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.
Local website cult preferred stock TECTP just declared divi yesterday payable 2/4. I picked up a 100 more on scrap money at 10.56 yesterday (or day before cant remember) and they also declared a common stock divi, too. This is second consecutive quarter the private common has recieved divi so I assume things are going well besides the solid profitable earnings reported (who the hell knows, as no one but PendragonY can deep dive bank financials) in their SEC filings…
On January 25, 2022, the Board of Directors of Tectonic Financial, Inc. (the “Company”) declared a quarterly cash dividend of $0.225 per share on the Company’s outstanding shares of 9.00% Fixed-to-Floating Rate Series B Noncumulative Perpetual Preferred Stock. The dividend is payable on February 15, 2022 to shareholders of record as of the close of business on February 4, 2022.
On January 25, 2022, the Board of Directors of the Company declared a cash dividend of $0.0625 per share on the Company’s outstanding shares of common stock. The dividend is payable on February 15, 2022 to shareholders of record as of the close of business on February 4, 2022.
Two EXTREMELY illiquid issues today stood out:
VNORP, 6.5% coupon, $50 par, busted convertible, down 38.11 to 50.00 on 13 shares. That is a 43.2% drop
BMYMP, 4.0% coupon, $50 par, strongly convertible into BMY common, down 794.00 to 1106.00 on a single share. That is a 41.8% drop.
Third largest drop today was TELZ, down 6.0%, but it is NOT an illiquid. Traded 55,262 shares so it seems more like an honest market opinion compared to the first two.
We have no positions in any account for these issues. We held TELZ in a few accounts but sold it a while back based on some conversations here on III.
Median preferred lost -0.40%, so these were outliers. On prefs/babys/terms that traded today, 553 were down, 206 were up and 0 were unchanged.
Just messed up the up/down stats for today:
528 down
179 up
27 unchanged
Also this excludes any issues that closed @ <10.00
My apologies for not editing the first post sooner.
I’m guessing BMYMP must not be a $50 liq pref. $1000?
Why guess, can just check on quantum. Its a deep itm convertible so the liq pref doesn’t really matter
I have never played with this late 1960s issued convertible largely because their guidelines state they can redeem it at $50 anytime. Now the issue has over the years been bled down to only 3-4k thousand shares (cant remember off top of head) so it doesnt trade much. Im sure loosely off current conversion value, but I never have tracked that down, though I never really tried either.
d) Redemption. The Corporation at its option, at any time, or from time to time, on or after December 23, 1972 (except as otherwise provided in paragraph (b) above), may redeem all or any of the shares of such series at the following applicable prices:
If Redeemed During
the 12-Month Period
Beginning December 23,
Per Share
Redemption Price
1972 $ 53.00
1973 $ 52.50
1974 $ 52.00
1975 $ 51.50
1976 $ 51.00
1977 $ 50.50
1978 and thereafter $ 50.00
together in each case with an amount equal to any dividends accrued and unpaid thereon to the date of redemption.
Read Appendix A in link if you want more dynamic intellectual stimulation.
https://www.sec.gov/Archives/edgar/data/14272/000119312511040120/dex3b.htm
3400ish outstanding. Even if it is called, it is still convertible.
They had a pretty powerful provison of the preferred (being its only one) they needed knocked out in 2015. They didnt want these shareholders holding up anything of importance.
SECOND REMINDER
April 20, 2015
Dear Preferred Stockholder,
You should have received proxy materials in connection with Bristol-Myers Squibb Company’s Annual Meeting of Stockholders to be held on Tuesday, May 5, 2015. According to our records, your vote has not yet been received. Your vote is extremely important, particularly for Proposal 5 to amend our Amended and Restated Certificate of Incorporation to remove the supermajority voting provisions applicable to Preferred Stockholders. At last year’s annual meeting, a stockholder proposal requesting the elimination of all supermajority voting provisions in our Amended and Restated Certificate of Incorporation received support from a majority of shares cast. The Board, in its continuing review of corporate governance best practices and after taking into account the…….
BMY does their best to hide info on this. Typically any convertible I can find the conversion multiple in yearly filings. Not with these guys. They list shares outstanding and that is it. I had to dig out Appendix A just to find anything.
Is UEPEN on the forbidden list? I own a small number of shares via fidelity in my 401k account. I am not looking to add or sell at the moment, but I was just wondering if it had been blacklisted in an effort to protect me?
No it is not. The way you can tell is by going to otcmarkets.com and looking it up.
https://www.otcmarkets.com/stock/UEPEN/overview
It is on the Pink with current information. Not the expert or grey which we are excluded from buying on.
Thanks for the link.
Somebody was buying PPWLM this morning for $170.09. XD is 1/19. I let them have mine.
New 52 week low for SLMNP @ 955.00, down 30.00 from previous close of 985.00 on 12/29/21. Only 15 shares traded @ 955, but there were two 876 share trades @ 997.5 and 995. It goes ex-dividend tomorrow 1/13 for the 15.00 dividend. Don’t know if any more shares are available @ 955 or not. It is one of the forbidden fruit SEC Rule15c2-11 issues, so it is not clear that mortals can buy it.
