4/22/2020 Markets begin somewhat orderly correction this week. Bought a reasonable position in PSEC at market close today.

Hi everyone, I hope you are all staying safe and are still quarantined. I don’t think I’ve left the house in the last week, but that’s pretty normal for me anyways.

The markets are somewhat stalling near resistance this week although we did see a spike up today. I found one stock that I decided to buy today (PSEC). With the purchase, I’m at about 45% cash and 55% stocks (up from about 55% cash and 45% stocks from about a month ago. The cash position is also a bit smaller since MRO and BA have gone up in the last month. 

My Schwab portfolio checkup says my portfolio is in really bad shape since I have all my eggs basically in Boeing, with smaller positions in MRO and PSEC that combine to about half the position size as Boeing. It also says I have way too much cash for my risk tolerance – Schwab thinks I should have 5% cash, but I have 45% cash. 

Anyways, I bought PSEC at $3.81 on market close today. The CEO bought a tremendous amounts of shares (30 million shares in March, almost doubling his initial position size of 40 million). His average purchase price is about $4.5 for the new purchases. I’ve also noticed a big bottoming pattern in the chart (daily chart below). Notice how the price keeps retesting lows, but the RSI (momentum indicator) disagrees with the price action.

Another benefit is their dividend yield of 19%. They pay a dividend of 6 cents per month (which isn’t suspended yet), so even if the stock price doesn’t move in the next year, I’ll be getting a 19% return just from the dividends. I have the dividends set to auto reinvest so I can avoid paying taxes on short term capital gains. I plan to hold for at least a year with a minimum price target at $5. My decision to hold longer is dependent on its price action, dividend yield, and insider activity. I have another limit order set to buy more at $3.2.

PSEC daily 4_22_2020

 

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s