Summary

• Sound Point Meridian Capital preferreds offer an ~8% yield, but the company's fundamentals have deteriorated, both in asset coverage ratios and NAV, warranting higher compensation.
• SPMC's common stock NAV has fallen from ~$20 at IPO to ~$9.5, with asset coverage ratios now just above the 200% regulatory threshold for preferred shares.
• Preferreds (SPMA, SPME) trade at around par, offering no capital appreciation prospects thereby, while still bearing credit risk exposure despite short maturities and low duration risk.
• The limited upside, with downside exposure to tail risk, is suggestive of current yield falling short for a prudent investment allocation at present, unless there's conclusive evidence of improving fundamentals.
• SPMA and SPME, therefore, presently require careful caution by investors for any allocation and also active monitoring if they are already allocated. A switch to other avenues might not be imprudent either.

The preferred stocks of Sound Point Meridian Capital Inc. (SPMC) at present offer a ~8% dividend yield, with very slight duration exposure, consistent with their short maturity profile. The two preferred stock series (

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