We have a micro-micro-microscopic number of shares in one account and NO open orders in any account. We were NOT involved in today’s trades.
Tex the 2nd,
My 30 units of SLMNP took a big drop today. i dont belive Lyondell is at risk of defaulting again. Is this a sell or it is best to hold on to them and keep collecting the interest payment?
It was only 14 shares sold. Some small holder decided to sell and probably put in a market order or kept lowering the price until they hit a bid. We cannot see what is going on but I have a feeling if there was a 500 shares available to buy at 1000 we would see a nice pop back up. The people who own this, I included, have come to the conclusion we will hold for a very long time. I don’t even look at it until it is payday every 3 months.
LYB is a very profitable company.
The drop is neither interest rate related or LYB related…. It’s strictly SEC Rule15c2-1 related where you’re allowed to sell it if you own it, but you can’t buy it… Buying is restricted severely to a limited group of “experts” who fully know that they have no competition from those who would willingly and knowledgeably be willing to buy sans SEC Rule15c2-1 so they take full advantage and rip the lungs out of anyone who feels compelled to sell.. So thanks again for the protection, SEC…
As with KTBA, I say if you can find something else investment grade, non-callable, and yielding 7%, then sell. Until then, I’m holding. The current prices of KTBA and SLMNP established by the “experts” are just not reflective of their values.
Tim and all, I tried to post it in User Initiated but I had difficulty. I have some good news on Gridbird’s SLUMP. Among many SA authors I have subscribed, WOLF report just issued a very possible article on LYB, the new owner of SLUMP according to QOL.com. It appears LYB is somehow survived bankruptcy and now got lots of cash and paying its common shareholders about 4+%. Fidelity.com shows steady and stable dividends since 9/3/2019.
I will continue to hold my 15 or 16 or 17 shares in various accounts. Disclosure: I sold only about 1 or 2 shares and decided I should follow Gridbird, who really knows his stuff. Good luck to Tim and all of us too.
I posted a similar or less detailed message in Silicon, where they have tons of Gridbird’s followers.
https://seekingalpha.com/article/4486387-lyondellbasell-lyb-buy-rating-due-to-fundamental-upside?mailingid=26680708&messageid=2850&serial=26680708.4994&utm_campaign=rta-author-article&utm_medium=email&utm_source=seeking_alpha&utm_term=26680708.4994
John
Grid and 2WR—thanks for your info on tectp. This preferred evidently was issued by a private company, which I think is why I was confused. There is really no info on Tectonic Financial. My question—how does one perform any due diligence?
Randy, they issue SEC filings on their earnings because TECTP is exchange issued. Here was most recent quarterly filing.
https://www.sec.gov/ix?doc=/Archives/edgar/data/1766526/000118518521001666/tectonic20210930_10q.htm
That reports mentions common shares—so they must be privately held and non traded?
Weighted average common shares outstanding
7,021,953
Yes, or at least shares traded are through private transactions. Some of my local banks have common shares, but arent allowed to be traded, and can be tendered back to bank at specific times, limits, and procedures.
Grid—what is the parent company for tectp? What do they do? Thanks
https://t.bank/
https://www.sec.gov/ix?doc=/Archives/edgar/data/1766526/000118518521001666/tectonic20210930_10q.htm
Randy, if you are a drive by reader, here is the overview from 2WR’s link.
About Us
Full Service
Financial Services
Banking/trust
Wealth management
Private equity
Insurance
Serving Wide
Array of Clients
High net worth individuals
Small businesses
Institutions
Registered investment advisers
National
Footprint
Clients in all 50 states,
with a concentration
on fast-growing
Texas markets
Proprietary
Software Platform
Proprietary technology to onboard and manage loans, open operating bank accounts and 401(k) plans
Tectonic Financial is a financial holding company that offers several intertwined verticals: banking, trust, investment advisory, securities brokerage and insurance services to small businesses, 401k/defined benefit plans, institutions and high net worth individuals in all 50 states.
The largest asset, T Bank (a Dallas, Texas headquartered community bank), was ranked among the Top 200 Banks in the United States in Lending Tree’s 2020 annual analysis and is an SBA Preferred Lender. The Bank’s loan portfolio has specialties in SBA originations and medical practices. The Bank contains a trust department, which has medical professionals’ retirement plans as its core.
Tectonic Financial also owns a registered investment advisor, Tectonic Advisors, which provides money management for many of the medical professionals whose 401(k)s and similar vehicles are trusteed by the Bank. In addition, a dually licensed securities firm, Sanders Morris Harris, generates private investments for clients and provides institutional execution and deposits for the Bank. Smaller parts of the holding company are successful third-party administration and insurance practices.
We believe that we can leverage this combination of financial services and our integrated next generation financial services platform to benefit those we serve: our clients, our employees, our communities and our shareholders.
Speaking of “high net worth individuals”… I wonder if any of their clients can trade on the expert market scooping up some pretty impressive buys the last few months.
AILIM@101.69. call price 103. about 4.65% if you want it. at least a 100 shares available.
