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.
MSEX update:
I asked Broadridge for instructions once the MSEX shares are unrestricted and received this:
Day,
We are in receipt of your request for information on how to transfer shares to a brokerage/financial institution.
Please note that our DRS number is 7824 and our DTC number is 50054.
As a transfer agent, Broadridge is unable to request the transfer of shares to a third party. To transfer shares, contact your broker who can initiate a Direct Registration System (DRS) electronic funds transfer or Deposit/Withdrawal at Custodian (DWAC) request for your shares to be transferred into a brokerage account. Broadridge does not charge a fee to DRS/DWAC shares, but please contact your broker for more information on this process and to ask about other applicable fees.
If your shares are held in certificated form, the certificates must be surrendered in order to convert your shares to be held electronically. You may surrender your certificates to your broker or to Broadridge to proceed.
Please note that only whole shares can be transferred to your brokerage account. If you choose to move all shares and your account holds fractional shares, these fractional shares will be sold and a check mailed to you for the proceeds, less any sales and brokerage fees that may be applicable.
As your broker will require details for your account at Broadridge, if you would like for us to mail an account statement to the address on record please let us know your account details (number and address of record) via e-mail or contact us by telephone at (877) 830-4936 or the International Toll number (720) 378-5591 Monday-Friday 9AM-6PM Eastern Time and we will be happy to issue a statement. After dialing, you will first be connected to our IVR which allows our shareholders to access their accounts in an automated fashion, providing account specific information over the phone or performing/requesting certain transactions through specific options after entering your account number. If the prompts or combination of prompts you enter are not recognized by our IVR, you will be placed in queue for the next available representative. We appreciate your patience if there is a wait to speak to our dedicated agents.
You may also access your account specifics online via the shareholder portal at http://shareholder.broadridge.com/bcis/.
If you have any additional questions, please feel free to contact us.
Thank you,
Gwendolyn
Correspondence Department
Broadridge Corporate Issuer Solutions
Thanks LT.
Not that *anything* has been easy with this adventure, but once the restriction is removed it should (famous last words) be easy peasy to move them to a normal brokerage. IBKR has an automated form to do it, for instance.
Bid on HWM/P is $69 ~ 5.43%
Ex dividend is 3/14
Very good article on SA (Arbitrage Trader), in my opinion, making the argument that CTA-B is underpriced.
https://seekingalpha.com/article/4756442-ctaprb-an-undervalued-investment-grade-opportunity-from-corteva
Did someone confuse it with cta-a? That one’s up 19%!
I am out of my CTA-A at 69 per share. Goofy. My cost basis was like 56ish.
Irish/fc, Some poor soul will be losing quite a bit on their purchase. Hopefully nobody on III site. Yikes.
Probably someone inexperienced from Rida’s crew ran up the price.
“Come for the yield….stay for the price drop.”
That explains why my CTA-B sold today for such a good price.
Had some other good flips today as well.
Hello All,
Long time lurker/First time poster who is not sure whether this is the right place to make the following comment, Keeping my fingers crossed that this will work-
Re: Illiquid Preferred BANGN Versant Power 7% preferred
Roth Conversion
Tax Form 1099-R from Fidelity
Turbo Tax
Some Background info: Prior to 2023 owned 96 shares in a Traditional IRA (TIRA). In 2023 converted 6 shares to a Roth IRA (RIRA). In 2024 converted the remaining 90 shares to RIRA.
Received the 2023 Form 1099-R from Fidelity which showed non-zero dollar amounts in both box 1 Gross dist and box 2a Taxable amt. Additionally, box 2b Taxable amount not determined was checked and box 7 Dist codes 7K were entered. Filed taxes without any problems.
Received the 2024 Form 1099-R from Fidelity which showed $0.00 amounts in both box 1 Gross dist and box 2a Taxable amt. Additionally, box 2b Taxable amount not determined is NOT checked (wonder if this is where the problem lies) and box 7 Dist codes are 7K.
