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Author: Innovative Income Investor

A Missed Portfolio Trade From Last Week

Last Wednesday I added some shares to our portfolios–but forgot to note it here. I did add it to my ‘laundry list’ of holdings.

I added the Chimera Investment 8% Fixed to Floating preferred (CIM-D) which is now floating at a coupon of around 10.6%. The issue has been floating since April at 3 month SOFR plus 5.379%–obviously a tasty yield right now I paid $25.02 last Wednesday and the shares went ex today for 64 cents and shares are now trading at $24.68. I could have picked up a little yield by buying CIM-B which has a current yield of near 11% as it is at 3 month SOFR plus 5.791%. My choice was made simply because if they were to make a call it would be the CIM-B issue first (who knows for sure).

This is my 3rd position in the mortgage REIT space which still composes around 8% of invested money. I have a position in Annaly 6.95% FTF preferred (NLY-F) which now it trading in the close to 9.80% area. Also I have the Rithm 7.125% FTF (RITM-B) which is now trading with a yield around 11%.

I watch these high yield issues kind of closely–any pricing over $26 could bring a swap into another issue as the lower rates go the more likely a ‘call’ will occur.

Aspen Insurance Calls a Fixed to Floating Issue

Apollo owned Aspen Insurance has announced a redemption of their 5.95% fixed to floating rate preferred (AHL-C) effective 1/1/2025 which is the next dividend payment date.

Honestly I have been waiting for this to happen for quite some time now. The issue was originally to float starting a year ago, but the company was able to fix the rate at 9.593% because of the prospectus language relating t0 the LBOR/SOFR issue. Just the same 9.593% is a very high coupon for shares just 1 notch under investment grade.

This issue had traded as high as the $26.80 area in the last 60 days–crazy–a reminder that holding shares much above $25 holds potential danger for those paying sky high prices for shares.

The announcement is here.

As has become the norm J posted this in reader alerts early today (very early). Thank you J!!

Weekly Kickoff

Well let’s get back to a normal week–whatever a normal week is. Anymore there really are no trading days that are ‘normal’ as we would have defined it 20 years years ago. Everyday there is some sort of economic news that has the potential to move markets–OR recently a simple proposed appointment of a particular person for Treasury secretary moves interest rates sharply lower. Oh well such is life–we just have to deal with it!

Last week the S&P500 moved up by 1.1% which once again puts stocks at new highs. It seems that stocks would be overbought–but these things can take months and months to play out and with the availability of cash in money markets ($6-7 trillion) and CDs if a time arrives when rates plug below 4% stocks could go parabolic. Who knows for sure? No one!

Interest rates moved lower and lower all week long. The 10 year treasury yield closed at 4.18% which was about 24 basis points lower than the close the previous Friday. Economic news on the week was pretty much on forecast and there was no economic news that logically caused the interest rate plunge–leading me to conclude that investors are now trading on politics. Well since politics are off limits here I will move on. We’ll see if this situation reverses this week with ADP employment on Wednesday and the official government employment report on Friday.

The Fed balance sheet fell by about $18 billion last week–now solidly below $7 trillion at $6.905 trillion.

The average $25/share preferred and baby bond rose last week by 12 cents–a seemingly small gain for a week where the 10 year treasury yield tumbled by 24 basis points–but given that I have preferreds overvalued by 2-3% this isn’t such a surprise. Investment grade issues rose by 15 cents, banking issues rose a strong 21 cents, CEF preferreds rose a dime, mREIT preferreds were up 8 cents and shippers were flat with last week.

Last week we have RiverNorth/Doubleline Strategic Opportunity Fund (OPP) issue a new 6% term preferred as the result of a rights offering. Details are limited, but more info is forethcoming.

Paypal Donation Form Broke

As some of you know the Paypal Donation form is ‘broken’. Pressing the button brings up a message ‘This Organization Can’t Accept Donations Right’. Needless to say we do accept donations, but only Venmo or snail mail until we can get the Paypal issue resolved.

I will get it fixed this coming week–a few years ago I could ‘fix’ this myself–but my skills in coding and such things are lacking more and more so I won’t be able to get the tech people on it until Monday.

My apologies for the issue.