Three illiquid, $50 par, Connecticut Light issues had >5% selloffs today on microscropic volume. Do not know if there are any more shares available at these prices or not. Two of the three made 52 week lows:
CNLPM 4.12% coupon, @47.00 down 5.5% on 200 shares
CNLTL 3.80% coupon, @ 45.00, down 10.0% on 111 shares
CNLTP 4.40% coupon, @49.88, down 9.3% on 100 shares
We have no positions or orders for any of these in any account.
Now ills have some advantages that are not always apparent at first glance as Grid would say but I would be hesitant to buy them even at those prices. CNLTL @45 is still only a 4.2% yield with some nice call protection upside. Paying 45 today might sell for 40 18 months from now. I would personally want at least 4.65% which means I would bid 41 today. Now I realize it is an ute. IG. Stable business but one should be able to do better then that in this current env. I would rather just by NSARO at 103 and take my risk of losing .20 cents per share if called. At least I get 4.65% today.
I agree FC. I am basically out of 4% perpetual illiquids.
Grid, I thought these investment grade illiquid utilities were your bread an butter…what happened?
Citadel, I do have a lot of illiquids, just not the traditional IG ute perpetuals. I have a nice chunk in various Indianapolis Power various issues and that is about it outside of untradeable BANGN. The low 4% perpetual stigma is just too risky for me right now.
Have more illiquid stuff like TECTP, KTH, WTREP, CRLKP types now, along with various term dated and adjustable stuff. But if I can get a sell off, I will be back those!
That is the life of an illiquid and why they make good trades on good entry and lucky exits. Take CNLTP the price drop was distorted as it really only returned to previous range considering it just went exD a short while ago.
CNLTP
TRADE DATA
DATE TIMESTAMP PRICE $ CHANGE VOLUME
01/10/2022 12:58:21
49.88
-5.12 100
12/31/2021 12:08:35
55.00
-1.07 257
12/31/2021 12:08:31
56.07
5.62 100
12/31/2021 12:08:17
50.45
0.45 100
12/16/2021 11:49:25
50.00
-0.25 100
A few shares of NMK-B offered for sale @ 99.00, down from 102.00. 3.6% coupon UTE immediately callable @ 104.85.
We have NO positions in any account.
So many good preferreds here that the government is protecting me from buying. Sigh.
Who exactly is deemed to be expert enough to buy these and how much did they pay the government to make them off limits to commoners like me?
Anyone buy into the KTH mini sell off on huge volume dump of 10k today? I missed the 31.20s bottom but got in at the $31.45 and under range. That is about 4.5% YTM, so not earth shattering, but I have to keep a certain amount of IG utes and this having the 2028 backstop at least mitigates the perpetual infinity problem. I dont know if any more are available at that price range or not.
With rates creeping up it would be a tough one to chase higher. Its been a historical fun one though for me. Just last month I bought and flipped for a buck gain a share holding just a few days. I was on a little getaway with an old friend and remember buying them at a mall and selling them in a bar, ha.
You get $27.10 on 4/6/28 for this $25 trust certificate? Is that right?
Yes, its $27.10. Been accruing next interest payment since end of October.
looks like I’ve got some reading to do tonight…. oboyoboy..
Study hard! I remember many years ago when I first traded it, I was studying deep into PECO’s public service commission reports to make sure it was ring fenced from then dirtbag parent Exelon. I wanted nothing to do with that company. Probably isnt so bad now, but PECO is ring fenced so it doesnt matter. If memory serves you have to deal a bit with OID phantom tax if held in tax free account. I have always held in tax free, but a few people told they got clipped a small amount in taxable.
2WR, By the way, in case you are curious, as I think you loaded your IBond account with me in September, they are now showing one months interest credited to your Ibonds (last 3 months are withheld of course).
Thanks, Grid – No real reason to even really look at Ibonds at Treasurydirect until re-upping on this year’s max later this month.
Thats only why I noticed…I went ahead and bought my yearly allocation today.
“With rates creeping up it would be a tough one to chase higher”
Not sure about that if the new OXLC 2027 baby bond prices at 5-5.25% lol. I wasn’t as quick on the draw as you, but cleared out what was remaining at ~ $31.50
I personally agree with you, 730, just trying to maintain some caution in post. Im a ute preferred honk so I dont need pumped up on them, ha. Also, I dont mind having a high/low barbell in income issues holding this type of issue and the SB type preferreds on the other end. My average total income yield is around mid 6%. But, out of my 30 or so issues, not one of them is a 6% current yield issue. So I definitely work on both ends.
If you got the $31.50 ones, you may have cleaned up the rest. As I am pretty sure the ask jumped back to $32 before market closed did it not?
Yes, after I cleared out the seller at $31.50 the ask was $32.10. But I’m trying for a quick flip Gridbird special on a few of my shares @ $32.00 lol.
I will wait for you first to clear. Its easier to sell higher when liquidity dries up, so we dont want to compete, ha!
KTBA now at PAR. *Shakes Head* 7% yield.
What has the SEC wrought??
Almost worth opening an account with Schwab just to buy it.
Alas…even Schwab now rejects any orders.
I suspect this is to some extent tax loss selling…a security that swoons in the last month in a very strong market. Expect a bounce in January…buy how to buy??
I thought there was some “trick” to buy there. Like you had to walk up your bid until you hit. Something like that. Even that is gone?
