Preferred Stock | Innovative Income Investor

Axis Capital Formally Calls Preferred–Corrected

Some of our readers caught the ‘formal’ call of the AXIS Capital (AXS) 5.50% perpetual preferred (AXS-D) which was released yesterday. The issue will be redeemed on 1/17/2020.

I had owned a full position in this issue for a portion of this year as it was trading around $25 plus accrued dividends so I anticipated it being called at some point in time, but took advantage of the reduced volatility and issue like this provides to garner a safe 5.50% dividend for a few quarters.

The company had sold a $1000 subordinated note earlier this month and stated the intent to call the AXS-D issue. Investors need to remember that such disclosure in a filing for a new issue isn’t a formal call–that will be done separately with all the details of the call.

In this case after the subordinated notes were sold we put in a limit order to sell our position at a price that I guessed would be about the final realization of value based on a guesstimate of call date. I sold 60% of the holding, but will be carrying the last 40% into the official redemption date of 1/10/2020 when I will receive $25.176/share.

Corrected below

This issue has now stopped trading under the original ticker and is trading under AXS.PR. D.CL (or some such symbol depending on the broker). Currently quoted at 25.13 bid and 25.15 ask.

The call notice press release is here.

Gabelli Multimedia Trust Prices Perpetual Preferred

Closed end fund Gabelli Multimedia Trust (GGT) has priced their previously announced cumulative perpetual preferred stock.

The coupon is fixed at 5.125%, which is about as expected for a likely strongly investment grade preferred. The company anticipates a A2 rating from Moodys, but thus far we do not see a Moodys rating on their website.

Being a closed end fund the company must maintain a asset coverage ratio of 200% or more and most recently GGT has a coverage of 382% (as of 6/2019).

The issue will trade immediately on the OTC Grey Market under temporary ticker GABGP–in fact I see a few shares have crossed around $25.03 today.

The pricing term sheet is here.

Medallion Bank Sells New Preferred

As some on the site already know Medallion Bank (a division of Medallion Financial (MFIN)) has sold a new issue of high yield preferred stock.

Note that this was sold last week, but has just begun trading. It is trading weak–now at $24.48.

Note that this issue is floating starting in 2025 and is NOT trading with a 3 month Libor rate, but is with 3 Month SOFR (the replacement for 3 month Libor). You can see the SOFR page at the New York FED here.

The coupon on this issue is high because they are a higher risk lender. Parent company Medallion Financial was the main lender for taxi medallions which has become a very poor business with the advent of Lyft and Uber. Recent financials appear to show they are slowly recovering by reducing taxi medallion lending drastically–which has involved many writedowns in the past.

Approach this issue with caution and make sure you do your due diligence.

The best place for research is the company website–here.

Medallion Bank is regulated by the FDIC so they do NOT file with the SEC.

Parent company Medallion Financial has a 9% baby bond outstanding which trades well–now at $26.33

For those wanting to access the FDIC regulated filings you can go here and then search by Medallion Bank.

CEF Gabelli Multimedia To Issue New Preferred

Closed End Fund (CEF) Gabelli Multimedia Trust (GGT) has announced a new issue of perpetual preferred stock. The issue should be strongly investment grade.

The pricing has not been announced via the SEC site but an OTC temporary ticker has been assigned as GABGP.

The company had previously announced the redemption of the 6% GGT-B issue on 12/26/2019 and they will use proceeds from this new issue to pay for the redemption.

There is just 1 other GGT preferred outstanding which can be seen here.

The preliminary prospectus can be read here.

Further company guidance can be seen here.

Colony Capital Redeems High Yield Preferreds

Giant REIT Colony Capital (CLNY) has redeemed 2 of their high yield perpetual preferreds.

A number of folks have discussed this a bit on the Reader Initiated Alerts page. Barbara posted this redemption at 7:16 this morning and other have chimed in.

The issues called (for Jan 10th) are the CLNY-E 8.75% issue and the CLNY-B 8.25% issue.

In addition to these issues there remains 4 outstanding perpetual preferreds that popped just a bit (1%) on the redemption news.

These 4 issues are all trading below $25 and have coupons ranging from 7.125% to 7.50%. Only the CLNY-G 7.50% is currently redeemable

Given the lack of yield in the market maybe some investors with a bit of risk appetite should look at these 4 issues?

Colony Capital has been a poorly run REIT and has been through trying times–their common stock trades at $4.xx, but recently they are coming under pressure to right the ship and with over $22 billion in assets (a total of $53 billion under management) you can be certain there is plenty of room for improvement. They have just sold a $5 billion portfolio of industrial properties to Blackstone so they are moving to get the house in order.

The 4 outstanding issues can be seen here.

This, of course, is not a recommendation, but a suggestion that maybe there is opportunity here for some investors.

Update–the company released an investor update yesterday which can be seen here.