Flipping and Dividend Capture

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.

152 thoughts on “Flipping and Dividend Capture”

  1. If it was only this easy every day. Sold PLYM-A 2 days ago at $27.06 for a quick buck a share gain. Got 400 of them back today at $26.50 and next trade after mine was $26.99. Should sell again, lol.

  2. Today I have an order in for LMRKO–Landmark Infrastruture 7.90% preferred units. Will go ex on 1/31 (although they haven’t announced yet) for almost 50 cents.

    Now trading at 25.65–not callable until 8/21.

    This is a MLP so it will generate a k-1—so I am not anxious to buy really so will have my order in at 25.65 but won’t chase higher.

    1. I’m new at this, and really appreciate your site! Is there a downside to a k-1 Issuer if you have it in a non-taxable account? Thanks!

      1. Welcome, Irish… For the most part, I now only keep my K-1 issuers in IRA’s (non-immediately-or-never-taxable-accounts) because I grew tired of screwing with the K-1’s come tax time – which are a nightmare if you are a flipper or have almost a dozen to deal with like I am/was. Ask 5 people their thoughts on this subject and you’ll get at least 12 right answers. Boils down to a personal preference with lots of mitigating factors. Here is just one article you can checkout if you find it handy… It dives into the topic.

        https://seekingalpha.com/article/2392375-mlps-yes-theyre-okay-in-your-ira-and-other-tax-questions-answered

        You can also type into the search box, something like “MLP IRA” and you’ll get a whole list of articles to browse that cover this topic.

        However, here is one big downside – to directly answer your question. If you incur losses on your investments and they are in tax advantaged accounts, you’re not able to deduct your losses and have those losses offset your taxable gains like you could if they were held in just a regular taxable account. So you’ll eat the whole mistake if you make a whopper of a big one….. speaking from experience… but investors in the MLP space usually take a number of these straight into the teeth over the course of their investing ‘careers’ when one or more go bad on you or you hold on too long when things start to go bad.

        1. Sorry A4I – but IMO that is an ill informed article. I say that because it excludes any discussion of UBTI and recapture of depreciation / depletion when you sell a MLP in your IRA. This recapture upon selling is the biggest potential generator of UBTI and can result in a tax bill to your IRA

          That said, I too hold the handful of MLPs I own in my IRA because I don’t want to deal with them in my taxable account. But I used to own a lot more MLPs and scaled back because of the tax implications when selling them.

          these are better articles that discuss the tax implications much better

          https://seekingalpha.com/article/4225840-mlps-in-iras-revisited

          https://seekingalpha.com/article/312281-master-limited-partnerships-and-your-ira

          https://seekingalpha.com/article/525861-master-limited-partnerships-your-ira-choices

          1. …This is why I refuse to participate in the SA bloodsport on this topic anymore. Will apply the same logic here moving forward.

            1. Well sure, some SA debates can overdue things but I am not sure that making sure things are accurate and not missed qualify as bloodsport. As long as the debates help educate people on the facts, we all benefit.

              To me accuracy is always important – and in the case of MLPs and IRAs, it is important that people understand the rules of UBTI and recapture of depreciation / depletion when you sell a MLP in your IRA. Far better to know up front before you buy so you can make an educated decision than be surprised down the road

      2. Irishrose441–I see A4I responded and I will leave it at that. For me I don’t mind getting them, but I know some really hate them.

  3. ok–I took a number of actions today. One is a pure flip–the other which was going to be a flip took a full 3 months to play out (much longer than I had hoped)

    Remember when the Highland Income Preferred 5.375% (HFRO-A) fell 3 months ago on news-shares fell as low as 24.56. I bought a full position at 24.72. Today I let it go at 25.64. I could have let it go sooner, but glad I didn’t as I got 92 cents plus 1 dividend–so over 4%. As always happens I see it spiking 20 more cents right now.

    https://innovativeincomeinvestor.com/large-share-dump-on-highland-income-fund-preferred/

    On 12/27/19 I wrote an article on Priority Income Fund preferreds–they were being dumped.

    https://innovativeincomeinvestor.com/priority-income-fund-term-preferreds-on-sale/

    Anyway I had a position in the PRIF-D issue, but took a full position in PRIF-C that day at 24.70. I let it go today at 25.19–so almost 2% in 3 weeks. I still have the PRIF-D.

    I have been studying the Compass Diversified 7.875% preferred I mentioned a few days ago CODI-C. I bought it on 1/9 for 25.78–it moved to 26.04 yesterday–went ex today and is trading at 25.80. It was ex by just a partial dividend (38 cents) as it is a newer issue–so am up 40 cents since the 9th and may exit anytime now–but actually I would like to squeeze out another 10 cents–famous last words–I don’t really like MLP preferreds.

    1. Tim, on golf course, I let go of my PLYM-A. Bought a couple weeks ago at $26.06 and flipped at $27.06. Would like to get back in it again, but needs to be cheaper for this mediocre infant industrial reit.
      I bought PRIF-A around 24.60 when you mentioned them. I suspect I bought A over the others because I didnt want to remember the rest of the alphabet to compare the choices. I think I am just going to hold for now.
      My ALLY-A “CD” is maturing on que like every quarter, so I will be redeeming it soon at “maturity”. I noticed LANDP finally declared next 3 divi’s today. So this will probably be flipped soon as it should drift towards $26 pretty quick Im guessing. If not I can hold, but I got a boat load of it an ALLY-A so my preference will be to sell some soon to get ready to buy something if opportunity presents itself.

      1. Grid–you are a good example of buying and selling based on a pattern versus capture or buying those pegged to $25. Martin G keeps imploring all of us to do that.

