91 thoughts on “Bank of America Prices Huge New Preferred Offering”

  1. Who can calculate the fair value of BAC-W? I’m putting it around $25.53. You’ll get the upcoming dividend of .41c plus roughly 27 days (.12c worth of divvy) until it’s called on 9/9/19. Anyone else compute roughly the same amounts? IF one can sell today at $25.55 or higher, why not cash out and move on?

    1. A4I – I’ll take the Affinity challenge on fair value of BAC-W and disagree on your idea of 25.53. I don’s see how you say you’ll get the upcoming dividend of .42c plus anything more… The first call date = 9/9, the same date of the next dividend date. Given they’ve got plenty of time between now and 9/9 to announce a call on the first day within the parameters of a 30 day minimum in advance notice, why would you think a holder can expect to get anything other than .42c? To me, BAC-W should be worth no more than 25.26 or so right now to properly discount the 25.42 expectation… I’m not familiar with the ins and outs of BAC-W only looked at quantumonline cover, which thankfully is back up, so am I missing something important? Anything above 25.26 has to be speculating these will last beyond the first call date.

      1. I was hoping you would take this up, 2WR!
        Merrill shows the last ex-date as 5/14/19, so I would think the next ex-date would be ~8/14/19 (this would entitle a holder to .41c divvy). Add on ~25 days until the call date to accrue an additional dividend of ~.12c. So I added par of $25 and then .41 and .12 to get roughly $25.53/share.

        QOL shows the 9/9/19 date as being the payment date, but the record date is before then and the ex date before that, putting it all before the call date.

        My math may be fuzzy, so this is why I am looking for comments. I’m also calculating the same value for BAC-Y. Holders of BAC-W may be able to sell and book profits on BAC-W before the call and then roll into BAC-Y and ride it until it’s call and not lose much on the difference in yield.

        1. Ahah! I think you’ve made a common mistake, A4I. Correct me if I’m wrong, but Ex-date is nothing more than an accounting date, a date that determines for the company who’s entitled to the 42 cents. Additional dividend beyond the 42 cents does not accrue after the ex-div date until after the next payment date… So, assuming a call is announced for 9/9 the price of BAC-W will fall to below par on the ex-div date and will remain there until call because those who buy BAC-W after the ex-div date will only be entitled to 25.00. That’s my story and I’m sticking to it….

          1. BTW, A4I, as an example, take look at what happened to your beloved CPE-A and where it’s trading. Figure out why the amount of payment they’re going to make is only 50.00 plus 24 cents…. Take your assumption and calculate what that payment would be if your assumption was right… you won’t come up with 24 cents, you’ll probably come up with about 45 cents..

          2. 2WR wrote:

            “Additional dividend beyond the 42 cents does not accrue after the ex-div date until after the next payment date…”

            For what it is worth, Preferred Stock Trader (TJ Burke on SA) and Richard Lejeune, state that the accrued dividend is calculated from the payment date – not the EX date – when considering *called* issues….which supports your statement.

            1. Right, Amy. I probably said it relatively poorly because of course, the dividend actually accrues daily every day of a 360 day year, only it accrues daily from payment date to payment date. Mentally speaking, though, for the person who buys a preferred the day after ex-div date he’s actually accruing nothing until it starts accruing for him the day after the next payment date…. Like I said, it’s a common mistake. If you know the BDCReporter, I even caught Nicholas Marshi making the same mistake.

              1. This is where I got goofed up, the payment date to payment date gotcha. Thanks so much for clearing this up.

                Wait, a 360 day year? Do you subtract 5 days for vacation or something? I thought a year was 365 days 🙂

                1. A4I Maybe it’s just a bond thing, I’m not sure, but the convention is 360 days… https://www.investopedia.com/ask/answers/06/daycountconvention.asp
                  I can’t swear that preferreds are treated the same way, but the conservative assumption is to think it is…. The real mystery is just exactly where those 5 missing days are figured to be. I don’t even know if there’s convention on that, so that always throws the proverbial monkey wrench into 100% accuracy of a calculation. It’s never much of a difference, but that’s the convention in bond world…

                  1. Please give me a moment while I continue to shake my head in misunderstanding why someone needed to make this more difficult for us aging folks to understand. Uggh. Thank you for the link and explanations!

          3. So you’re saying that if called on 9/9, holders as of the ex-date of ~8/14/19 will get the .41c divvy on 9/9/19 and then it’s lights out for this puppy?

