Illiquid Securities

On this page folks should comment and write about illiquid securities–preferreds and baby bonds. By Illiquid I am talking about those issues that seldom trade–or only trade in very small volumes.

We have a lot of discussion on the site about these types of securities–normally $50 and $100/shares issues and the commenting gets scattered about–by using this page we can keep this topic more centralized.

A caution to all investors, but in particular those will little experience in illiquid securities. Tight limits must be used on all of these securities–if you don’t use limits you will butchered. Also while some of these issues have been outstanding for more than 50 years they can still be called–it happens and if you overpay (pay more than liquidation price) you may be setting yourself up for a loss. Always do your own due diligence–always double check the facts–everyone makes errors (certainly I do) and you need to know the facts.

Investors should know that illiquid securities will drop like a rock if there is a large move higher in interest rates. One of my current and long time holdings has been a $50/share issue from CEF Tricontinental (TY-P or TY-) with a 5% coupon–very high quality. This issue is now trading around $56, but in its life (issued in 1963) it has traded as low at $18/share–so there should be no doubt they can move sharply.

225 thoughts on “Illiquid Securities”

  1. Doing a little useless surfing over coffee and discovered something I didnt know. For any Hawaii Electric preferred owners (or ones patiently waiting for a spill deal) who did not know, they are one of a very few subset that allow preferred shareholders to take majority control of the Board of Directors if 4 payments are missed.
    This provision just isnt around anymore, most preferreds from any company now are allotted the now customary 2 seats until paid. The Indianapolis Power issues have this mechanism and that is all I know about. Some old noncallables from various companies have the provision but the hold co’s own the majority of those shares negating that provision.
    For any who own Hawaii Electric here is the best primer info stating all about the preferreds I have encountered.
    https://sec.report/Document/0000354707-20-000045/
    Occasionally one can benefit from a mini dump to find relative value with these, however presently, there is none. Though one must be aware these are $20 par and $21 redemption preferreds (except Series I which is $20 redemption) not the customary $25. I own some of the Series J, but I need to see a price drop to get my investing loins more interested in accumulating.

    1. Thanks @Dick Whitman.
      Just what I was looking for. As long as I get it below redemption, I am glad to hold onto a 4.5% in my conservative cash portfolio….
      Malka

  2. The current ask for PPWLM is $160. This is a noncallable so that would be a yield of 4.38%. PacifiCorp is owned by Berkshire Hathaway. This issue is rated Baa2/BBB+.

    1. Oldman, I would bird dog them a bit down from there. I got 100 today at $101.95 to go with another 100 I purchased pre exD. A fair value type hold for me. Mostly bought to balance out the heavier higher yield flipping game I have been on lately.

  3. UEPEM is being offered at $100.00.
    XD date is tomorrow, for a dividend of $1.00.

    Only a 4% QDI yield at this price, which is likely too low to attract very many folks.

    The company can call this issue anytime at $105.63, so no cap loss risk.
    It has been a stable & reliable income stream for me, I consider it like a High yield CD.

    I bought another 100 shares at $100.10.

    1. I would probably prefer UEPEP here. It’s being offered at $103. If you strip out the next dividend of $1.14 per share, you’re getting a yield of 4.48%. It can be redeemed for $102.47 per share. Since redemption soon is unlikely, I’d probably go for the higher yield. Thanks!

      1. Dick, I already have UEPEP.
        I think both are great holdings IF one can live with the admittedly low yield.
        You are correct that UEPEP produces a higher yield.

        I might go get a few more UEPEP today, now that you have drawn my attention to it. :-))

        1. Guys, what about UEPCO? Current yield 5% at last price of $110 (if I’m calculating correctly)? I can’t find a prospectus, so I don’t know what the call risk is, however.

          1. Bur, if you could get it at $110 or under for no call risk. I believe it has to be called at $110. It trades very little though. 1 share traded in Nov, and 6 shares in Dec. I don’t like having buy orders sit out there for a few months.

          2. UEPCO appears to be of similar flavor to its sisters UEPEP & UEPEM.

            Looks like there were only a few trades throughout 2020; really fits the definition of “illiquid”.

            If you can get some at a good price, it would be a great investment. The challenge here is to find a seller. Call risk is zero if one buys at or below $110, as that is the redemption price.

          3. Bur, there are about a half dozen or so Union Electric preferreds. UEPCO is the smallest (though they all are small as combined they are about $60 million, in other words combined the same size as LANPP being issued today, and it is considered small in and of itself, ha). These issues were IPO’d in the 1940s and 50s with UEPCO being the last issued.
            They really are subsidiary Ameren MO preferreds (not Ameren the parent, AEE), as Union Electric ceased to be called that many years ago. For some reason Ameren never changed the name of these unlike the Ameren Illinois preferreds were when acquired.
            Basically if any are ever redeemed, all in unison will be redeemed. They may never though. I have owned and flipped in past, but as Mr. Conservative said it just is too hard as only 50,000 exist and I am sure most are tied up in some preferred funds. I own several Ameren Illinois preferreds, but UEPEP is the only Union Electric issue I presently own. I personally wouldnt chase too far above redemption price but you may need to be very patient as Mr. C said it rarely trades.

      2. Dick, I decided to pick up a few more shares of UEPEP to round off my holdings to an even 200 shares.

        Thanks for the heads up.

        1. Glad to help. If you have some extra cash sitting around, RNR-E may be another one to look at.

          1. i picked up 3,000 shares of RNR-E. I usually buy near this level and flip out if it goes above 25.70. Another good one.

          2. Will look at RNR-E. Would like to get at a price closer to par + accrued interest if possible.

        2. Inspy, Ya got the day after bounce on Power Reit today which puts it at “par” plus accrued….Are ya gonna be man enough to hang on and see what happens?

          1. Oh yeah. Definitely will be hanging tough on this.

            I got PW-A for $25.24; whenever a call comes, should get more in par + accrued interest. So this is a gravy train to be ridden until termination of the ride.

            Have way less shares than you, so it is a small position which will not move the needle much, if at all.

            1. Inspy, Ya I got a little eager beaver here. I own more than the amount that traded today that is sure. They typically wait and declare about 2 weeks prior to record date, so end of this month is “show time”.
              The dividends as has been recently will most likely be “return on capital”, as they are working through a 2017, $16 million tax “NOL” (Net Operating Loss) from unwinding of the Railroad lawsuit. So thus highly profitable now, they are paying no income taxes until that is exhausted.

              1. That is news – good news – that I did not know about. So they have a NOL that they need to work off? Great, so my cost basis will go down, which is good for me because I have big carryover losses to work off as well.

                Will hold strong

              2. (If and when I ever pick up any PW-A) Does the distribution for this one actually show on your broker’s statement as ‘return of capital’? (As opposed to them showing as dividends and you “just having to know” and accounting for it correctly at tax time.)

                1. Good question, I cant answer it. When I have held it in past has been in tax free accounts, or in taxable on a quick cap gain flip without a divi.
                  Brokerages tend to assume and be generic which may not properly reflect Power Reit tax status. Whether they correct later I dont know.
                  They do officially post it after year end though.
                  https://www.globenewswire.com/news-release/2020/01/29/1977086/0/en/Power-REIT-Announces-2019-Dividend-Income-Tax-Treatment.html

                  As far as buying it now…Make sure you are aware of call risk and current pricing in relation to that risk as it recovered from the buying 2 days ago.

                  1. Thanks the cautionary note Grid. Yeah, not for me at the current price. Too bad I didn’t act on the dip Tuesday.

                  2. After reading the posts from you & Bur, remembered that I had bought PW-A in my IRA, not a taxable account!

                    So the return-of-capital feature will be moot in my case.

    1. Justin, ya got your hands full snagging. 5600 shares left outstanding at DTC (And that is assuming BAC doesnt have some of those, too) Its noncallable 7% paper, great if you can get…
      http://investor.bankofamerica.com/fixed-income/capital-issuances
      The trades the past 11 years….
      12/22/2020 13:11:58 EST I 15.50 40 OTCBB
      10/28/2020 9:30:21 EDT I 9.50 2 OTCBB
      12/20/2017 12:43:49 EST 0.001 10 OTCPK
      04/27/2015 15:25:50 EDT 80.00 26 OTCPK
      08/13/2009 14:46:45 EDT 54.90 100 OTCPK
      08/13/2009 14:46:32 EDT 54.90 259 OTCPK
      07/23/2009 12:17:04 EDT 30.25 219 OTCPK
      07/23/2009 12:17:03 EDT 30.25 219 OTCPK
      04/14/2009 9:44:13 EDT 35.00 131 OTCPK

      1. held at DTC is different than outstanding. That just means they’re held in street name at cede & co vs certificate form. My data shows 7571 outstanding (not that it makes a huge difference)

        1. Dont disagree, but certificate form is typically not a likely trade. But what isnt showing is what the company owns from whats left and what is actually tradeable. Assuming the posted trades are correct above, there may be less of a truly “tradeable” float. Which could be a very different number than total outstanding and at DTC.

          1. Sure, that is generally referred to as the “float”, the shares that are freely tradeable. Would agree that the float is likely <= than the total held at DTC depending on if BAC has repurchased any and has them in the treasury but still in street name

            1. Its hard to determine without any company acknowledgement. I know only through company statements that at least two of mine have a significant smaller float than what is published as being outstanding. But it wasnt easy to determine as I had to hit some PSC filings to flesh those out.

            2. is it chilled for deposit or withdrawal?
              This thing could kill me in commissions if it gets filled one share at a time, so this is definitely one for the all or nothing option.

  4. Could not resist the bid, and sold 20% of my AILLL position at $31.10.

    Tomorrow is XD, but even with the dividend loss, it’s a pretty good sale price.
    Thinking that I will have opportunity to buy the stock back below $30 in due time.

    1. Nice play, Inspy!
      I wish I could find another illiquid to switch to lock up some nice gains in liquidville. But they keep stair stepping higher and some modest juice flipping and reentering to keep goosing things. So its hard to stop there when its going good.
      I did see APRDM dumped at $103 for 300 shares. So I set lead bid at $103. 200 more shares sold afterwards but the ahole back room club stole them from me and gave to somebody else at same price.

