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.

 

6 thoughts on “A Bloody Stock Market Takes Preferreds With It”

  1. Tim, Given the volatility in some of the lower volume quality preferreds, which is resulting in some intermittent fire-sale prices, cannot help but wonder if there are liquidity issues in the market, as in leveraged positions being covered.

  2. Tim,

    Interesting that REIT commons shares have been resilient while their prefs have been hit very hard. You would think prefs would be “safer” in times of stress and both class of shares should be similarly sensitive to rates.

    1. Your thinking is logical.
      Unfortunately, preferred ownership and trading is dominated by retail investors, where fear and greed are the triggering factors in their trading decisions. The upside is it presents opportunities for the level-headed to acquire shares in high yield preferreds sans call risk.

  3. REIT etf rallied over 2% today on indications that Fed may pause rate hikes. REIT prefs should benefit from the same news…but did not.

  4. Trading cheap today is PSA-Z with a 6% coupon. Today I picked up shares at $25.08. It goes ex-dividend on 12/11, which is only a few days away and I’ll pick up the .375 dividend soon. I’ve been out of PSA for a number of years and just recently started buying back in due to the high credit quality of the company.

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