Yes, that used to work. Now an order is immediately rejected.
“Your order cannot be accepted. This security KTBA is accepting closing transactions only.”
Of course this is not true, as someone…a so called “expert” is buying….
Even if you could place an order at a particular broker, it doesn’t mean you’ll ever get a fill.
The bigger question is: do you really want to buy it just because it’s cheap? What if it becomes unsellable in the future? You need 15 years of interest just to get your $25 back. And then there will still be 59 years more to maturity!
I appreciate that it is a theoretical steal if you could buy it at $25, but if it’s not going to mature during my lifetime, I’m not sure the payment stream itself is worth it. But hey, it’s all hypothetical because I’m sure I couldn’t buy it even if I wanted to.
Karma…you are assuming the SEC problem will not be solved. Or perhaps the trust will be dissolved and the underlying bonds distributed. Or ATT might decide to buy for their own account.
I would assume none of those things, in fact.
Unsellable is the only issue we have not had to worry about so why bring that up? That is the one thing we can all currently do. At a certain stage hypotheticals can be dismissed because the reality is wr can sell today and tomorrow. A rule change won’t take place instantly.
I looked at it on TDA, of course you can’t buy it. Bid/ask was in the $31 area.
Tim, Those are old abandoned last day it traded (pre SEC regs) bid and asks. Many brokerages appear to just left them frozen in time with no relevance.
KTBA caught a bid today.
OCESP paid my wife and I our dividends on 12/15/2021. Ally, in two different accounts, pulled the dividends back on 12/28/2021. Now based on past reading here at this fine website I knew to keep an eye on this situation as this is not the first time it has happened to others at different brokerages.
I called Ally to open a ticket. Ally did their normal dance of putting me on hold and explaining that OCESP does not pay a regular dividend. I expected them to say that and I am not surprised. Just pop in “”ocesp” dividend” into google and it quotes the wall st journal’s fabulous useless info of: “OCESP is not currently paying a regular dividend.”
I went on to explain the conversation that took place from other users from this website. Obscure preferred, paying faithfully for decades, my wife and I might be your only account holders who own it, Ocean Spray sends the money, yada yada.
I just wanted to let others know to keep an eye on their holdings if they own it. You might have to open a ticket to get the money back. Always check your div/interest! This site has taught me that. Last time it was OXLCL only giving me 1/3 the amount because they thought it was monthly instead of quarterly.
I hold my OCESP at Schwab. The 6/15/21 dividend was not credited to my account until 7/15/21 after going through “the same type of dance” fc. So this time I am simply going to wait until 1/15/22 before I contact them and waste any of my time.
I have my OCESP at Chase – they credited dividend paid on 12/15
I got mine at TDA on the 15th. Today they took it away. Same thing happened last time, but I did end up getting it back, so I suspect the same will happen this time too…..?
Ally paid out OCESP a few business days ago last week. I imagine the whole process will repeat like this again and again but in the end you get your dividend. Just wanted to post this to tell the end of the story.
“Big” day in illiquids! MSEXP , Middlesex Water, traded a whopping ONE share @ 106, down 27% from the last trade of 5 shares on 9/22/20, or 15 months ago. Gotta be the featured Poster Child for 2021 Illiquids.
FIISO, Financial Institutions, traded 82 shares, down 32% @ 144.88. Last trade was ONE share on 11/29/21 @ 177.00 Only had to wait one month between trades.
Not exactly candidates for a quick flip with either of these issues.
We have never owned them or had any orders for either in any account, nor do we plan to add any orders, till death does us part. . .
144.88 for FIISO was my bid that sat there for many many weeks. I did not get a single share. Whoever sold it had their order go to someone else and of course it was snapped up. Annoying but what can I do? I was so ticked I canceled my GTC order and now my 5 shares of FIISO sit there mocking me. Whoever sold it priced 82 shares at exactly what I was offering I reckon. OTC is truly opaque and unfair at times but I have to admit it has gone my way a few times as well.
I also bought that 1 share for 177 in an attempt to shake some apples out of the tree. I was going to post about it but felt too frustrated. lol
I had nothing to do with MSEXP…
fc, I have 99 shares of FIISO that I’m looking to offload. Let me know if you are interested in them. I wasn’t the one you shook the tree on, lol.
I would be interested in them between 142-145 per share. My goal was to attempt to get them at a 6% yield but that does not seem doable over the last months. So I raised my bid so the yield was a touch below 6%. It almost worked on that last 82 shares.
One issue I have is that ally does not allow greater then 10K purchases of OTC securities so I always have to place two bids of 50 shares each to show up on anyone’s radar. That could cause a problem?
Either way.. I would place a bid for that amount and you can sell anytime you want. If I get them.. I get them. If not.. we tried. What broker do you use?
Ugh. Ally wont allow me to place a bid at 145.10 to beat the other person. It is like I have to wait until someone has an active ask above that. I get this message.
“The limit price you have entered is too aggressive either buying at a limit above the current Ask, or selling at a limit below the current Bid. Please adjust your price based on the current quote.”
So it is like you would have to put an ask out of 177… get it active.. and then I put my bid. Or we wait for someone else. Getting annoyingly complex.
