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.
Conn L&P recently filed a Form 15 for a bunch of preferreds:
https://archive.fast-edgar.com/20230928/AEBOH62D8222DZZA222J2ZZZGGSRZ2V2Z252/
I have no idea why it was needed, but I am hoping they do not turn into a bunch of SLMNPs.
I am afraid they are preparing to go dark. Unfortunately, I own some of the issues.
I thought they were automatically piggy backed by other financials submitted unrelated to the preferred. Thus they will remain on the pink on the OTC. It is not like they were submitting anything to OTC currently.
If what you think might happen.. will happen that will include other things like NSARO.
Hi fc,
I don’t know how it will all play out. Gridbird probably does. Here is their latest quarterly report:
https://d18rn0p25nwr6d.cloudfront.net/CIK-0000072741/f4ad5a8b-3723-4e9c-a460-0a48cee778c7.pdf
My layman’s understanding is that all of the CT Light & Power perpetual preferred issues will “go dark.” The parent (Eversource) no longer will file any financial statements pertaining to these CT issues. The issues remain “alive” (e.g. not liquidated) but they will not trade openly. Existing holdings will move to the “Expert Market” and there will be no active buy/sell. An individual owner can offer shares for sale via an explicit order of their broker. There will be no way to know historic pricing or if there are any active bids–hence the terminology “Dark.” Many issues incurred this fate a few years ago (as many will remember). What puzzles me about the CT issues is the number of “holders of record” shown in Form 15 is very low–well below the 300 threshhold for going dark. But individual accounts are grouped under a single broker so, for example, all Schwab accounts holding a CT issue are, collectively, considered a single broker. Income will continue to flow but share Owners will only have a crude estimate of value. And, as has been the case for other similar issues, values inevitably will decline. Liquidity will be compromised but not eliminated. Here’s a bit more about this type of filing (Grid, please correct any errors I’ve stated–you’re the guru on this stuff!):
Section 12(g) deregistration is not automatic; the issuer has to take affirmative steps to get rid of its Section 12(g) registration.
A domestic US company will generally do this by using Rule 12g-4, which provides for termination by filing a Form 15 certifying that the company either (i) has fewer than 300 record holders or (ii) has fewer than 500 record holders and less than $10 million in assets as of the last day of each of the company’s last three fiscal years. This is easy to establish in typical M&A scenarios, in which the target company becomes a wholly owned subsidiary of the acquiring company and hence has only one holder.
Foreign private issuers proceed under Rule 12h-6 and Form 15F. The requirements of Rule 12h-6 and Form 15F are somewhat different than those of Rule 12g-4 and Form 15. We are going to focus on domestic filers for the moment, but if you would like to understand how this works for foreign private issuers, see the Latham FPI Guide.1
Note that the Form 15 does not take effect immediately – under Rule 12g-4, the form takes effect 90 days after filing (or such shorter period as the SEC may determine). But unlike its cousin, Form 25, the act of filing the Form 15 immediately suspends the issuer’s SEC reporting obligation (see Rule 12g-4(b)). So, you do not need to file required periodic or current reports even though the Form 15 has not yet taken effect. See C&DI 144.02.
Hmm. Wouldn’t these be down more if they were going dark? Also, why weren’t the new england electric issues listed? Just trying to get more info. Thanks.
If you go to otcmarkets.com you will find the same document for NSARO/NSARP for example.
If these are going dark I am trying to figure out what I am willing to pay for them. I imagine I would want > 7%. I might have to get some bids ready at 7.5% to start.
That is my understanding too. They already have been delisted years ago. SBNCM and SBNCM and the common all “went dark” about 10 years ago getting under the 300 limit to have to file and still trade pink sheets. I just bought some at good prices and I am keeping. I know they will pay as ES needs the upstream. I really don’t know the purpose of this current filing. Who knows. Most odd…and unappreciated.
Here is a link for the latest ratings. The preferreds are rating BBB+ and the parent is rated A. Hard to beat that..
https://www.eversource.com/content/docs/default-source/investors/credit-ratings.pdf
It’s a high quality company. That isn’t the problem. Unfortunately there is precedent here…MSSEL… A high quality delisted preferred that NGG is the public parent of. And it went dark to experts market when that SEC ruling went in. Massachusetts Electric…It continues to pay like clockwork and declare divdends as it should.
I suspect most havent read, but CLP have some pretty powerful protections. These would remain in effect, however that may not be meaningful if one does not want to own something that could go dark. One being to take majority control of the board if 4 divis are in arrears.
Whenever dividends on any share of the Preferred Stock shall be in arrears in an amount equal to or exceeding full dividends for one year thereon, or whenever there shall have occurred some default in the observance of any of the provisions of these Sections, or some default on which action has been taken by the bondholders or the trustees of any indenture of mortgage or deed of trust of the Company, or whenever the Company shall have been declared bankrupt or a receiver of its property shall have been appointed (said conditions being herein called “events of default”), then the holders of the Preferred Stock shall be given notice of all stockholders’ meetings and shall have the right to elect the smallest number of directors necessary to constitute a majority of the Board of Directors of the Company and the exclusive right to amend the By-Laws to make such appropriate increase in the number of directorships as may be required to effect such election.