      1. Sold some of my CNIG yesterday at 16.00 bought around 15.50 see its moved higher. Without targeted spending by the government instead of this talk of dropping 2,000.00 on everyone including people who don’t need it is like throwing kerosene or is it gas on the fire.
        I think treasury rates will continue to move up especially as overseas investors re-think the stability of them after watching the Shenanigans of this past Wed.
        If rates move up, then fixed rate assets will move inverse to them. May also be a good time to look at Canada and EU if the dollar falls

        1. Charles, Im 0-2 on receiving govt checks, so it isnt everyone getting them, lol. But hey, my Dad got one. The trouble is he couldnt personally spend it because he died in 2018.

          1. 2-2 Grid, just went into savings. My daughter blew a cork when she found out my granddaughter who is 18 and living at home with no bills supported by mum spent 16,000.00 of un-employment and stimulus money last 9 months and mom is paying for her dorm room and going off to UC Santa Barbara this week. Well at least Door Dash drivers, Dine out restaurants, and Star Bucks made out.

            1. Charles, Hopefully a degree from UC will help accommodate your granddaughters lifestyle she has already been accustomed to. Maybe you can give dear granddaughter your stimulus check to help keep Door Dash in business. 🙂

      2. Grid – what site do you use to get the updated float outstanding for some of these truly illiquid issues like APRDM?

        Quantum Online often does not have updated figures.

        Thanks!

        1. Rob, As Dick linked going to the parents annual filings (usually around a Feb. document) and dig them out there. It is the most reliably accurate method. OTC Markets under “Security Details” usually provides accurate data also for OTC securities. But not all of them are posted. For example this issue is not posted in OTC Markets.
          The specific stock page of a security from TD is typically but not always 100% accurate. For example here, with APRDM it is accurate and matches the SEC filings.

          https://research.tdameritrade.com/grid/public/research/stocks/summary?symbol=APRDM

  5. I just bought some NSARP for $100…this was a trade that got placed in early December in an non-qualified account. NSARP went ex-div this morning, which might explain the drop in price. Redemption price is $103.62, callable anytime. Thanks to Dick, Grid or whoever mentioned this one earlier. This will be a long term hold.

  6. One of the interesting things about old trust preferreds is what they are worth can not be extracted from selling in the market. Take KTBA which is an ATT 2095 non callable bond. KTBA itself is also noncallable. But its true locked up value historically will never mirror the actual bond pricing itself.
    KTBA trades at $30.50 with a 5.74% yield. While the actual 2095 bond itself last traded a week or so ago (maybe $25 million tops remain outstanding in “The Wild” while KTBA has the remaining ~$50 million remain trapped in KTBA) at $142.90 or a 4.86% yield.
    http://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C32618&symbol=T3668086
    Im showing this as I know several own this including me and may be curious.
    KTBA equivalent bond pricing is $122. Nothing unusual going on here, just showing what the bond is trading at in real life.

      1. Hey JB, Take my advise with a grain of salt because I have ‘tude towards equity units and mandatory convertibles. They are fake preferreds, they are common stock bets masquerading as a preferred.
        Keep in mind this is a personal opinion about the structure of these issues, not the actual company in any way. I have always spouted off on why I wont own these for years and succumbed to temptation with the CNP convertible. Made a quick buck flip early in year, went back to well and quickly lost $2 or $3 bucks and sold at $45. Glad I did then as it has dropped quite a bit more.
        Equity Units are even more convoluted. Anytime I read the main basic of a prospectus, and ask myself “WTH did I just read”, I usually move on. And with Equity Unit issues, I say that just reading the one paragraph summary, lol.
        Ultimately in general its just a bet on the common stock, which can be done by just buying the common. Typically these are done to delay the inevitable equity dilution with company trying to digest something and grow into the earnings before conversion.
        In other words they dont serve my purpose, but that doesnt mean it wouldnt for you though.

          1. I’ll chime in and say that normally I view convertibles like Grid. However earlier this year I went overweight utility convertibles on sector valuation. DTP, NEE-P, SRE-B, SOLN, AEP-B, CNP-B. I still like them as equity exposure, with higher IG yields until they convert.

  7. AILLL traded 241 shares @ 32.00, up from Wednesday’s close of 28.99. It did not trade on Thursday. Probably the most illiquid $25 face issue that traded today.

  8. Grid, in a thread below you wrote, “Did you know Hawaii Electric still has 7.25% private placed preferreds callable since 1990s still outstanding?”

    I wonder which family members are enjoying *that* sweet issue?

    Seriously, though, does HECO document these?

    1. Yes, last I looked it is in the SEC annual filings under Hawaii Electric not the holding company. I know annual public filing documents to Hawaii regulatory agency shows them. One was Maui Electric and I forget other one as they were actually subsidiary preferreds of Hawaii Electric. I did contact Hawaii Electric IR a few years back and they said no they were untradeable and private.

        1. Bur, I think you are being too cynical. Im sure its a complete minor oversight these preferreds werent redeemed 20 years when they should have been. And its probably just a bunch of Joe 6 packs who have all the shares, also…Ha!

        2. Bur, I quickly checked…Its worse…They are both 7.625% preferreds. One is Hawaii Electric Series G a $7 million issue, and the other is Maui Electric Series H a $5 million issue. Oh, but they had no problem redeeming the 6.5% lower yield trust debt issue I made a killing on over the years flipping that us low lifers could actually buy…
          The reference to them is on page 109 and page 110.
          https://puc.hawaii.gov/wp-content/uploads/2020/06/AFR-HECO-2019.pdf

          1. I have seen this situation up close and personal. The uncalled HE issues were probably issued to a closed group (employees, directions, et al) and buyers were given actual certificates. With restrictive legends, with transfers subject to company approval. And the company may well have acted as its own transfer agent. So none are likely to ever leak out.

            I still have a few such issues.

  9. How would you like a $25 preferred that trades like this one has the past 2 months, lol…
    Exch/Mkt
    12/08/2020 15:37:12 EST 17.50 200 OTCBB
    12/08/2020 11:09:07 EST I 17.01 57 OTCBB
    12/04/2020 10:14:14 EST Z 16.82 114 OTCBB
    11/25/2020 15:21:38 EST I 16.81 4 OTCBB
    11/20/2020 9:32:09 EST I 24.00 2 OTCBB
    11/18/2020 10:47:25 EST I 24.00 1 OTCBB
    11/16/2020 12:35:14 EST I 24.00 20 OTCBB
    11/13/2020 13:40:03 EST I 16.82 50 OTCBB
    11/12/2020 15:32:01 EST Z 17.00 400 OTCBB
    11/12/2020 15:31:48 EST Z 17.00 100 OTCBB
    11/12/2020 15:23:36 EST I 44.97 4 OTCBB
    11/10/2020 13:25:37 EST 25.01 100 OTCBB
    11/06/2020 12:00:01 EST I 25.02 1 OTCBB
    11/04/2020 9:30:00 EST I 25.01 3 OTCBB
    11/03/2020 9:30:00 EST I 100.00 5 OTCBB
    11/03/2020 9:30:00 EST I 25.01 45 OTCBB
    10/30/2020 9:41:31 EDT I 26.00 50 OTCBB
    10/27/2020 15:48:10 EDT I 149.99 56 OTCBB
    10/27/2020 11:40:22 EDT I 30.00 2 OTCBB
    10/26/2020 15:13:09 EDT I 50.00 4 OTCBB
    10/26/2020 15:13:01 EDT I 50.00 46 OTCBB
    10/26/2020 13:30:56 EDT I 50.00 4 OTCBB
    10/26/2020 9:37:20 EDT I 50.00 50 OTCBB
    10/26/2020 9:33:35 EDT I 49.99 5 OTCBB
    10/26/2020 9:33:32 EDT I 49.99 25 OTCBB
    10/23/2020 11:13:48 EDT Z 25.00 200 OTCBB
    10/22/2020 14:34:19 EDT I 144.99 1 OTCBB
    10/20/2020 9:38:40 EDT I 20.00 1 OTCBB
    10/16/2020 9:30:00 EDT I 173.99 4 OTCBB

      1. Dick, I promise I will. I just would like to find more info on this Sum Bitch first. I have just dragged Bob-in-DE into the fray and see if he can research anything as he has actually looked at company but for an unrelated look. You have definitely heard of the company I 100% guarantee, but I dont even know if it or its sister preferred even pays a dividend as I cant find any tangible proof it does outside of a 1976 financial statement I dredged up.
        Its not a 10% IG illiquid ute I promise though, lol. Though unrelated thought..
        Did you know Hawaii Electric still has 7.25% private placed preferreds callable since 1990s still outstanding? It aint called “Island Business” for nuttin’.

        1. Grid – if you can figure how to buy it I will be impressed.

          Hint: grid is totally right that it’s a household name.

          1. Bob, I did buy about 300 shares. Just as an amusement as I dont know enough about it to justify it as a true investment.

        1. Thanks. I was able to find it too.

          I couldn’t find anything yet about whether it actually pays a dividend. Weird.

          1. The Schwab website says it does not pay a dividend.

            In any case it is so thinly traded it would be very difficult to get more than a token number of shares, which would not make a material difference in dividend income received.

          2. Dick, this is the only “new” info I can track that shows anything and it is to the 144a 6.25% issue, that has an approximate $82 million float at $100 a share. Notice it does reference link the two older preferreds so they arent total made up scam tickers anyways. John Hancock is a lover of the 6.25% series it appears.
            https://fintel.io/so/us/675022404

            Ocean Spray Cranberries Inc (US:675022404) has 16 institutional owners and shareholders that have filed 13D/G or 13F forms with the Securities Exchange Commission (SEC). These institutions hold a total of 991,450 shares. Largest shareholders include John Hancock Premium Dividend Fund, John Hancock Preferred Income Fund Ii, John Hancock Preferred Income Fund, John Hancock Preferred Income Fund Iii, Flaherty & Crumrine Preferred Securities Income Fund Inc, Eaton Vance Tax Advantaged Dividend Income Fund, Flaherty & Crumrine Preferred Income Fund Inc, Flaherty & Crumrine Total Return Fund Inc, Flaherty & Crumrine Preferred Income Opportunity Fund Inc, and JHNBX – John Hancock Bond Fund Class A.