Thanks for replying so soon. Unfortunately not looking to sell for that low of a price. Can certainly understand you wanting to get it mid 140’s. Weird about your OTC limits. Haven’t experienced that myself.
I don’t blame you for wanting to hold them. If I had to pay a price which gives a 5.3-5.5% yield there is so many other options to explore. I want a “bargain” of course. But go ahead and put them out for bid and tell me your price and maybe I will snap them up 🙂
Ally is like a broker on training wheels. I am used to them since I am an old tradeking customer and Ally bought them out to become a broker. My old account is still grandfathered in many positive ways but some odd OTC rules did get pushed over from the new Ally interface which is a negative. Either way the work around of multiple orders does result in showing up in Level II so I can live with it. Having a bid for OTC securities is never a guarantee to get the shares as I have learned.
FC, I have dealt with Ally before, and presently liquidated to close them out. That being said those sub 100 share orders are more likely to get jumped on OTC unless it shows the odd lot ask (a few do). Or this has been my experience anyways. What you do is call the order in and have the rep put a 100 share order in. They can override that limit. I had to do that on more than one occasion with them..
Grid, thanks for letting me know. As always it depends on what person you get on the phone I suppose. I have tried to call in and was told no in the past. I guess I should try again. Take OCESP when it dropped. I was like hurry.. 1000 shares at 14! stat! They said no.. I was like ok.. 500 and then another 500 for goodness sakes. Then hang up and call back in for a different account where I had to do the same thing all over again with a different phone support person because my wife just happened to walk in the door at the right time.
I have been tempted to move to a diff broker a few times now. I hate the idea of having so many accounts. I already have 3-4 as it is for different things.
FC, The rep needs to contact “boss” to approve it. They always did for me. If they are just saying that is the limit maybe these are rookies and unaware they can get approval.
They are just so damn dumb, I threw in the towel with them. Now that new gray market IPOs are getting hard to get in on, my need for this brokerage went to zero. The last straw was when I was trying to sell an issue and it would cancel. They said it was market maker. I said that is wrong, as I have it in other accounts and could put sell orders out. He didnt believe me so I made him watch the screen and I would tell him the price I was going to post and then I did. I did it a couple different times to prove it. So he got on their incompetent tech staff and they fixed it that day.
Yesterday, I bought 200 IPWLK at $101. If a lasts a year, my yield to call would be about 4.6%. At 2 years, it’s a little over 5%. I’ll take my chances.
CNLHP buyable at par of 50. 4.5% IG.
Who here is upping their bid by a penny with me? 😛 I want a lowball end of day dump. I already own some of this so I won’t chase very hard.
Thanks fc for the heads up. Picked up a couple hundred @ 50 which is at the low end of it’s multi-year chart. This suits my goal of having a largely “sock drawer” portfolio. Along with 10 -15% riskier high yield issues and trading I shoot for a 7% annual return. This has been a good year as I’m up 9.3%. I try not to compare to the market at its depressing. I’m sure others here have done much better this year as I’ve made a couple somewhat costly boo boos. That said, can’t complain too much since my retirement budget is only 6%.
IPWLK dropped a buck and a half today? I know it went ex, but is AES calling this baby home?
Grid posted some info that gives an impression that over the next two years they could be called. I cannot seem to find it. Nothing solid but it seemed like a “clue”.
FC, My batting average isnt good on this site search either! I kept the link though for myself so here it is again.
https://iurc.portal.in.gov/_entity/sharepointdocumentlocation/e0384bcd-b126-ec11-b6e6-001dd802dc28/bb9c6bba-fd52-45ad-8e64-a444aef13c39?file=45575_IPL_Submission%20of%20Agreed%20Proposed%20Order_100621.pdf
can’t sell KTBA in schwab – my sell orders are canceled seconds after being accepted. Called them and they are “inquiring”….
@ dd
I have no problem entering a sell at Schwab. I entered an order to sell at 31 and it it is still there 5 minutes later.
Of course, I’m not selling at what pass for current prices….
Interesting, RetiredBroker, lack of consistency in their ops?
This is what they wrote to me:
“KTBA is an expert market only security. Sells must be entered through a rep like myself and only in a certain way.”
Needs to be “Not Held” and you have to answer 3 questions.
I was trying to change an old order, not placing a new one.
Can you change your order?
Strange indeed dd.
Perhaps it has something to do with your “risk tolerance”? Brokers have to ask such questions on account opening. Maybe Schwab is “protecting” you?
FWIW, my sell order is still there. I have had Schwab cancel buy orders on KTBA (seemingly for no reason…some orders stay put and some have even executed) but never a problem with a sell order.
I like their “protection” concerns….
BTW: schwab has no bid and ask for KTBA (and same in M.E.), while in TD they have ask at $31.10, yet you get no execution…. and last trade listed is $27.05.
