This quick note is to add a page for discussion for “flipping” issues and for “dividend capture” techniques.
We all discuss these types of things all the time so it is way past time to add a area for discussion for of techniques you use for “flipping” (a quick hold and resale for profit-or occasionally a loss) and for “dividend capture”–buying with the intent to secure a dividend and probably sell shortly there after.
NYMTI now trading below stripped par. Maybe the parent company is risky but their other preferreds are going up in price while not as good.. A head scratcher, I already bought too much thinking it was a mispriced bargain that would soon rebound.
Martin- check out MITN. It trades below par when factoring in the ex div, better credit/team and higher coupon.
I have plenty of MITN and MITP, curious that their fixed rate perpetuals actually pay less. MITT considered above average risk but better than it once was. Hoping to trade between them but there hasn’t been enough price variance lately, so I’ll settle for 9.5% now.
I sold 2k shares of EICC (8% due 4/30/29, call 4/30/26) today at $25.19 and flipped it into 2k share of EICB (7.75% due 7/31/28, call 7/31/25) for $24.91. I’ll take the 27 cents given its in the IRA so no taxes due.
I’m probably the only one in on this… but this has continued to be here almost every trading day. I’ve probably flipped over 6k shares. I just can’t figure out why there’s a consistent buyer for one and seller for the other. As long as I can net 20 cents or so, I’m going to keep doing it. It goes ex on the 11th so it’ll probably stop then.
mrinprophet, thank you for the head’s up.
This has been a wild two weeks. I started with the trade above and kept going. For me, these were in size (k’s of shares) with cash from sales being used to buy new securities. Here’s a summary with average prices.
Sold EICC @ 25.18
Bought EICB @ 24.94
Captured $.1615 dividend
Sold EICB @ 24.90
Bought EGLPV @ 24.73
EGLPV converts to EIIIA, Sold EIIA today @ 25.04
Bought EICC @ 25.01
This is the first time that I’ve really tried to “trade” preferreds for short term gains.
I’ve been trading between EICB and EICC. The gains are penny ante but they are reliable it trades within narrow predictable variance. Do it enough times and your 8% yield becomes 12 to 15% profit maybe more. Time consuming strategy if that’s it but I’m in there looking at 50 other things too so no bother
ACR-C trading at $25.12 paying a $0.70 dividend with ex date 10/1. currently floating at L+593 (or L equivalent)
AGNCO $25.42 will floating 10/15 at essentially same rate as AGNCN which is trading at $25.83. Both go ex-div 9/30
I have some AGNCO will try to cash out on ex-div day if I get a good fill the price seems topped out.
Also have a moderate position in ACR-C for the div capture or to hold, not one of my top REITs but I spread my REIT money out somewhat. The floor on dividends reduces the risk of large rate drops.
MFAO priced lower than MFAN despite having a slightly higher yield and otherwise nearly identical. Good time to swap if you have MFAN and care about smallish but reliable swaps. Though it’s tempting to just sell if it gets enough above par the YTM is too low. Term issues don’t do volatility as well as perpetuals.
Martin. The mREIT BB have been bid up quickly!
RWTO/N offer the best value now near $25, IMO.
BTW, check out CHMI-B for a Div capture flip. 70 cent divvy goes ex on 9/30. Yes, it has a low pref/equity ratio but it’s agency and the spread is a healthy 5.9%. They have also been buying back the prefs.
I have RWT-A for the div capture or to hold, the 1+% difference in lower yielding baby bonds is too much for me to justify. Actually sold some A early on the price runup since I bought it last week. CHMI is not one of the better REITs I bought some CHMI-B for the div capture but don’t want to hold it long term there are better choices for that.
Bought PNFPP yesterday at 7% on cost. Getting too many bank issues so this may be a flip. This is a small Tennessee bank that was showing improvement but last qtr. report was off. If I hold there is a good chance it gets called 9/25
Here’s a trading idea that was recently posted on SA. 👀
RILYM is trading around $20 and will mature in Feb. @ $25 with 80% being redeemed in November per a covenant agreement. If you bought 100 shares now @ $20 and 80 shares get redeemed in Nov. @$25, you would essentially have a basis of $0 in the remaining 20 shares.
I bought NYMTI for the dividend capture but it went up so much I sold it early. Take the money and run. Several baby bonds gpoing up t9oday on expected rate drops but they are 5 year issues too much extra price reduces YTM more than some realize if only paying attention to dividends.Also selling CIMO and buying CIMN 50+ cent difference should be 25 at the most.
