As I mentioned yesterday I did a tiny amount of nibbling on Tuesday and Wednesday.
In each case I added a tiny number of shares to current holdings–no use searching for some other issue since I am comfortable with the issues that I hold.
I added the following—
Affiliated Managers Group (AMG) 5.875% baby bonds (MGR) @ $20.59. 7.2% current yield at this level. Investment grade with BBB- from Standard and Poors and Baa1 from Moodys.
WR Berkley (WRB) 5.70% baby bonds (WRB-E) @ $21.85. 6.52% at that pricing level. Investment grade with BBB- from S&P and Baa2 from Moodys.
Athene Holdings (owned by Apollo Global-APO) 4.875% preferred @ $16.18. 7.6% current yield. Investment grade – S&P BBB with Baa3 from Moodys.
So as you can see each of these are quality holdings. 2 of the issues have current yields over 7%.
I nibbled at this point in time thinking we MAY be near a peak in rates–but of course one never knows (if we knew for sure we would buy full positions or more)—and after the inflation numbers this week, which were hotter than expected one has to guess that the Fed has 1 more rate hike. The Fed is NOT what concerns me–what mostly concerns me is that the amount of paper coming to market from the treasury which will be pretty massive. With buying from the Fed not part of the equation–what is the capacity to digest our treasuries?
So on these 3 issues I am hoping for worst case to collect my dividends and interest with share prices flat. Best case is interest rates remain at current levels or even drop just 25-50 basis points which will translate into a potential 5-10% capital gain in these issues—so I looking for a 7% to near 20% gain in the next 12 months.
All 3 of these issues are at around 1/3rd of my desired position size–when I reach a full position (if ever) will depend on economic data–I am very data dependent.
I will add this information to my ‘laundry list’ of holdings which is here. There is a link to this page in the side menu of the site.
Hi Tim,
$WRB-E and $MGR are bonds. Why don’t you look at YTM? I think that CY is not the right metric.
xenostrading–it is the right metric for me given my assumption – a leveling off of interest rates and maybe a cut or 2 within 12 months in addition to the level of safety in these issues. I want the safety and potentially 10-20% return in a year—at this point I reealuate and decide to hold or sell.
I have a confession to make. I recently Bought LBRDP at 21.61 and sold at 21.90 was hoping it had put in a bottom but looking at the chart it seems to be in a downtrend. Making lower highs and lower lows. It shows a repeating pattern of rising into x-dividend date then falling afterwards but we are a long way off until the next ex dividend date and a lot can happen before then.
Right now I have decided to be looking more at buying long term holdings and if confident adding more if they go lower. Trying to get away from flipping stocks right now, especially with the possibility of another rate increase in Nov. I do have a few I tend to have a core holding and have extra I flip but decided this is not one.
I did do another buy of EBBGF @ 19.25 and consider it a full posistion now.
Funny thing Charles,
LBRDP has been one of my long term holds for a while. I flip it a little, but not much. Mostly to reduce my basis.
However, I have been doing some tax harvesting (to offset some of my XOM sales), so I sold a lot of my LBRDP shares at the end of last month at about $22.60. Got rid of all my old higher cost shares. Money is in a treasury for a month so I don’t spend it or buy early and get a wash sale.
Not to wish ill to other holders, but I kinda hope it drops more over the next two weeks so I can get back in at a lower price.
Hope it will prove that it is better to be lucky…
Private, I don’t know what it is about cable and communication companies and their stocks but I just don’t have the warm fuzzies for them. They used to be regulated like other utilities and way back then the legacy companies loaded up on debt. Once they became unregulated they still had the debt and now have to compete with new companies and new tech.
I know a lot of investors here like Liberty Broadband and its holding of Charter. I am just re-thinking holding these perpetuals and long dated options that are 30,40, or 50 years out to call. Not that I don’t already hold a few.
Good news Charles. You don’t have to rethink this. Just “load up” and buy LBRDP hand over fist. Because it is not a perpetual or a 30,40,50 years out to call. It’s a term dated issue that matures in about 15 years.
So how much have you been flipping Grid? 😏
I’m surprised tax loss selling season is already starting but I can see it makes sense to hopefully try to buy back at a lower cost.
Actually too much for what I am getting out of it. But the grinding trades allow swaps to similar issues with better yields and further below par. My best investment right now appears to be my Iowa Hawkeyes 7.5 win total over bet. At 6-1 right now and nothing but door mats left on schedule; I should have invested a hell of a lot more in it than any preferred I have, ha.
LOL. “Grid-” … ‘Iron’ + “-Bird” … ‘Hawkeye’. Hmmm, what’s in a name though really?
Its actually the nickname of the old Big Red St. Louis football cardinals. Since the baseball team was Cardinals also, the then local papers referred to them as the Gridbirds to differentiate the two….You know you are getting old when you talk to people who didnt know St. Louis used to have another previous team before the Rams left too, ha.