Problem: Turbo Tax for 2024 is telling me that I need to provide an explanation for what they are calling an “Excess Withdrawal”. Not sure what this means or why I am seeing this.
Before contacting Fidelity I was wondering if others have had a similar experience and how did you deal with this issue.
Thanks to all for being patient with my first attempt at posting a comment.
Dan are you still working and having earned income?
I just opened a Roth last week because I plan on working for another 3-1/2 or 4 yrs and I don’t plan on touching the Roth in retirement.
Charles M-
I retired in 2018 and my wife retired in 2019. Our current sources of income consist of SS, an annuity from TIAA, and whatever dividends/interest payments are generated in our taxable accounts.
Thanks
Ok, Dan the reason I was asking and this is not tax advice I had some Cowen Preferred and TD Bank bought Cowen. When it was announced that the stock would be redeemed on a certain date the broker would not allow it to be traded. no buys or sells. After about a month they valued it at zero.
It sounds like Fidelity valued the BANGN at Zero not tradeable under their new rules. I doubt you can even buy it now under their new rules.
Yep I was right, no trades allowed, but they still show a price in the trade window.
Hi Dan,
Also not tax advice, but I think the value that the brokerage showed for the shares when they were converted will be the amount that will be taxed. If they were showing a $0.00 at time of conversion, there should be no tax liability. I don’t know what the “k” refers to, but code 7 is considered a normal distribution.
OK, It looks like the “k” refers to “Distribution of traditional IRA assets not having a readily available FMV (fair market value).”
If you had fed and state withholding on the conversion, then the IRS sees that as a distribution. You have to select no withholding when doing the conversion. Even if you are showing a $0.00 value for the conversion, if you did not select the “do not withhold any taxes” box on the conversion form, I believe the IRS thinks they need some of that $0.00.
As far as not being able to determine a fair market value, you may be able to claim that their own rules (well, the SEC) about Expert Market make it impossible to determine a fair market value because the SEC destroyed the market for these by forcing them to EM status. “The Expert Market was created in response to amendments to the SEC’s Rule 15c2-11, also known as “Rule 211″.”
Hello Mark in Co,
Just got off the phone with Fidelity and their rep “confirmed” that the box “I understand that I’ll likely pay taxes later” was indeed checked.
Not sure how to proceed without incurring a significant cost for such a small transaction. However, just now my wife proposed that I repurpose (to a small degree) your last paragraph into the explanation as being requested by the “Explain Withdrawal” box. Submit the Tax Return and see what happens. Being that we are in a very low tax bracket and have no other red flag concerns at the moment that perhaps this could work.
Thanks for the comments and God Bless our government for looking out for the little guy (hahaha)
CNLHN bid at $34.95 ~5.58%
ex dividend is 2/10
CNLHN bid $34.95 X 300
I have a quick question about how the current yield is calculated on the Preferred Stock of Banks and Insurance Company List. For example, today 1/31 long after the close (~20:00 EST) your table shows WFC-C with a price of $18.77 and a dividend of $0.27. So isn’t the current annual yield (4*0.27)/18.77 = 5.75%? The table lists it as 5.83%. Am I missing some more complex calculation? Thanks in advance for clarification. Great site which my brother just sent me and which I’m anxious to explore.
i’ve not looked at the code but there could be some portion of the dividend which has already accrued so paying 18.77 could be .07 toward dividend.
I want to start buying some illiquids like KTBA. Which brokerage allows it and how much do they charge? Any help greatly appreciated
i particularly like this asset class and have found that each retail broker seems to have some that they all trade and some they are unique to just their platform.
fidelity happens to be free for OTC trades but has some issues with trade size and they do not allow for trading the hawaii electric preferreds. fidelity told me that they will accept transfer of anything but may not allow adding to it.
etrade seemed to have less than others but did allow for trading CDZIP (not recommendations on anything).
schwab trades most but generally charges 6.95 per OTC trade even if it is not a full fill. if you complain they might refund you.
interactive brokers seems reasonable and charges 1 per OTC trade so far and i’ve brought in tickers they didn’t have and can add to them.
for a lot of reasons having multiple reasons can be beneficial and for a lot of reasons it can be a pain the rear.
