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Laggards Keep Jumping

Have you noticed? Have you noticed that while many of the preferred shares and baby bonds have moved sharply higher there are always laggards–some that seeming do not move higher regardless of interest rates. Someone asked about why Greenbrick Partners 5.75% perpetual (GRBK-A) was moving sharply higher–was there news? There was not news that I could find, but a writer on SA wrote an article on this security on 1/16/2024. Really that is all it takes to start ignition of a rise in share price. 1) Locate an undervalued security 2) write an article 3) wait for article traction 4) watch shares levitate. This is pretty normal – the share price was going to rise sooner or later with a 8% yield – it was just a matter to time and the article just boosted it quicker.

Another good example of this was the article “My Fixation with Bridgewater Bancorporation Preferred Stock” I wrote on 11/20. I ended the article with this sentence–Note that I am ‘talking my book’–this is not a recommendation, but at 9.55% current yield the risk/reward seems good – I would think a 10-20% capital gain is attainable in the next 3 months or so (plus dividends). The day I published that article was the bottom–down around $15.40–now trading at $19.81. It only takes some reasoned arguments to launch an undervalued issue higher.

As I noted yesterday I nibbled a little of the Sirius Point 8% Resettable preferred (SPNT-A) last Friday–this one has one more nibble left in it (for a full position). I expect this security to remain ‘pinned to par’ (well it isn’t really par–more like liquidation preference) for the next 2 years. While the issue is perpetual – with a reset that is likely to be over 10% the issue will be redeemed in 2026. I had a order entered for a nibble of Brighthouse Financial 6.6% preferred (BHFPA)–no execution–may try again today.

Well the 10 year treasury is trading at 4.06% this morning after the treasury announced they would need to borrow $25 billion less in the quarter than previously anticipated. Actually kind of a joke–$25 billion is not a meaning amount in the big scheme of the federal budget–just lots of money out there chasing investments–but in the last number of months ‘all news is good news’ and again our accounts hit record highs yesterday. There will be a day of when we get slammed–in the meantime enjoy the ride since we have no ability to predict the day of reckoning.

30 thoughts on “Laggards Keep Jumping”

  1. Reading SA is like…… watching the news. I don’t do either!!

    I did see that yesterday the FDIC said they’d make it harder for banks to merge. I kid you not. The same FDIC who shafted investors to reward uninsured depositors in FRC and SVB. They toasted the banks and have no plan on encouraging recapitalization. They haven’t articulate any plan. Except to roll out Basel 3 when they see fit. Last thing we heard was….”We’ve organized a 30 billion dollar credit facility from all the top banks”…2 months later the bank failed.

    1. I don’t think the FDIC “shafted” investors in FRC and SVB. I’d say bank management did by totally blowing duration risk. C’est la vie.

      1. Actually the fed knew about the risks and ignored them too. ALL of their holdings were on computer screens. The occ and fdic can NOT claim ignorance.

        And two days later looks like NYCB is paying holy hades for buying Barney frank Signature bank (fdic orchestrated)… . So just like the 30 billion dollar (fdic orchestrated) loan, new York community is technically on the very edge of failure. Where is the Treasury now?

  2. B. Riley Financial Announces Partial Redemption of 6.75% Senior Notes due 2024 (Ticker: RILYO)

  3. Yes – just noticed, my collective portfolio is up 2.11% this year so far. I don’t expect that rate to happen every month all year but, it’s a nice start. Laggards have indeed caught up for the most part.

  4. I have a decent sized amount of $$$ freeing with a treasury maturity 1/31/24 so need to roll somewhere – bargains are getting harder to find. Maybe some CDs to tide me over – looking like 5.2-5.3% for out a year. Maybe part into a nice preferred…

    1. With cash now, I am going for 4 and 8 week Treasuries, and biding my time. Over 5% parking place.

    1. Treasury has some obligations with interest tied to current prevailing market conditions. These include the social security trust fund, the TSP G Fund, and floating rate notes. Presumably lower rates at an auction can affect these obligations. I can’t believe these obligations are large enough to tip behavior at Treasury one way or another, but seems worth noting.

      1. Don’t forget that treasury is a political organization. The current President, who is running for re-election, appointed the treasury secretary, and a bunch of the people further down in the organization. They all want to keep their jobs for another four years, so they will do what they can to try to make things look good for the president first-and-foremost. Creating numbers that can “sound good in the press” and can be used as talking points in the political process is a simple starting point.

        Sorry if this sounds political, but it is true of treasury officials regardless of which party they are in/is in the White House.

          1. “But they cannot do anything illegal either.”

            Wow, Yazzer – what color is the sky in the world you live in?

            US politicians from both sides of the aisle have been doing illegal things for about 250 years. It is just the muck we choose to tolerate from our government.

  5. Sometimes that Greenbrick author, Pacifica Yield, articles fall into my feed at SA when he writes on a ticker I follow or own. Ok stuff, nothing great. Yes one of these articles now or other mentions does drive interest. Remembering the ‘good old days’ when preferreds/babies were a more obscure part of the market like closed end funds. Now we have to work harder and contend with the etf buys/disgorgements! Really only looking at one name now; usually FED week and subsequent ‘spin’ where they confuse the heck out of the message (!) gives us some bargain chances. We’ll see. The Whirlpool and UPS reads weren’t great. I will write on my thoughts for any feedback on my pfd stock in the Sandbox. Thanxx Timmo!! Bea

    1. Thanks Bea–Timmo huh. There was a little diddy back in the 1950’s and 60’s–Timothy Timmo–my older brother teased me incessently wit it.

    2. I always enjoyed Norm Roberts writing on SA back in the good old days. Great entertainment, and he talked about a lot of preferreds that weren’t being touted by the scummy writers on SA.

      1. Private, you know the difference between PendragonY and Norm? Unlike PennYlessY, Norm freely admitted he knew nothing. But he was very practical with the “smell factor”, which is typically more important to saving ones wallet, unlike PennYlessY’s half arse balance sheet understandings. I remember trying to get Norm to understand that LXP-C was not callable even though it reached call date. I dont think I ever got him to understand, ha.

        1. Back in my days on SA, I too enjoyed reading Norm’s articles and chatting with him. Interesting stuff but he swung heavily for the fence. I don’t mind controlled risk but many of his plays a bit much. I wouldn’t be surprised if he made/lost small fortunes.

          1. Theo,
            Norm said he almost went broke once and it shook him to start investing the way he wrote about on SA. He credited his heavy swing for rescuing his portfolio.

            I read him mostly for the entertainment value, but he had some good finds too. Best part was that he really didn’t take himself too seriously (at least on the investment side).

            1. Private, back when I actually was active on SA I reached out to Norm Roberts. He has a very interesting early background in NY, then made his way down to South Florida and did very well as a private lender here. We live near each other and went out to lunch and dinner many times. I was at his beautiful home on a waterway right off Ft Lauderdale Beach and we had many deep conversations about the world markets, shared our portfolios with each other, the Fed, politics (he’s VERY opinionated and was the first person I believe banned on III here). Sadly, I am the one that told him about III and shorly after the III fallout we stopped communicating. Does he still post on SA?

                    1. DEFINITELY no reason to reconnect (too radical) and fighting a sapience skirmish in his mind. I just wanted to see if he was still above the green grass and appreciate your help.
                      Some cause happiness wherever they go; others whenever they go.

        2. @ Grid- John PenYdraGoon, the man with sooo many comments yet says so little. Remember T is going to over $50 per share

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