            My math error would have then been attributed in adding in dividend accrual amounts from the ex-date to the date of the call.

            Thinking it made sense to do so (and before posting this question today), I liquidated my BAC-W for $25.55/share. Rolled it into BAC-Y. Slightly lower yield by same great dual IG and QDI.

            I don’t see CPE-A trading anymore. Ticker symbol changed and although I see some activity – I don’t see any trades showing in the normal places where they are listed. I’ll run the math on that one but I bet you’re right.

            1. Seems to me that looking at this from the dumbest angle, the fair value of BAC-W is arguably $25. If they call – and they should since they’ve already announced the intention to redeem it, the only ‘guarantee’ is getting one more divvy payment. However, it will then immediately drop to par. If you buy it for more than $25.41 prior to the ex date, you’re going to lose money. If you buy it for less than $25.41 prior to the ex date, you might be able to pick up a few nickels, but good luck with that. Seems like this was good while it lasted but the last one out now needs to turn off the lights as the party is over. Now I understand why some sell right before the ex date. You’re taking the baked in divvy and running before the share price is discounted by the amount of the divvy and you have to then wait for it to rise again over the next month or so and heading into the next ex divvy date.

              1. A4I – I’ve said before buying this crap is a picking up pennies kind of trade but if you’ve got idle cash, it beats by far having it sit in any money market type vehicle, even the sock drawer issues used here such as KYN-F. But saying it’s only worth $25 is similar to saying you’d never buy a preferred over par. There’s value to be had on an annualized basis by calculating a ytc on these and being willing to pay a premium… The example of CPE-A I think I calculated YTC on my purchase at 50.04 to be over 5.25% annualized. Granted, you only own for less than 30 days so the absolute dollars gained probably don’t make sense for most, but in my case, I have cash doing nothing and I’m unwilling to lock into anything longterm, so it’s better than seeing tons of cash doing absolutely nothing… It also helps to have some free trades available to do this kind of crap and I do at Fidelity…. And the good thing about this game is with the info flowing from III’ers on new issues refunding older ones, there’s an apparently never ending source of preferreds to do this with over and over and over… So if you’re into boredom inducing riskless, highly predictable trades, this stuff’s for you! I don’t expect many here to want to enter the fray – lol

            2. Yup…. You’d be double counting you’re way so the total dividend in any given quarter would exceed BAC-W’s 42 cents per. And according to Fidelity, there’s been 15,208 shares of CPEPRACL traded so far today with last at 50.10. Because of this exact problem, it makes the math of trying to figure out a true YTM a little difficult, but I think I got it right in a previous post… I bot yesterday from 50.06 to 50.02 being a bit too aggressive at first but still ending up with 50.04 average. What I’m doing is picking up pennies while the rest of the world is scoring dollars bigtime…….

              1. I received a notice today from Merrill that stated CPE-A will be redeemed for a total rate per share of $50.24. You’ll clink a few of those pennies in the pink piggy.

                I think Nomad already posted but here it is again.


              2. 2WR, Maverick61 posted a good one today about tech craze, which I’m sure many of us remember well. Made me chuckle. That was good times for everybody until people got sorted out. I can still see the stunned look on the bag holders faces. There is nothing wrong with making a little safe money. Nobody ever went broke doing that.

            3. Just curious why you would buy BAC-Y at this point. You have to assume this one will get called next year. The yield to worst is only 1.15% if it gets called. I suppose you could hold and collect a dividend or two and hope it maintains your cost basis but I wouldn’t bet on that either.

              1. It’s simply going to act as a money market stash house for now. Might be for 3 days or 3 weeks… If nothing else comes along – I’ll collect a divvy and keep waiting so at least the money is earning something and if the market dives for some reason, the strong yield and dual IG/QDI should keep it propped up better than a lot of other places I could try to hide out in. Plus, you can usually catch a pop in the stock price by people freaking out when the call is announced for BAC-W and they’ve been asleep at the wheel. They usually fly into the next closest thing yield-wise that isn’t under immediate threat of a call. So this would also be a good way to collect a few more coins while continuing to look for more permanent housing if you know what I mean.

                I try to keep my floor at a 6% yield with good quality holdings – but that floor is starting to bow a little with the increasing amount of 5.x%’ers coming out lately.

  2. With so many buying to flip this one may not run like some others. No real meat left on the bone.

    And I agree about BAC-L. If I was buying to hold its the better issue.

