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.
Well done fc and Grid and the lot of you! $@# I had to be away from my desk at the time and couldn’t finish the Mohawk trades I had going. I get almost zero buying power from these preferreds at Fido. Anyone else able to to get margin from illiquids? (TDA gave me quite a bit before)
Also, are we seeing something unusual happen with more opportunity on these issues?
I doubt it. As the guys mentioned yesterday, 4800 shares went by the board on June 18. I completely missed that and usually check MSEXP daily for a prayer that shares are for sale at a reasonable price. I think these same 4800 shares, or whatever block trade amount from that, are the ones being sold for a quick profit. Since about 3500 traded yesterday, there likely should be a 1000 or so more left come Monday.
To put this into prospective 2017 is as far back as I can go for daily trading volume. From Sept. 2017 to mid June 2024, 2800 shares in total traded. Then apparently 4800 traded one day on June 18. The reasonable explanation would appear to be these June 18 shares are getting recycled.
MSEXP ask $102, 6.86%
thanks ken. now that is better. I took a quick 50 to start. I see on otc someone got as low as 92-94 recently.
picked up 200. lucked out a CD matured today so had some idle cash
ken, I could not find any info on MSEXP on QOL. Other sites were similar.
Is this preferred callable now? I would think it is.
Is the par ( call value ) $100?
Anything else you can provide would be helpful, I am tempted to go for 100 shares at this $102 price
update: looks like mr. Pig Pile took the rest of the ask, it’s now at $103 ask, still not too bad if this is okay for a long term hold.
Insp, this preferred is non-callable. Supposedly less than a 1000 share float but over 4000 shares traded a few weeks back. there could be a ton more left to buy here if this person intends on selling it all.
Thanks for the quick reply, PP. Ask just went up again – now at $104. Still not a bad yield at 6.7% for a non-callable.
According to the annual report from 2023 MSEX had to use $120,000 to pay out dividends for the year for the preferred. If a single share gets 7 dollars that means:
120,000 / 7 = 17,142 shares being paid approx.
Page 46
https://investors.middlesexwater.com/static-files/afe54033-29ca-4554-8ff7-80593f8252a0
But then page 49 confused me even more because it appears they have a few preferred out there but maybe only 1 is tradeable. Who knows.
“Preferred Stock
At December 31, 2023 and 2022, there were 120,000 shares of preferred stock authorized and less than 21,000
shares of preferred stock outstanding. There were no preferred stock dividends in arrears. ” page 63
All we know is that is trades very irregularly.
fc, my guess at this point is 10 days ago, the big holder of this preferred let go of their shares, approx 4,000+. Now being spread out to the masses so perhaps we may get a more normal illiquid type volume going forward. Honestly, if I had 300K lying around I’d buy the rest right now. lol
I have to wonder if the only “person” who sits around with GTC orders year after year for this preferred is MSEX themselves. Those shares might have just been retired. But I am just guessing. I would have to review the annual reports from 2010 to today skipping a few years each report. A brief look does seem to show them getting their hands on them, albeit slowly.
I swear I saw the shares outstanding was under a 1000 several years ago. Pig knows as this damn thing has traded more today than maybe the last 10 years combined. FC I see did the back math like you did. But further down shows 2084 shares in capitalization. So somewhere around 2000…I must be going senile. Anyhow what a gift from the Gods. A noncallable regualted water utility preferred over a 100 years old and the company even older than that…I got 500 of them at least, and most at $103 and it goes exD next month. I have regretted selling the few hundred I snagged a couple times many years ago but when I could sell them 40-50 bucks higher than I bought them if memory serves, I had to sell them both times.
Welp.. this might be another case where the people on this forum may very well own a significant chunk of the outstanding shares if this keeps up. It is looking like whoever got those 4K shares just wanted a nice and easy flip.
And yea.. those spikes in the chart.. I do not blame you for selling. What a great flip those shares must have been.
Pig, I noticed in one of their 1997 filings they had 17 registered owners of this preferred, lol. Of course a few of those may have been in a consolidated street name of a brokerage. Companies used to report amount of shareholders but largely dont anymore I assume because of the way they are consolidated under each brokerage as one.
fc, looks like there are 3 or 4 issues outstanding, from page 49:
Cumulative Preferred Stock, No Par Value:
Shares Authorized – 120
Shares Outstanding – 20
Convertible:
Shares Outstanding, $7.00 Series – 10 $ 1,005
Nonredeemable:
Shares Outstanding, $7.00 Series – 1 $79
Shares Outstanding, $4.75 Series – 10 $1,000
TOTAL PREFERRED STOCK $ 2,084
I know this is non-callable 7% so I am comfortable with my current knowledge. But one has to be careful with reports. Often dollars are in 1,000s while shares are listed as reported. I noticed their very first page with numbers mentioned that while every other does not.
I would have to review a few annual reports starting with the oldest which might give a hint in plain english and work my way to newer. But I think we can all agree this is very much an ILL. 1000 shares, 10,000 shares, or even 25,000 shares outstanding does not matter much. A true oddball.
And alas.. I just decided to buy another 50 shares at 104 just to round this off to 100 shares at 103. I am done with it. Lol… Now to transfer some money around.
Fc, you think you have problems. I think I have 569 shares and I am on margin for tune of $15k. I will figure it out later. Got my GF a 100 also.
I don’t want to sell anything so I am stuck paying off 10K on July 1st.
Fc, if interested in the prospectus term (not the actual IPO as the papyrus paper has long since dissolved you can read about it here. It kind of intertwines with the convertible and other old irrelevant stuff being its from 1997. Better sit down and concentrate to ignore the irrelevant stuff intermingled from other series issues of the day.
https://www.sec.gov/ix?doc=/Archives/edgar/data/66004/000117494724000281/msex-20231231.htm
Grid, I tried to spend a bit of time researching this today. I have read all the posts people made about MSEXP. Honestly I cannot tell. I would have to email IR. My google searches just fail. Using the cusip, different terms, etc.. the information we need simply is older then the internet. Nobody appears to have scanned the documents and made them searchable in some fashion.
The one thing we all seem to be discovering is that this company used preferred liberally with many different series. I even saw, instead of like series 1-14, actual use of the date of the year. Like series 1994.
Oh well. Next step email IR. One has to wonder if they have an employee who really wants to dig or not. I recall Ocean Spray just ignored me and months later redeemed it all 😉 Ain’t happening in this case I suppose unless we get common!
Fc, lol, you nailed it…The blind asking help from the blind. A recipe for instant success I am sure. But what else is left other than trying to reach management. Now they do have an investing caretaker that possible could help….Broadbridge…
Investor Inquiries
Broadridge Corporate Issuer Solutions
P.O. Box 1342
Brentwood, NY 11717
Phone: 1-888-211-0641
International: 720-358-3643
Fax: 215-553-5402
shareholder@broadridge.com
It says to send investor info there…And you can buy common shares through them, presumably at a discount. But they may wash their hands of any help with preferreds. I will be in Vegas all week next week, so I wont be home to mess with this.
https://shareholder.broadridge.com/middlesexwater/
Added thought.. Water utilities were prolific preferred issuers back 40-50 years ago and beyond. But they all stopped. In fact through consolidation there are only a half dozen or so real public traded water utilities anymore, anyways.
Fc, I forgot to mention this as this was one of the damndest things I have seen. So I put a bid out at $102 for one of the earlier purchases and ask went to $103. So I decided to change my order and just buy them at $103. So I put the change order in at $103, and thankfully noticed damn Schwab changed the ticker I was buying to the common. Yes it changed it to MSEX and was going to have me offer $103 for those $53 shares. So I cancelled the change order and resubmitted a new change order and the damn thing did it again. WTH? So I finally had to just cancel the change order AND cancel the entire order and start from scratch with a new buy order. That was very odd…..
Grid, pig pile Sr in for 500 shares. I convinced him. He told me it would affect my annual “gift”. I told him no matter, give it to me in MSEXP shares in a couple decades. lol
Ha ha, too funny. You must have convinced Papa Pig its just one notch below an IBond, ha.
Fc, their rearticles of incorporation in ‘97 had this for the shares outstanding at 2500. BTW in case you havent read, MSEX has paid continuous common stock dividend since 1912.
Restated Certificate of Incorporation, February 27, 1997
and established and each of the outstanding 2,500 shares of 7% Preferred Stock,
$100 par value, was changed into and thereby became a share of such first
series.
The preferences, rights, qualifications, limitations and restricting of
the shares of the $7 Series Cumulative Preferred Stock, in the respects in which
the shares of such series vary from shares of other series of the preferred
stock, are and shall be as follows:
(a) The dividend rate for the $7 Series Cumulative
Preferred Stock shall be $7 per share per annum;
(b) The shares of the $7 Series Cumulative Preferred Stock
shall not be subject to redemption;
(c) The preferential amounts to which holders of shares of
the $7 Series Cumulative Preferred Stock shall be entitled upon any
liquidation, dissolution or winding up of the Company, whether
voluntary or otherwise, or upon any distribution of the capital of
the Company, shall be $100 per share, plus accumulated and unpaid
dividends thereon;
(d) There shall not be any sinking fund providing for the
purchase or redemption of shares of the $7 Series Cumulative
Preferred Stock; and
(e) The shares of the $7 Series Cumulative Preferred Stock
shall not be convertible into stock of any other class or classes or
any one or more series of the same class or of another class.
Ken, I used to be an expert on all that other series stuff, but I havent checked it out in 8 years so I am too foggy to go off memory. Will have to dig again.
This as far as I know is the only regulated water utility on the market. I made an assload off the only other one that used to be around. Connecticut Water got bought out and they redeemed all the shares and the redemption price was way over par price and I bought them way under and nobody knew about these things back in the day. They had 2 tiny float preferreds and I scored incredibly on both. Awe the good old days, Im reaching for tissue as I type from being sentimental.
Did a little digging after coming home before “sundowning” kicks in. Through a 2021 regulatory filing I have found out the 7% convertible was issued to help pay for their Tidewater Utilities acquisition which is now one of their subsidiaries. This acquisition according encyclopedia.com was officially completed in 1992. So this would mean the convertible was issued in early 1990s.
Exhibit No. P-7, Schedule DWD-1 towards the middle of this regulatory filing states in the notes that the 7% convertible was issued to help pay for acquiring Tidewater.
https://publicaccess.bpu.state.nj.us/DocumentHandler.ashx?document_id=1241894
Schedule DWD-6 has an interesting value line report from approx 2021.
It says they have 2.4 million dollars worth of preferred shares paying approx .1 million per year.
If you do the math on that..
2,400,000 / 100 = 24K shares.
24K shares x 7 bucks a year = 168,000 dollars.
If we assume those were “estimates” at that moment in time the math kind of makes sense. Like 20K outstanding and < 150K in payments per year.
Also all throughout that doc the math was making assumptions the tidewater preferred would all convert and disappear I guess.
