Summary
HFRO Chart
HFRO: Assessing The New $100 Million Share Buyback Program
Highland Opportunities and Income Fund launches a new $100 million, two-year share repurchase program, with $20 million to be deployed immediately. Saba Capital's activist accumulation and the buyback program create a tactical floor for HFRO's share price, narrowing the discount to NAV. HFRO's real estate-heavy, illiquid asset base poses execution and liquidity risks as buybacks shrink the portfolio and concentrate holdings.
HFRO: The Series B Preferred Shares Look Attractive
Highland Opportunities and Income Fund (HFRO) offers Series B Preferred Shares (HFRO.PR.B) with an 8.25% yield and stabilized NAV amid a -46% discount. Saba Capital's 9.4% stake in HFRO common shares signals activist scrutiny and potential for NAV discount normalization, benefiting preferred holders. HFRO.PR.B demonstrates exceptional price stability, outperforming CRE REIT preferreds during recent market volatility, aided by 1940 Act asset coverage protections.
HFRO: One Of The Best Investment-Grade Preferreds
Highland Income Fund's preferreds offer an 8.35% yield at a 36% discount to par, underpinned by investment-grade ratings and real asset exposure. HFRO's 71.8% allocation to commercial real estate, low 27.81% regulatory leverage, and broad asset diversification enhance preferred safety despite some illiquid holdings. Preferreds trade at 64 cents on the dollar, providing a 405 basis points spread over the 10-year Treasury, with potential for discount narrowing as risk appetite returns.
Highland Opportunities and Income Fund Investors
| Name | Quantity | Cost | Value | Profit ($) | Gain (%) |
|---|---|---|---|---|---|
| JD Jim Dushek HARBOUR INVESTMENTS Inc. | 142,243 | $812,207.53 | $1.08M | $270,972.91 | 33.36% |
 Bulldog Investors Bulldog Investors LLP | 10,715 | $75,326.45 | $81,440.43 | $6,113.98 | 8.12% |
 Jeff Ameen Spire Wealth Management | 500 | $4,985.2 | $3,815 | -$1,170.2 | -23.47% |
| SL Shad Lamm Keystone Wealth Services LLC | 21,330 | $210,858.49 | $162,961.2 | -$47,897.29 | -22.72% |
| MC mike Chen Byrne Asset Management LLC | 1,800 | $19,782 | $13,680 | -$6,102 | -30.85% |
Highland Opportunities and Income Fund (HFRO) FAQ
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Highland Opportunities and Income Fund Profile
| NYSE Exchange | US Country |
Overview
Highland Funds I - Highland Opportunities and Income Fund is a specialized fixed income mutual fund, established under the management of Highland Capital Management, L.P. and currently operated by Highland Capital Management Fund Advisors, L.P. Launched on January 13, 2000, and incorporated in the United States, this close-ended fund has evolved its investment strategies over time, reflecting in its name change from Highland Income Fund to its current focus on opportunities and income. Targeting the fixed income markets globally, it provides a diversified investment portfolio primarily concerned with adjustable rate senior loans along with other floating rate securities. A key aspect of its strategy includes investment in below investment grade securities and the use of derivatives to enhance portfolio outcomes. This fund seeks to compare its performance against benchmarks like the Credit Suisse Leveraged Loan Index, aiming to deliver attractive returns to its investors through its specialized focus on floating rate investments.
Products and Services
- Floating Rate Loans and Other Securities
This fundamental investment vehicle of the Highland Opportunities and Income Fund involves prioritizing adjustable rate senior loans offered to corporations and partnerships, alongside other securities that qualify as floating rate investments. Such assets are chosen for their potential to provide income through interest returns that adjust with market rates, offering a degree of protection against interest rate fluctuations.
- Below Investment Grade Securities
Targeting higher yield opportunities, the fund actively invests in securities that are rated below investment grade. This approach signifies a willingness to embrace higher risk for the possibility of increased returns, focusing on corporate bonds and loans that, despite their lower credit ratings, may offer appealing income prospects.
- Derivative Investments
In addition to direct investments, Highland Opportunities and Income Fund engages in the use of derivatives as a strategic tool to hedge risk and enhance potential returns. This includes a variety of financial instruments such as options, futures, and swaps that derive their value from underlying assets, rates, or indexes, providing a means to access broader investment opportunities and manage portfolio exposure to various financial risks.