  3. Thanks to all for the good chatter and updates regarding the new positions pouring out. Needed some fresh QDI longer calls. It calms my mind when I’m gone this summer….hey someones gotta pay the bills.
    AND BOOO! to tjhe QO hacks!

  4. As a new person here, i’d like to ask members why the PNC-Q a 5.375% issue is trading at 25.64 (call date was 12-1-17)and the new BAMKL is at 24.95.

    What am i missing?
    Are they not equal in most matters?

    1. Newman, the BAMKL just came public today. It hasn’t had time to run up yet but I would expect it to be trading in line with the PNC-Q within a few weeks at the most. This is the point I talk about below. If you’re looking to flip and move on to the next new offering, you can ride these waves as most new issues coming to market are rocketing higher pretty quickly. Just look at AHH-A. It just came up within the past week for sale and it’s already run up over $1.00/share and it’s not even QDI or IG rated. EASY flipping when this happens… Better to be lucky than good I think the saying goes? Not all flips work out this way.

      1. A4I,
        I have done what you said you do with previous issues and am ahead.
        I meant to buy 2k at 24.95 earlier for trading purposes. but my legs wavered a bit.
        Thanks for the confidence

  5. I have a sincere question, I am not trolling. Are some of you in the mode of chasing almost every single new issue that comes out? That’s how it looks to me. I’m pretty conservative, but 5.375% is too low even for me. Any of you that could please describe your motivation for wanting this one, I am willing to listen and learn.

    1. Larry,

      Depending on how this trades, it could be a quick flip. I think it should easily run up 50 cents or so – at which time, I’ll take a few coins off the table and roll into something else with a higher yield.

      I was using KYN-F as a ‘juiced money market’ parking spot for idle cash, but why, when I can dump it into some of these new issues and watch it run up pretty quickly and then either hold or flip out to something else (rinse and repeat).

      With a dual IG rating and QDI to boot, I have no doubt this will trade up quickly but probably come short of $26.00.

      I also hide out in these new issues, waiting as they rise, to catch something else that I want on the ex-date or the day after the ex-date. I’m riding one elevator up (the new issue) while waiting to step off and catch the other elevator on the ground floor (the other issue that just went ex). Seems to be working pretty well so far. All of my trades are commission free, so I don’t get nailed with any of that – so I can trade tiny or big lots of shares and not lose any compounding of my money while I’m bobbing and weaving.

      Just my .02c

      1. Affinity4Investing, thank you. I use the CEF preferreds as my “juiced money market” and I don’t have the time or inclination to flip things. But I see your reasoning.

        On another post, someone said “The busted convertible BAC-L offers a 5.4% yield with no possibility of conversion for a very long time. ” Can anyone (briefly) explain what that means? QOL is offline for upgrades after a hacking attack, or I’d look there.

        1. BAC-L: $1000 par, 7.25% coupon, trading at 1340 (5.4% CY). Issued in 2008, cannot be redeemed, convertible to 20 shares if BAC common trades over $65 (130% of $50) for 20/30 consecutive trading days. Which may have seemed reasonable in early 2008 but BAC is at $29 today. Do I have all the facts?

          1. Larry,

            BAC-L cannot be converted unless the common stocjk BAC trades at $65 or higher for 20 out of 30 days. Since the common is at $29 presently, it would be a long time ( if ever ), until it hits $65.

            So, for all practical intents & purposes, there is close to zero chance of forced conversion in my lifetime – I consider my position as a perpetual income stream of about 5.8% based on my purchase price.

            Expect that my heirs will inherit them eventually, at a stepped up cost basis.

            the same, identical logic holds true for my WFC-L position.

    2. Larry, I’m fairly new to this site and there are many here smarter than me and more adept at buying / trading these preferred. I don’t chase them all but am in the process of exiting most of my common stock holdings in favor of a more conservative approach. I bought this one for diversification and because it is investment grade. It should also be very liquid and easy to exit should I choose to do so. Everyone has their own agenda and tolerance for risk.

      1. I’m a bit surprised at the number of people passing on this. I guess it really depends on your stage of life and the overall yield/income stream you need. For me, this yield fits in nicely to the big picture and i like knowing i can liquidate when i need to, unlike some issues where the daily volume is just too low. With a fed rate cut likely i do think this one will run up and is probably one of the few issues where you can buy enough to flip it and make a few thousand dollars thanks to the volume, again. Maybe it’s me but I don’t see many high yield issues out there with companies that I am very comfortable with. Of course, in retirement mode maybe I’m considering worst case scenario too much — recession, suspended dividends, etc. Appreciate any thoughts on this as I am certainly no expert in this area and also get yield from stocks and individual bonds.

