RE:LBS No-braineractually you have to sell them well ahead of when the market and/or sector is going to tank. overnight offering is not a signifincant enough reason to buy for me. i bought a sh*t ton of lbs, sbc, dgs and lcs in 08/09 and march 2020 and later. as lcs and dgs got under 7 i unloaded it all, my last lcs at 5.75 and then it went to 3.50 in october, which would have been a good buy.
LCS has been very surprising to me lately after it hit the 3s in october, congrats to anyone who bought then, i would be selling that one hand over fist today at 5.30 and change, mfc is not that far from 12 month high, and LCS is close to 5. that tells you "danger" there is little margin for safety. LCS is the most dangerous and likely to dive, it has a lower distribution also, and is most likely to shoot below 5 at any sign of trouble. I wouldn't hold my breath about getting much yield for next years on it, i would buy it for a trade back in the sub 4 level or sub 3 even better but its no longer on my list for yield.
As we know these A shares trade at high premiums to NAV, which is impressive in itself since they don't have any of the actual underlying holdings yield (that goes to the prefs) to pay the distributions (how do they do it? you ask; the magic of using capital to pay distributions, i.e. selling units and covered call writing to a much lesser degree).
I have been trimming lbs all the way from mid 9s to high 7s last few months, fearing lower banking profits for several years and reversion to mean of share prices etc. (i.e. banks trading at 30% above their 2019 all time highs unsustainable). My cost basis on these was 3s and 4s for lbs and 2s and change for lcs, so not worried about getting rid of em. I still have healthy positions in lbs and sbc, sbc i probably won't need to trim, my cost is 5 -8, but if lbs heads back towards 7 and macro situation gets worse (and i believe it will worsen for longer than people think), and economy really tanks (let's not forget that canadian consumer debtload is a lot worse than US right now, and banks may grind lower over next few years until some of that is reset after higher mortgage rates are applied on outstanding mortgages (probably by 2026 or 2027, most of the low rate 5 years will be reset a lot higher.
It turns out financials have been getting some love with this bear market rally and my lbs triming was a bit early but i needed to rebalance anyways because brompton was such a huge % of my holdings.