PFO - PFO: Deeply Discounted Preferred Exposure

2024-05-01 12:57:14 ET

Summary

• Flaherty & Crumrine Preferred and Income Opportunity Fund (PFO) is currently trading at a historically wide discount and provides exposure to preferred securities.
• The fund has adjusted its distribution in response to changes in interest rates, which had resulted in several distribution cuts over the last couple of years.
• PFO would work best in a lower-rate environment, but the latest payout increase shows signs of stabilization, and the significant discount makes it an appealing opportunity.

Written by Nick Ackerman, co-produced by Stanford Chemist.

At one time, Flaherty & Crumrine Preferred and Income Opportunity Fund ( PFO ) enjoyed trading at a premium to its net asset value per share for most of its life. Over the last couple of years, the environment has completely changed, and with higher rates and a few bank failures came some skepticism. That's helped to push this fund into the double-digit discount territory, a level that it really hadn't seen since the Global Financial Crisis and before that, one would have to go back to 2000....

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