Happy New Year to All and My Shopping List for This Week

2018 ended on kind of a high note with further gains Monday which when tacked onto gains from last Friday made our accounts look almost respectable.

As I had mentioned too many times I am awaiting Wednesday (January 2nd) to make any purchases for the new year and I am chomping at the bit to make a buy, but I plan to do it slowly–likely starting tomorrow.

I am determined to raise at least a couple of our portfolios (we operate 4 different IRA accounts and some are high quality, lower coupon issues only) yields somewhat in the new year and I will do this with perpetuals that are ‘decent’ quality with current yields in the 7% to 7.75% range.  We will make these purchases with cash on hand which includes funds now in money market.  We don’t really plan to do any selling right now on the shorter duration issues we own (i.e. term preferreds).

We already own ‘starter’ positions in some of these issues (CHSCN and AMH-D), but whether we start new positions or add to these starter positions isn’t known–we will see what tomorrow brings.  Regardless of what we buy it is with the intention to hold the issue for the long term.

Here are the issues we have identified as being ‘sound’ issues.

Most of the issues from CHS (Cenex Harvest States), but in particular the Fixed-to-Floating perpetuals, CHSCM and  CHSCN with current yields of 7.67% and 7.43%.

Everyone knows by know that CHS was hit with a charge of around $190 million last quarter to resolve some fraud from prior years.  Just the same CHS is a massive ag cooperative and even with stress in the agricultural community the company will survive for a very long time to come.

The perpetuals AMH-D and AMH-E from single family residential REIT American Homes 4 Rent (AMH) with current yields of 7.22% and 7.17%.  We had previously noted we were going to do a deeper dive into the company financials and write about it on here–we have done a deep dive, but haven’t found the time to write extensively here.

A couple of very important points to know though is that American Homes 4 Rent has about $9 billion in assets and just $2.5 billion in debt is a REIT with a very strong balance sheet.  The company had $77 million in net income in the 9 month period ending 9/30/2018 with about $300 million in free cash.  For the 1st 9 months around $45 million was paid in common dividends with $39 million paid in preferred dividends.

AMH has about 13% insider ownership and one of the insiders is B Wayne Hughes founder of cash machines Public Storage (PSA) and PS Business Parks (PSB).  More important than B Wayne Hughes is Tamara Hughes Gustavson, who is B Waynes daughter.  B Wayne has gotten up there in age (he is 85 now) and has managed to pass a lot of his wealth to Tamara.  B Wayne now has a net worth of just $2.5 billion while Tamara is said to have a net worth of $5 billion.  Why do I even mention these folks?  I mention this because it never hurts to have billionaires in your corner with large shares of their net worth invested right along side you.

The monthly paying perpetual 6.70% VER-F from giant REIT VEREIT with a current yield of 7.08%.  Recall that VEREIT is the old American Capital Realty REIT which was rocked by scandal and fraud way back in 2014.  The company has been rebuilting ever since with new management and is a massive company with over $14 billion in assets.  The company has survived in spite of massive payments made to prior shareholders for losses that came with the fraud.  The company paid settlements of $85 and $42 million 2 months ago to settle claims and I expect that the company will continue to resolve lawsuits for the next year or two. With the exception of the litigation this is a stellar company.

The former General Growth Partners 6.375% perpetual preferred which is now a Brookfield Property REIT perpetual with a current yield of 7.21%.  General Growth was purchased by Brookfield.   Brookfield Property REIT is controlled by giant Brookfield Property Partners who has assets of over $111 billion.  Recall that General Growth Partners was a mall REIT that got caught with no liquidity back around 2009 (just guessing on that date) and filed bankruptcy.  They emerged from bankruptcy and then Brookfield came along and snapped them up.

While this is our list for the next few days or weeks we know that each and every investor has different ideas on what do to at this point and we don’t mean anything here to be a recommendation for anyone–they just seem to work for us right now.  Additionally with CHS and AMH there are many issues outstanding and while we might buy a certain issue-there are others that are, in general, equivalent.

