Innovative Income Investor | Innovative Income Investor

Maybe a Little Steel Partners Preferred to Add Some Diversification

As I look around at the minimal number of preferred issues I want to hold (or maybe buy) at this time virtually all of them fall within either the CLO closed end funds or in the BDC (business development companies) area.

One that I have looked at for a long time–but not closely, is a 6% preferred from (SPLP-A). This issue has a mandatory redemption on 2/7/2026 at $25 plus accrued dividends. These shares were originally issued during an acquisition in 2017.

Currently there are around 6.4 million shares outstanding (they have an active buyback on the shares so likely there are a few less outstanding).

As one might guess the company is in the steel business–but they also own 100% of WebBank which is a state chartered bank with assets of just over $2 billion.

Obviously this is a different sort of company than I would normally invest in, but with a yield to maturity of about 8% I am thinking about a small taste. More due diligence to do before I commit.

The company is an MLP so any owners will receive a K-1.

B Riley Suspends Preferred Dividends

B Riley (RILY) announced a suspension of their preferred stock dividends today. The beleaguered financial firm has 2 issues outstanding which can be seen here.

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.

Headlines of Interest for Holders of Preferred Stock and Baby Bonds

Below are press releases from companies with preferred stock and baby bonds outstanding. Additionally, news of a more macro economic importance may be posted.

Regency Centers Announces Tax Information for Regency Centers 2024 Distributions

Armada Hoffler to Report Fourth Quarter Earnings on February 19th

SL Green Realty Corp. Announces Date of 2025 Annual Meeting of Stockholders

NewtekOne, Inc. to Report Fourth Quarter and Full Year 2024 Financial Results on Wednesday, February 26, 2025, After the Market Closes

SL Green Realty Corp. Announces Common Stock Dividend

Old National Bancorp Reports Fourth Quarter and Full-Year 2024 Results

CareCloud Announces Early Resumption of Preferred Stock Dividend Payments

B. Riley Suspends Preferred Payouts Ahead of Note Redemption

MFA Financial, Inc. Plans Live Audio Webcast of Fourth Quarter 2024 Earnings Conference Call

Rithm Property Trust Inc. Schedules Fourth Quarter 2024 Earnings Release and Conference Call

Capital One Reports Fourth Quarter 2024 Net Income of $1.1 Billion, or $2.67 Per Share

Hancock Whitney reports fourth quarter 2024 EPS of $1.40

Schwab Reports Fourth Quarter and Full Year Results

Fifth Third Bancorp Reports Fourth Quarter 2024 Diluted Earnings Per Share of $0.85

Fulton Financial Corporation Announces 2024 Fourth Quarter and Full-Year Results

The Party Continues For Now

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.

Weekly Kickoff

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).