We noticed today that all old preferreds from utilities Entergy Mississippi and Entergy Arkansas have been redeemed as of Friday, 11/16/2018.
A reader had mentioned that he noticed an issue of his had been redeemed and while reviewing FINRA data today I see that a total of 7 $100 issues had been called.
The old issues many times require a premium to be paid to holders when redeemed.
The list we have of $50 and $100 issues can be seen here with the called issues.
We had written back in May that some of these would be redeemed as some 1st mortgage bonds were sold in order to call these old preferreds.
We have written before and are owners of the Invesco High Income 2023 Target Term Trust (NYSE:IHIT).
Invesco recently filed the semi-annual report for the CEF and it appears that everything continues on track for the payment of the monthly 5 cent dividend. This represents a current yield of around 6% which is a darned good yield for a CEF than holds mostly (80%) investment grade securities. There are 57 different securities in the Trust–so a decent level of diversification.
The semi-annual report can be found here.
The objective of the trust is to return $9.835 to the investor on or about on 12/1/2023 while paying a reasonable dividend along the way. The current NAV (net asset value) of the Trust is $9.97 while shares are now trading around $10.02.
We must point out that the Trust does use leverage to help generate incremental income. The $80 million in leverage has a weighted cost of 3.38%.
The chart below shows the lack of volatility this issue has displayed SO FAR.
Maybe this security fits a need for your investment portfolio–and maybe not.
Time for a few facts that may or may not be ‘fun facts’.
This site now has 15,000 users and of that number about 4,000 are very active. Many folks just stop by once or twice a month while the 4,000 very active folks stop in 3-5 times per week. All of this traffic stems from the 1 link left for Gridbird 10 months ago as we wrote about in October.
The most popular time of day for folks to be on the site is between 8 and 10 am. Makes sense to us.
The most popular pages on the site are about as expected.
The Master List Page is the most used (and it really isn’t a page but a spread sheet).
Next is the Preferred Stock Page by Share Price Loss
We have only had 1 person that we have had to ‘ban’ from the site. I think we all know that we leave most all (90%) of our political views behind when on the site. I know we have some very diverse views on the politics of the nation, but the 1 person we banned was ALL about politics. We really don’t have the ability to totally ban some one, but we can catch items and delete them and/or put their comments on a ‘review’ basis. Since we don’t have time to go through all of the comments if anyone notices anything please leave a message on any page and there is a chance I will see it.
Our initial goal was to have 25,000 users–and we didn’t really define how many active users would be reasonable–maybe 10,000? We know from the past that we will not be happy when the goals are met–it’s kind of like retirement money–you can never have too much.
Little lodging REIT Sotherly Hotels (NASDAQ:SOHO) has a debt issue outstanding with a coupon of 7.25% and a maturity date in 2021.
The issue which came public on 2/8/2018 was eagerly bought at the time of the IPO was floated is an excellent holding for those looking for a pretty darned good return with modest volatility. The share price of $25.33 represent an excellent holding. The issue just went ex-dividend on October 31 and has a yield to maturity of about 7% for holding the issue to maturity in 2/2021–just a short 27 months from now.
The issue trades thinly with only 800-1000 shares traded per day so one should be patient if interested in the issue.
The issues ticker is SOHOK and further details and charts are here.
An interesting and helpful feature of this baby bond is that even though it has an early redemption available to the company starting 2/1/2019–but if it is called between 2/1/2019 and 2/15/2021 it is at 101% of liquidation preference ($25) thus eliminating the call risk for the most part.
The baby bonds are unrated (thus we consider them junk rated).
SOHO recently released earnings which were a bit soft because of storms in the areas where they have some hotels, but for the 9 month period ending 9/30 FFO was strong at 83 cents/share–the common dividend is easily covered as they are paying just 12.5 cents per quarter (thus their payout ratio is less than 50%). Earnings can be reviewed here.
Here is the chart of the SOHOK issue.
DISCLOSURE–we have held some of these baby bonds since the IPO and may buy just a little more.
It is seldom that we see a company reopen a preferred offering for 120,000 shares to be sold–but that is what Chicken Soup for the Soul Entertainment (NASDAQ:CSSE) is doing.
The company will sell 120,000 shares of their 9.75% Series A cumulative preferred with an additional 18,000 shares available for overallotment.
The prospectus can be read here.
The original issue was sold on 6/27/2018 and was just 600,000 shares.
The chart of the issue can be seen here.
The little entertainment distribution company announced earnings yesterday. Revenue amounted to $6.6 million last quarter with net income of $836,000. They expect revenue of $36 million for the year. Earnings can be reviewed here.