Maybe we simply have to forget these illiquids, enjoy the divs, and leave the shares to our grandchildren
DD, KTBA is a total market distortion caused by SEC and OTC. KTBA is simply the 2095 7% Bell South bond (assumed by ATT of course). This actual bond also trades on the bond market. Its last trade 2 days ago was 155. It is trading 55% over par! KTBA is trading what 8% over par? Its the same thing. Of course its value that cant be unlocked at this time and maybe never, but if they changed the rules it would. I wouldnt try to dump it now, just keep it as an annuity and assign any value you want to it. 🙂 Here is the KTBA bond in true bond trading pricing.
http://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C32618&symbol=T3668086
Grid,
I like the idea of considering it as an annuity (forever?), and simply do NOT look at the quoted price. In fact, in my spesaheet I have separated all the illiquids so that I compute my account performance WITHOUT them.
This raises the converse question: IF you find a broker that would accept buy orders and you have more $ to place as annuities, isn’t KTBA at around $27 a great deal?
Is there a future for KTBA?
To put its terms in perspective. It matures in 74 years.
going backwards in time 74 years was 1947, which is about the same amount of time before area codes were introduced (8 years) as the birthdate of someone who would be retiring on the date the bond matures in 2095.
DD, Justin brings up a good point assuming you want residual value for whomever you leave it too. I think it can be treated like an annuity, but not bought in a manner annuities can be, because of singular company concentration risk.
I own a couple of “annuities” in BANGN and WTREP. Im personally not worried about them. You almost have to assume its a private issue untradeable and if you want to stick heirs with it…Though personally there appears to be a market with KTBA at the present fleecing level it is at, so being “stuck” with it isnt likely.
Big difference. WTREP is callable. BANGN is not .
There are only two types of investors that should buy these things.
Insurance companies and dynasty trusts because they can collect the income in perpetuity and won’t be fazed by buying something that will be around like those hundred year old railroad issues and 60 year old Ocean Spray preferreds.
Yes, but near term its irrelevant because the ability to sell now is out of your hands, so it doesnt matter if its callable or not since you cant do anything about it once it went private. So this is why I percieve as the same. However it does have a 2034 owner optional redemption which I hope to be alive still. BANGN, well there is a 3rd type…Me… I dont care, I own it and wont sell it anyways. 🙂
If brokerages are not allowing to place buy orders, who am I going to sell to?
Who is allowed to buy?
And regarding “perpetual annuities”, these would be fixed annuities, meaning that with time, the fixed income you r receiving is worth less and less — not a great gift to heirs…
You can enter orders to close open positions. The designated “experts” can buy it from you in the so-called expert market.
I have a large (for me) position in KTBA. My cost is ~$30.50. I would not consider selling it for $27. In fact, if I were offered $30.50, I would not take it in the present market conditions. I am getting 5.7% yield on my cost (nearly 6.5% on the present $27 price). Considering that KTBA is not callable, you cannot find anything now of comparable investment grade that gives you that kind of return. As Grid correctly notes, the underlying security trades for an equivalent price of $38.75. There is a serious disconnect here between the value of KTBA and its price in the expert market. I’m content to collect the interest until conditions change.
The greatest gift is probably not being around when your kids say that you could have left them 4.8 mil, but you instead gave them only 4.2 because of some annuities you were invested in.
Mr. Conservative,
I like your approach!
In my case they would say in addition to “only 4.2M because of some annuities you were invested in”, they would say: “with a stupid annuity that can’t be sold and pays only $1.75 per unit per year, which by then due to inflation it may be equivalent to $0.45 per unit per year”.
I guess the best, in order to avoid sourness, is to donate all the remaining KTBAs to some non-profit, and thus they will only say: “the old man left me 4.1M , even after his philantropy!!!!”
If I owned enough KTBA, I would be tempted to file a class action lawsuit to force Citigroup to cause the termination of the trust under clause iii.
TERMINATION OF THE TRUST
The Trust shall terminate upon (i) the payment in full at maturity, (ii)
the distribution of the proceeds received upon a recovery on the Underlying Debentures (after deducting the costs incurred in connection therewith) after a Payment Default or an Acceleration thereof (or other default with respect to the Underlying Debentures) or (iii) the distribution in kind of the Underlying Debentures upon the tender by an affiliate of the Depositor of 100% of the Certificates in exchange for 100% of the Underlying Debentures.
Justin, nothing you copied implies any cause for termination of the trust. Either way, the prospectuses always state that there may not be a public market for the securities, so you’d be out of luck just based on that.
I should be clearer on why. It isn’t that they aren’t making a market, it is the reason why it it moved to the expert market, namely, because the trustee hasn’t complied with the OTC Market rules regarding SEC disclosure because the underlying issuer is compliant with their SEC filings, and the trustee has a fiduciary responsibility to the beneficial owners and file with OTC Markets all AT&T’s (the issuer, now, as successor to Bellsouth) SEC filings and that not doing so is breaching their duty to the certificate holders.
The other problem is that the contract is one sided on the terms in how it treats the beneficial owners because it grants them no powers, but they need at least limited powers to do things like terminate the trust if the trust continuation is not in the beneficial owners’ best interest.
So the suit asks for two things:
1. Either the trustee can start filing with OTC markets the SEC filings, or 2. the court can order the affiliate to terminate the trust and distribute the underlying bonds to the certificate holders.
I should add, this is the only security that has this problem. All the other structured products that landed on the expert market had worthless JCPenney bonds underneath.