            1. Both OCESP and the 144A issue are listed as Ocean Spray Cranberries, Inc., so it appears that they are issues of the same corporate structure and are therefore likely to be pari passu. I’m not guaranteeing anything here, just positing that if the 144A is paying, OCESP most likely is, too. I picked two of the institutional holders to peruse their holdings data for details. Eaton Vance priced the 144A at 87 last November, while Flaherty & Crumrine priced it at 80 in May. If anyone wants to dig into more of the institutional SEC filings, you may be able to find something more recent. But just based on overall market action and not knowing anything specific about the company, I wouldn’t be surprised if it’s priced around 90 right now. That would be a 7% yield, meaning that OCESP would need to trade closer to $14 for a comparable yield. And given OCESP’s illiquidity, you should probably want to pay less.

              1. You mean the shares for the $25 par issue bought at $50 overpaid, lol . Personally its uninvestible without more info for a serious investment. Parri Passu wont mean anything if its a payment tied to direct disbusements of a common dividend instead of a traditional cumulative preferred type. As I have had no direct proof it is on. And any prior credit rating reports never mention them just the 144a issue. Some may not no know this there are preferred stocks tied directly to common divident payment.
                And this being a co op may make situation different. Clearly the company itself is not of the credit quality that the name brand itself represents.

      1. Definitely not Fannie/Freddie. None of them have traded like that and it’s easily discovered that they stopped paying dividends in 2008.

        I skimmed through QOL and OTCmarkets.com and I suspect it’s on neither of them, so something really off the wall.

          1. If it’s on OTC, then the screener data can’t be correct. There is only one security with 257 shares traded today, GIKLY, but it’s last price is $14.35, so no match. There are no securities with a last trade of 17.01. There are 4 securities that show a last trade of $17.50 (including rounding up), but all 4 show no volume today and are definitely not household names. So is the screener broken?

            1. Karma, I just used that volume screener for first time. Never used and looked any further down than the screen tool list than just the preferred stock tickers. I see the problem though. The screener lags a day. As I see NEWEN on the screen list with 100 shares. That happened yesterday not today as NEWEN did not trade today.

            2. I see the problem now. The stock screener appears to still be showing 12/7 data. So I looked up the previous last price of 16.82 and found OCESP, Ocean Spray 4%. Moody’s withdrew credit rating of Ba3 rating in 2014, so while junk rated it must have still been paying dividends at that time, otherwise it would have been rated C.

              1. While it would be nice to buy OCESP for $6 (you could probably try your whole life and never get any), this one doesn’t look to be worth the effort. A junk-rated preferred with a 4% coupon and no liquidity…I’ll leave it for someone else. Schwab currently shows a bid of $12 anyway – too rich for my blood!

                1. Karma, besides not knowing if it still actually pays, the credit rating is dry. It could be better or worse since then as that was withdrew and its very dated. It in the past actually had the preferreds A rated, so its hard to tell.
                  The company is a private co-op so any real info is hard to come by besides just sales and membership number affiliation. Now they have a 144a 6.25% preferred issued around 20 years ago that is owned by many fund companies. I would assume it pays or these income funds would have no interest in owning.
                  But yes clearly this is not an “investible idea”. I would like to track down its issue date and terms as getting ahold of their balance sheet doesnt appear possible online anyways being its private. It must be old as by 1976 its original near 100,000 shares issued was already down to about 60,000 outstanding with the others put back in treasury. Who knows what has went on since then with it or the participating sister issue.

        1. Grid, you have “Stumped the Chumps” with this one. It is not in my database. A little tougher than the similar BANGN trade I was able to solve a couple of months ago. . .

          1. Tex, Still you all caught me off guard, as you guys have more systematic screening methods than I do. I just operate under random “poke and hope”. Never occurred to me there was an actual method. It must just be delayed in terms of showing screening wise. As all the brokerage sites I have under its specific ticker matches up to the volume and price correctly.
            Bob is working on it, maybe he can find something. Its hard for me to say, ya I like this issue because it cranked out a divi in 1976, lol.

  10. Anyone familiar with WTREP? It’s a an L+6.68% floating rate preferred from an insurance company that is being acquired by Arch Capital after a bidding war. Preferred should be left outstanding after the merger. It’s strangely low volatility, especially for an unrated issue, going no lower than 23 in the March panic. Just wondering why it trades like it does.

    1. I’m interested in this one too as a long term holding. Why do you say that the preferred will be left outstanding after the merger?

    2. I know the press release stated it would be continued, but can one trust such a release?

    3. Landlord, great tip idea, thanks. I spent last couple days buying up enough for me in 25.50s. The acquiring company has investment grade preferreds themselves (page 2)..
      https://www.archcapgroup.com/Portals/0/Charts/corporate-overview.pdf
      Kind of an inbred as management of Arch already owned some of the common stock as well as Arch itself.
      This preferred was a private placed issue back when it was formed about 2014.
      8½% cumulative redeemable preference shares
      On March 31, 2014, in connection with our original private placement, we issued 9,065,200 8½% cumulative redeemable preference shares, at a price of $24.50 per share, for an aggregate subscription price of approximately $226.6 million. In this subsection, we refer to these preference shares as the preference shares.

      It has gone floating but has the 1% Libor floor. (Libor will be around for a bit still in US).
      Dividends accrue (i) from (and including) June 30, 2014 to (but excluding) June 30, 2019 (the Fixed Rate Period) at 8½% (the Fixed Rate) of the $25 per share liquidation preference per annum (equivalent to $2.125 per share per annum); and (ii) from (and including) June 30, 2019 (the Floating Rate Period), at a floating rate per annum (the Floating Rate) equal to three-month U.S. dollar LIBOR plus 667.85 basis points; provided, that, if, at any time, the three-month U.S. dollar LIBOR shall be less than 1%, then the three-month U.S. dollar LIBOR for purposes of calculating the Floating Rate at the time of such calculation shall be 1%. Other than the right to payment of accrued but unpaid dividends, if any, on the preference shares, the holders of the preference shares are not entitled to share in any other dividends or distributions of our company.

      With it going exD in less than a week, I will gladly pay 7 cents above that and let this play out and see how long they let them stay outstanding as there is no money lost from any redemption at this entry point. I have moved the ship past couple months into more higher yielders and call anchored types. This one more than fits the bill for me. Not a big insurer guy, but this one is set up to fit my needs as a great capital hide out and see if they walk the talk on leaving issue outstanding for a while. Lets see if things go to plan how long they want to keep a 7.5% plus issue outstanding from an IG company and let it play out.

    4. Guys, looks like a slight of hand action going on, as Randy was already pondering that. I actually got ahold of the filings and buried deeper is the fact this one is likely a goner near merger completion. Buried on page 44…Not much meat on the bone here with an anticipated first quarter closing.
      https://www.sec.gov/Archives/edgar/data/947484/000094748420000087/ex21.htm
      Cooperation. From the date of this Agreement to the earlier of the Closing Date and the date this Agreement is terminated in accordance with its terms, at Parent’s sole expense, the Company shall use its commercially reasonable efforts, and shall cause each Company Subsidiary and its and their respective Representatives to use their respective commercially reasonable efforts, to provide Parent and Merger Sub with all cooperation reasonably requested by Parent or Merger Sub to assist Parent or Merger Sub as is reasonably requested by Parent or Merger Sub in connection with a potential debt financing in an amount necessary to redeem the 8½% Preference Shares outstanding on the Closing Date (the “Debt Financing”, and the redemption of the 8½% Preference Shares and the transactions related thereto, the “Redemption Transactions”), including using commercially reasonable efforts to:

  11. Can someone give me a quick refresher on cnlhp
    i see it closed at 50.66 and its a little over 4 percent yield wise
    thanks in advance

    1. Bob, for illiquids that last trade is about 4.4% with a BBB+/Baa2 rating. That will be about top end for any old ute that is right around redemption price. Like all CLP preferreds they are old and small floats. Redemption price is $50.50. Been callable for about 50 years. So at that price point of $50.66 call loss risk is not there but long end yield rates backing up would be your big enemy. 8 year low is about $45 and all time high is $51. When 10 year was near 6% in early 2000s, it was trading sub $30. ….It didnt trade today. Current ask is $51.25 and current bid is $50.66.
      I dont own this one, but I own a couple other CLP sister preferreds.

      1. thanks for the quick response. i was curious what the redemption price was.
        Might put on a small position if i can get it under 51 and just hold it indefinitely. Higher rates are coming but probably will take a year before they start to take off.
        my daughter bought a house today. i think she got quoted 2.8 percent for a 30 year. My first house was at 9.5 percent. And i thought that was a good rate at the time LOL

        1. Bob, sounds like your first house in 1979ish? Mortgage rates pretty much killed the housing market back then. Rates peaked higher than you 9.5%, so you got a bargain at the time. Hard to have imagined 2.8% 30 year rates back then. The average for all Freddie Max rates last week was 2.72%

          1. 1979 is about right. Bought a house then got transferred down south(from chicago). It took a long time to sell it, though my company making payments was part of the moving package so it was more a mental thing that a real money thing
            Fun times LOL

  12. There’s quite a bit of selling in NSARP today. The current ask is $101.99 which gives a yield of 4.17%. The redemption price is $103.63.

      1. Justin, “non mandatory” redeemable means the company decides. Eversource controls the board of NStar but hasnt shown any preference to force them or CLP to redeem yet. But one never knows. This is why I rotated out of my NSARO at $108 and plus yesterday which was around $5 over redemption price.

  13. Somebody wanted some NSARO at $108 and plus…I was glad to help accommodate. Thanks Dick for the liquid sell tip a few weeks ago in $103 range as I took advantage of it.

    1. Happy to help you out since you’ve been a huge help to me and many others. I saw the $108 bid on NSARO but I decided to just keep mine. At $108, it’s still a yield of 4.43%. I’d need a slightly higher price to sell…plus I’m trying to limit the capital gains for the rest of 2020. I definitely understand why you sold though.

      I did end up buying some PPWLM for $150. I’ll be getting a noncallabe 4.67% from a BBB+ utility.

      1. Dont worry, Dick, I will find that money a home somewhere in illiquidville, lol. I saw the PPWLM trade. Solid buy for you to lock in a non callable there at that yield. I sold another illiquid today at $1.25 a share more than I even asked for it, very odd but I aint complaining there either.
        I largely have been playing with the other part of the stash in the high yield trash and its been good there too. Pedal to medal like its been all year…for now….

        1. I have no doubt you will. I’ll probably end up kicking myself for not pulling the trigger.

          One another note, whoever is continually buying WELPP at $98 should stop it. That’s a yield of 3.67%.

          1. Someone is thumbing their nose at me…the ask on WELPP is now $98 x 400. If you have these shares, I strongly suggest selling.

