Monday Morning Kickoff

Well we ended one of the more ‘wild’ weeks in equity trading as the retail investor decided to go head to head with hedge funds in a battle of fairly epic proportions. This will end in substantial pain for some investors–while other will become instant millionaires. I have no ‘dog in this fight’, but the battle does bring some discomfort to conservative investors who prefer ‘steady as she goes’.

The S&P500 fell by about 3% last week. The close on Friday at 3714 was off 127 point from the close of of 3841 the previous week.

The 10 year treasury yield closed the week at 1.09% which is flat with the close on the previous Friday, but during the week the yield was as low as 1% and as high as 1.13%.

The Federal Reserve balance sheet showed assets falling by $10 billion after a rise of $81 billion the week before. The Federal Reserve continue the announced $120 billion/month purchase of assets–Federal debt and mortgage backed securities mainly.

The average $25 preferred stock and baby bond fell by 14 cents/share. Investment grade issues fell by 15 cents, mREITs preferreds by 6 cents, while CEF preferreds rose by 4 cents. All in all a fairly stable week given the turmoil in the equity markets.

Last week we had 3 new issues in the income arena.

Wells Fargo & Company (WFC) issued a new non cumulative preferred with a coupon of 4.375%. The issue is trading under OTC ticker FRGOL and closed on Friday at $24.70.

Banker US Bancorp (USB) sold a new issue of non cumulative preferred with a coupon of 4%. The issue is trading on the OTC market under temporary ticker USBML and closed on Friday at $24.65.

Lastly First Republic Bank (FRC) announced the sale of a new non cumulative preferred with a coupon of 4.25%. The OTC Ticker has been announced as FRCLP and the issue closed on Friday at $25.00.

10 thoughts on “Monday Morning Kickoff”

  1. Can anybody tell me what is going on with NCV/A and NCZ/A? In my Schwab account they were moved from the equities to fixed income and the symbol is gone, replaced by a CUSIP.

    Thanks

      1. Thanks, I wonder if they will get new symbols to trade on stock exchange or will they be trading as a bond using the CUSIP

          1. Maybe its an update thing that Schwab needs to do. Below is what they now list for NCZ/A at on my trade ticket and in my portfolio. They have moved the position from the equity section to the fixed income (bond) section of the portfolio.

            018825802 ALLIANZ GLOBAL 5.5% XXX NAME CHANGE EFF: 02/01/21

  2. Newbie Question:
    Have any of the major banks (JPM, BAC, WFC, C, USB) ever suspended or deferred their preferred dividends? Most of the prospectus documents note up to 40 quarters of non-cumulative payouts (10 years).
    Thanks for help!

    1. Before the Great Recession circa October 2012, all TBTF (Too Big To Fail) bank preferreds (some are trust preferreds) were cumulative. BAC andC (citibank) got huge toxic assets, along with GE and many others, ridiculously rated by Moody and SP as A- or so. Fed Chair Ben Bernanke, along with the last Secretary of Treasury, a sharp Goldman Sachs guy, with Nancy Pelosi getting all the Dem House votes along with some clear thinking Republican in the house, passed the huge bailout bill which made all these bank preferreds whole. Today, they are all non cumulative, technically they can suspend their dividends for 5 years or so. These banks are now all well capitalized and Moody/SP cannot afford to do sloppy rating fearful of HUGE lawsuits.

      1. For those who might want to take a non SWAN opportunistic buys:
        Two of the bulkers, despite an opposite SA article “forecasting” contradictory views, were upgraded to BUY by Stifel as follows:

        https://seekingalpha.com/news/3656754-diana-shipping-safe-bulkers-raised-to-buy-at-stifel?mail_subject=sb-diana-shipping-safe-bulkers-raised-to-buy-at-stifel&utm_campaign=rta-stock-news&utm_content=link-3&utm_medium=email&utm_source=seeking_alpha
        As I recall, Richard Lejeune of SA (deemed credible by Gridbird) likes Diana shipping. Diana suffered through the bad shipping years holding onto cash did little. Then it pounced on small competitors which needed to sell ships to avoid bankruptcy. Apparently, it worked out very well. I have convinced Mr. Lejeune that SB (Safe Bulkers, Inc) as a reasonably safe bulkers. Safe Bulkers has just ex div the 8% annualized quarterly dividend and common stock has been climbing, preferreds showed nice gain today too.
        Disclosure: I have no positions on Diana but SB-C and SB-D have been my largest single company for a very long time. The two Greek brother owners have more than 20% with their own money in commons and preferreds and repeated telling the analysts that they chose NOT to suspend the dividends for the preferreds. At this time, common shareholders receive no dividend. The quarterly report nicely summarized at the safebulkers.com show all the history including the latest. They use their own private company money to buy new ships and lease them back to the public company at very fair market deals. Very transparent and extremely ethical.

        BTW, the price/volume action seems to validate my online friend, Chuck J of Dallas on the “fake” or reseller of electric utility, SPKE and SPKEP. The market makers and the company can be tricky. I hold around 250 shares in my IRA as a test one quarter ago. Now I picked up another 300 shares on taxable account. Both Fidelity analysts and Schwab seem to like the common, SPKE.

        Huge dividends all QDI, just like the shippers.
        I play the DRIP since my wife is not in good health and I did not buy sufficient long term care insurance. LOL.
        BTW, I continue to hold BEP with dividend around 3+%. For the past two years Brookfield Renewable beat the best of the fossil, i.e. EPD.
        For healthcare names, I like PRHSX, T Rowe Price Health Sciences. Its 3 year performance for each of the years easily beat all healthcare mutual funds and ETF. As I recall, the manager who took over a senior portfolio manager retired, showed his worth. I bet that it has lots of Biotech names. I cannot decide whether it would Bristol Meyer Squibb or Merck, Abbott, the spin off of Abbot or Pfizer. Most of my holdings for PRHSX is in my IRA. Just added a little in taxable account today.

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