…… Except with the consent of the holders of a majority of the Preferred Stock at the time outstanding, given in writing or by vote at a meeting duly called and held for the purpose, the Company shall not merge or consolidate with or into any other corporation or sell or otherwise dispose of all or substantially all of its assets (except by mortgage or pledge) unless such
merger, consolidation, sale or other disposition, or the issuance or assumption of securities in the effectuation thereof shall have been ordered, approved or permitted by the appropriate regulatory commission.
Unfortunately one provision is not voiding a delisting!
A good read for those interested in such matters of the CLP preferreds. It references all the preferreds too.
https://www.sec.gov/Archives/edgar/data/23426/000007274112000004/charterclpamendedandrestated.htm
If any own NSTAR preferreds (the old Boston Edison Co.) they also have the same provision that preferred holders take majority control of the board after 6 missed payments.
However, whenever dividends accrued on any shares of any series of the Cumulative Preferred Stock at the time outstanding shall equal or exceed an amount equivalent to six (6) full quarterly dividends thereon, holders of the Cumulative Preferred Stock shall have the right to be represented at and to receive notice of any meeting of the stockholders of the corporation held for the purpose of electing directors and the exclusive right, voting separately as a class, to elect the smallest number of directors which will constitute a majority of the total number of directors of the corporation constituting the full board as then last fixed by the stockholders; and the remaining directors shall be elected by the holders of the Common Stock and any other class of stock entitled to vote therefor.
https://content.edgar-online.com/ExternalLink/EDGAR/0000013372-94-000032.html?hash=53f8cb31b8294a45abe3fffd94a989cef3130cf973b92025a5bcffccf6c4ec30
Thanks Grid!
I’ll push my luck and try to extract further info from you..
Any idea if management had ever commented on these Preferreds? Seems strange they wouldn’t have called some of the higher yielding coupons, especially during the days of low interest rates, and/or to simply clean up their balance sheet.
Some companies like preferred shares because it helps with keeping the debt to equity ratio lower compared to bonds. I think it is a 50/50 split for preferred. So they do have a purpose in a way. Not sure if the amounts of all preferred, for these older issues combined with the newer, even matter when totaled up though.
Maine, who knows. This came from left field as is. The real question is why any are around as collectively they represent less than 0.4% of their entire capital structure. CLP’s board of directors declare the preferred stock dividend. They are of course lackeys to Eversource. But they dont bring any press to themselves outside of declaring the dividends.
So I never hear anything. About 10 years ago CLP wanted to raise short term debt ceiling which required approval from preferred shareholders. Management lamented they couldnt find enough of the shareholders to get an approval to do it. All they had to do was redeem the paltry amounts and they could have done it. Yet they didnt.
Maybe 5 or so years ago during a state public service commission rate filing conference they stated they had no plans to redeem them and liked them in their capital structure. Nothing specific as to why was mentioned though from my reading if memory serves.
….I noticed many noticed the SEC filing this morning. I didnt know anything until I got home from golfing this afternoon. Funny thing was I sold two issues at a quick 6% or so profit today, and repurchased some NSTAR today $2 cheaper than I sold them and after I had previously sold for $4 quick gain.
So I still have a modest amount of 4 different series. Im not worried so much to sell, but will probably need a nice price dump to entice me to get more.
Here is the link to the contact info for IR:
https://www.eversource.com/content/residential/about/investors/contact-investor-relations
I reached out earlier today but have not heard back. Maybe others might have better luck.
I’ll respond here if I end up getting a response.
The redemptions of Indianapolis Power and Light preferred stocks last December 30, the June redemption of Narragensett Electric and the recent redemption of Ocean Spray suggest that redemption is still an objective for companies trying to clean up their balance sheets. So, despite the yield-related crash in OTC Market bids, the opportunity to add to Connecticut preferreds in the low $30s and Corteva preferreds approaching 7% would seem to be intelligent. The dividends are safe.
These rarely trade Grid. I have a couple 100 at a cost giving me 7% so will continue to hold.
On this website, which I enjoy, there is always chatter about the U.S. deficit and how the government is just kicking the can down the road and basically ignoring the problem.
The U.S. demographics are the underlying cause of the problem. We have an aging population that is no longer economically productive. We don’t have enough young, economically productive people to pay the taxes needed to cover the retirement benefits that older people are receiving. Politicians are not going to reduce benefits (or increase taxes) that are needed to solve the problem. It would be political suicide and the vast majority of our esteemed politicians are not, shall we say, of a noble nature. Eventually, the shit will hit the fan when the cost of government borrowing becomes intolerable/unsustainable. It will be a chaotic situation.
There is a solution which I believe will ultimately occur. The U.S. will welcome immigration, especially of young people who can fill jobs AND pay taxes. Now, many jobs are paid off the books because the workers are illegal or non-documented, however you want to phrase it. Bottom line, the U.S. needs a young productive workforce. If we have an open, but somewhat controlled, immigration policy, we can at least attempt to keep the bad guys out and allow the good guys in. We need the latter because otherwise, the current benefits of social security and medicare will no longer be available.
I recognize that most of the people on this website, including myself, enjoy the retirement benefits we receive, but would not be destitute if they would be sharply curtailed. However, this is not true for a very large segment of our population who live paycheck to paycheck. It does no good to say “they get what they deserve”. That may be so, but it does not solve the problem.
