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Month: February 2020

Updated Data for Oxford Lane Capital

Just a couple updated items for Oxford Lane Capital (OXLC).

The leverage ratio for the company is claimed to now be 300% by the company as of 9/30/2019.

The number of shares outstanding of the OXLCO 7.50% issue was 3.6 million as of 9/30/2019. This issue was originally 800,000 shares with 120,000 over allotment—They have sold millions of shares since the offering in 2013. OXLC is the king of ‘at the market’ selling–both common shares and preferreds.

Data below is from the offering prospectus of the new issue.

Oxford Lane Capital Prices New Term Preferred-Correction

UPDATE/Correction–dividend is monthly at .1302/month–1.5625/annually.

Oxford Lane Capital (OXLC) has priced their previously announced term preferred stock issue.

The issue will carry a fixed rate coupon of 6.25%, will be cumulative, but non qualified. This issue in unrated.

The company plans to use the proceeds and to possibly redeem some of the 7.50% OXLCO term preferred. The new issue is 3.5 million shares plus an over allotment of 525,000–this is enough to call all of the OXLCO issue if desired.

The issue trades immediately under OTC Grey market ticker of OXCPP.

The pricing term sheet can be see here

Thanks to Nomadicmist, Fabrib and Steve all of whom were right on top of this announcement and within 1 minute of each other in posting.

Buy/Sell/Hold Decisions – Short Term Trades

We have discussed on here many times ‘sock drawer’ holdings–those that we really like for the dividend/interest they pay us, but also for the safety they bring along. These many times as what I call ‘base holdings’. I try not to sell them–and many times I don’t pay attention to them daily.

It is obvious to all on this site, that I, along with many others, have been reluctant to jump on the spate of low coupons issues that have been presented to us during the last many months.

This leaves us with excess cash in accounts that is earning maybe a 1.50% money market interest rate–sometimes even less.

Because of this I use some of my excess cash to buy some short term holdings (flipping and dividend capture) with the desire to earn just 1-1 1/2% in a month—I’m not asking for much–just a friggen 25 to 40 cents/share.

NOTE–nothing here should convey the idea that myself and folks on the site are about short term trading–quite the contrary–we love to buy and hold, but we have to have issues that are of the right risk/reward and allow us to sleep at night–the low coupons offered currently just don’t cut it.

Well for the most part this has been like ‘shooting ducks on a pond’-for months and months, although January was much more difficult than December in this regard.

But as some commenters have noted today there are a number of decisions that have to be made–and here are a few examples–some of which I may have outlined on the Flipping and Dividend Capture discussion page.

Triple net lease VEREIT has a 6.70% monthly paying preferred (VER-F) outstanding which has been a great preferred to own. Unfortunately the company has been redeeming shares–in chunks of 4-8 million–as you can see here. Fortunately it is a 43 million share issue so it will take a while to get all the shares redeemed at this rate. During the last partial call in December shares fell to near $25–I owned a small position at that time and added a decent chunk after the fall. Today the issue hit $25.73–I am out after collecting 2 monthly dividends and a capital gain.

So the decision was–let it ride and see if it goes higher–or will they call some more shortly thereby driving the price down? I decided that it best to exit with the gains and wait for the next partial call and see what develops.

I bought a full position in the TravelCenters 8% baby bonds (TANNL) on 1/21/2020 for $25.43 looking for shares to rise into the ex-dividend on 2/13. I have a GTC sell in at $25.90 right now–today it closed at $25.79. I have achieved my initial goal with a near 1 1/2% gain and obviously could sell right now–but I believe that there is just a bit more upside in the issue prior to the ex date next week. If my GTC executes fine–otherwise I will have to decide whether to take my gains or hold through the ex date for the 50 cent capture. The issue has been callable since 2017–but I believe it has no risk of a call.

