Our ‘fun fact’ today is – who was the very 1st visitor to this website?
The answer is Gridbird.
Back in December, 2017 (if I remember right)–long before we were near completion of the site I had an exchange with Grid on Seeking Alpha and noted the site. Thus with the exception of folks working on building the website Grid became the first one to visit.
59 thoughts on “Fun Fact Friday”
I have been watching AILLL, CNTHP & CNLPL in the hope some selling panic kicks in, but they appear to be quite resilient, which I suppose is good news.
Today’s action appears to be indicative of at least a short term floor, no telling what the next few days have in store.
Hanging on to what I have, not selling.
You guys are really proving my point. This is all good discussion. It meanders from this to that and back again, and that’s fine. But we need a better place for it. It has nothing to do with the topic of this article.
Tim, can you add a discussion board or a chat area or something like that? Then we’d know where all the random discussion is. Instead of it being lost under your articles.
You don’t use the margin (I don’t), its a back up in case you get an unexpected fill.
Let’s me keep sometimes dozens of low ball bids active at the same time without fear of the nasty Vanguard email.
I broke down and bought some more ALLY-A today. Who knows, may C-N tomorrow.
Bob, Probably some dumb form I would have to fill out, I bet. I detest “paperwork”, lol. Its been over a year, since my screw up, so I got three fresh screw ups in my back pocket, I should be fine. ALLY-A is the high call risk flip play. C-N in my worthless opinion is more of a high wire act call risk considering it is well over 3 payments above call. Plus they are stronger financially, and more likely to pull the plug first. That would be a very nasty bug smash on the windshield call…Ouch… I used to play C-N but it got too far over par for my call loss risk. CNBC has been blaring out the interest rate risk, so that means we are about to hit the near term ceiling. They always are a day late and a dollar short. Still I got my bets spread out..Term dated, adjustable, longer term dated, and perpetual. I put some money in secondary brokered CD that yielded about 2.5% that is coming out of jail in December. So I will have some fresh proceeds to deploy then. …..I should have loaded up on CHSCN Friday and flipped half today. Instead I bought only enough that I will just hold them for now.
If you get a margin account you don’t have to be concerned about failing to cover a trade. No screen watching required. Taxable accounts only.
Im a simpleton, Bob…No margin, no puts, no options. I can barely keep track of my passwords, lol.
I didn’t understand your statement on standing orders. How to you place GTC bids without using up available funds? Are these in taxable accounts? My brokers, tdAmeritrade and eTrade, won’t let me place an order at all in my IRAs if the funds are not available immediately upon filling.
Jay all I know is they let me do it. I cant do it with TD or TradeKing though. One time last year an order hit right at market close and I wasnt paying attention. I sold some immediately the next morning to get out of the hole, but I still got a nasty email saying if I did it 2 more times within next 12 months, I would lose the privelage for a period of time…I make sure that doesnt happen, anymore and close out orders 10 minutes before market closes so that doesnt happen again. Itis a very nice privelage to have and I dont want to lose it….I can do it both in my taxable and my non taxable account through them.
I’m not a frequently poster but wanted to underline my appreciation as well for all the hard work you put into this site and confirm how helpful it is to many.
You may be aware that Left Banker who was one of the sharpest analysts writing on sa had some kind of major run in and has stopped writing. His interests are a bit different from yours in that he looks into both fixed income and equity assets and originally did cefs. He would make a terrific addition to your site. If you were so inclined, I would strongly encourage you to consider chatting with him to see if you could work things out. Since income was not his goal rather better understanding of the issues that interested him, he and those who follow him would be a very strong addition to your site. Just suggestion. Thank you again SC
BTW, I realize Tim’s “price drop” page will show me that, as long as I look at it at the right time. But an automatic alert would be beneficial…
Bruce, its usually too late by then…Illiquids have huge bid/ask spreads…I just scan them usually once a day on ones I track. If the ask price starts to drop, and/or you see more than 100 shares become available, that means something might break. Especially if the issue hasnt traded in a while. So I get my position in on the order, whether it be the lead dog, or a trailor to sop up the remaining dump in case of a price spill through. I actually saw this WELPM happening with my phone on the golf course. I saw an $11 drop in price with the fake ask price $5 lower than its been after a few hundred were sold..So they werent done dumping, but there was no legitimate bid worth selling so they were waiting. I went in on last share price of $113 and wound up getting 300. Then somebody bought at $117, and it dried up…I just waited a few weeks until the bids creeped up because no one was selling and then sold them off at $119.