            To whoever is buying at $98, I dare you to buy the ask of $150 x 200. 🙂

          2. Dick, It took me two days as I tried to bird dog down even more but to know avail. But over past 2 days I replaced my NSARO at $108 with APRDO at $104. It goes exD in weeks and redemption price at $103.14, so effectively its under par. Same credit A3/BBB+ but eliminated any call loss risk. This one worked out well as I bought 400 of these day before previous exD at $103. Sold with divi in hand a couple days later at $105-$106 transactions, and now repurchased back at $104 and didnt miss the divi either. Didnt buy as much only taking a couple hundred, but I didnt want 400 this time either.
            Effectively APRDO was bought at same yield and infinitely better credit rating that new Selective Insurance that just went to market. It wont matter much to the upside, but it sure will on the downside….
            Private- The title to the house still is in my name, but two weeks in for practical purposes I have lost total control of it already. There clearly is a new sheriff in town…
            Razor- Higher ed is an incredible cost. When I went to college, my Dad told he he had the first two years. And I had the last two. But he told me to take out max student loans first 3 years and put them in CDs and the fourth year would be “free”. Sure enough it was. Those 13%-16% CDs were money makers! Try doing that now with student loans, ha!

            1. Grid, I wish my Dad had shared ideas like that with me. We were a “talk of money is distasteful” family, and it’s taken me years to catch up! Thank goodness for communities like this.

    2. I did a swap today.

      Sold 100 UEPEM @ $100 ( yield of 4.00% ) and bought 100 NSARP @ $101.25 ( yield of 4.18 )

      A small improvement of 18 bps, both securities are illiquid and pretty safe. NSARP was bought below redemption price, so no fear of cap loss due to a call.

      Might buy back UEPEM if it dips to the $98 range, which is where I had bought originally.

    1. Thanks for the wake up, Dick. You caused me to check CNTHO that I am in and out of. Sold 300 of them a buck higher a month or two ago, than my $53.50 purchase today for 200. And didnt miss the divi either.

      1. Someone has ants in their pants to sell CNLHP. I bought some more today. I passed my limit in ES preferreds $10k ago.

  14. Ya gotta love the odd behavior of illiquids. Whenever I run out of trade ideas I usually buy some POS HL-B in $52-$53 range to play with. Bought some a few days ago and decided to reach up a bit in price on one last 100 lot at $53.10 today. So they intentionally trade me 1 share at my $53.10 bid and then fill it out instantly with 99 at $52.50. That seems very odd as I was willing to pay the $53.10. This kept the “official” price higher since a 100 lot did not trade. Then someone later bought 130 at $54.25.

  15. Somebody around here sold one share of BANGN yesterday @ 175.25, up 59% from the 110 trades on Tuesday . Not every day you see 59% moves in any preferred. Normally the only time you see that kind of percentage move is on a suspended payout ~ 1.00 ish issue

    1. Tex, that is actually about what is normally does….That $110 trade was actually more the anomaly as I wouldnt say it was exactly “trading” at $110, it traded 6 shares at $110. With previous trade before that was $176… Here is the trading volume and prices for past 12 months.
      Date/Time Price Shares Exch/Mkt
      11/13/2020 9:37:46 EST Z 175.25 1 OTCBB
      11/10/2020 11:15:15 EST Z 110.00 6 OTCBB
      10/21/2020 13:36:19 EDT 176.00 1 OTCBB
      10/21/2020 13:28:43 EDT 180.00 1 OTCBB
      10/21/2020 13:28:35 EDT 180.00 1 OTCBB
      10/07/2020 10:31:58 EDT Z 225.00 1 OTCBB
      10/07/2020 10:31:45 EDT Z 215.00 1 OTCBB
      10/07/2020 10:31:17 EDT Z 174.00 100 OTCBB
      10/06/2020 14:21:10 EDT 144.00 18 OTCBB
      10/06/2020 14:21:10 EDT 144.20 18 OTCBB
      10/01/2020 9:40:57 EDT 137.01 3 OTCBB
      09/21/2020 9:57:48 EDT Z 136.00 12 OTCBB
      09/18/2020 11:46:37 EDT Z 107.00 12 OTCBB
      08/07/2020 11:27:01 EDT 225.00 1 OTCBB
      08/07/2020 11:00:28 EDT 225.00 1 OTCBB
      08/04/2020 15:38:55 EDT Z 225.00 1 OTCBB
      06/08/2020 10:01:13 EDT 185.00 1 OTCPK
      06/01/2020 9:41:18 EDT 185.00 1 OTCPK
      12/17/2019 12:48:26 EST I 175.00 15 OTCPK
      11/18/2019 9:48:41 EST I 225.00 2 OTCPK
      11/18/2019 9:48:35 EST I 225.00 1 OTCPK
      11/01/2019 9:51:07 EDT I 175.00 1 OT

    1. Camroc that thing is goofy and it is what it is. It bounces from around there to $215 on lots of under 10. And usually by passes the bidder. Lord knows I have been bypassed several times over the years chasing it. I got what I need. The only time I ever got any was ask price. I noticed the lead bid was unchanged on shares…Who knows what happened this time.

  16. Ameren Illinois announced $375 M of low coupon mortgage bonds maturing 2030, the proceeds will be used to pay off short-term debt.

    AILLL ( now callable ) is my biggest holding, so I’m considering selling off some, in light of this news. My cost basis is about $28, well above call price.

    Any comments from AILLL holders would be appreciated.

    1. Inspy, If you want to sell at $28, lemme know. Maybe we can work sumpin out at that price point! As Im not reentering at present price… Your decision to buy or hold should be based only on your risk comfort level owning something roughly 16% above redemption price…Howev’s a couple thoughts… You do know next divi has been declared, correct? And…Go to SEC filings and peruse the AEE debt filings from Ameren Illinois the past 10 years, and see if you havent heard this story before without any relation to the preferreds. The odds of long term capital asset being moved over to a short duration liability seems highly improbable and unrelated to what your decision should conclude.

      1. Grid, thanks for the input.

        Yeah, I know that in the past they had issued stuff and the preferreds remained. Good to be reminded.

        However, I decided to lighten up just a little, sold 250 shares @ $28.86.

        IB

    2. RE: AILLL

      Grid has addressed the no call issue on this and I agree with his reasoning. That said, stuff can happen. All it takes is one regulator to ask about the issue for it to be gone. Such things do happen. If there were truly no call risk on this issue it would trade much higher.

      I size my position such that my life won’t be ruined if it is called.

      1. Bob-in-DE, what you say is very true. Despite what has been said and/or done in the past, nothing is ever cast in stone.

        I have held AILLL for many years now, and thus far it has been a great investment, but very well aware that things could and can, change in a heartbeat.

        I feel that I am still a little overweight, but will wait for another opportunity to sell at $30 or higher to further lighten up.

      2. I agree, And one needs to remember though the AI preferreds are old, Ameren hasnt owned these since issuance. These were acquired 10-20 years ago, so they are bastard preferreds from acquired companies.

      1. Bur, No they arent. Ameren never has paid the dividend. That is the holding company. Union Electric is the original company before Ameren became a holding company years go. Union Electric has been renamed to Ameren Missouri. Which is one of two subsidiaries Ameren owns. So, subsidiary Ameren Missouri (Union Electric) is the obligator of payment.
        BTW, Most people get confused here on that. And in general this is a good thing getting the dividend from the subsidiary instead of the holding company. As in general most ute subsidiaries have better quality than the holding company. Because the holding company would die on the vine without extracting dividends from the subsidiary. So in short you get paid first before the holding company does.

        1. Thanks! So that explains why I see no pfd dividends on the AEE Cash Flow Statement…

          1. If you pull up the Ameren 10-K and do a Control F for “preferred”, there should be an entire section devoted to discussing the preferreds.

          2. Additionally Bur, the subsidiary preferreds are under the auspicious supervision of the local regulatory commissions which lay certain financial guidelines the utility must comply with. This varies state to state though. The holding company is more at arms length in terms of their financial structure. For example, one subsidiary preferred I own, they went as far to force holding company not have majority board of director control of subsidiary utility, need regulatory permission to extract for than $31 in annual dividends, must maintain an investment grade credit rating, and have complete and separate untangled financial relations amongst many other controls.

              1. Camroc, This one is so illiquid even you arent interested which is a miracle in itself. Its BANGN. The float was issued uncallable with 25,000 shares back in 1911 when it was a rail line/utility combo company. They stated they have over 99% of the shares so that only leaves a bit under 250, which I have a 100. I overpaid but being it only traded one 100 share block once since 2008, prior I wasnt going to lose my shot being I have chased it for 7 years.
                A lot of the tight restrictions placed on holding company (also included forced donations to many local charities, no job losses, headquarter remains at same location, etc. etc.) was because this is the second time a foreign entity has owned the utility and the locals are pissed. And the damndest thing is indirectly the City of Calgary actually owns this Maine utility now called Versant Power.

  17. There’s been a bunch of selling of NSARO today. Someone is showing $105 x 1,700 shares currently.

        1. Happy it worked out for you. Gridbird and others here have helped me a lot so it’s nice to be able to try to do the same for others.

          You got yourself a 4.59% yield from a A3/BBB+ utility. That compares very favorably to anything new issued recently.

          1. Dick, For an income hold and quality that is a good purchase, esp compared to new liquids coming up sub 4% and exposed more to the market gyrations. The separation in all these illiquids has narrowed alot. So its really just looking for liquidity for a respectable hold entry point. Basically I would just be switching 2 quarters for a 50 cent piece where I am presently in the ute illiquids, so NSARO wasnt a real option for me. And my belly is kinda full with the quality illiquids, so I would need a sell off somewhere to do a switch off.
            PNM is being bought out by Avangrid. I worry they could redeem PNMXO which is a subsidary to PNM. As many times when another hold co takes over they redeem the old issues and rid themselves of it. Entry point was $102, and basically the price sits there so no material call risk at that point I bought back whenever. It seems to sit around $102 most of the time when it trades anyways.

        2. The ask for NSARO now is $104.50 x 1000. Over 1,800 shares of NSARP moved today too. Maybe someone worried about the election or liquidating an estate but in any case, it looks like a pretty good value.