        1. I’m with you. You can take what the market gives you or you can sit on the sidelines waiting for higher yielding quality but honestly, does anybody see that in their crystal ball? I don’t. Like you I’m retired. I don’t have the time to sit on the sidelines earning near ZERO on my money.

          The ECB has indicated a further easing is in the future. The FED is pretty much headed in the same direction. In another year 5.375% might look really good. BAC is a high quality institution. Their preferred issues are practically worry free investments.

          I bought 500 shares for the IRA this morning at $24.95

        2. The main draw for me is the dual IG rating as well as the QDI. I’ll lose my BAC-W with all of this in a few months but recently, other than AIG-A, this is the only excellent quality offering (dual IG/QDI) that’s come to market (very recently) that we could get at a great price (below par). ALL-E is past call and any day might be going away. Same for AILLL. The JPM C and D are sky high and it didn’t take long for DUK-A to run up in price. Unfortunately this one won’t run up like BAC-B did, but I think many of us knew the lower yields were coming sooner rather than later.

          1. A4I, the one thing we can take solace in AILLL, is when 10 year hit record lows several years back it never was redeemed. In fact it was well over going rate when Ameren acquired it (it like all of them were acquired bastard preferreds). In fact several years later they made effort in 2010 to consolidate them and rename name them all in a uniform manner.
            But why any of them remain outstanding is a mystery. They have never issued a preferred ever, and having these as capital is no different than you or I making sure we put 3 pennies in our pocket before heading out of town for a week in case we need some “emergency money” on the trip.

        3. “you can buy enough to flip it and make a few thousand dollars”

          Implying that one buys a few thousand shares or more, depending on how much of a run-up you expect. Obviously I do not mean to ask for anyone’s exact numbers, but that means having at least mid-5-figures in idle “risk” cash sitting around waiting for issues like this. That would be very unusual. Wouldn’t it?

          1. Larry, i think even with the cash sitting around the bigger problem is the volume is just too low on many of these issues to flip them in a short time frame. If you can spread it out over a few days it might work, but I’ve found it difficult to flip them in a one-day time frame. I’m curious if anyone has a good strategy for this.

          2. It depends on your situation. It is not unusual for me to have that available.
            While I mainly buy things to hold, sometimes you have to play the game that is in front of you. And right now the run-up on new issues after issuance has been for the most part a good trade. If I have a high chance of success at making $1k to $2K, why not just help juice the returns a little

            I remember back in the last 90’s during the tech stock craze – common stock IPOs would come out and go up an astronomical number. And online brokers had just gotten into offering IPOs to their customers. I must have had 10 accounts set up at different brokers, not to mention the couple I had my parents set up. Why? Because when someone offers you free money, you don’t turn it down. Long term it was unsustainable as evidenced by the crash but as short term trades, if you were allocated an IPO back then you could make 2 to 10 times your money in a short period of time. So why not play the game in front of you.

            My trading days are 95% over – but if a good opportunity presents itself, why not. Not everything must be buy and hold

            1. Amen on that. I too am a retired income investor but every now and then I stray out of my lane but I don’t stay in the middle of the road for long as that’s roadkill territory. I strayed today for an hour on the slack IPO (work). Bought it the moment it started trading, sold it later for a quick 7% and got back in my lane.

              It can be fun…but only for a few minutes.

        4. Yes, Franklin, I also think it depends on your stage of life. I’m fortunately at a stage where I don’t have to try to maximize everything I do, so I flip less and less and really don’t like it when things I love get called away.

          So, for example, I buy BAC-L and WFC-L instead of the latest callables that are similar in yield and rating.

          I’m also worried about the CL&P preferreds being called. I have held them for a good while and loved them, but they are now trading about 2 years worth of divvies above their call price. So I’m nervous and paring down and hopefully out of them before somebody wakes up and says, “Oh we better call these things.”

          And while I deeply respect Gridbird’s historical knowledge of rate fluctuations wrt CA reset permutations, I don’t want to be sitting on that coiled spring with him. If our past is somehow not going to be prelude, then you might wind up sitting uncomfortably on that coiled spring for a long long time. Just remember what’s happened in Japan over the past few decades. And now the rest of the world seems to also be headed in that same general direction of negative rates.