TWO-A and TWO-B now at the same price. May be a good time to swap if you are in B.
Dividend captures I’m playing for next week.
MBINO 30 cents below stripped par and floats at a high rate next,
NYMTI paying it’s first dividend and running almost as much below stripped par.
MBNKP which may be a keeper.
ICR-A HFRO-A ATH-D though I don’t necessarily recommend holding them just playing the game.
SCCE and their brothers were there but I took my small gain already.
TDS-U/V is there too but I’m not in.
I appreciate you regularly sharing these. MBNKP is interesting. Will float soon at a very nice rate but there is a group trying to get BOD seats and they raised performance and governance issues. Not really relevant for a flip, but might not be a keeper, unless of course the activist wins.
ZimCal disturbed by Medallion Financial’s second quarter results
15:31:00 PM ET, 08/20/2024 – GlobeNewswire
2Q24 results show worrying trends that must be addressed immediately.
Core charge-offs (YoY), ROAA, ROAE and holding company cash-burn trended poorly.
Quarterly earnings, ROAA and core ROAA (Ex. Taxi Medallion) are at 3-year lows.
Low Price/Tangible Book Value multiple may be an indication of market skepticism despite Russell 3000 inclusion.
ZimCal believes that Medallion Financial Corp. has tremendous upside with the right governance and leadership.
ZimCal previously provided MFIN with a version of its “5 Steps to Improvement” plan https://static1.squarespace.com/static/660d933ebd099f4347f44cc3/t/66c673529c161a2b2fd1dde0/1724281683647/5+Step+Plan+-+White+Paper.v4.pdf
ABR-D has been cheaper than ABR-E lately even though it pays more and otherwise the same thing. Good swap for those who do such things. Then I’ll trade back when the prices correct themselves. Double the return when the market is inefficient enough.
MFAN first dividend 73 cent div capture next week I’m all in don’t prove me wrong. MITN and MITO below stripped par higher div for somewhat more risk also first ex-div Aug 1st. Other newbie baby bonds such as NYMTI slightly below stripped par. I’m not sure how to play this new breed of BB’s I’m more familiar with perpetuals. Dividend rates have become very close but the perps have price upside and more volatility for whatever that’s worth.
MFAO has the first dividend of 73 cent.
Correct. They all run together in my brain after awhile.
End of quarter is a busy time for dividend captures. Next week offers NYMT AGFNC CHMI EFC ACR GPMT XOMA DX RWT preferred issues, among others. Flip them and buy early April ex-div ABR RITM TWO DBRG CIO NREF.
Dividend captures weren’t as profitable last year with the rising rates. Hopefully the tide is turning. I’ve had a few good ones lately but offset by one loser.
Roche (RHHBY) is a very high quality pharmaceutical company. Like many European companies it pays an annual dividend. They will pay it in just a few weeks- if anyone is interested. I added to my position this morning.
The issuers of TPTA and TFSA merged in 2022. Does anyone know why these two baby bonds, with similar terms, trade at a wildly different YTM?
LANDP available at around $1 cheaper for anyone who holds the O. Good swapping opportunity.
Interesting BB14
It has a lower float
Where did you see that it floats?
Martin, that is not the float you are thinking of. This version of “float” refers to shares outstanding in a particular issue, not a floating rate as you are thinking of.
My head is spinning. How does it make that much difference?
Im not suggesting it is or it isnt as I have seen it work both ways. I was only explaining what he meant by “float” so you knew that it meant shares outstanding not a floating rate issue.
It makes a difference because of supply and demand… it’s why one ran ahead of the other…..
I traded between LANDP and LANDO a couple times for a couple nickels. Thought I had a good thing going. But O has been higher for some time. I guess I’ll have to settle for 8% divvy and some upside.
Lpoading up on ABR TWO RITM preferreds or ex div this week. Dividend capture strategy was not quite as effective during the rate increase price drops. Now might be the time to get back in the game.
Martin, the CODI pfds go ex- tomorrow.
If interested, huge dump on CODI-B.
bid ask = 24.48/24.51. Down 2.4% on the day.
CODI-C (same coupon as -B) bid/ask = 25.00 / 25.27
-B floats in April 2028. -C is a perp.
Thanks for the heads up I bought some. Waiting for the bounceback.
You got it. Me too – waiting for the rebound.
I bot some in the low 24.50s. With the 24.22 bid, it’s already worked as a div capture, but since it appears to have just been a dump, and today with CODI-C still much higher than -B, a rebound coming soon seems reasonable.