        Don’t wear out your welcome on the prif-a, not exactly AAA rated.

        1. Yes, Tim, I have been doing this for years. And you described it better than I did even though its what I do, ha. I dont trade for the dividend, I trade off the movement caused by the dividend. And to best do that one has to buy a different subset of issues. For example you use the call anchored a bit lower yield issues to capture the dividend. I use the higher yield past call issues that trade well above par, that wont “pop” until that dividend gets declared, or the 30 day call window drifts past the payment date. ALLY-A isnt quite there but its a few days away from going past it.
          ALLY-A trades like clock work. Buy about one month after going exD when it sags into the 25.80s range, and then hold your breath for a no call, and let it drift up pennies at a time. About a few weeks before exD it drifts into the 26.40-60 range and you then sell. So usually you get 60 cents holding a month and one can get out. The price for the easy money is of course the more relative penal call risk. But last time they mentioned it, they stated they werent interested in redeeming it. They are interested currently in rolling off an 8% bond this March. Admittedly it is getting harder mentally to pluck down the relative big purchase I did a month ago. But the ol’ gunslinger wanted one more shootout at the OK Corral, so in I went.
          The reason why its so predictable is because it is extremely liquid. It trades daily more than many common stocks do.

  4. Also forgot to mention I took a position in Compass Diversified 7.875% perpetual preferred (CODI-C) @ 25.78. Will go ex tomorrow for 38 cents (partial quarter) as this is a newer issue. Whether I hold it or sell it in a few days or weeks is a function of price movement after ex date. Honestly these MLP issues don’t trade as well as others so I am prepared to hold if necessary–BUT it is NOT any kind of base position–maybe more an act of desperation.

  5. I took a modest position in RILYO-6.75% this morning at 25.71. This one has no call risk in it as 1st call is 5/2021. ex divi tomorrow for 42 cents.

    I don’t know if this is going to be just a div capture or a longer term hold–will see how it acts after ex tomorrow.

      1. Hi Pete–I didn’t want the call risk. While the coupon is a tad lower than some of the others it has been my observation that those near 1st call date MAY (not guaranteed) fall much more than the ex amount tomorrow.

        For instance the 7.5% RILYZ issue could fall 55-70 cents as folks know it may well be called in May–and then the price would move slowly higher as interest accrues. The O issue will fall the ex amount and has the ‘potential’ to bounce back faster as there is no call risk in the near future. These are just my anecdotal observations–and given the irrational movements of late in similar issues who knows for sure. I forfeit a nickel of interest but if it bounces back quicker OR falls less I am net ahead.

        1. Gotcha and thanks so much for your detailed reply. I love getting many different perspectives, especially from those of you who have been trading preferreds for many years.

        2. Oh, please do drop 55-70, RILYZ…. I’ll welcome that and I own it….. As per normal, I go the other way and want to take the call risk because I’m willing to accept a great YTC as my return yield if that should happen. If it happens, I’ll add more.. Given RILY’s reluctance to call RILYL immediately, I’ll take the gamble of a YTW calculation… To me it’s another way to look at an alternate investment for maturing KYN-F.

          1. Given my low entry cost and their delay in calling RILYL, I am going to continue to hold RILYZ. 7.5% preferreds are hard to find these days, and there is not a significant capital loss if called. Will probably buy more if there is a 50 to 60 drop.

    1. I’m trying the same with RILYP. I got in today at 25.53 and hope this turd doesn’t go belly up before I can flip. Also have buy order for RILYN if it hits 25.41. BTY, your site is the best.

      1. Well Hank, you arent the only one. I had a bit of cash sitting with nowhere to go past week so I just dumped it into 200 shares of RILYP myself at 25.52. Probably will just hold and not bother with it since its just 200 shares.
        I had an incredible flip month of December leaking over into early January. But a few weeks ago as the flips got sold, I couldnt find anything in my rotation list to buy and flip as a replacement. So basically my flip money has been moved past few weeks into time out plays of dividend captures. I usually trade for price movement flipping not dividends, but I am trying to take what the market gives without too much undue risk. These shares will just sit here until I can get some price movement worthy of a flip.
        This is pretty normal occurrence for me over time…Issues bought a few weeks ago such as ALLY-A, or more INBKL, and CBKLP again become longer term holding tank issues until I can get some volatility again to create a flip opportunity from other issues.

      2. Thanks HankLA—I think you will be fine–someday we will all have to work harder to make return, but for now a dart is mostly successful.

    2. Tim,
      I too took a flip position in RILY but I chose the P issue as it has a higher current yield and its a new issue with lots of call protection. In addition, I took a position in 7.375% CORR-A purchased at 25.58 which is callable 1/27 but I don’t think they’ll call before the next ex-div date (~2/14) as they don’t look to have enough cash to pay off the preferred and I don’t see them coming to market with a new issue until full year financial results are disclosed at the end of Feb. Also took a flip position in new issue UBP-K with a 1/16 Ex-Div but I think the price will recover quickly, OK to hold this one if price does not recover.

      1. JDC–right now I like the UBP-K and may buy after ex—again. I had it from 25.35 to 25.73 10-11 days and let it go last week. The RILY issues – hope there is something there for both of us–no real right or wrong issue on them, although you chose the preferred instead of one of the baby bonds–it may well bounce back stronger than the baby bonds only because preferreds generally have more movement in price. CORR isn’t on my radar and haven’t followed them at all–will see how it trades after ex–if it traded in the 25.10 area post ex would maybe be a good snag to get as it should be tied to $25 only accruing dividends without a crazy bounceback.