          1. Dick, thanks for the heads up this afternoon as I wasnt around. I am worried there is a shot AGR could possibly force PNM to redeem PNMXO down the road since they are acquiring PNM. So I bought the last 100 shares today of NSARO at $103.90 as an insurance policy. NSARO at $103.90 is an example of not buying at a premium, as that is 1% lower than 12 months ago when the 10 year was 1.90%

  18. Someone is selling shares of UEPEP for $102.50. That’s a yield of 4.45%.
    Redemption price is $102.47

  19. Here’s a fun one: BMYMP:
    -way past call at $50
    – Priced last at over $1,000
    – Convert at any time is pegged to common within reason
    – A bunch has probably been redeemed over the past
    – 4% to the company, 0.19% to the holder
    – Seems this was a preferred done right in the old days, but still lingers
    This market sorting is starting to feel like a game of solitaire where I’m counting the jewels on the king’s of diamonds cape instead of playing the game. I’m sitting in the perfect place too, a coffee shop in Raton NM that used to be the Silver Dollar Bar…silver dollars laid into the floor…when does Clint walk in?

    1. BMYMP is really an open ended, deep in the money call option on BMY. It will not behave like a preferred issue.

  20. I picked up some more UEPEP today for $102. There was a lot of selling today with the volume being much higher than normal. Sometimes these selling sprees tend to last multiple days so it’s possible the selling continues Monday. At $102, it’s a yield of 4.47%. Redemption is $102.47.

    1. Dick, I wasnt around yesterday so I had to check. The last traded purchase was for 2000 shares on the nose $102.10. So is that your personal definition of “picking up some more”. 😁.. Hey if you dont mind for the benefit of the illiquid haters here, could you give them a little advanced warning of what you are going to say. This will allow time for the Paxil to kick in and keep ‘em regular.

      1. I definitely wasn’t buying lots of 2,000. I’m just a guy with a job so I picked up another 200.

        I really appreciate the ability to get 4.47% under redemption price. I definitely don’t understand the hate. I think a lot of these people haven’t followed these issues closely enough to really understand them.

        I don’t see how they see utilities and think bad and see REITs and think good. For a good CPA, I think writing paid articles on Seeking Alpha is one of the worst ways to make extra money. Delivering food through Uber Eats would probably be more lucrative.

        1. Congrats on the buy, Dick.

          Purchasing under redemption price is great because you have a cap gain if called.

          I have owned UEPEP for about a year now, bought it at around $101.50.
          Only a small amount, unfortunately.

        2. Dick, Im dissapointed in you that wasnt your 2000 share block late day trade. You are “small ball” like me, ha. Ya I dont get the reit superiority thing. I own a few reits and certainly dont judge one over the other. But I owned ones that didnt drop like CDR preferreds into single digits, off 75% while these illiquid utes hung right around par if not over it during that panic. And you and I both know there were panic sells from that reit rout.
          Everyone can think anything is a great buy when everything is fine and dandy. But when s##t hits the fan people panic, and having a ballast that sits like the Rock of Gilbralter in the center of a storm suddenly becomes a welcoming friend.

      2. Me thinks some of those trading illiquids are on lithium. Or should be. Definitely not a place to learn to walk.

  21. I think it would be great if our discussion topics are focused on the topic so that everyone benefits for that topic. For example, this topic forum should be focused on $50+/share investments, investments that trade very little, and similar topics. Tim has posted a paragraph that defines each topic forum.

    When we start posting random thoughts, non topic ideas, etc, they need to be posted in the Sandbox section. I am reading posts from obsessive compulsive behaviors. I do understand that we all go through challenging things in our lives like divorce, etc, and things can be overwhelming and cause compulsive behaviors, stress, hate, fear, need of attention, and a full range of roller coaster reactions. That is what Dr’s. are for.

    I asked for this topic to be created, and I got it, and I feel that it is becoming cancerous. This site is for many interested parties, and not the needs of a 1 person to continue to post warnings about illiquids. I really don’t need to read 4 posts a day warning me about them. Let’s move along and get back to investment ideas please.

  22. Tim: I have been contacted my many investors on SA that apparently want me to post more on your board and continue great discussions on preferreds and common stocks. However, there is a very large concern about Pump and Dump issues going on here now, and I can certainly provide examples on the board. If time allows, I am respectfully requesting that a new topic of Pump and Dump thread be posted on your message board. It’s actually a very valid topic and may help to improve and clean up some of the issues on your valuable website. Thanks for your consideration.

    1. And just another note to investors that like illiquid securities: Generally speaking there are no issues with securities that don’t trade very often. They may be solid companies. Personally, I have a trade order on a security that trades about once a month and will sit back and be patient to see if my order will fill.

      However, it is something else to buy an issue, promote the thinly traded stock on four message boards, claim that I will “never sell” and then dump the issue on novice investors. And this is exactly what has happened here over the past couple of months. Wishing everyone here the best on their investments!

    2. Hi kaptain–just put a caution on the illiquids chat page–will consider the pump and dump page

  23. I’m not sure if anyone else here is following the PCG preferreds. Vlae Kershner has written some good articles about these on Seeking Alpha in the past. I messaged him to see if there were any announcements about the reinstatement of the preferred dividends. Here is his response:

    “There haven’t been any announcements. The next quarterly earnings report comes out Oct. 29 and the normal pay date would be Nov. 15, so I expect an announcement one way or the other at that time.”

    I happen to own a little PCG-D, which is redeemable for $26.75 (QOL has this wrong – see below). PCG-D has been trading around $25 as of late. I hope to hold at least through the date the dividends in arrears are paid.

    http://investor.pgecorp.com/shareholders/Frequently-Asked-Questions/default.aspx

    12. What are the call provisions for Pacific Gas and Electric Company preferred stock?
    There are eight issues of Pacific Gas and Electric Company preferred stock; three of the issues are non-redeemable (which means that they can never be called by the company), and five of the issues are redeemable. The redemption provisions of the five redeemable issues are shown below:

    Issue Description Redemption Provisions
    5% Redeemable First Preferred $26.75 after July 31, 1963
    5% Series A Redeemable First Preferred $26.75 after July 31, 1963
    4.80% Redeemable First Preferred $27.25 after January 31, 1965
    4.50% Redeemable First Preferred $26.00 after July 31, 1969
    4.36% Redeemable First Preferred $25.75 after October 31, 1975

    1. Dick, I will admit it, I am scared of them now. I noticed some news is saying they are already investigating PCG as being the cause of some of fires out there that is going on. I know there is a fire fund now, but fires and “CA Inverse Condemnation” scare my wallet.
      It may just be baseless fear on my part, but I think the preferreds are shaky B ratings already. I do trade them some, but I personally like to play them when CA is out of fire season.
      I wish they didnt have inverse condemnation and massive debt overhang wrapped around their necks. Because owning a 6% non callable basically at par from accrued dividends would be a gift from the heavens wouldnt it!

  24. I bought some shares of AILIM today for $103. That’s a yield of 4.56%. The redemption price is $103 so no call risk. According to QOL, this one IPO’d in 1952. Thanks Gridbird!

    1. Wow, Dick, 900 shares today traded. That is a big dump, for that issue. Yes I like that. Actually AILIM I dont think I have ever snagged that issue before. Any time I have made a play for it, it was dead with no interested seller. It is actually one of the smaller floats AI has in its preferred series. I was out golfing today and didnt get to follow market today.

      1. I thought you weren’t allowed to say anything about golfing anymore, Grid… Shame on you…. 😉 😉

        1. Oops, But I actually played well today, ha… I was doing some old research and you will enjoy this being an old bond guy. An advertisement in a 1920 newspaper telling readers to contact ANY Central Maine Power employee about buying the 7% par Central Maine preferred at a price at $107.50 for a 6.5% “net”. Look at the huge ad on page 8 of this link (the last newspaper page) its hilarious…Want some preferred stock from the local ute? Why just get ahold of the janitor in the building he will set you right up! Ah, the good old days…
          https://digitalmaine.com/cgi/viewcontent.cgi?article=1040&context=rj_1920

          1. I wonder how much of that $7.50 premium the lucky Central Maineiac got? And I thought today’s going issuance cost of around 3% was not justifiable……….

          2. There is a ton of info in that newspaper. They went through 90+ days lockdown on withdrawals from banks, etc.

            I also like the Castoria and the L.F. Atwoods medicines ads. They cured everything in the world. Just take 1 dose per day. Even cured acne, get the kids a good nice rest, so the parents can sleep. The Atwoods medicine was largely alcohol which knocked the kids out. But sure… it cured your liver problems too.

            1. Mr. C, Wasnt the “good old days” hilarious then? Heck I remember cures for baldness from that time period too. They must have lost the recipe somehow.
              2WR, I doubt Central Maine got it all. Remember the janitor who sold you the preferreds gets a commission cut, also. 🙂

  25. Gridbird—I noticed you own SLMNP. I assume the parent company (A. Schulman) no longer exists by that name. Is this a busted convertible that has no possibility of a forced conversion (as noted in quantumonline)? I’m interested in it and would appreciate your answer?

    1. Randy that is also what several people have stated who have contacted company. There is some sort of “owner put” (not company) where you can tender them to company at something around $803. Obviously not anything one would do want to do now.
      I love the non call feature, QDI, and pricing is pretty stable. But, this is a small position for me personally. Its a cyclical chemical business sector. And although not near it now, LYB went bankrupt in 2008-09. And they said things are going to be down a while… Plus I am too dumb to figure out what responsibility LYB parent has in payment being this comes from the subsidiary. The stock tender would go to LYB so its possible this preferred must be paid in front of LYB common divi. But I have no idea when push comes to shove. It is certainly an interesting issue, but personally my neck is never going to be sticking out far here.

    2. I’m a big fan of SLMNP due to the ability to convert it to $800 in cash at anytime. In essence, only 20% of your investment is at-risk while you earn a yield on the full 100%. Another way to think about SLMNP is that it’s 80% a super senior secured perpetual bond and only 20% a preferred.

      1. LI, that’s a great way to describe it. Thanks again Grid for bringing it to our attention. ATB

    3. Randy, I just noticed I didnt fully answer your question yesterday. A. Schulman was bought and folded into some of LYBs subsidiaries and has been consolidated into one subsidiary now. Its now called LyondellBasell Advanced Polymers, INC. I guess you have to give LYB credit for having enough energy to notify OTC of the name change earlier in the year. Ticker never changed but name of the preferred did though.

  26. This may be amateurish, but I’ve ranked them by 65-day average volume (from TDA) x market cap. Where does one find 90-day volume?