          Can we be far behind? I have no idea, but I’m trying to position myself more and more in IG rated uncallables just in case.

          To each his own, he said as he kissed the cow…


          1. Camroc, I dont disagree with a word you said…. That is why I own more of the Spire preferred alone, than I do all my resets combined. 🙂 That sector is just interesting and more “behind the curtains” than standard perpetuals, so I discuss it more. But there is no correlation between my print comments on resets in relation to volume owned, lol…
            Too be perfectly honest, If there was any real possible way (which there isnt), I would just be perfectly fine having all the stash in my local utes of Spire and Ameren and calling it a day.

            1. Camroc, why are you worried about interest rates? You own the majority voting block of AILLL, have a 6% yield and it just went up to $27.60 today. 🙂

              1. Saw the AILLL spike up to $27.60, so I stuck in a sell order at 27.60. Nothing done, brought down to $27.58, still nothing.

                There was another seller entering sell orders a few cents below my price, tried to match him/her, but in the end nothing was done.

                Oh well, tomorrow is another day.

                  1. Good question, camroc. Must admit the field of possible replacements is very small.

                    Still, it’s hard to resist when the over par premium is close to a full year of dividends.

    3. A lot of people seem to agree with you, Larry. BAC-L & WFC-L are being bid up into the 1340s and still yield more than the new bac pfd. Plus, they are de facto uncallable as yields continue to race lower. I’m not chasing these new ones either.


      1. Like you, I own both of these busted convertibles and always looking for other (relatively) safe busted convertibles. Any suggestions by anyone?


        1. RLJ-A is another one, Ben. Then you have KTBA also. KTBA isn’t busted, but it’s not callable until long after we’re all gone (12/2095).

      2. WFC-L can be converted if the WFC common price is above 40.56 (31.20 * 130%). Right now WFC is at 45.65 so it could be redeemed? Unlike BAC-L which has a redemption price of $65 but the BAC common is at $29. What am I missing?

        1. You can redeem it any time you want….And take a blood bath on conversion. As far as a forced company conversion, you are looking at over $200. Living a clean life will better ones chances to be alive when forced conversion occurs.

          Convert is at $156.71*6.3814 or $1000. Stock has to get to ~ 203.72 (130% of 156.71) for the convertible option to kick in.

        2. Larry, you are confusing the shareholder right to convert, versus the forced conversion option of Wells Fargo Bank.

          Grid has explained it, so no need to repeat the details.

          1. Inspy, I was about to PM you and make sure you were still alive. Glad to see you posting.

            1. Grid, yep, still alive & kicking.

              Last few weeks have been tough. Had 2 friends coming down with Stage 4 cancer, and 1 that had to have a kidney removed and has to undergo dialysis as the other one is also diseased.

              Been spending time with them & their families, to lend support.

              Makes me much more appreciative of Nomad’s words of wisdom that he posts here. Life is never easy.

              1. inspbudget, my family and I are sending beautiful and caring thoughts and prayers your way. When times are tough I always say hug and kiss the ones you love. Tell everyone you truly care about how much they mean to you and always find ways to take care of your life and soul.
                Be well my friend, Nomad

          2. QOL is down so I am using this info:
            This is the same language used for BAC-L which can be converted “at your option” into 20 shares (conversion price=$50).

            “Each share of the Series L Preferred Stock will be convertible at any time, at your option, into 32.0513 shares of our common stock (equivalent to an initial conversion price of approximately $31.20 per share of our common stock)” – Yes, “at your option”.

            WFC can convert if:
            “On or after March 15, 2013, if the closing price of our common stock exceeds 130% of the conversion price for 20 trading days during any consecutive 30 trading day period, including the last day of such period, we may, at our option, cause some or all of the then outstanding Series L Preferred Stock to be automatically converted into our common stock at the then prevailing conversion rate. ”

            130% of 31.20 = 40.56. The common is above 40.56, so WFC can convert the preferred at 31.20/share. Right? Obviously not, since you quote totally different numbers: “Convert is at $156.71*6.3814 or $1000. Stock has to get to ~ 203.72 (130% of 156.71) for the convertible option to kick in.”

            Again, please realize that QOL is offline so I can’t look up the usual info there.

              1. I was going to reply that WFC-L was a takeover from their acquisition of Wachovia bank, but that’s great that you found out.