Over the years, when a country’s economy collapses and there are too many have-nots, its government is over thrown either through the ballot box or violent revolution. I don’t think either of our political parties has the stomach (or will) to deal with the problem and face the political consequences. Easier immigration might be the only acceptable solution.
JM2C
My Ocean Spray, OCESP shares at Schwab have been listed at $0 for some time. As of today they are still shown at $0, but now have the following in the description “**CALLED** @PAR EFF: 10/17/2023”. I can’t find any information or announcement of the call. Are we really going to receive $25 per share on 10/17/2023?
sman,
Yes we are. If you were one of us who bought them right before they went dark for cheap it is quite the pay day. Another poster here gave us the news about two weeks ago.
Thanks fc, sorry I missed that post but yes happy I joined in that buying spree…lucky occasionally.
No need to apologize for missing a post. I just wanted to mention the other user broke the news. I am just parroting the information.
The Connecticut light deals keep getting better. CNLHP offered at 35: 6.4% yield.
Lol. I made a mistake and typed in 34 instead of 35 and it is gone. Thank you for the tip. Maybe next time. Someone snagged it. With the way things are going it is probably for the best I missed out.
Lol again. who just took the CNLPM i was going to buy at 31?
Cnltl is ex tomorrow and offered at 30: 6.33%.
Yeah I’m accumulating too many of these this week!
I got a couple hundred over 7% buying CNLPM… It was a sell off feast on some of these CLP issues and exD tomorrow too. I bought 3 different issues today.
Does anybody understand why Duke’s preferred (DUK-A) is rated Ba1 by Moody’s? DUK is Baa2. I don’t understand why the preferred is below investment grade.
Skinky,
I think DUK might be Baa2 at one level but the preferred go a notch or two lower thus Ba1. So the senior secured might be A-Baa2. Senior unsecured a bit lower. Preferred a bit lower and so on.
With that said I own some of DUK-A and buy on weakness/down days. It is a position I do not worry about.
Thanks fc. I did a little more digging in the prospectus. Looks like DUK can defer dividend pmts only if they don’t pay interest on their subordinated debt–seems pretty unlikely this would occur.
Skinky, this is SOP. Each issue is a different stack. One cant pay the next if it doesnt get paid… In general…
1) Revolver/Secured/Unsecured, etc…
then the deferrables in order of payment priority…
A. The deferrable subordinated debt
B. Preferred stock
C. Common stock
I’m trying to find the prospectus for SOCGP. Can anybody help? Thanks!
Being they are probably close to 100 years old, the prospectus is probably yellowed and torn, ha. This is as close to one that I have ever found. Maybe an old annual filing may have more info.
https://contracts.justia.com/companies/southern-california-gas-co-7752/contract/87426/
What! I didn’t realize we had a competitor for one of the oldest outstanding ute stocks out here
Many thanks Gridbird!
SOCGP has dropped over 10%, any reason other than God hates me?
I do not know the reason and for some reason nobody is dumping shares into my currently reasonable offers. Probably a one time thing here. Not really sure I want to add at 24 which is the current ask. I am more comfortable at 23 to 23.50. That low would have been a nice gift.
6.25% has become the new 5% on illiquids. Pray for 7% and buy more! 👍
picked up a few hundred shares of AILLO this morning on a similar 10% dump
Just wait until tax loss selling season hits in full force. There will be more dumps.
You just never know about these things. As they are uncorrelated on a day to day basis to the liquids . They saved my arse big time in COVID. I was about maybe 70% in illiquids and while everything else was dropping 30-50% I noticed these weren’t moving at all. So I sold them and bought all the roached out liquids and rode them up in waves of trading. And then this past rate rise I sold them after the liquids told the future. I may be getting in on some early as who ultimately knows ….But the right ones are being bought at turn of the century prices and those are the ones I am now buying.
So it appears that all of the Hawaiian Electric preferreds will indeed pay their dividends in October? Looks like they were declared and go ex-div on 10/4/23.
Are there still owners of these preferreds here on III? Wild pricing…as one is at $9+ while another is at $16.
Kid, It sure APPEARS the HECO preferreds were declared 9/25. This is fully a month after HEI announced future common stock dividends were suspended after the contractually obligated one was dispensed. So they clearly could have not declared it if they wanted to.
If accurate I am a bit surprised. Keep in mind there are variables here. HEI is the holding company that owns HECO and issued all public common stock. HECO (Hawaii Electric Company) is a holding company that owns HELCO (Hawaii Electric Light Company) and MECO (Maui Electric Company; the service area where the fires occured). HELCO and MECO both have one $100 par private placed preferred also.
So its possible they keep paying. The preferreds have a provision that the preferreds take majority control of HELCO’s board if 4 payments are missed. Maybe this factors into the decision (or not), as the lawsuits are going to drag on for possibly years.
PCG has a similair business holding company structure but they suspended the subsidiary preferreds immediately with the common divi. So even if they pay this time it may not next time, as capital access could get tight.
