I Went on a Buying Spree–Relatively Speaking

In one of my accounts I went on a buying spree of sorts–I hope not too early.

I opened starter positions in a number of issues today as the ‘baby went out with the bath water’ and investment grade utility and CEF issues presented what I thought was a buying opportunity. We will know in a month whether this was a wise decision.

Remember that most of these are just starter positions and if they fall more I almost without a doubt would add more.

Here is what I added today.

More Ellsworth Growth and Income 5.25% perpetual (ECF-A) at $24.70.

DTE Energy 5.375% baby bonds (DTJ) at $23.49.

DTE Energy 6.00% baby bonds (DTY) at $24.99.

Duke Energy 5.625% baby bonds (DUKB) at $25.05.

Entergy New Orleans 5.50% baby bonds (ENO) at $24.39.

Nextera Energy 5.65% baby bonds (NEE-N) at $24.86.

I think being able to secure some investment grade issues around 5.75% to 6% current yields is a small gift–but we will see.

Note that some of these issues have 2, 3 or 4 years of call protection some do not, but at these prices I am not concerned.

I can’t predict tomorrow, but I hope to move to a different account looking for some quality issues.

As many of you know WHEN we come off the bottom it will be the middle grade (and even junky issues) that will head higher 1st and strongest–BUT this is when we come off the bottom and we don’t know when that will be, but we will be holding cash to do some buying there in select higher yielding issues.

51 thoughts on “I Went on a Buying Spree–Relatively Speaking”

  1. Tim,
    I think the ticker for your first buy should be ECF-A not EFC-A, fwiw.
    f

  2. Missed out on buying yesterday being on a plane all day, missed out on trading the last 10 days for travel. Being away from the thicket has shifted my thinking as this looks to be a long haul. I’ve been waiting for so long for good deals that I eagerly snapped up too many issues two weeks ago in the first wave of crashes. I have to be more patient.

    Balancing between lower for forever fed rate and credit/liquidity squeeze brought on by covid19, the preferreds do look more attractive. If the fed funds drop to 0.5%, it means a 5% preferreds yield 10X but is it payment enough for risk? I’m thinking yes and wondering how much portfolio I should allocate to safer utility BBs and safer bank preferreds. 20%.

  3. Things I have bought since the meltdown.
    CBKLP
    SLMNP
    DTQ
    SR-A
    NGLS-A (dumb)
    UGT (also dumb in hindsight, I didn’t think it would get this bad but maybe OK longer term)
    IHIT
    VER-F

    Most of these are things I always wanted to own, or wanted to increase my position in.

    I held onto my midstream stuff too long and now I will just have to ride it out with those. That worked in 2018, but this will be a longer downturn. Part of the problem is that things looked like they were holding up, and then you turn around and the bottom has fallen out by the time you get back around to looking. Lots of lessons being learned. I figure we would all learn more by relating our misses. People tend to only want to brag about what they get right, but that information is less useful.

    On all my stocks I put trailing stop percentage orders in early on and am waiting to go back in. I figure if I miss part of the fall I can miss part of the climb later and come out even, or a little ahead.

    1. Thanks for sharing your list Scott. Purchased similar including a small portion of UGT as well as dripping little by little into USA CEF starting yesterday. I appreciate your candor as it makes me feel less stupid about nibbling on Maratho MPC and Valero VLO last week which really bites now!:).

  4. TDS baby bonds plunged 20% today, while the common was only off 5%. Is the coronavirus eliminating the need for cell phones or something? I would think there’d be an increased demand for phone/tv/internet services with people being quarantined at home / working from home.

  5. I bought some VER-F today. I love the company, yield and the monthly pay option. To get it at a sharp discount to par I felt was an absolute gift.

    Call protection is off and they have redeemed portions of the issue already.

  6. Does anybody else find this appalling? backstory: i have about 20% of portofolio in preferrreds, rest in stocks and stocks with good yields (not high risk) etc., some in growth stocks, 20% in bonds, etc. My “advisor” from brokerage calls tonight and says we are calling our 60 and over clients to see if we can do anything for them and I notice you lost a lot of money… and then proceeds to try to sell me some of their products including annuities. is it just me…or is this just wrong?