The real mystery to me right now is all this mention of 4.75 series preferred. Also every time I think I find a clue and making progress understanding the situation I realize I am totally wrong.
According to docs.. this 7% uncallable simply does not have enough shares outstanding for all of us to have bought some. The 2023 annual report says there is only 79,000 dollars worth. I feel like grid almost bought that much himself.
Which leads to me think we must have convertible. How else does this work out math wise unless they (MSEX) sold some in the open market for some quick money? But us having convertible would be too good to be true. That would mean each preferred we own is worth approx 650 dollars a share. Gifts like that don’t just magically appear in this market but if it did it would be something truly goofy like MSEX preferred.
Lol. I have no idea what I am talking about. I will try to email them this week. I need to find the actual cusip of what we bought and be 100% sure before emailing. I am pretty sure it is us596680207
ISIN appears to be US5966802077
As of June 30, 2019, our authorized capital stock consists of 40,000,000 shares of Common Stock, no par value; 123,357 shares of Preferred Stock, no par value; and 100,000 shares of Preference Stock, no par value. As of June 30, 2019, 16,554,059 shares of Common Stock, 23,357 shares of Preferred Stock and no shares of the Preference Stock were outstanding.
The authorized Preferred Stock is comprised of four designated series: $7 Series Cumulative Preferred Stock”, “$4.75 Series Cumulative Preferred Stock”, “$7 Cumulative and Convertible Preferred Stock”, “$8 Cumulative and Convertible Preferred Stock”, and undesignated shares. The Board of Directors is authorized to determine and designate the rights, preferences and privileges of the 100,000 shares of undesignated Preferred Stock and the 100,000 shares of Preference Stock from time to time.
https://fintel.io/doc/sec-msex-middlesex-water-co-424b3-2019-october-11-18299
What a truly confusing situation. Never read anything like that before. And I keep coming to the conclusion.. according to the annual report… there is not enough of the 7% nonredeemable available for all of us to have purchased it.
I cant say with certainty what we have, but I can with 100% certainty know what it must be based on info available. Here is the kill-shot.
Preferred Stock
As of June 30, 2022, our restated certificate of incorporation, as amended, authorized the issuance of 120,357 shares of Preferred Stock of which 20,357 shares were outstanding as of June 30, 2022, in several series as described below.
$7 Series Cumulative Preferred Stock.
There were 784 shares of this series issued and outstanding at June 30, 2022. The holders of shares in this series have a liquidation preference in the amount of $100 per share. Shares of this series may not be converted into shares of any other class or series, and are not subject to redemption.
$4.75 Series Cumulative Preferred Stock
There were 10,000 shares of this series issued and outstanding at June 30, 2022. The holders of shares in this series have a liquidation preference in the amount of the redemption price for such shares in effect at the time in the event of a voluntary liquidation, and $100 per share plus accumulated and unpaid dividends thereon in the event of an involuntary liquidation. The Company may redeem shares of this series in any calendar year at a price of $100 per share plus accumulated and unpaid dividends thereon. Shares of this series may not be converted into shares of any other class or series.
$7 Cumulative and Convertible Preferred Stock.
There were 9,573 shares of this series issued and outstanding at June 30, 2022. The shares have a liquidation preference in the amount of the redemption price for such shares in effect at the time in the event of a voluntary liquidation, and $100 per share in the event of an involuntary liquidation plus accrued and unpaid dividends. Each share is convertible into Common Stock at the option of the holder at a conversion rate of 12 shares of Common Stock for each share of this series converted. The Company may redeem up to 10% of the outstanding shares of this series in any calendar year at a price equal to the fair value of three shares of Common Stock for each share of this series redeemed.
https://investors.middlesexwater.com/static-files/15aa4e4f-ed6e-4418-89fc-d0894da92d63
…..And I cross referenced with this years annual filings…Same amount of the 7% convertible shares outstanding. No redemptions past several years by either owner or company.
Fc, I have just kind of dismissed the 4.75% preferred. It clearly is like one of those small local bank preferred stock jobbers. Privately issued to insiders or existing shareholder subscriber rights. No trading ticker symbol will ever be established it appears. But, it would be interesting to know the history of it.
Grid, your posts tell me that what we own must be the 7% cumulative and convertible preferred.
FC stated it was not possible to be the non-convertible version, simply because there were not enough shares to have been purchased by our small group alone.
So, it should be fairly safe to assume we have the convertible shares, correct?
if so, would someone – maybe you ? – with a large number of shares, try to convert 100 of them, following their procedure, and let us know if it succeeds?
Inspy, Im sure I will at some point and let you know. A couple people are going to work on it now and attempt to find out what we have. Im in Vegas now so that wont happen this week. Quietly waiting for my lady to wake up…Oh, and buying 101 more of these little bastards at $111 today. That gives me 760 of them and my lady 100. Even if it isnt a convertible I love this issue…Even loved it when I thought it was just a lowly fixed (and still may be who knows as of yet).
Im still just at the dreaming stage. Quite frankly even if luck deals us a good hand sitting on it doing nothing could be very profitable also. As being the tiniest public water ute, it is a possible buyout candidate and has had rumors before on such matters. That could boost it more at some unknown point…..Or not who knows.
We talked about it too much and everyone is interested…
Yield, it took collective thought to even try to dissect this. Although I have owned a few times when lucky over the years, I never had an incling it could be the convertible. As I read PSC filings to state the convertible was zeroed out. I took that to mean there werent any. But what it meant was it was treated as equity capital for rate making decisions. As preferreds get their own personal slot when regulatory rate filing increases occur. They only use the yield of the 4.5% and 7% fixed in rate filing. That came out to a blended 5%, and the convertible is treated as pure equity. That kind of threw me off until I checked the numbers deeper.
Hell some of the people who bought Friday may be selling already, lol. Not me….The risk/reward favors a hold here for now. And like I said before, I liked the 6.7% yield as a hold anyways.
When you enter in the CUSIP 596680207 into the Schwab fixed income site, it shows that the symbol is MSEXP and it trades OTC. It lists the “first coupon date” as 11/1/1992.
“The conversion feature of the no par $7.00 Series Cumulative and Convertible Preferred Stock allows the security holders to exchange one convertible preferred share for twelve shares of the Company’s common stock. In addition, the Company may redeem up to 10% of the outstanding convertible stock in any calendar year at a price equal to the fair value of twelve shares of the Company’s common stock for each share of convertible stock redeemed.”
https://investors.middlesexwater.com/static-files/afe54033-29ca-4554-8ff7-80593f8252a0 (page 80)
It looks like the common last traded for around $51.64.
Dick, 1992 is when Middlesex closed on Tidewater as an acquisition. New Jersey regulatory filings stated a convertible was used to help finance the acquisition. It appears the ducks are all starting to fall into a row.
From Fidelity:
MSEXP original issue date 8/12/1992, amount $1.7M.
Appears to be the convertible issued to pay for Tidewater acquisition.
But, Fido shows shares outstanding as 784, which doesn’t make sense with recent volume.
Ken, 784 is the amount of shares outstanding from the noncallable fixed issue. Apparently from my understanding anyways, it has never had a trade-able market along side the 4.75% fixed one. I like Fidelity have thought it was the fixed one also, but its just impossible for it to be.
My point is, can Fidelity information be trusted? Maybe they are confusing/combining/conflating the 7% issues?? Who knows.
Ken, if you want to trust Fidelity’s share count, you have to suspend belief that a 784 share float has completely rolled the entire float over 10 times in less than 2 weeks.
I’m betting that 4800 or so chunk that you noticed that traded 10 days or so ago, were the same ones being dumped Friday and finished off today. Plus a few sellers who bought Friday.
Grid, can you save me a moment and find the original doc that says the 7% convertible was truly 3 shares? My research points to 6 originally. Yet either will work, depending on exact timing of the issue, with the splits that took place. One split just happens to be Sept 15th, 1992. Tidewater was 1992. Kind of unusual for a preferred to be issued and then days later a split takes place doubling the conversion rate.
Also 6 shares seems more reasonable for a 100 preferred and their stock price back then.
Fc, you arent digging deep enough. You see the six, but way down link it shows the original pre split 3.
shares.
The preferences, rights, qualification, limitations and restrictions of
the shares of the $7 Cumulative and Convertible Preferred Stock, in the respects
in which the shares of such series vary from shares of other series of the
Company’s preferred stock, are and shall be as follows:
(a) The dividend rate for the $7 Cumulative and
Convertible Preferred Stock shall be $7 per share per annum;
(b) the redemption price for any share of $7 Cumulative
and Convertible Preferred stock shall be the Closing Price (as
defined below in this article), on the day the Company’s Board of
Directors authorizes such redemption, of three shares of the
Company’s common stock plus any accumulated and unpaid dividends
thereon; provided, that prior to five years from the date of
issuance, none of the shares of such series shall be redeemed,
directly or indirectly, out of the proceeds of, or in anticipation
of, any refunding operation involving the incurring of any
indebtedness or the sale of any class of stock ranking senior to the
common stock of the Company which represents a cost of money to the
Company, computed by the Company in accordance with generally
accepted accounting practice, of less than $7 per annum; and
provided, further, that, notwithstanding any thing to the contrary
herein, the Board of Directors shall not redeem in any calendar year
more than 10% of the $7 Cumulative and Convertible Preferred Stock….
This is the link, but it takes you back to the filing….Which in turn your need to go down to the 1997 incorporations I believe, and then scroll deeper than you did to find the original three….Which subsequently went to 6, and them ultimately 12.
https://www.sec.gov/ix?doc=/Archives/edgar/data/66004/000117494724000281/msex-20231231.htm
I would like to help more but I am at a pool, the ipad is getting hot, and I really cant see off glare anymore…Vegas is hot! Anyhow I will check in by phone occasionally. Good luck!
Grid, I must be slow. I did not realize you wanted us to click a link inside the doc to go to a new doc. Yes I see that now. Originally 3 shares. So issued right before the 2 for 1 split. Math works out fine as long as issued before the split date.
Fc, I didn’t want you to. That is just how the damn thing worked. It wouldn’t allow a direct link. When I copied the link and posted it, it always reverted back to the original link. Definitely wasn’t trying to make it more difficult that is just how the system worked. Glad you could get there.
I see the ask amount of shares is showing 0 now. Gee I’m shocked.
Guys, they have more different numbers of shares outstanding than a dog has fleas. But we know it isnt a lot. The link below is a 2021 rate case filing in New Jersey. Two notable things here. There rate case filing amount was in part assisted by assumption of a Moodys A2 credit rating. This would align with the S&P “A” rating the company has posted. 2) If you dig deep down to the bottom of the filings you will see TWO 7% preferreds. One has been zeroed out as it was used for acquiring Tidewater Utilities. The footnotes say it has been zeroed out. So that just leaves the 7% noncallable issue. Here in the regulatory filings they have it listed as a value of $1,078,400. I am going to assume they are going off “par value $100”. So that would mean in 2021, there were 10,784 shares outstanding…..This one has made my head hurt. And there could be less now as FC has mentioned the share counts have shown lower amounts. But I am reasonably sure that is how many shares were outstanding in 2021.
