Category: Mid Day Report

Today I went ahead and added more shares to a couple of banking issues.

I added some shares of the Heartland Financial 7% fixed rate reset perpetual (HTLFP) with a current yield of 7.65%. I had a position in this issue already so this is a modest addition. Yield to first call on this issue is near 12%–and with a spread of 6.675% (plus the 5 year treasury) on 7/15/2025 one could easily see this get redeemed at that time.

I added the fixed rate issue from Associated Banc-Corp 5.875% perpetual (ASB-E) with a current yield of 9.13%. I scrutinized the presentation that I posted (it is here)–pretty impressive action at the banker to reduce risk-of course one needs to always have their BS detector on when reading company presentations.

So any new issues I add I will go to my list of holdings which I published a month or so ago. I will refresh that list soon and post it.

I had a chunk of money in a Gabelli money market fund for a good share of this year and with buying cash in short supply I have put in a sell order for the end of day today.

I am looking back to the mid sized regional/community bankers to buy in the next few days. I am going to add to a current position in Customers Bancorp FTF (CUBI-F) which is now floating–I already owned it and added a little today at $25/share (utiltized the last of my cash in that account). The issue went ex dividend today and is next redeemable on the next dividend payment date (3/15/2023). Current dividend is at a yield of around 8.2%.

I am also looking at others including the Valley National 5.50% fixed to floating (VLYPO) which has just converted to a floating rate effective 10/01/2022. This will be inferior to the CUBI floaters in yield terms–but I need some diversification. The December dividend is around the rate of 7.3% and all things being equal more in March. Of course this issue is now redeemable, but only on a dividend payment date.

Equity markets have been quiet today–the 10 year treasury moved up by 5 basis points. While I would prefer ‘flat’ in interest rates, plus or minus 3,4 or 5 basis points is not harmful to our investments—remember speed kills (i.e. 10 or 15 basis point moves).

Watching the equity markets all day is painful. Each time the indexes move higher a tiny bit sellers come in–lots of folks looking for exits in particular in the tech stock.

The 10 year treasury moved sharply higher hitting 1.87%–up 10 basis points from last week. We will see a bit of pain in the income issues with this increase–hopefully not too much, but anytime we get sharp, quick moves of 10-20 basis points there is a possibility of a stampede out of income issues.

I will take no action on these days–in fact I have done almost nothing but collect dividends and interest for a couple months–I have some dry powder if an opportunity presents itself.

This morning retail sales for March were released with the official number showing sales ripping higher by 9.8% against a forecast of 6.1%.

New unemployment claims fell all the way from 710,000 last week to a stunning 576,000 this week.

The Philly Fed manufacturing report and the Empire State manufacturing report both ripped higher.

Well in an example of of ‘what is up is down’ and ‘what is down is up’ the 10 year treasury has plunged by 10 basis points all the way down to 1.53%.

Oh well–such is life.

As I survey my accounts it is really hard to ‘bitch’—halfway through the month it is another extraordinary month. Conservative issues I own go higher–dividend captures (that turn into quick flips), and new issues are powering me higher–another record close in all accounts. I am sure I am a laggard compared to most readers because of my conservative nature–but any month I can get over a 1% gain means it is Miller time.

On a relative level today is kind of a calm day–equity markets up 1.5% or so. I am very leery of this market–everyone is trying to pick a ‘bottom’ without firm data to really be able to see clearly.

I have made 2 purchases today–no sales of investments (except most of my Proshares Ultrashort SP500 (SDS) early in the day).

I went ahead and started a position in the RLJ Lodging $1.95 Conv Preferred (RLJ-A) @ $17.05–see it is up to $18.xx already. I chose this one because of the strong balance sheet–I think they will remain in good shape for a couple quarters without much business.

I also bought some of the AllianzGI 5.625% Convertible and Income preferred (NCV-A) which is an add to a previous position.

That will probably be it for today since I strongly believe we are in a bear market rally and opportunities remain to be seen in the months ahead.

I see the mREITs are getting hammered today while the lodging REITS are mixed. Seems to me that these sectors will take a number of months to sort out–maybe even longer.

So for now am just slowly moving back into the marketplace and staying with quality sprinkled with a few others that have more of a speculative twist to them.