As Common Shares Tumble Hard–Income Issues Getting a Bit Cheaper

The pressure has been on common shares all week and through yesterday the general market downdraft had pulled preferred shares an baby bonds down by about 15 cents on the week.

Right now the average share price is down by 29 cents on the week and while investment grade issues sometimes hold up better than the general issue population that isn’t true right now. Investment grade issues are off 30 cents on the week.

For the last 2 weeks I have been watching the lodging REIT preferreds–this is the sector that has been beaten up quite a bit–I show shares off about 4-6% in recent trading. This includes those shares from the strongest REITs. For instance the RLJ Lodging Trust $1.95 issue is off 90 cents today. Other strong company’s have been taking it on the chin also–this includes the Sunstone Hotels and Pebblebrook Hotel issues. All the lodging REIT preferreds are here.

As always I am looking for bargains, but honestly a bargain is in the eyes of the beholder–I am not talking 25 or 50 cent lower bargains (although in some utility baby bonds and CEF preferreds 50 cents or a dollar lower might make bargains)–I’m mostly talking in dollars and I am not expecting to see those right now.

10 thoughts on “As Common Shares Tumble Hard–Income Issues Getting a Bit Cheaper”

  1. ALE (Minnesota Power) common stock seems reasonably priced at $51. 4.8% forward yield on the dividend. BBB rated.

    I am not sure why the stock is trading near its 52 wk low.

  2. If the last couple of weeks are any indication of the markets brilliant “forward looking” abilities and this pandemic continues on the path its on, I can’t help but believe that 2021 and 2022 are going to exceed anything we’ve experienced since the Great Depression regardless of the election results.
    And there are no guarantees nothing even worse will follow on the heals of this epidemic, a global food shortage or catastrophic climate event are two things that come to mind.
    The Market is as adept at creating wealth as it is destroying it.

  3. It’s the un-stimulus – could get interesting. I noticed UBP-H/K are sagging but I’m keeping my powder dry, may be serious opportunities ahead.

    1. If you like UBP, you might be interested in AHH-A. It’s twice the size (But still small) with the same solid record but a higher yield.

        1. Thanks Potter. Me Too. I took a quick look at AHH and AHH-A. Decent balance sheet. Apparently they may have reissued the preferred A in August 2020. I have lots of UBP-H just tiny remnant shares of BFS preferred. The market does seem to value BFS more. Momentarily BFS was trading at par (some joker must have placed a market order). I sold some of my WFC-Y with the intention to grab some WFCCL. Today, it is no longer a serious bargain. I have a limit order to buy AHH-A. I realize that I am exchanging a SWAN with something which is not speculative but no SWAN. I may sell some more Brookfield Property Inc common or the God awful GMLP common to offset the risks and taking some tax loss.

          1. Oh oh, paid too much it seems. Someone bid $23.42. So, I followed with 300 shares at $23.44. Got filled. Now the bid is $22.85. Now last trade $23.35 last trade not horrible. Perhaps I have a tough stomach for non SWAN’s. Oh well. For whatever reason, the ones identified by Tim and Gridbird seem to work the best, e.g. WCC-A, FPI-B (Gridbird), SITC-A, BFS-D. Actually I do know the reason. They are both smarter and MUCH MORE EXPERIENCED TOO! Ah Ah!

  4. I’ve been taking a break from investing for several months and come back to see preferreds being issued at sub 4%. Sad times. Hard to imagine there can be any good deals out there with rates so low.

    1. I think there are relatively good deals to be found. I bought 350 shares of NSARO today for $104. That’s a 4.6% yield from a A3/BBB+ utility. The redemption price is $102.80 but it was issued in 1958 so I’m not expecting a call anytime soon.

      Someone had an ask order out for 1,700 at the end of the day today that went unfilled so I’m expecting there could be buying opportunities tomorrow too.

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