Kid, as far as the wild discrepancy in pricing, I dont have an explanation. Typically in an orderly situation, these have got arb trading written all over them. But I think this things are very disorderly based on who knows which tickers are and which have sellers that would drop it. As the documents clearly show these are all equal standing preferreds.
https://www.sec.gov/Archives/edgar/data/46207/000035470720000045/heexhibit4vi201910-kus.htm
Purchased 9-21-23 250 shares of PCG-H at 14.95 for an approx 7.53% yield goes x-div 10-30
Some more CTA-A out there at 58.00
6.03% yield QDI with Ex Div Oct 5th
BBB Corteva issue much discussed on these pages.
Near 52 week low…I know some was snagged in 57’s few months back, but I toed my way in today with 100 shares.
Yes its only 50 bps above CD’s available, but v safe and can only be called at 100…or is it 102 Grid? Whatever it is…about as likely as the Jets winning the superbowl
Yes Adrian, it’s $102. The other is about $118 or $120. ….So glad I didn’t take Jets 9.5 over. I was worried Rogers would get hurt…But not on the 4th play of the year.
Anyone desiring a 6% ute at 6% way under par at 32.45 CNLHN has 600 shares for sale.
Thanks Grid,
Think I should flip those shares of SOCGP? 🙂
I only plucked 200 shares. I already had 100 about same price from a few days ago. I’m still very tepid in the fixed perpetual arena. Don’t own a lot here, but need to toe in some because timing perfectly correctly is impossible.
Cannot get the timing perfect as you posted. Expanded fixed preferred holdings slightly also. Not an illiquid. Added small amount of MER-K recently below par..
Well Grid I have almost 700 shares in my wife’s account and at this point I don’t think I will be flipping them. What is my PITA is what to replace the DCP-C with. Tough call to find something safe to lock in 8% for the next 10 years.
Charles, here is one that isnt 8% but it keeps slowly climbing in yield and is a bit off the beaten QDI path if you havent seen it. HWM-…Its an old $3.75 $100 par issue drifting towards $52 now. Its genesis is an Alcoa old preferred. It was spun off to Howmet which makes aerospace engines and turbines. Its credit rating is getting stronger. Certainly higher than Alcoa was at the end. Fitch just upgraded the preferred to BB+. I bought a few hundred recently under $53.
Utility powerhouse Fortis (50, yes 50, straight years of yearly common stock dividend increases) has a strong 8.3% IG preferred. It just reset last month. But the plus 8% yield is of course only guaranteed for 5 years, not 10 plus its in CAD currency.
Very similar CNTHN Eversource has some sat there at an ask of 41.25
Yielding 6.01% going ex Div on Oct 9th. QDI
Snagged 150, but theres more there. Love me some 1958 preferreds!
Thanks Grid!
Thanks – I snagged the last 200 that were sitting there at an ask of 41.25
I will add it to my collection of Connecticut Light & Power issues with CNLPL, CNTHO and CNTHP
Gang, we may see some more dumps as rates climb. Is it a decent time to buy with rates still in upward trend? I guess we will know in due time. In still just toeing in. As another example PNMXO had a nice drop today. It got down to around $74 on a few shares before closing back to $77. I bought 100 at $75 as it goes exD next week.
It certainly doesnt mean they cant drop further, but personally I like to see entry points of these illiquids around the early 2000s price points.
Well 2WR says Grid and me seem to be some of the ones who play around in this sand box. Seller out there today of the SOCGP average volume about 800 shares was over 7,000 today I picked up full holding between 24.71 and 24.80 solid 6%
Nice! I got cnlpl today at just over its redemption price of 51.84: 6.2%yield. Nice hold, or flip if someone takes my gtc!
Nice Irish, good catch
Anyone have Corteva? I purchased some CTA-A yesterday. 6%. Hopefully another long term hold. Been buying lately with more of an annuity mindset.
Pig, I in past month or so have bought a fullish type of position ($58-$58.20 range). As I dont have a lot in fixed perpetual, though slowly building up some. If this dropped down near $55 I would probably buy more. Remember this isnt a Corteva issue, but a subsidiary preferred from DuPont (the splintered off ag portion of DuPont). The credit rating of Corteva and DuPont are both the same of A- senior unsecured range though.
Thanks for clarification on subsidiary!!! Always a confidence booster when Grid is in the game too. Agree on repurchase for lower price. Would gladly grab another half at lower price.
Pig, the brokerages had it screwed up for quite a while labeling it Corteva also. Then I noticed EIDP being titled to name of the preferred and went to SEC filings to see it is actually a DuPont (Ag division basically, think Pioneer Seed, etc.) preferred. Thus why several years later they actually correctly identify it as EIDP.
CTA-A has been showing a lot of volatility recently.
I have been trying to build a position in CTA-A for a few months, but every time I get some cheap, I can sell it for a buck or two more – and I do. Its always lots of little trades, but they add up pretty quickly.
My goal is to end up with a full position, but those pesky buyers keep tempting me to sell. So, I guess I will keep flipping and hope that I end up with a position.
I’ve seen UEPEP with an ask of $77 most of the day. I’m surprised Gridbird hasn’t bought these out yet. Someone should check if he’s ok LOL
Dick, I wont because a bunch sold at $74 range a few days ago, and $77 aint 6%, ha. So no, not playing here. But…I am thinking about buying a little of the 2 yr note auction Monday if it stays over 5% though. I did just buy a 60 degree wide soled wedge though today.