Another example (this wasnt a deal, just a I have been trying to get 100 shares for 4 years and never have got them trade) was AWRY…It is guaranteed to be paid by CSX, so essentially its a preferred (it was issued in 1898). For about a year the ask was 1 share at $175. Then I noticed a week or two ago a couple hundred sold at $103 (only 400 shares had traded in past 4 years and the float is only about 15,000 shares that are mostly institutionalized) and there was an ask of $115 for 100. This meant there was a serious seller looking to sell some more. I went to $105, got jumped to $106, and set my line in sand bid at $108. 5 minutes later it bit with the last 200 shares going at $108 (presumably the jumper went to 108 also and we both got them). After that the ask went back to 1 share for $175. That usually means a placeholder ask from market maker and no serious ask offers are available.
I admit, I spend time on price movements and buy/sell imbalances and very little on finances. Now that yields are rising, I lower the price of what I think a deal is. There is no need for me to seriously number crunch Ameren or CSX financials. They are safe and profitable. It works well for me and I enjoy it…When I do wade a bit in higher yield/risk and liquid issues I read Moodys detailed analysis of their financial cap structure and family debt ratings. I don’t rely on those knot head writers on Seeking Alpha seeking to promote a subscription service to lose you money on high yield dividend dumpster dives. For example, NSS…Moodys has held my hand and been spot on with their analysis every step of the way.
Now that’s some good info! Worth 5 or 6 re-reads! Thanks!
Bruce, I pulled one off this morning that I am very pleased with even though it “cost me” about an immediate $1000 loss on the books… I saw a few weeks ago a “flash ask” on CNIGO for over $28 a few weeks ago. Not even a serious offer, but it made me notice a seller was probably out there…I let the low ball bid of $24 sit (it wasnt mine) for a few days, then I jumped in at 25.30 as lead bid for past few days and it hit today at 25.30….Since I already own a chunk this price drop “dinged” my net worth, but I am pleased. This is a 2023 term preferred QDI 6% par preferred. Beautiful terms!!! Now I can hold these 1000 or so shares I have until maturity and not worry about this money getting caught in perpetual issue downslog. I will get my $25 in 2023.
I actually have bought around $26 and flipped over $27 many times the past 18 months. I checked, and I am personally involved in the buys or sells of this issue of probably 75% of the transactions. It just doesnt trade much because the shares are largely concentrated in just a few holders who will keep them until maturity.
I actually own more of CNIGP than I do CNIGO which I absolutely love, as my cost basis is near the $20.75 par and I have an owner optional convertible into 1.2 common shares whenever I want, or just hold and redeem at par in 2026.
Corning though a public regulated gas and electric utility is largely owned and controlled by the CEO and Gabelli. So its a very illiquid. Just as disclosure, I really have no business looking to own more (portfolio proportion wise) but that 300 share bid of 25.35 is mine. I dont NEED anymore, but I REFUSE to let any go cheaper if there are more shares to be sold, lol.
Gridbird, congrats on the sweet trade!
I realize you are also an expert and reading and deciphering prospectuses (prospecti?). Do you have a legal background? Any tips on how to comprehend all the conditions and legal mumbo-jumbo in some of the more complicated filings? You’ve written on change of control issues and historical info in the past. How do you find all that background?
