I keep watching corporate news to see what is shaking in some of the companies of interest to me (and maybe you).
Arbor Realty Trust (ABR) borrowed $40 million this week paying a coupon of 8% for the 3 year note. Guess they won’t be calling any of theoir high yield preferreds for a while (not that I thought they would anyway).
Diversified REIT Gladstone Commercial (GOOD) put out a business update yesterday–on the face it seems positive
As you might expect so previously announced deals are falling through. Lodging REIT Xenia Hotels and Resorts (XHR) had a $100 sale in Austin Texas fall through.
For those of you that have nerves and courage of pure steel FORD MOTOR CORP. is issuing a new $8 Billion dollar bond. Underwriters are saying somewhere between 8.5% and 9.6% coupon. Iam NOT interested but just wanted to share this with you guys.
What is that phrase about fools and money….?
With that 9% coupon, the yield starved bond funds outside the US will likely suck it up like a vacuum cleaner.
Since Ford is below investment grade, the number of bond funds that could buy it is fairly small.
I’ll bet the ‘fallen angels” ETF will be the biggest buyer..
This week Barrons -April 27 has article on time to buy preferreds.-
page M-12
Anyone know what is going on with Highland Income Fund (HFRO)? I just saw that it is down almost 7% today. Looks like I have a 100 shares of this leftover from trading it at higher prices.
The Texas Supreme Court decision regarding the Credit Suisse law suit came in today.
https://news.bloomberglaw.com/banking-law/credit-suisse-gets-highland-capital-verdict-cut-to-26-million
Thanks..but that would seem to impact the management company, not the income fund. At least that’s what I garner from the link.
No, the award would have gone towards the NAV of the fund. That is the primary reason the mutual fund converted to a cef a while back.
ah, thanks.
Any opinions on NRZ Preferreds?
Their NRZ-C was the latest with IPO 2/11 and currently trading in $14s. As far as I can tell, they have not said anything about suspending their dividends. They announce next week 4/30
https://innovativeincomeinvestor.com/?s=nrz-c
Currently holding the A and B flavors of NRZ. Common divvy was cut 90%. At some point, I’ll eject these to never be bought again (any mREIT or derivative thereof, that is). They were small spec positions that went sour. Personally, I think there is a slim chance that they don’t suspend the preferred divvies. You just cannot look at the unemployment numbers and think that so many people are going to be able to get back up to speed with their arrears in any kind of timely fashion given the current state of the unknowns and the Fed spigot of monopoly money can’t remain on indefinitely.
So I’m content to hold for now as they have at least stabilized, but I’d personally, not buy more shares. If they cut or suspend the divvies, I’ll liquidate and take my toys to another sandbox. Just MO.
Appreciate your opinions A4I and Martin G.
It is cumulative so I guess it is okay to hold for now even though its is quite in the red for me. As they just cut the dividend and not eliminated it, it gives me hope that they may just pay this dividend …
I too have now gone sour on these mREITs but that is in retrospect and also think a lot of these will go belly up. However, some may manage to to get themselves sold to bigger, more deep pocketed mREITs or likes of BX or other hedge funds…Those that even postpone their death should expect to get better prices for being bought or sell some of their underlying assets to live longer…
I hear that. Nor can I argue with your sentiment…. . But many have come back to 13-15….heck some 21-22. Why haven’t they all been flushed. Is the market saying there is some value there??
I was looking back today to see chart patterns thru tough preferred times like 2015 and 2018. Many mreits were very strong as others dropped to 18. And some black box rating agencies had most of them at 8-10. We cam make back 50% hits in diversified accounts. Down 80 or more is different. A troubled area for sure.
I was told that mortgage rates hit 3. 25 and dropping on that Friday a dollar price on GNMAs 102. Opened Monday at 80 /rates moved to 3.95……margin accounts rightfully betting mortgages world follow tbonds…… Crushed as realization mortgagee payments suspect across all mortgage classes.
You have to distinguish between agency only mReits (agnc, dynex, cmo, orchid etc.) and the hybrids. Then you can ask yourself if you believe that fannie and freddie bonds will be allowed to default. If you believe that, then sell all of them – and probably all other investments except gold. Maybe also gold.
