As I noted in the last couple of days I have added a minor position in a perpetual preferred to the portfolio–it has been a while since I had the confidence to go in the direction of a perpetual.
After reviewing my various lists I opted to add shares of the RenaissanceRE Holdings LTD 5.75% perpetual preferred (RNR-F) at $21.20/share at a current yield of around 6.80%. Yield to maturity is huge if we assume a call today (it is currently redeemable). The issue is investment grade.
This continues–albeit at a very slow pace– my movement toward higher portfolio yields. Right now the 10 year treasury is trading at 4.31% and by buying a perpetual I am banking on the 10 year staying below 4.50%–if congress doesn’t find a way to reduce the budget deficit (and I know it is highly unlikely) the 4.50% upper bound might be a total dream. If necessary I can always back out of this position (or others like it). We’ll see.
I saw it late Thursday at over 7.00 current yield. Whole holding done 6.00 at class see you par. Not sure if there’s bad news, believe the common is holding up,
IPhone really causing me some issues w bad autocorrect,,…..then no edit function?
Was going to follow along and continue adding to my own stash of IG perpetuals, with some cash from a recent called security…
But I added to my position in WU instead. I just don’t see anything nearly as compelling right now. I think people generally feel that the revenue declines at WU are from FinTech/crypto disruption when they are actually more a result of the recent sanctions on Russia and Belarus following the war in Ukraine (they increased dividends each year until 2022). The current administration is very friendly with Russia. I read that these regions accounted for about .44 cents per share in earnings.
It is easy to transmit value over borders with crypto but still very hard to transmit CASH and that’s why Western Union is still here, with positive earnings, IG balance sheet and tons of cash flow in the year 2025. I’ll take 11% yield at 3X earnings that is more than well covered from earnings from a large investment grade company with shareholder friendly management and tons of cash on the balance sheet.
Correction – earnings from Russia and Belarus closer to .24.
WU was priced at 15 times cash & equivalents in 2008 and about 1 time today. Massive decline in premium could present a good opportunity. A big risk, besides if the business doesn’t turn around, at these valuations is private equity or another company taking it private. Historical share buybacks at high prices also indicate management might be favoring certain private equity shareholder friends trying to exit at high prices than all shareholders.
Danny DeVito Speech – Other Peoples Money:
https://youtu.be/zYidHyGoao0?si=lSJHV0jSzGGViku1
On Treasury rates, one thing I haven’t seen discussed a lot is the impact of the Social Security Fund being drained over the next 10 years.
As that runs or sells off to pay benefits, the public market will have to pick up the slack, right?
That along with minor QT (vs QE), and huge deficits should be putting upward pressure on treasury rates.
Isn’t this a better buy, priced at $15.8 ?
RenaissanceRe Holdings Ltd Pref Share RNRpG
ravi–I don’t think there is one best buy–either would be good. My thought is the F issue may be called in the next year or two (if interest rates fall) while the G issue may well stay out forever. Certainly G has a lot more upside if rates move sharply lower.
A recent survey by the WSJ determined that IIIers own more than 50% of the shares of WTFCP. Unusual trading volumes in preferred stocks are expected on July 15 and 16.
With lots of WTFCM & WTFCP monies headed to the portfolio…..After careful review….and from the hiding spot list……I went with 1000 shrs of RJF-B Raymond James Investment Grade with a high probability of being called in July 2026 & for a bigger bump in yield the 8% SPNT -B @25.30……Also likely to be called in 2/26/26
Good job Eyeman
Eyeman – I must not be understanding JF-B. It’s ExDiv and expectation is it’s called 7/21. So you’ll get 21 days interest which is about 9 cents a share and it’s trading at $25.08. XIRR is 0.66%. What am I missing?
RJF-PRB is currently redeemable and floats on 07/01/26 at the 3-month LIBOR or whatever they will substitute it with.
https://www.preferredstockchannel.com/symbol/rjf.prb/
It floats July 1, 2026. The idea is to park cash where it will be called and guaranteed to get your principle back. Its a safe way to make ~ 6.3%.
All of us have different goals. For example, I am looking for under par, 6-7%. I will then receive that rate + opportunity for cap gains. I am not looking for every 3 months to try and figure out where what to do with cash every time something is called. I will probably shift to that idea in 15 years.
July of 26, not 25
My RJF/B expectation is it gets called in 1year ….A rated Raymond James with a 150 stock price ….I don’t see them paying 9% after it “floats” at current rates…or even north of 7.5%….For me, this is a money market replacement as i ponder where to go next
SPNT /PRB is higher paying money market replacement……..
I had a combined 5000 shares of WTFCP & WTFCM that were just called……& need re-deployment
I agree with Mr Conservative….I’m not looking to do this every couple months…….currently just to handily beat a 4.3% Money Market…….
I knew there was something I was missing…. it is callable now and now I see… July 2026 not 2025. Got to get a better set of eyes.