Honestly they are a quarter or two too late on this–they should have done it previously. Both issues traded down sharply today–to close in the $6/share area. Dividends are cumulative.
This could be disaster for some holders OR it may present great opportunity for the speculators. The company finally filed old financials last week showing there is now a negative $143 million in equity as of 6/30/2024.
Below are press releases from companies with preferred stock and baby bonds outstanding. Additionally, news of a more macro economic importance may be posted.
The party in the various markets are continuing for now with the S&P500 up near 1% and the 10 year treasury yield off a few basis points at 4.57%.
Our portfolios are showing some decent gains on the day considering the large allocation to CDs and money market funds.
Personally I feel a need to see get a ‘feel’ for what the new administration is bringing to the party. It is so difficult for all of us to get around the ‘no politics’ comments right now–so I will just say that I need to see some info on tariffs etc before I can even consider buying into any perpetual issues—these markets are very susceptible to either a melt up–or melt down right now. So many unknowns.
So of course, very boringly, I am sticking to short duration issues. Of course this is a sector with limited offerings. Either term preferreds or baby bonds with maturities of 5 years or less. While it is boring playing the waiting game I would rather miss a few percent of gains than pile into perpetuals and have politics do a ‘rug pull’ on me.
Last week we had stocks move back into ‘party’ mode as the S&P500 moved higher by a giant sizes 2.9%. This appears to be related to the CPI and PPI info which came in slightly softer than expected earlier in the week which sent interest rates tumbling.
As mentioned above the yield on the 10 year treasury to a good sized tumble last week falling from 4.78% from the previous Friday all the way down to close at 4.61% on Friday.
For the coming week economic news is relatively light, and while we could be surprised none of the data should send markets plunging or flying. Of course now have the Trump administration in charge so there is no telling what sort of news could move markets. We had no news released Monday since it was a holiday and there is none scheduled for Tuesday. Leading economic indicators are released Wednesday, but this has been a market mover over the last year or two. Existing home sales and PMI (purchasing managers index) are released on Friday and typically these will not move markets.
The Federal Reserve balance sheet fell by about $20 billion last week.
The average $25/share preferred and/or baby bonds took a jump last week as one would expect given that the 10 year Treasury yield fell substantially during the week.
The average share rose by 20 cents last week, with investment grade issues jumping a huge 36 cents, banking issues jumping 33 cents, CEF preferreds were up 14 cents, mREIT issues were up 2 cents but the shippers fell by 6 cents.
Last week we had 1 new income issue sold–mortgage REIT Redwood Trust (RWT) sold a new issues of senior notes with a coupon of 9.125%. RWT has other notes and preferreds outstanding and these can be seen here. It is always best to check outstanding issues because there may be outstanding issues that are superior in some regard (i.e. yield to maturity etc).
Markets have gotten a lot of milage out of inflation numbers that were ‘not too hot’ and ‘not to cold’ and now the S&P500 is just 1-1.5% off of all time highs–quite remarkable given the circumstances. The old saying of ‘markets climb a wall of worry’ is certainly true right now.
The push higher in stocks and the now 20 basis point drop in the 10 year treasury has certainly been productive for our portfolios, which have moved to a modest all time high (remember my wife and I do not withdraw any funds from accounts–at least we haven’t thus far). If I wouldn’t have chickened out holding many perpetuals gains would have been better this week–hind sight is 20/20.
Next week we start off the week with a holiday on Monday so there is no trading. Then the week has very little economic news of consequence–by all rights it should be kind of a quiet week–we’ll just have to wait and see whether that plays out.
When I think (whether I am right or wrong) that interest rates are stabilized and maybe moving lower here are some perpetuals I would like to own.
Federal Agricultural Mortgage (AGM) Issues. Rock solid financials and good current yields.
Lodging REIT Pebblebrook Hotels (PEB) offers mid level quality with darned good current yields. PEB has quite a few California properties and I am not aware of an update being released relative to wild fires.
National Storage Affiliates (NSA) has a good mid level quality perpetual outstanding which is down $3/share in the last 4 months and could provide some nice capital gains IF rates move lower.
These are not recommendations of course, but issues that should move high and provide some capital gains if the 10 year treasury can begin a long and sustained move lower in yield.