KTBA might be expert status on OTC which is a whole other issue and most retail brokers will not allow adding to that position. if you find one, let us know.
YH, what is your experience with extended hours orders?
Schwab will let me place good till cancel orders for extended hours.
Fidelity will accept neither GTC orders or trades for OTC stocks for extended hours.
I trade extended and overnight to a problematic level these days with my quantum shorts. Schwab is slowing getting there. Interactive Brokers is far ahead.
IBKR has a Pro and a Lite. The Pro allows premarket trading at like 4 am vs 7 am for the Lite. Schwab premarket is like 7 am. After hours are the same but stop at some point.
I haven’t tried anything with Fidelity… the interface isn’t that sophisticated so I am using the web browser mostly for trading div growers and preferreds.
I have IBKR Lite but think I will switch to Pro after I get through the QC war at Schwab. Schwab generally has higher margin rates, higher borrow rates and more fees while IBKR seems to be more transparent.
It is good to have the multiple choices, however, because one broker may have shares to loan and another may not. Some ppl love Schwab and I like the ThinkOrSwim interface but don’t like the fees. One of the main guys over at TastyTrade told me that Schwab intends to retire this tool in the future. Take it with a grain of salt.
No recommendations here but just my experiences.
FP,
I have not checked with other full service brokers, but I know Stifel will buy it .
This is an OTC Expert market security.
I paid large commissions to acquire it. Very large.
I’m the current “lit” bid , but there are some hidden orders above my 20.75.
I tend to place hidden orders when I can do so. It generally avoids someone jumping in frot of you by a penny, which many algo traders do
lt, you have me interested now. Does Stifel allow for the purchase of most Expert Market securities?
What might a commission (not necessarily on your trade) look like at broker like this?
Can I also ask what do you mean by hidden bid – is it irregular and not divisible by 100 shares or contingent upon a trigger?
Stifel allows a limited number of expert market securities. Basically, if there’s no bid/ask they can see. they won’t permit me to buy it.
There is likely a discount broker where you can buy these but I have not gone down a list. I could likely do trades through Wedbush if I wanted to open an account where I guaranteed them a certain commission level.
Stifel commission is what ever you can negotiate. In my case the discount brought the number down to about 3/16 ( why else would I be a losing trader?). Not cheap by current standards but oh what a deal compared to pre-1986 fixed commissions!
Let me know what you find if you call around!
As to hidden orders it’s possible to route an undisplayed order to just about any market or ECN. Your order is there, but simply not displayed. I believe reg NMS does not apply to these orders. It’s useful if you are getting “pennied” by another trader or algo, but I’ve oftened been pinged for 1 share by someone testing the dark market.
I used to have a trading system that displayed all the hidden orders, so there’s obviously software that can see the orders. No idea how that worked. Many years ago.
I really need to stop watching markets, just buy 5 year FHLB debt and leave town.
I appreciate your posts, LT. You have some insights that some us might not otherwise easily come across.
KTBA …. I have had a position for a few yrs.
All bot at Schwab …. original trades were no xtra chg. Last Buy had $6.95 tag on.
20 day Avg Vol ( Feb 4 ) =291shs
26 week mov avg Close = $22.67
Feb 4 = $24.74
Very little volume …recent wide trade levels.
Jim,
Were you able to buy this at Schwab after it went to the expert market. If so, someone there steered me wrong.
Jim, Funny you should mention this. I wonder if anyone else has noticed?
Around about 12-15-2024 Schwab started dinging me fees and commissions.
Buy KNTNF 6.95
Buy KNTNF 6.95
Sell SUM 1.62
Sell KNTNF 7.28
Sell IBRX .52
Sell IBRX 1.26
Sell MDST .18
Note no fees on Buys on the IBRX or MDST
” M ” …. my buys KTBA ( no sales ) were all in 2021 . . .
March ~ Nov 2021 no tack ons
December 2021 1st xtra of $6.95
Jim
Jim, thanks.