  6. RE: KYN-F – It seems to be tough to calculate accurately what it’s supposed to be worth right now… Is it a hold to maturity of 4/15/20 or a sell today at 25.12 bid -25.13 asked? With Monday still being the last day before x-div I think, you still have 3 monthly payments of .07292 coming for a total of .21875, BUT you then also have a 1/2 month payment due as well since payments are made on the first of the month but KYN-F matures on 4/15/20. That’s an additional .03646. So there’s a total of .2552 in divvies left. Tough to use a bond calculator to figure exact YTM on this but my gut’s telling me a sell at 25.12 is the way to go but one way I calculate YTM I’m coming up with a 2.52 ytm, so ……… I know there’s others still in KYN-F – what are your thoughts? how exciting! More potential cash to deal with…..

    1. 2WR,

      I’m sitting on a full position of KYN-F, with a cost basis exactly at par.

      To me, it is the best option to hold till maturity. Unless KYN-F goes above the sum of par + dividends, it is not profitable to sell and leave money on the table.

        1. They’d still have to issue a 30 day notice so that means they wouldn’t call until about 1 month before maturity… Slim but possible chance they’d bother with whatever the redtape is involved for a 30 day savings in interest (aka dividend) savings….

      1. Inspy – Well there is the call risk theoretically as 720cap points out and if the true ytm is anywhere around 1.70% or less as opposed to what I thought might be possible, u can sit in MM and be done with it…. I’m not sure how to figure YTM accurately in this case and came up with a possible 2.52% using a theoretical zero coupon… I think that overstates the yield and probably by a significant amount… Generalizing, price to call on called bonds has been discounting payout at call date by about 2 cents per week, slightly less. KYN -F at 25.12 is about 10 cents net for 12 weeks if I’m figuring right.. If you made KYN-F as maturity 4/1/20 I think you get YTM stripped on Monday to be 1.81, then you’d get 3.50% ytm for the last 2 weeks on a calculation, so probably real YTM is around 1.90% not the 2.52% I mentioned… all boring stuff I realize…….

    2. 2WR–I have a hugely overweight position which I have had hanging out there with a 25.20 gtc sell. I think I will let some go if I can get the right price – edit –tomorrow as it is ex tomorrow–will probably just let 1/2 of it ride–unless someone foolish want to take me out at my gtc price.

        1. Yes–I will look at a change after ex tomorrow. I have had the 25.20 for a month or two–no suckers took me up on it.

  7. Anyone holding PSA-J (4.7% coupon) may want to ponder swapping to PSA-K (4.75% coupon). Their respective first dividends should be prorated. The difference in first divys is about $0.11 higher for PSA-J. But PSA-J is trading about $0.35 (and sometimes more) above PSA-K.
    GGT-E and GGT-G have same coupon and pay dates. The first dividend of GGT-G should be slightly fatter yet it has been trading lower.

    1. Bought GGT-G in an IRA and in a taxable account. The first is to flip when the price catches up. The second may hold for awhile, until it’s a buyers market again.

  8. I just let my UBP-K 5.875% preferred go at 25.73. Bot 12/26 for 25.35–so 1.5% in 10 days. Goes ex 1/16 so may re-enter after that–we’ll see.

    1. If not mistaken, UBP-K has not yet paid a dividend. Instead of normal dividend of $0.3671875, the first dividend is prorated to $0.4896. XD is Jan 16; pays on Jan 31. But I may be missing something (would not be my first time).

    2. Good to know the ex date is close. I had a partial fill to sell at $25.75 last week. I got in at 24.90. I too would look to get back in after the ex date.
      I think I learned about this issue here so thanks.

  9. Rung the bell today on 500 shares of SLG-I at $25.85, I purchased this week at $25.35 blend. Still have kept some. This could have been bought at this price, pre exD a few days ago. Amazing how these things trade. Continued drawing down more of my MBNKP shares at $25.40 and $25.37 today. Bought at $24.50 here. This issue was alway bought for flipping purposes only. Still hold some shares here but down to a modest level now.

    1. I too range the bell this morning. Sold half my position of BACPRB:
      Paid $25.09 Sold for $26.69. Sold half position of NRUC: Paid $25.09 Sold for $27.70
      Kept these for a long time, but wanted to start the new year out with
      some good profits.

      1. Nice work Bigbear – one of my biggest mistakes last year was selling NRUC for about 26.

        I’ve got to learn not the ring the register too fast on the good ones.

        1. Jacob–you can’t look back or we will all feel foolish as these things just go higher and higher.

      2. More bell ringing Bear, ha. Sold the rest of SLG-I at $26. It could go back to Oct peak and thats fine. But a $1 above call, just starting next cycle, I will take the 65 cents for 2 day hold and move on.
        More bell ringing…There goes the last of my MBNKP at 25.54. It may get to $26. That is fine. I got my buck and moving on!

      1. Mikeo, I really didnt think it would pop back this quick after a volume dump. The terms itself are actually favorable quality and yield wise. But, to be honest I wasnt really watching it pre exD, so it wasnt like I was looking for a better trade price as I wasnt even looking, ha.
        But the reason I largely sold a bit over half is the fact its price recovered so quickly, and basically is 2 dividends above call price now. And they never declare dividend until a few weeks before exD. So one is left blowing in the wind on a past call issue the entire divi accruing cycle process.

    2. It is interesting. Many preferreds have been rocketing higher of late and just as many are barely moving. Not sure why but I have some of both and have been selling into strength. My cash balance is rising quickly but that may not be so bad…just look at the prices in December 2018 to see the downside risk.

  10. Bought some RILYN today at 25.23. Ex Div is 1/14/20. Closed at 25.30. Stripped price at close is 24.95. Wide spread in YTW for the B. Riley family ( I came up with about 6.0 for the N, I think Tim’s chart is in error) Maybe a flip opportunity for someone.