Here is that rate filing document.
https://www.middlesexwater.com/wp-content/uploads/2021/05/PT-7-Testimony-of-Dylan-W.-DAscendis.pdf
sorry i may be a little dense. on a non-callable issue how do the number of shares decrease? what happened to them?
The company buys them in the market to decrease the float. Then typically retires them to treasury unless they have some key voting provision that allows them to keep majority control in case a non payment trigger allows preferreds to control the board. And of course the cost of capital may cause them to buy at a price conducive to a purchase.
Noncallable NEWEN had a tender offer back in the 1990s along with NMKCP, NMPWP, and NMKBP. The latter three had tenders well under par to take advantage of higher interest rates to take many off the table well below par. Their floats are just a shell of what they used to be 30 years ago.
fc, Grid
great detective work!!!!!
Pig it gets more confusing. Look at this link from 1998. Some 20 years before. It shows on page 24 there were only 1017 shares outstanding of the 7% nonredeemable preferred. So I guess I wasnt losing my mind when I thought there werent many. But clearly there are more and have to assume it’s the plus 10,000 shares from the 2021 regulatory filing.
The only thing that would make a plausible explanation is they reissued some retired preferreds they had put back in the treasury. I have never heard of that before, but it plugs the hole of the mystery as a plausible but unusual explanation.
https://www.sec.gov/ix?doc=/Archives/edgar/data/66004/000117494724000281/msex-20231231.htm
Here is something else screwy. Take a look at the volume of the common, MSEX. It has a 10 day trading volume of 100,000, and today it had 299,000 shares traded, and get this… 394,000 plus more after hours, all at the same closing price of $52.26. Those after hours trading included a block of 144,000, 73k, 75k, and 29k. Most odd day with this company.
https://quotes.freerealtime.com/quotes/MSEX/Time%26Sales
very strange, always an odd duck, even odder now
For what its worth, Barrons shows 10.24K shares outstanding
https://www.barrons.com/market-data/stocks/msexp/stock-grader
Pig, read my post I wrote to Dick. Maybe this is the reason why I would buy these at $120-$140 and somebody else was buying them from me over at $170 to over $200 years ago. I thought they were the stupid ones, maybe I was the stupid one. As MSEX for a while during the “water ute buyout mania” a few years ago, was over $100. These people could have been buying and converting into $300 worth of common stock back in January 2022 for example. Do ya feel lucky punk as Dirty Harry would say….This has been hard to figure out and I am not still entirely sure what to think. I mean understanding the preferreds is easy…But trying to match which preferred on the market it actually is, is not!
Grid,
Just read it. Good grief, I remember being thrilled to get 100 shares of this back a few yrs for $120. I sold to YOU for $140 thinking….nice. If you are dumb, I’m dumber, lol.
Pig, is my case for this actually being that convertible making sense to you? Did someone who dumped 4000 plus shares not understand what they really owned? Or am I missing something here. What do you think?
….I remember begging you for those 100 shares, ha. You got $20 a share profit for a couple days hold…not bad! The question is did we really know what we had/have now?
For what it’s worth, todays Schwab email notification of transaction indicated this security has “redemption features”. So, to me, it looks like if it quacks like a duck…….
Grid, trying not to be Captain obvious, but wouldn’t a sudden surge in common volume be indicative of…..say, convertible preferred owners cashing in their preferred shares for common?
But, these shares were just dumped into the market and not converted. And we are already talking a minimum of 1/4 of the entire float, sold and almost resold in 10 days. If they arent the same shares which I find hard to believe some people just magically in unison dumped half the float in 10 days after an 1/8 barely traded in 7 previous years combined?
So I dont have a logical explanation at all. So your guess is as good or better than mine…I would have to assume those almost 400k shares bought after market close were arranged deals. Notice the price was totally unaffected. If you or I (well you because I am not wealthy enough) dumped 400k shares of MSEX in after market, that would temporarily tank the price.
When you look up the symbol MSEXP on Fidelity, the “Key Characteristics” section says the following:
Coupon type Fixed: Plain Vanilla Fixed Coupon
Current coupon rate 7%
Coupon pay frequency Quarterly
Seniority description–
Cumulative dividend No
Qualified dividend Yes
Face (par) value $100.00
Maturity date–
Perpetual Yes
Callable Yes
Convertible Yes
Convertible features Convertible into Equity of the Issuer
Prospectus–
Obviously I’m not sure how reliable any of this is considering it says it is not a cumulative dividend.
When I go to the “corporate actions” page at Fidelity, I don’t see anything listed for MSEXP. On the other hand, I do see a page with instructions on how to execute my put option on my shares of SLMNP. If others bought at different brokerages, do you see any conversion instructions on your broker’s website in the corporate actions area?
Dick, nothing shows up in corporate actions at Schwab for MSEXP
Fidelity is clearly wrong as the “prospectus” info clearly states in their filings its cumulative. Here is the problem I see as most likely. It still is and was a tiny company when this preferred was issued long ago (when I have no idea yet). I would strongly suspect being how small even the original float was, the convertibles could have been a private placement to existing shareholders way back when. Then later an OTC ticker was assigned over time to allow a degree of liquidity if needed. In other words the same playbook as FIISO and CNIGP and CNIGO were back when they were issued. So know real reportable prospectus is easily found….
I remember well before covid I snagged some deals on BURCP. I knew it would pay as it had for a 100 years plus, but I wanted more info. So I actually got lucky and got ahold of the CFO on phone (great guy for talking my call). He said he had been there over 5 years if memory serves and he had barely even heard about it. He said he would get back to me after researching as it interested him also. Well, he called back and said he flat out hit a wall in the 1920s. He knew it was outstanding then but the trail went cold after that. He knows it was around before then but doesnt know where it originated nor had any info within the company to find out.
Added thought…I saw on a regulatory filing MSEX paid $25 transaction fee to issue one of those preferreds. That clearly reeks of a private placement. As no underwriter is just going to want a $25 cut…Even Egan Jones would want more than that, back then, ha.
Gridbird is the expert on this issue. What he said a few weeks ago:
“Its perpetual, noncallable, not convertible….and basically unbuyable too, ha.”
Except it’s been buyable recently.
Odd timing. Dividend ex-date in a couple weeks ~7/12.
7%, $100 par, qualified.
yeah, the proximity of the next XD date makes it that much more attractive.
congrats to those who grabbed MSEXP at $102 !!
At $102? Hell yes. Crap I would have paid $110 just because of the terms and quality. And the nostalgia value too!
I’m still buying it at $104 today. Going in the sock drawer.
Grid, I remember when you started talking about MSEXP when we first met online about – was it 6 years or so ago?
It was always around $220 or so every time I looked at it, so I simply moved on.
This time I bit the bullet and bought 100 at $104. I see there is still a seller at $105, thinking about grabbing it.
Inspy, one of my favorite online guys, its been longer than that! It is closer to 8-10 years ago! Remember when I tried to slide you some CNLPL way back in the day, and some ahole bot program stole them?
Oh yes ! Absolutely remember that CNLPL thingy!
You clued me onto AILLL very early on, and I held until it was sneakily called away with little advance notice.
And I decided to grab another 100 MSEXP at $105. My yield is now 6.7% and I expect to hold and pass it to my kids when the sock drawer finally gets cleaned out after I’m gone 🙂
Ha, I admittedly paid up $105 for last 100 shares before market close. I think I have 669 but its in 4 accounts so I will have to add them up. Speaking of old times, this was maybe 8 years ago or so, but do you also remember when we both had standing bids for CNLPL and shares were trading way below market price and way below our bids and we never got a sniff? That one infuriated us too!
Wow, between you, me, pig Jr & Sr, fc, ken & legend, this board must have vacuumed up about 1200 shares of MSEPX today.
Wonder if next week will see more selling?
All,
What would you rate Middlesex Water preferred at? Or is there a rating from S&P or Moody’s?
Pig, this is a layup…Its S&P “A” rated according to Middlesex Water website. I figured as such being it has a couple small water utes with some waste water contracts, services and such outside regulators authority. They do not foray into crazy stuff at holdco level like SJI which is doing a waste food energy plant, boo hiss..
Middlesex is just old meat and potatoes.The George Strait of utilities.
https://www.middlesexwater.com/investor-relations/
Like most high quality utes, this preferred if rated would slot in BBB range.
….I finally added them up. My guess was off 10, I only bought 659. But Pig Sr. would still be proud of me!
Correction.
From MSEXP annual report:
Dividend ex-date is 7/15, pay 8/1.
Yea. I noticed that too. A quick 1.75 to help ease the pain of paying over par. lol. I would have bought no matter what though.
Keep forgetting record and ex are now the same day with T+1 settlement change.
I was able to get a small amount too. Thanks for the information.
I haven’t had a lot of time to research this yet. Work has been nuts. Does anyone know if there is a convertible/exchangeable aspect? Asking because this is how Schwab titles the security: “Middlesex Water Co 7% PFD Callable Convertible Exchangeable MSEXP: OTC Markets”
Thanks in advance!
Dick, you made me start fresh with my line of thinking. Which makes me believe now I have been both right and wrong at the same time. The 7% preferred I have continuously thought and said before seems to be actually correct. The rate filings link proves its little.
But I noticed after your mention of the “convertible” preferred. See in past I had always owned it in Vanguard and I just checked. It refers to it only as $7 preferred… No mention of convertible…And neither does it on OTC markets either. Just preferred. So I may have been assuming this was the noncallable 7% perpetual. When maybe it isnt as the trading volume would rule that possibility out….
Which means according to share count of the 7% convertible mentioned here…. (Immediate below info came from 2024 annual SEC filings)
4. The aggregate number of authorized shares, including shares outstanding, itemized by classes and series, after giving effect to such cancellation, is a follows:
Class Authorized Shares
Common Stock, No Par Value: 40,000,000
Cumulative Preferred Stock, No Par Value:
$7 Series 784 (Note A)
$4.75 Series 10,000
Cumulative and Convertible Preferred Stock,
$7 Series 9,573 (Note B)
$8 Series 0 (Note C)
All Series 120,357 (Note D)
Preference Stock, No Par Value: 100,000
5. The Restated Certificate of Incorporation provides that the shares cancelled shall not be reissued; and the Restated Certificate of Incorporation is amended by decreasing the aggregate number of shares which the corporation is authorized to issue by the number of shares cancelled.
Note A: Reflects an authorization of 2,500 shares reduced by the number of cancelled shares which are not to be reissued.
Note B: Reflects an authorization of 17,000 shares reduced by the number of cancelled shares which are not to be reissued.
Note C: Reflects an authorization of 20,000 shares reduced by the number of cancelled shares which are not to be reissued.
Note D: Reflects an authorization of 150,000 shares reduced by the number of cancelled shares which are not to be reissued.