I don’t think you can buy this at Schwab any more. Certainly not through the website.
Maybe new SEC chairman can be persuaded to do something about the Expert Market.
if you “complain” about the commissions they will usually refund them but that’s a whole hassle and it might not be worth it unless there were many trades. i’ve done it before out of principle when i didn’t get complete fills so 11 shares of a 300 order and $6.95 fee.
I’m still with them but ridiculous.
I’ve heard of people negotiating the OTC fee down to $2.95 but I haven’t had success with that.
Yield Hunter, I place a minimum buy quantity on the order so that I can manage the fee per unit. Ex, min 50 units at $6.95 = $0.14 fee per unit if the entire order is not filled.
Interesting, I never saw that option in the order entry. I would tick the fill entire order to avoid partial fills but your method is good because you at least end up with some shares at a price that you like.
MSEXP:
Has anyone gotten their restricted stock legend removed yet?
By virtue of trading the stock , I am not due for removal on the first lot until late Feb
I have not. But I did contact Broadridge and they basically said the same thing you did. Get a letter from a lawyer and fill out their form if you have held for 6 months and they will give you a window of time to sell. If you do not sell within 3 months the restriction goes back on. You work with Broadridge directly and they handle the rest which I assume is communications with Middlesex.
I basically said uh.. that sounds like work. I will just wait a year and review my options. I also discovered that the clock starts ticking for the year hold at the date of conversion. Well that is what Broadridge said and it is kind of the conservative view of things from their point of view. So I am hoping people wear down Middlesex with their efforts to the point someone holds for a year they will go easier on me.
So that is where I stand. I might not start digging into this again until 08/2025 when my 1 year hold period is almost complete. In the meantime I will enjoy that big fat dividend relative to what I paid.
I don’t think one year is going to help you
Well one year at least will help with taxes. So waiting and then asking does not hurt a thing. > 1 year tends to be a well known path to get the restriction lifted that most everyone knows exists.
Part of me thinks the desire for people to sell earlier then 1 year basically caused MSEX to say you need a letter. It did not cost them anything to become more strict and make sure laws are being followed properly. I have communications with them very early in this whole shebang and they seemed a lot easier going back then. After the 150th email even I would start creating a more burdensome process that covers my rear.
But that is just my opinion. I am not referring to you personally. I just think it is a good guess. They got annoyed and became more strict to protect the company. Once you start involving their lawyer he is paid for those exact things. Not to make life easier for us.. but harder so it is easier for MSEX.
In the end I did one big conversion. If I require a single letter so be it. I will at least try to be cheap by being patient.
FC,
The general counsel of MSEX has confirmed that once the legend is removed, it’s gone permanently. You can transfer the securities to another broker.
I’m not sure from where the 3 month window thing originated, but whoever said that is incorrect
It was from the pdf doc they sent me. I wont cut and paste the whole thing.
“EXHIBIT “C”
SELLER’S REPRESENTATION LETTER
(NON-AFFILIATE – 6 MONTH HOLDING PERIOD)”
….
….
“7. [ADD IF SALE IS NOT IMMINENT – I agree that in the event the facts set forth in this letter change, or a
sale of the Shares is not completed within three (3) months from the date of this letter, I will reaffirm
the representations made herein, or return the Shares to you to be re-legended.]”
So either reaffirm or get re-legended. So that is how I understood it from the doc sent to me by Broadridge. I am not sure what reaffirm means. Another lawyer $$$ letter? Who knows.
Pacificorp tender results:
https://www.pacificorp.com/about/newsroom/news-releases/ppw-holdings-cash-tender-offer-pacificorp-preferred-stock-2025-01-27.html
8 shares of PPWLM traded today for $276 ~2.54%
I would have thought more people would have accepted the generous offer. I wonder if a lot of shares are locked up with people who paid zero attention to any correspondence on the subject and will simply keep what they own.
There is no issuer redemption privilege, so the untendered shares should continue to trade.
$276!!!
I could’ve been rich!
