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Garth Is Partying Hard – I’m Just Steady and Executing the Plan

We’ve had crazy down days and now crazy up days–who knows what tomorrow brings?

I purchased a starter position in the 6.75% CHS Reset preferred (CHSCM)–current yield of about 6.86%. I could have bought the 7.10% Reset Preferred (CHSCN), but wanted to lock in the coupon for the extra 6 months as I suspect we will see lower rates by 2024.

I tried to snag a few more shares of the Tri-Continental $2.50 $50 preferred (TY-P), but it has moved higher and likely my low ball order will not execute any time soon. This is one of the safest CEF perpetual preferred’s out there with a coverage ratio of 4400%–the yield is somewhat meager, but it goes to the ‘sock drawer’ for eternity.

So with the S&P500 up 2.70% at this moment and the 10 year treasury yield at 3.62% I am back to watching and waiting. My pure cash holding is relatively small right now, but I have plenty of ‘near cash’ in short term treasury’s if needed.

6 thoughts on “Garth Is Partying Hard – I’m Just Steady and Executing the Plan”

  1. CHSCL is nearing par too, so yielding more than n or m, but fixed rate, callable 2015. Seems like a good deal too?

  2. Tim, I think we all expect in the long term that rates will go down. When and by how much is anyone’s guess. I think that over the long haul we will be trading out of the FtoF but for now they are a good place to hang out.
    If any of the reset preferred or the FtoF stay around 5 to 6 % for the next 2 to 5 yrs I would like to hear any suggestions people might have. If they are a decent rated -BBB and above I would probably just keep holding them.
    I put in for 200 shares each of the CHSCN & M but haven’t looked to see if I snagged them.

    1. That may be, but I’ve been reading a bunch of smart people elsewhere who say that inflation is about to explode upward again. I haven’t a clue, so I just keep buying income securities, though it helps, I suppose, that I can live on ~25% of my annual income. Did I say I buy? I do. Every time money becomes available. Lucky me. But, hey, that’s just me. We all make our own choices and bet our own $$$$$$…


  3. Party on, Garth. Because there’s no iconic movies today.
    I’m terating this like another bear market rally, Could go in for awhile but I don’t think it’ a long term reversal. Imagine the logic, the economy sucks so they’ll have to stop hiking rates so fast, and that’s somehow good news?

  4. I thought L was the most intriguing when it was below 26 but that price no longer exists. I listened to their 2021 meeting and they did not mention squat about any actions on the preferred which would be against rules for them. Meaning someone asked and they were like NOPE. No info. No sauce.

    I do not think the farmers are driving the bus really. I know they extended H but I got the impression the board will do what they think is best money mgmt wise. I find the reset rate to be a bit low for my taste on M and N. Knowing my luck when they reset they will pay 5.5%. I think L will become the new H over the next several years. H/O should be called if they can afford it in due time.

  5. Tim—thanks for mentioning CHSCM & CHSCN. I used to own them and bought both again today. The farmers own a lot of these issues and like the high yield. Even if rates go down, these issues might not be called.

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