Kind of a Calm Day

After opening up about a 1% lower stocks have been pretty much trending water–folks don’t know whether they should be buying or selling. I am just watching–haven’t bought or sold today. Of course the 1st time unemployment claims were terrible–but we all knew that would be the case. I will really be interested in the April employment numbers to be released late next week–they will be terrible–we all know–just how terrible is the question.

I have been watching the investment grade Utility/CEF spreadsheet just in case a bargain springs up–but no such luck–not really much available in the investment grade area that anyone could call a ‘bargain’.

I did take a look at some pretty respectable earnings from Site Centers (SITC)–an open air mall company. There earnings were above last years 1st quarter and they had sold a their holdings in a joint venture and banked a nice $141 million in net proceeds. The company has over $500 million in cool, hard cash in the bank. Additionally they suspended their common dividend–a smart move I think as this quarter will not be so impressive–it is nice to see someone with that much cash move to preserve assets during a period of uncertainty–obviously the common holders are less impressed than I am.

SITC has a couple perpetual preferreds outstanding with current yields in the 8% area–trading around $20/share. The preferred shares are rated Ba1 and S&P at BB–so NOT investment grade by any means, but maybe on the watch list, but only at much lower prices. $500 million in the bank will go a long way toward getting them through the storm.

Heading toward the close I suspect we might see a larger market move–whether it is higher or lower is anyone’s guess.

72 thoughts on “Kind of a Calm Day”

  1. Question for all of you this morning. Are you happy with your broker and if so what are the big pros and are there any cons with them??? Iam very unhappy with Schwab. I may post this again when Tim chimes in later today. Thank You for any valuable input you can give. I find anymore that working with Schwab is about 3 times worse than working with Walmart. And if you are really happy and very impressed with your firm then I would ask that you please share their names, and what office, etc etc. Thank You.

    1. Fidelity – won’t let you trade some FtF issues w/o calling in
      Merrill Edge – forced me to dump issues they had sold me. I despise these guys.
      TDAmeritrade – scolded me for using a different person when the one I was dealing with was out of the office
      Vanguard – not for trading

      All in all I would say I like Fidelity best. They and Vanguard have best bond price/selection online. Merrill is easier to trade floating issues with since they do a simple text validation.

      But they each have their strengths and weaknesses and I keep a little money with each of them. I think you will find a lot of people here do the same.

      1. Scott – Did TDA call you to scold you? I’ve not experienced anything like that…. I do have a local rep whom I find to be pretty much irrelevant however. She’s told me things I couldn’t do that were easy to do once I called the normal national call in number and spoken to whomever answered. I am in the Private Client Group if that makes a difference. I’ve also never had any trouble picking up a topic started with one rep then talking to another who picked up from notes left by the first rep…. How odd..

        1. There is one particular person who handles a particular type of product. She was very offended that I placed an order for that product when she was out of the office even though it was the last day to place such an order.

          The scolding was via e-mail. She took offense that she went out of the way to find the information for me but someone else got the order so I assume they work on commission. But I thought that was very unprofessional. I need to make investments when I need to make investments. And I am nice enough I will go out of my way to use the person who helps me if they tell me it is a matter of commission — which she did not. I even told the person I placed the order with who I was working with just in case.

          And yeah, I have had some contradictions between the local and national offices too. A brokerage is only as good as the person you are dealing with at the moment I guess.

      2. Scott, totally agree with you on Fidelity. Not being able to buy a FtF online is nonsense. If they are that worried about it, simply have me check a box saying I’m aware of the risk. Calling a trading desk is an option of last resort, especially when the markets are moving fast and considering online trading is the most efficient way to go. Trying to get a transfer from TSP (federal employee retirement funds) to Fidelity was also a major hassle. They insisted on doing things their way, while TSP made it clear they would only allow it to be completed on their terms. Came close to dumping Fidelity over that one. Would really appreciate getting the FtF trading issue resolved.