So, combining Schwab’s title with matching shares outstanding of each series one is led to believe MSEXP is indeed the 7% convertible as there are only 784 shares outstanding of the noncallable 7%…….
Ok now this is where it gets REAL interesting…..
Here are the terms for the old 7% Convertible….Now read this real closely….If you read what I read this issue is worth quite a bit more than what it is trading for…..
the redemption price for any share of $7 Cumulative
and Convertible Preferred stock shall be the Closing Price (as
defined below in this article), on the day the Company’s Board of
Directors authorizes such redemption, of three shares of the
Company’s common stock plus any accumulated and unpaid dividends
thereon; provided, that prior to five years from the date of
issuance, none of the shares of such series shall be redeemed,
directly or indirectly, out of the proceeds of, or in anticipation
of, any refunding operation involving the incurring of any
indebtedness or the sale of any class of stock ranking senior to the
common stock of the Company which represents a cost of money to the
Company, computed by the Company in accordance with generally
accepted accounting practice, of less than $7 per annum; and
provided, further, that, notwithstanding any thing to the contrary
herein, the Board of Directors shall not redeem in any calendar year
more than 10% of the $7 Cumulative and Convertible Preferred Stock
issued and outstanding on January 1 of such year.
https://www.sec.gov/ix?doc=/Archives/edgar/data/66004/000117494724000281/msex-20231231.htm
It appears the Board can redeem up to 10% annually on Jan. 1 of each year, by giving 3 common shares plus any accrued divi. (Plus adjustments mentioned in previous link).
But the owners of the preferred can also redeem on their own anytime according to this…
e) Unless earlier called for redemption in accordance
with the provisions hereof, each share of the $7 Cumulative and
Convertible Preferred Stock shall be convertible at the election of
the holder thereof at any time after five years from the date of
issuance of such share into:
(i) Shares of the Company’s common stock at the Common
Equivalent Rate in effect on the date of conversion (the
“Conversion Date”); plus
(ii) The right to receive an amount in cash equal to
all accrued and unpaid dividends on such share to and including
the Conversion Date, whether or not declared, out of funds
legally available therefor.
Any holder of shares of $7 Cumulative and Convertible Preferred Stock
electing to convert such shares into shares of the Company’s common
stock shall provide written notice to the Company of such holder’s
election to convert, such notice to be sufficient if contained in a
postage-paid envelope addressed and mailed to the Company. The time
of mailing of such notice shall be deemed to be the date of delivery
thereof. The holder’s notice shall also include the following:
(i) The conversion Date, which shall be not earlier
than 45 days or later than 90 days from the date of delivery of
such notice;
I would appreciate anyone fact checking to clarify if my morning brain is seeing this all clearly.
Grid, what you have posted about MSEXP is indeed very complex. My eyes glazed over, and I got lost somewhere, sometime, between starting to read and my ( post-stroke ) self imposed bedtime.
The little I think I got from it was that, at the owner’s discretion, 1 share of MSEXP could be converted to 3 shares of MSEX plus accrued dividend.
IF this thinking is correct, then at current price of MSEX=$52, 1 share of MSEXP should be trading at 3*52 = $156 plus accrued dividend.
Is this what you were implying when you posted that MSEXP could be worth a lot more than what it is trading for now?
Inspy, you are suggesting what it appears to be if I am understanding correctly. That part seems fairly cut and dried. But what isnt 100% certain is, are these preferreds the 7% convertible preferred? The numbers suggest by almost default they have to be. I cant imagine the sub 800 share count 7% perpetual being churned over and over to come up with 3500 shares sold in a single day.
Plus, if you read the details, it likely is higher than 3 shares now, as MSEX had two minor stock splits at turn of century. So that would increase the conversion value more.
This appears to be like the Bristol Myers old convertible. BMYMP was issued as a 4% $50 par convertible and now what few shares are left are trading for $900…For a $50 par issuance. For me though…I got the one water utility preferred left on the market paying an above market yield for its credit quality. If its not a convertible, I have a good relative deal. If it is a convertible, I will just sit on it. I like the company and the preferred pays over double plus in dividend yield what the common does. Yet while just holding it, any price increase of the common falls directly right back to increasing the convertible value of the preferred. So no real reason for me to do anything…Except try to figure out with 100% certainty what the hell we actually have.
Where did you see a conversion to 3 shares of common? The 2023 annual statement seems to mention 12.
“The conversion feature of the no par $7.00 Series Cumulative and Convertible Preferred Stock allows the security holders to exchange one convertible preferred share for twelve shares of the Company’s common stock. In addition, the Company may redeem up to 10% of the outstanding convertible stock in any calendar year at a price equal to the fair value of twelve shares of the Company’s common stock for each share of convertible stock redeemed.”
https://investors.middlesexwater.com/static-files/afe54033-29ca-4554-8ff7-80593f8252a0 (page 80)
Dick, that was from a link I provided above. Those were the ORIGINAL terms. As I just mentioned it could be more…And if what you found is what we own its worth considerable more…Its like the BMYMP issue I mentioned above. Perhaps the company hasnt been redeeming any over the years…It likely could be the shareholders tendering. 12 to 1? That is some serious jack if it is what it is…Almost as good as my 50-1 Blues to win the Stanley Cup in 2019 was, lol.
Dick, Grid mentioned there were 2 stock splits of the common MSEX at the turn of the century.
If these were simple 2 for 1 splits, then those original 3 shares conversion would now be 12 shares.
Could that be an explanation for what you read?
Inspy, here is their stock split history.
https://investors.middlesexwater.com/stock-information/splits-history
The question when was this convertible issued? I have no idea. It could have been before the 1980s and all of those splits are now included.
But once again, it hasnt been determined if we even own the convertible.
Dick, I went and read your link page. It seems pretty black and white they are convertible to 12 shares doesnt it. Im hoping Pig’s “quacks like a duck” analysis is true! It makes sense as they have had a several stock splits since the 80s. And convertibles get rewarded for those to avoid dilution.
It will be fun to dream about this while I am miserable attending an outdoor wedding today. I have most in my tax free accounts which makes it sweeter, also.
Grid:
I took the easy profits this morning and blew out of MSEXP (very small position) after the bid exploded higher to $111. Just too quick and too good to pass up. I don’t mess around two often in these illiquids, but the last time was when the CTA preferreds had a relentless seller – and that also worked out real well.
This site is truly worth its weight in gold (or even bitcoin)!
But I never got too excited about the 3-to-1 convertible feature of MSEXP (if that is indeed the ratio). Although the common MSEX has fallen from $120 in December 2021 to its current price of $52, it still seems way overvalued at nearly 30X EPS and 8X sales. This is a dinky small cap water utility that has only 150,000 customers and a paltry yield of only 2.5%.
You would have thought one of the larger utes or private entities would have gobbled up MSEX by now, but my guess is the stock price is way too high for them to make any real money. My fair value for the MSEX common is $30-$35/share, which makes the convertible feature irrelevant (at least to me).
GLTA and DYODD.
Kid, except its a 12-1 ratio now. The 3-1 was what it was when originally issued. Stock splits and such have made it 12-1 per MSEX own SEC filings and Dick’s timely sleuthing skills for us.
Grid:
For the III comrades that still own it, I certainly hope you are correct on the 12 to 1 ratio. Someone just paid $130/share for MSEXP, which equates to only a 5.38% yield!
This is truly Christmas in July.
Kid, there is no hope to the 12-1, it’s a fact in their filings and it’s posted and linked here in this unruly thread. The real hope part is this issue is that convertible. Because if it is, it is a 12-1 convertible.
If it is just a fixed which appears mathematically impossible from filings, its max worth is probably around $110 for its relative slotted BBB type quality 7% preferred.
The fireworks seem to be over. I managed to get 200 more shares at open for a total of 300. The funny thing is.. if this is all true, our current speculation, the shares are still cheap at 150. Earlier today it felt like 10 jackals trying to pick apart a carcass on the OTC.
I just told myself in case this is not true I need a blended yield on my current shares > 6%. That way if this all falls apart and we are totally wrong I am still quite content to toss these in the sock drawer. I have a meeting to get to but in a bit I will try to show even more evidence of what we have and why it is 12 shares conversion.
I had to let go 800 shares of RMPL- that mature in OCT and sold some T-C shares I had a fat gain on. I tried not to dip into my SGOV for this situation. Pigs get fed, hogs get slaughtered. I am content with 300 MSEXP if this plays out nicely. If not… I am also content.
It would be interesting to add up the number of shares owned by board members and see what percentage of them we collectively own. I picked up 400 myself.
BTW, Fidelity gives this a non-fixed rate security warning so I wonder what that is about? And if you add dividend payments to the chart on Fidelity it looks really odd for some reason.
NMKCP is trading at 63.7 or so. I grabbed a few shares and it’s still at that ask
6.1% yield I think this preferred would yield. I doubt this one would be called anytime soon. A call meaning like other ills that recently went poof as a group. I was hoping it was 6.5% or something more exciting. Perhaps I will regret not buying more of this type of material but they are all yielding right around this mark.
Thanks for the heads up YH…I got 100 at $63.70.
I am confused. In late 2023, these were supposed to be delisted. Did they change their minds?
https://otp.tools.investis.com/clients/uk/national_grid2/rns/regulatory-story.aspx?cid=374&newsid=1741240
They were…Delisted to OTC. See NMK-A was delisted years ago to OTC. However for whatever reason NMK-A and B remained on NYSE. NMK—A became NMPWP years ago…And then at turn of this year B and C followed suit. As long as financials are piggybacked they should trade on OTC (ala Ameren and Eversource preferreds on OTC).
thanks
I am not sure what is happening here. NMPWP according to OTCMarkets has a PQE status of No. It also does NOT say it is eligible for Pippyback reporting. As I understand this, it was moved to OTC years ago. Financials are on the site and trade history, so it is trading.
On the other hand, the two recently delisted issues are trading on the OTC as you indicated. They are NMKBP: NIAGARA MOHAWK PWR CORP PFD 3.60% and NMKCP: NIAGARA MOHAWK PWR CORP PFD 3.90%. They have the same status as Ameren and Eversource preferred’s. They are both marked as PQE status of Yes and Eligible for Piggyback reporting of Yes.
I’m not sure why the original OTC issue has a different status but as I said it is still trading.
Hey Steve. Taking a break before dinner on vacation. Niagara Power has 3 preferreds outstanding. Originally an A,B, and C series. Same company..I havent tried to research history but for whatever reason NMK-A was delisted around the time NGG acquired them. But B and C waited years and years until NGG recently delisted.
They are all one in the same in terms of priority and cap stack. But when you mix AI and dumb computer nerds who know nothing and punch the buttons to control whats tradeable…….Who knows ultimately the end result….But legally NMPWP is the exact same thing as newly titled NMKBP and NMKCP.
Thanks. I see that trades on the Otcmarket site for NWPWP. I was also able to enter a trade on Schwab.com and it was accepted. So it is tradeable. Yes, looks like it is their glitch to correct.
sorry NMPWP
Added UEPEO today at 6.23% yield.