(for some reason Ladenburg Thallman’s securities are classified as structured products)
A supporting argument is there are a lot of of other structured products created by this same issuer that still trade on the NYSE, so the issuer singling this one out for the expert market while leaving the other certificate holders unaffected is a showing of bad faith.
“Terminate the trust and distribute the underlying bonds to the certificate holders…”
Yes! Wouldn’t that be grand?
Justin, the entire thing is a farce. Have you ever read an old filing of KTBA when it was on an exchange? All it said was to go to ATT financials to find them. So it never disclosed anything when they filed because there was nothing to disclose.
And they stopped doing even those bare minimum filings. ..
but they are current on the one linked to Peco Energy.
There appears to be a reason….Once it was no longer Bell South, and now ATT from acquisition, this led to delistment.
As a result of such termination of reporting by BellSouth Corporation and BellSouth Telecommunications, Inc., it will not be possible to continue the listing of the CorTS Certificates identified above on the Exchange.
The Exchange also notifies the Securities and Exchange Commission that as a result of the above indicated conditions this security was suspended from trading on February 13, 2007.
…..PECO still reports earnings through parent. So this is probably why its so.
UEPEP (part of Ameren) ask at 101. Redemption at 102.47. 4.56% coupon at 100 par. Could tank if rates rise but an IG issue with little call risk.
Sold my last shares of UEPEP at 102 recently on the third of fourth try. Not really worth the effort for such meager returns (imo). The proceeds will likely go into i-bonds, or something else a bit more liquid earning a better dividend.
UEPEP @ 101. Seems like a few hundred shares if anyone cares. I bought a few to round out my position to an even number.
WTREP Groupies…. A.M. Best which is a respected insurance credit rating agency, put this out after Watford acquisition was completed. Preferred is a solid bb rating.
AM Best has removed from under review with negative implications and affirmed the Long-Term ICR of “bbb-” (Good) and the Long-Term Issue Credit Rating of “bb” (Fair) on the $225 million ($52 million outstanding) 8.5% cumulative preference shares of Watford Holdings Ltd. (Watford) (Bermuda), the group’s ultimate holding company. The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect Watford’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
https://news.ambest.com/newscontent.aspx?refnum=236848&altsrc=23
Thanks Grid
Grid—is there any gossip or any rumors about the intentions of the three firms owning this company? Are they raising funds to call the prf stock? Just ignoring it for the moment because of other more important matters? I guess we’ll wake up one morning to find it has been called. In the meantime, let’s just enjoy the nice dividend checks.
Randy, dont sell it as we are about to get another dividend! Wait you cant, never mind, ha. No, they mentioned they were looking at financing this and redeeming but that was at beginning of going private.
$52 million is a drop in the bucket, so I dont know why they redeemed $200 million of it several years ago and left $50 outstanding and then gave it a trading ticker at that point (it originally was a private insider issued preferred).
So who knows, if its still outstanding come summer, I guess they just want to strand it and worry about overpaying on yield.
I found this newsletter by accident. I don’t pay for newsletters. I have no idea if their track record is any good.
There was some free stuff though that I did read that was interesting. They seemed to have a pretty simple model for the micro cap banks they cover.
http://www.oddballstocks.com/
no track record as they don’t do recommendations.
What would you call this?
“In the previous Issue, we ran a feature called “Small Bank Snapshot,” wherein we presented what wethought were two small bank ponds that were worth fishing in – a “cheap” one with low price totangible book value and also a “quality” one with higher return on equity banks at reasonable prices.”
I guess we will agree to disagree on this one. I was trying to make it clear there is no “vouch” from me is all. I did find one little bank that looked good to me, but the div was 4% and to low for me.
I know that newsletters think they are clever, but the SEC was crying about freakin’ Wall St Bets chat rooms but no recommendations there! Even that Roaring Kitty fool was questioned.
Anybody that tries to induce me to do or believe what they want me to do especially if I am paying said person to do so to me is a recommendation.
Just checking my Schwab acct, and a sudden boost in total value from our old friend OCESP coming back to life. Apparently 1500 shares have traded today, last price 16.85 and ask is 17.00. Just under a 6% yield at those prices..Think it just went Ex-Div …
Schwab only place I know of that can be traded, but maybe others..
Someone can scoop up 100 shares of CNLHP for 50.70 if they want. That is about 4.47% and call price is 50.50 so hardly a concern. Just does not interest me to buy more even though a bit below my own cost basis. I require more yield now days!
Meanwhile CNLPL up nearly 8% to $62.01… Yowza
Yea. I don’t understand who is buying that along with CNTHP. 10 dollar call risk on the last purchase. I guess they like to live dangerously.
CNLHP went unsold. How things have changed. I reckon that would have been bought up quite fast just 6 months ago.
I dont like these low yielders now necessarily (dont know if I like anything really for that matter, ha), but I have to own some as stabilizers and trade some bouncers. For example I snagged a full position for me of noncallable SOCGP today and yesterday at 31.50-80. It finished with a trade over $33 today. I will play bouncers such as these. 4.75% non callable ute aint anything to beat chest over but I was buying way below 52 week lows.
