The Liberty Broadband 7% preferred (LBRDP) is being sold again today on triple normal volume–off $1.03 at $23.72. Of course I nibbled some more–about a 7.4% current yield.
Update–as I suspected might happen buyers came in and snapped up the shares starting around noon and shares closed green on the day.
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This was one of the stranger trading issues of the day. It closed yesterday (Thursday) @ 24.75. Today it had a low of 21.86 on 300 shares, which was a drop of 2.89. Then it rebounded later to close @ 24.92, up 15 cents on the day. Usually when you see a low print followed by a rebound, you suspect that someone placed a single “market” sell order. This drop was NOT a single trade at one instant, it occurred over about a 53 minute span, totaling ~ 10,000 shares. If it was a single seller, they used a trading algorithm to route out the trades in smaller batches over a longer period of time. This is common for LARGE trades on more liquid issues by institutions, but you don’t usually see this from individual traders.
Something else unusual was the 79 one share trades out of 409 total trades. You do see single share trades all of the time, but not usually that high of a percentage.
We do NOT own it in any account nor did we participate in any of today’s trades.
It is reasonable to keep below market buy orders for issues you have high confidence in, but these days some of those issues get crushed and do NOT quickly rebound like LBRDP did today. It’s always something. . .
BTW, the other mini flash crashish trade of the day was on AFFT which trades on the expert market. Which means that widely varying trades are much more common, compared to issues that trade normally.
Ha Tex. I was the recipient of 51 of those 79 one share trades. It was definitely some type of trading algorithm because my buy order filled essentially at the exact same time, one share at a time
Strangest thing I have seen
Thank goodness for free trades!
Hi Maverick – Do you follow PSB which has a couple of different preferreds – X & Y? Any thoughts if you do.
Sam – I don’t follow PSB closely in terms of their business but as I posted here a few times last week, the weakness is due to their acquisition by Blackstone. And some people thinking there is a risk they would go to the expert market. As I mentioned a few times, I think that is an unfounded risk as BX said they would remain listed unless the amount outstanding fell to a certain level. I believe BX has a very good reputation and would not sully it by going back on their public statement.
Mav, Do you have a link to info where BX said they were intending to not delist the preferreds?
“PSB’s three outstanding series of preferred stock, and associated depositary shares, will remain outstanding in accordance with their terms following the closing. We currently intend to continue to have the depositary shares representing our preferred stock listed on the NYSE with public reporting so long as there is at least $75 million aggregate liquidation value of preferred stock outstanding.”
https://www.blackstone.com/news/press/affiliates-of-blackstone-real-estate-to-acquire-ps-business-parks-inc-for-7-6-billion/
People love to hate on ESG but committing straight up fraud like Amtrust by delisting the PSB preferreds after saying they would not delist would look very bad on their ESG reports. The Blackstone company that bought PSB, Link Logistics, has their own annual ESG reports and they would have to put committing fraud in that report if a court found they did something fraudulent (like Amtrust).
Tex, yes there was some near violent movement The PSB preferreds were violent in one way, down. Normally NYCB-U is a fairy daily benign mover. I told myself if it hit $42.50 I would get back in. So I bought at that price, and later I noticed at near close almost a 7000 share transaction went off at $44.59. Then I see a few hundred shares are sold Friday night at $44.73 and .63
Gridbird:
I keep forgetting the ETF’s and Funds reshuffling of equities every end of quarter.
IMO, NYCB-U will give back some gains on Monday.
I have 900 shares of the issue.
I trust the regional banks in the northeast and they are thisclose to a 7% yield.
I also own DCOMP, VLYPO.
Good luck
Yes, Newman. I agree with you. In fact it has already after hours, I just posted wrong numbers. It was $43.73 after hours, not $44.73 that I incorrectly wrote.
NYCB-U is a bit of an odd duck issue that I have owned off and on through the years. It really was issued to be converted, but the banks stock price receded and then largely became just a large dividend payer, so it will never reach the strike price. Though its been adjusted downwards over the years, now in the lower 20s I believe. Also, its not the best served being in taxable accounts due to the interest and OID that hits it too.
Can anyone confirm whether this dividend is qualified or non-qualified? The info page says it is non-qualified, but I’m not sure why.
Excellent question. I will do further checking on it–BUT Liberty classifys it as a liability (debt) instead of equity because of the mandatory redemption in 2039. But I am going to dig a bit more on it.
Sorry to go off topic, but how does one initiate a “conversation” on the Sandbox Page? I can’t find any window where one might do so. Thank you.
Way down at the bottom. It is designed that way to cause us to have to place some effort into creating a new thread 🙂
Not fc–but good story.
