HFRO: Reassessing 8% Yield On Preferreds After Monetization Of Large Asset

Saba Capital has surpassed a 10% ownership stake in Highland Income Fund and is pressuring HFRO for larger buybacks to close the persistent discount to NAV. While HFRO’s first major monetization event has helped improve the NAV discount, activism indicates management may still need to accelerate capital returns. The catalyst is likely to influence HFRO’s discount/NAV narrative over coming weeks.

Analysis

Saba Capital has surpassed a 10% ownership stake in Highland Income Fund and is pressuring HFRO for larger buybacks to close the persistent discount to NAV. While HFRO’s first major monetization event has helped improve the NAV discount, activism indicates management may still need to accelerate capital returns. The catalyst is likely to influence HFRO’s discount/NAV narrative over coming weeks.