    1. Thanks Pete–1) 1 for the idea and 2) for the heads up on the ytw–I corrected it and it shows 5.97% now.

      1. I thank you for this site. I would not be trading in preferreds without it. Also, I thank Martin G and 2WR for their comments on RILYZ. It seems there’s always a different way to look at these flips and it certainly adds to all of our educations, experience, and opportunities.

    2. I bought RILYZ for the div capture flip. Higher yield means less downside if the market turns south. RILYN may have more upside if conditions improve but that’s not my game. Quick gains while avoiding losses.

      1. Martin – I’m with you on RILYZ. Bot @ 25.53 on Tues and then again today when the chance wasn’t there to grab any at 25.49. With call risk holding it down, it still offers up a great ytc and, therefore, also YTM, plus recent history on RILYL tells you RILY’s not necessarily in a big rush to call on first available date… Difference between final maturity date and quarterly payment dates makes it difficult to calculate actual YTM, but it’s probably near 7.40% stripped. Assuming you’re OK with what’s still a generous YTC and you’re OK with RILY, it looks like the cheapest RILY note or preferred out there right now to me.

  11. Sold PPX today at 26.17

    I’ve lost track of how many times I have bought and sold this one.

    There should be a link somewhere on this site to pay Grid royalties

    1. Jacob, glad its working out good for you. I was a bit early pulling the plug a few weeks ago on this for the zillionth time. But sometimes that happens as I needed cash for another flip I had to buy. Im glad you rung the register here. Gotta keep that call monster in his cage and protect those gains!

  12. Scrolling through My positions today And saw AHHPRA was up over a buck and today was ex-div. so I sold half my shares. Should be a nice gain, collect the div, and buy back when price normalizes. Happy new year to all.

    1. Just had a sell order fill at $28.07. Great company but selling like that on ex-div is a New Years present. Put a buy back in at $26.50, now that would be a gift,

  13. For those interested in past call issues, and a modest call risk exposure, one may look at 6.5% at issuance, reit SLG-I to research. This issue outside of 2013 Taper Tantrum has been a relative rock above $25 through the years. I bought 400 today at 25.37 as sells have been dribbling out in 100 share lots but a lot of volume. Just went exD today. Pay date is 1/15, so its accruing next divi being call notice warning would have to be in effect. Its been past call, for a couple years. Its also one of those late dividend announcers, so call angst will always be there quarterly.

    1. Grid–that is one I have looked at in the past–I haven’t done anything as I looked and then forgot–got to make notes. Will look again.

      Did buy the Bancroft Fund 5.37% today at 25.65—trading at 26.16 now. Thought I would hold it, but 50 cents in 90 minutes might be too good to resist.

      1. Sweet, Tim, you know I would ring the bell and cash on that! I saw your post but didnt get around in time to try to get in. I guess I need a reminder pad to write things down. Assuming of course I could remember to look at the reminder pad. 🙂
        I want to ring the bell on my $42 CBB-B buy from last week as it is climbing to 47.50 now. But I have to wait until Jan. 2. I hope everybody else isnt thinking the same thing, ha.

    2. Jacob, I hope it lives on as it has a very stiff pricing backbone. I never do this with crap issues falling, but I doubled down 400 more shares at 25.33. Only 4 cents lower than original buy, but I had to make sure it wasnt the beginning of an immediate call rout dump. It doesnt appear to be so.

  14. Dividend capture ideas for mid-January

    TWO-A, B, C. High price, should’ve bought 2 weeks ago.
    CLNY-G, J, J, H. large REIT, high debt load.
    NRZ-A, B. I trade between these two.
    GECCL. compare price to GECCN, GECCM. different ex-div date.
    SOJA. utility preferreds are solid and boring.
    SNHNI. long history, bad management team.
    CTAA. Century Link has been up and down with breaking news.
    SLMNP. gridbird special.
    AIW. parent company has problems but not going bankrupt next month.
    RILYL, RILYZ, RILYI.
    SSW-various

    1. Martin, it will be interesting to see if that dang SLMNP follows its previous quarters playbook and drops to 1015-18 range again after exD. Now I did this last time and it may work again for someone being its a smaller volume hold. If it trades up stiff into exD, you may be able to dump some on exD date or pretty tight after to pre exD. It worked for me on a few. Presently, I just own an amount I am comfortable holding long term so I wont play that with a now reduced position. And basically considering its a $1000 issue the darn thing really doesnt move alot to begin with.
      Its funny, but I have really dont try a true late divi capture much. I dont really have a reason as to why either. I just kind of trade inverse to it. I buy past call issues that dip on a dump during mid divi cycle on call fears. Then I load up and pray for a non call, then dump into the runup pre exD. So some times I dont get the dividend, but sometimes I get the div and sell later. It just depends on its price action and if there is something else more appealing at the moment.

      1. I’ll trade wherever I find opportunity. I don’t understand why dividend capture strategy works, but as long as it keeps working I’ll keep doing it. Higher yielding REIT preferreds seem to do the best. I wouldn’t normally put SLMNP on the list, only because it’s been in the news. our news.

    1. kapil–was just looking at that as tco-k popped as well–don’t know what is up with these issues, but I need to get out of tco-k tomorrow if possible. I actually only have 100 shares left–from a previous play.

      1. You guys might want to replace tco preferreds with BPR close to par. I got some shares today at 25. ATB.

  15. Made the “Do ya feel lucky Punk” trade for a flip buy today…Bought 800 shares total of LANDP at 25.60 and 62 this morning. A couple weeks ago I was suggesting get out of it at 26.25. Its in the dangerous period again where the monthly dividend hasnt been declared yet (they declare it 3 months at a time and its past call). The looming 9/21 maturity is going to pressure this trade more as it gets closer to that date, but this one has been a good one for me over the years, so going into battle one last time.
    They were hiding them early but a bigger ask volume is now showing at 25.60. The call risk CANNOT be minimized on this trade, But if it drops to 25.40 range, I may buy a little more.
    May be good one to just watch and see if it heads lower.

