McGlinn Capital Management, a money manager based in Reading, Pa., is considering adding roughly $50-100 million in 15-year mortgages, and another $50-100 million in high-rated junk credits. J.P. Weaver, who manages just under $1 billion in taxable fixed income assets, plans to make the move within the next few weeks. He says he'll sell Treasuries and possibly some agencies to fund the move, though he won't specify maturities or what type of agencies. He is duration neutral to his three Lehman Brothers benchmark indices, and says he will remain neutral for now.Weaver likes 15-year MBS because it has lagged 30-year paper, and he expects bank demand for 15-year paper to pick up to reflect Federal Reserve easing. Banks tend to invest in 15-year MBS in an easing environment because it fits their liability profile, he explains.
Among the crossover junk companies he likes are Pulte (Baa3/BBB), Centex (Baa2/BBB), Global Crossing (Ba2/BB), particularly if it is purchased by Qwest Communications and Allied Waste (Ba3/BB-).
Weaver currently allocates roughly 40% to treasuries, 40% to corporates, and 20% to Agencies.
