Resource Capital: A Quick Trade To Boost Yields On Idle Cash

Many cautious investors have trimmed equity market exposure during the euphoric run-up earlier this year. Agile traders were able to snag up bargains with their dry powder during the early February sell-off, but the short-lived correction likely left many still holding a sizable cash position. The market still feels expensive at close to all-time highs, the tech growth stories look fully-priced, and allocating to fixed income seems like a bad bet against the rising rate backdrop. I am one of these investors holding a larger-than-desired cash position, but hesitant to deploy capital due to the lack of bargain in the markets. One of my solutions is to look for short maturity income situations to boost my portfolio yield without sacrificing liquidity.
The Opportunity Resource Capital Corporation’s (RSO) Series B preferred stock offers an attractive opportunity to put idle cash to work, and juice your yield with a short holding period of 20 days.
Resource Capital Corp is in the midst of a turnaround, where management is working to lower cost of capital while simplifying the core business. As part of this strategic initiative, they have been refinancing high cost capital via redemption of preferred stocks and bonds and re-issuing at lower rates. I am bullish on the common stock and have recently written about the company here and here.
Resource Capital announced the redemption of their series B preferred stock, which will take place on March 26, 2018. Holders of the... Read more

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