Lastly for now–I had bought the B Riley 6.75% baby bond (RILYO) at $25.71 on 1/13 hoping for a quick and profitable dividend capture. It went ex-dividend the next day 1/14 for 42 cents.–poor idea. Typically I want to buy on a dividend capture 2-3 weeks before the ex date, but I made a bad decision to buy the day before–just antsy with too much cash on hand. Anyway I continue to hold the issue and finally today see about a 20 cent net gain–all in all not really that bad, but timing was really bad and this isn’t really an issue I want to hold long term. So my decision is to exit immediately for just under a 1% gain, hold a bit longer and see if I can squeeze out another 5-10 cents–or just be patient and hold closer to the next ex date in April before selling. As alway I want to have a rib eye steak gain–hamburger steak isn’t that great.

The Party Continues with Interest Rates Continuing Higher

It is amazing how fast these markets change–we go from ‘the world is going to end’ to ‘everything in the world is good’ in the blink of an eye.

With common stocks up 1% this morning the 10 year treasury is moving higher–just like it is supposed to work. The 10 year treasury is up 3-4 basis points to the 1.64% area. Energy markets are in sync as well with crude up $1.50/barrel.

The new preferred from giant mREIT AGNC Investment (AGNC) is trading now under the OTC Temporary ticker AINGZ and is around $24.99–it has thus far traded in about a 5 cent range. As Bob-in-DE points out whether to buy the new issue or go with one of the older outstanding issues is kind of a toss up. The YTC on the new issue is better, but the current yield is worse. Bob attached a little Google sheet to his comment which can be seen here.

Qniform is targeting some of the debt issues of junky–even bankrupt companies and you can follow some of his comments over on the Reader Initiated Alerts section. I had been looking at the Atlas Financial baby bonds last weekend and at $6.50 there is a decent risk/reward if these get paid off at $25.00–I bought a very small taste. I am not advocating others follow–this has little to do with income investing–more like going to Las Vegas.

Fabrib noted that NuStar Energy (NS) reported earnings today--they are pretty decent. Of course NS is a MLP so if you hate K-1’s this isn’t for you, but they have some high yield preferreds for those with a little appetite for risk–you can see them here.

We are still awaiting details on the new Oxford Lane term preferred issue–I suspect it will be out after market close today. The older issue OXLCO 7.50% term preferred issue is off 42 cents and trading at $25.24–folks are awaiting news on how much of this older issue will be redeemed with the proceeds of the new issue.

Since the party is continuing you would expect maybe $25/share preferreds and baby bonds would be up–in spite of higher interest rates–and you would be correct–the average share is up 4 cents this morning.

mREIT AGNC Investment Prices New Preferred

AGNC Investment (AGNC) has priced the previously announced fixed-to-floating rate preferred issue with an initial coupon of 6.125%. Starting in April, 2025 the coupon floats at 3 month Libor plus a spread of 4.697%.

Shares will trade immediately on the OTC Grey Market under temporary ticker AINGZ.

The pricing term sheet can be read here.

Bob-in-DE picked up the FWP (free writing prospectus) and OTC tickers instantly.

Oxford Lane Capital Corp to Sell New Term Preferred

CLO owner Oxford Lane Capital (OXLC) has announced a new offering of term preferred stock.

Term preferreds are sold with a mandatory redemption date–in this case it will be in 2027.

This issue will be cumulative, pay monthly dividends and will be non-qualified.

The permanent ticker on this will be OXLCP when it finally trades on the permanent exchange (NASDAQ).

OXLC currently has 2 other term preferreds outstanding which can be seen here. NOTE that the company MAY redeem part of the 2023 term preferred (OXLCO) 7.50% issue per the prospectus. These shares are currently redeemable–they closed at $25.66 today so it is likely someone is going to get a bit of a spanking tomorrow (actually the shares are already off 23 cents in after hours trading).

These will trade OTC Grey market but the ticker has not been announced.

The preliminary prospectus for the new issue is here.

I always try to beat mcg to the punch with these new issues, but he/she is quick on the draw and beat me by 16 minutes today–under Reader Initiated Alerts.

Party Time!! Let’s Get Crazy

As everyone knows stocks are flying high today–maybe it is ‘party time’ again as Tesla (TSLA) leads the way with a crazy move higher-up $116/share right now.