                Makes a strong case for us doing DD on stocks before actually making any move, to buy or sell.

                The strange numbers are a result of adjusting for inclusion of the Wachovia prospectus Terms & Conditions into the Wells Fargo infrastructure.

                1. Yes, WFC common would have to go up by about 5x before WFC-L could be converted. That’s an oddity of the Wachovia takeover, I get that. But how do you explain BAC-L? BAC would have to more than double, which is more possible but still a long shot. Is that just a consequence of its being issued in early 2008 before the big banking collapse?

                  This is the first time I’ve looked at issues like this. If you folks have been discussing them, I guess I haven’t seen it. Tim has never written about them, AFAIK.

    4. Yep 5.375% is too low for me.

      But I bought it anyway – for a flip rather than a hold.
      The recently issued VOYA issue at the same 5,375% rate has moved up to $25.35. Someone pointed out the PNC-Q issue, same yield is at $25.64

      Given that most new issues have jumped after issuance, and given where the other two issues are, hopefully I can get 50 cents a share out of these on a flip and move on to something else. Seems like a pretty low risk trade

    5. Larry, obviously there’s lots of IPO flipping going on. That is not investing but speculating, different but not saying it’s good or bad. If a investor was looking to find a reason to buy it would probably be the yield is skimpy but YTW looks like a rock star compared to issuers other ones already trading. I am passing on this one.

    6. Larry- I think your point is a valid one that I consider quite a bit not just with preferreds but with the stock market in general. When we are getting so used to everything going up is when we should be ready to be blindsided. For purely political reasons, the people we elected have been printing money, jaw boning the Fed, running up debt like drunken sailors. This party will end as all parties end, and I think it is a fair point whether or not it is prudent to be flipping things with the upside being a quick 2%-3% return. All that being said, I have been taking part in some of that, but I have my hand over the sell button at the first sign of trouble like never before.

    7. @Larry
      I purchase these issues for INCOME, not for trading. Many on this site want to make a quick gain by purchasing the issues when they are still near par and trading under a temporary symbol and then selling when the share price moves up 50 cents or more. We don’t all purchase these issues for the same reason. I am willing to earn 5%+ for 5 or more years by
      buying a decent issue, like the new BAC preferred. Thanks.

      1. Exactly, Howard. Perhaps I’m in a different place than most of you. I am still working, probably will retire in 5 years or less. I am fully invested, mostly in common “dividend growth” stocks, some mutual funds from my younger days, and maybe 10% in preferreds for additional income. I save a lot of my income and I’m constantly investing or reinvesting. But the amount of new cash that I might use to buy a new preferred, lets me buy 100 or 200 shares. After I retire, I’ll be living off the dividends of my commons and preferreds, but I won’t ever have a big “play money” budget to be flipping things in the quantities being talked about here. I guess for those of you with big pensions that already cover your living expenses, you can devote all your cash to the hobby of flipping preferreds. I won’t ever be like that.

        As to your other point about buying the new BAC 5.375%, I’ve been buying preferreds since 2012 and I personally don’t consider 5.375% to be worthwhile. I bought a PS issue at about 5% and it got hammered down last year when rates started going up. Now, I don’t really care about what happens to the principal, like you I buy these for the income. But in the last several years, it’s always been possible to buy Quality issues for 6% or more – if you have the patience to pass on the 5% junk (even if it’s high quality junk) and wait. My two cents.

        1. ” I guess for those of you with big pensions that already cover your living expenses, you can devote all your cash to the hobby of flipping preferreds. I won’t ever be like that.”

          You should not assume things like that about others. I don’t have a big pension. I like most have my retirement funds in an IRA account (much rolled over from 401k plans I contributed to during my career).

          My savings in taxable accounts as well as my retirement funds came from hard work, saving and wise investing. Started saving the day I started my first “real job” after college with my achieved goal of retiring early.

          Until I reach the age when I will start to draw SS and withdraw funds from my IRA, I live off those taxable accounts / savings and earning on those savings. All part of my planning. As is having funds available to make some short term trades like flipping some preferreds when it makes sense to do so

          1. No offense intended, Maverick61. I also have a rollover IRA with all my old 401k’s. But the only preferred’s I have in it are REIT preferreds that don’t pay qualified dividends. All my preferreds that pay QDI are in my taxable accounts, which is what I will also live on in my early years of retirement (pre SS and pre MRD’s). You do realize that QDI in a IRA will be taxed as ordinary income when you take it out, right? I guess if you are flipping preferreds in the IRA and not using them for income, then it doesn’t matter.