Tim, I would like to encourage you to:
1. Get Gridbird writing articles for your site. I asked him to write for SA, which he’s declined to do. And that’s fine since SA’s standards have really gone downhill.
2. Set up a discussion area where Gridbird and others can banter back and forth about their various preferreds and their trades and etc. As it is currently, Gridbird posts a ton of mostly off-topic remarks on SA articles that are behind SA’s pay-wall so it’s impossible to see the remarks in context.
If you can do either or both of these things, you’d be doing a great service to the preferred investing community, such as it is. And you’d be removing discussion and page clicks from SA who really doesn’t deserve it.
Larry, I appreciate the compliment (per our agreement, the check is in the mail, now ?) but I actually think Tim has way way more to offer than I do. I simply write off half the universe of preferreds simply because I am mule headed and absolutely refuse to invest in BDCs, Mreits, and Shippers. And toss in LTS also, lol… I just am not open minded to be a well rounded income investor for people to follow me. Many of my issues just cant handle more than 1 person wanting to buy, assuming any shares are even for sale.
And I cringe to suggest much of what I buy as it is so illiquid. I feel more comfortable mentioning AILLL here or something of its ilk since people are a little more saavy on what they want and price limitiations. I try to limit saying it on SA, because invariably after it was mentioned someone will pay ask price, which is just a horrible purchase. Entry points matter on illiquids.
I dont do a very good job of it, but there was this old crusty investor named South Gent who used to post. He would write for 3 paragraphs trashing an issue. So I am expecting him to say he was selling. Instead he was buying…But he always wanted the negative outcomes exposed before any purchase occurred. I love that mentality.
And I think finally some are seeing the negatives in preferreds if caught owning the wrong types in the wrong yield or investment sentiment cycle.
By eliminating things like shippers, you miss out on things like SSWN. It is a bond, and it will be redeemed on 4/2019. It really seemed against the odds that this company would go bankrupt in the last 2 years. With it being a bond was a great buy for awhile. Another good area to stash some cash.
By not investing in BDC’s, I think you would be missing out as well for risk reward. But we all have different risks. Since a BDC has never gone bankrupt (maybe they merge to get out of difficulty), and had to have 200% asset coverage, I don’t shy away from these. Many have bonds or term dated preferreds. Ex. I have invested in GAIN preferreds. Monthly payments and term dated. It was sad that they have called most of them. I do own GAINL. There are others I own. You can get a sense of safety by reading anything from BDC Buzz, and Scott Kennedy regarding this space. You wont get rich as these seem to trade within interest payments/dividends, and are unlike investing in their commons.
Let me clarify. the authors give you a sense of safety/risk. BDC Buzz goes as far as ranking them. Scott goes as far as telling you what he owns, and his buys/sells.
Mr. Lucky, I actually owned SSWN may back when first issued. I saw the preferreds tank badly, while SSWN hung in there pretty good. I sold out at what I bought at and said to myself, I dont need this problem of shippers, debt leverage, over capacity issues, family deals, etc. I just said no more. Its not like my investment portfolio is so large I have to invest in things I dont feel comfortable owning or trust. I dont need it. I can find that yield in other places.
BDCs, its now down to 150% coverage. I dont like investing in a company that invests in companies that they get to determine what the valueis as they are mostly illiquid and value is determined by what the pocket pen protectors deem it to be with “gentle” prodding from the CEO. Just dont need it. Doesnt mean its not good for other people, or a good investment in general. One needs to have confidence in what they own in case things would go bad. I just dont have it in those areas. And not willing or wanting to admittedly, lol.
south gent still blogs under Tennessee independent blog spot if you googl it.. I used to regularly read his SA stuff too .. don’t read regularly now but he still comes up w some ideas.. a lot of politk too, glad Tim doesn’t want that here. ..
