Searching for yield

Marke for later. On a phone.

What kind of principles are we trying to protect? Green energy? Humane treatment of animals?

Fair enough, I blew it on Principal. My bad.... So you got any great ideas? Sectors? High quality? Market sector trends

This is a bit nontraditional, but I bet there are some perfectly good local businesses that can use a loan and can't get one from the local bank because lending standards are too tight.

I wouldn't go too long, something in the 5 year range maybe, but it's something to consider if you're willing to do some research on the right borrower.

Maybe look into a low volatility ETF like SPLV (+3% divvy).

I'm just saying, investing in a small business isn't exactly something I'd call focusing on preservation of capital. Unless you're talking really small sums like $5-10k it seems like outsized risk imo (read the block of rambling below if you want to know why I think that, otherwise just ignore it).


Block of rambling:
Their books are likely close to useless so the bulk of your diligence is simply figuring out if the guy isn't a thief and if his business plan is reasonable (of which I don't think you could reasonably expect to do without being somewhat involved in the day to day operations of the business, especially given the accounting records), you're going to have some relatively large amount of transaction fees hiring a lawyer to draw up an agreement or loan doc, you're completely and totally illiquid whether its equity or debt financing and undoubtedly a long and potentially difficult to define payback period (just cause the note is 5 years today doesn't mean you're getting it back in 5 years), and even then its not likely you'd be able to recover anything in the event the thing goes belly up. Its definitely an outside the box idea but it seems way more risky than something I'd want to be in as a retiree, unless I was trying to start my own business. I mean we're effectively talking about angel investing.

What kind of yield would you want on something like that, debt or equity? I mean if a bank won't give them debt financing what are you going to demand? Certainly more than the bank would. One of the businesses we worked on last week is completely upside down after a management buyout + merger 3 years ago (D/A of 151%, yes, A, not E) and they just managed to refinance secured debt into an unsecured revolver to the tune of almost 50% of their entire balance sheet. Cash flow is mediocre, the audit (not comp, not review, AUDIT) makes me ashamed to be a cpa its so thin. and the projections they gave us, while full f/s, I find incredulous [especially given their track record]. shite they were in default of the major debt piece just 2 years ago. Its not 2007 but people can get financing. A lot of small businesses simply don't want it.

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That's a great idea. Perhaps even some sort of inventory infusion. I've got a family member who owns a pretty high turn store who can always use more inventory who I'm considering doing this for.

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I have underwritten a lot of companies that have high yielding sub debt. I often wish I could get in on some of it.

I'm currently long in AGNC, yielding around 20%. it's had a good run up recently, but I still like it.

Floating rate bond funds are also worth a look right now. No way I would be buying fixed rates bonds right now, though.

I think there are some real values in the banking sector, but none I consider to be a long term hold.

I've been long BP for a long time and I still think it's a great value. I think being long O&G in general is a good long term move. Short term, I like a few oilfield service companies that have a focus on natural gas. Nat Gas will eventually be back strong and I think those guys are the best way to take advantage.

CQP is a stock I've always been interested in, but never bought, because when it was cheap because I didn't think I fully understood the risks, and didn't buy later because I thought I had missed the boat. I would be interested to hear what someone smarter than me has to say about CQP.

Can't talk stocks but the floating rate bond fund is an interesting angle.

No issue with that suggestion in general, just don't have any specifics to talk to. We have to mess with a lot of closed end funds and I often feel like some of those (both fixed income and equity) are trading at attractive valuations to NAV.