Ocean Shippers Continue to be Sold

Today the selling continued in most of the Ocean Ship owner segment of the preferred market.  Selling has been happening in these issues for the last month, but today some smaller investors were ‘bailing’ out at most any price.  We are not overly surprised that the smaller investors were bailing–too many smaller investors like to ‘buy high’ and ‘sell low’ in a panic.  We encourage holders to review the reason they bought the shares in hard hit issues and to review their finanicals–if there has been no change there is no reason to sell.  Of course if you are extremely overweight an issue you will have to make decisions on the future.

In particular today today the LNG carriers got taken to the woodshed.  The Gaslog Partners preferreds (GLOP A, B and C) saw selling earlier in the day with some shares down more than a dollar.  By the end of the day the shares had bounced off their lows from early in the day.

Additionally selling continued in the Tsakos Energy Navigation preferreds (TNP).  The company has 5 issues outstanding, but only 3 have been moving sharply lower as 2 of their issues have ‘failure to redeem’ clauses in effect so they have held up better.

There is no news to account for the fall in these issues.

Container ship owner Seaspan saw fairly heavy volume in their preferreds but 4 of 5 issues traded in the green after being quite red earlier in the day.

As we have disclosed before we are an owner of the Gaslog Partners 8.50% fixed-to-floating rate issues (GLOP-C).  Obviously we have a substantial loss in the shares, but we have reviewed all the data–income statements and more importantly the balance sheet and we see no reason to sell for a loss–in fact the current yield hit around 9.8% today and we have set a 10% current yield to be the point where we add a few more shares.

Shares in Golar LNG preferred 8.75% (GMLPP) and Hoegh LNG Partners 8.75% preferred (HMLP-A) have fallen some in recent weeks, but not to the extent of the shares in GLOP, TNP and DNLG.

Mid Day Action In Preferreds

While the $25 preferreds remain fairly steady–off a penny–there is plenty of action in various individual issues today.

The biggest standouts are the 5 preferreds from American Homes 4 Rent – the issues went ex-dividend today.  While the shares were ‘marked down’ for the ex-dividend date they have fallen plenty past the normal markdown.  For instance the AMH-H issue which has a coupon of 6.25% would be marked down by 39 cents for the ex–but has fallen another 50 cents beyond the normal markdown.

Readers are cautioned that the Google Quotes DO NOT show the markdown for the ex dividend–instead for 1 day it shows the ex dividend date plus the further decline–for instance on AMH-H it shows the issue down 87 right now.

The American Homes 4 Rent preferreds have now all fallen into the range where they have current yields above 7%.  We made a small purchase of the AMH-D 6.50% coupon issue with a current yield of 7.17% for a long term hold.

The Farmland Partners Participating preferred (FPI-B) is being slapped down mightly–down $1.05.  We wouldn’t touch this one as FPI management is highly suspect (in my opinion).

Some quality perpetual issues are again being marked down–Digital Realty 6.35% (DLR-I) down 77 cents, First Republic Bank 5.625% (FRC-D) down 75 cents, and First Republic Bank 5.70% is off 72 cent.  The FRC  and DLR issues are ex dividend today–but have fallen beyond the ex amount by a goodly sum.

Abnormally high volume is seen in the Gabelli Utility Trust 5.375% perpetual (GUT-C) at 4.4 times normal volume, and the Bank of America 3% minimum floater (BML-H) is seeing volume 5 times normal–this issue is now trading with a current yield of 4.03% at $18.65%.

We also note that the KIMCO 5.25% perpetual (KIM-M) is trading higher by 12 cents on almost 3 times normal volume.  As we had exchanged comments with some readers on the KIMCO issues seem to being bought the last 2 days on higher volume.  Current yield are getting to the 6.50% area for investment grade perpetuals of KIMCO.

Stability Returns to Income Issues – For Now

After weeks of prices tumbling we now note that stability has returned to the preferred and baby bond markets.

The average share is off just 4 cents this week which, thus far, is much better than we have seen the last couple of weeks when share prices fell by 41 cents in total.

We have personally lost about 3/10% the last couple of weeks–almost all in our perpetual preferred holdings.  We have been in the mode of losing a little capital each month, but recouping it the end of the month when dividends and interest hit (since we hold a lot of monthly payers).

Watching volumes on preferreds stocks leads me to believe there is plenty of action still occurring in the preferred stock arena.  Yesterday we saw heavier than normal volumes in the shipping issues (Tsakos and Teekay) as well as in the regional banking area (TCF Financial and MB Financial).  We also saw the Gladstone Investment 6.25% term preferred (GAINM) fall by 39 cents on 10 times the normal volume.

Always Double Check Your Prices

Reader ‘G’ and I have exchanged notes today on some incorrect price quotes on a list.

After double checking it appears that Google had a bad price or two on Tsakos Energy Navigation preferreds.  Of course with a bad price for today it makes the ‘change’ column incorrect–a compounding of issues so to speak.  The volumes on the issues were correct.