If not, then the agency only stuff do offer value. Most have decreased their leverage and they have the FED backing them with repo-facilities and mbs QE.
NRZ has been a good one for trading between the preferreds on varying price movements. Then I sold off most of mine on the rebound. It’s an enigma, harder to read than most REITs.
SA has an article today saying so far no real plan to rescue MSR types- but might revisit later. Looks a bit like a set-up for banks to get back into MSRs at fire-sale prices if/when BKs start. Prices on NRZ & others.
Gary, I thought after 2008 banks weren’t permitted to be in mortgage servicing, although I may be wrong on that one. The short article on SA talks about getting past the four month moratorium put on the servicing agents. I’m holding some NRZ-C, but in all honesty, not sure what the four months is going to accomplish unless the economy is coming back. Looks like NRZ can survive the four months, but will month five be any better?
Based on the results in other countries that have had widespread testing and stay at home orders, the 4 months is the period where you know that you are out of the woods, as you can relax restrictions.
the problem is if there are places where the virus is still raging because they didn’t take precautions and then you still have problems with transmissions until a vaccine can be developed.
I believe that commercial banks are still permitted to be in the mortgage servicing business.
Any of you guys think we retest the lows. Or is that it correction over, and we live happily ever after ? Hard for me to believe that it is over and we are all good now. Just doesn’t make sense to me.
No, I don’t think we retest. With the Fed spigot still wide open, the party continues. I do think we can drop 10% from where we are now but certainly see no reason why we go back to the 3/23 lows. However, a handful of states who buck nearly every notion of moving forward may toss their wrenches into my thoughts about where we are heading. They usually do.
I think we fall from here but I can’t predict how much. There’s nothing magical about the previous low point, I’m not a chartist. Stay flexible so you respond to any kind of move.
Looks like SHO-E and SHO-F, as picked by Tim, should be decent buy, if I have more cash. I got lucky when they threw babies with the bath water on HGH, with HIG apparently had no headwinds. Another lucky hit was KEY-I. Should get more WFC-R following someone here. Tim’s AATRL and CMSC are both solid. Gridbird’s non SWAN PW-C not so shabby. Heard on CNBC the evening daily special on the Market, the pundit interviewed some oil broker who spoke with a heavy foreign accent. Apparently, the storage for oil is a big biz, too much oil. They flashed a lot of shippers’ names (I heard of them), includes GLOP plus a few other names. No wonder GLOP-A, B, C and GLMP (until today) and GLMPP all “recovering” nicely from the ashes. Luck me! Tons of SA articles on eREITS such as EPR, vs MAC, Mall and SPG. The DPC’s are currently doing better than the eREIT. Perhaps these folks may know how to become a lender for the Fed’s money. Someone started to question Brookfield eREIT. I am glad that no one has the nerve to short their stocks. For energy, BEP and TERF (Brookfield) renewable have been doing better than the likes of EPD and MMP (which I also own). Yesterday, a local regional bank, headquartered in Pasadena, CA, reported great revenue increase with almost decent earnings, EWBC. I managed to buy more shares. Started buying at $60+, down to $20. Today, it went up anther 3+%. Risks: “guilty by association”: if there is anything negative about China, EWBC and CATY, its competing Chinese immigrant bank in Southern CA will drop. Decent balance sheet and the yield is in 3%. CTL common continue to be challenging, best to buy their baby bond OR real intermediate bond. Today, the market seems to hate perpetual preferreds. I thought STL-A is a great buy. Bought up some TSCBP and STL-A recently. STL up 4+%, STL-A down. Ditto for ASB, CUBI etc. I am not worried. I do not believe that the Treasury or the Feds will stand if any one of these decent regional bank started to suspend the preferreds, knowing exactly what Moody, SP and Fitch would do. Then of course, one can never say never. Like Gridbird said, it works until it does not. Best to buy baby bonds, one notch above the stack.
