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As Common Stocks ‘Party On’ Preferreds Follow

While common stocks party on the backs of extreme liquidity from government agencies of all sorts it looks like preferreds are joining in.

A few weeks ago I started doing a little dividend capture and new issue ‘flips’–given that I am flush with plenty of cash it seemed reasonable to try to garner ‘steak dinners’ (minor short term gains) on some new issues and dividend captures.

I started out by buying a 75% position in the newer Wintrust Financial (WTFC) 6.875% reset preferred at a price of $24.90. Given that I simply had a short term goal to garner 2% in a month or less I have now let this issue go (I sold it) as it hit $25.70 today. I left a little on the table, but the goal was reached–so the shares were sold.

Also a few weeks ago I bought a full position of the UMH Properties 8% perpetual preferreds (UMH-B). This issue is redeemable 10/20/20 and the company says they will be redeeming the issue. This is like shooting fish in a barrel as I bought shares @ $25.10 then the shares went ex-dividend on 5/14 for 50 cents. The share price is back above $25 so I have an order in to unload at a 2% gain.

With UMH-B with a ‘threatened’ redemption in October the shares should have a $25 floor–and should move toward $25.40 or so in August near ex-date. So one could go ahead and continue to hold–or sometime in early August it may still be around $25.10 in which case I would buy back–numerous ways to play this.

Another ‘old friend’ is the WR Berkley 5.625% subordinated note (WRB-B) which is currently callable–I bought a 1/2 position at $24.92 and it is now at $25.53–too high and I will exit today. It doesn’t go ex dividend until July so it has 1 1/2 dividends in the price, but could be called any time.

So I am off to see what else is out there to provide a little extra income while I wait.

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