Stocks are heading toward a 1 1/2% move higher while the 10 year treasury is higher by 8 basis points–a pretty healthy move higher in yields and for once in sync with the stock market.

Preferred stocks and baby bonds have pretty much disconnected from the higher yields and are moving higher–again–up about 4-5 cents right now. The chart we post multiple times a week had shown a huge gain in December and then a flattening for most of January before starting to move higher again during the last week of January and now into February. Maybe the December move was caused by folks clamouring to buy to get in before the end of December ex-dividend dates. I will be glad when my data gets out a few more months to see what trends develop–10 weeks of data is pretty unreliable.

Today we had some pretty large repurchases done by the Fed–they accepted $64.45 billion for an overnight (1 day) repurchase and a hefty $30 billion in a 14 day operation. Funny thing is they had requests for $59 billion in liquidity on the 14 day issue–somebody didn’t get the liquidity they wanted. Again it looks like the Fed is tightening the reins a bit–can it be? Remember that the Fed balance sheet, in total, has not moved higher for 6 weeks. Hum?

We will have a meaningful economic number on Friday as the employment report is released and it is one that should forecast the next few months–that is if you believe the report. The average forecast is for 165,000 new jobs.

mREIT AGNC to Sell New Preferred

Giant mREIT AGNC Investment Corporation (AGNC) will be selling a new preferred.

The issue will be a fixed to floating rate issue and will have an early redemption option starting in April, 2025. This is also the date at which it will begin to float at 3 month Libor plus a spread (not yet announced).

The issue is cumulative and will be non qualified. The issue will be unrated.

AGNC has 3 other preferreds outstanding–all of which are fixed-to-floating and none of them are currently redeemable. These issues can be seen here.

The preliminary prospectus can be read here.

This issue will trade on the OTC Grey market–probably tomorrow, but the temporary ticker has not yet been released.

mcg was right on top of this issue 30 minutes ago.

Exuburance Turns Into Just a Moderately Positive Day

I was anxious to get this week kicked off–I wanted to see where markets would trade after the little bit of volatility last week. As of this moment things are just about perfect for someone who is most happy with quiet markets.

The S&P500 is up about 3/4% after being higher in the morning–that’s great–the smaller the move the better. The 10 year treasury is up less than a basis point–really I would think it would be somewhat higher.

Average prices on $25/share baby bond and preferreds have moved a couple pennies higher today–lead by the banks and investment grade issues.

A couple items folks are talking about today on the website.

Over in the Sandbox Citadel West has been wrestling with tax withholding for Puerto Rico securities. I follow a number of Puerto Rican issues on the website–and need to brushup on the withholding policies. Nomadicmist provides Citadel an answer from Oriental Finance (OFG) website relative to these issues. Popular (BPOP), Oriental Finance (OFG) and First Bancorp (FBP) are all Puerto Rican domiciled issues (although they have mainland U.S. operations in some cases). If you are pondering a buy of these issues make sure you check the withholding situation.

Woody asked about CTPPO in the Sock Drawer Discussion page–an old issue from Central Maine Power which is 6% coupon perpetual preferred. It is one of the $100 ‘illiquid’ issues that some here love to own. I did some research and found that as of 2005 there were just 5700 shares outstanding – maybe it is less now. I had originally had this as redeemable at $110/share, but my research shows that the issue is not callable at all. Google shows this has traded in a range of $102 to $250 per share this year–wow what a range–this is why you always use a limit order–you probably don’t want to be the person who pays $250.

Gary A made a mention on the Sandbox Page that the Farmland 6% Participating perpetual is flying today–likely because of China trade (or anticipated trade). He is right as it is trading at $25.99 which is a level that was last hit in December, 2017.

Lastly the Canadian Security discussion are is full of good information and discussion if you think you want to venture into a new area. Folks there know a lot are would be good resources to newer folks–honestly I would like to venture into some of those preferreds, but I haven’t had the time to ‘study up’ on them–one of these days.