Bea, I read occassionally, some, but he has gone off the deep end politically the past year, or so., lol. And very conservative in investing now too. But he was treasure of info in explaining things such as trust preferreds, synthetic adjustable preferreds, etc. Literally knows the mechanics of about every investment there is.
Gridbird, I’m not looking to invest in illiquids, because I don’t understand them. But every comment you write brings greater insight to all of us on preferreds in general and illiquids in particular. Another reason I won’t focus on illiquids is because I’d have to leave my buys invested, or my cash sitting in a GTC order until a trade executes. I just don’t have that kind of cash sitting around at this point of my early retirement. Please keep writing, because you’re an expert at this game and I learn something every time you do.
There are other posters who kindly share their knowledge, insight and the securities you’re interested in. I thank you all for the immeasurable help as I begin to dabble in this area. And my thanks go to Tim as well for creating and footing the bill for this meeting area. Good investing to all!
Bruce, I am lucky, I guess. I have a Vanguard account, and I dont need cash up front to lay my bids in. If and when they hit, I either need to shove some money in or sell something before the close of the market that day. I always have in mind what I am willing to jettison if the trade consummates. If I dont have anything I am willing to sell, I wont leave a bid out. But that is very rare.
Btw, Bruce, concerning illiquids. The only thing different with the illiquids I invest in and the “liquids” is that the share count is smaller, and/or the issue is older, so it dont trade as often. Using the quality of these is infinity larger because most are very old that never got redeemed. The longer a preferred issue stays outstanding, the more “institutionalized” it becomes. Many are bought by companies or individuals and they just hold them indefinitely. So as these shares become impounded the daily trading float shrinks.
Its just exploiting buy/sell imbalances…As the opposite works too…Take WELPM..An extremely high investment grade preferred electrical utility. It rarely trades, so that means there rarely are people looking to buy. So someone tried to dump over a thousand (which is a lot for this issue) shares last summer and it dropped the share price over $10 bucks. I snagged several hundred at $113, waited for the liquidity to dry up and couple weeks later flipped at $119. It works both ways with illiquids concerning buying and selling. You just have to know where the price point value is to exploit..And get lucky to snag them too.
I also like old illiquids because of their huge coverage ratios. Many new ones issued may be covered by their earnings of 1-3 times…Many illiquids have coverage ratios of over 100. Meaning they have plenty of profits even in downturns to cover the preferred payments.
How did you know they were trying to dump the shares? You saw the bid price drop on Vanguard? Or you saw the “last” price drop after the first trade? Do you have to monitor that manually, or is there an alert for that?
Man does time fly. I believe i saw that post in SA between you and Grid, and I followed thereafter. I try to read as many articles as i can, as there is a wealth of info from a set of people.
Dont hide your cards, Mr. Lucky….What have you been snooping around in?
Hey Grid. My biggest holding is KYN-F. 10,000 shares – about 12% of my portfolio. That is some of my play cash that i could sell for some crazy deals ahead. I also have plenty of cash that I have started to let go this week. I am looking for great buys like everyone else. The near term bonds really did not drop. I have a large portfolio that for the large part didn’t even dance too much this past week. These are bonds due in 6%, etc, and running tons of screens probably like everyone. What I bought this week: RNR-C, RFP-A, UBP-G, AIV-A, ARGD, AED, AGO-E, HT-D, FHN-A, VER-F, AFC.
It is probably anyone’s guess how things will progress. But I still have plenty of powder to buy. Things are getting interesting, and I like it. I have things on my watch list that are getting interesting.
oops I meant to say due in under 6 years.
Thanks for sharing Mr. Lucky… Do me a favor if you dont mind. If you decide to hit the sell button on a 12,000 share dump of KYN-F at market, give me time to set a floor bid at $24, lol…I dont own any KYN-F at this time, but it is a great hideout place. In fact 12 months from now, I would not be surprised if it returns more income and capital than a 6% perpetual would.
I think the bond market is closed Monday, so I wouldnt be surprised if things stabilze a bit Monday.
