Gabelli Utility Trust Preferred Ripe for a Call

I was reviewing the large volume issues from today (large compared to normal daily volume) and I noticed an old friend of mine in the list–Gabelli Utility Trust 5.625% preferred (GUT-A) had traded just 8,700 shares–but that is 7 times normal volume.

It wasn’t really the volume that caught my eye–it was the ridiculous share price that stood out—$27.81 and optionally redeemable since 2008. I think investors are just daring Mario Gabelli to spank them with a 10% loss.

With the call of the Gabelli Dividend and Income preferred (GDV-A) on Monday you would think they maybe would be keeping their eye on other potential calls–especially because they could replace called issues with sub 5% new preferreds if they desired.

I mentioned this as being an ‘old friend’ as I held it for many years – even after it was redeemable–but I guarantee you it was never this far out of line in price.

Gabelli has always been kind of slow to call issues, but it is becoming more difficult for a fund manager to explain to common holders that it makes sense to line the pockets of preferred holders at the expense of the common people.

I am watching for a call here.

15 thoughts on “Gabelli Utility Trust Preferred Ripe for a Call”

  1. I just sold mine for 28. There are a lot of strange people in this world.

    I used to own a whole bunch of these Gabelli preferreds. They were a good deal, but I was getting more and more nervous. This was the last of them.

    Thanks.
    D.

  2. “Gabelli Utility Trust Preferred Ripe for a Call”

    Tim, couldn’t you have said all of this two years ago?

    Thanks.
    David.

    1. The difference is that GDV-A was always going to be called first, so you had a call buffer. You were unlikely to wake up with your shares called one day with no warning. With GDV-A called, now GUT-A is next in line.

      Also, new IPOs are being issued with all time low coupons (for the modern era, before Grid jumps in with some example from 1950).

        1. Martin, good catch on GRX-B. Not sure why they didn’t call it along with GDV-A. Only guess could be that GRX-B is rated two notches lower. Mario Gabelli is obviously a smart investor but I suspect he doesn’t know a lot about preferreds.

          1. Landlord, I suspect he knows a lot about preferreds. And I also suspect he keeps them outstanding longer for other unrelated reasons to the fund they are supposed to goose returns on. In other words his own self interest (Or one of his other funds) above common stakeholders. I know he was the genesis for forcing and creating the 10% cash redemption feature of SPLP-A. Also one of his funds is the biggest holder (Outside of ute CEO) of a utility preferred I also own.

      1. Landlord, Modern Era? So you are suggesting some of us here were born in the Stone Age? 🙂 By the way here is a 1963 issue with a 4.5% coupon. And yes it still trades with its BBB+ rating. I consider 1960s modern era, because I was born in mid ‘60s. Camroc is so old he considers the 1960s “very recent history”.
        https://www.quantumonline.com/search.cfm?tickersymbol=CNLHP&sopt=symbol
        Seriously though it is good to be aware of history as it tends to repeat itself in shades. And lets be honest, unfortunately a high quality 4% issue sent to market today is still in normal spread ranges of current 1% and under 10 year yields. Of course that doesnt mean one should buy though.

        1. Lol, Grid! I knew you’d come educate us on preferreds history! Just because you’re an expert on Preferreds Antiquity (and own a number of artifacts from that time period) doesn’t mean you’re ancient yourself!

  3. Both of the Aspen Insurance preferreds I follow (ASP/E and ASP/E) dropped significantly today on high volume. Not sure why…..

    1. Bill, it’s certainly not call related, as you know, since their call dates are way out in 2024 and 2027. Have not seen any news about the company.

      1. Now it finally occurred to me that the price drop is likely hurricane Laura damage related since AHL is an insurance/re-insurance company.

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