 

76 thoughts on “Happy New Year to All and My Shopping List for This Week”

  1. I would like my account to go up 1% everyday, lol. Feels good… but could easily reverse :*O><

    1. Tech guy–if I can get a solid 1% in a month (or 2 months) I am happy, but you are correct those too often reverse.

  2. Tim, you listed NTG, Tortoise’s midstream CEF, as a holding? or was that a typo.. recent buy? sticks out like a sore thumb on that listing..

    energy is so out of favor now and most of these o/ng CEF’s are so depressed I have several on the watch list for a possible add. I trade in and out of CEF’s medium term holds/ as I have found that to be a good way to grab some cap gain + yield if you time it right. Was lucky to buy into NTG in the last downturn and sold it derisking early this year after Gundlach recommended it and everyone piled in.. also had CEN which I sold for a decent gain in Aug.

    they have plunged w the unexpected swoon in energy this year.. many have cut dist or will have to if this keeps up…so much for the safe “toll takers”.. but they are so beaten down they may be attractive..

    the old Louise Yamada/Gail Dudack technician in me says we have a test of the Christmas massacre low to come before it makes sense to jump in more…but that is just me, extra cautious being retired at 55/ 60 now as a full time caretaker who is grabbing nickels and preserving capital. Luckily I do not need the income yet.. now I am doing a barbell ultra safety and a little risk (ala Mohammed El Erian) based on 45 yrs of investing ( and luck!)

    1. Hi Bea–no that was not a typo.

      I had 1 account that I mostly ignored last year–no trades–it is in that account and is a very modest position. For once in my life I wanted an account to simply ‘run’ without interference from me. Kind of an experiment-it worked well overall as that account ended up being up 1.24% for 2018.

      When I listed those out last night it reminded me how concentrated I am in the various Gladstone issues etc–some of those are way overweight and I didn’t even realize it. I think I will ‘clean up’ my accounts over the course of the next month–the downside of having 4 separate accounts is I don’t coordinate them very well.

      Gail Dudack–that is a name from the past–hadn’t heard it for a long time–maybe back in the Louis Rukeyser days.

  3. “We have almost an embarrassing sized ‘savings account’ with Farmers Insurance–in fact it has gotten so large that it worries me and I think some will need to go else where soon–it has paid 4.5% since day one ”

    Can you provide more details on how to open this type of account with Farmers Ins.

    1. Hi etsfl–this account is tied to a whole life insurance policy that my wife bought in the late 1970’s (I think–maybe the early 80’s) and the only way to have this acct is in conjunction with the life insurance policy.

      1. Tim, its January….You still considering retiring soon? I thought you mentioned this a while back.

        1. Hi Grid–yes-kind of. I hope to hold work (work that pays) to 2 days a week–that kind of dovetails with a very slow real estate market and higher interest rates which has slowed business tremendously.

          I ran into a few problems with the social security which are not yet resolved. I can make up to around $49,000 (since I turn 66 later in the year which is my full retirement age) before they would cut me back $1 for every $2 and when you are self employed the government is reluctant to believe your earnings numbers–i.e. they just assume you understate your income.

          So until I can resolve the earnings question with SS I can’t step away fully.

          1. Tim, I sympathize with you self employed. That double SS tax is a booger! Pay double then lose $1 for $2 on top of that would be a cruel tax also. I hope things resolve in your favor sooner than later.

            1. Grid–I believe that worst case I can start drawing it in June–it is a critical piece to the whole puzzle. Yes the SS and Medicare hit each year is huge.

    2. I have a similar account with Lafayette Life. It pays 4.3%. Basically you buy a life insurance policy and overfund it. The Life Insurance company is betting that they can make 7% and pay you 4% or so. Some years they win and some they lose, but they have an army of actuaries working the numbers on this. Although the 4% is not guaranteed, I don’t think they have ever not made the yearly payment. My account is considered a retirement account so the money grows tax free. It was also a tremendous help when my son went to college as it greatly increased his financial aid. The only downside is that this should be money that you are really not planning on touching until you retire.

    3. I have a similar account with Lafayette Life. It pays 4.3%. Basically you buy a life insurance policy and overfund it. The Life Insurance company is betting that they can make 7% and pay you 4% or so. Some years they win and some they lose, but they have an army of actuaries working the numbers on this. Although the 4% is not guaranteed, I don’t think they have ever not made the yearly payment. My account is considered a retirement account so the money grows tax free. It was also a tremendous help when my son went to college as it greatly increased his financial aid. The only downside is that this should be money that you are really not planning on touching until you retire.