You are funny Grid. I won’t be doing a market order. 🙂
tip of the hat to all that participate…very much enjoy the conversations.
Special thanks to SteveA for letting us know of Innovative Income Investor.
Glad to have you jeffmagner–and thanks for SteveA his help.
I’ll add my appreciation for this website. Great comments & discussion by all, and really happy with the timely information from our posters.
I was hit hard these past few weeks, but holding tight to everything and looking for some additions to the portfolio. AHT-D below par would be a great holding.
Along same vane I was looking at Brunswick Corp $1000 issues today. They have a 2027 7.125% issue currently trading at 114. In 2009, it went to 17.80.
Wish I’d backed up the truck on that one.
Speaking of backing up the truck, I see that the Maiden issues are way up today. Think we might see an SA article from the usual back up the truck group? 🙂
Bob, you make me want to own a time machine! Maiden….Dont be giving Rida any more great ideas to write about, lol…
Bob, I smell a victory lap for some SA “professional” writer… Wishing you profitable investing, Nomad
Bob and Nomad, I moved a few things around and nibbled a bit here at the close… Went back in for 400 shares of ALLY-A today at 25.98. If it survives another 10 days it is good for 2 interest payments, so at worst a tiny profit on a redemption (breaking even next few months may be a good trade, lol). I bit the bullet and went in for 400 on CHSCN today at 25.48. It is down 10% this past month. Might be a bit early here, but I really miss owning the CHS preferreds, as they simply were too high for too long. Those were the good old days buying all of them out of IPO and flipping for easy profits, sigh….
I look at Ally-A every day but I don’t understand the reason for the non call well enough to take the call risk. I already own a good chunk of the issue. If I understood the call risk better I would be willing to go for more.
I, too, bought CHSCN (and M) in the last 2 days. With SY and YTC at 6.7-7%, QID, I can live with them very happily. Both are non-rated but if the company paid S&P’s ransom they would do very well.
Sometimes enough of something is enough. I am just guessing but will assume it gets called next year as some final Basel regs come in that might kill it off. But if I can get three payments in 7 months that may be an outright good trade. And if I am wrong, I will gladly let it pay me. Yes, CHSCN (the sister did too) got pounded..As late as the every end of August, CHSCN was at $29.20 pre exD. Heck of a drop. Worth an entry point here at this price for me anyways.
Bob and Nomad, I sold out of ALLY.A a few months back after doing the analysis of the preferred and still can’t believe it has not been called. There is no reason for Ally to continue to pay such a high interest rate (floating now) when they could refinance at a much lower rate.
I bought many securities LANDP, GLIBP, KYN.F, NSS, ATAX, OXSQL, SAF, ANH.A, CMFNL and TCRX (this one got called today). Like a kid in an income candy store and I hope I can continue to find other excellent opportunities during this nice interest rate move higher and scare. These income and equity markets have moved so quickly and no one really knows when the interest rates will stop heading higher. I invested in these and my thought process was that if I had to hold them until maturity (baby bonds) or forever (with the others), I will just keep getting the dividends. I can’t believe people panic so much or are lost when their securities correct. It’s just an opportunity and I hope the next few week and months have even better deals for all of us that follow the income markets so closely. Wishing you profitable investing, Nomad
Nomad, we sold out of ALLY-A basically together a few months back, remember? A dearth of issues on market “not exposed” to rate panic-mania caused me to drop back in on the price drop. The thing about ALLY-A at this point is they redeem these interest issues on their payment date. So if a redemption notice is not served in 9 days, it will be good to February minimum. Kind of using it as a placeholder. Minimal downside from Libor and call anchoring, plus it has liquidity. So if a more compelling drop hits somewhere I can flip out, or trade off an approaching exD date, or just hold.