Hey now, in my defense, I’d like to point out I didn’t ‘Google’ anything. Strictly, just working off your clues when I encountered them. Played it like a crossword is all.
I’m not far from a nest of Cardinals at the moment. … When I was a little punk whose epiphyseal plates hadn’t even hardened yet, my Dad took us to watch another kind of bird, that once also nested in St. Louis, win a game on the way to yet another World Series title. Simultaneously, it so happened, “The Golden Arm” also reigned supreme in our city during those halcyon days. I remember now, after one series win, my elementary school, built of the once ubiquitous red fire brick, exploded in such pandemonium the old glass windows rattled in their caulk, the ancient buzzing florescent hanging lights got to pendulum’ing, and dust rained down from the old yellowing ceiling tiles. It was probably pure asbestos dust, but we were tough back then, and that kind of stuff didn’t scare us 😉
Ignorance is bliss, caw. Growing up we played high school basketball in a lot of rural gymnasiums that had sprayed asbestos walls. Was always digging and picking at that stuff. Fortunately all of that potential health hazard was neutralized by my constant playing with liquid mercury on science desks.
Could all that asbestos and liquid mercury be why Conrad Dobler was the “dirtiest” player then? So dirty, even his compadre Dan Dierdorf took to wearing gloves. 🙂
FWIW, you and Charles may be interested in this concerning LBRDP. Since I just reentered today after a long layoff from holding, I tend to review things. First the mandatory redemption date is first business date after March 8, 2039.
Also it has a 2% penalty add on to preferred yield after 4 missed divi payments until the missed payments in arrears are completely repaid.
Page F-61, of below link, is companies summary of the preferred.
https://www.sec.gov/Archives/edgar/data/1611983/000110465923048360/tm2313414d1_ars.pdf
As a bonus, LBRDP prospectus states
“If at any time or from time to time the Liberty Broadband Preferred Stock fails to be publicly traded for 90 consecutive days or longer, then the dividend rate shall increase by 2.00% per annum of the liquidation price until cured.”
Tim,
You make an important point about Treasury issuance as the federal deficits continue to rise unabated. More of the same on deficits as we have no deal in congress, inflation remains stubborn and now all hell about to break loose if Biden decides to have US forces directly join the fight in Gaza. The confirmed direct cost that is already committed for that war is 10 billion (8 already sent to Israel and another 2 billion on the way). This will be a relatively trivial cost if a regional war erupts and oil flow out of the middle east is disrupted as a result of this intervention. Inflation goes back up plus more bonds will need to be issued to fund a new war effort in addition to the cost of the Ukraine war = Rates will go way higher.
AJ, I agree with you about the economics. Foreign purchasers and banks have been falling off at treasury buyers, so who will buy (https://www.youtube.com/watch?v=dJcH1bj53aE&t=103s)?
That said, I can”t see the US committing troops in Gaza (even with Biden in office).
1. Israel doesn’t need them. They have a huge standing army and twice that in reserves who are being called up. They train regularly in urban combat and have a training facility that is built to resemble Gaza.
Gaza is really small (like the city of San Jose or Philly). Any more troops, and they will have to start carrying each other piggy back just to fit.
Israel will need support (ammo, replacement/repair spares for vehicles, etc.) which we will provide, but they don’t need our combat troops.
2. it would foul up our relations with the Arab world and would give Iran great propaganda ammo to recruit groups to attack us. We can get away with supporting Israel (we have decades of experience tap dancing around that problem), but putting troops there would be a very different thing.
3. It would remove the US as a mediator or peacemaker. The russians are already offering to mediate. US troops would complicate that immensely.
Anyway, hope for the best, plan for the worst.
@AJ Private is not incorrect about the likelihood of US troops (Green Machine variety) being deployed. On the other hand our two aircraft carriers have extensive numbers of our most gung-ho “shock troops” aboard. However, I’ll wager with confidence, that if they are ‘deployed’ it will only be in support of the Navy’s medical teams being staged into positions as near as possible to the American hostages Hamas has captured. Better not forget the US citizens that may require extraction from the blast-zone(s) in the coming days as well. The Aircraft carriers will also be providing signals support, extensive air support if necessary, and probably more than a few pallets of re-armaments for the US aircraft platforms Israel is now ramping up heavy duty-cycles on. Don’t forget to toss in some pallets of artillery shells. So, nothing sinister or usual about the aircraft carriers in the vicinity and the absolutely necessary support armada that must surround each one.
Just saw some new bits of video leaking out from the Hamas attack that left even me aghast. This stuff was even more barbaric than an image of a machine gunned baby. Just the sound track was beyond description. No transcription required. The image the video dredges up is impossible to deny, at least for any Israeli, or for any human being that doesn’t deny the Jewish Holocaust. It is, it was, the closest thing you could hear and watch that could give you a sense of what it must of been like inside the Nazi gas chambers for so many millions. These images capture Hamas engaging in acts that almost make an ISIS beheading video look tame in comparison.
