Sold EICC (3.8%)

My first “involuntary” sale. This preferred share was callable and Eagle Point decided to do exactly that. They will exercise their option to buy back all EICC preferred shares for $25 plus accrued and unpaid dividends on April 6th. I decided not to wait, and sold mine. This has been one of my favorite investments because it offered ultra low volatility and high, consistent income. 

EICC was trading close to $25 so “Call Risk” wasn’t a problem. It was for this reason I sold the preferred share, DX.PR.C. Excellent source of income, but the price has surpassed $26 several times this year. If Dynex “calls” it, investors would only receive $25 (plus accrued dividends). If DX.PR.C moves close to $25 I’d happily buy it again.

Sold EIC (2.4% Allocation)

A distant cousin to EICC, is the EIC Closed End Fund. Unlike EICC, this one has been a disappointment. The fund holds Collateralized Loan Obligations (CLO’s); a troubled sector recently. Specifically, it focuses on BB rated CLO debt (low risk), and up to 35% CLO equity tranches (high risk). The income and total returns were excellent…until they weren’t.

CLO’s hold floating rate business loans, and the Fed’s rate reductions have therefore reduced interest income. This was to be expected, but the income generated by the fund has fallen off far worse than expected. They announced 2 distribution cuts, with the intent of using some of the funds to boost NAV. Despite this, the NAV has continued to decline.

In short, the fund is more sensitive to interest rates than I expected. If interest rates continue to fall (possible), then EIC is at risk of further decline. Additionally, the fund’s 35% leverage (Source: CEFConnect as of 3/18/2025), is an additional risk factor. Nobody likes to sell a loser, but I’ve reached a point where I’ve lost faith in management’s ability to navigate through interest rate cycles.

Bought ADAMH (3.8% Allocation)

When I sold this baby bond last month, I noted that “I would happily buy it back again”. Didn’t take long! The timing is fortunate, as it's slightly cheaper now, and yielding 9.96%.

The EICC redemption was a surprise, but ADAMH fills the hole. It’s a bond issued by the Adamas Trust mREIT and was explained in this November 2025 episode. My goal for this bond is to provide predictable, consistent income, and remain close to its $25 par value.

Adamas Trust has issued several bonds with slightly different terms, and there isn’t one “best” option. For example, as I write this, ADAMO offers slightly more upside in price but slightly less current yield. If you want to explore the details of the various bonds offered by Adamas Trust, click this analysis by Arbitrage Trader featured recently on Seeking Alpha. At the time of writing, he was leaning toward ADAMG. 

*I suggest using limit orders when trading bonds and preferred shares as they typically trade in smaller volumes than funds.

Increased KGLD (From 1.3% to 3.7% Allocation)

KGLD sells call options to generate an 11.6% yield (currently) from the price volatility of gold. 

During fearful times, almost everything sells off, although Midstreams like EMO and NML have been a notable exception. What about Gold? Isn’t it supposed to be a hedge, or a safe haven?

I’ve been waiting for a correction to increase my gold allocation via KGLD. The recent selloff doesn’t necessarily say anything about gold as an investment. 

A sudden external market shock (in this case the Iran war/Energy Crisis) typically leads to a liquidity selloff. Leveraged investors need cash in a hurry to avoid a margin call (forced sale of their portfolio), so they’re willing to sell whatever gets them the cash they need. 

Once the leverage is unwound, money tends to look for quality. At that point, it will be easier to assess what the market thinks of each asset class. To put it simply, I think gold currently has more upside than CLO’s (hence the sale of EIC).

KGLD continues to deliver the impossible…it is outperforming its underlying asset. Only slightly, but impressive none the less. Howard Chan from Kurv shared a detailed technical breakdown of KLGD’s option strategy in our Armchair Insider Lounge community.

Note that the KGLD distributions (and therefore yield) may vary considerably. March was 50% higher than February! I used the most frequent distribution so far ($0.30) to calculate the annualized yield of 11.6% quoted above. Also, KGLD may distribute some income that will be treated as return of capital for tax purposes. However, the actual amount will be determined by gains and losses over the course of the calendar year. Tax information distributed on 19a-1 notices (from any fund) should not be relied upon….they’re often wrong. I don’t read them anymore.

Watch this interview with Howard Chan, CEO of Kurv Invest, to learn more about KGLD, Gold (and Silver).