Let’s Do This 1 More Time

1 more day–it will be great to get to the weekend. The mental flip flops all week long are pretty draining for me–I suspect for everyone.

It looks like we will see a stronger opening on the equity markets today–but as we all know that doesn’t mean we will finish positive–BUT it feels like a potential change in situation today–for now.

Maybe we (as a country) are going to come to grips (acceptance) that we are going to have a soft economy because of the Covid 19 virus. With all kinds of large events, schools and business shutting down for at least a couple weeks–maybe a month, but in the end–in the near future we will be fine.

Anyway today I have 2 issues on my shopping list. 1st is the CMS Energy baby bonds (CMSC)–5.875% with call protection until 10/2023. Last traded at $23.47. 2ndly the Spire 5.90% perpetual preferred (SR-A) trading at $24.25.

This continues the theme of high quality purchases.

Now if I am correct that markets move to another stage–less craziness–with swings of only +/- 1 or 2% I will move to another stage of adding some higher coupon, junkier issues–which I have only partially identified. I am looking at some REIT preferreds–maybe in the mREIT area–but UNDER NO CIRCUMSTANCES will I be buying lodging preferreds. The lodging REITs preferreds might work for a trader who is nimble, but I am looking for stuff to hold longer term.

So hold on–I see the equity futures are on a halt (an upside halt) so with good fortune today will a calmer day–at least one which may not be such a loser.

32 thoughts on “Let’s Do This 1 More Time”

  1. Nabbed some GGT-G earlier in the day, I think that will be reasonably good and safe in the long-term. Market seems to have liked the news conference, as the indices spiked up during the last 30 minutes of trading. I doubt we’ll see a steady upward trend — probably plenty of bouncing around in the coming weeks, but hopefully not nearly as violent as recent days.

  2. Well so far it’s not raining knives outside like yesterday. For the most part I’m staying indoors today applying Band-Aids not so much on yesterday’s buys but just in general. I was lucky enough to catch bids on couple nice flips from yesterday and also sold some of my SR-A. I picked up some EQH-A $19.20, SJIJ $20.06, AQNB $23.95 and I kept little more cash. It still looks pretty cloudy outside to me but I am not a meteorologist.

  3. Most on this site are far more knowlegeable than I am, investing wise at least; BUT, I am suggesting you all be very careful. The volatility is INSANE. I had an issue gain over 44% today. If you purchase anything, check it before the end of the day, because it may be up or down by a HUGE %.
    Just my 3 cents worth. Thanks

    1. Bill S–absolutely–that is where I had to buy–over 6% investment grade and likely will be called in 3 years–great hiding place for 3 years.

      1. Tim: I bought 300 CMSC @ $24.53 . Thanks for the tip and thank you for all your hard work making this the best investment blog on the net.

        1. I too bought CMSC today at 24.50 and 24.51. Same coupon as CMSD (5.875) but CMSC ex-date is later this month whereas CMSD’s was last month. CMSC price was lower than CMSD’s so easy decision; merely 4.5 months of less call protection than CMSD.

  4. Thank you Tim for continuing to share your picks and to be a sound of reason during this unprecedented panic.

    Seeing how everything energy is getting whacked I was wondering about DCP-B. I have a decent position in this pref and very tempted to average down, any thoughts would be appreciated.

    1. Jay,
      I sold this recently, before the big swoon @ $25.23/unit. Good timing or just plain luck?

      In the past year, the parent has gone from ~$33 down to $6 and sports a yield somewhere near 45% if you believe Yahoo Finance.

      The 2 best of breeds in this space are EPD and MMP, IMHO and experience. When the both of them cannot avoid a spanking with the balance sheets they have, a DCP is a bit on the doomed side – so that’s why I saw the writing on the wall and bailed on DCP. Having ridden a midstream into bankruptcy and liquidation for .08c on my invested dollars, I can tell you that it hurts….. A LOT…

      I would urge you to reconsider. Just look at the carnage done to the likes of KMI, EPD, MMP and any of the oil majors.

      However, good luck to you if you make the buy. I sincerely hope it works out for you.

      1. Hello Affinity; I still own big positions in “HESM”, “EPD”, and “ETP+D”. Now here’s the deal. I called all 3 I.R. Mgrs and they all told me that they are well covered in their distribution/dividend ratio. As an example the gal at EPD told me they have NEVER cut their dividend in their history and have a coverage ratio of 1.7. So I would love to hear from you as to your opinion. Iam not an expert on these Oil/Gas pipeline companys but will just say that first they are not E&P companies they are just “transporters” of the stuff. And I know that AOC wants the Green New Deal but we are years away and maybe even decades away from replacing Oil and Nat Gas. Hope to hear from you and others. Thank You.