      3. I agree Scott. All brokers have their quirks of what they do well and what is annoying.

        I used to have a number of different accounts spread around but consolidated all with Fidelity several years ago because I found them to be the best. The only annoyance with them is the having to call in to buy FTF issues (except when in the grey market when you can place an order online). But I don’t buy a lot of FTF after they are out of teh grey market window – so calling a handful of times a year is no big deal for me

    2. Chuck and Scott, thanks for posting. You may want to consider re-posting on the Broker/Brokerage Info link located under “Additional Links” in the right-most column of this website. It would be a good thing so that others can find under the right topic in the future. Thanks again!

    3. I have accounts at Fidelity and TD. Like many others I have a problem with Fidelity and the FF issue. I will not call the desk. I buy it in the TD account. That being said, I prefer to trade in my Fidelity account. I prefer the Fidelity Active Trader Pro over the TD Think or Swim platform.

    4. Hi Chuck,
      Here’s my 2 cents on brokers….
      Used Schwab for 20 years but moved to Fidelity 3 years ago because their bond trading platform was so much better than Schwab. BUT then over the next 12-18 months I found out how they restrict trading in various preferrreds and what a poor job they did on IPOs in the gray market. Also, their bond desk refused to look for bonds outside their network unless I bought 50 minimum. I typically buy 25-30. But the final straw for me was when they sent me a tax bill for UBTI on MLPs in my IRAs (and I do understand how UBTI works) and refused to even discuss it with me. They basically said we have filed the tax forms and it’s between you and the IRS now. Moved everything back to Schwab the next day.
      Schwab is not perfect but no show stoppers for me at this point. They have been responsive to my issues and always can find me the bonds I want and have very few restricted trading issues. They also just starting offerring limited margin in IRAs which is a nice feature. I do have a good local VP here in Akron, OH and I do have access to their head of bond trading although I rarely call him directly. Hope that helps. Good luck
      Cheers
      Gary

      1. To be fair Gary – every broker is required to complete a 990-T for any account they are custodian of with over $1,000 of UBTI in a year. Fidelity is just following the law. I understand some brokers are lax in this area

    5. Chuck P: No, I am beginning to lose all confidence in Schwab and thinking very seriously about going elsewhere. Up until this year I think they were pretty decent, but my problems started with them in January and are ongoing. First issue with them is the online transfer function on their website will not let anyone 70 1/2 or older contribute to their IRA. It states that is an IRS rule. Well, yeah, it was until 4 months ago. The Secure Retirement Act changed that to where there are no age restrictions as long as you have earned income, the law become effective Jan 02, 2020. After 10 phone calls and 20 e-mails no change still unable to put money into IRA and wife’s spousal IRA. They did change the transfer page, but that part is still wrong. I gave them a zero on one of their surveys, someone called me and said that wasn’t changed because they don’t have all the information for the CARES act yet ! WTF does that have to do with the Secure Retirement Act ? Also, I did not get a monthly dividend on one of my CD’s. I called them, the guy said yeah, I don’t see it either and I wasn’t the first to call about that. Nice, so fix it. Nope, he had to “research it” and would call me back. Never did call me back, so I sold the CD in the secondary market. I am retiring at the end of this year and I need to move a fairly large 401K from my employer with VOYA, but it sure isn’t going to Schwab. Probably Vanguard.

        1. alpha8: I know this is supposed to be on the Broker thread, so this will be my last rant here, but one other thing I forgot. One of the fixed income guys said he could make the IRA contribution transfer manually for me until the website was updated. I was pretty skeptical so I had him do a small amount ($500) from my checking account into my IRA as a contribution for 2020. About 40 minutes on the phone whilst this guy was trying this and that, lots of elevator music and Schwab commercials. Finally he gets back online and says “done” ! I should see it within 3 business days. I did, it went into the IRA, but the history journal says “IRA ROLLOVER CONTRIBUTION”. Not sure how that gets fixed.

