PIMIX and PDI: Ivascyn buys $2,301,489 of PDI

andrei

Bond rates are up, bond funds are falling down today. Until now, PIMCO fund PIMIX and its closed end brother PDI behaved beautifully. Today PDI is jumping down (right now at -0.76%), so one may wonder whether this is a sell signal. While this may be the case, I found an interesting information which may be relevant:

http://www.minyanville.com/trading-and-investing/stocks/articles/Goldman-Sachs-Sells-Cobalt-International-Energy/1/24/2013/id/47611?camp=syndication&medium=portals&from=yahoo&refresh=1

Here is the relevant part:

"Below are lists of the top 10 mainly open-market insider purchases and sales filed at the Securities and Exchange Commission Wednesday, January 23, 2013, as ranked by dollar value...

In insider purchases, Daniel Ivascyn, a lead portfolio manager for PIMCO, bought $2,301,489 worth of the $1.25 billion close-ended PIMCO Dynamic Income Fund PDI, which he runs."

I do not know how long ago did he buy $2.3 M of PDI, and whether he continues buying it now...

Any thoughts?

Andrei

Hiyield007

http://www.secform4.com/insider-trading/1510599.htm

A graphic of insider activity at PDI. I haven't checked recently but at one time PDI and PIMIX aka PONDX were different animals in that PDI was almost exclusively RMBS and with more leverage. Also, the two funds aren't necessarily correlated on a day to day basis albeit they always seem to go up. Will be interesting to see how PIMIX is priced this evening, hopefully unchanged. I will be out 100% whenever price has declined 0.75% to 1% from the highs. I am itching to sell to seek other opportunities but can't sell strength. If income is your game and you want a bit of momentum from stocks too without all the volatility then PGDIX looks good with its exposure to MLPs.

andrei

Thanks for the very useful link, it helps to understand the general picture. I will research PGDIX.

bee

Reply to @Hiyield007:

HY,
On the M* site it mentions that this fund (PGDIX) is available through JP Morgan NTF. Are you aware of anywhere it can be purchased NTF with a reasonable minimum?

Looks like a great steady performer. Thanks.

Hiyield007

Reply to @bee: bee, no minimum at Scottrade but it's a TF fund with a a $17 transaction fee

fundalarm

Reply to @Hiyield007: Actually, the only sale appearing on the form has been corrected to a buy. So the PM keeps accumulating. Not a bad sign.

Hiyield007

Reply to @fundalarm: I am not a volume guy but to those that are, today's volume on the price decline have to be a bit concerned. Today is already the second heaviest volume since inception for PDI and by the close may well be the heaviest.

bee

Looks like PONDX settled down a penny today...not too bad on such a news worthy equity day.

andrei

Interestingly, while the price of PDI dropped down by 1.05% today, its NAV actually slightly increased.

fundalarm

Reply to @Hiyield007: yup. the thing is back at a discount. still love it though.

BWG

What are your thoughts on buying PDI at this time -- on the plus side it is trading at 1% discount. Excellent manager who invests in the fund. A high level of flexibility in the fund's mandate. My biggest concerns are that the fund has risen very fast very quickly over the last few months and that the bond market is reaching a top.

Thanks in advance,

BWG

andrei

This is a very interesting question; I would be happy to know the answer. I am new to bond investment, and PDI is my first closed end fund. Up to now, it was fantastic. Its 50% leverage does not fully explain its success. Its NAV continues to grow, at least for now. But if investors decide that bonds are going to fall and the Big Rotation begins, they may try to sell bonds as fast as possible, and the fund will be trading at a much greater discount than now.

From this perspective, the fact that the manager of PDI invested $2.3 M of his own money in PDI on January 18 looks like a vote of confidence. It may be equally important to compare the history of his investments in PDI with his investments in another closed end fund he manages, PKO, see

http://www.secform4.com/insider-trading/1412350.htm

As you can see, he invested in PKO as well, but he did it almost a year ago, and the total amount that he invested in PKO was much, much smaller than his total investment in PDI.

http://www.insider-monitor.com/trader/cik1201895.html

BWG

Reply to @andrei: Thanks for the additional info on the manager's investment in PKO.

A fund manager's investment in his/her closed end fund can be more informative than a manager's investment in his/her open end fund. In the case of the latter, the investment also performs a marketing function, in terms of helping to bring in more assets from other investors (who are impressed by the fund mgr's investment, even if it is a relatively small portion of his/her net worth).

BWG

Hiyield007

So far at least another ugly day for PDI. And it is looking like another rare down day for PONDX based on RMBS and foreign and emerging markets bonds. But then it has always been a difficult fund to figure out on a day by day basis.

catch22

Reply to @Hiyield007:

Also, per your "funk" reply. I don't feel the rotation is in place yet; and that the
current market actions are hot money moves.
However, this does not mean that perhaps our house needs to move into other
areas of bonds with a multi-sector touch and let go of the investment grade stuff
that we have direct exposure to: as FBNDX, TINPX, ACITX.
'Course if there is a nasty coming to the equity area, these funds will benefit.
HYG is about the happiest camper among a broad range of equity and bonds at
this point (noon) today, with the exception of NASDAQ and a few select etf's.

Take care,
Catch

IYR  -0.13%
PDI  -0.63%
HYG  -0.08%
TIP  -0.30%
LQD  -0.27%
IEF  -0.34%

andrei

In the end it was a positive day for PIMIX/PONDX. Interestingly, the price of PDI continued to fall, but its NAV continued to rise...

Investor

Reply to @andrei: Someone with large position is probably off-loading.

Hiyield007

Yes, PONDX aka PIMIX is back to all time highs. Over 40% is in foreign and emerging markets bonds and not a good day there and a flat day for non agency RMBS. I will never understand how Ivascyn does it and with little to no drawdown along the way.

andrei

At inception, this fund was sold at a significant premium, then this premium disappeared, and now it is trading at a very small discount. My guess is that the Great Rotation plays some role there. I checked several PIMCO closed end funds, many of them are trading at a substantial premium, but very recently this premium began to decrease. I do not know whether this is a buy or sell signal, but it is somewhat reassuring that the NAV of PDI continues to grow.

fundalarm

i am also quite surprised. in a day when general high yield underperformed equities, and treasurys tanked, this fund -- again -- looks like a winner. i better add to my position while still at a discount (pdi). don't forget 7% distribution yield, which is being significantly over-earned. so the real rate will be much-much higher for those who can stand volatility of the leveraged CEF.

catch22

Reply to @Hiyield007:

HYG getting picked on today, in the hot money rotational games in place.

BOND +0.04%
RWR  +0.12%
IYR  +0.13%
PDI  +0.87%
HYG  -0.24%
TIP  +0.02%
LQD  -0.04%
IEF  +0.10%

andrei

PDI is up today. A new closed end fund from PIMCO was just launched, PCI, see

http://www.sec.gov/Archives/edgar/data/1558629/000119312512506897/d451805dn2a.htm

http://www.bloomberg.com/news/2013-01-29/pimco-to-doubleline-leveraging-as-yields-retreat-credit-markets.html?cmpid=yhoo