Because this REIT operates in a very dangerous sector (holds poor quality mortgage and commercial real estate securities) of the economy and is currently levered 10:1, trying to catch a falling knife like this requires an insane amount of due diligence. While the fundamentals may appear attractive, finding that Fortress Investment Group (the managing partner) owns only 2% of the company and has not increased its holdings in the aftermath of the subprime scares and subsequent decline in stock price does not indicate a high degree of confidence in the viability of NCT looking forward. On the other hand, real money is made by investors willing to jump into chaos and pay pennies on the dollar for assets. In NCT's case I think that they probably stole subprime mortgages from desperate companies looking to dump these illiquid securities last February when they paid $1.7bil for a batch of subprime assets. Until the subprime mess is sorted out investors seeking to steal some dividends might be able to take advantage of NCT's 11% yield while it's at its $25 support level.

With interest rates around the world rising as investors reevaluate market risk bond holders will likely be subject to declining bond prices as investors demand higher rates of return, especially on more risky debts. The Floating Rate Strategy allows you to bet on climbing yields as PFN's pps will rise in inverse to declining bond prices. PFN currently yields a little under 9% and has stood up well in previous subprime/interest rate scares.

If you're extremely bearish on the junk-bonds financing LBO activity, one might consider selling OTM calls on AT against TPG and Goldman's buyout of Alltel as the expected premium on the deal makes a rival bid highly unlikely. KKR's massive debt offering to cover their purchase of First Data has already spooked some investors and a weak response to this transaction could endanger Alltel's upcoming $27bil debt offering, set to be the largest in junk-bond history. --from FT.com The Alltel debt is set to include a $3bn chunk of bonds that carry an option to pay quarterly interest in issues of further debt. These bonds, known as a "payment-in-kind option", or "toggle", notes, have also attracted the derogatory nickname of "pay-if-you-can" notes.