    6. @Chuck P

      Re Brokers.

      Well, if you want a bare bones brokerage, try Vanguard. I initially went with them years ago because I’m heavy in their mutual funds. Nearly every task with them is multi-stepped.

      Ive been with Schwab around 10 years, and I’m pretty well satisfied. For some things the site is a little unintuitive, but their phone support is outstanding. Everything else is pretty smooth, I like that they have a bank also…most on-line brokerages don’t.

      I recently reopened a non-funded account with Fidelity, at their invitation. I think their research is top notch, better than Schwab’s. Their platform for displaying investments, and trading tools fall behind Schwab.

      What specifically don’t you like about Schwab?

  2. Does anyone have any thoughts on MNR-C?

    Odds of this being called on 9/21?

    Safety of this one in the meantime?

    Selling below par going ex 5/14.

    Thanks

    1. Bill W : I sold a few hundred shares late January as it was near $3 a share over what I bought it for. I believe that was early 2018. Took the money and ran. I think they will be ok and continue to pay the dividend. Only thing I didn’t like was they had some big losses in their investment portfolio, mostly other REIT’s and BDC’s and the other issue was they are heavily dependent on one warehouse customer (FEDEX), would like to see warehouse footage more evenly split. I don’t think it will be called on 9/21, not sure they would get much interest if it paid less in dividends.

      1. Thanks Bill S – I plan on looking at their AM presentation in the near future for any hints on the preferred. In the meantime I am enjoying the 6+%.

  3. MVCD dropped today because of a large $2 million sell block trade. It is not clear whether the sellers know something or just had to sell for other reasons.

    1. the common has been chugging back up so i have been surprised at the slight pullback on the notes this week.

    2. Usually that’s a buying opportunity. Seller is probably a fund manager who is either lazy or forced to sell because of a restrictive charter. Especially on the last day of the month he may be rebalancing. But there’s always a risk that he knows something you don’t. I’d check the common and the other preferreds, if all is fine then I’ll buy.

  4. I bought a bunch of the new Boeing bond today. They came out with a 5, 10, 20, 30, and 40 year bond . I bought the 40 year bond with a 5.85% coupon at par. I have to say I really hate the way these bond people do business in general. All morning long the ” B S WHISPER NUMBER” was 6.45%. Then 3 hours later they change it to 5.85%. The bond guys/underwriters rank right up there with the Mafia in my opinion. Shakedown artists. I sure wish I would have bought a whole lot more of AAPL back in March when it fell down to below $227. I bought some (220 shares) but Iam kicking myself in the —– today as it hit $294. I knew at the time it was a world beater company. Well life goes on.

    1. I feel the same way but
      just for some perspective………….

      March 2009 – nobody was buying anything because the world was ending – just wait it may go lower

      March 2020 – nobody was buying anything because the world was ending – just wait it may go lower

      In January I was thinking about the two sides of the Nov election and buying high yielding income securities – the March crash happened so fast I did not have any capital to deploy and the securities I had been buying were under water – all of them

      Just have cash for the crash of March 2030 I guess……………..

    2. Where did you buy these bonds? Do you have to call a broker?

      I have owned preferreds and baby bonds online but never speaking to underwriters. I did not see then at Fidelity or Schwab online under new issues earlier AM

      1. Hi “mSquare”; If you are interested you need to call your broker first thing in the morning or if they are still open right now. I got an early morning email about 7:30 this morning and put my order in right away. Boeing sold about $25 Billion of bonds in different maturity tranches. I always go for the longest maturity (40 Years) because it has the largest coupon. I was somewhat dissapointed after being told the “whisper number was 6.45%” and then it came out at 5.85%. But thats the B S game they play. I was told they sold out in 2 hours, but check with them as you never know.