  4. The new Enbridge offering that was recently discussed here will be trading today.
    The symbol is EBRZF.

    1. Wedgehead, what new Enbridge offering are we talking about here? I have missed that conversation. Do you know the terms?

    2. Wedgehead, I figured it out…EBRZF is the old recycled ENB.PR.D…These are very tricky and one needs to know the differences…We have been discussing here EBBNF which is the Series L. EBBNF is 5 yr US Treasury plus 3.15% set in 2017 and resets 2022 and pays USD..
      EBRZF is actually the Series D. It is 5 year Canadian treasury plus 2.37%, and was reset early in 2018 so it wont reset until 2023. One needs to know about Canadaian currency issues on this one if bought OTC through EBRZF. It looks like it trades blind pink sheet gray market like EBBNF does. I would need to study EBRZF harder as it wont compare or trade like EBBNF which pays in USD.

      1. Grid
        Love Canada. Love Canadians. Every time I got tangled up in one of their securities, not so much. Have you sniffed around ETP-D?

        1. P, It looked appealing…I just wont mess with K-1s, so that leaves tax free space and I am kind of locked in unless I sell something.

          1. Thanks for your insight Grid. I missed it around the low, somebody got a deal I think. I’m moving to the sell side to lock in some profits on stuff I don’t really want and raise some cash. Maybe we get another crazy run and that’s one I’ll watch.

      2. Gridbird, thanks for listing the terms – I’ll try to add more specifics in future posts of new offerings (or those new to the US exchanges).

        1. Wedgehead, I tried to probe the issue with a low ball bid…Get this Vanguard blocks it, and I would have to call in to try to put a bid in…But it allows EBBNF to trade online. Either the usual random Vanguard craziness or maybe they want a buyer to know its in Canadian currency.
          I went ahead and bought 10 more MTB- as the ask is sitting right at par $1000. Almost 400 basis point spread between 10 yr and investment grade QDI cumulative bank preferred at 6.375% is appealing to me. I bought 15 at 955 last week on a crazy day, so the 25 will be a full position on this one.

          1. Etrade took my day buy for 1000 at $1. I don’t know where they took it but I just left it there.

              1. Buying that EBRZF. At close of trading it will come back either as expired or rejected. Expired would tell me it’s alive. I don’t want but would take it for a buck.

                  1. Probably would sell it to you for that. Innovative Income Investor discount. It’s falls under my “I won’t trade rules”. I remember Canadian buck under $.50 and some bad experiences. Came back expired. That ticker is live but maybe didn’t start trading today.

                    1. P, Its trading….It just wont much…These types of issues can go months without trading. Probably very few sponsored shares and they dont have to fire sell. They can just sit on them. No market makers with these type of issues.
                      Actually it may be a good counter dollar trade if we dont get budget under control down the road. It could go to par one day and you would rake it in on that at current dollar exchange rate.

          2. Not willing to pump the cash in account so to cover my par MTB- trade, I flipped 200 of my CHSCO when it was over 26.30, after buying 80 cents less other day and flipped 400 of EBBNF a bit over $19. That has been fun…Bought those 400 a couple weeks ago at 18 flipped at 18.80, a few days ago and repurchased them an hour later at 18.20. And just flipped them again at 19.03. Working on those short term cap gains already, lol. Still have some CHSCO and 1000 shares of EBBNF so I am not dry there.

          3. Yes, it’s pretty weird Gridbird – I had no problems buying the other Enbridge preferred ADR (EBBNF) online on opening day (with respect to US markets), so I’m not sure what’s going on here. I’ll try the trade online again tomorrow and Friday if I can’t get it on Thursday, and if not I’ll have to call it in.

            1. Wedgehead, I wanted a piece of ERRAF as it is a Canadian reset from Emera, who owns many US utilities. But Vanguard wouldnt even put a bid in for me. It was blocked online so I called in, but to no avail.
              TD is useless on those types and TradeKing flat says they do not trade OTC securities that end in “F” (foreign). So I gave up.

  5. Happy New Year to everyone here and wish all investors a prosperous 2019 with all of their investment decisions. It has been an interesting year to say the least!