            1. No worries Larry. Just pointing out that everyone’s scenario is different and everyone has a different plan. For me, an occasional flip is just a small part of my overall plan

              I am quite conservative these days with my investing – and look at these as low risk trades.

              Yes, I realize the QDI is irrelevant in the rollover IRA. I hold all of my QDI issues in my taxable account (except any bought for a flip like this one) and hold most of my non QDI preferreds in my rollover IRA. I do have a few non QDI preferreds in my taxable account as well.

              For this issue, it doesn’t matter to me holding it in the IRA (actually I have some in the IRA and some in the taxable account) since I bought it just for a flip

  6. Here’s a shocker: Bank of America/Merrill Edge will not even let me buy the new preferred. It’s classified a ‘low priced security’ and is blocked from trading, yet is trading at Fido/Vanguard/TD. $1bb offering, dual IG, and trying to buy it from the underwriter. Answer=NOPE.

    Pretty unbelievable. I’d encourage anyone looking to move their money to Merrill to ponder that move carefully. This is at least the 6th new offering in the past month or two that they’ve not allowed to trade until after the price has run up at least a few points past what you could have gotten it for at the other brokerages, days to a week earlier.

    1. Finally, they allow trading for their own security – hours after 4 other major brokerages were selling it. Search for it by CUSIP, but they still make you get a confirmation code to be able to trade it.

    2. Affinity4, I’m NOT buying this issue but just entered a Safepass Merrill Edge order for this BofA preferred. You must have some bad rep or they are giving you poor information. Please try online my friend. Be Well, Nomad

      1. Nomad,
        We posted at the same time… I tried (from multiple accounts) trading from 930am until 1055am and even called the Premium Elite trading group (which you are likely familiar with). Online trades were blocked and they couldn’t put in a manual order for me either. Dedicated rep was no help either. Tried at 1056am and was allowed to buy it w/my Safepass.

        1. I completely agree with you that 10:56 is way too long to begin trading of a new NYSE preferred. We have to hold our firms accountable as there is an implied “mutually beneficial” relationship and ME was definitely not keeping up their side of the relationship.
          Perhaps a man’s character was like a tree, and his reputation like a shadow; the shadow is what we think of it, the tree is like the real thing.” – Abraham Lincoln
          Be Well, Nomad

          1. They were listed as the sole book runner. I can’t find a reason for 4 other brokerages to be trading this before them. But this is the trend with Merrill as of late, which was totally my point – not just to vent off about this one issue. They keep telling me that they are ‘working on it’ but no progress has been revealed. Feels like they wanted to see it hit par before trading began. Interesting that it was at 24.99 when it went live and my trades went thru. Maybe coincidence, maybe not. Be well Nomad and thanks for your thoughts.

    3. Many people utilize more than one brokerage platform with circumstances like this in mind. I certainly wouldn’t toss Merrill Edge out the window simply because of some delay with getting a new preferred issue to trade on their platform.

      1. I hear ya’ but this is roughly the 6th or 7th new issue in less than 2 months that they have restricted from trading for days to a week after other major brokerages have been going to town. Moving money elsewhere isn’t what is desired, yet is being almost forced at this point.

    1. Shooting for $24.96 at TDAM – let you know if it fills. Won’t pay over par for this one.

      1. filled at $24.95. Yield is a little low but trying to bring up the overall quality of what I have.

      2. just bought it at the asking price of 24.94 – the spread is tight at 2 cents – I expect this will remain a very liquid issue

  7. Vanguard rep said his Bloomberg says this issue is not rated and non-qualified. I differed based on above. He is going to check.

    1. bill–any rep worth their salt would know better. Mostly these folks know damned little about preferreds.

    2. Then he should get rid of his Bloomberg and get a Trump.

      Brokerage info is often wrong, especially on new issues. Go to SEC and look at FWP and 424 for the issue. It’s a 60 second undertaking.

    1. Yes. I picked up BAMKL around 1 hour and half after market opened at Schwab @ $24.95. Tim, I am sorry that I sent the link provided by Doug Le Du. Like everyone says, we, including me, should pay your website instead of Le Du, who let his subscribers “swim” on their own with tons of links on the SEC links looking for the “new issue”. He is correct ONLY on Temporary symbols. LOL.

Leave a Reply

Your email address will not be published. Required fields are marked *