    3. Chuck,
      I hear ya’ on AAPL. I bought a measly 4 shares and then before I turned around ready to buy more, it ran up 10% and now sits up 28%. I keep lowballing buys but I’m not chasing it. It’s down after-hrs after reporting the quarter. Maybe I’ll re-adjust and try to buy more tomorrow if it dips. For the time being, I’m more than happy in MSFT, which I bought near $55. SBUX is another newer common buy as is XLK and JPM. Added to VZ as well. Finding many more bargains on the common side of the pond than the fixed although I did grab more DUKH, PSA-E, NEE-I, and DTJ today.

      1. Affinity I read good things about apple’s new Iphone SE. Free lance writer compared it to the Iphone 11 and outside a couple camera options and battery life comparable to a Iphone 7 , she liked it very much. Considering a price of 400.00 to 1,000.00 I could live with that. Of course 7’s are now selling used for 50.00

    4. I think that’s gutsy Chuck! Not knocking it at all because i own a lot of bonds and am always looking to add but Boeing at 40 years, i think you’re right, the coupon should be way higher because of the duration. I bought Delta bonds that mature in a year, because i know they have enough cash to last that long, and the ytm is 6%+. It’s still available and i think it’s one of those hidden gems buried in a pile of you-know-what! check it out.

      1. Franklin; I fully agree with you my friend. But my wife and I live off our coupons of our close to 75 holdings. We will pass it all onto the kids when the Big Guy Upstairs calls us home. Hope you are “ SAFE & SOUND”.

        1. ChuckP, Well, leave the Boeing bonds but suggest not booking that passage via 737 Max. I mean, you want to make it there.

          1. One thing to consider when you own individual bonds is that you MUST keep track of interest payments that are due. It varies from brokerage to brokerage but sometimes interest payments either come late or never show up. It is worse for muni bonds than corporates or US treasuries. I usually give the brokerage an extra week and if the payment does not show up, I will contact them. If you use a portfolio tracking problem like Quicken, it only tells you when you received an interest payment. It does NOT flag you when one was missed. This is VERY time consuming when you have large portfolios of individual bonds, but necessary IMO.

            1. To Tex the 2nd; Fully agree with you. I spend an incredible amount of time keeping track of the semi annual and the quarterly payments. And for sure sometimes they don’t show up “on time” and I have to call. Its for sure alot of work but if I go with a big name brokerage they are going to want to charge a management fee of probably between 75 basis points and 1.25% of my assets. So with Schwab I don’t pay any of that.

              1. This is one area where Merrill excels IMO. They have a feature called “estimated investment income”. For the forward looking 12 months, they give you a listing of all divvy and interest payments by account & by holding. Outstanding for use by those that live off of the income their holdings generate.

                For any month looking out from your current month, you can see every payment and the date it’s expected. I take what it shows and plug that data into a spreadsheet. I then match it up to my “activity” log. This way, I’m sure to not miss a payment one way or the other. It’s not a full proof plan, but almost. Not believing Social Security will be there for me when I deserve it, I’ve built my own Self Security support net, meaning my investment income and being able to see how that’s flowing for the next year from today – is invaluable to me.

                Schwab recently introduced something similar from what I understand but from what I saw, it’s nowhere near as granular in detail to what Merrill has.

      1. Amen, Bob, I know I could trust the Mafia better than the bond desk thieves, for a fairer quote. Anyone who has tried to streamline efficiency into the bond market like stocks today, have mysteriously disappeared and have never been heard from again.

  5. Sold some 5% “sock drawer” preferreds, the price is getting up there. USB-O, GAB-K, IPLDP. No risk is priced into them now.

    1. Martin, at least you are selling preferreds that actually pay a dividend. I bought some suspended dividend preferreds today, lol. I did however rip the cord on FPI-B for a quick $1.35 a share on a small ball 500 purchase late last week. It could go higher, but I usually dump when one jumps rather quickly, as its not a core hold anyways but a spec flip.