As someone newer to actually buying illiquid preferreds (past year plus), it seems that there is some very cool esoteric knowledge of issues that some members here have. For those that are willing to share, what are some other rare issues such as the MSEXP that came up recently that would be worth watching out for? I went through all of Tim’s (great) spreadsheets as well as all of quantonline and prefschan.
Thank you to all of the contributions…. great group of people here.
YH, ask Gridbird about his obscure Birmingham railroad preferred that is out there somewhere that remains elusive even for him. Gridbird responsible for many a rabbit hole.
The best and oldest one outstanding that I am aware of is DMRRP. The Dayton and Michigan Railroad, 8% perpetual uncallable which over the years wound up in CSX’s lap through the mega RR consolidations over the years. It was issued pre Civil War. Was involved in a major tax case back in the 1800s in Ohio. Companies were switching out debt and converting to preferred stock to avoid taxes as preferreds were not taxed back in the day, but bonds were. Court ruled in companies favor.
I had owned off and on, but the SEC sent it to the expert market basically unbuyable now. Despite the fact due to its inherent provisions backed by the land, it really is a senior bond. Never missed a payment since its pre Civil War issuance. You can buy an original DMRRP stock certificate issued in 1870s from Amazon for $75…..But its a cancelled one so dont expect any dividends, ha.
https://www.amazon.com/Dayton-and-Michigan-Railroad/dp/B00TTB0ILM
Another one that the government won’t let you own because you should be protected from such terrible investments.
AWRY (Allegheny and Western Railway) guaranteed by CSX is another one they jettisoned to expert market. Although technically a 6% common, its a “guaranteed payment” common and hasnt missed its $3 semi annual payment since issued in the later 1800s. Now CSX could likely do the effort and piggy back the financials ala, Ameren or Eversource. But they refuse too or havent bothered. In fact CSX owns 51% of the DMRRP and the common stock DMRR and likely same amount of Allegheny for permanent control. They used to have bogus board of directors meetings which consisted of CSX management doing it for free, but they eventually dissolved the charade, by delisting the shares in 1990s. As the companies had no formal business operations.
Grid, going to the wayback machine, which….given the fact it’s been several years can possibly explain my memory issue on it. But I could swear you mentioned the “holy grail” of preferred stock being some obscure Birmingham Railway (I’m paraphrasing the name of the company). Basically it never traded but supposedly was out there. All I remember is the ticker had multiple B’s in it. How is that for exactness? lol
Yes Pig. It was Mobil and Birmingham. MBRRP
https://www.quantumonline.com/search.cfm?tickersymbol=MBRRP*&sopt=symbol
I searched for years and never found a share. Then quantum said it was declared dead in 2019. But it hadnt traded in 10 year prior to that. I called and hunted and everything. It was issued in 1800s also.
A lot of OTC issues have some good history as they were originally issued by another company and bought out over the years. For example PPWLM and O both were issued long ago by other utilities. PCG-A was issued over a 100 years ago and the name and identity of company changed over the years. BANGN is now a Maine utility Versant Power that is owned by the City of Calgary (figure that out) so its dark now. Its origins were in Bangar Hydro Maine (and maybe a name before that as I forget) I believe and it was operating street cars and gas city utility lights at the time!
Grid and Pig, I love this stuff. Thanks for sharing all of it. I was able to score some PPWLM at the bottom of the range not too long ago. It’s even more satisfying that Buffet will be indirectly writing the dividend checks! It also looks like PacifiCorp settled the majority of their suits today.
So, how are you uncover these rabbit holes? Do you ever find that you just barely missed an opportunity on an old bond or preferred?
Yield, I started investing in preferreds just after GFC. So recency bias greatly affected me. A lot of big bank preferreds went well under single digits, and many smaller bank preferreds went under. It isnt named BANKruptcy for nothing. So I was looking for non financial preferreds, found a couple and then found the OTC website which listed a slew of them. And after researching them I found they in general didnt come close to feeling the pain price wise the financials did. Plus finding out that many had continuously paid since WW2 and some from WWI I knew I could trust those.
The research was interesting too. A lot of them had “stories” too worth reading about. Added note, if you arent familiar some are dinosaurs from a bygone era. Back in 1960s and earlier preferred stock was a normal cap stack from companies. Many corporations such as IBM and Exxon (Fortune 500 Companies) had preferred stock. Now its largely financials, reits, and dirt bag outfits.
I’ve been reading some of your back posts and there was an issue that went grey or expert and someone suggested that it might be because it was actually a bond backed by land rather than a preferred or something and that led to the OTC site I think. The OTC website is super interesting and I killed most of my sleep last night perusing. GFC must have been a great time to start hunting these I suspect.
Hopefully there are some more non dirtbag opportunities to be unearthed. Awesome discussion here
Yield, there are not a lot of the rabbit hole issues left unfortunately. But they are fun to research and you can find some things that are not available on quantum. For example INPAP, a preferred from International Paper. Quantum has it as uncallable. That is not correct. It can be redeemed any time by company for $105, which isnt likely since it has been callable since July 1949. Finding semi complete prospectus for these oldies is hard. Sometimes can be found in links from annual SEC filings. The best one for this issue I had to dig up. It is in Article V here for example.
https://www.internationalpaper.com/sites/default/files/file/2023-02/Certificate%20of%20Incorporation.pdf
What fascinates me about this one is although its an old issue, it still has about 400,000 shares of almost $40 million issuance. This is over 3-4 times the size of similar issued era preferreds such as UEPEO and UEPEP, yet INPAP has only had about fifteen 100 lot or more trades in roughly past two years. While the other 2 trade weekly or better. The great majority of this float has been institutionalized or the company owns a chunk on the books not retired. I havent figured this out yet and would like to.
I have been out of this issue for several years as it didnt trade and when it did it was way too high. I have snagged 300 past couple weeks with a blended yield of barely 6% which is not impressive at all. But it’s about at its 20 year low commensurate with the old utes 20 year lows, so I bit despite not being overjoyed. But it just doesnt trade and my trades alone represent about a fifth of last 2 years 100 share plus block trades. And I noticed the ask price went to a not for sale ridiculous price of $105 after my purchase. There are a couple others I would like to own again, but there is just no ask price available. But I keep looking, maybe one of these days…..
That looks like it took some digging to find so even at 6% yield there had to be some satisfaction in getting those recent fills. Fintel.io seems to think there are 7 institutional holders on INPAP but I’m not sure about the veracity of that data. I suppose you didn’t find anything current in the 13Fs…
Over the years I have seen a few managed preferred funds hold some. But dont remember to what degree as sometimes its just minimal in these old issues. OTC doesnt indicate how many shares are DTC available. I guess many could still be in certificate form and not actively tradeable.
I will have to dig around in filings to see annual preferred stock dividend payments. As typically if a company or subsidiary owns the preferreds (not redeemed to treasury) they dont pay out the dividend to themselves. So that is a back door method to see how many a company owns themselves.
Pig, here is your quote of the day. From famed portfolio manager Larry Swedroe. “There are only 3 types of interest rate forecasters. Those that dont know where interest rates are going. Those that know they dont know. Those that know they dont know, but get paid lots of money to pretend they do.”
Very interesting that the Amerens and the CLPs are clustered around a CY of 6.2-6.3%. Why do you suppose? I think it’s the market’s way of saying what an IG preferred should yield in current conditions. A nice barometer.
UEPEP selling for 72.88 at a 6.257% yield,
I put out a morning bid at $72.50 for just 100 and have just seen I got them. That little purchase dribbled me over 80% of my fixed QDI perpetual issue segment I own are Ameren ones.
I just put in a GTC offer to sell 100 AILIO for $68. Does anybody see it anywhere? It’s not on my ToS.
camroc, I do not see it, I see an ask of $69 with zero volume today. Did you put it in AON?
No, just GTC. I think I’ll change it to a day order & see.
The order never got put in. Because it hasn’t traded since January, Fido has put on their nanny hat and I will have to call in, ask for Active Trader Services, and have them enter my order.
It’s always something. 😉
That entire situation is odd Camroc. I was looking, and I have a few hundred shares of AILIO . I bought at $63 back in October. I tend to trade around all the sisters so dont always hold any particular issue an extended period of time if I can upgrade yield or lock in a cap gain. For whatever reason totally unbeknownst to me, I have never attempted to sell my AILIO shares. Dont worry I wont give you any competition today.
Thanks, Grid. You’re a real mensch. It’s the first hiccup I’ve had since moving to Fido. I finally got a knowledgeable rep late yesterday who said it was nanny protection but he couldn’t say much more about it. I will call it in this morning. At 68, it will give the buyer a reasonable yield–unless a Schwab or other commish is involved.
It will all go toward a wh generator. Because of ERCOT, you know. Sheesh.
JMO
camroc full summer is not even here yet with peak power demand. Wonder how the ute’s are going to handle it?
Projected growth of energy demand in TX dwarfs every other state. It will be a Manhattan style project:
https://texas2036.org/posts/new-texas-energy-dashboard-maps-future-production-and-demand/
Texas is somewhat of a bad example to use.
It isn’t connected to the national grid, so they can’t buy excess power from other regions like everyone else can. Part of the problem is that Texas has really wide swings in power consumption, which makes generating it very difficult. e.g. Bad cold snaps.
But this is crazy. “the expansion of data centers”.
Texas is literally the LAST place I would put a data center because of the issues with their electrical grid.
Meanwhile, California is producing too much power that they can’t use it all because of the widespread adoption of solar power by homeowners and the huge numbers of empty office buildings that are no longer drawing on the grid during the workday.
As the regulator said, “it is a nice problem to have”
You almost are having as much trying to sell this as I did Monday buying my Nassau of New York bonds.
I filled at 68 on this
Where did you buy?
I was on the phone with Fido for over 2 hours trying to get mine sold. Finally, the 3rd or 4th guy I talked to said he had an EMAIL (?) to somewhere deep in the bowels of Fido about why the entries always got rejected–mine and theirs! After he hung up, a popup box wanted me to rate the interaction. By that time 160 shares had traded and the bid was down to 67.45.
I gave them the rating you’d expect and asked them why they didn’t just buy it from me for my 68 ask and put it in their inventory.
Then I gave up and went to pick up curbside groceries. I had no sell order listed, but when I got home, my shares were gone and $6800 was in my account.
I don’t know what happened and I’m afraid to ask. Very strange, but I’m out at my price, so
Saul Goodman
Schwab via TOS.
NSARP has an ask of $67.75 (6.27% current)
NSARP has an ask of $77.50 (6.2% current)
CNPWM has an ask of $33.50 (6.24% current)
CTA-B has an ask of $70.25 (6.4% current)
UEPEO has an ask of $72.25 (6.23% current)
CNLTP has an ask of $35.50 (6.20% current)
CNLHP has an ask of $36.00 (6.25% current)
Some of the electric subsidiary illiquids are still slipping above 6.3%. I plucked a few hundred of NMKBP at $57 for a 6.32%. It just went exD yesterday.