Nomad, I couldnt help myself and went back to the ALLY-A well again at 25.88….You have tracked this issue before, so you know the game…It skipped the process last time, but its back to doing it again. It sags right before that critical 30 day call window before interest payment which is right where we are at. If they dont announce a redemption notice by Friday, this will almost be an easy money flip in next 2 months. If they do….Well the bug smashes the windshield with a 40 cent call loss, lol….
Congrats to Gridbird for being #1.
I find his comments and well as a few others very educational. Even bought some JBK when Gridbird sent out the word that some shares were available. And Tim I owe you a huge thank you for all you do!
Waiting, watching your site and hoping to find some great deals in the next few month.
Your welcome Leslie–thank you for being here.
Well Leslie, I hope they stay in business for the both of us, lol… We could be in an environment most of us except for the oldest grizzled preferred stock traders have not witnessed. We speak in terms of quality, duration, and yield. But the realities outside of maybe KYN-F, all issues can be exposed to market risk (investor stampedes to the exit). So duration risk, credit risk, and market risk can affect any security. We can talk about rates, but it is best to actually see a chart on how it effects perpetuals. Any newbee might be interested in going to the CNBC stock site and plug in the 20 year history of CNLPL. This has and is still a high quality 6.48% perpetual stock. Even though its quality has been strong and presently still trades well above $50 par today, look how it traded 30% below par in early 2000s, when treasuries were higher.
Thank you for your reply and insight.
I find any investment to have its perils and Preferreds are certainly multi layered and complicated. But it’s been a tough environment these last few years.
I hope that interest rates climb to the point where I can get back into Muni bonds. Even though they are not the same as the use to he for many reasons.
Best muni bond ever story- My grandmother had a 12% California GO bought near par and the thing actually went to maturity!!! Would be shocked to ever see that rate in my lifetime again.
Leslie, my best story on interest rates was on a more modest scale being a poor college student in the early 1980s. My Dad (who was an intelligent blue collar guy who steered me right) convinced me to max out my students loans and stick them in CDs. I remember drawing 16% my freshman year down to 12% my junior year. The interest alone from the Cds paid for my senior year in college… That was easy money!
Impressive rates and a good move on your part.
Grid, that is a great story. It’s great that you have such a wise father. (I’m pretty sure he still with you.)
My parents are also financially-savvy people. Instead of me renting an apartment for 4 years while in vet school, they bought a house for me to live in and then sold it at a profit 4 years later.
And i remember sitting in a bank after I graduated in 1984 asking the person helping me if a 12% CD was a good value…..
Amy and Grid, we say L’Dor Va-Dor; this means, from generation to generation. My grandparents left me 1000 shares of AT&T before the mass monopoly breakup in 1984. I was quite young then, but they wanted to make sure my financial future would be secure and I’m doing the same for my son in college right now. I have gifted him a mix of growth equities: Visa, Mastercard, Disney, McDonald, Dunkin’, Coca Cola and primary income securities: AT&T, Southern Company, NSS/Nustar Note and Nextera Energy. My son is from the generation that wants to sell EVERYTHING and use the money to travel with friends and party. They do not want to own anything and find it foolish that I own homes, property, metal, art, cars and many securities! He is studying to be a doctor (like you Amy) and I keep hoping he eventually will have an interest in investing for the longer term. Wishing you profitable investing, Nomad
I want to thank everyone for their input. I don’t get a chance to check prices every day but by reading your comments I’m not as shocked when I open up my account and see my preffered have tanked.
Hi Johnny–it has been rough–but ‘this too shall pass’.
Tim, does Gridbird win a prize for being the first to visit the website? 🙂
The first to visit….And the very last to ever be able to provide ANY technical assistance, lol.
Hey Grid–just keep contributing and all of us (all site users) will be the judge of the assistance you provide.
Tim, to steal a line from The Anchorman, my posts should be read in this manner…. “I wanna say something. I’m gonna put it out there; if you like it, you can take it, if you don’t, send it right back.” ?
Hi kaptain–I will have to give that some consideration.