      1. I frequently cash out too soon. One of my favorite quotes is “Nobody ever lost money taking a profit.”

        Why is selling prefereds that pay a dividend better than selling non-payers? I’ll be missing out on the dividends.

        1. I just meant to infer I was sliding down the risk scale with preferreds. But this is in the high risk bucket, so I have some latitude there. And I have done well small ball wise here the past couple years. But its just a couple weeks from “show time” and I am getting my seat at the table for the results.

      2. Grid, this is the question i’ve been wanting to ask: looking at all preferreds w/suspended dividends, which ones do people think will come back. Yes, it’s that Las Vegas gonna-hit-it-big mentality I cant’ shake; sorry but i was raised behind a horse race track. Any thoughts?

        1. Franklin, This one is coming back with certainty if the 66% of the litigants vote the affirmative to the proposal. The court has already shown the accrued deferral of preferreds to be reinstated. Early votes turned in are clearing the threshold I was told, but about 3/4 have not been submitted, so anything can happen. This is in my wheelhouse sector of comfort so I am playing. Its not a home run play anyways. More like a ground rule double or potential strikeout. 🙂

          1. Are you talking about the PGE preferreds Grid?

            I’ve bought a few of the A-shares on the strength of that SA article outlining potential gains if they clear bankruptcy.

            We’ll see…

            1. Ya had to go there didnt you Citadel, lol. Yes, I made a big relative kill a couple years ago when it first got suspended knowing last time it went bankrupt the preferreds were paid in full. Then I went back in on smaller amounts and it dropped and I lost a bit and got nervous and sold and lost a small amount and largely forgot about it. Recently started playing it every now and then for very small ball amusement on A series…Then another online friend told me about playing the series’s against each other on price movements and I have recently doing that. In fact dumping G series today for a quick buck on a couple hundred shares. A series cratered late in the day and I got 700 shares at 25.45-55 (missed the dump spill below that price). I just recently last month bought at around 26.50 and sold again at 27.50 hoping for another entry point lower and got it.
              But its approaching show time. It could get rocky fast if victims dont vote in affirmative. California clearly blinked and dont want this in their lap as Gov. did a 180 and agreed to terms after Corona broke out. If they can exit pre June 30 and get in on fire insurance fund the uncallable Series A ultimately will sit around $27 and crank out an accrued $4 plus in divis and modest capital gain ultimately using the SCE preferreds as the markers. As PCG preferreds will be about BB+ with a projected BBB out of gate debt rating.
              The series all really need to be looked at as they can all trade out of sync at any given time I have discovered, but it takes some work… But things could go south quickly if any road blocks including the Vote goes bad. Should know in a couple weeks…And I assume a last gasp second effort shortly after if that fails as they have to get out of bankruptcy by 6/30 or they cant get into that fire insurance fund that is needed.

              1. I got in on two of the 5% issues when they were down at just under $19.

                I am holding onto them for the ride I guess. I don’t see California wanting a utility mess on top of a pandemic… but it is CA so you never know.

                Also looking at some calls on the commons in anticipation of their making it out of bankruptcy.

                1. Scott, I never had the patience to just bought and held through it, but of course your entry point is a great one if it gets pulled off.
                  Everything in the series’s pricing is messed up. Either the 6% going down is correct and the others should fall in suite or the 6% will have to go back up. Basically at my last rodeo buy yesterday, its simply a play to get an uncallable 7% utility preferred, with most likely a small bit of cap gain thrown in….Or an ass beating, take your pick.

                  1. Well, what is one more spanking after all we just had…?

                    Seriously, I can’t trade in and out because I have the worst timing. If I want to do that I will usually buy extra and play with it while holding the core position. My theory is if I can’t feel comfortable holding it I probably shouldn’t be buying it anyway. But on the other hand, if you can get the same gain while spending less time exposed to the market then that is always better too.

                    BTW Grid, where are you seeing the voting results so far? All I saw was some regulator was going in for another bite of the pie to get a little more cash from them before letting them open up again.