Been trying to buy UEPEP and NSARO in my taxable account. Playing the spread is a sloooww way to buy them and I won’t pay the ask unless it’s low enough. Do you get much price improvement on illiquids?
UEPEM has an ask of $64.25. I’d probably prefer that one over UEPEP. UEPEO also has an ask of $72.25.
Martin, I just noticed is closed yesterday with an ask of $57. I was golfing today and I just put a buy order of 200 shares at $57, and it snagged them. I didn’t try for any price improvement.
Thank you, Dick.
To gain 5 bps in yield, I swapped AILLN into NSARP. I offered AILLN at the 78.70 bid but got price improvement (79.5232), so I actually gained 11 bps.
Thanks – added a tiny bit more NSARP
Dick thank you for these. Are these at this 6%+ returns a good buy. I know they are way under par, but are these interest rates good for today’s environment.
TY
For your amusement; the extremes of illiquidity:
MSEXP has traded 2 shares today, at $94 and $295.
Ken, there never will be a liquidity day in MSEXP. There are less than 800 shares outstanding. And no I didnt forget any digits, lol. Several years ago, I had the market “cornered” on this issue owning more than 200. But when an offer to sell $50 higher than I paid came up, I was forced to sell, ha.
Gridbird,
MSEXP, from my notes written long ago. Is any of this accurate (lots of question marks)?
“7%, $100 par, non-cumulative, QDI, perpetual? callable?, convertible? 411 shares outstanding? maturity 12/31/49?”
Ken, they may have bought more. The tiny float always tended to shrink whenever I checked. But I havent checked in a couple years because after selling them all for around $175, I havent checked lately as it really hasnt been buyable in over 5 years. OTC is showing 13 shares have traded since 2020.
Its perpetual, noncallable, not convertible….and basically unbuyable too, ha.
MSEXP floodgates opened today, volume 4786.
Ken, had to see it for myself, and yes, there it is. I’m stunned by this. And at $92/share. That sounds like some kids got a hold of poor granny’s stash after she passed away and sold it on the cheap.
The long-time CFO is retiring this Friday, June 21. Maybe he sold and not granny’s kids?
Fidelity shows 784 shares outstanding.
Almost as bad as spending a coin collection at face value.
The ask on CNLTP is $35.00 x 500. There’s been a decent amount of shares sold yesterday and today.
Still available today. I just bought at 34.99
Illiquidity is an interesting push/pull on a securities pricing. Most of the illiquids bottomed out last fall and are a fair amount below their last price. But some are so illiquid that they are still bottoming out from lack of transactions. Take AILIM which just hit its 52 week and post GFC crisis low today of $75.69. Even now its just largely within the range of these of yields for illiquid utes, nothing of great relative value. Just the longer lag time occurring to normalize.
The ask on NSARO is currently $77
Quick flip?
I was able to get some CNPWP for $32.79 today. A 6.221% yield. That was nice on an otherwise rough day.
Bought CNLPL at 51.95. Ex date coming soon on 6/10. Quarterly div is .81. Looks like a decent deal to me
I really want these to start yielding > 6.5% before buying more. Why do I get the feeling a lot of shares like the above have now transferred to stronger hands who have no need to sell now days. On top of that people are ready to buy as well keeping bids high. On top of that the world of illiquids has gotten much smaller than just what it was 3 years ago increasing competition.
I don’t think they are terrible buys. Not at all. I just don’t find them terribly exciting at this moment in time. Need some fear to stir things up.
I was watching CNBC today and the Halftime Report traders were asked a question about preferred stock. One was especially fond of the idea now and mentioning a few bank preferreds plus 6%. Those hold no allure to me though. The CTA preferreds have receded back a bit some I have bought a few hundred each of these including today, getting over 6.4% with both issues. I have traded these off and one. The old illiquids are definitely a smaller lot now and on OTC, but even smaller on NYSE, ha. What maybe the CTA issues, HWM-, and CMS-B.
The ask on CNPWP is $32.10 and CNLPM is $32.80.
I am offering $32.20 for CNPWP but no one is accepting my offer yet.
CNLPM also good volume, just got filled at $32.50 (6.34%)
Some UEPEO available at $71.75
6.27%
Picked up some this morning.
UEPEM also available for $64.75 (6.18% current yield not considering accrued div). Callable anytime at $105.63.
UEPEP available at $73.25
6.23%
Callable at $120
I saw those but I decided to clip some more CNTHO at $42 this morning. Paid a bit more than I did the other day but it’s still 6.29% and going exD early next month.
Is there any friction from brokers when you try to sell these? Merrill Edge gives a message that indicates selling might be an issue/pain. I am not planning to sell, but one never knows. No doubt that limit orders are a must when selling and buying for that matter.
The bid/ask are uniform across brokerages with these. 75% or greater of my fixed perps have been OTC pinks for 15 years. Never been a problem selling. You can’t force dump thousands or you would swamp the standing bids. Patience may be needed depending on volume you want to sell. Can’t always do it, but my preference is to buy into liquidity and sell into illiquidity.
I got that message at Merrill with one of the cnl issues, but I didn’t have any trouble selling it last week.
Grid/Irish,
Thanks for the information. I wasn’t sure about what to make out of the message on the Merrill site concerning these securities. I already bought some despite the warning and it is good to know it probably isn’t a real issue.
New, I certainly dont worry about it. In fact with another dribbling out maturity CD (still have 45% in CDs, short duration treasuries) I bought 500 of CNLPM at $32.50 today. Almost 2000 shares of this were hidden at a sell price of $32.50 today. They went quick once it was figured out the sell point was well below the ask price.
UEPEO has an ask of $71.75 (6.27% current yield not considering accrued div). Callable anytime at $110.
UELMO has a bid of $65.57 (5.64%)
Its been there a while. Trust me,if I had any to dump on it I would have!
So Southern BancShares released their annual report. I got an email about it.
https://www.iproxydirect.com/uploads/sbnc/sbnc_annual_report.pdf
So I start reading. Now I know their common shares are rarely traded. They have a very high value per share since there is only like 77-78K shares outstanding.
So I head over to SA and pop in the ticker and I see a 60% one day loss on 77 shares traded! Yet no other places show this drop. I was like uh.. I am a buyer tomorrow at 2.5K.. Then I was disappointed. I have no idea how SA’s data is this out of whack unless I am missing something.
https://seekingalpha.com/symbol/SBNC <- bad data
https://www.barrons.com/market-data/stocks/sbnc <- correct data
Anyway.. I thought I would share the link to the annual report of this ill. I have been waiting to add but the preferred never really gets much lower then a 6.7-7% yield. 10.50-11.75 per share would be nice for either preferred at this stage.
Fc I was trying to figure that out myself but I then I noticed the shares trade infrequently so when I hover over the SA chart I see the date of the last trade and I am thinking they just don’t update the price on their chart.
Also fc , I picked up several hundred shares in the last year around 12.80
FWIW, I just received my scheduled dividend payment from my holding in Central Parking (CRLKP.) It’s ~2 weeks late. The company that holds this debt (SP Plus) will be taken private later this year and I plan to hold onto my holdings as it (may) go dark.
Greg, being its two weeks late, that is actually being paid “early”. Last couple interest payments have been in that 2-3 week late window. But its been 4-6 weeks late before in the past. SP shareholders have approved merger but federal govt has had a second inquiry for more info. So its not a total done deal it will get done, though that is my base assumption. This started back in October. NuStar received a buyout from Suncor in January and already has govt blessing. Metropolis started this process back in October. This has really dragged out.
Greg—I just got my dividend too. After it went xd, I sold out a fairly sizable position between $22.75 & $23, which was my cost. I had owned it for a couple/few years. I just got tired of the late dividend payments and the fact that it will probably be going dark.
PPWLM trading at $115 (6.1% yield, 7% issue). Close to annual and ten year lows. What plagues this issue and its sister (PPWLO, 6%) is potential fire liability. Several sizable suits over the last year resulted in substantial real plus punitive damage awards for Oregon fires in 2020 and 2021. Pacificorp, a major west coast and mountain states utility, acknowledges the risk, has close to a 10-figure fire reserve and, undoubtedly, will ask regulators to permit it to pass along to customers some of the fire liability cost (good luck with that!). Berkshire Hathaway, the utility’s owner, publicly announced that it will not contribute any capital to bolster the company’s financials in light of liability exposure; it will allow the company to use any or all retained earnings to fund any damage awards, or so it says. The pivotal question is COULD the claims drive the company into bankruptcy a la Pacific Gas and Electric? Lots of commentary in the media about this, but I’m unaware of anyone claiming that restructuring is an imminent or a real risk. Would appreciate the III-community’s input, should anyone have info or opinions. As always, thanks to Tim! (P.S. Pacificorp is diversified well beyond Oregon, but the other business units are smaller).
Oldman, Their bonds are certainly sleep walking through this. And I have owned both on and off in the past, but for me, why would I even be interested in them at 6% when I can own other HQ illiquids at 6.25% and way under par. Which in my book nuetralizes most of an “uncallable” feature.
Thanks Grid. I’m not a buyer at currrent price, but I hold a bunch (one of my key sock drawer holdings) and my antenna go up when I see an issue like PPWLM (low volume with only about 16000 outstanding shares) trading considerably lower than recently (it was in the ask $125-$130 range a month or so ago). The sell volume is low and one or two sellers likely is an abberation, not a sign of imminent danger. But that’s what I’m trying to snuff out. Is something bad about to happen? See nothing in the Oregon press, but someone is selling at what could be construed as very low prices (a “fire'” sale?). Can’t argue with your reasoning. I’m looking at CHS and Ameren issues as potential buys for the reasons you cite (also Brunswick–but there may be looming issues with it!).
Oldman, my opinion is it is trading now largely at market value even if there were no fire liability risk. Look at similar issues like NEWEN and WELPM that are also ancient uncallables. PPWLM at current ask of $115 is a 6.09% yield going exD tomm. I personally think that is a low yield in this world of 4.5% 10 year.
Think of it this way, PPWLM has a lower yield now than higher cap stack PacifiCorps 2055 senior unsecured bond which is 6.24%.
Hey Y’all,
I’m looking for some ideas and discussion. I love the conversations here, I’ve learned a lot and hold many issues discussed as well as hold others that were inspired by the chats on this site.
I am a US resident and looking for 7% ish yields, very reliable with monthly/quarterly/semi-annual coupons. Or maybe term preferreds that don’t have long left on them. The issues will be held in a taxable account so I like qualified dividends, MLPs, “safe” BDCs, or long term cap gains or? The Eversource preferreds are examples that I like but are still in the 6.X% area so I’m waiting to add to them.
I’ve recently switched around my accounts to have distribution payers (these that I am requesting ideas on) and the higher yield experiments kept separately.
