I redeployed some of the cash from the JNJ sale into PMT this morning.
music selection: “Walk This Way” — Aerosmith
weigh-in: 218.4 (0.0) — no change from prior week
PennyMac first came to my attention in a 13F filing by Leon Cooperman (Omega Advisors), famous for founding the asset management arm at Goldman Sachs and now as a top hedge fund manager. That was quite an endorsement for me. PMT is a mortgage REIT based in California and is mostly invested in residential mortgages. It has an attractive 12.86% yield. Somewhat unusual for a REIT under 2 billion market cap, options are available providing an opportunity to create a real cash flow machine.
I’m taking just nibble for now with a purchase of 100 shares at 14.69. I collected 22 cents in immediate income by selling PMT151120C00015000. The annualized yield over the 19 days the trade will be open is 28.77%. This is an income play rather than a growth play so covered calls and cash secured puts will be written at the money.
I have two more trades today to deploy my recently available JNJ funds from the exercise of the covered call. I’ll be posting about those on Wednesday and Friday.
Devour your prey raptors!