    1. That is appalling. He/she is trying to see if you are in a panic to take advantage and sell you their product.

    2. It’s just business, Franklin. Opportunity. He wants his yacht and doesn’t really care what you’re rowing.

      A broker put my sick 85yo aunt in a fixed income instrument that locked her in for 5 years and just shrugged when I called him about it. So it goes…

      JMO

      1. Camroc, agree and also that’s repulsive what the broker did to your aunt. fyi: “So it goes” is a great reference to Vonnegut’s Slaughterhouse Five.

    3. …time to change brokerages. I would have told him/her to screw themselves.

  7. The infamous question is when will be the right time to buy? I brought a very small amount today relative to my cash position. I stopped buying. Why? The only thing that was changing was the price of stocks and preferred’s. Isn’t that all the matters? Maybe, but still no clarity at all, on the following questions.

    When will large scale testing be in place for this virus?
    When will the OIL price war between Saudi’s and Russia end?
    What economic packages will be provided to businesses and people?
    What will this do to company earnings?
    Will this trigger a financial liquidity crisis among companies?

    I stopped looking at all the bargains. Maybe, I will miss out on all these bargains and just recover my losses. I would be very happy with that. Maybe, I’d be buying too early and adding to losses – that would be very bad. So I stopping trading. I would like to see answers to at least a few of the above questions before increasing my overall exposure. I have basically stopped trading for the short term (may buy some and sell some). 59.5% of my net worth is plenty for me right now.

  8. Was able to add to some some muni closed end funds that I own that traded down 8% at the wides today. Not sure why muni funds down so much but it must be sellers w/no buyers.

    1. SCOT
      bought both PML and PNI at discounts to nav which for pimco funds is quite unusual. Which if any funds did u think especially interesting.? tia sc

    2. Scott–yes liquidity locked up and munis went out to generate cash–hopefully we will see some relief now.

  9. I was more daring/foolish picking up RLJ-A at $16.70 near the close. Dropped more than 25% on the day.

    1. Tim
      with all the destruction today several of your buys were neither cumulative or QDI i.e. duke and eno. Just interested in why you were picking them rather than one that has slightly better terms. The answer may be the intrinsic quality of the company but would value your insights as have been tending to think that cum and qdi were required to make an issue interesting. tia sc

      1. SC–they are all bonds so they are better positioned in the capital stack which is why I bought the ones I did. I will be looking at the Spire preferred SR-A and NiSource preferred NI-B each of which is QDI and Cumulative. Also all my stock investing is in tax deferred accounts.

        1. tim appreciate the clarity. Mine are in taxable accounts which makes a difference. Good luck with your selections. Best SC

    2. I bought as well Gumfighter. I had a small position bought long ago at 26 and wondered why I didn’t buy more as it rose to 29.

  10. We definitely don’t seem to be in Kansas anymore Toto!

    Lots of my high yield issues are very iliquid and the pricing does not make sense until you get to the level 2 screen. One issue LMRKO has a range of bid and ask that’s amazing — $15 and $30 per share (it has a $25 par).

  11. ARES – A

    7% investment grade
    qualified / c-corp

    is this worth a squeeze?

  12. Thanks for sharing, Tim. I bought in smaller quantities but bought more issues today than in recent days. I think we’re all noticing the draw towards the ute’s in a big way here on the board. We all better hope that the low interest rates don’t cause the public utility commissions (puppet masters) to want rate renegotiations for consumers. That has the potential to slice earning big time. Didn’t we see some of that in recent years when rates were substantially higher? I lost track…

    My beloved NEE common stock… What a slashing it’s taken. Same for D, DUK, SO, and so on. Of course, this has trickled down to their ETD and Pfd’s as we know.

    1. A4I–I noticed that the NiSource and Spire preferred that were trading in the 27-28 area are both near 25 now—Grid-do you still have these?