      1. Thanks. I think yearly volume is more appropriate and useful for illiquids. Edgar Online appears to have the data, but the retail sites that use it don’t report yearly volume. I found some code for Think Or Swim that can extract it, but I don’t currently use that platform. Yahoo gives historical daily volumes, and I will probably wind up tabulating that.

        1. Dogbite, you want some illiquid volume? There is one OTC issue that has traded less than 500 shares total in past 5 years combined. That is about as illiquid as one can get, ha!

  27. I want to thank Gridbird for all he has brought to this board. I am grateful for the amount he has taught us. I don’t trade the illiquids much, but a lot of what he says is applicable to more liquid issues.

  28. Who put the burr under Kaptain Lou’s saddle? I’ll point out that everyone talks their book. It’s suddenly an ethically challenged thing to do if the book is illiquid? Maybe we can come up with a safe space board where no one can post about anything they own. /s

    My contribution to the illiquid categorization discussion is to distinguish illiquid from thinly traded. The former may not trade for weeks. The latter trades regularly at low volume. But it’s a continuum obviously.

  29. My situation is quite different the company I work for pays for all my basic needs (clothing, food, shelter). Family seems to have a propensity to make bad decisions and die early.

    Main investment goal is to preserve capital meaning I’m just trying to keep up with inflation. To Kaptain Lou point you are all hucksters to me but I enjoy reading about the lobster dinners.

    Illiquid Securities – My first stop is mid west credit union GIC/CD. Government issued bonds including Euro especially the 50/100yr. Next provincial/state and municipal. Which requires you to understand demographics in the area you are investing.

    Once you guys get really excited and start bashing each other on the boards I know its a good time to start buying preferred. Btw right now is not the time. And gold/silver remain an illiquid fools errand unless you are my wife.

    1. I’m curious, micahc. I have no idea how old you are, but you are still working and I wonder how you are “trying to keep up with inflation.”

      Do you have some sort of dividend or income growth strategy or do you just plan to die early?

      1. My income growth strategy is owning farm land and crop sharing. 10-15% of my portfolio is within equities/preferred which automatically reinvests.

        Once I wind up business activities will roll money into more GIC/CD.

        Will start claiming social security at 67.

  30. Good evening:

    Great comments here from everyone involved with this thread. Thank you so much. If time allows, I’ll post a Pump and Dump 201 article in the next couple of days. This is an advanced class. Interesting to see that my post may have been controversial for many posters, but no one will oppose the facts in my article that many OTC and illiquid issues are being sold/promoted to produce additional returns for their own personal portfolio. These are facts.

    For the newbies here that did not read Pump and Dump 101, we will go on to the second session. This will talk about Deflection, Avoid the Issue, and My Preferred Cannot be Called – all of which are great topics. Also, it may discuss “Bury the Issue” which is done when no one wants to really discuss the fair topic of Pump and Dump. And by the way Pump and Dump sounds really “yucky” but really not as bad as it sounds.

  31. Captain Lou,
    You have stated several times that you are leaving this website because you are dissatisfied. You have stated that you are going to inform the SEC about what you claim is happening on this website. Yet you stick around, making accusations. What is the basis of your anger and why do you think sticking around is helping yourself?

    Wishing you peace and calm,
    Jay

  32. Pump and Dump – Class 101

    Good evening investors: as we have a new thread here, it may be helpful to some of these posters to talk about the classic Pump and Dump I have seen a number of times on message boards. So let’s begin:

    1) What you want to find is an illiquid security that trades rarely. Buy all shares possible. Tell your online friends about this one, but buy them first.
    2) Once the shares have been purchased – it is now time to take action!
    3) Post on various message boards, including, but not limited to Yahoo, SA, III, Silicon Investor, Morningstar, etc. Add other boards if possible. The more boards, the better. This will work!
    4) Work with your other “team members” to see if they will post as well and recommend the security. It will help your credibility!
    5) Deflect at all times that a “past due security” will be called. It is just not possible. This is critical to the operation.
    6) When questioned about #5, you really need to post that you “called Investor Relations” and the issue will not be called. It’s just not possible the issue will be called. This is also an important step in the process.
    7) It is also very important to remember that any type of Ethics and Fairness to novice investors should be ignored. They are on their own and should know the risks involved.
    8) Find your next target and then just repeat Steps 1 – 7.

    1. Great points as everyone should do due diligence on what investment is appropriate at the safety level one requires. But that goes with liquid ones also as many more of them have been pummeled through poor financial structures.
      There appears to be some clarifications needing to be made here though. Points 5 and 6 are being directly made about some past CLP comments.
      Lets let the facts guide us here..
      The preferred stock rate is purely a historical rate reflecting the Company’s cost to carry the preferred stock issuances made over 1949 to 1968. Preferred stock has not been issued since 1968, but this asset class is perpetual and will remain outstanding until the Company chooses to call it in. The Company’s explanation for leaving the preferred stock outstanding is that the credit rating agencies give up to a 50% credit for preferred stock to their credit rating matrix, thus up to 50% of the outstanding preferred stock may be treated as common equity for credit rating purposes with the remainder treated as long-term debt. This treatment has the effect of increasing the Company’s common equity portion for credit rating purposes. Additionally, the cost of preferred stock is much cheaper than the cost of common equity and only slightly more costly than long-term debt; thus, it is more cost effective for the Company and the customers to keep the preferred stock rather than refinancing it with common equity. Response to Interrogatory FI-94; Tr. 2/8/18, pp. 167-169. The Authority finds the proposal reasonable and approves the cost of preferred stock of 4.75% in each of the three rate years.
      The Public Utilities Regulatory Agency of Connecticut would appear to me anyways to be a more reliable source of info to support such a wild supposition. (Page 17)
      https://www.eversource.com/content/docs/default-source/investors/2018-ct-final-decision.pdf?sfvrsn=f23fc262_2
      I personally have never stated to have called IR, but this guy did in an SA article. Maybe you should seek confirmation from him? He wrote this article and seems like a nice guy to me, as I enjoyed the article (he referenced me in article so I must have influenced him in some manner I guess) but you can decide that for yourself.
      Non-Correlating Stock Ideas
      ContributorPRO
      Comments413 | + Follow
      Author’s reply » Truth be told, I was originally only going to write about the CL&P issues, but decided to expand it a bit just so people would consider the reasons why I find them attractive and how that can be applied to other potential securities. Just as a side note, I actually talked with ES about the CL&P preferreds before writing the article, and asked anyway if there was any reason why they wouldn’t call them in or anything I was possibly missing. The quick response I was given was no and essentially they said they’ve been around for 50+ years and they don’t expect any reason for that to change. That doesn’t mean I’d recommend paying the offer on the highest coupon. You can see the trading range history. Use patience and take advantage and pick them off if interested. CNTHO is a good example. You give up the highest yield, but you gain the added security of par. Also note a bunch of these old issues have a slightly higher call price than issue price for par.

      And yes they could be called anytime…Maybe tomorrow even..wait, maybe not tomorrow as they already declared the next round of dividends for next cycle… Maybe next time, but not this time anyways…
      https://www.eversource.com/content/docs/default-source/investors/dividends-clp-09-17-20.pdf?sfvrsn=2841d062_0

      People like to discuss yield, but most dont discuss coverage ratios and protections.. The devil is always in the details.. As a few commenters mentioned in another thread about coverage light issues. These dont matter until they do… Did you know Ameren and CLP (and many more illiquid utes) have mandatory minimum coverage ratios.. For example Ameren requires a minimum of 2.0 interest coverage ratio (its actually presently way above that) and preferred dividend coverage of at least 2.5 (its presently well over a 100) to protect the preferreds… How does that compare to say MNR-C? (Which I own, btw). Dig deep and research…And you will find nothing I am reasonably sure… By the way with frequent mention of MNR-C on the forum we should be thoughtful and cognizant of fact the issue runs an ATM. Its issuance size has grown almost 2 million shares alone this year already (used for acquisitions which I am fine with me as much as that matters, which it shouldnt). And these illiquid utes dont tend to own a portfolio of money losing reits that have dinged the balance sheet like MNR has. But as I said I own it myself so it is what it is. And I also own a couple others where the preferreds take over the board if 4 payments are missed.. No wonder companies buy them off the market. There just arent too many new issuances I am aware of that provide that protection. Maybe you know of some?
      Some people value safety (everyone has their own risk tolerances). Just yesterday a kind man thanked me for my posts the past few years to provide safe income for his 89 year old father. He said he also does his separate due diligence (which all should do) but appreciated the ideas to research and act on. I get these frequently and they do warm the heart.
      We all have our comfort zone, but in the end most of the time our destiny is out of our hands. Diversity, proper allocation, and due diligence should be applied. Index funds and various professionally managed funds can be also utilized to accomplish this also.
      And above all if one buys perpetual preferreds or funds that do, one needs to understand the inherent capital losses one could be exposed to on higher long end of the yield curve movement. That day will almost invariably come. Be it this year or 10 years from now, I have no idea.. Jeff Gundlach was calling for 5%-6% 10 year a couple years ago, and that never materialized and that prediction fizzled out long before Covid. Anyones guess is as good as another’s there. The current budget deficits and total debt are indeed staggering….

      1. @Gridbird
        I wanted to take this opportunity to thank you, profusely, for your help in uncovering safe, QDI preferred issues I would have never known about. I have purchased several and hold them in my cash account and am very grateful to have them. My bank is paying almost nothing, and I view these holdings paying me 3-4% as a very conservative and excellent yield for this environment.
        I also appreciate your “teachings” and guidance on these issues.
        Malka

        1. Malka and Jay, that black masked red breasted creature has shown me time after time that he is a selfless individual. People have coined him a few names since he is a “preferred” encyclopedia. I am not “lucky” to have the rights but to me he is not just Gridbird but the genuine Prefersor.
          Best regards, No. 12

    2. I think you may have posted this in the wrong section, kaptain. What you’ve described seems to relate more to worthless penny stocks with millions of shares pumped out of bucket shops and boiler rooms.

      It would be hard to corral enough shares of most illiquids and then pump and dump them to maintain much of a high lifestyle, don’t you think?

      Besides, the illiquids discussed here are not worthless. Whoever bought those few shares of WELPM @ 172 or FIISO @ 212 still gets 4% or better, as regular as clockwork. Compare that with CD rates anywhere these days. lol

      Call risk? Sure. I once owned enough AILLL to have a 5-figure call risk. That was my choice, made wearing my big boy pants.