Hi Tim,
I was wondering if you have a list of preferred convertible stocks/notes,etc anything convertible ? I want to thanks everybody for all the infos and opinions..it’s a wonderful and very useful site !
Stay safe and healthy all of you .
God bless !
Danny,
Here are a few names: DTP, DCUE, CNP-B, LXP-C, RLJ-A, WFC-L, BAC-L, NYCB-U, RPT-D.
https://www.quantumonline.com/listwipo.cfm?type=ConvPfds&RequestTimeout=60
This is a list from QOL. You have to login to be able to see all the names (I think). Let me know if you need any other help from me.
A4,
Thank you very very much for all that you bring to this site, you are a wonderful and helpful person..your expertise is greatly appreciated by all of us novices,I am the one that needs all the help..I was able to open the site and I wonder if you are looking at any of this? And if you don’t mind , why not or why yes? I am sorry to bother you all. I follow some of you guys ,Tim first , on buying a few sh on AATRL @31.51..thank you all for the info/help.
Thank you again ,stay safe and healthy all of you !
God bless you all!
Danny… Glad to help. Appreciate the questions you asked.
I of the list provided, I currently own DTP, DCUE, CNP-B, and LXP-C. I previously owned RLJ-A and NYCB-U. Might be some others sprinkled in there from the quantum list.
My interest in convertibles has mostly evaporated as there are just better opportunities elsewhere. A lot of these names are ‘busted convertibles’ that may never be redeemable – so I like that aspect of them, but I don’t like the tight correlation of some to the price of the common shares they are tied to. Some trade in tight lock-step to the commons and others seem to care less about what the common is doing. Some are considered liquid (the DCUE types) and some are held in sock drawers to probably never be sold (BAC-L and WFC-L).
It’s just a matter of personal preference and what you feel comfortable owning. Banking and utility related convertibles will be a bit challenged here because of the issues being forced on the company’s – directly affecting the common shares. Utilities are not allowed to terminate services for those that don’t pay and thus they are watching cash piles evaporate as they weather the storm. Banks can’t foreclose or take actions against delinquent accounts and such and thus they are also watching huge amounts of cash evaporate. Real estate related convertibles are in trouble almost without exception.
I’m currently selling out of DCUE. Anything else is being held for now but I may sell of DTP in the coming months.
Danny–I haven’t done a specific list–just sprinkled throughout–I will put one together.
Thank you again to Tim, and A4 wonderful job ,well documented.
Stay safe and healthy
God bless you all
For what its worth CFG had an insider buy 10,000 shares of their common on monday April 20th. Mr. Hankowski Director now owns 44,000 shares. I own CFG+D. It has a 6.35% coupon and not callable till 4/6/24. Still trading at an attractive price of $24.95. According to S&P and Fitch they rate them at BBB+. The bank has over $176.7 Billion in assets and 1,000 branch offices in 11 states. Obviously alot of you are scared of banks via previous posts and I certainly can understand that. It seems to me that the GOV. does NOT want the banks to fail. On a side note I’ve been trying to call the I R people at SRE for 4 days now—they do not return calls.