Dick, you goaded me into this, so I am blaming you! I violated my 6% rule today getting 100 shares of NSARP at $71.00. That is 5.985%. But if I pull a 2WR, and add in the accrued part of divi, that justifies the trade and gets me over my 6% illiquid threshold.
In a world where no one knows anything including me, I think 6% QDI on a subsidiary utility issue looks like a really solid buy to me. I’m sure you’ll do well on it.
I’ve got all sorts of terms (live floaters, fixed, resets, etc.) to try to hedge risk. On the fixed rates, I’m trying to mostly buy them WAY under par like you did with NSARO. Convexity can be a beautiful thing if you’re on the right side of it.
Dick, I agree. There is 6% and then there is 6%. The 6% issues significantly under par, hold considerably more allure than ones near their par price. These are still a smaller part of what I own, but I am slowly picking away in this area….Who knows maybe they will become 6.5% in time, ha!
along same lines, managed to pick up some UEPCO yesterday. pretty rare purchase of 100 shares for sale at a decent price. well, I guess a decent enough price for me. long term hold I hope. UEPEP still holding at $78, but much more liquid so maybe that hits 6% soon.
Not super exciting but SOCGP available at 25.50. 5.8% yield at that price. No call risk as it cannot be called. Pretty decent rating on this one. QDI just like the other I posted today.
Definitely not that exciting risky rush of buying a 7% plus yielding something something but more sock drawer material. Personally I added to both CNLHP and SOCGP today.
Not super exciting but CNLHP seems to have a few hundred shares at 38. 4.5% preferred which would be 5.9% yield. No call risk at that low price.
Anyone dipping into the Hawaii Electric preferred mess? I purchased small number of shares of the HAWLL at 7.15% yield. No idea if I will ever be paid, but I thought I would give it a try.
No. I got out of HAWEL for a small profit before the fire and glad of it. Put it in ET before XD for >9.5% tax deferred. More my style.
JMO
Ironically I recently got out of HAWEL also as there was a weird little spike so sold with an unexpected decent profit. I’ll stick it out through the litigation and see what happens. Purchase was small enough to put out a marker, but will be there picking thru the HE table scraps later also.
Pig, just too much unknowns for me at present yield. There will be a litigation cloud out for some time. Technically this was Maui Electric’s problem. But Hawaii Electric (which owns Maui) and HE (which owns Hawaii Electric are all getting sued so they likely are all in bed on this issue. The issue is so old it might have more selling pressure later. At some point if it drops enough I will buy. But it would be under the premise of a bet (like my minus 102 odds I recently bet that Buffalo Sabres make the NHL playoffs this coming year) not an investment.
I presently only own 8 “preferreds” but most of that is in ALL-B, Nustar preferred and baby bond, KTH, and KMPB. But thinking more longer term I bought 100 more of the old Dupont series A $100 preferred at $58.20 for a plus 6% yield. I have 600 shares of that. The yield isnt much the drift from par is back to mid 1990s pricing. Im still very tepid in the fixed perpetual preferred arena.
From Bloomberg…..
If there is a link to power lines, Hawaiian Electric will have to be shown to be negligent or that it could have reasonably prevented a loss, a higher legal standard than the one applied to utilities in California, according to analysts.
“If there was negligence, I would expect all options, including bankruptcy for Maui Electric, to be on the table,” said Jay Rhame, chief executive officer of utility investor Reaves Asset Management. Reaves doesn’t hold shares of Hawaiian Electric in its portfolio, Rhame said.
The company’s insurance coverage is likely under $1 billion, Wells Fargo utility analyst Jonathan Reeder said in a note Monday. It’s unclear if the parent company could “ring-fence” potential liabilities within its Maui Electric subsidiary, according to the note.
Many gloomy articles out there on this company’s prospects. All speculation as is any investment is at this point. Changed my mind and sold what I bought at end of day with a tiny profit (old habits die hard). Not steak dinner, think more McDonald’s fries. Probably will jump into the common though at some point. Grid, you wouldn’t know me now, I’m more of a buy & holder rather than a persistent day flipper.
Unfortunately, the speculation is all negative! With damages in excess of $5 billion, that is significantly more than the equity valuation of the company. If Maui Electric was found liable, but it was somehow ring fenced to just Maui, this would ultimately have no impact on Hawaii Electric preferreds since that is a different subsidiary. But this will take years to unwind. PCG fire was 2018 and they didnt even go into bankruptcy until 2020…Maui actually has a couple of preferred stocks, but they were privately issued several decades ago.
No doubt. HE is an interesting entity, not a typical utility with the bank element. Much to play out in litigation, how much will they determine was a result of their water system being tied to requiring the power on? Were there a significant amount of dry brush available for the fires to rage on? Why didn’t the warning system operate correctly (I remember this happened with tsunami some years ago as well). Will they throw away a company with 150 yr history providing power? or do what California did, which is basically hurt them as much as they could without sending them over the edge. As you said, time will tell, and likely to be a few years.
.
I started a small position in a senior note from Alabama Power that matures in 2041 (CUSIP 010392FD5). I will have a YTM of around 5.85%.