      At times I’ve had almost half of my portfolio in illiquids and I still have almost 40% in that sector. I’ve made a significant amount trading them this year, simply by watching a list of favorites on think or swim. So I love illiquids. I love to read and learn more about them. Some of the most knowledgeable illiquid investors I know post here on III and they are pretty much the only posts I read.

      It’s easy to filter out what I’m not interested in, e.g., REITs. Anyone not interested in illiquids can easily filter them out, too, especially now, thanks to Tim trying to satisfy everyone on this great site.

      Anyway, this section for illiquids was set up primarily to satisfy your gripes about having to read about them elsewhere. Yet here you are posting something that relates more, in my view, to penny stocks.

      JMO

      1. As we go along this evening, we will work along with class two of the great Pump and Dump scheme. I’ll call this one Pump and Dump 201:

        1) When investors have been informed of a classic Pump and Dump scheme, the first thing you want to do is Ignore the facts. This is prudent when you are running the classic Pump and Dump. Do Not Ever At Any Time Admit You Were Posting On Multiple Message Boards to Sell your Illiquids.
        2) The other basic rule is to “Change the Information.” It does not matter if a security has been callable for 20 years. You just have to change the “facts” in your favor. This is the best option for you.
        3) Deny, deny, deny and ignore any comments that you have posted on multiple message boards regarding your illiquid securities. This will only validate the credible comments made by valid posters. At all costs, deny and deflect all of these comments. Once again, this is extremely important.

        4) Confuse new investors with information. This is also very important to the cause. The newbies will not be able to absorb this – so it really helps when you are trying to Pump a security that is trading way above fair market value. Please let me give you an example here:

        The preferred stock rate is purely a historical rate reflecting the Company’s cost to carry the preferred stock issuances made over 1949 to 1968. Preferred stock has not been issued since 1968, but this asset class is perpetual and will remain outstanding until the Company chooses to call it in. The Company’s explanation for leaving the preferred stock outstanding is that the credit rating agencies give up to a 50% credit for preferred stock to their credit rating matrix, thus up to 50% of the outstanding preferred stock may be treated as common equity for credit rating purposes with the remainder treated as long-term debt. This treatment has the effect of increasing the Company’s common equity portion for credit rating purposes. Additionally, the cost of preferred stock is much cheaper than the cost of common equity and only slightly more costly than long-term debt; thus, it is more cost effective for the Company and the customers to keep the preferred stock rather than refinancing it with common equity. Response to Interrogatory FI-94; Tr. 2/8/18, pp. 167-169. The Authority finds the proposal reasonable and approves the cost of preferred stock of 4.75% in each of the three rate years.

        Do new investors know what this mean? Of course not! But this is the way that Pump and Dump works! This is why we are working with class two of Pump and Dump.

        5) When doing advanced Pump and Dump, you really have to work with some other posters to get this done. We will work through this issue in Article 3 of my series.

        1. kaptain, your efforts to warn and protect us unsophisticated neophytes here in this minor venue are certainly notable.

          If I may ask, when do you expect to present your findings to the SEC? Soon, I hope, because the wheels of justice often turn slowly and time is of the essence for, as you well know, there are charlatans all around us.

          Please keep us informed as you progress through the labyrinth of the government agency sworn to protect us little guys. We will certainly want to follow along.

          Thanks again for your tireless efforts on our behalf.

          JMO

        2. Grid, is Kaptain Lou directing this at you (in part)? The language he’s quoting is from one of your posts. Feel like I’ve come in the middle of a movie, what in the world is going on here? I notice you have referenced hm so understand if you don’t want to, but we all do our own research here and if you don’t understand something don’t buy it! I see that advice here over and over. and it’s good advice.

            1. I do miss comments from Nomadicist. I haven’t seen any here in a long time. Here is one of his that I like regarding currently owned stocks: “If I didn’t own this stock today, would I still buy it now?”

        3. K LOU-
          PLEASE spare us number 3. I think you have crusade for some reason that is not fact based (as it might relate to commenters here), except perhaps for penny stocks, as others have noted. Enough rant.
          If only there were an ignore button.

    3. Kaptain – Was that directed towards me? Let me start by saying that I opened up accounts with Duke and Dominion for the premier notes after your article on Seeking Alpha. It was an administrative nightmare to get the accounts open. Transferring money didn’t work correctly either. I wasted a lot of time making phone calls to Northern Trust (the administrator of the notes). That stuff wasn’t mentioned in your article. It would’ve been nice if you tested the notes yourself before writing the article. Perhaps an updated article would be appropriate to point that out. Also, I’d be way more worried about U-Haul investors club than CLP. Last week, I got 100 shares of WELPM for $136.55 (4.4% yield that’s noncallable and Baa1 rated). I’m getting QDI from WELPM vs. the interest income taxed at ordinary rates from U-Haul. Is it harder to acquire WELPM shares than buy a liquid preferred? Yes, but good things in life typically require more effort. However, I spent way less time buying the WELPM shares than jerking around with the Duke/Dominion premier notes accounts.

      I mostly hold CNTHO at a cost pretty close to par. I sprinkle in CNLPL and CNTHP on occasion when I see an attractive price. I do it because I can more absorb the call risk and I like my odds. Check out the chart on CNLPL and tell me that $58-59 doesn’t look like the recent floor.

      If this stuff isn’t for you, that’s fine but it doesn’t mean it isn’t right for others. I appreciate knowing what is out there so I can decide for myself. For example, I don’t think U-Haul is a good investment, but I never posted about how that was a bad idea because maybe someone wants to lock up money for 3 years at 2.75% that’s backed by used furniture dollys which I’m sure will bring in a lot of money if things go south. I also missed the part of your article that covered Amerco’s bankruptcy.

      I appreciate all the info Gridbird and others have provided about these illiquid issues. It’s been a huge help to me and I hope they continue to post.

      1. Mr. Whitman. If we were on the new site, i would give your post a few likes. Well said. “If this stuff isn’t for you, that’s fine but it doesn’t mean it isn’t right for others.” Let me decide for myself as noone else should. If you don’t agree with someone, it doesn’t mean they are wrong. And.. if you start thinking that you are the smartest person in the room, then you aren’t looking for the train that’s coming up behind you. We need to value diversity, and other’s opinions. We all need investment ideas, and the more diversity we have, the greater the choices are.

        In my situation, I have been reading Grid’s, Camroc, and other’s ideas for a few years, and it has worked out really well. Why? when the market panics, the illiquid, pinned to par, and non callable issues don’t move a lot. The ol’ geezers holding onto them have a tight claw, and have them in a triple locked sock drawer. The owners do no panic like the other investors.
        Why would I sell my illiquid for a loss of 10, 20, 30%? In late 2018, I sold a # of illiquids because they didn’t show large losses, and used the funds from the sales to buy discounts on many stocks when investors dumped many fixed investments. Then in March and April of this year, I did the same thing. In times of volatility they have their place.

        Thank you Gridbird and others for your advice, stock talk, and history lessons.

        1. Mr. C, G&G, Malka, Dick, Jay, and begrudgingly Camroc, thanks for the kind words. An open market provides various strategies. Everyone has to do what works for them. Mr. C your purpose for holding illiquids mirrors mine, along with tremendous coverage ratios off the charts that liquids dont have. And the beauty of them is you can trade around inside the bubble if one prefers to juice a bit. As when its said and done there is negligible difference between owning CLP, AEE, Alabama Power, PacifiCorp etc etc preferreds. You try to buy on the lower end of current trading range and sell on the upper if one desires.. But I wish they would issue more liquid ones.. Or you just hold for secure income. Its pretty obvious they arent growth stocks, lol.
          … But now all of this has given me an investment idea. I need to research and see if Eli Lilly has any preferred stock to invest in……😀

          1. GRID
            if you want to consider lily then might as well do BMY as well as seveeral of the others. Most of the larger pharma have rich pipelines. The issue with them is what if anything might be the impact of increasingly high healthcare costs and the desire to control the price of pharmaceuticals. In all events, will be interested in the results of your study.
            p.s. consider abbv as well. sc

          2. If you want to know who those guys that hold onto the illiquids, I’ll try to describe them. Too bad I cant attach an emoji or gif.

            Picture an older gentleman. His face is worn and weathered over the years. He has plodded and trudged through countless battles. Years ago it was the wars, and now the battles are with his wife and the damn hipsters that constantly want to buy his stocks. He has aged now, and harder for him to get around nowadays. He still has a glimmer of his old self and from a distance he still looks thin and wiry.

            He has taken a liking to his grandson, that helps him much on the weekends. He is coming over this weekend, so he has put on his best pair of overhauls and a new flannel shirt (red and black plaid striped) he just ordered from Fleetfarm.

            Today his grandson will help him check the prices of his stocks, and will continue the coveted lessons on how to use the computer. He finds much content and satisfaction in seeing the stocks he purchased in the 60’s and 70’s. As he was waiting for his grandson… he drifted off into a slumber. He began to dream, and was picturing himself printing off the stock certificates and burying them deep into his backyard. He continued to snore and dream…
            No-one will every find these and force him to sell….

            1. Mr. C, And when his oldest son called in March asking him if he is worried about the market collapsing, he says… “Me worry? These things have survived, Vietnam, OPEC, Watergate, Y2K, 08-09 Crisis, Taper Tantrum… Heck son I also own a couple preferreds that breezed through the Spanish Flu, WWI and WW2. also. The only thing I need to worry about is where the hell did I hide those damned old stock certificates at. I cant seem to remember….

              1. Nicely done Grid. Reminds me of a writing game I think i did when I was in middle school. Teacher comes up with a topic. Then she writes a sentence on the chalk board (lol, i dont think there is any chalk boards nowadays). Then we write that sentence on our papers and continue writing. Then every 5 minutes we pass the paper to the next person. So you end up reading what was written, which takes a minute or so, and then you write and add to what they have. Then at the end, students can read them aloud to the class. Brings back memories… lol. nicely done.

                The lesson here is that everyone should have a % of a solid foundation to fall back on, wherever you are in your journey. It could be cash. It could be a little more than cash. If you are thinking really conservative, follow and read https://seekingalpha.com/author/regarded-solutions. His alias is Regarded Solutions. He and his followers have lots of ideas around the 1-3% targeted area with a focus on capital preservation. Regardless, do whatever works for you and that allows you to sleep at night with whatever choices and decisions you have made for the path you are walking on.