3 months ago you could buy it for $5.05 right from the issuer.
https://www.sec.gov/Archives/edgar/data/838875/000119983521000580/wvvi_fwp.htm
SEC jerks strike again. I see AWRY was forced to be sold at $50 today or a 12% yield. This being a railroad issue that has paid consistently since the 1890s. The $50 price today was lower than its been since at least since 2003.
I gave up looking at them it is so frustrating. I can picture brokers basically buying them for themselves. Not clients.
It’s not the brokers buying for themselves, is it? Isn’t it more likely the “experts” who have been created to protect us from ourselves while giving us an opportunity to get out of the mistakes we have made by previously having been stupid enough to buy highly risky securities such as AWRY at terribly inflated prices obviously not reflective of the risks involved? Thank you, oh great experts, for saving me by ripping me off as you have been given the right to do by our heady protectors…….
Grid, what are the terms for AWRY? Is there a prospectus posted somewhere?
It has no prospectus because its not a preferred. But it basically is because its a “guaranteed stock”. See railroads issued these back in the 1800s. And there were hundreds and hundreds of rail companies back in the day. This one avoided bankruptcy that many did and kept getting bought out taken over by other rail entities.
CSX is obligator of payment and owns the majority of the common float. Its buried deep inside the bowels of CSX financials. They eliminated the sham company in the 1990s and just folded it into CSX at that time. It originated in the late 1800’s and has dutifully paid ever since.
Grid, what dividend does it pay and how frequently? I see you refer above to a 12% yield at $50, so that implies something like an annual dividend of $6.00/share?
Yes, a 6% $100 par guaranteed common stock.
Here is an ancient Moodys summary for you. Its the second paragraph. Same float as back then except CSX owns over 16,000 for control.
https://books.google.com/books?id=daE9AQAAMAAJ&pg=PA1556&lpg=PA1556&dq=allegheny+and+western+railway+6%25+guaranteed+stock+history&source=bl&ots=1vuv–2sPF&sig=ACfU3U3N1S3dYrNk1HuRZ-BFeWvOT1dVkQ&hl=en&sa=X&ved=2ahUKEwiA1Z3xkJnsAhUITawKHSLFA3M4ChDoATAOegQICBAC#v=onepage&q=allegheny%20and%20western%20railway%206%25%20guaranteed%20stock%20history&f=false
For AWAY, the current bid / ask on TD Ameritrade is $108 / $121
With a $6 annual payment, the yield is ~ 6%
Those are dead stale bids, back when it could still trade and have been there ever since. Its an expert market issue now. Those bids were showing when over a hundred shares traded at last week at $50.
Grid:
Great stuff and thanks for the update on the IPALCO preferreds. Obviously, with this new filing, the only series I will be looking to buy is the 4% IPWLP – which is callable at $118/share. Hoping somebody dumps them to me well below $100, but there are only 47,611 shares outstanding.
The big one (5.65% IPWLK) is callable at $100 and it would be crazy to buy it at current bids of $103.75.
Rob, I own about a couple hundo each of O, P, and G. We shall see. It may take a while.
Looks like you get a 15% bonus if you take the divvy as a wine credit. And management is saying “trust us”, we wouldn’t ever call them lol:
https://www.wvv.com/OwnershipFAQ
https://www.wvv.com/Ownership
They have been doing this for many years.
More locations are being built and developed for 2022.
Well, there you go. The market is efficient, after all, but some times you need to be a wine insider to know it.
I love that link. I have never read a company actually pleading to buyers that they will not redeem their redeemable preferreds, ha.
In order for the Company to exercise this provision to redeem, it would have to repurchase ALL the Series A shares at once at $4.15 plus a 3% premium. Now, this would require the company to pay back more than $25 million in cash, plus the $10.7 million cash raised in this offering (and still have cash to run the company). There is no possibility this will happen. Why would the company repurchase the Preferred Stock when we are raising money by selling Preferred Stock to fund expansion? Where would we come up with that amount of money at once and at what cost? Why would we incur the wrath of more than 19,000 wine enthusiast investors in doing so when our sales model depends upon their support of the winery? (Preferred stockholder direct purchases of wine and winery services were $2 million last year, covering the cost of the Preferred dividend and administration, making this a self-funded form of capitalizing the company).
One way to solve the redemption price issue is to start a new Series B with a new registration filing. This would mean we would have to pay more than $100,000 in new legal fees and file for a new Series listing WVVIPB with the NASDAQ and pay those additional annual listing fees. We would also have to go back and earn a nationwide registration for the Series B as we did with the Series A. That’s a lot of work, reducing the total trading pool of the Series A, potentially lessening those investors’ trading price growth as well as those of the Series B — all to solve a redemption price issue that will never be exercised.
Yeah, I smell legal trouble for this company down the road. I can’t believe they say “there is no possibility” of a call. If you own this thing, you better monitor that website frequently because if they ever remove that language, it will be a strong signal that they’re going to call it.
The prospectus also claims that these special benefits are immaterial to the value of the shares, which has clearly been proven false.
I’m wondering if there really is some portion of these benefits that depend on share count. Like if you get entered into some sort of drawing for priority allocations, maybe you get one ticket per share. Something like that could could easily explain the preferred price.
I like cheap wine, so buying a share wouldnt help me, ha.