Mid Day Report

While equities are up strongly this morning interest rates are just a few basis points higher.  The good part of trading today is that the markets are orderly–no new provocative tweets from the President and soothing trade words from Larry Kudlow.

Income securities are essentially unchanged on the day.

We do note that AmTrust Financial has filed a very large document that outlines all the processes and procedures for going private.  Of course AmTrust and Maiden Holdings, both insurance companies, have substantial amounts of non cumulative preferreds outstanding as well as baby bonds.  Investors have an interest because there is always a chance that both companies decide they non longer want to declare dividends on their preferreds which leaves investors in the position of holding assets which do not have a income stream attached which would mean shares would likely trade down to the $5-10/share area.  We have no idea if this is a realistic outcome.

Interested folks can find the major document here.  We have not read the document.

16 thoughts on “Mid Day Report”

  1. Tim, I think I will skip the document and just not buy any, lol… I own PFX, and that is enough distressed insurance debt from me….At least they last got a credit upgrade and are not affiliated with Amtrust, ha.

    1. Tim, what you are describing about eliminating dividends after the privatization, and leaving Preferred Holders high & dry – is that the infamous process known as ” Waldenization ” ?

      I suspect it is, correct?

      1. Yes it is. A recent example and ongoing legal battle is Impac Mortgage. They almost went bust back 10 years ago.

        It is here. It was cumulative at issue–the management managed to get it changed to non cumulative–then they wouldn;’t declare dividends.

        I just noticed on this chart something is going on–there were lawsuits all over the place. 6 or 8 years ago it traded near ZERO–I see now it has jumped to over $20–have to check it.

    2. Yes–I had PFX when it was publicly traded. AmTrust and MH are beyond my desire for stress.

  2. Got out this morning, have been collecting dividends on maiden Holdings since 2012

    1. Good for you. Of course always hard to take a loss, but in the end you don’t need the stress of this issue.

  3. Tim, you cornering the market on GDL-C? $51.30 for a current 4% $50 par yield? I know I liked the safety when I got them, but this is a bit much!

    1. It is trading like it is Aaa rated or something. I won’t own any as that is way below my goal of 7%. Way too much good stuff out there to be had for 6%+.

      1. Most Gabelli preferreds basically are treated as solid investment grade issues. Just shows the value of what has for puts and short duration though to escape duration risk. Certainly does appear priced over its skies. I wont sell mine despite sitting on an easy profit since I got at $50, par.

      2. Hi Mr Lucky–yes there is good stuff at 6% or more, but I am not doing perpetuals much at this moment so it is more limiting. Also trying to run 3 different businesses so just like solid safety as I have enough on my mind to keep me awake at night.

        1. I agree at par or so….But sheesh, $51.87, doesnt leave a lot of value in the put. And the YTM at present yield in 2025 is 3.40%… Just plan horrible buy. Im half tempted to sell and move on already. I could do almost as well at this point to sell with the profits and roll it all into a 7 year govt note instead of holding this.

    2. Grid–there is always a market for a solid 4% with a put attached. 300 is enough tho.

  4. Hey Tim,

    Was the GDL-C you purchased, a personal buy or will it be showing up in the portfolio posted on the site, here?

    Any hints on your next buy? Think you mentioned having some money coming available this month.

    1. Hi GW–was a personal buy. I was going to add some to the model portfolio, but it got away from me.

    2. Whoops–forgot. No I have had so little time to search for another buy I am at a loss at the moment, but likely a baby bond with 6+% and short maturity.

      1. Sounds good… Thanks, Tim… I got my GDL-C not long after you did at about 50.60 I believe…

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