                    1. Scott, here is the early voting….
                      In late 2019, Apollo and Centerbridge were competing against one another to strike a lucrative deal with Watts and other attorneys for wildfire survivors. The Watts group’s client roster includes 16,000 of the estimated 70,000 PG&E fire survivors who have filed claims in the bankruptcy. Watts was heavily involved in negotiating the $13.5 billion compensation deal that lawyers for fire survivors brokered in early December, according to people involved in the case and Watts himself.

                      “I wanted to disclose to my clients that backdrop, of who I met, and give them the full color of why I thought one deal was superior to the other,” Watts told KQED this week.

                      PG&E fire victims have been casting ballots on the bankruptcy deal since April 1, with voting continuing through May 15. The plan requires support from two-thirds of survivors who vote. Watts says nearly 13,000 of his clients have voted “yes” so far.
                      https://www.kqed.org/news/11813173/attorney-for-pge-fire-victims-funded-by-wall-street-firms-hes-negotiating-against

              2. It sounds like the PCG-A should reach at least $31 on the news of a successful vote, which is currently underway as I understand it. That might make a good exit point for someone like me who bought a few speculative shares below $24.

                1. Citadel, that is where I pencil it. The accrued divi is about $4 this summer. Back that out and that leaves $27 for 6% noncallable. Using SCE-G as a marker that would put it around $27 and assumed BB+ rating from BBB new debt. That would be a good exit point, but I may keep mine if things go good and a big spike doesnt force my hand. It sure had a nice bounce today. I guessed yesterdays late dump just dragged it down. I had to go into after hours trading yesterday to get the last 200 shares at $25.55 share after buying 500 right before close.

        2. Franklin, I forgot you can PM me on SA. Its just something that needs to be explained fully, and I dont want to give people short info on a bad chase.

    1. msen–got some of that already and will buy more I am sure, but thinking these may tumble further providing a good opportunity.

  6. Thanks for the update Tim. Just swapped my IPLDP for NEE-I with a 30 cent credit. Goes x-div on the 13th.

  7. I am new to your site. I have been watching Site Centers for a couple of weeks. Rated as overweight with a target price of $15 by MS for the common. Without any factual support I suspect that the new management (or new CEO) will use the cash and additional $250 MM line of credit to make some deals. You think some malls might be for sale now? With the divestiture, prior year statements may not be helpful.

    1. George–I think there are folks scurrying to sell or find financing–BUT I think the real deals will come 3-6 months out. On the other hand companies up to $5 billion in revenues are eligible for the new Main Street Lending from the Fed–this may float a bounce of ‘zombie’ companies for a long time. Looks like the new management is well focused.

  8. F-C is yielding 8.8% @ $17.04, with a recent S&P rating BB+. I also saw that S&P has a “recovery rating” of 65%. If I guess right, that means that in the event of bankruptcy they estimate you would get back 65 cents on the dollar? Would that imply a reasonable value of ~$16 even if Ford went bankrupt? Which I don’t think will happen, so it could well return to January levels above $26.

    1. That’s what they’re saying, but I would be skeptical of a 65% recovery rate unless I was holding senior secured debt.

      Unsecured debt recovery rate usually ends up being a lot lower than that.

      1. You might want to adjust the 65 percent for waiting time and risk. Unsecured creditors aren’t entitled to interest while they wait

    2. GM pfds went kaboom with GM common 10 years ago. Ford is now a major concern too. End of last year one market pundits ‘Top 10 surprises for 2020’ included Ford needing a bailout. IF that happens their pfds are going to get manhandled. I am worried!!

    1. Been sitting on AGO-E for some time now. Holding for the yield, not a quick flip. Got smoked today. No idea what that’s about.

      1. I’m wondering if the market is starting to fear how much AGO will be on the hook for if we starting seeing muni bond defaults given the financial stress on communities and states. That has been my concern and why I’ve been on sidelines watching AGO-E.

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