      1. Tim, I bought quite a bit today of SR-A between 24.20 and $24.50 today. Laclede Gas has been around since 1840s, and keeps raising common divi stock yearly. The world can kiss my butt, I bought under par and 6% plus QDI. I aint selling and it can go to $12 and I would sell something for a big loss and buy more!:)
        No interest in NiSource. Dont like the reset in terms of where its price is at. Its price point isnt in the same league as Canadian ones. I bought some more Series J Enbridge. I would rather own Enbridge with 3.05% reset plus 5 yr USD at $14 than NiSource 3.65% and 5 yr at $25…
        Just my opinion. 🙂

        1. Great point on NI/PRB reset terms.

          A swap of NI/PRB for SR-A would make sense for me at right prices

          Similar credit bureau ratings

        2. Grid–will be after Spire tomorrow more than likely. Of course only God knows what tomorrow brings.

          1. I really hate to hear that, Tim. A lot of us will then likely be bidding against each other.

            I offloaded some old illiquid railroads paying 5% of cost today and moved the proceeds into SR-A, IPLDP and, yes, more EPD. My income has never been higher and I have more cash to invest tomorrow should this craziness continue. Let’s hope so.

            I don’t phantom mark to market and don’t agonize about unrealized cap gains or losses. I just care that what I own continues to pay me. And I think the three above will do that.

            JMO

            1. Camroc, Im bowing up, I got my fill unless it goes to 7%. I have too much already. But it is what it is. As far as sleeping well goes, I could have half my money in it, which is my local gas ute and the other half in Ameren ute preferreds (which is my electric company) and not lose a bit of sleep at all.

              1. Grid, my company is one of Spire’s customers. If this gets worse, and companies shut down I don’t think they can. Takes a lot of gas to run those smelters

        3. Grid,
          What about EBBNF and EBGEF? Did you flip out on time, are you still holding them or buying more, or did you sell at a loss?

          Thanks to this website, I flipped them a number of times, except the last buys @ around $18, but still overall have a small profit.
          Hold or just dump them now?

          Thx

          1. Dan, I got out in mid $18s. Good timing..Started toeing back in last week with Fairfax.. Just renentered Enbridge Series J yesterday and today in $13s and $14s. I just picked Series J but other 2 are fine also.

      2. Was so tempted on SR/A but I went with NRUC and CMSC due quality of the companies.

        1. Steve, I own those also, and you are wise to buy what you trust especially in times like this. But for me, Laclede is my local gas company and their headquarters is here. They got a nutty rating. Laclede (Sprire I guess is what they want to be called now, whatever) cause me less sleep than the other two. Their earnings should be growing because of a new pipeline they put in. They are like Stacy’s mom and they got it going on. They just raised common div 5% last dividend.

          1. Gridbird…love that song! Think I’ll play it now. Good to lighten the mood.

  13. Opened 25% starter positions in both

    CMSC (at 24.60 which is 6% current yield BBB- and BAA2) Call date 10/23
    NRUC (at 25.00 which is 5.5% current yield BBB+ and A3) Call date 5/24

  14. Tim
    I like your choices, after taking such huge losses this week that i never thought could happen in one day, I am going to limited my purchases to utility preferreds and possibly high coupon large banks that have got slammed, like c.j.
    I’m wondering if you or anyone else knows of any utility term preferreds or baby bonds with shorter maturity’s of say 3-5 years.

    1. RK,
      Most of the ETD ute related stuff that I see or have is of the mandatory convertible flavor and all have been slaughtered beyond belief. CNP-B, DCUE, DTP.

      PPX has been the most stable, IMO, trading past 1st call.

  15. I’ve been on a trading spree. The only thing I bought without selling something else was NLY-D and a little SLV.
    and I bought a 1.9% no-penalty CD in case it’s going to be awhile.

    1. Martin. I can’t follow you in all your trades, you are very nimble, but I’m happy to say I laddered 2% CDs for the next two years the other night. Security is golden Good luck!

      1. Mostly I’ve been selling an issue to buy another issue from the same company. When prices move wildly there’s bigger price divergences.

    2. I gotta a 3.2% add-on CD at nfcu. But it expires in June. After that idk. Hopefully by July / August everything is settling down and no secondary outbreaks. I’m semi young but I sure wish those cd rates from the early 2000s had came back. I prefer fixed rate CDs over this game of stocks.

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