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Category: Preferred Stock

Did You Know? General American Investors

I have held shares in the 5.95% General American Investors (GAM-B) for a long time–I think it has been years–certainly off and on for years.

GAM is a solid closed end fund with $1.6 billion in assets and the only leverage they use is this issue of preferred shares—they have a asset coverage ratio of 837% as of 6/30/2024.

The interesting item of note is that the Board of Directors has a buyback in place for the preferred shares anytime they are under $25/share. They have authorized up to 2 million shares being bought (original issue was 8 million shares)–thus far to date they have bought just shy of 400,000 leaving lots of dry powder for further purchases.

Does this buyback authorization help to keep this high quality modest coupon price above $25? Not positive of the answer, but I do know that it doesn’t hurt.

RiverNorth/DoubleLine Strategic Opportunity Fund Term Preferred Now at $10

The series C, 6% short duration term preferred (OPP-C) from closed end funds RiverNorth/Doubleline Strategic Opportunity Fund (OPP) is now trading somewhat ‘normally’–right around the liquidation value of $10. This ‘rights offering’ series sold with strange pricing for a few days before now settling in. This has just 410,000 shares outstanding and it looks like the $10 liquidation value threw folks off for a few days.

The issue has a mandatory redemption on 12/1/2027 so maybe it is a decent spot to hide out in as a cash alternative of sorts.

CHS Confirms Business Softness

Today giant Ag Cooperative confirmed that the ag economy is extremely soft and that the threat of tariffs is bringing more uncertainty to their business. More than once in the last month or two I stated that we would likely see this market softness hit CHS earnings in the next couple of quarters. Of course we know that CHS is as much a oil refiner as they are a grain merchant–so earnings can still remains respectable.

An article in the local newspaper today outlines some of their challenges. This article is timely as I am going to start to add some more shares of the CHS preferreds to the portfolio. I currently own two issues (the CHSCM 6.75% issue and the CHSCN 7.10% issue) and will continue to add more shares at favorable prices starting tomorrow. If I am to own more perpetuals at this moment–these are pretty much the most stable issues that can be found. That earnings will likely be down in the next few quarters is only a minor consideration as it has been shown time and again that CHS can go these cycles and while they can be a bit painful the coop will survive just fine.

Tomorrow I will add some of the CHSCM 6.75% to current holdings around $25.17/share. Recall that this issue was originally a reset issue, which has now been fixed at 6.75% because of the change from libor to sofr. If share prices fall I will consider further purchases. The CHSCN 7.10% issues currently trades at $25.55 which is not a price which I am willing to pay at this time–but 25 cents lower it becomes a consideration.

RiverNorth/Doubleline $10 Term Preferred Ready to Trade

Folks are noting that the new RiverNorth/Doubleline Strategic Opportunity Fund $10/Share 6% Term Preferred (OPP-C) is ready to trade.

It looks to me that a few early shares sold at $14–that is crazy and will likely correct itself quickly. For a test I tried to put in an order on Fido for 100 shares–got the Mother Fido message ‘maximum shares allowed has been exceeded’ (or something like that). Changed to 25 shares at $9.75 and it took-we’ll see what happens–not one I really want to own that badly.

This one is ‘thin’ with just 419,000 shares outstanding–God forbid someone puts in a ‘market’ order.