    Overall, I’m a big fan of Wayne Hughes and the way he has run PSA and PSB over the past decades.

    Have a great year everyone!

    1. Tim, “feedback is the breakfast of champions”, so I just want to let you and the community know that I am really learning from all the thoughts expressed on this site. I’ve taken positive action on several preferreds that have been discussed over the past few weeks. So enjoy your breakfast this morning because you folks are champions! Thank you.
      Ps: your wife sounds like my wife .

      1. BigBear—my wife is like this “why did we lose $100 today?” Then the next day it goes up $1000–nothing. She wants to buy only stuff that goes up–everyday.

          1. mikeo–yes Bea and Amy on here are too rare–wish more women had a higher interest in investing.

            1. I recently had a flashback of playing a game called Stocks and Bonds when I was about 12 or 13 years old. I had forgotten all about playing that game until it popped into my mind recently. I remember that it was in a fancy cardboard container that looked like a book that would sit on the bookshelf.

              I’m wondering if anybody else remembers that game. It was a good learning experience. I also remembered being seven or eight years old and writing down on a small piece of paper everything I wanted for my horse and how much it cost….and then recording how much money I had in my piggy bank. I still have that piece of paper. (I am 61.)

              1. Wow Amy–I would have been around 15 then and had nothing to do with stocks and bonds. I can imagine my dads look if I would have mentioned a stock – he would have rolled his eyes and said something like ‘we’re just trying to put food on the table around here’. The closest he ever got to a stock or bond was a government savings bond which he did buy for many years.

                1. What is strange is that my parents, like yours, were not invested in the stock market so I don’t know where that game came from.

                  I wish that my memory was better. I’d like to know the details of how my brother ( two years older than me) and I ended up playing that game.

                1. Ah…very interesting! This was manufactured in 1968 but our version must’ve been older because I distinctly remember a black chalkboard that we had to use chalk to write on. This one has a green (grease pencil?) board.

                  Thanks for the trip down memory lane! Now I’m going to go see if I can find one with the black chalkboard. That’s a very vivid memory of mine.

              2. Wow, I haven’t thought of that game in many decades, but that was a favorite of mine when I was about that age. Thanks for sparking a couple of neurons that haven’t been used in awhile!

            2. Hi Tim, I don’t contribute much because I am a newbie but love the info here. I started following gridbird on SA at first because I loved how he gave certain authors a hard time but then realized he has some great advice. I am a woman and building my retirement income stream for early retirement. I don’t flip like gridbird for tax reasons and my current job won’t allow it. This is the best site out there, keep up the good work guys!

              1. Hi Kitti—glad to have you here–the more the merrier. Don’t hesitate to ask questions–someone here will have something to say.

              2. Hey Kitti. Sorry to give you bad news, but I wont be able to call out those liars on SA who lie anymore…They censor my commments now. I let Rida have it the other day for being a liar when he said he had no “Top Pick” for 2018….But then goes on to brag about his 2016 Top Pick instead. He flat out lied…SKT was his “Top Reit Pick” for 2018 and its stock price was down almost 22% for the year…Ya no wonder he said he didnt have one…Anyways all I get to do now is post warm fuzzies because the liars get protected to protect the geese that lays the golden eggs. I did get a prominate writer the this week PM though to tell me how he was sick of those types of lies and how they made the honest ones look bad.
                I dont understand how anyone can take seriously any investment advise from anyone who lacks character and truthfulness.

                1. Same thing happened to me. Rida put out an article extolling the virtues of an investment in AMLP. I simply replied “…another CBL ?” ( which he foundly wrote on as it continued to tank) and like magic my simple comment disappeared, lol.

            3. I’m the wife and do the investing, my husband does EXACTLY what you describe “why did such and such go down” but mute when everything soars!