I used to be in the Alabama Power preferreds before they were called. It’s funny how the yields on those used to be around 4.5%-5% and a few short years later we’re now able to get a higher place in the capital structure at much better yields.
CRLKP has suddenly risen from the dead and a few shares have actually recently traded. I have always enjoyed playing in this goofy issue. A quick dump the other day lead to 100 shares bottoming at $20. I wasnt so lucky on them but got a couple hundred at $22 that day. Then induced some action to get over 300 more today at $22.25.
I own a a couple hundred shares of this issue. Have you received the July dividend? I have contacted Schwab and they have not been able to find the payment for July.
Damn, you gotta move fast. I had a 400 share trot line set up on HAWEL at $16 not expecting any thing to happen. And suddenly it hit and fell through 300 more shares down to $15.25. Then an ask suddenly popped up at $16. So I am quickly putting in an order to buy more at ask, and then boom some 3000 shares plus traded in one transaction. Now I magically see 3488 available at $17.90. I bet these are the same ones that just sold.
Looks like the person who successfully pillaged that big tranche is in the process of unloading them all at $17+. Current ask is $17.02 for those interested, 5.88%
Ya, that wasn’t hidden very well was it. Kudos to him for a nice quick flip. I sold 200 at 17.50 this morning, but still have the rest.
Is there anyone on this site that currently owns OCESP ? Trying to find out if still a trading security and if dividends are still being paid. Any info would be welcome.
OCESP dividends are still being paid 2X per year
I agree with llabs. It is paying. Have it in 2 accounts. Grocery stores chock full of ocean spray products. Valued at 0 dollars. Don’t worry about it at all.
I can’t buy anymore since it went dark but I could sell for something above 0.
Yep, OCESP pays like clockwork for me too. IIRC, I am getting north of 7% at the price I paid for it. But I have no idea if you can still get shares of it, or how often it trades. I got mine after you couldn’t get it at most common brokerages.
Thank you for the response. My broker could not find it available anywhere. Last reported trade was December 2021 I believe. Would love to know how to obtain a small holding through my broker if you have any suggestions.
The last trades I am aware of was when we were discussing it here right before it went dark. We were buying it at 14ish a share which was right around a 7% yield. I assume the final trades were people dumping it to “professionals” after it went dark to get out of it. Everyone else just holds onto these semi ancient preferred from a stable co-op company. Heck, I live close to their HQ.
I think you have to be an accredited investor or have a broker who will place a bid for you on the expert market. Naturally none of my accounts will even bother to discuss such a thing with me except to say NOPE.
I have tried to google for a broker who would assist in buying expert but I failed last year. I imagine being an investor with millions, having an individual broker working with you as a professional service, etc.. might allow it to happen. This is all just speculation on my part. Otherwise you have to be a professional in the biz, pay all the dues to get access to markets, and so on.. just to buy a handful of somewhat desirable securities.
It simply is not worth the effort for me to dig further.
Thanks for the info. Any thoughts concerning a sales price per share that you would entertain?
I bought a 1000 shares for myself and a 1000 shares for my wife in her account. This could very well be 4% of the outstanding preferred issue if only approx 50,000 left out there. Hard to figure it out since the docs I can dig up are old. They pay 500 to each account every 6 months. I enjoy the round numbers and plan to hold them. Since I am local to MA, hardware stores around here have big posters of ponds full of cranberries, and it is local history I plan to hold. Makes for a neat story and nice to be part of the company in a small way. Otherwise you have to be a farmer to be part of the co-op.
fc –
I bought 1,000 shares on 9/22/2021.
I have a feeling between all the IIIers, we probably own a very signicant % of the outstanding float.
I have 600 shares — which was all tht was available at the time. That is 3600 shares total just in this thread, which would be over 7% of what is outstanding if the 50k number is correct (and I haven’t looked). I wonder if we could scrape up a majority amongst III’ers?
I have a broker who got these for me on the experts market as a personal favor just after they went dark. I figured that would be the best time to grab some.
I emailed Ocean Spray earlier today asking about outstanding shares for both preferred, if I could have a copy of their most recent annual report, and their plans for the preferred shares. If I hear anything back I will post it here. I am curious.
To FC:Are you interested in selling any shares in OCSEP? If so, I’d be interested in buying some shares if we could ultimately transfer them into FIDO. If so, let’s arrange to talk outside INN.
Ask FIDO if they will actually accept them. Most brokers won’t accept them on the way in. Only certain brokers will take them or you may be able to go the physical certificate route. (which may come with processing fees)
Justin, that has certainly been my experience with 2 different brokerages. They wouldnt allow any OTC shares to be transfered. Even if they allowed trading of them. I even had a local rep go to bat for me and appeal it upstairs. And they rejected it again. I believe fellow poster Camroc raised holy hell and finally got some CLP preferreds transfered if memory serves a few years ago.
These being “dark” now would appear even more problematic. This looks like the best possibility would be to get the shares transferred into certificate form. Then meet at a halfway point airport with black sunglasses and briefcases to conduct the transaction. 🙂
Illiquid Hall of Fame! To make this one, your last trade had to be BEFORE April 2023.
