Another Shellacking for Preferreds and Baby Bonds

Well another pounding for the income issues today. On one hand I am salivating looking at potential buys while on the other hand I am licking my wounds from the perpetual holdings I have which got whacked.

The $25/share issues took average losses of just over 1% today with many taking 2-4% losses. I will be doing some buying tomorrow–no doubt. No buying today because I was out of the office all day–no trading on my phone–besides this isn’t urgent–deals will be available for a while.

I will once again add small bites to some of the perpetuals I own (Arbor Realty and Ready Capital), but I am getting loaded to the gills on the high yield perpetuals I do own so I need to start more dipping into investment grade issues.

I am looking for issues in the 6% current yield area–maybe a little below and a little above. A few possibilities (and there are many more).

Affiliated Managers (AMG)

Athene Holdings (ATH)

Brunswick (BC)

AIG International (AIG)

Associated Banc-Corp (ASB)

Just in the ‘A’s’ and ‘B’s’ (alphabetical list) I can find quite a few possibilities–some a little shy of the 6%, but some are already there.

After the pop in interest rates today (i.e. the 10 year treasury at 2.12%) we may not see much higher rates for the time being, but just like ‘legging in’ to my perpetual positions I will not jump in with full position buys in investment grade–nibble, nibble then wait a week and nibble, nibble. No need to rush–opportunity will be around for weeks and months.

19 thoughts on “Another Shellacking for Preferreds and Baby Bonds”

  1. I’ve been buying CEF’s even though their leverage is scary! And ATT pfds look ok to me here

    That robo catcha just asked me to ID bicycles when there were only motorcycles in picture. Have you seen the commercial with the robot getting upset and the robe capture??

  2. I greatly appreciate the list, even if it is just some of the A’s!!!

    I keep trying to sort these so I can do like for like. I have a few constraints that keep me from going back to some of my previous favorites. So being aware of all alternatives per issuer is important.

    The big Q is….how bad will it get? I don’t want to move on a 5 something at 20…..just to see it hit 15 in short order.

      1. Maine has linked a seminal finance research study which should be in every investors library: “Triumph of the Optimists.” Amazon is selling a new copy for $144. It is also called “The Dimson Marsh” study/report. Credit Suisse pays them to update their research each year. The public can get the hot off the press 50 page 2022 summary report for free at this link:

        https://www.credit-suisse.com/media/assets/corporate/docs/about-us/research/publications/credit-suisse-global-investment-returns-yearbook-2022-summary-edition.pdf

        If you are a CS customer you can get the unabridged version for free, but the summary version is probably sufficient for most. Worth at least a few minutes of your time IMO, if not longer.

        BTW, there is a fatal flaw in their data for one country, but it does not diminish the overall message they are trying to convey.

        1. Right now I’m finally reading The Intelligent Investor! Maybe 40 years late but I found an OLD copy lying around office figured WTH !!

  3. Nibbling on Capital One and First Repub Preferreds: COF-J and FRC-J.
    ~5.6% yield with 10%+ to call.

  4. $17B preferred ETF PFF had another large outflow yesterday – $50+ million – after having $150 million in outflows last week. Saw some real panic selling yesterday in some of the PFF holdings. $1.2 Billion+ in outflows YTD and the fund’s total return is down 10.4%.

    But there is still some crazy stuff going on in individual names – somebody just bought all my CSR+C at $26.50/share – I had bought these recently near $25 just to “hide out” in them since this 6.625% apartment REIT preferred went ex-div yesterday and is callable at $25 on 10/10/22 at $25. I put a crazy offer out there and boom – gone. Check out the chart on that one.

    Happy with the realized gains and future dividend payment, but who buys this stuff like that in the current environment?

  5. For some reason, the bank issues seem to be getting hit especially hard. I own a couple and just took a nibble at OZKAP at $20

    1. Rkill, make sure you are calculating off of .28/dividend. That would be a value opportunity if it was .32/quarter that some brokers are showing. Otherwise its kinda in that ballpark with other banks as of now, along with the other sub 5% coupons.

  6. Did everyone’s broker get the Brookfield right as qualified dividends? This seems like one that could be one that leads to never ending calls to get it fixed.

    1. BIP is all over the place w several different issues, including at least 1 w a K-1

      1. Jay:

        Yes…see the comments that Gridbird has been writing on this one. It is at risk of being relegated to the “Expert Market” when the merger for SJI closes. But the deal is unlikely to close for a year.

        I have been dipping my toes in the water on this one at yields of 6.85%+. I can live with a utility annuity at that yield.

  7. I have been picking up a local ute SCE-L a little at a time, getting near 6% with BB+ rating.

  8. I like WFC-L 7.5% busted convertible preferred 6% = $1250
    BHFAL – 6.25%
    Few Brookfield Notes like BEPH closer to 6% F-C at 6.25%
    OPINL – 6.4% will be probably downgraded to BB stable

  9. Thanks for this update, much appreciated. I notice PTY has taken quite a hit, would this be a good time to pick some up?

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