In the last 3 minutes of trading today numerous big blocks of the Spire 5.9% perpetual preferred (SR-A) were traded dropping the price from $23.85 to $23.40–shares did bounce a bit in the after market to the $23.59 area. This is a current yield in the 6.3% area. There is a chance that if one wants a few shares at a discount Monday morning may be the time. The drop was on a multiple of normal daily volume.
Spire is a natural gas distribution company in Missouri, Alabama and Mississippi. The preferred shares are now rated BBB- (investment grade) by Standard and Poors. These shares would be an excellent safety buy at this yield–so course they have the risk with being a perpetual issues.
We have an overweight position in this issue and will not be adding more.
Last Friday was in fact a busy day for PFF on its end-of-month rebalancing. Here’s a summary. Please forgive the lousy formatting.
+++++
9 issues with 6 figure sales
RC READY CAPITAL SENIOR NOTES DUE C -296,293
BW BABCOCK & WILCOX ENTERPRISES INC -236,362
RC READY CAPITAL CORP -233,336
BA BOEING CO -200,746
C CITIGROUP CAPITAL XIII -156,675
BW BABCOCK & WILCOX ENTERPRISES INC -145,198
T AT&T INC -122,241
EQH EQUITABLE HLDNGS DRC REPRESENTING -121,163
COF CAPITAL ONE FINANCIAL CORPORATION -104,597
19 issues with >5% figure losses in value
BW BABCOCK & WILCOX ENTERPRISES INC -16.94%
RILY B. RILEY FINANCIAL INC -14.38%
BW BABCOCK & WILCOX ENTERPRISES INC -12.52%
RILY B. RILEY FINANCIAL INC -11.99%
BW BABCOCK & WILCOX ENTERPRISES INC -11.07%
RILY B. RILEY FINANCIAL INC -10.56%
QVCN QVC INC -9.40%
RILY B. RILEY FINANCIAL INC -9.12%
RILY B. RILEY FINANCIAL INC -8.89%
QVCN QVC INC -8.87%
QRTEA QURATE RETAIL .0 CUMULATIVE REDEEM -8.71%
FOSL FOSSIL GROUP INC -8.21%
PSEC PROSPECT CAPITAL CORP -6.81%
PCG PACIFIC GAS & ELEC CO -6.22%
SLNH SOLUNA HOLDINGS INC -5.84%
INN SUMMIT HOTEL PROPERTIES INC -5.60%
CIO CITY OFFICE REIT INC -5.51%
FCNCA FIRST CITIZENS BANCSHARES NON CU -5.32%
TRTN TRITON INTERNATIONAL LTD -5.08%
6 issues with 6 figure adds by PFF
JPM JPMORGAN CHASE AND CO DS REPSTG T 102,035
JPM JPMORGAN CHASE NON-CUMULATIVE PREF 105,870
JPM JPMORGAN CHASE DRC 107,964
JPM JPMORGAN CHASE & CO 161,826
JPM JPMORGAN CHASE & CO 167,882
MSTR MICROSTRATEGY INCORPORATED 199,600
4 new issues
FOUR SHIFT4 PAYMENTS INC 5-May-25
NEE NEXTERA ENERGY CAPITAL HOLDINGS IN 15-May-25
TWO TWO HARBORS INVESTMENT CORP 13-May-25
WTFC WINTRUST FINANCIAL CORPORATION 22-May-25
Other stuff
PFF sold 17,440 shares of Spire / SR-A on Friday.
I’m happy to answer any questions about other issues.
Thanks ESW3
Where can we get this list ahead of the actual rebalance? Thanks.
Mo – PFF publishes its daily list of holdings in .csv format here:
https://www.ishares.com/us/products/239826/ishares-us-preferred-stock-etf
Thanks, ESW3. It’s good to know what PFF is doing. It also reinforces what a bad idea a preferred tracking etf is. Gag!
Thank you for these information how are you reaching the data are you using any platforms or are you collecting your own data
Was their 17,440 shares sold of SR-A a large percentage of that position just before the sale ? If so, any speculation as to why ?
I am a holder…..and customer here in Missouri !
Appreciate any insights.