  6. Tim:
    Many thanks to you for the work that you put into this site. Much appreciated. You are doing a great job.
    Although most of the revenue from Cenex Harvest States (“CHS”) comes from the agricultural coop side, last year 2/3 of the income came from the 2 refineries it owns. CHS would NOT have been able to pay the $169 million of preferred dividends from the ag business alone ($74 million in income with $78 million in capital expenditures). IMHO Energy enterprises deserve a little bit more of a risk premium due to the inherent risk, volatility and long term price cycles of oil prices. To a certain degree you have preferred stock in 2 refineries in Montana and Kansas hiding behind the skirt of a grain cooperative. Will income from the 2 refineries be affected by the recent drop in oil prices, i.e. WTIC ?
    HAPPY NEW YEAR TO YOU, YOUR FAMILY AND ALL THE CONTRIBUTORS TO THIS SITE.
    – Dave

    1. Hi Dave–yes you are correct as to energy and I personally believe that there will plenty of tough times ahead for them—but the ag business will turn – sooner or later. They may have to batten down the hatches a bit, but from my experience whether it is a c-corp, reit or coop it doesn’t hurt to have to cinch up the belt a bit from time to time–they all suffer from ‘bloat’ when times are good and the bloat doesn’t get fixed until tough times arrive.

      Happy New Years to you as well–glad you are here.

    1. Alan–no I haven’t ever done so per se, but it reads like a list of everything we discuss on here.

      CHSCN, GAINM, GAINL, KYN-F, LANDP, SOHOK, ECF-A, TY-, CNLTN, NISOP, CNLPL, NCZ-A, SAF, SPKEP, GLOP-C, AMH-D, GLADN, GUT-C, GGO-A, VTWNX, IHTA, IHIT, GLADD, NCV-A, NTG, GABXX, FDRXX.

      The biggest singular security we own is KYN-F with almost exactly 2,000 shares. The largest position is cash type items (money market). We are pretty full to the gills with all the Gladstone issues–in fact some of those listed above are held in 3 of 4 accounts and I need to get this spread thinner since if I add them up some issues are way too high in total investment. You can see that of what we own it is from ultra conservative to high yield. 1 account is fully invested and has been all of 2018–don’t think I made a single change–also ended up being the best performing portfolio–up 1%.

      All 4 accounts are IRAs and that is the only stock investing we do.

      We have almost an embarrassing sized ‘savings account’ with Farmers Insurance–in fact it has gotten so large that it worries me and I think some will need to go else where soon–it has paid 4.5% since day one which was maybe 15 years ago–I don’t worry about maximizing a return here because with our situation the 4.5% is decent and it keeps the wife happy as she is so conservative she makes me look like Ivan Boesky.

      Also we have plain old checking accounts with way too much money in them–of course some here may think it is chump change, but we run anywhere from $30,000 to $50,000 in the checking accounts mainly because I am self employed a larger balance smoothes the slow times, plus it is there to pay income taxes which are way high (we have almost no real personal deductions)–a big chunk being the 18% I pay for being self employed (social security and medicare).

      Lastly we set up UHAUL investors club IRAs (2 accts) in 2018 and funded
      those (thanks to kaptain lou on this one). The debt I have been buying thus far in these accts pay 3%, 4.15% and around 5%–I have just transferred money into the accounts yesterday and will be buying some debt paying around 6%.

      Shoot just listing this out shows that we are a bit fast and loose on some stuff.

        1. Alan–it actually surprised me to find I am too concentrated in too few issues since I have many of the same issues from account to account so was a good exercise.

          1. Thank you Tim for being so candid with your holdings. It gives me extra comfort to know I hold some of those securities.

            May this pivotal year bring good returns to all.

            1. Hi Jay–yes for sure may this year bring fair returns to all.

              Thanks for participating.

      1. Tim, I briefly looked at the U-haul investors club a year or so ago but did not tip toe in at that time. I assume you are happy with it thus far if you are looking at adding more funds to the platform?

        P.S. Happy new year to you and your family and thanks for your hard work on this site.

        1. Hi Gary–yes after kaptain lou highlighted it I took a look and we opened 2 IRAs there. We haven’t shifted big money there just about $7,000 so far as we had already partially funded our IRAs in our eTrade and FIDO accounts.

          We can do everything online–although they are a little slow getting the money transferred from our bank (a week) and the interest rates paid-3% to about 7.25% are fair I think. Initially I stuck to the 3% and 4.15% notes, but am going to get some 5-6% notes next week when my money I transferred yesterday arrives.

          There is a $100 minimum note purchase so if a person just wants to tiptoe into something there is not a large commitment. There is zero liquidity after purchase–you receive quarterly payments of interest and principal–but you are committed to the full term of the note–not a problem if one keeps the total investment modest in size.