Chuck,
Regarding SRE, did you see this from Moody’s on 4/15/20? I sold the common last week and still hold SREA
On Review for Downgrade:
..Issuer: Sempra Energy
….Issuer Rating, Placed on Review for Downgrade, currently Baa1
….Junior Subordinated Regular Bond/Debenture, Placed on Review for Downgrade, currently Baa2
….Senior Unsecured Shelf, Placed on Review for Downgrade, currently (P)Baa1
….Senior Unsecured Regular Bond/Debenture, Placed on Review for Downgrade, currently Baa1
Affirmations:
..Issuer: Sempra Global
….Senior Unsecured Commercial Paper, Affirmed P-2
Outlook Actions:
..Issuer: Sempra Energy
….Outlook, Changed To Rating Under Review From Negative
Hello my Friend Affinity; No I did not see that report. THANK YOU very much. I own 2,500 SREA and will say I’m just a little frustrated with them. I left their I R Team a voice mail on monday, tuesday, wednesday, and yes today again. Their I R Dept. does not answer their phone and it just goes straight to voice mail. I called several I R Teams this week (Summit Hotels, EPD, and even WFC) and they all have someone that answers their phone. As you know SRE is a very large company–no reason why they couldn’t have someone from the comfort of their home checking voice mails. When I ran my own company for over 39 years I checked Business Voice Mails from my home all the time. Really no excuse of this after 4 days. Thank You again—Are you planning on keeping your SREA??? Looks like we are in the same boat on this one. LOL
I’m curious what you expect to learn from their IR team that you can’t find in their public disclosures? In theory, they can’t provide you with any answer that hasn’t been disclosed to the public already
Hello back at ya! I’ve had a higher level of conviction owning SRE and SREA – but with each span of time that passes, their chosen state of headquarters continues to show its arse in bigger and bigger ways. The regulatory environment they have to deal with, say in contrast to something like a NEE – is just night and day. I fully expect they will lose that Baa1 rating on the common and the Baa2 on SREA. They should. That ******* state won’t stop until they take the ute’s over by forcing so many unbearable regulations down their throats. Just take a look at Tim’s Master List – Utilities.
https://innovativeincomeinvestor.com/master-list-utilties/
Take note of the ones selling for say sub $24 or sub $23/share and then tell me where the overwhelming majority of them are headquartered or do the bulk of their business? That’s right…
Sempra’s Oncor is big in TX, which is a big reason they are not currently PCG part deux. They are also running gas in Mexico – which ironically, is easier to do business with than their home state. Wrap your head around that one.
I continue to move heavily into more NEE and other ute ETD. My NEE, WEC, SO, D, DUK, ETR, DTE, PPL, and CMS commons and ETD just continue to print money for me on the regular. I have the least amount of confidence in SRE/SREA and DTE. Doubtful I’ll have SREA in the portfolio for much longer.
Just sharing my opinion and experience…
Please be well…
Thank You again Affinity; You’re the best thats for sure!!! Thank you for the additional names as Iam going to check them out. Please Keep in Touch and You stay safe too.
Affinity:
I am curious what regarding DTE concerns you?
Several reasons in no particular order:
1. Their regulatory environment – being hq’d in Michigan. Not the friendliest by far.
2. The underperformance of the common in relation to say a NEE or SO or D.
3. The fact that they have so much tied up in methane recovery from landfills at a time when oil/gas/associateds are at rock bottom prices.
4. They are burning cash like all utes during this period where they cannot recover normal fees from consumers nor terminate services – so they have to be the gift that keeps on giving.
Some of these points require more lengthly explanations but hopefully this gives you the gist of some things that have it lower on my list of things to accumulate shares of.
@Chuck P
RE: CFG D. Sounds like on to look into!
Thanks
Hi Chuck, according to QOL and this site, CFG-D is rated BB+ which is below investment grade. Would be interested as to where you are getting the higher rating – may be a timing issue.
Steve,
The ‘parent’ issuing company’s common stock is almost always rated higher than the preferred’s are. There can be exceptions. Here’s some additional info from more than a year ago. Doesn’t seem like Moody’s really covers them and S&P is light on info as well. While I do hold CFD-D, CFG is definitely the weakest bank I hold (compared to the likes of JPM, BAC, and others).
NEW YORK (S&P Global Ratings) Jan. 22, 2019– S&P Global Ratings said today it
affirmed its long- and short-term issuer credit ratings of ‘BBB+/A-2’ on
Citizens Financial Group Inc. and ‘A-/A-2’ on Citizens Bank N.A., which is the
main bank subsidiary of Citizens Financial Group Inc. The outlook on both
entities is stable.
A little surprised that the GOOD preferred are still trading in the low $20’s. I saw the report and expected them to show some strength
SteveA–historically they have traded really strong–stronger than they should have in my opinion–I am pondering a small taste.
I love monthly payors and they have traded great. I should change my name to StubbornSteve. Still holding approx. 70% cash. I really like them but I want them at 17.50 or below. Probably dreaming. I am contrarian right now. This low will be tested or broken. If not, so be it.
Steve check out VER-F if you like monthly pay