@ Mike – that 17,440 shares that were sold last Friday May 30, 2025 was out of total holdings of 809,431 the previous day, so about 2.15% of the fund’s total SR-A holdings. PFF’s benchmark index is the ICE Exchange-Listed Preferred & Hybrid Securities Index (Bloomberg ticker PHGY), which reduced its % weighting of Spire, Inc. on May 1, 2025 of 0.14355% to 0.13865 as of June 1, 2025, which would account for the reason behind the sale. As we’ve discussed here frequently, these end-of-month rebalances are simply PFF blindly following its benchmark index, PHGY.
@ EKO – I use Excel to process the PFF holdings numbers that I obtain from this web site:
https://www.ishares.com/us/products/239826/ishares-us-preferred-stock-etf
“PFF’s benchmark index is the ICE Exchange-Listed Preferred & Hybrid Securities Index (Bloomberg ticker PHGY), which reduced its % weighting of Spire, Inc. on May 1”
This is like legal front running….
Back up the truck and short sell it on the next to last day of the month when the quarterly re-balance occurs.
Tim, you indicated that you have an overweight position in SR-A and as such, would not be adding to the position. This indicates that you focus on diversifying your portfolio. But, in your laundry list you have 38% of the portfolio invested in CEF/Specialty Finance. Please help us understand how a 38% weighting in a single market segment is not in conflict with a focus on diversification.
Larry, I am not Tim and can’t speak for him.
I personally would feel comfortable having 100% of my portfolio in preferreds issued by CEFs, from a credit perspective. It’s kind of like saying I would be comfortable having 100% of my portfolio in mutual funds, which contain hundreds of positions, so they are inherently diversified, especially if you invest across asset classes for various funds.
And prefs of CEFs are even safer because they get paid before equity holders.
Of course, I would avoid the super speculative issues like HFRO.
I don’t rely on credit ratings, but you will see this line of thinking regarding their safety, backed up in the ratings of CEF prefs.. as high as AA IIRC.
LarryL–yes I have addressed that before–it is simply a safety position and for the moment I feel safer in that segment.
Just to tag on to my original note—this is now less than 38% as I sold a number of issues last week that were CLO related. I will recalculate today.
It’s a good question! Adding another piece that I don’t think I’ve seen mentioned in this thread, the important part of that category is “CEF” and not “Specialty Finance”. CEF’s are governed by the “40 Act”, which was a financial act passed in 1940. It puts rather stringent limits on the amount of debt and preferred stock that a CEF can issue while remaining compliant.
The result of this is that historically, no CEF has ever (yet?) defaulted on its debt or failed to make a mandatory redemption on preferred stock. As long as they can sell common stock to get back into compliance—even if it tanks the price—they will typically do so. This leads a lot of people to treat CEF preferred as equivalent to a (low) investment grade issue even if they are officially unrated.
This is probably part of the reason that Tim and others are comfortable holding what would otherwise be an “overweight” position. Whether this is actually a good idea is something we’ll find out in the next severe downturn. Almost certainly they are safer than a corresponding non-CEF issue, the question is how much safer they turn out to be.
Yes Nathan–closed end funds, in particular, with level 1 assets (stocks and bonds) which are readily valued (and most are rated A1 and A2—right now have asset coverage ratios of 260-800% right now. If any one of them has big trouble then the nation as a whole is in really big trouble and we won’t have to worry about our individual investments as the country will be gone.
PFF holdings
Spire quantity March 30. 829,000
Spire quantity May 30. 791,000
So it looks likely they just one of the big sellers, as their quantity reduction was only 1/4 of the reported volume.
CTA-B under $68 was another drop on Friday. Added some.
Why do we like sr-a I don’t understand it really are there much better options in preferred stocks. I think this one is one of the expensive ones. How can this be a better buy than wrb-e for example?
wrb-e is a baby bond as a starting example. While sr-a is a preferred. So how the income is taxed is a difference.
thank you for this insight
It’s a relatively safe issue in a relatively safe sector so 6+% Qualified Dividend makes sense for some investors. I suspect the price drop has more to do with interest rate projections. I added to my position and may flip if it goes back up otherwise I’m making money on the dividends. Only way to lose is if they default which is unlikely.
It makes sence thank you
EKO, most investors are looking to diversify their portfolio. SR-A is a utility company and WRB-E is an insurer. Both are considered good, safe buys in their respective business sector. I own both and added to SR-A at this price.
