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Morgan Stanley Prices New Preferred

Morgan Stanley has priced their previously announced new fixed rate preferred.

The issue is non-cumulative, qualified, NON investment grade and 20 million shares priced at 4.875%.

With all the substandard coupons we have seen I should be used to being disappointed in these meager coupons–but I’m not!! If it was investment grade–then maybe 4.875% would be right–but they fall short of investment grade.

Oh well–it is what it is and my simple answer is –NO I won’t buy any.

The pricing term sheet is here.

Thanks SteveA for being on top of this one.

Replay–Snoozers are Losers–Gabelli Comes a Calling

Reader JDubs has just pointed out the trading halt and subsequent confirmation that numerous Gabelli CEF preferreds are being redeemed.

This is hopefully not a big surprise to readers as we covered this a month ago—here. Everyone had ample time to review their holdings and unload them.

Here’s is the scoop–

Gabelli Dividend and Income 6% (GDV-D) will be redeemed on 12/26/2019.

The press release is here.

Gabelli Equity Trust 5.875% (GAB-D) will be redeemed on 12/26/2019.

The press release is here.

Gabelli Multimedia Fund 6% (GGT-B) will be redeemed on 12/26/2019.

The press release is here.

Since the announcement came at the end of the day there will be some blood letting in these issues tomorrow morning–assuming they trade. If they do not trade holders will have to wait 5 weeks to be spanked.

Amerco (UHAUL) Announces Earnings

Giant equipment rental firm Amerco (UHAL) released their earnings about a week ago.

We mention this because of our personal investment in the UHAUL Investors Club and because I know many readers also participate in the Investors Club.

We had written almost exactly 1 year ago on the club–you can see that (and the comments) here.

The earnings for the quarter ending 9/30/2019 are pretty decent–as has been the norm in recent years. On revenue of $1.15 billion the company brought $156 million to the bottom line. Revenues grew 4% over the year ago quarter, but earnings were off 6%.

We do note that depreciation, a non cash charge, is always the one of the companies largest expenses, but unlike real estate companies the assets of the company do in fact depreciate and the company spends dramatic amounts of capital on replacement equipment. During the 1st 6 months of the fiscal year the company spent $1.6 billion on new equipment–obviously there are plenty of new UHAUL trucks running around the country.

Taking a look at the Amerco balance sheet should always bring comfort to investors. The company currently holds about $3.2 billion in cash and securities–nothing like cold, hard cash to make a lender (investors in the Investors Club) feel secure.

The companies common stock now trades at $366 giving the company a market cap of about $7 billion.

The SEC 10-Q filing can be found here.

Morgan Stanley Joins the Preferred Stock Party

Morgan Stanley (MS) has announced a new non-cumulative preferred stock issue. The issue likely will be rated just below investment grade.

The shares will have an early redemption date starting 1/15/2025. The issue will only be redeemable on a dividend payment date.

The proceeds of this issue will be used to redeem the 6.625% preferred MS-G which is only redeemable on a dividend payment date – the next payment date is 1/15/2020.

The permanent ticker will be MS-L after it trades for a week or so on the OTC Grey market (temporary ticker not yet announced).

The preliminary prospectus can be found here.

Thanks to mcg and a bunch of other folks all which were on this one right away on the Reader Alerts page.

Monday Morning Kickoff

The stock market continues to party as the S&P500 hit new record highs last week trading in a range of 3075 to 3120 before closing on Friday at the high of 3120.

As the stock market trades at record highs interest rates have begun to drift lower with the 10 year treasury closing last week at 1.83% after trading in a range of 1.81% to 1.94%. We have seen this pattern occur many times over the last number of years–mostly certainly the bond markets isn’t in agreement about with the stock market party.

The Federal Reserve balance sheet grew by $8 billion last week. The non-QE, QE continues and I suppose we should all learn to accept that the global economy will need to be ‘juiced’ for the many years to come. Exactly what measures the central banks will use when we hit recessionary times isn’t known, but certainly they are shooting most of their ammo during times that are relatively decent (economically).

Last week 4 new income issues were announced and sold.

Annuity/insurance company American Equity Investment Holding Life (AEL) sold a new issue of non-cumulative Fixed-Rate Reset preferred. The issue will have a fixed rate until 12/1/2024 of 5.95%. At this time the coupon will be ‘reset’ at the sum of the 5 year treasury and a spread of 4.322%. This BB rated issue (junk) was greeted with very strong trading with a closing price on opening day of $25.50. The issue is trading on the OTC Grey market under temporary ticker AQYVL. Details of the issue can be found here.

Container ship owner Global Ship Lease (GSL) sold a new issue of junky baby bonds with a coupon of 8%. The issue will trade under the ticker of GLSD when it begins trading. Further details can be found here.

Regional bank BancorpSouth (BXS) sold a new issue of non cumulative preferred stock with a 5.50%. The issue is trading under the OTC Grey market temporary ticker of BCSBP. This junky issue is trading around $24.90/share. You can find further information here.

Lastly diversified manufacturer and distributor Compass Diversified Holdings (CODI) sold a new issue of fixed rate preferred with a juicy coupon of 7.87%. The issue is trading under the OTC temporary ticker symbol of CMPSP. Even a juicy coupon can’t lure buyers as the issue closed the week at $24.64. Almost without doubt the fact that CODI is a MLP which will mean a K-1 at tax time is not helpful to the market rebuke. Further info is here.