YWHY,

I've had my 7 for 8 years I spent 3 as a muni odd lot trader and 5 as a FA. But yes, I did do well on the test.

[quote=RiverPlate]

and give floor traders authorization to buy odd-lotts without consulting the port managment team. They also were long in duration and low in credit quality when most funds were shortening duration and increasing quality. It seems to me that they are a fund that likes to take bets, and they don’t seem to turn out well very often.

[/quote]

As a floor trader wouldn't you agree that often the traders know a good odd-lot bargain when they see one?  And that there is often a need to act decisively to grab a good price?

The Rochester has always maintained that they manage their funds to maximize tax free cash flow....not for the best short term total return.  Hold on for the ride, reinvest dividends, and it will work out well for you and your clients, IMHO.

HymanRoth,

I agree that they can see a good individual odd lot, however, their job is to find the best price and execution for buys and sells, not to look at targeted duration, overexposure to a given type of muni, or a given region, it is also not their job to check the overall credit quality of the protfolio and how 100 to 200 odd lots a month might affect that quality.

By the eay I agree with you that if we reinvest dividends and hold it long enough we will be fine, but I think that same can be said for most investments, wouldn't you agree?

Also, it is nice to talk to someone who doesn't view a disagreement as an act of war.

Thanks!

[quote=RiverPlate]

HymanRoth,

I agree that they can see a good individual odd lot, however, their job is to find the best price and execution for buys and sells, not to look at targeted duration, overexposure to a given type of muni, or a given region, it is also not their job to check the overall credit quality of the protfolio and how 100 to 200 odd lots a month might affect that quality.

By the eay I agree with you that if we reinvest dividends and hold it long enough we will be fine, but I think that same can be said for most investments, wouldn't you agree?

Also, it is nice to talk to someone who doesn't view a disagreement as an act of war.

Thanks!

[/quote]

Same here.

Honestly I don't know enough to tell you if the 100-200 odd lots per month will have material affect on average duration/quality.  I would presume the PM's must get some ongoing reports, and would have the ability to give some guidance to the traders on odd lots...or ask them to stop for a bit.

[quote=RiverPlate]

Also, it is nice to talk to someone who doesn’t view a disagreement as an act of war.

[/quote]

River = well said. Sometimes some people on this board really go beyond reason.

[quote=RiverPlate]

EZ,

why do you think they are well managed? They have 25% in an illiquid tobacco settlement,

The entire spread muni market is illiquid right now. The tobacco bonds have never missed a beat and are unlikely to. The MSA is the deal of the century for big tobacco. They aren't going to upset the apple cart.   they have loaded up on leverage,   They use inverse floaters, which in normal times, you know, when we're not on the brink of depression, work just fine. What we have now and more so a month ago, is a liquidity crisis, not a credit crisis. Once this resolves, it's back to biz as usual. Today is a buying opportunity.   and give floor traders authorization to buy odd-lotts without consulting the port managment team. They also were long in duration and low in credit quality when most funds were shortening duration and increasing quality.   And this is what makes them not a good fund but a great fund; They aren't changing  their strategy to save their management asses. You see, Rochester mgnt said they are long term income buyers in the spread market. Then their market falls apart and takes their flagship fund with it. Most managers, in that situation start thinking about their future and decide it's time to get real short real fast. The problem with doing that, of course, is that it locks in the loses and destroys the fund's income. That in turn screws all the fund's shareholders who have no say in the matter. Those funds that did shorten screwed their shareholders for the sake of saving the portfolio manager's job. Muni investors who buy individual bonds would never sell into a falling market. It makes no sense. Those bonds will recover their price and continue to pay their coupon. Other than window dressing, there is no reason to sell. As the muni markets recover so will the fund. Praise Oppco mgnt for having the balls to stick to their strategy and thus not screw their shareholders.   It seems to me that they are a fund that likes to take bets, and they don't seem to turn out well very often.   Really? What bets would those be? They invested in airline bonds and mopped up. They've done the same with tobacco. These managers invest the money exactly as they said they would. Their analyst are made up of the best and the brightest. They don't place bets, they make well researched investment decisions in one of the toughest markets on the street. Today the non accrual rate for ORNAX sits at under 2%. Three years ago when ORNAX was a Morning Star five star fund it's non accrual rate was over 4%. Today's shareholders have a higher quality portfolio with a higher yield than did those share holders three years ago. Every major position this fund has taken has worked. They haven't lost yet.   And, buy the way, most if not all of those bonds in non accrual will eventually pay in full. They always have. They have to. Here the way that works: if the municipality ever wants to borrow money again it needs to clear up its outstanding debt. So out comes the checkbook.  And if the defaulted bond happens to be something like a redevelopement project backed by muni bonds, well, that project stays a big gaping unfinished eyesore to the community until someone comes in and pays off the bonds backing it. The community gets to look at the unfinished stadium. condo project, shopping center, whatever until someone writes a check to the bond holders. It's really simple, muni bond holders are first in line to get paid and they really do have the debtor by the short and curlies. It could take a little time but the muni holders almost always get paid off. This is why the major ratings companies are moving to a global rating sysytem with munis after the first of the year. They will seprate munis, because of their stellar track record, from other types of debt. Almost all munis will increase in rating. I know, probably not in the Jones report. I remember 6 months before the credit crisis hit, Jones was saying that when it comes to risk adjusted return they were one of Oppys worst preforming bond funds.   And the same would be true for any long term income investment let alone one that is non rated. ORNAX invests for maximum income and they do so in a little understood place. [/quote]

On the topic of munis;   One play that I am seeing smart advisors do is to buy individual muni's that have a Sinking Fund. A sinking fund  means that the municipality sets aside money to defease their debt into U.S. Treasury bonds. Now, if you buy a Treasury bond for 10 years, the yield without a mark is about 2.98%---Treasury yields are terrible. However, buying a Muni bond with a sinking fund is a treasury play with more yield.

Just think, 40 million consumers will get up at 3am tomorrow to buy stuff half off...we've been doing that with Oppy muni from the convenience of our comfy offices, and getting paid a 293% yield at the same time.   Good times, good times.....   I'd be careful with Oppy. The fund was at 12 billion one year ago and now they are at roughly 6 billion (asset devaluation anyone?). They also had half a billion in redemptions in Sept. They are too aggressive in my book as leverage is being called away in the bank. I believe they are taking on redemption risk. Not only that, I'd take a look at the addendum that they added to the prospectus on Oct. 21st stating part of their portfolio is illiquid and not properly valued.....I'm just sayin be careful as clients have already been burned badly enough that own this stuff!