    1. Ha–one of my larger holdings until a week or two ago when I unloaded around 26.25–we’ll see how luckey you are–I notice the volume in the last week or so has climbed–profit taking or someone expecting something to happen. Quite honestly I don’t know if they can ‘refi’ these early–not like the company is a ‘cash machine’ with investment grade financials.

      1. Tim, my main fear is them selling the open till LANDB issue and then scraping funds from there to redeem. But they appear to be using the proceeds when received for their acquisitions. And technically they dont have to redeem immediately at maturity if they want to pay the penalty premium.
        I have recently moved back into the old gunslinger safety flips. I do this when I find things unappealing…Been recently loading into ALLY-A, INBKL, EP-C etc. type to hide my flip money until a compelling value pops up.

        1. Grid – But that LANDB issue is 6% and they’re still open ended selling those suckers… You would think that selling a 6% issue to refund a 6 3/8% doesn’t offer enough meat on the bone to do and the fact that they still think it’s good for them be issuing more 6% is a reason to think they won’t bother LANDP… Incidentally, this is my way of saying I’ve owned LANDP so long that I had lost track of its price and the call implications until either you or Tim or whomever mentioned they successfully unloaded at a very high price… Sloth at its finest on my part, rationalized by knowing I originally bot it with an acceptable YTC in mind so every day that goes by without it being called, I’m better off than my original expectations, even if I miss maximizing what I might have been able to do.. .

          1. 2WR, I wouldnt be buying at 25.60 if I felt the odds were in favor of them doing that. Just wanting others to know possible perceived risk. And the 6% from 6 3/8% wasnt my real math concern. This is…
            The primary offering of the Series B Preferred Stock will terminate on the date (the “Termination Date”) that is the earlier of (1) January 10, 2023 (unless earlier terminated or extended by our Board of Directors) and (2) the date on which all 6,000,000 shares of Series B Preferred Stock offered in the primary offering are sold. The offering period for the dividend reinvestment plan will terminate on the earlier of (1) the issuance of all 500,000 shares of Series B Preferred Stock under the dividend reinvestment plan and (2) the listing of the Series B Preferred Stock on the NASDAQ Global Select Market (“NASDAQ”) or another national securities exchange.
            They may eventually catch some heat about getting this thing publicly traded to provide a sell option besides the lowly $23 put they have on it. Rolling P into that could help expedite filling the issuance out. Im not worried personally, though, but anything can happen. What I want is what has happened a bunch of previous times to happen one more time…Liquidity dry up and next 3 month divi announced and sell out over $26. :)….But like you, holding if it doesnt happen will provide me no angst.

    1. I didn’t get that one, end of quarter is a busy time with lots of ex-div’s. I’m playing CHMI-A, DX-B, several AGNC’s.
      picked up some AFINP for next Thursday.

  16. 2WR, You go crazy buying more EP-C driving it up? Those who bought recently for a flip notice its last trade was $50.47 up 68 cents today as of this post. Its tempting to unload some of my relative big chunk. But I probably am going to hold for now. Not so much for higher gains, but to stay out of trouble buying something else with proceeds.

    1. Grid – ‘Twasn’t me, but it’s only natural because I had decided to bid for a third tranche if I could buy without increasing my 49.66 average cost and then boom! off it goes without me…….

      1. 2WR, Just based on its price action, credit quality, and duration risk, this was a layup play. This is a prime example that low yielding issues can have as much short flip possibilities as high yield issues have, and these have worked well for me. Now one had the chance for an easy 2% plus flip. The window could and probably will close again. And on this issue, I would prefer it to drop to mitigate any selling thoughts that could enter my head. This thing can bounce like a yo yo. But the 2028 time stamp basically makes the movements a non issue for me because I do have the option to hold.

  17. About to tee off and seen my additional 200 share purchase of CBB-B hit earlier this morning at 46.15…We shall see about this. Looks like it went a lot lower this morning than that though. That gives me 500 to go with Monday 42 purchase.

  18. I’ve enjoyed listening to your stories on flipping. Preferreds for me are mostly buy and hold. If something better comes along I’ll sell a weaker stock. I like that income coming in every quarter. My fun is trading Spx with leverage, (sso, upro, sds). Thanks to Tim and the rest of you guys on this great site for sharing your knowledge. ATB.

  19. I cant recommend this but I wanted to share it as I have done this for years. It involves juicing returns on past call issues and taking advantage of their movements inside a tighter window…
    I will use two example this past quarter…OSBCP and AILLL… OSBCP tanked about 6 weeks ago apparently on a CEO CC that they may look at redeeming issue (something they have said 3 years ago, and he also stated they are looking to acquire a bank before redeeming as a first priority). So I loaded up on the 40 cent drop and bought up on dump at $10.25…Then a few weeks later I sold them all around 10.60 on a liquid day. Then I bought back at a less amount of shares at 10.49 and sold back at 10.60… Then I repurchased again at 10.52… Then today I sold them at 8 cent higher ave and then turned around this afternoon and bought them all back at 10.51-52.
    So I have 54 cents of gains on a 19 cent divi, plus I am still going to get the interest payment, never missed getting it. One has to be willing to let an issue go if it gets away from you. But, Im like Mr. Lucky, there is always something on my rotation list I can move too. But doing these trades mitigates the call risk loss. I have been fortunate to never been smacked with a call. But I mitigate the risk by playing in ones that have compelling reasons not to be called. This helps tilt the playing field in ones favor.
    I just dont buy and hold above par, past call issues generally. Even AILLL though it is harder. I have been able to buy and sell my 1000 shares at 27.20 and under and sell at 27.40. Plus I got them back last week again and will also collect the divi when it goes exD in a few weeks. At this point I will hold unless someone wants to pay $27.70 or more then I would sell. In this case this preferred moves in a narrow range, but in essence juice a 6% er into a 12% er on trades like these.