In this case the prices are incorrect by about 20 cents–so not terrible–and many times we find prices differ from exchange to exchange by 2-3 cents.

We have double checked our formulas etc and they are correct.  We have used Google quotes for years and find them generally correct–but they do go off the rails on occasion.

So as we have said before we believe the data in all the lists should be around 98% correct-but the lists are just a starting point for you and your brokerage quotes are the gospel for your trades.

Mid Day Movements

Big abnormal preferred stock volume leaders (over 5 times daily average volume)  today come from Southern California Gas (SOCGP), KIMCO (KIM-M), Spirit Realty (SRC-A) and TCF Financial (TCF-D).  There has been only modest up and down movements in the share prices–so no big dumps.

We can follow this data on the High Volume page for preferred stocks.

The big losers today at midday are Pacific Gas and Electric (PCG-G) and investment grade low coupon issue First Republic Bank (FRC-F) as well as Iberia Bank (IBKCO) all with losses of over 75 cents.  Another issue of note is the Sotherly Hotels 8% issue (SOHOB) trading off 56 cents for a current yield of 8.06%.

We follow the current share price loss leaders here.

New Prospect Capital 6.875% Baby Bond to Trade

We have been notified by ‘Wedgehead’ that the new baby bond from Prospect Capital (NASDAQ:PSEC) should start trading today.

The ticker will be PBC.  This issue has a coupon of 6.875% and a maturity date in 2029.

This is an investment grade baby bond with a coupon that is enticing.  While the maturity date is a little longer than we would like it may work well for someone.

Further links and data can be found here.

Investors should be patient for a day or so to allow for some brokers to get the symbol set up in the system.

“Bluejoseph” Inspires a New Listing Spreadsheet

Early today reader “Bluejoseph” noted in one of the comment sections that he was able to jump in on some of the Gabelli Dividend and Income preferred shares (GDV-A or GDV-D) as he noted them tumbling on very high volume–likely a dump by a fund.

“BlueJoseph” was able to buy them for 1-1.5% below where they had been trading and share prices popped back up after the selling was done.  Better yet the shares go ex-dividend in a few days.

We have already instituted the “Near New low List” and we have instituted the “Sorted by Share Price Loss” list.

Now we have the “$25 Preferred Shares – High Volume” list.  We will add the link on the “All Preferred” tab.

The new list will show the all the $25 preferreds–and they will sort in real time by multiples of the average 30 day volume.  We will highlight in RED all issues that are trading at least 3 times their average volume.  Investors should be able to pick up on large share dumps after the first 30-60 minutes of trading and if desired maybe capture a bargain.

By the way–the 2 Gabelli issues noted above traded at 28 and 17 times their normal average daily volume today.

Another Fly in the Interest Rate Ointment

We all can look at interest rates and the economy and make a reasonable guesstimate of where rates are heading–we all are about as good as the most highly educated economist.  We do this all the time as we try to formulate the type of investments we want to hold (short maturity-term preferreds or perpetual securities).

But the items we can’t predict or have a good guesstimate about are ‘what are foreign buyers doing?’.  We can get data on some buys and sells by foreign governments etc. but why do they do what they do?

Here is a decent article on what is currently occurring in the short end of the marketplace where the yield curve has inverted.  It enlightened us to more complications in enticing foreigners to purchase our debt.  This is another fly in the ointment of trying to figure out which securities are best to hold.

The Reuters article can be found here.

Listing Corrections

Our reader “Tex” did some proof reading on the last spreadsheet we released over the weekend and found a dozen errors in pricing and/or dividends and interest on the list.

We have corrected those dozen errors and since the original ‘master list’ was the basis for the new spreadsheet we also corrected those items on the original sheet.

It should go without saying that these listings should be used as a ‘start’ of your research for potential buys/sells and pricing data at your brokerage firm should be considered the gold standard from which you operate.  We have normally said we are 98% correct on these lists–maybe it is 99%, but 1 of the incorrect items we had made a difference of $4/share–a big difference.

Earlier in the year our reader “Russ” had found about a dozen errors on various lists and those items were all corrected.

Anyone proofreading our data is welcome–we need some of that high priced help.

We hope to add a “Error Reporting” area on the site soon so we can locate these types of messages–now we just stumble on them as there is so much commenting activity on all of the various threads we can’t keep up with them.

 

Monday Morning Kickoff

Well last week can be described as exciting–holders of a basket of common stocks would likely describe it in more colorful terms.  For us and for other holders of lots of preferreds and baby bonds it was much less exciting as long term interest rates trended lower-although in the end we lost a little bit of money.

The DJIA traded in a range of 24,242 to 25,980 closing the week at 24.388.   While common stocks tried find to some upward energy a number of times, in the end, the bears won out.  The 10 year treasury opened the week at 3.04% and drifted down, down, down to close the week at 2.85%, the lowest close since mid August.