Ticker, payout status, last official trade date
OCESP, Paying, 12/6/21
MNESP, Paying, 7/1/22
MSEXP, Paying, 7/20/22
AWRY, Paying, 8/18/22
DMRRP, Paying, 12/16/22
EHPTP, Deferred, 1/3/23
BANGN, Paying, 1/17/23
SKRUF, Suspend, 1/18/23
AILLI, Paying, 3/6/23
CNLHP, Paying, 3/17/23
UEPCP, Paying, 3/29/23
CTGSP, Paying, 3/31/23
We do not own any of these in any account and/or have open buy/sell orders.
Tex, UEPEP and CNLHO, TY-P and some others not on this list that I am still trying to fill full positions on. Still holding SOCGM waiting for someone to pay my asking price.
Charles, here are the last trade dates for the five you mentioned along with average 3 month volume
SOCGM 5/4/23 17 shares
CNLHO 5/15/23 13 shares
CNTHO 6/12/23 140 shares (added per Charles)
TY-P 6/22/23 727 shares
UEPEP 6/23/23 138 shares
I think their membership in the Illiquid club is secure! The reported 3 month average volume number changes depending on data feed, so you might get slightly different number. I show 66 issues with <100 shares per day and 23 issues with <10 shares. Plenty of illiquids to choose from.
Tex, at least 5 of your list are jettisoned to expert market. And MSEXP has less than 700 shares outstanding. That being said I have owned most of those at one time back in the day. I even made money on BANGN selling into the expert market. If you want another illiquid that rarely trades throw BURCP onto your list, ha.
Hi Grid, do you have a link to a list of securities trading on the expert market? and what is the downside of holding any of these securities?
Have positions in CKNQP, SOCGP, CNTHP, NSARO, CNPWM, UEPEO
MFZ, none of your issues are expert market. They are OTC Pink Sheets. A perfect reminder that delisted does not necessarily mean expert market issue.
The terms of all preferreds are unaffected by being on expert market. The tradeability is though. Its only a one way market for retail investors. Meaning they can only sell not purchase, into a select few entities able to buy….At a price that is good for them!
I have no list but here is the process. Just go to OTC markets.
Lets use one of yours…CNTHP..Notice it says “Pink current information” (in pink color)…Pink means its tradeable with a bid and ask quote.
https://www.otcmarkets.com/stock/CNTHP/overview
Now lets use an expert market issue several here own… OCESP (Ocean Spray preferred)..Notice on the right is says “expert market”…This means they will not show any bid or ask quotes and are largely unpurchasable.
https://www.otcmarkets.com/stock/OCESP/overview
Many thanks Grid for the detailed explanation.
Tex, added more CNTHO today
Charles, we’re pulling on the same oar – joined you with a small (<100) but accretive CNTHO add today at $46.00. Love that QDI and the embedded 0.22 ($45.78).
How about SOCGP Tex ?
My mistake, I didn’t have my account open on my cell. CNTHO is what I meant
I will be happy to let my UEPEP and CNTHO go if you want to pay me a big premium, LOL
I enjoy these and other illiquids – they are no maintenance holds. Pretty much set and forget
I used to be the king of illiquids, but really don’t have any now. I monitor but when CDs pay the same I don’t have any real interest in them now. But when the value returns so will I!
I picked up some LTSF ($17.35) and LTSK ($17.50) through Fidelity today. Very small positions. I come up with YTMs of over 16% on each at those prices.
Is the future of Pacificorp (PPWLM, PPWLO) in doubt? Oregon, N. Calif, Utah utility that this week a jury found negligent regarding 2020 fires in Oregon. Punitive damages were awarded as well as actual damages. While the action was brought by a limited number of plaintiffs, the decision will spawn a larger class action that, according to news accounts, could result in billions of dollars in damages being awarded. Company is owned by a subsidiary of Berkshire Hathaway, but BH is not liable for any settlement–only Pacificorp is on the hook. The two preferreds, both non-callable, are available at historically low prices after dropping considerably due to this week’s verdict. Pacificorp has a strong balance sheet with reserves sufficient to pay the jury awards from this week ($71 million plus 25% of any award for punitive damages). The company will appeal. Any thoughts on: (1) the prospects for the award being lowered on appeal; (2) the possibilities of a bankruptcy filing a la Pacific Gas and Electric, and the impact on preferred holders (probably wiped out?), or (3) the time frame for the appeal and/or for a larger class action being filed? My vague recollection is that these preferreds, while shown at the corporate level, originally were issued by its Utah affiliate. Anyone have a view on whether the preferreds might be insulated from a corporate bankruptcy filing if, in fact, they are obligations of an otherwise financially sound subsidiary?
https://apnews.com/article/wildfires-utility-company-berkshire-hathaway-warren-buffett-ff26bcf69a111e7343e7f806c6c7c937
Is it possible that their insurer will have to pay some of this?
The ask on KTH is $29.00. I come up with a YTM of 5.46% at that price.
Some UEPEN shares have moved recently. I picked up a small number this week at $68. A nice 5.15% yield there.
Anyone have any thoughts on how CKNQP is trading these days?
Am I crazy to think this is a highly probable security to get called at $100 on 1/1/25 that effectively makes it over 10% YTC return for 1.5 years, or it doesn’t get called and the floating coupon goes over 9% again giving you a current yield near 10%? Considering CoBank recently retired two preferred securities with 6% handles, I’m struggling to figure out why anyone is selling this at these prices with such a short runway left. Thoughts appreciated.
