Enough Reward for your Risk?

Check out this article.  Blackstone is paying investors practically nothing on their rental units, and you are not even in first Lien position, and you are holding over multiple years.  I get my Investors 10-12% net on brand new residential construction, and they sit in control of the property.  Plus they are in and out of each transaction in less than a year.  Drop me a line at bkudla@ignitefunding.com to learn more.  Only 10K minimum investment.

http://www.bloomberg.com/news/2015-01-14/blackstone-said-to-market-first-rental-home-securities-of-2015.html

Blackstone Group LP (BX) is offering the first securities of 2015 tied to rental homes, the start of what Morgan Stanley analysts predict may be a more than doubling of issuance this year in the nascent market for such debt.

Blackstone’s Invitation Homes is planning a $513.8 million deal backed by 3,072 properties, a person with knowledge of the matter said. A total of $227.8 million of top-rated securities may be sold at yields that float about 1.35 percentage points above a borrowing benchmark, said the person, who asked not to named without authorization to speak publicly. That compares with the 1.3 percentage point-spread to the one-month London interbank offered rate at which it sold similar bonds in its last offering in November.

Sales of the securities, after totaling about $7.1 billion since Blackstone’s inaugural transaction in late 2013, could reach $15 billion this year, according to Morgan Stanley analysts Richard Hill,James Egan and Jeen Ng. The next frontier will be issuance tied to loans to smaller single-family rental investors and bundled together, the analysts said in a report, a market being targeted by firms including Blackstone’s B2R Finance LP and Cerberus Capital Management LP’s FirstKey Holdings LLC.

‘Significant Growth’

“Successful issuance of a multi-borrower deal could serve as a catalyst for significant growth of the sector,” the New York-based analysts said in the Jan. 6 report.

Denise Dunckel, a spokeswoman for Dallas-based Invitation Homes, declined to comment on the company’s planned offering.

While the biggest institutional landlords, led by Invitation Homes andAmerican Homes 4 Rent (AMH), have been more visible in gobbling up properties in the wake of the U.S. foreclosure crisis, they own fewer than 500,000 homes, compared with the more than 14 million owned by smaller investors, according to the report. Investors with small enough pools of properties can also turn to taxpayer-backed Fannie Mae and Freddie Mac for financing.

Seven different issuers sold about $6.5 billion of rental-home bonds last year, according to data compiled by Bloomberg. Investors have been demanding to be paid more to buy the securities than at the market’s start after supply rose and yield premiums climbed on competing debt such as speculative-grade corporate bonds.

Invitation Home sold the AAA rated securities in its first deal in November 2013 at a spread of 1.15 percentage points over one-month Libor, and the riskiest portion at a spread of 3.65 percentage point. The most-junior-ranking debt it’s offering this week may sell at a spread of 4.5 percentage point, the person said.

Libor, the rate at which banks say they can borrow from one another, was set today at 16.8 basis points for one month. A basis point is 0.01 percentage point.

Fetch is Building

As many know I focus my trading on volatility, and since the end of QE the action in said instrument has changed.  Looking at VXX one can clearly see higher lows, and the SPY, getting toppy.  The swings are getting more frequent, as well.  This is looking like the pre-start of a sailboat race, and one of these moves is going to break out and up.

For me, I profitably closed my SVXY position and UVXY puts on Thursday, and am neutral expecting to go long TVIX and VXX calls this week.

At the first of the year I started a portfolio of taking $50,000 to $1,000,000 in five years going long and short vol.  Once I get enough trades under my belt I will post a graph of my progress.  Follow me on Twitter as I will post the buy/sell signals real time (see above right on blog).

The Signal

Reversals?

OK, signals will trigger this morning on volatility, oil and the indexes.  Taking my shots.  Also, will take my first trade on turning $50,000 into $1,000,000 in five years trading only SVXY, cash, and TVIX.  I will post results every Saturday on progress.

I also will post an another trade experiment selling credit spreads on SPY based on another traders SPY reversal signal. I expect the first reversal today. I will post there, as well.

Both will outperform the market, and we will see how much, over time.

Here are some charts, enjoy.

SVXY

Asset Returns for the past 10 years

Pretty cool charts showing the relative performance of different asset classes over the past ten years.

Sources:

http://slopeofhope.com/socialtrade/recent?show=17737
http://seekingalpha.com/article/2794015-why-i-cashed-out-most-of-my-lendingclub-shares

Keeping it Simple

As I look back at my trading for 2014, the area I most consistently outperform is in the volatility area. There are natural edges trading the fade in fear, and the built in contango in XIV et al, which is nearly always good for a positive trading bias.  Also since the end of QE the market has begun swinging more allowing for a two way trade to develop.  Therefore, 80% of my trading will be swinging between TVIX, and SVXY, with occasional purchase of puts on VXX or UVXY.

The other area that will benefit from the end of QE is the Gold/miner trade. I am not saying gold and miners are ready to rock, but we will start swinging again which will allow some trading profits.  I intend to trade and follow the following.  SLW, NUGT/DUST, DGP/DGZ.  This will keep me quite busy n the stock market for 2015.

Specifically regarding the volatility trade, I will post the performance in a weekly graph. My goal is to take $50,000 and turn it into $1,000,000 in 5 years.  My intent is to be fully invested either long or short, and I will use no leverage or options.  The other trades I will post buy my buys or sells only.

Right now, there is no official stock position in vol right now, but I did post a purchase of Jan UVXY 25 puts on Friday.  I am waiting on my signal to fire to  buy some SVXY.