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5/18/24

To our MYFR fans:

 

We have put a pause on our out-of-the-money (OM) put option sales.  That’s for a couple of reasons:

1.       Our cash on hand is limited.  We had expected an infusion of supplemental capital from our sales of real estate but that has not progressed at the pace we had hoped for.

2.       We are concerned about the possible geopolitical turmoil at least up to the November election.  We were surprised by the effects of the war in Gaza in our cities and on our campuses and around the world.  Mix that with the intensely divisive national election cycle and who knows what happens in our communities and the effect on markets.

3.       Like most businesses we are comfortable in our family asset management business with a reasonable level of debt.  In our case, that would mean risking incurring margin debt in our OM put selling.  But margin rates are still very high and with capital from property sales lagging and our uncertainty about exogenous events we think the time is right for an extra measure of caution.

4.       We are taking advantage of the pause to do some late spring cleaning.  That means we are considering the sale of some scratch the itch community banks we still own.  We typically sell OM calls on those few former Dividend Champions we own.  Should we need more capital to meet strikes on our outstanding puts we are designing strategies to buy to cancel those calls and sell the underlying stock.

5.       On May 17 we had a number of puts expire.  With the market up recently nothing struck.  That felt good.  Almost all outstanding puts expire in the next two months.  We only have a couple expiring in August.  None are in the money presently.  We will monitor closely so as to buy to cancel if amounts required to execute exceed available cash.

 

If you have any questions send an email to Pat at pkeogh1@comcast.com

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