The other UTE that had a similar large block trade at the close was PCG-A which lost -6.2% to yield 7.11%. SR-A lost -1.8% to yield 6.3%. Obviously PCG-* has higher default risk compared to SR. If you are comfortable with the PCG’s, you might be able to pick up some Monday AM at an attractive price
These block trades reported at the close are typical for PFF. I think most of their trades are not MOC’s, but negotiated in advance and reported on the NYSE at the close. ESW3 tracks all of the PFF daily changes and can say if these were PFF trades or not.
List of all Prefs/babys/terms, not including coverts that have >=7.0X volume on 5/30 compared to their average 90 day volume
CSV format: ticker, ratio of 5/30 volume to 90 day, % range of 5/30 prices, % price change,
Sorted by volume ratio highest to lowest
BWNB,9.3,53%,-16.9%
BWSN,12.8,32.9%,-12.5%
DCOMP,9.2,8%,-3.2%
PCG-A,7.1,6.6%,-6.2%
SF-D,10.1,5.3%,-4.5%
CIO-A,8.8,5.2%,-5.5%
FITBO,7.3,4.9%,-3.3%
WAFDP,9.9,4.4%,-4.4%
TFC-I,9.3,4%,-4.1%
FULTP,7.9,3.7%,-3.7%
FHN-F,9,3.3%,-3.2%
EPR-G,8,3.2%,-1.2%
FTAIN,7.1,3.2%,-1.8%
AFGC,7.6,2.9%,-2%
MHNC,8.7,2.7%,-2.3%
BPOPM,13.2,2.4%,-2.8%
ASB-E,13,2.4%,-2%
HBANP,9.4,2.4%,-0.6%
EFC-C,7.8,2.4%,-2.6%
SR-A,9,2.3%,-1.8%
SF-C,8.5,2.2%,-1.7%
AUB-A,10.8,2.1%,-2.2%
RCC,7,2.1%,-1.6%
GAINZ,7.7,2%,-1.9%
RCB,9.4,1.7%,-1.5%
AGM-D,8.3,1.6%,-1.4%
BAC-P,7.4,1.3%,-0.9%
PMT-A,8.3,1.2%,1%
GAINN,9.5,1.1%,-1%
BAC-S,7.9,1.1%,-0.4%
CHSCO,12.6,1.1%,1%
BAC-N,10.7,1%,0.1%
BML-H,9.8,1%,-0.9%
BML-L,11.1,0.9%,-1.3%
BAC-M,8.9,0.9%,-0.4%
MER-K,9.9,0.8%,0.6%
BAC-B,7.7,0.7%,-0.2%
BAC-K,12.6,0.6%,-0.5%
PFXNZ,11.3,0%,-0.1%
(We had no trades on any of these in any account on 5/30 and will not have any trades on any of them on 6/2.)
Informative comment. Thank you. Was this a typical month-end rebalance or atypical from a volume / volatility perspective?
Just based on memory, am guessing this was the most volatile month end in at least 6 months.
Looking forward to the stats from the likes of Tex or ESW3 once the changes of the ETF holdings are available.
wfc-l, didnt make the list?
I bot some SR-A as well.
Many, many prefs got dumped starting at 3:50 pm on Friday, all due to month end rebalancing for the big funds. Some names were also bid up. It was great!
I don’t think we’ve seen EOM fireworks like this in a while!
Pcg-a down 6%!
Nimzo, That is a large dump. Normal volume is very thin so you have to be happy holding long term as it would be difficult to sell. I do own this myself at an average cost of 20.15
Looking at the T&S and having had a bid under the market for a few weeks (that got hit), sure appears to have been a market on close order. Not clear who would place such a thing into an illiquid issue, but I’d say some entity wanted/needed to be free of shares by end of month. All my due diligence suggests this is a solid holding for the long term, so I’m happy with the purchase and thinking of perhaps doubling up. Might give it a few days to shake out. Chart has been showing weakness before this.
Personally, I think you have to be very careful with perpetual fixed income vehicles these days. On top of that, with a 5.9% coupon, the price will be more sensitive to increases in rates.
I will definitely be on the lookout Monday AM. I am in these at 24.21 and welcome the chance to lower my basis even if only by a few cents.
Monday morning extended hours purchase at $23.65 on Schwab.