Monday Morning Kickoff-Corrected

I HAVE REMOVED THE CHART ON PREFERREDS AND BABY BONDS AS I FOUND AN ERROR IN CALCULATIONS.

Last week, being a holiday week, was fairly quiet, although–of course, the S&P500 moved higher. The average moved in a range of 3117 to 3154 before closing the week at 3140–a gain of just under 1% for the week. All news is good news (so says stock prices).

The 10 year treasury traded in a range of 1.73% to 1.80% with a close at 1.78%–essentially unchanged from the week before.

The FED balance sheet data was NOT released at noon Friday as is normal, because of the holiday business week. We should see it by noon on Monday.

As might be expected the number of new preferreds or baby bonds announced last week was muted.

Fortress Transportation and Infrastructure (FTAI) priced a previously announced fixed to floating rate preferred stock issue that carries a coupon of 8.00%. The issue is trading under the temporary OTC ticker of FTABP and last traded at $25.21. Details are here.

Banker First Republic (FRC) priced a new fixed rate at the rock bottom coupon of 4.70%. The issue is trading on the OTC Grey market under the temporary ticker of FRCJL. It last traded at $24.90.

18 thoughts on “Monday Morning Kickoff-Corrected”

  1. QVCC (QVC 6.25% Pref) which started trading is in $24.86-$25.22 range today. Anyone know when it goes the first ex-dividend?

    If same as QVCD their older 6.375% which went ex-divd last week it would be Feb 28, 2020 or so…

  2. PFF down 0.6% to 36.83. It’s 16 cents ex-div today but it’s been a while since it was below 37 regardless. I don’t think it’s the 10 year popping to above 1.8 because we’ve had the 10 year at 1.9 with PFF below 37. Price action Could be rebalancing related though.

    1. Landlord, whenever someone announces a PFF rebalancing to find deals, just reinforces its a piece of crap outfit fund. They dump at bargains, and overpay when buying to fill the quota. Totally lazy fund managers that prove again, nobody cares about your own money more than yourself. If I ever come close to getting annual returns the PFF generate, that is time for me to sell out and just buy CDs.

      1. The one thing PFF is extremely useful for is to buy puts on for hedging purposes. Puts are very cheap (I usually pay 10-20 cents) because IV is usually low but PFF can be subject to panic selling by the masses plus poor structure/management is a big drag on share price. I usually have puts with a 37 strike as I’m significantly margined in my preferreds account so I need to hedge but alas I never replaced my expired October puts. Laziness plus complacency.

      2. PFF measures success by how closely their returns (after management fees) track the index they follow, not by whether they make trade in a way that produces the greatest profit for their shareholders. If PFF has to get in or out of a security with limited liquidity, the ETF doesn’t get any points for gradually buying or selling. That creates opportunities for the rest of us. Unfortunately, changes to the index are no longer published in advance.

        1. Roger, Yes, I am very familiar with process, though I should admit being flip in response. I just cant stand pitifully created funds that have dubious benefit except to the totally uninitiated. That being said, they can pat their self on the back for beating their arbitrary man made index (preferred index trackings are hideous and have no relevance). Unlike a common stock index fund that history proves time and again beneficial. So I will pat myself on the back for using PFF as my tracking index and whipping it yearly, lol.

      3. Preferred stock funds don’t make sense to me. People who don’t have time or interest to buy individual issues would be better off just buying regular stock funds and forgetting about preferreds.

  3. Tim,
    I completed my move from ECCA to ECCB last week. Took a while, as I tried to get a decent spread between the two. Fortunately, ECCB has come down after I sold the last ECCA.

    Thanks for the heads up on the need to move out of ECCA.

  4. Happy Holidays Tim.
    What does the scale on the right hand side of the graph (1.6 – 2) represent?

    1. If you Prefer–unsecured subordinated debentures are debt, not preferreds. I know a lot of folks use the term interchangeably, but they hold different positions in the capital stack. Next week I will filet out the baby bonds in the chart.

      1. Tim, I am a traditionalist meaning I believe the only true preferreds are QDI, capital stack. That being said we need to wave the white flag. Anymore debt held in trust is now flat out titled “preferred”. Case in point today. I just got back in EP-C nicely today under “par”. It is subordinated debt held in trust and the issue is titled… El Paso Energy Capital Trust I, 4 3/4% Trust Convertible Preferred Securities

        1. Haha–maybe you are right, but you know that if I call everything a preferred then others will say bonds–or debt. I have noticed the same thing on the broker sites. It’s like the old distribution versus dividends argument on MLPs–and there are a couple others.

          1. Tim, here are the new rules…Take notes, lol… 1) Anything $25 pushed out the door is now a “preferred”…. 2) Any payment to owner be it a dividend, interest payment or distribution is a dividend. 3) And “par” always means redemption value no matter what… 🙂 … I publicly embarrassed Pendragon last week (its too easy) again on teaching him the difference between par, liquidation value, and redemption price. He couldnt get out of that debate quick enough after I had him chewed up.

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