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Category: Preferred Stock Call

Gabelli Dividend and Income Trust Announces Redemption

In what almost seems like a ‘return to normalcy’, CEF Gabelli Dividend and Income (GDV) has announced a partial redemption of their 5.875% perpetual preferred (GDV-A). The redemption is for 5/6/2020.

The company will redeem 50% of the outstanding shares–shares that have traded very nicely during the recent market drop.

The announcement can be read here.

The CEF is a relatively decent sized fund with over $2 billion in net assets (as of 12/31/2020) and this redemption of 1.542 million shares is relatively easy for the company.

This partial redemption may make the other half of the shares remaining outstanding a decent buy at around $25–of course they could announce redemption at any time.

Gabelli Healthcare and Wellness to Redeem Preferred

I had missed the press release on the call, but 2WR, noted it in a comment.

Gabelli Healthcare and Wellness (GRX) announced a call on their 5.76% (GRX-A) issue for 4/9/2020.

The release is here.

So when you are ‘shopping’ for CEF preferred you should look for ‘call protection” (the 1st redemption date is a year or 3 in the future) OR pay no more than $25 plus accrued dividends.

I just noticed also that the Bancroft Fund (BCV), which is also a Gabelli Fund, is doing a rights offering to sell more shares of their common. While the Bancroft Fund is in good shape relative to their leverage (554% asset coverage as of last November). This is the type of move that various Gabelli Funds will take if Mario Gabelli begins to worry about potential asset coverage ratios.

For those not familiar with how this works – if a CEF falls to a point where they have less than 200% coverage on their leverage they will have to suspend common stock dividends. They will sell common stock like crazy to avoid this potential. They can either sell common shares or redeem senior securities (preferreds or debt) to reduce leverage.

From the history in the 2009 period we KNOW Gabelli funds will sell massive amounts of common shares if necessary.

141 Preferreds and Baby Bonds That are Potentially Dangerous to Your Wealth-Updated

UPDATE–I have tweaked the spreadsheet removing some issues with redemption dates in the future with incorrect calculations on the YTW.

Below is a spreadsheet that lists 141 preferreds and baby bonds that are either currently redeemable or will be within a couple of months.

I have arranged these with the worst yield to worst on the top–potentially the most dangerous of them all.

I am not saying any of these in particular will be called now–but a high percentage of them could be–do you hold them?

The last time I published a list of these I used just investment grade issues–this list covers any and all $25/share issues no matter the rating.

Note that the yield to worst calculation is off by a small amount (less than 1/2%) as it doesn’t figure accrued dividends and interest in the calc.

You need Google Sheets to open this spreadsheet.

Here is the spreadsheet.

Dynex Capital Does a Surprise Partial Call

mREIT Dynex Capital (DX) announced a surprise partial call of their 7.625% DX-B shares of preferred stock late today.

DX which just sold a new issue of 6.90% perpetual preferred (4 million shares plus 600,000 for over allotment) had announced with the sale of this new issue they were calling for redemption their 8.50% DX-A issue for 3/14/20. There was no mention of a partial redemption of the 7.625% DX-B issue.

Lo and Behold late today commenter Ralph happened upon a press release stating the intention of the company to redeem 1.7 million shares of the DX-B issue on 3/16/2020.

The press release can be read here.

The DX-B issue closed Fridays trading at $25.55. This partial call should now peg the remaining shares closer to $25 plus accrued dividends for the future.