I’ve read lots of threads and poured through Tim’s sheets. Any creative ideas or things that you think people are missing out on? I even like those creative threads that talk about shares where you have to call the company because you can’t find them on publicly traded markets. Preferreds and BBs are relative new to me (1.5 years maybe). and I’m fairly enthralled.
What’s some cool stuff that you’d all be willing to share? I’m down to start building some new positions.
Many thanks to you all that share your wisdom/opinions and Tim for hosting all of this!
Deep in the Money–thank you–and very glad to have you here.
FYI – I have an offer out there for CNPWM at $33.25. Assume they will get snapped up quick. I’d buy/hold if didn’t need the cash for taxes. 🙁🙁
Was just buying those-I appreciate it!
😭😭😭🎁
Maine, Im sharing the crying tissue with you. I had to pull cash out this last week, too. I owed the Feds alone over 30k this year and I am just a small potatoes retiree! I have never owed like that before. And then the state had the nerve to clip even more. Unfortunately some of my better trades this past year were in taxable accounts and Uncle Sam wanted his fair share of the cut too.
Grid, Stock up on tissues as it’s possible we are experiencing the lowest income taxes we may see again in our lifetime.
Any effort to work the annual deficit down will near certainly involve both the top and bottom of US income statement.
Alpha, I gotta go back to doing better in my tax free accounts and quit protecting them so much!
Hey Grid,
Cry me a river , you rich bastard!
Maine
🤣🤣
Gridbird, your gonna have to cancel that HDO subscription from Pennyless and Riduh…they are making you too much Coin/INCOME…”Were making great Income together!!!”
1%er problems……
Grid,
I have had those kinds of nasty surprises before, but not this year.
I had a good year in my taxable, but really walloped by MMC getting sold and having to pay all the MLP recapture, so I sold everything that had any kind of a loss in 4Q (much of which I repurchased, some at significantly lower prices – proving its better to be lucky than good), pulled in a bunch of stuff from offshore, accelerated some charitable giving, pre-paid my property taxes, – all the tricks.
I ended up with a refund of just over $1K (about a $20 refund from state).
Absolutely shocked me that I didn’t owe. I put myself on an extension because I always have a few k-1s come in/revised late (etc.), but a nice surprise for me.
Im envious Private. I did learn a good lesson a few years ago its better to be a high net worth person in retirement than one with relative high income, but not high net worth. During Covid, I had all sorts of golfing buddies getting multiple 10k Covid checks those years, and I didnt get one red cent! So they were just blowing it on some trips, etc., and a couple wasted it on just sodding their lawns, lol. They refused to believe I didnt get anything. I had to explain that by being cheap rich bastards they arent showing any earned income, and I cant hide mine, so I got the shaft!
CNPWP currently has an ask of $33.31. I come up with a stripped yield of 6.2% at that price (the next ex-date is April 9).
Dick there was some active volume on the illiquids today. I was wheeling and dealing on the golf course. I was selling anything bid up below 6% and rolling it into ones over 6%.
I didn’t do a ton today. I bought a little of the CNPWP with the proceeds from a CD that just matured. I didn’t own a lot of the symbols that had high bids.
I bought 400 shares of LTSH. I also added to CHSCM.
Oh, the highlight of today was getting a huge packet of info from WEC inviting me to their annual meeting in Milwaukee (I own WELPP). They basically said I could vote my preferred shares but they own 99% so I shouldn’t get my hopes up. Milwaukee is a hell of journey for this old Texan so I’ll have to pass on the invite. Although I thought it would be funny to show up wearing my cowboy hat and boots say “blame it all on my roots, I showed up in boots and ruined your black tie affair” LOL
Yes, the invites are a hoot. Basically inviting you to a party and saying your not welcome at the same time. The hold co will always own all the common stock shares and sometimes some of the preferred too. So you cant stir up any trouble, ha.
Ok, I am ashamed to say I started browsing through all this paperwork from Wisconsin Electric. The shareholder protections for these old utility subsidiary preferreds are really something else.
I’ll paraphrase page B-44 here:
Wisconsin Electric Power Company (issuer of WELPP) may not pay common dividends to its parent, WEC Energy Group (common ticker symbol WEC), if any dividends on the preferred stock have not been paid. Further, pursuant to the terms of the 3.6% preferred (WELPP), Wisconsin Electric Power Company’s ability to declare common dividends would be limited to 75% or 50% of net income during a 12-month period if its common stock equity to total capitalization is less than 25% and 20%, respectively.
Here is an excerpt from the most recent WEC 10-K (parent company of the preferred issuer):
“We are a holding company and rely on the earnings of our subsidiaries to meet our financial obligations.
As a holding company with no operations of our own, our ability to meet our financial obligations including, but not limited to, debt service, taxes, and other expenses, as well as pay dividends on our common stock, is dependent upon the ability of our subsidiaries to pay amounts to us, whether through dividends or other payments. Our subsidiaries are separate legal entities that are not required to pay any of our obligations or to make any funds available for that purpose or for the payment of dividends on our common stock. The ability of our subsidiaries to pay amounts to us depends on their earnings, cash flows, capital requirements, and general financial condition, as well as regulatory limitations. Prior to distributing cash to us, our subsidiaries have financial obligations that must be satisfied, including, among others, debt service and preferred stock dividends.”
https://www.sec.gov/ix?doc=/Archives/edgar/data/783325/000010781524000095/wec-20231231.htm
Yes, this is why I always say utility subsidiary preferreds are the safest preferreds there are. Additionally many PSC regulations require IG debt ratings at all time (not the hold co as they could care less if parent goes bankrupt). Now “modern day” subsidiary preferreds, ala bought out companies from like Blackstone are a different matter. Those subs need the parent. In utes its the other way around. The parent needs the subs.
WELPP traded today with a 5.8% current yield. It’s rated A- by Fitch, Baa1 by Moody’s. It’s currently callable at $101.
It’s always interesting to me that you have lower quality issues trading with lower current yields than this one.
Because WELPP is on the OTCQB, the packet I was mailed is actually listed here for whoever is interested in reading it:
https://www.otcmarkets.com/filing/html?id=17405625&guid=WwQ-kWli46_GB3h
Here is the OTCQB certification:
https://www.otcmarkets.com/otcapi/company/financial-report/369556/content
This is just me, but at a certain point its overkill in terms of credit rating to getting yield. For example, there is no way in hell Union Electric preferreds are at any more risk of not paying than Wisconsin Electric’s despite credit rating tick differences. So my preference is grabbing a bit more BPS. But I certainly do own Wisky preferreds at various times though dont get me wrong.
A positive though for Wisky ones you mentioned is they do pay the “OTC ransom” to be “fake exchange traded” listed on OTC. Them, and the Southern California Gas preferreds are the only 2 delisted ute companies I am aware of that do this.
As far as credit ratings, I didn’t mean the WEC preferreds are safer than the AEE or ES preferreds. I’m not sure how much weight I put on the credit ratings anyways. The OTC ransom thing and basic diversification principles are the reason I hold the WEC preferred.
I was thinking of the comparison of the current yield of WELPP to WAL-A. They almost identical at the moment. About a year ago, there was speculation about the going concern status of WAL (https://archive.ph/3esra). In this old guy’s opinion, it doesn’t seem like WELPP and WAL-A both share the same risk profile.
I almost forgot my favorite thing about these old utility preferreds like WELPP. The right of the preferred shareholders to elect a majority of the board if preferred dividends are not paid for 4 quarters. LOL
“Dividend Default
If and when dividends payable on any Preferred Stock are in default in an amount equivalent to four full quarterly dividends for any such Preferred Stock, until such default has been remedied, the holders of the Preferred Stock, voting together as a class and without regard to series, are entitled to elect the smallest number of directors necessary to constitute a majority of the full Board, and our common stockholder, voting separately as a class, will be entitled to elect our remaining directors. When all dividends in default with respect to the applicable Preferred Stock have been paid, the special voting rights of the holders of the Preferred Stock to elect a majority of the Board shall be divested, provided that such special right to elect a majority of the Board shall be exercisable in the case of any similar future default or defaults.”
https://content.edgar-online.com/ExternalLink/EDGAR/0000107815-20-000091.html?hash=a7b724ef1da47b6bd096b6c4f69956145461b74236e56bb6018613405e9b7c51&dest=a2019we10kexhibit42_htm#a2019we10kexhibit42_htm
Yes, the majority control of board is a dinosaur thing. The NSARO and NSARPs, Niagara Power, CLP, and Hawaii Electric are ones have same feature. The Ameren ones do not. Of course one doesnt know how many the hold co ultimately owns. Many of these have are owned or controlled by parent via purchases or tenders of long ago where they were redeemed but not retired to treasury. For example Pacific Enterprises which is the parent of Southern California gas (Sempra is parent of Pacific Enterprises) owns most of the float of SOCGM. So they in effect would block any effort to change the board. Most I suspect are set up this way.
This is kind of interesting on page 42. I’m not sure if this means WEC doesn’t necessarily own a majority of the preferred stock of Wisconsin Electric Power Company.
=========================================================
OWNERS OF MORE THAN 5% OF PREFERRED STOCK
Based upon reviews of Schedule 13Gs filed with the SEC as of February 14, 2024, there were no beneficial owners holding more than 5% of any class of WE’s preferred stock.
https://www.otcmarkets.com/filing/html?id=17405625&guid=WwQ-kWli46_GB3h
Dick, its really hard to know for sure if the hold co or in some cases, a hold co of a hold co owns any. You have to get deep into the financial weeds to know, or like I have on some, just stumble onto some public disclosure.
But the most important things are the facts that issues like WEC preferreds have continuously paid uninterrupted for decades upon decades without problem. And even more importantly all of WEC’s debt is in effect subordinate to the preferreds of the electric company. So most likely, in effect, WEC will go kaput before the preferreds do.
Which brokers will let you buy LTSH? No luck for me with Schwab or Etrade.
Fidelity
A quick note that the buying cartel has established a bid of $19 for all LTS baby bonds.
A question earlier about the LTS baby bonds thoughts. The LTS baby bonds are Pari-Passu with the Advisor Group 10.75% 8/1/27 00791GAA5. These bonds were bid at 106.677 Friday for a YTM of 8.5% (at IB).
Grid, was it you pushing PNMXO up to 80? 🌞
D, I thought when I sold at $77 I made a good flip a short time ago…I was wrong…Who the hell would pay that much for this when you can get well over 6% illiquids with even a better credit rating?
Purchased some CNPWP today at $33.25 (1-day after the x-date). Effective yield of 6.135%.
I had an order hit today too. $33.24 for me.
Does anyone have opinions about the Ladenburg Thalmann senior notes (LTSL, LTSF, LTSK, LTSH)?
Bids of $18.75 for LTSH seem to be getting filled today at Fidelity. Looks like that’s a YTM of 15%.
I picked up some NMKBP today for $58.25. Several hunderd shares have moved today so might be a good one to keep an eye on in case there’s more selling.
Hi Dick, I could not find NMKBP on QOL. Is it regular, qualified preferred? Or a baby bond?