I spoke w Pacificorp today. My understanding is that any remaining shares will undergo the reverse split, then tendered for at the current tender amounts.
Btw, I also pushed my luck.. and asked if Warren knew about this tender, but didn’t get a comment. 😉
why would they trade for that? short covering?
Reverse split concluded. PPWLO and PPWLM no longer trading. I believe, but am not certain, that the change in the charter permitted Pacificorp to buy out untendered shares at the tender prices, thereby “extinguishing” all outstanding shares Can anyone confirm? Yahoo Finance shows some minor volume and trades. FIDO dropped the issues.
Lawyers have no shame.
I don’t even want to know what he is charging to have his paralegal copy and paste all of that on the additional copies.
She.
“Ladies” always charge each time.
i’m full of veiled references lately.
Honestly she had to have someone review and put on a spreadsheet hundreds of small trades, and the total will be less than what big law quoted. I’m not shopping anymore because she spent a few hours looking over things and talking with me before my check and engagement agreement arrived.
So now you’re “engaged” to her. lol
Re MSEXP:
Today, my attorney sent a proposed form of the 144 letter to me. I forwarded it to the MSEX general counsel, he read it and responded that it looked good.
Unfortunately I am not permitted to post the form of the letter here. It just recounts everything in rule 144 and says the attorney reviewed the trading records , transfers to Broadridge and relied on my representations.
It then provides a conclusion that the securities may be sold without restriction as of XX date.
I made 9 different transfers to Broadridge, so I will be sending (and paying for ) several letters.
Moving on from speculation on politics guys and back to investing.
I sold a small amount of my TY-P shares yesterday for 45.20. These were my higher priced tranche that I bought when I thought 5-1/2% on YOC on a solid preferred was good. I know I sold before the next dividend, but it’s a small part of my wife’s income and I’m trying to get back to about 25% cash in SPAXX
WOW! My good til cancelled order to sell 245 UEPEP just executed at 79.88
I think I saw one other trade at 82!
Earlier, on 10/21/24 and 10/22/24, I had a partial fill of 255 out of 500 at that exact price and the price promptly collapsed.
I think somebody overpaid just now, but I’m not complaining.
UEPEM bid at $69.75 ~5.73%
Ex dividend is 1/17
Thank you Ken.
I only had a small amount of UEPEM in 2 accounts since I never got a large fill. So I simply sold it at the price you mentioned and bought UEPEP right after. So a 5.73% yield turned into 6.1%. I also get to keep the div coming up now. Perhaps I should have worked harder to find a better yield then 6.1% but it will do.
Much appreciated, Ken.
Sold all mine. Got the prior div + a nice gain. I was underwater (even with the div I got) until I saw your head’s up.
I first thought I’d swap it to UEPEP (6.19% stripped yield at the 74.75 ask), but if the 10-yr rate keeps rising, these Illiquid Utes can keep falling. For now, I’m keeping the cash, looking for better deals.
I had a small UEPEM position purchased @ 64.55 and had a gtc sell order in @ 67.50 which got filled @ 69.75. Similar stroke of luck happened on a couple CL&P issues over the past few months. The “greater fool theory” comes to mind (lol).
I sold most of my UEPEM yesterday for the 69.75 bid and just bought about half back at $64.64 fill with a $65 ask. I think I should still get the dividend on the repurchased shares.
Mark, you should get the div on your shares purchased today.
Tomorrow is the ex-date – today is the last day to buy and be entitled to the div.
https://www.nasdaq.com/market-activity/stocks/uepem/dividend-history
Thanks for the head’s up. Yesterday, I sold all mine at 69.75.
This morning I checked the ask price and I think it was much higher than 65. I read your post and calculated 6.25% SY on 65.00, so I got some at that price. Now the ask price is 69.75 again.
BTW, my sell orders for UEPEP just hit. Sold some for my purchase price and got 1 div on them. The others I sold at 79.99! Now the ask is 77.00
I had a 100 share GTC buy order fill at $60 on UEPEM today! Better lucky than good.
BB14, holy cow! Good work.