          UHAUL of course is owned by Amerco so one should feel comfortable with Amerco–there financials are available on their website and are reasonably good.
          Happy New Year to you as well Gary–thanks for being here.

  7. Happy New Year Tim…for my part I’ll continue selling into any rallies and nibbling on baby bonds with maturities of three years or less. Recoveries are rarely V shaped, and I want to accumulate as much dry powder before what I expect to be the next leg down.

  8. Tim, there is a large difference between AMH(American Homes for Rent) and the other SFH(Single Family Housing) reits compared to traditional reits. THE SFH reits are a “trade”, not an investment. They took advantage of very depressed housing prices to snap up a lot of properties to rent. As housing prices rebounded, by definition prcies reverted to the mean, i.e. fair value. In general SFH reits would NOT have a viable business model if they had to pay full market prices for houses. You essentially get a REIT that has NO long term growth plan for additional housing, unless we have another housing crash.

    Contrast that to other equity REITS, be then in apartments, office buildings or industrial properties. You can envision growing their assets for 10 to 30 years.

    None of this means that AMH will default on their preferreds, but you should understand the long term outlook for the company. AMH originally offered two preferreds that included a home appreciation kicker in addition to the coupons. They worked out well, but sadly were both forcibly converted to AMH common.

    1. Tex, despite my hope that AMH Preferreds to regain its old glory, you have a valid point. At least one Realtor told me that the market for sellers of existing homes had been accumulating inventory on existing homes. This is especially true for upscale SF homes. AMH typically were buying a whole bunch of homes when the real estate was booming fast and furious. I live in Orange County, California. Not sure the turning to the buyers market is seen in other locale.

    2. Tex–I wouldn’t buy any of the SFR common shares, but I like AMH preferreds and the company is actually going to turn themselves into a long term business of renting these units–really won’t be much different from the apartments REITs-just need mass.

      I think those initial preferreds with the appreciation kickers were just another example of the different angles issuers can take to reduce the initial coupon.

      1. Tim and Tex, while I hate to vacillate on AMH-D, I bought 600 shares at the IPO primarily based on my assumption that David Singely founder and CEO of AMH was a co-founder and co CEO of the famed Public Storage with AMH COO by the former COO of Public Storage Canadian COO. I have been considering this holding as almost like de facto SWAN just like CHS, Inc. the Agri Coop. I took comfort when Bruce Miller wrote an article on SA revealing his example portfoilo of this holding. I also bought tons of AMH-E but sold most of them at the opportune time when the prices gapped up on one good Quarter. AMH is a decent REIT. In a recession, which should precede double digit inflation, IMHO, it should hold much better in valuation as compared with higher dividend mREIT and mREIT preferreds. In this stormy climate, between Trade War driving down all the shipper preferreds and oil prices and commodity related vs. Fed’s aggressive rate increases PLUS huge federal deficit as opined by Steve A, AMH could be faced with uncertain valuation. At the current price, AMH-D seems to be undervalued with its decent coupon.

        BTW one of my recent purchases was BC-B. an IG note. 6.625% BC was unlucky in issuing a second preferred, making income investors doubting its leverage and the shares of the B was way below the BC-A 6.5%. Last Friday it did gapped up and my limit order was not filled. I have modified my limit order to the last Friday’s last price. I like NISOP better, the utility QDI preferred which should weather the storm than BC-B. What is the risk of BC-B, good business but could with very low probability, double downgrade as the TDS or CTL or USM. Yet none of these had any existential threat, except USM in one quarter, scared the heck out of me with blatant negative income.

        1. JohnKCal–thanks for your input. I think there will be lots of uncertain with many issues with a recession and yes AMH would be one as they would likely have to mark down the asset value on all the houses weakening the balance sheet. Yes SteveA has been relatively correct in his worries–but I have worried about such things for years–the question is when does it all come home to roost?

