Innovative Income Investor | Innovative Income Investor

Monday Morning Kickoff (on Tuesday)

So last week the S&P500 moved in a range of 3796 to 3890 – about a 3% range, but closed Friday just 1/10% below the close from the previous Friday. At this moment (6 a.m. central) futures are pointing to about a 1/2% higher opening, but we all know this can change any moment.

The 10 year treasury yield closed at 3.75% Friday which was the highest close since 11/22/2022 as Japan has moved to more restrictive interest rates. This close is 27 basis points higher than the close the previous Friday and there were 2 days with yields moving 10 basis points–ouch!!

The economic calendar is light this week with much of the data being released housing related. Being a week sandwiched between holidays volume is likely to be light as many folks take the week off—so even modest economic news can move a thin market.

The Federal Reserve balance sheet moved lower by around $19 billion last week–the last 4 weeks the balance sheet assets have fallen only around 58 billion so with a target of $95 billion per month we will likely see a very large drop in the next week or two.

The average $25/share preferred stock and baby bond fell by 26 cents last week–given the movement higher in interest rates this move was relatively modest, but for me was plenty painful enough. Investment grade issues fell by 37 cents, banking issues fell 28 cents, mREIT preferreds moved lower by just 15 cents while shipping issues were flat.

Last week we had no new income issues priced.

Merry Christmas and Happy Hanukkah

I need to take a moment to wish you all a happy holiday.

I am not a huge fan of the commercial aspects of our holidays, but certainly I am thankful for all I have – and that includes everyone that comes onto the website (whether it be lurkers or those that participate through commenting).

2022 has been a difficult year for investors, but we have all learned over the years that we go through good times and difficult times, but patience will generally be rewarded.

A special shoutout to InspBudget wishing you a speedy recovery. InspBudget is a longtime participant on this website and on others and shared that he (or she) suffered a debilitating stroke back in August and is just rejoining us. Comments are over in the sandbox.

I Dip In for a Little Heartland Financial Fixed-Rate Reset Preferred

This morning I took a nibble on the Dubuque, Iowa community bank Heartland Financial (HTLF) 7% fixed rate reset preferred shares (HTLFP).

HTLF is a $20 billion in assets regional/community banker which appears to be generally well managed, although net income was off a bit in the quarter ending 9/30/2022–primarily because their salaries and benefit cost jumped quite a bit from last year. Of course they have the typical losses on investment portfolios, as most banks and insurance company’s have had during this credit tightening cycle.

The fixed rate reset issue (HTLFP) has traded strongly since issuance in 2020 spending much of the time in the $26-$27/share area, but now is down to around $25.

The issue has a 1st optional redemption date on 7/15/2025—and the great thing is that the reset is at 6.675% plus the 5 year treasury (now 3.85%)–all things being equal this probably means the issue will be redeemed on 7/15/2025 or alternatively the coupon moves to over 10%.

Of course I don’t make recommendations, but I find this a good time (around $25) to lock in a decent 7% yield.

Thank You for All Donations

I want to thank those that have donated to the website account. It is truly gratifying to see that lots of folks find the site worthy of a donation.

Also thanks to those that have had a ‘glitch’ when trying to donate and all those that have the desire to donate, but are do not want to use the Paypal processing.

I will look into glitches and see what I can find out–this is new to me so I don’t have much experience troubleshooting.. For those wanting to donate, but don’t care for Paypal I will be in contact in the next couple of days with other potential options.

Note that I will keep the Donation note at or near the top of the page for a few days and then let it go away–maybe reviving on monthly or quarterly in the future.

Donation Capabilities Now Active

After a year or two of considering adding ‘donation’ capabilities I have now launched the donation page.

Donations are an alternative to advertising supported websites–which is what the old ‘Yield Hunter‘ website was, or to subscription based websites. Neither of these models are very attractive to me. Advertising takes up too much ‘real estate’ on the web page, while subscription limits the amount of participation in the commenting section and this is key (in my mind) to providing a needed exchange of ideas.

I have received a few donations already—I received one in the snail mail from a very generous individual and others from folks who somehow found my donation page before I announced it. I am hopeful that we will have strong participation in donations so that I can make some needed updates and expansions of the website. I have no idea at all if a ‘donation’ page can generate much money, but I guess we will find out.

The donation page has the capabilities to accept ‘one time donations’ or to accept monthly ‘recurring’ donations which seems to be a good option.

Note that the only information I receive is a name and a email address. Processing is through Paypal (and of course they take a processing fee).

Thanks in advance for everyone’s support–we have a great community of contributors.