No options trades for me this week but I am planning to add some JPS two Monday’s from now with the proceeds from last month’s options contracts that are expiring worthless.

music selection: “Youth Gone Wild” — Skid Row

The fund in question is Nuveen Quality Preferred Income Fund 2 (NYSE: JPS). This is a closed end fund of preferred securities (80%) and some debt securities. It provides good diversification and stable income in exchange for low growth potential. Current yield is 8.06% and is best held in tax advantaged accounts. Payments are made monthly allowing for greater compounding and easier budgeting if you are using the distribution to pay current bills.

The great thing about Closed End Funds is they sometimes trade for a discount to their Net Asset Value (NAV). Today, we can scoop up shares of JPS for a bargain price. Shares are trading for 11.11% below NAV. It’s kind of like being able to by a dollar for about 89 cents. This is a delicious snack.

ACTION TO TAKE: Buy JPS for up to 10% discount to NAV (currently 8.75 per share). Today’s closing price was 8.64.

More information about JPS is available from Nuveen on the JPS data page.

Devour your prey raptors!

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Buy JPS for fixed income and preferred shares exposure

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3 thoughts on “Buy JPS for fixed income and preferred shares exposure

  • July 11, 2015 at 12:41 am
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    One must ask why such a huge discount to NAV. Unless there’s a serious problem, arbitrage generally keeps discounts and premiums much smaller.

    Reply
    • July 11, 2015 at 1:44 am
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      That is why when I see discounts, I like to snatch them up. The discount theoretically cannot persist.

      Reply
  • July 13, 2015 at 7:29 am
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    Many CEFs trade with huge discounts to NAV. This is not something that is atypical. I used to own a few CEFs many years ago but have since shifted to a dividend growth model instead. Many CEFs distributions are taxed at regular income rates and also are just offering a return of capital in many cases. I had PHK and JSN a while back. I don’t think JSN trades anymore as a separate CEF.

    Reply

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