Income Issue Have Peaked for Now

After watching income issues rise day after day we noticed the general rise has now come to an end. It was nice getting the big ‘bump’ in January and then getting another 1/10% per day through most of the 1st week in February–but all things have to come to an end.

Today we are seeing common stocks tumble with the DJIA down 300 points most of the day–and interest rates following the DJIA down. The 10 year treasury is trading down in the 2.66% area, which is down 4 basis points.

The average preferred stock today is down 10 cents. Those down the sharpest are the usual suspects–as they gyrate around–some of the AmTrust Financial preferreds, Maiden Holdings, and now joining these 2 insurance companies is affiliate National General Holdings preferreds. Additionally the Tsakos Energy Navigation preferreds are off 75 cents or so. Large preferred share price losers can be seen here.

There are only a few issues with really high volume today and they include 1 AmTrust issue and the National General Holdings preferreds. Lawsuits are starting to fly relative to the AmTrust Financial delisting and we would expect that as long as the issues continue trading they will rise and fall on heavy volume with each court hearing and ruling. There is probably real opportunity here for the speculator–this probably doesn’t include us.

The new preferred issue from Cherry Hill Mortgage (NASDAQ:CHMI) is trading on the OTC market and there is no surprise here–it is trading around $24.84. Maybe there will be a few nickels and dimes to be made by flippers on the issue–but nothing to be too excited about.

21 thoughts on “Income Issue Have Peaked for Now”

  1. Question for Tim and all his informed readers. I have a significant portion of our retirement funds with Fidelity. I’m going to leave that with them but I have about $250k in the Thrift Savings Plan (TSP) that I’d like to move to a Rollover IRA with someone other than Fidelity.

    I have mentioned previously that I’m not always happy with the restrictions Fidelity places on certain income issues such as fixed to float preferred issues so I’m looking for suggestions. Should I go with TD Ameritrade, Schwab, Merrill Lynch or someone else. Any help is much appreciated. Feel free to explain your reasoning.

    1. I was with Fidelity twenty years ago and still have a College Savings account there for the grandkids. I’ve done my online trading since then with Schwab and find their StreetSmart Edge trading application to be more than satisfactory except for a few trace volume preferred/ETD issues. There support is very good and trade cost is one of the lowest at $5. They are apparently slower to list new issues than TD Ameritrade, which is the only serious negative, but I’m not really into grabbing new issues at release anyway. Good luck to you!

      1. Hi retired. I’ve been with Scottrade and now TD Ameritrade Since Scottrade got bought. TD Ameritrade seems to bring up a new issues pretty quickly. I got a preferred trading rate at Scottrade. TD Ameritrade, it’s $6.95 per trade. No other downside though. Good luck

    2. Thanks much. I think I have seen positive comments in the past about TD Ameritrade on this blog when it comes to being able to purchase issues which Fidelity restricts. I will take a look at Schwab too.

      1. Retired, TD has done so well for me that I have never even called them. They are on those IPOs very quick. Plus for me they allow me easy access to grey market foreign issues that my other two brokerages cant or wont handle. I also like the appeal of a local office to touch base with. I have seen how valuable it has been for me dealing with my then aging dad and their financial matters.

        1. Looks like I’ll being moving that money to TD. Thanks Grid for chiming in. I know you trade some issues that Fidelity won’t touch and it sounds like TD is your brokerage.

          1. Retired, you may want to check promos here:
            Comments posted at bottom suggest that TDAm will match competitors’ promos. I suggest also negotiating trade commission upfront as free trades do expire.
            I have accounts with four: ML (Merrill Edge), TDAm, Fido, and Schwab. They each have their respective set of pluses & minuses. My experience is that Fido and Schwab forbid buying Sec 144a restricted securities, whereas ML & TDAm do. ML requires confirmation via a message (txt or email).
            Another TDAm plus: once in awhile offers attractive short term notes that others don’t, such as a recent 3% Citi 12-mo note that pays monthly, and attractive short-term TD Bank notes (safest bank in NA; 11th in world according to that list of top 50 safest banks). My two peeves with TDAm are the lack of free trades (long term) and that the yield of MM (PTTXX) for sweep account is lower than at other brokerages. But TDAM’s pluses should render the minuses moot.