  9. Tim,

    Thank you so much for your Herculean efforts to help your fellow and lady income investors. The tips on American Home 4 Rent (AMH-D), my legacy 600 shares which I did cash out when both AMH-D and AMH-E gapped up before it got downgraded by Moody presumably for its preferreds debt load. I do remember that VERIET came from that activist, then owner of the Chicago Tribune and LA Times, saved American Capital Realty claiming that they want to be a bigger eREIT than O (Realty). I sold my preferreds taking profit. For whatever is worth. Rida et. al. have a recent BUY signal on BPR (the equivalent of the partnership shares without the K1. Rida told me that my membership ends in Jan 11 or 12 or so. However, your possible pick is a preferred much safer than the huge pro forma dividend for the common shares with HUGE debt load.

    BTW, I have doing some study. The issue which holds the value best throughout the current storm is DTY, just a baby bond from DTE. When I did a comparative chart for 1 and 2 years using FIDO, DTE has good correlation with the recent CNP, the issuer of the mandatory convertible preferreds (CNP-B). Among my recent IPO purchases. CNP-B seems to withstand the storm. Years ago EBay has a baby bond with 6% and fared well. Unfortunately I sold them both with the Taper Tantrum. Perhaps, Gridbird’s secret sauce has a good positive correlation with the utility like bonds. I sold some CNP-B with the aim to buy NISOP now asking $25.04. I do believe that NISOP is the best deal on safe IG issues. I intend to hold all my remaining shares of CNP-B.
    Happy New Year to you and your family, Tim.

    John

    1. Interesting info John. I do have a starter position in NISOP also and will probably add to it–it has been as firm as can be through the downdraft and at a 6.5% coupon certainly is a great IG offering. I was watching the CNP-B also–Grid doesn’t do anything with convertibles if I remember correctly.

      I hadn’t watched the DTE issues–those maturity dates that are 50-60 years out keep me away from them–at least those lower coupons–if they had current yields in the 7% range I would be more likely to own them.

      1. John and Tim, yes, I dont invest in mandatory convertibles. Nothing evil about them. Just for me its another variable to deal with I cannot control,as they are directly tethered to the common stock. But admittedly I dont own common stocks, so that is part of my problem there.
        Now I do like perpetual convertibles, busted convertibles, and owner optional convertibles though if opportunity presents. That old Bunge perpetual convertible is getting closer to my interest level again.
        The NISOP is a nice core hold I think. We havent seen a 6% traditional ute preferred since 2006 and it is long gone. You dump a half billion in preferreds into the teeth of the depressed preferred market and it hugs par the entire time that says something….Plus as a diversifier, how many opportunities do you get a 5 year adjustable reset off a 5 year Tbill instead of Libor? They adopted the Canadian styles as the Enbridges and Emeras of Canada started issuing off 5 year US and Canadian bonds.
        Utes rarely issue QDI preferreds anymore, so here is a chance. Alabama Power sent one 15 months ago, and that was the most recent.
        Now they did try to blow up a town with their gas line and that probably is why we got the 6.5%. As they issued their first preferred just 6 months ago with a 5.6% yield in a private placement. But when the dust settles, the insurance will cover the costs management said…And what is quietly known is they will “upgrade for safety” and you know that is a code word for eventual rate recovery in passed along costs to consumer.

      2. Tim, I did the comparative chart trying to get the common thread vs. CNP. Both the 1 year and 2 year suggest that CNP is a better stock than DTE, more restrained drawdown when it gets down and much higher or steeper “recovery” in up markets. Perhaps this could be okay. I bought it between 10/1 and 10/3 at IPO. Amy took a look at the complex mandatory. If the share prices for the common when it becomes mandatory, then it would be better to invest in the common. Otherwise, enjoying the 7% QDI with SP BBB. From QNL, “If the Vectren Merger has not closed at or prior to 4/21/ 2019 or if an acquisition termination event the Issuer will be required to redeem the Series B Preferred Stock”
        I suppose the Company is using the proceeds to make acquisition or merger the Vectren. The word Energy, although in delivering to the producers. However their 40%+ biz in electric and gas makes it less dicey problem. Hence, I believe that NISOP is safer but CNP-B can give more yield. Like you and RazorbaEA always say, there is no free lunch. Probably because of the convert, there has no posting on SI.

    2. anyone notice how far Ihta has fallen in recent weeks
      now below 9 dollars
      any issues
      2024 maturity

      bob

      1. Hi jazzbob–yes I see that now–hadn’t paid much attention. Any lower and I may have to add just a little.

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