    1. Wow–old second keeps you busy–might have to put that on my list–not that I need more to do.

      1. Tim, it seems like only a couple times a year I get this opportunity to hit it over and over. And eventually price and risk/reward gets away from me and I move on until a reentry point can happen.
        I think I actually created the mini sell out today as selling begets selling for a short period. I saw a strong bid and I dumped them onto the bid to cover another trade I made today. And then the trading picked up right after I dumped. So then I tried another trick on another stock to flip and used that money to repurchase the OSBCP at 10.51 and 10.52. It mostly dried back up after that and price moved back up when the liquidity dried up.

          1. Martin, that is exactly what I do, within the list I play. Two days ago EP-C dropped to $49.15 again. I needed 200 more like a hole in my head, but I bought them. Yesterday I exploited a huge bid spread on EP-C selling in essence those 200 shares at 49.70 and 49.61. When the ask went to 49.98 and bid was 49.45, I thought there would be some play within. The free trades help this cause. I sold the above in consecutive transactions and they filled almost immediately. An easy hundred bucks made buying in a restaurant parking lot and selling relaxing in a chair, ha. Some people dont think that is worth their time. I respect that, but this is fun for me. Plus I respect a buck. There are millions of good people busting their butt working for $100 a day before taxes. And I made a hundred tax free punching a couple buttons. Doesnt seem right really.
            But the overall the key is buying something you are comfortable holding longer term if need be, which I am with this issue.

            1. grid, I added to ep-c yesterday too at 49.44. My last purchase was at 49.99. i also sold usb-o 26.30 that i picked up at par a couple of months back(i posted the buy on the reader alerts page). i also purchased osbcp when it dropped but i am only up 3.5% so i will continue to hold. I have sold a lot this week that we’re up > 5%. 2019 has been a great year and this web site has been phenomenal for sharing.

              1. Libero, I always find it interesting to see who controls these issues as they ultimately determine the liquidity and how it trades. Its a rear view mirror thing of little use but interesting none the less. Take EP-C. Around $220 million is left in old float if memory serves. Invesco Advisors and Loomis, Sayles & Co. LP between the two held well over half of all shares as of 9/30.
                https://money.cnn.com/quote/shareholders/shareholders.html?symb=EPPRC&subView=institutional

    2. All your in and out trading on OSBCP and all I managed to do on it this week was have my best offer get @ 10.64 get shopped and have a lost trade for an .001. That’s why you’re the master and I’m a buy and hold kinda wimp… Yeah, I tried, but missed, then began to think the characteristics of OSBCP that got me in in the first place was the defensive aspects that could theoretically make it more valuable if interest rates rise (as the call risk theoretically is lessened), so I stopped trying to flip… I did manage to buy small amounts at 25.26 and 27 on 10/28 and sell 1/4 of it the next day at 25.46 while spreading my arms out wide and shouting I’m king of the world… Is that called the gambler’s high?

      1. 2WR, I got lost in your post above — the trades at $25.26 and $27 were obviously not OSBCP, which is a $10 par issue. And it could not have been AILLL either, that one is comfortably above $27. So which stock were you talking about?

        I am just consumed with curiosity…..

        1. He meant 10.26 and 10.27 as that was the day it was crashing. That was probably the day I bought all of mine. I didnt realize it had been that long ago already, but it is still the same payment cycle…Time flies anymore…I do remember buying them on my cell phone while trying to drive on a country back road from golfing. I wasnt going to be denied!

        2. Another one of those DUH moments that seem to be happening more and more these days even with Tim’s adding his 5 minute “Edit” button. Yes, Grid’s right – I wrote 25 by rote when I meant 10… Sorry ’bout that…

          1. Cool, glad that’s cleared up. I was trying to connect dots in case you were referring to some other security, but simply couldn’t do it, so had to ask.

            I’m glad I have OSBCP, bought 2 years ago around $10.25 or so. Do not intend to sell, in fact if it does go back down to $10.25 again, I might add.

      2. 2WR, There is absolutely nothing wrong with buy and hold. And what you did was great too. Collect an entire quarter interest payment holding a day. Plus you take down some call loss risk too. Great stuff!
        Im more pliable just because I am more of a Mr. Lucky (fellow poster here) type guy..Always something to buy. I got about 50 on my rotation list and some will be wobbling up while others wobbling down at the same time.

        1. Grid – Gosh I think I stopped having a 50 item rotation list once I figured out dropping one vinyl record directly down on another using a multi-record dropdown automatic spindle stack-o-matic turntable was the best way to scratch up all the 45’s and lp’s I had in my rotation. I spin my 50 item list manually nowadays. My old Linn Sondek saved the collection.

          1. Thats basically me, Martin. I break up with my lady stock friends often, but we always do so on good terms, to be able to reunite once again down the road. 🙂 But, I suspect I have more portfolio drag than you, that is why I like to trade and juice returns so frequently. I mean I have some significant low yielders I own and wont part with. Issues like IPWLO and owning several of the old Ameren/Union Electric preferreds are going to drag down yield and performance. It is what it, is as I am not selling.