  2. In the past 2 1/2 months the yields on CDs, Treasuries, and Corp bonds have declined about 10%. This has coincided inversely, as should generally be expected, with the value of income securities. Seems little likelihood of an eminent rate increase but the unresolved economic problems are back in focus and now pressuring prices on risk basis. Grid, “the world is ending” outlook for PCG seems to be fading for now and that means an even more favorable outlook for SCE issues, which I agree with. I bought favorably a couple weeks ago. I have no plans to sell anywhere close to this level but no doubt some twists and turns lay ahead.

    1. P, I did something I normally dont do. I bought earlier and then flipped a few days ago off the initial spike. Then it bounced higher and then receded briefly back to my sell price and so I went back in at my sell price and have road the wave higher again. Their finances are in no immediate danger and they have the means to address financially their fire issues. In fact they just raised the common divi. Im still trying to resolve my bank/ute imbalance and selling SCE would only aggrevate the situation, so I will ride it out. I have brought in Fortis, Canadian Utilites Ltd, and Emera ute preferreds to help but its not enough. I sold an over balanced lot of NI-B at 26.95 but only bought back a partial amount 50 cents cheaper this week. Was wanting it to drop more if possible. Buying a slug of JBK today at 25.85 and some yesterday didnt help my problem, but right now it represents decent relative value.

      1. I got in 7.1% yield with intention to exit if 6.4% but may stay longer depending on what’s available to buy as replacement. I had another bond roll off the week and found my New Years resolutions to be somewhat elastic in buying some NSS today $24.65. I am expecting it to be called before long and so I viewed it as kicking the can down the road.

        1. P, 7.1% was about what I got in… 6.4% is getting close. I dont know how much more price momentum there is as their yield is getting close now to less percieved risk issues. If CA has any proactive legislative relief they would go to 6% I suspect and maybe a bit below in current yield environment. They wont see par though, 5% is too low. I would be fine holding here with stable price point though.

        2. P, I just punched out of SCE-L. Made some good coin once and flipped last week. Got back in 2 days ago and flipped $1.50 a share higher on top. It may go higher but I am pleased locking down the gains again for a second trip to the well.

          1. Nothing wrong with making good money. I’m still holding, nothing else I want to buy right now and I think it’s possible to continue up another buck (yield 6%).

            1. Yes, I have seemed to encounter that problem myself, lol…Cant buy Canandian Resets out of dump hole TradeKing…In fact this brokerage is such a dump one cant even buy NI-B on it…They call it NIPRB when for them it should be NI.B. They dont even assign correct tickers to their own trading platform…Such a dump!

                1. I have 2 other brokerages so usually its not a problem. Not looking to buy more NI.B yet, just citing an example. They have helped me out getting a few quirky ones that other 2 couldnt bag. But largely after a couple years the main top reason I still keep it is I am too lazy to fill out paperwork to shut it down and transfer.

            2. P, I found the SCE-L money a home. A tip from a fellow poster here, and I think it is a good play…AGO-E, bought a slug at 24.42. This is a par 6.25% baby bond. Compare to sister AGO-F which is a 5.6% issue and is at 24.95. This makes no sense and look at trading volume on E versus F, huge difference. E had 300,000 and F had 8,000. The charts of these 2 the past month are exact inverse to each other…Lowly E heading up and F went down. This looks like a classic liquidating position….I have owned AGO-B on several occassions so had researched this outfit enough to know I am comfortable owning it. And at worse I am stuck with a high quality long dated past call bond rated issue of 6.4%.

              1. Thanks, I’ll check it out. I got a big position in B last December $24.80 but wouldn’t be opposed to adding AGO 6.4% at below par.

  3. I hope SCE-L isnt done peaking. Up 2.3% today and 64 cents since I bought again yesterday. Now if I had any sense I would sell, already, lol.

  4. The same looks true for the common stock market. Earnings announced in Jan/Feb have been poor, still a way to go on China trade deal, no budget deal in DC, and debt ceiling approaching. Nothing to drive that market higher either.

  5. I believe the Amtrust issues get delisted tomorrow. My guess is the company will stop paying on the preferred but the debt issues will pay for now. Takes longer to weasel out of debt issues.

    This is a total lack-of-character company.

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