      2. Thanks for weighing in Affinity4Investing. I am in at mid 22 having bought it in 12/19. 
        I thought their pref dividend coverage was well covered but now with th possible fracking squeeze who knows. Hard to imagine Russia & Saudi would withstand sub 30 oil for much long.
        I could still tolerate some pain so I’ll stay put and not average it down hoping to unload on any popup in price (wishful thinking 😉

  5. I am bought a couple issues today with short times until call date ( SCHW-D & WFC-X ). I fully expect these two to get called in June 2021, but in the mean time they will pay about 6% dividend at my cost and should pick up another 6% in price appreciation. Still just nibbling around the edges, however I do have two large 3% CD’s maturing soon so I have to start looking for some keepers, with at least 3 years till first call. So for the longer term I started off by buying MET-E today with a first call of 6-15-23 it also pays about 6%.

  6. Anybody on the fence liquidating JPST/NEAR/MINT to raise cash since they are down a bit? Unfortunately my loitering cash hangs out there and I’m hesitant to sell at a loss even if it’s less than a 1%.
    My other cash hangs out in treasury funds and I am loathe to let those go.

    1. I’ve been raising cash, but mostly with the intention of buying something else
      that is on fire sale.

      1. I’m assuming even though almost all holdings are less than 90 day maturity, even this short term BBB rated stuff had a mark to market and may be related to some of the liquidity issues in the market.

        Assuming things calm down a little, this stuff should get marked back up again shortly. Or no later than 90 days as it is all repaid.

  7. This may be more speculative, but seems like a good trade. PBI.B is a $25 par baby bond from Pitney Bowes. Got hammered down to $10 on panic selling, or .40 on dollar of par. Sr Unsecured. Ba2/BB+. Now $12 or under .50 on the dollar of par.

    “Big” PBI bonds (not exchange traded, several issues) are consistently in 80-90 range, right now. I suspect this is a “right” price versus retail people getting blown out on the baby bond. PBI.B was almost $22 or .88 on the dollar at the end of February (three weeks ago), which is emblematic of panic selling.

    1. William I held PBI.B last year with the expectation that the parent company might be able to stabilize but PBI.B has been a steady decliner and I unloaded it all between 22 and 24 and took my loss (at the time I thought THAT was my worst performer). If one wanted to make a wild bet on a snapback recovery I’d bet on something crazy like OXY before I’d bet on PBI.B which I don’t see having much of a recovery compared to some of the other my preferreds. Of course just my gut feeling FWIW vs any actual analysis.

  8. With Boeing’s move, does anybody else think that the calls of higher yielding debt is now over, and that companies are going to hunker down with the cash they have and not redeem anything?

    1. I think many will hunker down and put many things on the back burner. Nobody knows how long this stuff is going to last and now you have people talking about this virus being with us and coming back every year, yadda yadda yadda. Cap-ex spending is DOA for now. Boeing is in for a world more of hurt and will likely need to be ‘bailed out’ IMO.

  9. Hey Tim, you still have GLOP in the portfolio. What you intend to do? Adding when the situation gets clearer even if probably will be more expensive?

    1. Gabriele–as I noted yesterday I sold on Monday for $14.xx more or less. I booked my $6/share loss.

      1. Tim,
        Besides GLOP, are there any other changes in the portfolios, like sold or bot something, or plan to? Or still holding all?


      2. Thanks Tim but I read you took the loss on GMLPP (frankly I did not know you had that) but I was talking about the other that turned distressed in the blink of an eye: GLOP C.

  10. Lot of price action on the DLR preferreds today. Were some great deals last night. Some have evaporated but others still there. Parent company in excellent shape and in category of REITS best able to withstand what’s happening now, according to various research metrics. I picked up a few different issues. Worth keeping an eye on.

  11. For you chartists, look at the 40-month simple moving average on the monthly SPY for the past 15 years. It has been tested several times since 2010 but has held each time. It’s at 264 now but was broken at 248 yesterday. Not sure where we’ll be after today’s bounce, but it’s worth watching. If we break MA (40) and stay below, it supposedly would be a sign of more market downside to come.

  12. Tim,
    Looking at the Dow overall and just thinking of investor sediment you have to wonder as we approach 20,000 if its a psychological barrier ? If market dips below it will there be a larger sell off? if so, where is the next support level?
    Glad I sold my SCE-PH at a slight gain if you count dividends for a year. Otherwise I had a 25.00 loss with free trading. with a re-set in 4 yrs I wonder how it will do? of course no telling where we will be at in 4 yrs. At least its cumulative. The more things seem different, the more they are the same. Where is the inflation of late 70’s early 80’s

    1. Inflation? Ask Japan where did it go…we’re heading to zero rates. Who knows maybe a real helicopter money by the Fed would change the picture.

      1. Gabriele: Funny you should mention that. Geraldo Rivera was on FOX this morning saying the government should mail everyone a check for $1000 immediately.

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