QOL still shows it as NMK-B. It used to trade on the NYSE under that symbol. It now trades OTC under NMKBP. It’s a preferred stock so it should be QDI.
There’s also NMK-C which is now trading with the symbol NMKCP. These have been available for over 6%+ lately. When they were on the NYSE, they both were always way over priced and typically had below market yields over the last several years.
Finally, they also have NMPWP and those are the 3 preferreds for Niagara Mohawk.
If you search NGG (the parent company) on QOL and then select “Find All Related Securities for NGG” that’s another way to see the entire series of issues from their subsidiaries.
Dick, Thanks for the information. Being owned by a UK parent, do you happen to know if there is any tax withholding for US holders by the UK authorities?
Though its a unique circumstance in which the parent now also guarantees the payment from subsidiary preferred, “the entity” is a US entity and based in USD so no 15% withholding is created or generated.
Thanks Grid, for the very helpful information.
Grid, It’s story time. Tell me about Central Parking.
Pig, I know SEC filings state all debt to be redeemed. But it largely said that the last time this polished turd was bought out. Who knows if either company knows it even exists? I can’t get a fart sound out of SP so they are no help. I treat this as a best case/worst case hold. I bought hoping for a redemption but bought at cost basis where it was above 10% YTM hold. Because if merger goes through and it stays outstanding until 2028 maturity it will go AIC style totally dark until maturity. Biden admin is slow waking this merger approval. I hope this a foreshadow for NSS too.
Thanks for your take. It does have that Boston Sand & Gravel feel to it. Potential to be as solid a 10% (now a tick below 9% YTM) as can be, or it could result in someone “forgetting” to make payments on it. I like buying little pieces of these things and just holding on forever for a slight juiced return. Hold enough of them, even if not in large amounts, can really add to my bottomline nicely. Had some decent price action a few days ago and actually had a bid out at one point.
Oddly enough last payment was on time. That never happens usually it’s 3 weeks late or so. I have about 2000 shares and holding. No more either.
Grid,
What news did you find that whoever currently owns Central Parking is selling it? Is this the news in the link below?
https://www.reuters.com/markets/deals/logistics-technology-firm-sp-plus-go-private-about-15-bln-deal-2023-10-05/
Yes it is, fc. Central Parking has been bought and sold by a few entities since Central Parking was its own separate company. Metropolis is a privately owned company formed maybe 5-10 years ago.
CNLPM day range $34-$75, redemption is $51.
I sold 240 shares @ $50 and 100 @ $58.08. I felt pretty good about those sales until I saw $75 LOL.
I just got done reallocating the proceeds of those trades.
Dick, now that we have established who is picking up the tab tonight, where are we all meeting up for dinner and what time?
I wish someone would run the price of UEPEN up to $100 so I can cash out on some GTC sell orders. It is in my 401k so I won’t be able to spend it on dinner.
Billy Bob’s in Fort Worth! I hope the new owner of my shares enjoys them as much as I did.
That was thrilling! Who needs Vegas when you have utility preferreds!?!?! LOL
Right before the close, I trimmed about half of my position in SOCGP today for $27.48. What a wild couple of days!
Who in the world is buying this stuff at such high prices? Amazing. I have some of this but truly just expecting to hold unless rates go down and I cannot resist banking large profits.
Fc, I wonder too. Dick has had him some nice ones recently. I have them in the past too and have no credible explanation. I dont believe it to be “fat finger” or market orders as brokerages dont allow market orders on these. I think some momentum algos get a hold of these at times for whatever reasons and chase it up.
On opposite side I have had a few extreme illiquids for whatever unexplained reason I could drop a very low ask right next to a low ball bid just seconds before market closed. And then that price I set would magically be available at market open next day. I would quickly buy them, and then instantly something would chase the bid up quickly seemingly trying to repurchase what I bought for some odd reason. A few times it was like $10 higher crazy stuff. Kind of like the crazy BACRP trade stuff.
Dick’s windfall reminds me of some happy times in the past lining up to sell AILLL for crazy prices, buying them back, then repeating. Good times.
I was able to get some UEPEP for 74.75 yesterday for a 6.1% yield. Not too bad I guess. Added to NMKC recently too at a little over 6%. I don’t plan to go overboard with these illiquid types, but they do have nice returns with lower risk in some cases.
Im not suggesting to buy, but there are shares of CNTHO at $42.50 which is a 6.2% and maybe could be bird dogged a bit lower. It did recently go exD though. Im just not being overexposed perpetual long duration myself, but I do own these things. Largely, its the only perps I own.
I just got a fill of $40.01 on CHNTN. My only illiquid ute so far.
Gridbird, I agree with your comments. Do you have a method of identifying when these “illiquid spills” occur vs placing a number of GTC orders and hoping for the best.
Larry, Grid has commented he has made buys out on the golf course and while on vacation on the beach in the Caribbean I assume he’s watching certain ones and has alerts set on his phone.
I just put GTC bids out there and wait collecting mm interest. When you go ice fishing in Wisconsin it’s more about being out at the lake with friends and freezing your you know what off than being warm at home
Charles, what is funny is, yes, I have screeners set up that I look at when I am home. But I have never set the buy alert thing or bothered to figure it out. Mostly its just random lookins from phone after a bad golf shot or in clubhouse settling the bets. Or in last case of rebuying PNMXO, Dick mentioned they were selling at $75 the previous day. I hadnt paid attention to it in a couple weeks, but his mention inspired me to poke there and suddenly the ask at $75 showed up and I just entered a buy order. Got mine then the rest were bought seconds after mine. If I was totally committed to fixed issues, I would be loading up here. But I am just staying diversified if not chicken in terms of duration risk. I can leave some food on the table and collect 5% in 100% safe for time being. But as maturities start to roll off this year, decisions will need to be made.
I look for suggestions here and then I set the bait. Have to go back once in a while to check the bait and decide if I need to cast in a different location or use a different bait to snag a bid.
Right now, the hits have been Slim Pickens, last one was CTA PB at 67.57 on Feb. 12th
Positionally percentage wise I am where I want to be. Now its just trying to move around on arb advantages. But like you said, its been slim pickings to improve from arb tradings.
UEPEP. It’s funny when I buy 50 shares and it’s the total volume for the day.
Hard to get this one. Yields 6% and it seems safe. Anyone like this?
Welcome to the world of illiquid utes.
I have some UEPEP, but bought ~$4 ago. would like some more at some point.
There have been days when I only got 1 share on an issue (partial fill of a GTC order) and that has been the total volume for the day (and sometimes it transacts at a price significantly below my bid).
I also have a couple of illiquids where the market maker makes no sense (drunk? an apple computer? algo that wasn’t tested? – no idea).
I will have a GTC buy order in, and feed will show sales at lower prices than my order (sometimes by more than a $1), but not fill my order. However, if I place another order at the price of the other sales, my order will fill (at the lower price). Exactly the opposite on sales (sales below my orders).
What is really crazy is that sometimes I can buy at the lower “market” price and sell within a few minutes at the “higher” market price (and make a buck or more per share) – and it can go on for multiple trades. I had one a few years ago that went on for about a dozen or two trades a day for a week or so. Unfortunately, it is always for tiny volumes, so it is more for fun than big money.
King it’s just kinda being aware and patient. I bought 400 of UEPEP a few weeks or couple months ago (can’t remember exactly in $72- $73 range.) But anyhow I bought them all at once when I did. But I have sold and bought a few times from the low points. I’m always looking to ARB some.
Larry, here is an example…I see bids creeping up on PNMXO at $76 now. That doesnt really make sense to buy this at $76 when UEPCN is just laying there for the taking at $78.10. Its a little better yield, the utility itself is a lot better, and you dont have to poke and hope at $76 for PNMXO. FWIW, I have them both, but dont need anymore as I would have to do some maneuvering which I dont feel like doing,
For those who cashed out of CHS issues trading well above par or sold anything else that has run up a ton lately, here are some potential reinvestment options from OTC utitity preferreds.
I’ll list symbol, current ask price, current yield on ask price.
AILLO, 69.15, 6.15%
CNTHN, 42.17, 6.17%
UEPEO, 74.00, 6.08%
UEPCN, 77.75, 6.11%
WELPP, 62.75, 5.74%
These are well below par and most have ex-dates coming up fairly soon.
This is not a complete list. Just me looking at my list and looking at the most attractive current ask prices…Dick’s picks if you will.
Oh, and CTA-B has a current yield of 6.25% at the current ask of $72.00. Ex-date for that one is coming up on 4/3.
Part of me was hoping the delay in interest rate cuts would cause a mini disruption that would have the price of these fall a bit more. Nope. One is lucky to get 6.3% if your timing is excellent. I am still waiting with cash sitting in SGOV. Making small scattered purchases to round off positions to the nearest 100 and dabbling in other issues to watch them more closely combined with deeper research. Nothing really to recommend yet.
There may again come a day where people wish they could buy 6% QDI preferreds from high quality issuers.
Yes. The thing is I have plenty already and when you are discussing approx 6% QDI it opens up quite a few more choices then just ill utilities. Off hand I am not sure what I would compare them to but a lot of choices at 6ish. Thus I am looking for a little bit more of a discount on them. 6.5% would be nice.
One thing Dick is alluding to is in addition to the ~6.15% yield can get, you are getting 20-30% below par. Many bank IG issues are not even 6% and are back around par. So no real cap gain opp if or ever interest rates dropped. Additionally there may be issues with near same yield at 6% and same credit rating, but they arent the same coverage quality. Preferreds are just mindless slottings off senior unsecured. Most of these ill utes are covered 100x plus by profits…. Dividends almost covered by the soda machine profits at the corp offices, lol. One cant even to begin to find any on the exchanges that have profit coverage ratios within earshot of that.
Yes exactly. Also they were available for 6.5% yields last fall. No one wanted them then.
You make some good points that I will have to consider going forward.
On the other hand I sometimes forget that we are buying these ill utes at a par of 50 and 100. So when I look at share count and forget their par value I actually have 2 to 4 times the amount in dollar value compared to 25 dollar par shares. I am really heavy into this stuff and that is not even counting the other 25 par utilities I own.
How much is too much? lol.
Fc, keep in mind I was just commenting in terms of generalities. Concentration risk, sector risk, etc. are basic principals of conservative investing and should never be discounted or ignored. You are wise to ponder those implications and how they impact your portfolio.
Trading volume on these is very low. It requires a lot of patience to purchase any of these illiquid preferreds.
Larry it will be that way because most issuances are only $1 million to $10 million floats issued 50-80 years ago, so there are very few shares and many are institutionalized. You have to wait and be aware of random “spills”. Like PNMXO for example. It can go days or weeks without trading but over 2000 shares have been dumped this week. Not buying is considerably better than chasing a high ask.
Gridbird, I agree with your comments. Do you have a method of identifying when these “illiquid spills” occur vs placing a number of GTC orders and hoping for the best.