          2. 2WR, Speaking of manually, that is how I rotate my issues. I used to have that cool platform TD thing, but TD phased it out last year and now they got Sink, sank, and Sunk, and something else. Whatever, I dont even look at it. I just look at my culled list I put together on a CNBC watchlist and occasionally check some bid asks quotes on Vanguard as they have the honest numbers on lead bid and ask.
            I bring a knife to gun fight on this trading stuff, but I dont care. Im not going to think hard on this stuff, it happens or it doesnt. I already studied long ago to determine if and how much I will invest in each of them. If just becomes a rote transaction without thought if the price point is achieved.

    3. You have to wonder why they don’t call these issues. Love the OSBCP coupon so I’m putting it on my watchlist. Thanks For the post Grid.

      1. Kapil, its iffy but it boils down to math. Grandfathered Tier 1 capital trust debt. So after fed and state income tax this 7.75% doesnt cost them that but actually 5.58%. So they would have to issue a 5.58% preferred to redeem and just break even. So that isnt going to happen. So its either leave outstanding near term or flat out redeem. They alluded they may reduce their capital needs if they cant acquire a bank. But this will take time to explore. But its effectively trading 2 payments plus this months payment.
        So I will look to flip after payment and try to find a proper reentry point not so exposed. Sometimes I have to wait quite a while. There is other things to own in between, ha.

  20. Does the TNX bother anyone?
    Higher highs and higher lows concern anyone?
    I admit to being trigger happy, but i always had a keen eye.
    Watching you guys buy/sell and being out of the loop nags at me.
    Gold is getting a lot of press these days.
    Anyone know a decent etf i can buy ?
    or should i buy a long term option on them instead?

    1. It feels like year-end selling is abating as my preferreds are moving up in spite of the rise in rates. Would like to buy RILYG on any weakness for a dividend capture. I sold it on the recent spike at 26.16

  21. Has anyone had a close look at an anti-dividend capture strategy? I’m talking about issues that take a deep dive after the ex date and recover strongly after all the divi capture selling is done.

    Some charts would seem to support such a strategy.

    1. bob-in-de—I do that also–buy after ex for issues I think will spring back quickly (maybe they spring back all the ex amount within a month). So I sometimes buy before and ride it higher into ex. Sometimes I go right ahead and hold through ex–and sometimes I buy after ex. So 3 ways to play it–all have been fairly successful this year in my experience, but I focus on a limited number of issues for these plays because of time constraints.

      1. TY, Tim, I suspect the key is narrowing the field of candidates by some process. One can only look at so many charts in a day.

        1. It would relatively simple to write a program that could churn throughout hundreds of issues to find the best candidates.
          Where can bulk stock price historical data be downloaded from?

      2. I don’t like the middle of the 3 months where issues generally trade flat without much increase. The weeks before ex-div date and the date itself are the biggest gainers. After ex-div is a more volatile time, which could go either way.

    2. Bob, See the e-ticket recent charts for NEE-N and EP-C.

      Being a YTCer like yourself, my flips or arbs are based on YTC or TNX + x depending on the issue. Fewer transactions and less flip $$, though whenever one occurs it’s a potential keeper, so no worries if it can’t be unloaded.

      1. TY, Alpha. One can get sea sick just looking at those 2 charts.

        Unless rates go way up (doubt it) I figure I’m my own prop trading desk, so picking up nickles in front of the steam roller will be the job.

      2. Alpha, EP-C admittedly is one of my bigger holds. It may even be my biggest individual issue. I have made some quick goofy $2 flips holding for literally days this past year with this. But if it never spikes again, my last purchases was over 5% YTM for 2028. That is a backstop of this quality I can hold until 2028 to get my $50 par in redemption.
        For potential flips of this ilk, you got to get the liquidity dried up. It just isnt quite there yet. Look at INBKL…It became illiquid and a quick sell yesterday drove it down to 25.28. Now today the reverse swung and drove it up to $25.84. Its like it doesnt trade, people forget about it, see the dip, cant get in and chase it up…I stayed on the sidelines both directions as I own just a bit less of this than I do EP-C and am basically at this point unwilling to part with.

        1. Sonofagun – I had a standing add on bid in on INBKL at 25.40 if I remember correctly but pulled it the other day because I gave up on it executing and wanted to bid on something else…. Darn! I didn’t notice the execution either…. Of course I had more dry powder to use at Fidelity but they won’t allow an online bid on INBKL because of the F/F. I’m so glad they know better than I do what I’m smart enough to be bidding on… What would I do without their protective womb?

        2. Grid, KMI+8 year maturity makes EP-C a keeper and was adding right at 49 a few days ago. Instead of INBKL, holding INBKZ. The 30-month longer call protection on the 6% coupon pushes the YTC over 5%.

          On illiquids, have 5 bids sitting out there waiting…and waiting.

          1. Alpha, I think 2WR, is more on the INBKZ one also. And overall a better play for more duration. I am in L because it is prone to bouncing a lot come exD time. Though L has a higher adjustment which is appealing and is jumpier at times if I ever want to exploit.
            Im hoping EP-C stays sedated for a longer while. It would remove the risk of me flipping as it really makes a solid longer duration hold without too much duration risk. Not much playing going on here other than going nuts and engorging myself on MBNKP the other day at 24.50. Not a trade Im calling home to momma and bragging about. A shameful yield chase/flip.