The fallout will be manifold and involve things we haven’t even thought of discussing yet. For example, it is slowly leaking out how the “Platforms”, the American founded entities not subject to the SCOTUS rule 230 in the manner “Publishers” are held accountable (at least, eventually), have responded to and have bungled yet again. The Magnificent-Seven. Yeah, right.
As we ponder the videos of several “hi-tech” fences the “lo-tech” terrorists sliced through, under and over with ease. I’d suggest a use for the rubble that North Gaza will be reduced to shortly. T.E. Lawrence’s (of _Seven Pillars of Wisdom_ etc fame) first and life long intellectual interest, was the study of Medieval fortifications. Long before he became an internationally known ‘war-hero’ in his day, he WALKED throughout the current hot-zones in the Middle East studying the remnants of low tech fortifications. A short-youth with blonde hair and blue eyes on foot when life over there was even cheaper than it is today. The guy must of clanked when he walked. Anyway. My suggestion is to start processing the rubble starting from the North working South immediately. Truck the material to the existing Kibbutzes that were attacked and deepen the lines of their dense, then, raise and reinforce their current walls. Use the rubble to create channels into kill zones for mechanized adversaries. Build new berms, dragon’s teeth, and fortifications for yet to be built Kibbutzes that will make it easier to slow the advances of barbarians and savages on foot, while providing excellent checkpoint fortifications for roads that will be routed through the defensive mazes. Good chance, in the centuries to come these ‘low’ tech fortifications will be the most lasting, if not also the most beneficial, mark Hamas will leave behind on this earth.
Apologies if this is a repeat question, but my search for the answer turned up nothing so I’ll ask again. Does anyone know for certain the status of the ATH preferreds as it relates to APO paying their common dividend? If I knew for sure that a failure to pay ATH preferreds meant that no APO dividends could also be paid, then I’d take it them to a full position size. Right now, I’m at 1/2 position because I don’t trust Apollo. Thoughts?
Mrinprophet you seem to have concerns regarding APO any reason?
landlord investor has good article on ATH on that other site. Doesn’t go indepth on their financials but did point out they are not heavy into commercial real estate. From reading, most of these PE companies keep the subsidiaries they have bought separate from their operations collecting management fees etc. I would hope the reverse holds true and if APO suspended dividend it wouldn’t affect the individual subsidiaries except for credit rating. But then this is all speculation on my part. If concerned, take a lower yield and buy their bonds which landlord investor mentioned
Thanks Charles. It’s not that I don’t trust APO to stay in business and keep paying their own dividends. I have great faith they will. In general, I don’t trust APO to keep paying ATH pref divs if APO determines they could do something more productive with that money. I’m looking for general protection that they won’t stop paying because there’s not enough disincentive to stop. I absolutely trust them to do the best thing for APO, I just want to be assured that also includes paying ATH prefs.
The company seems to be one of the better insurance companies probably why APO bought them. Tim had good luck with the AAM preferred being called. Both the ATH-A and E are reset preferred but that is a long way out. If the resets were closer, I would have some confidence APO would call them. Again, the APOS or the bonds might give you less worry.
Mrin, I cant give you that answer, but I can give a thumbnail sketch of the process. APO is the parent, the holding company. In general, dividends are paid from upstreamed cash and profits from their subsidiaries. If just one of the subsidiaries is facing severe financial stress and it has preferreds, yes the preferred dividend could be suspended, while the other subsidiaries are profitable. In this example yes a holding company could continue to pay common divi while not paying a subsidiary preferred.
That being said, I dont really see many companies ever “screwing around” with the preferreds in terms of paying dividends, unless the company is truly in financial stress. Now we get the delisting and tanking the preferred price situations from subsidiary preferreds. But that isnt a dividend paying issue.
Personally, outside of utilities, I dont trust these things. But that is purely an emotional reaction, and not based on any true facts at all. And in truth my worries reside with delisting stress. Overkill on my part, but hey I dont have enough money to buy everything, so its easy for me to just buy something else and avoid my personal demons about it.
Thanks Grid. Exactly why I’m at 1/2 position size.
Tim,
When you update your laundry list could you include any sales? I know you have included those in the past.
Charles – I think I have been doing sales–but none in the last few weeks. While I had hoped to unload a few more small banks with earnings just a couple weeks out I will probably go ahead and hold them (but not buy more).
Tim lot of banks will be reporting end of qtr. and first 9 months of the year over the next 2 to 3 weeks. Hopefully the regional banks will be giving us good news.
Tim, I think on a previous site you ran you had a drop down list of Canadian preferred’s do you still keep a list ?