As we have gone through the gyrations of the last weeks and months we again observe folks who maybe should (or would) consider buying some of the $50 and $100 preferreds out there that currently trade. Maybe even some of the $1000 issues (and even a couple $20.75 and $25 issues) -unfortunately the $1000/share issues do not have price quotations that we can use in our listings so there is little use in trying to cover those issues.
In light of this interest in these shares we have added the 52 week trading range to the issues and we have added a credit rating column where we simply whether the issue is investment grade. We have more work to do on the individual security pages, but wanted to remind folks that these issues are an option for the patient investor.
A fair number of the group of $50, $100 and $1000 issues fall into the category of “illiquids”, of which a number of website participants champion on a fairly regular basis. The concept of “illiquids” is that they don’t trade often (or many shares)–in fact some may only have 1 trade in a year–so if you are fortunate enough to snag a few shares you have something for the “sock drawer” (a spot you put reasonable quality stocks and bonds that pay dividends reliably and may have been outstanding already for 50 or 75 years). We should note that there are quite a number of issues on this list that trade a fair amount of volume – these, by definition, are not illiquids.
1 particular illiquid from Financial Institutions Inc. is a 8.48% cumulative, non callable preferred (ticker:FIISO). This is a $100/share issue and trades so infrequently you have to dig pretty hard just to get a quote. This is a Gridbird special.
Other illiquids aren’t even $50, $100 or $1000 issues. There is one $20.75/share convertible issue and a $25/share issue–both from tiny Corning Natural Gas. They trade once in a while.
In the end investors need to realize that the illiquids can be great for the investors that can put them in the ‘sock drawer’ and simply draw income BUT just because they are in the drawer doesn’t mean you can totally forget them. Small companies like Corning Natural Gas (revenue of $34 million) and moderate sized banker Financial Institutions ($4 billion in assets) obviously have risk and are not investment grade.
Also one should know that because these shares trade so little that when they do trade it may be at a price significantly higher or lower than the previous trade. This means if you hold an issue that you paid $100/share for may trade the week after at $95 or maybe $105 so you can get a little surprise if you are one of those that baby sit your holdings.
Additionally just because many of these issues trade in small volumes–or maybe only trade on occasion doesnt’ mean they won’t trade lower on higher interest rates–they will.
Disclosure–we personally own the following issues on this listing.
Tri-Continental (TY-) 5% preferred, Corning Natural Gas 6% (CNIGO) and Connecticut Light and Power 4.96% preferred (CNTHN). We have owned these for a few years.