Well that few seconds it takes to scroll down might possibly be enough time to get that hot blooded political post out of a person’s system. I also should have used a wink 😉
Control + down arrow on a mac
From:
https://www.libertybroadband.com/investors/financial-information/sec-filings-liberty-broadband/content/0001558370-21-014646/lbrda-20210930x10q.htm
“The Liberty Broadband Preferred Stock is accounted for as a liability on the Company’s condensed consolidated balance sheets because it is mandatorily redeemable. As a result, all dividends paid on the Liberty Broadband Preferred Stock are recorded as interest expense in the Company’s condensed consolidated statements of operations.”
Thanks Ken for the ‘official’ word–thought that was the case.
Tim, this issue may well be treated as interest. But they are not all this way. All term dated preferreds from my understanding are treated as liabilities on the financials. But I had a term dated issue redeemed this summer CNIGP that was a liability on the balance sheet but was 100% QDI in its dividend payouts.
Add on…Just checked 2020 tax returns…LBRDP was definitely treated as “qualified dividend” at TD.
In theory you would think it would be–wonder if all brokers treat it the same?
Tim, they should be uniform, but you never know. I can give example with OTC Canadian preferreds. Some brokerages withheld foreign taxes inside IRA tax free accounts and some didnt. Even though tax treaty specifies clearly they shouldnt be. I had that problem while others didnt. So I just now buy in taxable account to avoid the problem and reclaim the tax credit come filing time.
Thanks for the reply on the QDI guys. I think I will buy a small amount in an IRA and see what I get. Then if QDI is indicated, buy in the taxable account. If not, it can remain in the non-taxable accounts. All assuming it makes sense from a price/risk perspective, of course. Need another sell-off for a better entry.
Schwab listed it as qualified dividend on my 2021 tax summary .
This is the former GCI Liberty preferred stock.
See the March 8, 2018 filing on Edgar for Registration of securities filed under CIK 808461.
It is definitely preferred stock and as such, should pay qualified dividends.
Names of this quality (BB/BBB) are starting to look very interesting; 7.4% for investment grade or close to it is quite tempting. Might be painful for a little while but I think beginning to accumulate here is not a bad idea. At least you get paid to wait.
I’ve bought more as well, but admit I thought we were past the volume for sale until today. Other than end of quarter is there anything else to be pointing to as a source for the weakness? Is there a cable Co struggling out there that I’m missing or something like that?
NCSI–don’t see anything. Charter (who Libery has a 31% economic interest in) has a market cap of 50 billion today -which is only 1/2 the 52 week high. Maybe folks don’t under stand the sitution–the more complicated the security investors have trouble fathoming what it up.
Who woulda thunk Tim. This came out today. Just to calm anyones needless panic, Fed Ex was number 2 and it aint going anywhere.
Take a look at the biggest losers and gainers on the S&P 500 index (SP500) during the three months ended September 30:
Top losers:
1. Charter Communications (CHTR): -35.3%.
The telecommunication firm’s Q2 earnings topped estimates, but its internet subscribers declined. Analysts raised concerns over its broadband business amid growing competition and the threat of existing subscribers switching to fiber. Additionally, CHTR was reportedly directed to pay $1.15B to the family of a customer murdered by a Spectrum field technician.
2. Fedex (FDX): -34.5%.
The package-delivery giant reported preliminary Q1 results well below expectations and withdrew its FY23 forecast, dragging down markets. In its earnings report, FDX highlighted cost cuts and pricing actions. But Deutsche Bank cautioned clients that these may not be enough to provide an inflection point for FDX.
Grid–I was looking at the Charter fall last week. Even with Charter getting hammered the Liberty Broadband balance sheet remains super solid, but certainly it could be a cause for selling the preferred’s. Oh well I’ll take the ‘bargain’.
Im not suggesting selling them. I was just showing how painful the quarter was for Charter. Of course having a murderer as an employee didnt help the situation either. I watch and would be willing to switch back into it at some point myself and have owned many times in past. It would be interesting to try to nail down a semi plausible credit rating though being Charter is only BB+ senior secured.
Yeah Tim – someone who may have entered a market order got hosed when LBRDP temporarily dipped to $21.86. Shoot I had just cancelled an older low ball order yesterday when I bought some more as I figured I had enough.
I tried quickly to get some in the 22’s but no luck. I was able to snag 50 at 23 and another 50 at 23.15. That last 50 literally filled 1 share at a time – 50 order confirmations
Guess on some of these we need to leave low ball orders intact.
Looks like I jumped into too early at 24.50
Morbaine–just ‘leg in’ to these positions. It may pop back up today just like it did yesterday.