NC, exactly. CKNQP is 4% of my portfolio. I think its a case of a baby being thrown out with the bathwater: “bank = sell” in spite of Co-bank’s very “sticky” deposits, good balance sheet and operating performance. I have another stink bid in the 93’s.
GR, They are very sticky because they really dont even have any, in the traditional sense. The biggest risk to this issue is largely LIBOR (SOFR) collapsing over time. But its adjustment plus being under par effectively makes it 4% which is a very good relative base.
Grid – sticky deposits in the sense of its share of agency bonds
I won’t argue against any of your or GridBird’s points, but TBH I was hoping for someone to give me some pushback! 🙂 It’s not even a traditional bank with risk of deposit issues at all. In general it always seems like issues don’t react to the the YTC risk until about 12 months out, so perhaps that’s also the answer here and when the calendar turns it will start to reflect that. Thanks for your perspectives.
Well on Quntum online it says non cumulative and perpetual so there is a 50/50 chance come 1/25 it falls below the 6.2 % return. Does Co-bank offer other series of preferred?
They recently called in two other ones with 6+% coupons. That’s why I think this has such a high probably of getting called on 1/1/25. The FCS Reserve banks like CoBank and AgriBank are unique entities as well.
Btw, I was able to buy some on the open at 94, but someone with size is jumping the balance now with a 94.65 bid.
I don’t get your logic, Charles… How does being non-cumulative and perpetual make the odds of it falling below 6.20% return on 1/25 50/50? Wouldn’t that be entirely dependent on where 3 mo LIBOR or its equivalent is on 1/25?
Nothing can be assumed. Certainly not a redemption on call date. Remember that one fixed rate CoBank issue that was plus 6% and hung around for several years before they called it. Even when banks were issuing preferreds considerably lower. We used that one as a call anchored issue for a long time.
I probably pipe up on this too often (and Grid has heard it a dozen times), but if you are going to buy Cobank preferreds, make sure you have a “thorough” conversation with your broker.
For many Cobank issues, Schwab will let you buy them, but won’t let you sell them. Sounds crazy, but it is true. I got caught up in it once, and almost got caught again (I had to really push to get a clear answer). Not a problem if you intend to hold until redemption (which may be years after first call date), but you should be aware.
Basically, they say that if you want to sell, you have to go find an accredited investor who is willing to buy (on your own), then they will facilitate the sale to that person. Where in the hell am I supposed to find an individual investor to buy?
Schwab doesn’t have the same restriction on all Cobank issues, or on other ag bank issues. Its just bizarre. I
know other brokers don’t have the same silliness, so this may not affect you.
Private—I got the same runaround from Schwab and just decided it wasn’t worth the hassle to buy this Cobank issue. Plus, the bond desk will not work very diligently to find any offerings.
Private and Randy, Vanguard did that to me with a CoBank issue when they allowed OTC trading. They told me I had to sell it immediately. Well the bid ask spread was about $3 and I told them to pound sand and get their forks and knives out and eat this one at my purchase price since they allowed the trade. They accepted my terms so that ended that.
I’ve been buying and selling CKNQP on Fidelity for years with no problems.
GRJ – Schwab will let you buy, but won’t let you sell.
have you been able to sell at FIDO?
I requested a copy of the prospectus for CKNQP. See below for an excerpt re LIBOR. Seems like this one should be a fixed to float that will actually float someday if not called.
“If no such quotations are available or if CoBank determines there are no suitable banks that are prepared to provide such quotations, CoBank will determine 3-Month USD LIBOR for such Dividend Period in a manner that it deems commercially reasonable by reference to such additional resources as it deems appropriate.”
300 shares of GMLPF traded today at $13.61. I have a GTC buy order for 100 $16.05 that was not filled. Fidelity said my order is still open but the 300 share order was filled using a different “channel” and may have been an older trade. Seems like the Wild West.
George, here is this morning’s tape for GMLPF (from IBKR) – https://imgur.com/a/HcLdITx
IBKR uses the OTC Link ECN as their data source & execution venue for OTC Expert Market trades. The $13.61 trade appears to have executed on the OTC Link ECN, since it shows on the tape as the best bid at the time of trade execution.
Wherever Fidelity sent your limit order, they did not send it to the OTC Link ECN (as your order does not appear as the best bid there).
It’s possible Fidelity sent your limit order to the OTC Link ATS (which is a separate venue from the OTC Link ECN), or some other venue. If you speak with them again, ask them which OTC venue they’re sending your order to, and ask if they can redirect your order to the OTC Link ECN instead.
Illiquid Connecticut Light 3.8%, $50 face, preferred (CNLTL) that IPO’ed in 1947 hit a ten year low = 32.00, down 8.00 (-20.0%) on the day. 449 shares traded @ 32.00. This gives a current yield= 5.94% which is the third highest amongst the 13 Connecticut preferreds that trade. Would seem to be a reasonable sock drawer candidate to me if you get pick up any more shares @ 32.00.
We do not own it or have any open buy orders in any account
I just received my LTSF interest for the baby bond maturing in 2028. It was lower than normal. Any comments appreciated.
There was an error. They have I believe 10 days to correct it.