Here We Go!!

The futures markets in stocks were way up and way down overnight–but now are up by over 1/2%. A guessing person would say we will be seeing some pretty wide swings today.

Last week cost us personally around 2%–almost all of the losses on Thursday and Friday and they were biggest in perpetual preferreds–that should be no surprise.

Here is what we are doing today.

1st off we are doing nothing–we are going watch and see if stocks and bonds hold steady in here. I don’t care if stocks fall again–but I hope these moves are kept to the 1% area.

2ndly we are shopping in the short maturity issues-those maturing in the next 10 years.

We are also shopping in all utility and CEF preferreds and baby bonds.

The last area we are watching is the mREIT preferreds. Theses issues are offering plenty of value, but being perpetual they may have more volatility.

So our theme is quality and/or short duration with a sprinkling of perpetual preferreds. Some folks may remember that I have always tended toward the shorter maturity issues–baby bonds and term preferreds–this serves one well with wild markets, but you give up some coupon.

Everyone should note that many of the quality issues are still expensive–but they have a lot less call risk in them–so if they were a good buy at say $27 they are a bunch better at $25.50 (or whatever the number is).

The CEF preferreds are here.

The shorter maturity issues can be seen here (slow loading page). How about the Gladstone Investment 6.375% issue now at $25.35 and not callable until 8/2020 with maturity in 2025?

The utility baby bonds and preferreds are here. How about the Entergy New Orleans 5.50% (ENO) baby bond issue trading at $25.13. First callable in 4/2021 and rated ‘A’ by S&P? This is a first mortgage bond.

As far as selling–I don’t see anything that I plan to sell right now. I have plenty of dry powder and while I hold the Golar LNG Partners 8.75% (GMLPP) which got hammered, I bought only 200 shares. I also have an overweight in UMH-D–I plan to hold the issue. In spite of UMH being ‘hated’ I see little fundamental risk in the issue (although I ‘mark to market’ in my mind everyday–none of this ‘you don’t lose money until you sell–I have lost money on this position).

17 thoughts on “Here We Go!!”

  1. Some things I just dont understand. I decided to get back into RPT-D after it got too high and sold and today decided why not reenter a small 200 share position. Ask was 50.86 and my bid was 50.85. I got ahead and change order to 50.86 to get them and next thing I know my transaction went off at $53.51. And no volume occurred before my changing bid order either. And immediately after my purchase bid was 53.75 and ask was same 53.86… Im not complaining though so dont get me wrong, ha.

    1. I’ve never seen a price improvement of $500. Though I’ve recently added the odds of price improvement to my analysis of trades.

  2. Impressive upside rip in stocks. However, I wouldn’t read too much into this. I don’t have access to quotes on credit spreads but I understand from someone who does that they are widening instead of tightening. Not supportive of the current upward spike in equities. Be careful.

    1. I sold everything I bought Friday at a discount. But I only bought small amounts Friday. I was a coward.

      Big winner CIM-D. Bought this morning at 25,26, sold 2 hours later at 25.94. But I only bought 200 shares testing the waters.

      Bought MFA-B below par. Who in the world is buying the new issue at 6.5%?

      1. good call, martin. I was laughing at some of the called issues dropping below par, mfa-b included. Between a laggy internet as of late and my toddler being home on Friday, I didn’t get all the purchases I wanted but I got a few.

  3. Incredible irrational exuberance on “AAPL” from friday to today. From $256 on friday to now $293 right now. Thats just crazy. I didn’t realize many people have NO CLUE.

  4. Tim – Thanks for mentioning ENO. I really like this one, and bought a half position this morning. Couldn’t get it for the $25.13, but I’m happy to have it now.

      1. I have several starter orders also. Not filled. Stock market recovering too quickly for my taste. Treasury Bonds still off.

  5. Thanks for the spreadsheets! But, one thing. You wrote:

    How about the Gladstone Investment 6.375% issue now at $25.35 and not callable until 8/2021

    Both the link you included and QuantumOnline say GAINL is callable in 8/2020.

      1. I am not terribly concerned with duration risk, assuming the Feds are under tremendous pressure, be it political or otherwise by the so called “demand destruction” by so many of CNBC’s pundits, some of former Fed board members, so I have sold all my shares of GLP-A (one of the few transportation still seem to have positive EPS and trading nicely above par) on my IRA account, with the proceeds trying to get LMHB, unloved IG rated note plus CHMI-A (small but seemingly agile mREIT preferred). Plus some CORR-A, so so Earnings Call transcript, not stretched maintaining its pro forma dividend of 8%. Very nice recovery on the shippers, GMLPP, even some GMLP and GLOP, A, B and C. Picked up some EWBC following one SA article (most of their biz is actually in the USA with lots of non interest paying deposits and decent dividend and actually had a great quarter right before the Coronavirus breakout). My other recent purchases are not good, e.g. CDR-C, or DTY and all the BEP-A (BEP nontheless is a good recent buy). Not terribly worried. DTY and BEP-A should be okay going forward. Traditional energy for DTY and it seems that we can always trust Brookfield. It continue to rock, unbelievable. Some SA pundit wrote an article on some weird renewable with tiny dividend (FAN), ridiculous pick, it seems.

      2. I am not terribly concerned with duration risk, assuming the Feds are under tremendous pressure, be it political or otherwise by the so called “demand destruction” by so many of CNBC’s pundits, some of former Fed board members, so I have sold all my shares of GLP-A (one of the few transportation still seem to have positive EPS and trading nicely above par) on my IRA account. Picked up another 200 shares of 200 shares of LMHB @$25.22 with ex div 3/12. unloved IG rated note. LMHB with its 5.45% not tremendous duration risk because its sister LMHA 6.375%, callable 3/15/2021 is trading above $26.
        I try to get some CHMI-A (small but seemingly agile mREIT preferred). Plus some CORR-A, so so Earnings Call transcript, not stretched maintaining its pro forma dividend of 8%. Very nice recovery on the shippers, GMLPP, even some GMLP and GLOP, A, B and C. Picked up some EWBC following one SA article (most of their biz is actually in the USA with lots of non interest paying deposits and decent dividend and actually had a great quarter right before the Coronavirus breakout). My other recent purchases are not good, e.g. CDR-C, or DTY and all the BEP-A (BEP nontheless is a good recent buy). Not terribly worried. DTY and BEP-A should be okay going forward. Traditional energy for DTY and it seems that we can always trust Brookfield. It continue to rock, unbelievable. Some SA pundit wrote an article on some weird renewable with tiny dividend (FAN), ridiculous pick, it seems.

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