The issue being reopened is trading under CSSEP and shares closed at $24.80 Thursday.
Needless to say this preferred issue is unrated and thus I view it as junk.
We have noted some folks always looking for new lows on preferred shares so we have taken that as a signal to present a new page that may (or may not) be helpful to some folks.
The page does a real time sort (each time you load the page it sorts) of all $25 preferred shares that are at or near a new 52 week low.
This is NOT a new low list as it will NOT SHOW an issue that drops to a new low and then immediately bounces higher. It will show all issues that are within 1% of their 52 week low. The 1% is an arbitrary number chosen by me–I could change it to 2 or 3%, but it seems 1% gives the best results for investor that are interested in potential bargains right near new lows.
Today the list is composed of many of the banking pure floating rate issues, some of the CHS issues that have been knocked down lately on news, and troubled issues like those from AmTrust Financial and Maiden Holdings. It also shows issues like Ashford Hospitality and Capital One–maybe they are bargains.
We present this page for those that may want to have such information, but for those who don’t find it of use simply ignore it. We have found that if we presented data in 100 different ways someone would have a use for it while 95% of folks don’t give a damn.
Right now there are 105 issues near 52 week lows.
The list can be found here.
We will add a link on the Preferred Stock Index page for this list.
Great Ajax (NYSE:AJX) is selling more $25 convertible notes which have a maturity date in 2024. This is a ‘reopening’ of a previous issue and is not a new issue. The company had sold 3.5 million shares in April, 2017 and then sold another 820,000 in August, 2017.
These notes (NYSE:AJXA) have a 7.25% coupon and have performed relatively well since their initial issuance in April, 2017 and are currently trading in the $25.16 area. A chart on the issue can be seen here.
NOTE–AJX is somewhat of a specialty mREIT in that they buy ‘reperformng’ loans at a discount. What this means is these were loans 90 days or more past due and which the borrower began payments once again. While the company has had decent performance it is not something one wants to hold when unemployment begins to rise as I believe those previously in default on loans are more likely to default again (just my anecdotal observation-I have no data to support this thought).
The prospectus for the reopening can be seen here.
These notes are unrated and we consider them junk.
UPDATE–The company is offering around 640,000 shares (notes) at 24.69.
Term sheet is here.
We have mentioned on here numerous times the UHAUL Investors Club which is an alternative way to invest is a fairly conservative way for conservative income investors.
We would be remiss if we didn’t again thank kaptain lou (Early Retirement Advisor on Seeking Alpha) for bringing this opportunity to light.
Simply this is a way to invest in what is termed ‘asset backed’ debt in small amounts (or large) with varying coupons and maturity dates.
UHAUL is owned by AMERCO (NYSE:UHAUL) and the debt of AMERCO is unrated (as far as we can find). Also in our due diligence we note that AMERCO had filed for Chapter 11 bankruptcy in 2003. Since that time, and no doubt with the aid of the previous bankruptcy, the company has performed very well. AMERCO common shares now trade around $340/share and for the 6 months ending 9/30/2018 reported net income of $291 million.
The companies recent 10-Q (quarterly report filed with the SEC) can be found here.
We started 2 IRA accounts with the Investors Club in May, 2018 and have deposited almost 1/2 of this years IRA contribution to the accounts (we had previously already started our 2018 contributions in our eTrade accounts). Investors are able to transfer money from other IRA accounts into UHAUL, but we are still in the ‘trial phase’ and since the short term investments available right now have coupons of only 3 and 4.15% we are unlikely to get too carried away with deposits into these accounts.
Here is a screenshot of one of the accounts.
You can see that payments to us include principal and a interest component. kaptain lou describes it as ‘annuity like’ in that you receive part of your investment back with each payment. Once payment are received once you have $100 or more you can re-invest.
The deposits and withdrawals (if so desired) are all done on the Investors Club website and we have found the process to be easy–although the transactions take a few days longer than what we would think are normal–we I pay my credit card online they snatch the money the same day–these transactions take about a week.
The Investors Club website is here.
Of course we can not recommend an investment by anyone because we never make any recommendations. We feel comfortable with our experience so far.
Following a trend of others Teekay LNG Partners (NYSE:TGP) will ask shareholders to approve a measure which will allow TGP to be taxed as a corporation in the future instead of as a partnership.
Currently Dynagas LNG Partners (NYSE:DLNG), GasLog Partners (NASDAQ:GLOP) Teekay Offshore Partners (NYSE:TOO) and Tsakos Energy Partners (NYSE:TNP) are taxed as corporations instead of partnerships.
For the investor this means they will be issued a Form 1099-DIV at tax time instead of the K-1 which some investors are resistant to dealing with because of some complexities.
