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.
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.
Last Wed bought another 250 shares of JXN PRA at 25.10
Today sold 500 shares of CUBB @ $20.00 and 500 of ALL PRB @ 25.30
Both just paid their dividend for the last qtr. so it is possible I can buy back at a later date for a lower cost. Just trying to raise funds for other purchases.
Anyone here been flipping the United States Cellular BB’s ?
I decided to take Craig’s advice on Tim’s post on XFLT-A
Craig says:
12/26/2023 at 8:23 pm
I bought more CHSCL….7.4% current yield…and a solid well run co-op
I just bought more than I normally hold in CHSCL today at 25.35 to lower my cost basis ( 25.75 on one tranche) went x-divy a couple weeks ago so I will flip when it gets closer to next ex-dividend date. Maybe more time than Grid or Maine like holding!
Ha.
RIV-A is worth a gander.
At a price of $23, 6.5% current yield, not including any accrued div.
It is a CEF and has to abide by ‘40 act rules.
I forget if it’s rated, but I would peg it in the AA category.
Heck, I personally think it’s saver than the Eversource Preferreds.. it just has a smaller following. And the div is not qualified, last I checked.
But to get a spread of 2.7 percentage points above the 10 year for AA type paper is phenomenal. My hunch is this trades closer to par if rates stay at these levels, or lower.
Maine–RIV-A is A1 Moodys. I own quite a bit of it.
JXN-A looking like a decent flip candidate.
It’s down ~1% today to $25.20. It goes Ex tmmrw for a 50 cent divvy.
The bid ask can be wide but a persistent seller keeps popping up.
Another potential flip is TGH-A. Goes ex-div tomorrow Nov 30 and currently trading at 25.02×25.04. Since it is likely to be redeemed sometime next year after the Stonepark takeover, the price should recover to 25 quickly.
Note that there is TGH accepted a go-private offer a couple of months ago (?), so it will likely be delisted. The go-shop period just expired. The buyer said they expect to redeem the preferreds, but who knows whether that will happen (or will they weasel out of it).
Not knocking it (I own the preferred) – just pointing out the challenge that might be coming.
There just doesn’t seem to be a way to weasel out based on the Change of Control provisions…. as long as they’re going to go private, they either have to offer to convert the preferred to new common or they have to call…. Since it’s going to go private they don’t seem to have an alternative but to call… Famous Last Words??? I suppose until it’s done, it’s not done, so who knows.. Thanks, Yogi..
2whiteroses. Coming from you , that’s excellent to hear. I forget, are you a former attorney or salestrader? Either way, your opinion is valued!
NLY-I might also be worth a div flip here at $25.50.
Are the good times back?!
Just a lowly ex-institutional muni bond trader who spent a 25 year career reading obscure old prospectuses on forgotten muni bond issues when they came available in the marketplace (pre-internet days where everything’s available to everyone)… no attorney that’s for sure and not always right either…. witness NEWTZ experience….
Did you mean NLY-F at 25.50? I like NLY-I at 24.50 better floating soon but it already went up, now I’m looking to take profit not buy more. Putting in a high offer on ex-div tomorrow.
Martin, sorry, I meant 24.50 for NLY-I, which went ex yesterday.
2White.. Bet you had some adventures. I just listened to this podcast on muni tax loss harvesting and thought of you.
https://www.bloomberg.com/news/audio/2023-11-28/tax-loss-harvesting-comes-to-muniland-masters-of-the-muniverse
Somewhat related, except for some new issues, I’m afraid my fun in muni land is done for now as the bargains are gone. fixed income/muni’s are cool again!
Hi 2WR,
mostly I was just wanting to put the “go private” out there.
However, I try not to assume that there isn’t some bright lawyer out there who could find a way to weasel out of a seemingly ironclad document.
Didn’t catch that one. 1+% gain for one days work, nice trade.
Thanks Martin. Hope some others were able to get in. It didn’t hurt that the market opened up massive today.
Jtrader. How ironclad is their commitment to redeeming the pref? And why are they choosing to redeem it? For instance, why redeem the series B which is only 66.25% fixed. is I know they kept the SEAl prefs outstanding.
Sorry, I know I could look this up but figure you might have a more nuanced take.
OK, I did some research.
I am guessing the will redeem them because the holders have the right to convert them to common (upon a change of control) assuming the company doesn’t triggers its optional redemption. I also looked at the prospectus and the change of control wording seems good but I am not 100% on it.
From Q3 Earnings
“Each Series of preferred shares may be redeemed at the Company’s option, at any time after approximately five years from original issuance, for
cash at a redemption price of $25.00 per depositary share plus an amount equal to all accumulated and unpaid dividends, whether or not declared. The Company may also redeem each Series of preferred shares in the event of a Change of Control (as defined in the Certificate of Designations). If the
Company does not elect to redeem the preferred shares in a Change of Control triggering event, holders of each Series of preferred shares may have the right to convert their preferred shares into common shares.”
Maine – take a look at p S26 of the original prospectus for TGH-A and read the language under Conversion Right Upon a Change of Control https://www.sec.gov/Archives/edgar/data/1413159/000119312521109459/d110907d424b2.htm#supprom110907_7 That’s what I’m relying on when saying they have no choice but to call. Given that redeeming is what they say they’ll do I suspect they’ve researched any possible way around this language and pretty much concluded redeeming is their only option.
I don’t think I examined TGH-B’s language to verify it’s the same but I suspect it must be
Maine, I looked yesterday at JXN last qtr. report. Glad people like alpha and 2WR told me to spend more time doing it. I am no expert, but it looks like they are righting the ship. This looks like a better deal than the LNC PD
Glad to hear it but that’s not the main thing I look for in a dividend capture. Get in get out based on price movement. Just gotta be careful not to catch a falling knife.
A good flip satisfies the best of both worlds. Hoping for a quick 2% but you like the name enough you are prepared to hold for years if needed.
I was already fully allocated, so was happy to take my gains and run.
I do like JXN-a as a long term hold, same w/ CSWCZ, I’ve just needed to sell them for names that have traded down lately,.
BTW, tomorrow is likely to be nutso given month end. If you can afford to stay in front of your computer to hunt for opps, it may pay more than your day job!
Nothing better than taking $$ from the passive funds rebalancing at month end. It’s so silly. The funniest part is that they match the index return since the index return is based on EOD pricing. So in their eyes, they did well!
I also do well taking the other side so I guess we both win, 🤩
Maine, have a low ball GTC on the CSWCZ that has been filling in drips and drabs. Not one of those 2.00 flips your talking about. Although the small amount of NSARO I picked up at 65.00 might qualify. But hanging onto it at that cost.
Can’t possibly pay more than my day job. Because it is my day job!
Well just waiting for next x-dividend date on SITC PA guess it qualify’s for Maine’s $2.00 flip if I bought at $19.50 As a REIT is one of my higher risk investments, but the 8% return is nice
Martin and Charles.
Wow!
Hope you guys were able to get in on the fun from 3:50 until 4.
For the last few months, this has been the gift that keeps giving.
I was able to snag some profits, most notable in FBRT-E.
I was able able to sell the TGH A back only 10 cents from yesterdays purchase.
SITC- A and NMFCZ also yielded nice profits. Amazing.
For next month, keep in mind some of the newly issued names like CCIA, although these trades are hard to predict.