                  1. On that note… you cant go wrong reading any of these guys on SA:
                    Dividend Growth Investor. He took over David Fish’s champion lists.
                    David Van Knapp
                    Chowder with his rules
                    Mike Nadel
                    Dividend Sleuth

                    You can learn a lot from the above gentleman, their philosophy, their articles, and comments.

          3. Grid, I would forget the drug idea, it won’t work. For instance, Ely Lilly helps people with the use of Prozac to mitigate obsessive compulsive disorders. Just being an investor, it does not get rid of obsessive compulsive behaviors of other investors knocking on and down your front door. 🙂

  33. For those inclined, there is an ask out there for a couple hundred shares of CNLPL at $59. I’m at my limit for these.

    1. @Dick Whitman
      CNLPL – just what I needed to add to my cash portfolio
      Thank
      Malka

      1. Are you at all concerned that it’s callable at any time for $51.84 and it’s selling for $58 and change?

        1. Gumfighter, it is a valid point. In fact, it is one of kaptain’s points. If my memory serves me, some of the seasoned illiquid posters here have expressed they bought or would only buy at lower entry points. I speculate that seasoned illiquid investors would only buy a limited number of shares at such high price (if any) while capturing the dividend, and would then flip them when possible.
          IMO the concern is not just that they could be called but that share price could drop a bit. While there may be reasons that suggest they would not likely be called, nothing is a 100% certain.
          FWIW: I do not considered myself a seasoned illiquid investor and would and will NOT buy at these high prices; IMO the reward for the risk is just not there. And I am not in it to flip.
          Best regards, No. 12

          1. Rodgers/Favre/Holmgren/Lombardi, Those are always great points to be reminded of. Personally I think one needs to be cognizant of entry and exit points when owning issues well above par. They tend to trade in ranges and if you can snag the dividend on price movement, you take it, and reenter later. If you buy and hold one way above redemption price and it gets redeemed even in 2 years, one really hasnt done more than maybe break even if lucky. That doesnt accomplish much.
            As an unrelated note I stumbled onto something most dont have any pricing experience with. That being perpetuals during high interest rates. Hopefully that wont be a problem because lets just say it isnt pretty. A 7% ute preferred of mine in late 1979 with 10%, Ten year Treasury was trading at $53($100 par) and its 4% sister preferred was trading at $30 ($100 par). How is that for some cap losses?

            1. Grid,
              You remind me of the days there was a AMEX and when I first started trading SDGE preferred on it.
              One thing we all need to remember is when higher rates come it will not be around for as long as lower rates if my short memory serves me.
              Also talking of the Pharma, I own PFE and GSK and been looking at BMY, ABBV, RHHBY, NVS, NVO, MRK
              and I am probably missing a couple letters of the alphabet here
              My hoped for price range is when they fall to a range they pay a 3% dividend
              and yes I know some of these are affected by currency exchange.

              1. Hey Charles, I havent heard AMEX in a while, lol.. When I have researched old ute preferreds many were on like local exchanges such as Chicago or Boston. Heck even Hawaii had their own exchange back in the day.
                I saw an ad in a newspaper advertising a 8% $100 par Connecticut Light and Power preferred, with $120 redemption price. But unfortunately the ad was from the 1930s if memory serves, and of course the issue has been redeemed long ago.

  34. There are plenty of preferreds/baby’s to choose from in the illiquidity pool. Of the issues I track, 409/925 = 44.2% traded on <=29 days out of the last 30.
    164/925= 17.7% traded on <=20 days out of the last 30.

    If you look at the average daily volume over 3 months, about 197/925= 21.3% average less than 2,500 shares/day.

    It is fine if invest in these if you understand the risks. I suggest using extreme caution if you are not used to dealing in illiquid issues like these.

    1. I wonder for the sake of this topic whether or not a definition of what qualifies as “illiquid” vs what is just low volume might be a good idea. Where does the line get drawn? How did you decide, Tex? What’s the most highly traded by volume of the 925 you have in your illiquidity pool? To me, low volume is interesting… Illiquid not so much..

      1. I would guess/assume that most people would say that illiquid = low volume. Why? Many investment advisers want the avg investor to buy liquid issues with investment time horizons < 5 years. What they mean is that they want the investor to easily buy/sell anything. If the investment vehicle is liquid, that means the avg trade volume is at a level where you can do that. I would guess that illiquid issues are the lowest 1% of the issues ranked according to avg daily trading volume in that investment vehicle (bonds, preferreds, equities, …)

        Am i washed out?

        1. Mr. Conservative, so where would you place that preferred in terms of liquidity I just bought yesterday that I messaged you yesterday about? 😂

          1. Grid, if I was doing a yearly liquidity measurement and ranking… I am guessing it is #1 on the list. hahaha. I didnt think about this, until i wrote a response about Arbitrage Trader… since i have margin on 1 of my accounts, i could list some buys out there, that might not hit for a few years like yours. Then i can always cover the margin later. 🙂

            I am going kayak fishing on the Mississippi in northern MN this weekend. I wont be doing bobber fishing, but I liken a buy listing to fishing with a bobber. If you don’t like that analogy, I am finishing up staining my deck over the next 2 days, and it would be like watching stain dry? 🙂

      2. 2WR, my apologies for not being clearer. The 925 issues I track include really liquid all the way to really illiquid. Stated differently 516 issues traded all 30 days, which I would suggest as a starting point to pass a “liquidity test.”

        As for the highest volume issues, I excluded any issue that IPO’ed since June 1 because they have a lot of initial trades in the rollout period. 29 issues trade >= 100k shares per day. And you will be shocked to know the two highest issues. Personally I would never have guessed, but they are both Fannie Mae issues that have not paid a dividend since 2008, FMCKJ and FNMAS. They average >500k shares/ day. IIRC, there are several hedge funds/distressed debt funds that have been fighting a legal battle to force Fannie to reinstate the dividends. Obviously these are at the extreme end of the risk curve, so I would NOT recommend any III reader to speculate with them.

        1. Thanks for the clarification, Tex… that helps.. good parameter I suppose for a break point – those that do or do not trade every day for 30 days = liquid or illiquid… Those Fannie Mae issues = the ones Berkowitz/Fairholme has been fighting for forever?

        2. Tex, you got me curious as I have never really tracked 90 day average volume liquidity. As I wait as long as it takes, as the last one bought yesterday took 7 years to buy. I generally run 20-30 preferreds at any given time and presently have 26.
          Here are my breakdowns.
          10 or less – Five
          11-100- Four
          101-1000- Two
          1001-4000- Eight
          10,000 plus- Seven

          1. Grid, I’m curious, can you list the symbols for each of these categories you mentioned?

            I suspect I have several of these, but likely not the most exotic ones.

            1. Inspy you have or at least had a few of these I am certain. Some of these I should consider selling and locking gains, but havent done a lot past couple weeks. And of course there is zero correlation in shares or dollar amounts owned per issue. Think these are it.
              10 or less, PPWLO, SLMNP, AWRY, BANGN, AILLN
              11-100, IPWLK, PNMXO, AILLM, SBNCM
              101-1000 UEPEM, CTGSP
              1001-4000, LXP-C, NYCB-U, GJH, EP-C, PFX (guesstimate), GOODN, KTBA, GLIBP
              10K and up, RILYZ, WCC-A, QRTEP (has not traded 90 days but its running 500,000 early on,), MNR-C, SJIJ, NGHCO, NGHCP (actually this one should be on previous line, I just assumed it had similar volume as sister NGHCO but it doesnt).

              1. Grid, if I’m tracking, those categories are 90-day average of daily volume, correct?

                Seven years?! Do you place a GTC limit order and renew whenever it’s about to expire, or…?

                1. Ha, Bur, No not that way. I just have a list and casually look. I never had a seen a 100 share ask before and didnt know why. But I always watched and knew one 100 share block traded in 2018. The ask came out, I tried getting them to drop for couple hours but it wouldnt budge. So I just paid up as I might not get another chance. As I recently had came across a filing to regulators stating 99% ownership of the preferreds. I usually leave an active bid or two out a day but not many usually.

              2. Thanks, and yes, I do own several of those names. Hopefully they will remain outstanding for a long time.

        3. Reading the lower court opinion(if it upheld), those things should be trading at $.80, not $8.00 a share.
          Talk about a lottery ticket. The Supreme court could either make them worth 30-35 a share with the 10 years of missing dividends, or make them worthless if they uphold the Treasury’s Third agreement.
          IMHO, worthless is probably the way it will end up, but shorting them is ridiculously risky, as there is no telling when the decision would come down.

          1. Justin, could you be so kind as to specify which particular issue you are posting about?

            I tried scrolling up the thread to find out, but was not able to.

              1. Thanks! I have not looked at Fannie Mae for many years now, and at this time prefer to direct investment resources toward illiquids of the Grid universe.

          2. Yes, I agree this is just lotto gambling as the evidence Justin just mentioned seems to not be positive. There is an entire subset of speculators playing these various issues all the time and posting thoughts on SA. Remember these or most anyways (havent checked) are non cum so there are no accrued dividends. Of course the stock would pop big time if they were reinstated though. These are out of my investing relm.

            1. Yes. both say non-cumulative in their description, so no back dividends, so yes, probably 20-25 a share. (they are fixed to float)
              I should dig up a prospectus and see if there are any other surprises.

      3. I’d define illiquid as pretty much anything that is OTC plus anything more than 30 years old.

    2. Tex, I can only give you historical personal reference to that term Camroc, Inspy, and I have used for years on end. And its not proper, but historically we simply used it for the old delisted utility preferreds so we wouldnt have to list all the alphabet tickers. Age of issue, how much its been institutionalized, size of issue, issuance price amount of share all factor into an issues liquidity.
      And of course another variable too is some people wont invest in ANY preferred because the entire sector as a whole is viewed as illiquid in nature.
      A perfect example of how things converge is say EP-C. Its about a $400 million issuance which is fairly hefty. But some days it never trades and many days a 1000 or so. The reasons are 1) Its institutionalized as some funds own it in chunks and hold it 2) Its a $50 par, not $25 which halves the share count 3) And its 20 years old which tends to bring about less trading.
      Liquidity I suspect is like beauty, its all in the eye of the beholder ultimately I guess.

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