All of these partnerships have numerous high yield preferreds outstanding so this may simplify the lives of some income investors.
Further information on this move can be found in the companies SEC filings here.
As predicated by some the new $25 perpetual preferred issue from insurer Enstar Group (NASDAQ:ESGR) has priced with a coupon of 7%.
The issue is non cumulative and of course pays quarterly dividends with the 1st dividend to be paid on 3/1/2019.
The company will sell 4.4 million shares with another 660,000 available for overallotments.
Starting tomorrow the shares should trade under the temporary ticker of ESGRL on the OTC Grey Market. This means that it may be Friday before some investors see it listed on their particular broker website (some brokers are faster than others). Potential buyers will likely get as good a price on Friday as they will tomorrow as 5.06 million shares do take some time to sell.
Shares will trade on the NASDAQ under the permanent ticker of ESGRO.
The pricing term sheet can be read here.
The issue is rated BB+ by S&P and BB+ by Fitch–both of these are 1 notch below investment grade.
Thanks to George for keeping us on our toes.
Specialty finance company Eagle Point Credit (NASDAQ:ECC) has released their 3rd quarter investor presentation.
ECC is a holder of CLO’s (collateralized loan obligations) and has been as transparent with their data as any similar company. While we personally believe that companies that hold CLOs have a very high risk in a poor economy they provide some decent returns with a trending or growing economy.
ECC has 2 term preferred issues outstanding and 2 baby bonds outstanding that income investors hold and thus this overview might be of interest.
The term preferreds and baby bond issues currently outstanding can be perused here.
The new investor presentation can be looked at here.
Any bonds or preferred stocks issued by ECC are unrated-thus considered junk (junk means less than investment grade rated).
Large specialty insurance company Enstar Group (NASDAQ:ESGR) is selling a new fixed rate preferred stock issue.
Being an insurance company the issue will be non cumulative in respect to dividends.
Other terms will be the normal terms, quarterly dividend payments, an optional redemption period beginning in 2024 etc.
The preliminary prospectus can be found here.
The permanent ticker when trading begins on the NASDAQ will be ESGRO. The OTC Grey Market ticker has not yet been released.
The company has another preferred issue trading and it is a fixed-to-floating rate issue. Initial coupon is 7% and it begins to trade with the floating rate in 2028. Info on the older issue can be seen here.
The older issue was rated BB+ by S&P (1 notch below investment grade) and it is assumed the new issue will have the same rating.
Thanks to Eugene for keeping us on our toes most of the time.
REIT Braemer Hotels and Resorts (NYSE:BHR) has priced a new preferred stock offering with a coupon of 8.25%. The company will be selling 1.6 million shares with an overallotment available of 240,000 shares.
BHR is the old Ashford Hospitality Prime and is a small lodging REIT focusing on luxury properties. The company owns just 12 properties.
The new issue has the normal terms with quarterly dividend payments, cumulative dividends and an early optional redemption period starting 11/20/2023.
The issue is fairly junky, in our opinion, but is unrated and thus assumed to be junk.
The pricing term sheet can be found here.
Shares will trade on the OTC Grey Market starting tomorrow (Wednesday) under the temporary ticker of BHRPP.
We had forgotten to mention last Friday that we had purchased 400 shares of the new GasLog Partners 8.50% fix-to-floating rate preferred which is now trading on the OTC Grey Market under the temporary ticker of GLOUF.
We paid $24.50 for the shares and we see the shares are trading at $24.25 right now. Even with this bargain price it is unlikely that we will purchase more.
Further info for the issue can be accessed here.
Today we will add 200 shares to the High Yield portfolio which can be seen here. We already hold the 8.20% fixed-to-floating issue (GLOP-B) in this portfolio so we are making the new purchase small.
All issues from GasLog Partners (GLOP) are junk rated (they have no rating), but we consider them pretty good junk because of their strong balance sheet and large backlog of contract revenue.
Also we note that eTrade charged just the regular commission on this purchase—no $50 foreign stock charge.
Braemar Hotels and Resorts (NYSE:BHR) will be selling a new perpetual preferred issue.
It has been quite some time since we have had an issue come to market from the REIT lodging sector so it will be interesting to see what the issue is priced at coupon wise.
Proceeds will be used for the purchase of a property in the Lake Tahoe area.
All the terms of the issue will be the normal terms with an optional redemption in 5 years, cumulative dividend, NON qualified for preferential tax treatment etc.
The company currently has 1 convertible preferred outstanding (BHR-B) with a coupon of 5.5% which is trading at $17.80/share right now.
The preliminary information can be read here.
The new issue will be unrated–thus junk.