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More Irrational Exuberance – I Like It – Kind Of

It’s hard to argue with another very green day–but the spreads on many preferreds are way too wide for me to jump into them. I was able to buy only 1 preferred today – just need to wait a few days for maybe a retracement back down. I have 2 other limit orders in that have not executed-spreads on the bid/ask of 75 cents doesn’t work well in this market-probably will have to wait for a few days.

I added to my Jackson Financial 8% fixed-rate-reset preferred (JXN-A) @ $24.71. Probably one of the best 8% current yields out there yet. Reset is 4 1/2 years out so probably is a good hold for a few years.

I did have one somewhat ‘accidental’ sale on my Associated Bancorp 5.875% perpetual (ASB-E). I had an old (maybe a month) good until cancelled sell order in place as I was looking to sell small banking issues. I had pondered lowering my sell price earlier this week–glad I didn’t. Sold at $18.20/share. I end up with a 6% capital gain, plus a 1 dividend. In hindsight probably could have kept this one.

So like everybody our accounts are pretty damned green today–as they should be with the 10 year treasury yield off 11 basis points at 4.68%. Now we will see how the future data looks and see if the Fed is really done–who knows.

11 thoughts on “More Irrational Exuberance – I Like It – Kind Of”

  1. Treasury going to issue 1.6 Trillion in bonds (this is only going to last 6 months)
    Yup, just about 10% of GDP, let that sink in.

    China / Japan not buying, so who is going to pick this up?
    The drop in long term rates looks like a lot of shorts being covered as the 5% ceiling held.

    This next auction is going to be interesting for the long term end.

  2. I dumped everything I could from lower quality credits or higher quality with extreme duration or just to cash in a gain.

    I bought some more AG today. I use miners and PM CEF’s (Sprott) as an inflation hedge on my fixed income portfolio.

    I also bought this bond today from Key Bank @ FIDO.

    4.15 coupon
    937.49 price
    due 10.29.25
    CUSIP 49326EEH2
    Rated BBB S&P

    With the CG and coupon added you get over 7% return. It works for me at least.

    Also sold CGABL and picked up the CCIA instead. Got rid of Digital Bridge for a penny over what I paid. I have had it since the Colony Capital days. Too many good opportunities out there now.

    Also sold for a profit;

    My fingers were getting numb from entering all the orders!

    1. NWGG,

      Did you buy more AG as in First Majestic Silver or do you mean the metal? Just curious. Thanks.

      1. @blkrahn

        First Majestic – The miner

        Mining is a fool’s game though. Volatility through the roof. Easier to just take the nickels from PHYS on price swings. If I used options, I might buy a call at the $4ish level instead, but I don’t.

        Sprott and one other big name were long this stock around $10 when I first started buying a year or so ago. It gets a lot of revenue from gold as they are often in the ground together.

  3. Good trading day. Flipped MBINO for a quick profit, hopped between MITT-A and B with surprising amount of price improvement, all in RITM-D from RITM-C, grabbed some NYMTZ for NYMTN good deal if rate hikes are done, same with ABR-D for ABR-F, sold a couple others than went up good deal if the rally is done.

  4. LNC out with earnings the headline isn’t great. They had a negative reserve adjustment of $144M. The positive side of this is that it’s a lot less than last year’s credit rating altering $2.1B negative adjustment. They fired the CEO and CFO for that one so I would have expected that those issues were behind them. Looks like that’s not the case. Another item was their Risk Based Capital ratio (my #1 credit metric for insurers) was 385%. This was supposed to be over 400% by now. Failure to get back over 400% was why they were downgraded by Moody’s. S&P and Fitch have had them on negative watch since the $2.1B adjustment last year and I expect they’ll be downgrading them as well. I don’t blane current management for the reserve adjustment but I blame them for not catching it sooner.

    Oh and they also lost $15M on their hedge fund investments not performing to long term expectation. They lost quite a bit more than that last year under prior management. Shocker: this company has no idea what they’re doing investing in hedge funds. It’s the kind of management that buys naming rights to a football stadium (but again, prior CEO/CFO).

    1. And yet it’s up 6.50% on the day… Go figure….. The real bath on insurance today seems to be MKL -12.40% right now on disappointing earnings… This for a company with a Berkshire clone label on it…

    2. Nikolas–I read those (or skimmed them) and they were pretty lousy–at least as far as I could tell. I am pondering exiting the high yield preferred where I have a giant sized gain. Yield to maturity is down to 6.88% when I looked earlier today.

  5. “Moody’s downgrade of Jackson is driven by the lower-than-expected capitalization, volatile statutory capital and risk-adjusted capital adequacy ratio levels from its sizable variable annuity (VA) business, and the challenges to improve net capital…As a result, JNL’s total adjusted capital and NAIC CAL RBC ratio, which while good (near the midpoint of the company’s target range of 425% – 500% as of June 30, 2023), is lower than expected for its rating level placing downward pressure on its ratings.”

    1. Nikolas – that is why they had to issue a high yield preferred as they have had some issues of late–they should get things squared away within 6 months or a year and the reward is decent.

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