Last week we had vehicle sales released on Monday at a higher than expected sales rate of 17.5 million units against a estimate of 17.3 million units.  On Wednesday the Fed Beige Book was released and it showed that the consumer stayed relatively strong during November, but the housing market continued to face headwinds-neither of these are surprises-they confirm all data from previous releases.  Thursday the ADP employment report was released at 179,000 new jobs created which was a somewhat soft number and this was followed up on Friday with the ‘official’ government employment situation report which showed 155,000 new jobs created against an estimate of 190,000, but more importantly it showed wage pressures have moderated a bit rising .2% in November against a .3% expectation.   Consumer sentiment released on Friday showed a reading of 97.5 against expectations of 97.3.

For the coming week we have producer prices released on Tuesday followed up by consumer prices being released Wednesday.  Neither of these numbers are expected to show substantial inflation–the CPI is projected at +.2%.  These are the only bits of economic news being released next week that are likely meaningful, although on Friday we have retail sales, industrial production and business inventories being released.

The Fed Balance Sheet had a runoff of $11 billion last week–of course with falling interest rates obviously the runoff is not exerting much upward pressure on long term interest rates.

Last week we had only 1 new issue announced and that issue has apparently not yet been priced.  BDC Great Elm Capital (NASDAQ:GECC) announced a new baby bond early in the week, but has not, as yet, released the pricing details of the issue.  Guess we will have to simply wait.

The average $25/share preferred stock fell last week to $23.31  which leave the average share down 41 cents in the last 2 weeks and about 60 cents in the last 3 weeks–not a good November.  We have 285 issues trading at or below $25/share which is by far the largest number we have seen in the last year.

Personal Buys/Sells for Last Week (Ending 12/7/2018)

Last week we only made 1 move in personal portfolios–this is pretty normal for us–we strive to not trade much at all.

We made a purchase of a position in the CHS (Cenex Harvest States) 7.10% Class B Reset Rate Preferred (NASDAQ:CHSCN).  This is in keeping with our thoughts that rates could have peaked for now and we can go with a few perpetual preferreds with the corresponding higher yields (compared to our term preferreds and short maturity baby bonds).  We paid $25.35 for our shares.

This particular issue has fallen over $2/share the last couple of months and $4/share in the last year caused by the issue being perpetual and also by the recent issues CHS has had with financial oversight at the coop (fraud by employees).

 

A New Spreadsheet Listing with New Data

We were asked to try to present a new spreadsheet based on the ‘Master List‘ that would present the data in a format similar to our “preferred stock by near new lows’.  Thus we would have a listing of over 600 issues sorted in a real time fashion that are either at or within 1% of a new 52 week low.

Our challenges are that in order to do that we need to have the 52 week low and 52 week high data and as everyone who has messed around trying to get decent data knows when dealing with the baby bonds it can be a real challenge.

We were quite surprised that after about 30 minutes of fooling around we could secure the data with a chunk of javascript.

So with the exception of 5 issues (5 won’t work–out of 633 right now) we have posted the new page under the “All Preferreds” tab up on the menu.

We have created a spreadsheet that opens in the Google sheets fashion–thus anyone who wants a copy can copy and it will update as I make changes.  Just be aware that if I make a name or file change your copy will STOP updating as issues are added.  I would suggest simply ‘bookmarking’ the spreadsheet if you want to access on a regular basis.

Here is the link for the spreadsheet.  1 or 2 seconds of patience may be required depending on your internet speed–there is a lot of data on these pages.

The Bounce That Refreshes

Even though we don’t worry too much about the day to day movements of our holdings it is still nice to get a bounce after some days of moves lower.

Today we have only around 90 issues AT or NEAR new 52 week lows compared to 200 yesterday.  Maybe this holds and maybe not–but just the same our portfolios are up nicely today.  We have the new ‘near lows’ page to monitor the overall $25 preferred marketplace which can be found here.

If you are holding any of the Maiden Holdings (NASDAQ:MH) issues you are looking very red today with all of their preferred off a bunch as shown here on the share price loss page.

CHS Releases New Presentations

CHS (Cenex Harvest States) has released a new slide presentation given by the CFO at the annual meeting on the state of the business.

A quick glance shows not too much of substance on the slides–this slide deck accompanied the speech he gave so I have attached the speech as well.

The slide presentation can be found here.

The speech can be found here.

A Bloody Stock Market Takes Preferreds With It

As we are down almost 700 points in the DJIA we took a peek at the $25 preferred stocks and we are now down on average 20 cents a share this week (of course averages are just that–some are down a buck and some are unchanged).  Additionally almost 75% of all the issues are trading at $25 or below.

Here you can see that we have near 200 preferred issues trading at or NEAR a new low (within 1%)–certainly bargains being created.

Peeking at our own holdings we are off 2/10% this week–virtually all caused by the perpetual preferreds we hold and we knew this was an issue when buying the perpetuals.

We would be cautious with ‘flips’ and new issue purchases at this point–they just aren’t working very well–as we know with our holding of the new GasLog Partners perpetual preferred.