            1. Grid – You’re one strike away from a Kingman whiff on me as I’ve been all in on INBKL without extending out and with my risk tolerance being as it is, I never even gave MBNKP a passing glance….I just can’t get into flipping on something I’m not willing to own long term. And I bet you can imagine what fun I’d have in Las Vegas.. Do they still have nickel slots?? I’m not saying either of those moves into INBKZ or MBNKP is dumb, it’s just not what I’m willing to do… I’m willing to accept YTC yields and to me INBKL is a lock to be called on its first floating date because of its high LIBOR + rate. Where conventional wisdom has people running for the hills from these types, they appeal to me. CUBI preferreds are another example. Go figure… But I do agree that INBKL does tend to bounce around at x-div time. Looking back, I did not have a standing bid at 25.40 as I thought. What I did was manage to buy a partial of 100 @ 25.26 on x-div and then canceled the remaining bid instead of continuing to adjust it upward…. woulda shoulda coulda.. BTW, I did choose to move out to longer issues from called issues on NEWT to NEWTL and SAR to SAF, so I guess maybe I’m really a wild and crazy guy afterall….

              1. Knock me over with a feather, 2WR, I need to take memory pills. I thought you owned the Z shares…Maybe Im thinking of Inspbudget then.

    3. No I haven’t done that. I’ve noticed a trend on ex-div day where they drop toward midday. So if you profit from div capture in the first hour you could buy it back a couple hours later then flip again. Just an observation, I haven’t tried it. Since I trade in IRAs I can’t do much day trading.

      Sometimes the best price is at opening bell. I set a high sell order before opening. It gets executed more often than I expected. The risk is you set the price too low and could’ve made a bigger profit.

      1. Martin – Why do you say that about trading in IRAs, that you can’t do much day trading???? Are you saying just because of not being able to use margin or some other reason?

        1. Takes 2 days for a trade to clear and that matters when you can’t use margin. I can daytrade with cash just sitting around but I can’t recycle the same dollars to sell, buy, and then sell again in less than 2 days. You’re allowed to do that twice a year, then after the 3rd time they restrict your trading to settled money. It’s a regulation.

          1. Martin G – been there with the restrictions before–90 days I think. I don’t have that problem anymore as I usually have plenty of dry powder.

      2. Martin – agreed, day trading or even short term trading in qualified account is challenging. Vanguard will let me have outstanding orders in excess of any cash balance but if they hit I have to sell something by end of day. No margin.

        1. Im in Martin’s situation. But short term I can be aggressive with Vanguard taxable account. If I dont want to sell anything to cover trade near term, I can funnel immediately untapped home equity line of credit account to Vanguard via checking account in a minutes time before market close though.
          I typically have an issued already eyed for eject when I have a bunch of no cash backed bids floating though.

    4. I look for this trade as well. A lot of preferreds drop sharply over the 2 weeks after x date and I look to ride them up over the next month or two. My target is usually double the dividend. If feels like a safer trade sometimes.

      1. Kapil – sounds good to me. Rather double my return by trading low risk issues than follow the HDO boys into the swamp chasing garbage.

        Been meaning to ask Rida how his CBL trade is working out.

        1. I was sad to see Preferred Stock Trader join the HDO Team. I think he is good and would love to see him here.

          1. Kapil, This may lighten your heart a bit. He doesnt advertise it, but any writing proceeds he receives he donates to his charity to assist people in paying for health insurance. He gets paid more to funnel articles through it. But the volume of articles is really not up by him as he truly only writes when he sees relative value. Unlike the other writers of dubious truth speak, I totally believe him to be a stand up guy.

    5. bob-in-de. There is a website, Dividend.com, that provides data on price recovery rate after the dividend ex date–along with a lot of other data. I subscribed to it for a year, and concluded that there were very few, if any, investments that one could reliably forecast a consistent, timely price recovery. My actual performance was as much luck as it was data driven.

  22. Just flipped the newest Voya. Good cap gain + 2 dividend payments.

    Comment about banks being good candidates is spot on. One of the C issues got to 28 and change a few years ago.

  23. Dividend captures I’m monitoring for late December.

    AGNCO, AGNCM, AGNCN. watch the prices. I trade between them often.
    CMO-E. also a good hold if you don’t want to sell.
    XAN-C. high coupon.
    CHMI-A, CHMI-B. bought A today. B is slightly better when prices align.
    DX-B. also DX-A if you care to risk a loss if called.
    ANH-C. first call date in January.
    NGHCN, NGHCO. price rose this week, I’ll pass unless it drops back.
    GBLIL – div capture doesn’t seem to work as well on insurance stocks.
    TANNZ, TANNI. makes me nervous I’ll wake up and they’ll be $1 lower.
    HFRO-A. ex-div this Friday. low coupon.
    TWO-D, TWO-E. both callable. I gott tiny amount of D before it went up.
    NYMTN – actually 4 issues from NYMT. N looks like the best candidate.

    1. I just bot some DX-B for a dividend capture. I especially look for preferreds that are weak a month before x date. Also bot some CORR-A recently.

    2. Martin, do you know a a good charting site that gives you either ratio charts or price difference charts on preferreds? Scottrade elite used to have them but no more.

      1. No, I just look at individual charts and then set up a watchlist. I don’t like to automate too much because ironically I don’t notice as much I’m not as focussed. If I’m closely following a few stocks I remember the details., otherwise I call up the chart again when something happens.

  24. Right now, I like Corr-A for potential dividend recapture. It’s coupon is 7.375%. Call protection ends the end of Jan 2020. Last dividend was 11-30, so if my calculation is correct, you get 0.28 cents guaranteed (you should check my math for yourself). It has traded down to 25.22 – 25.23 range. So you get .05 to .06 cents for the next six weeks which is about money market rates.

    In their last quarterly earnings they talked about opportunistic repurchases (plural ) of their preferred offering in 2020. Does this mean multiple or not an immediate call the end of Jan? That’s what I am thinking.

    Either way the high coupon and the mention of repurchases should keep it at 25.00 plus accured dividends .

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