6/28/2025
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As noted by aj in the comments just now Brighthouse Financial (BHF) is looking to sell itself.
I have very modest exposure to 2 preferred issues which I may/may not exit with losses. My concern is a potential delisting of preferred shares–I will need to read the prospectus to see what it has to say on the matter.
I have a couple mREIT fixed to floating rate preferreds in the portfolio–in limited quantity that have performed very well in the current environment.
Looking at the reduced potential for interest rate cuts from the FOMC this year these issues have good potential (at least relative to fixed rate preferreds). Markets are likely to be ‘dicey’ all year long so one just as well be paid for their invested dollars at the maximum available rate.
As a pretty conservative investor I don’t buy mREIT common shares—EVER, but the fixed to floating preferreds have the right risk/reward for me. I never go ‘all in’ to anything, but a modest allocation is quite comfortable.
I have a fixed to floating list with potential coupons on it which can be found here. Of course one never knows the exact coupon until the dividend determination date (the date that SOFR is observed for the coupon).
Markets are back to a calmer mood this morning with the S&P500 up just a bit, as is the NASDAQ. The DJIA is being buffeted by lousy earnings from Boeing–what a surprise (not). While markets may be calmer at this moment I wouldn’t expect that to continue–with the new administration we can expect disruptions weekly–whether it be a trade fight with some country or something related to immigration we will continue to have market disruptions.
I was amazed by dislocations in the utility issues yesterday–2 issues in particular got slammed. Vistra Corp (VST) closed off $54 at $138 while Constellation Energy (CEG) was off $75 to close at $275. Obviously these issues were tremendously overvalued–maybe they benefit from AI and data centers, but honestly the rise in prices in recent months was totally silly. CEG was up $80 or so this months–pure silliness. I am certain there were many other utility issues which fell hard, but those 2 caught my eye.
Today the FOMC meeting starts with the interest rate announcement tomorrow afternoon. This is followed up by GDP on Thursday and the personal consumption expenditures number on Friday. Certainly more than enough fresh data to keep markets active. Interest rates are bouncing a bit this morning now back to the 4.57% area–4 basis points higher.
Did you notice the earnings from WR Berkley (WRB) last night? Once again they were stellar–and a record. This insurer is so well managed that they just keep reporting record earnings. They made no mention of future losses from California wild fires, but I would think they will take some losses there–just a question of how much. WRB has 4 baby bonds outstanding. The WRB-E 5.7% issue is trading with a current yield of 6.12%–I own this issue in limited amounts, but could re-enter if I believe interest rates are going to be flattish.
Our portfolios had modest gains yesterday–2 very modest. Today I am once again just a ‘watcher’ of markets–kind of boring, but I am happy with the way I am positioned.
Below are press releases from companies with preferred stock and baby bonds outstanding. Additionally, news of a more macro economic importance may be posted.
Energy Transfer Announces Increase in Quarterly Cash Distribution
Freddie Mac Issues Monthly Volume Summary for December 2024
Western Alliance Bancorporation Reports Fourth Quarter and Full Year 2024 Financial Results
W. R. Berkley Corporation Reports Fourth Quarter and Full Year 2024 Results
JPMorganChase Announcement Concerning Preferred Stock
Sachem Capital Corp. Announces Tax Reporting Information
Enterprise Financial Reports Fourth Quarter and Full Year 2024 Results
Dynex Capital, Inc. Announces Fourth Quarter and Full Year 2024 Results
Well we have had quite a ride lower today–based on Chinese AI? Or maybe based on the Columbian dustup. Or maybe there simply are lots of folks with big gains in big tech who are looking for a reason to sell. NASDAQ is off 3% and the S&P500 is off about 2% is what we know for sure.
Interest rates took the plunge with equity prices–now at 4.55%–down around 8 basis points.
The tumble in interest rates helped to negate the downward pull caused by the sharp tumble in stocks—meaning preferreds and baby bonds are relatively flat–or maybe up the smallest of amounts.
I notice that some folks are tip toeing into the political arena with their comments. It is unbelievably hard to avoid in the current environment, but do the best you can. I am watching comments as always–and may just on occasion delete any that get over the line too far. I am not going to delete stuff that has a little toe over the line–it is getting almost impossible to avoid.