PTA - FLC: Deep Discount And Better Outlook Lead To Opportunity
2024-02-23 05:28:27 ET
Summary
- Flaherty & Crumrine Total Return Fund has been negatively impacted by Fed rate hikes, causing borrowing costs to explode higher, while their portfolio was also hit by higher rates.
- FLC recently raised its distribution, and that provides a glimmer of hope that stabilization is taking place.
- The fund has a potentially brighter future moving forward, and the large discount present could be a further opportunity.
Written by Nick Ackerman, co-produced by Stanford Chemist.
The discount for Flaherty & Crumrine Total Return Fund ( FLC ) is off the deep levels of our prior update. That said, the fund's discount to its net asset value still remains material. Given the recent distribution boost, it is a good reminder that things are starting to stabilize and settle on the rate front.
Of course, this fund is still impacted significantly by risk-free Treasury Rates in terms of its underlying value. It isn't just all about the short-term rates that the Fed has control over, and that wreaked havoc on the fund's borrowing costs....
FLC: Deep Discount And Better Outlook Lead To Opportunity