McGlinn Capital Management is looking to reduce its telecommunications holdings by about 0.5%, or $5 million, according to J.P. Weaver, portfolio manager of $1 billion in taxable fixed income. Weaver would not name specific issuers in the sector whose bonds he is looking to sell, but says he is hoping that a few of the troubled credits will rebound slightly.
The firm may also look to add to its holdings of AOL Time Warner and Comcast. In the case of Comcast, he still needs to get comfortable regarding the proposed merger with AT&T's cable unit and the complicated corporate structure it would create. Regarding AOL, he needs to be convinced that the potential calls on its cash reserves from various corporate partners will not dry up the firm's liquidity.
McGlinn has been taking profits in its consumer cyclical holdings, and in basic industries, such as chemicals. It recently sold its Dow Chemical 6.5% notes of '28 at 85 basis points over Treasuries, and Federated Department Stores 6.30% notes of '09 at 107. The Federated paper had been as wide as 260 basis points over Treasuries last year, says Weaver.
The Wyomissing, Pa., firm's portfolio has a duration of 4.75 years, slightly long its benchmark, the 4.5-year Lehman Brothers aggregate index. It allocates 35% to corporates, 31% to mortgage-backed securities, 22% treasuries, 11% to agencies and 1% to cash.
