Personal Buys/Sells for Last Week (Ending 12/7/2018)

Last week we only made 1 move in personal portfolios–this is pretty normal for us–we strive to not trade much at all.

We made a purchase of a position in the CHS (Cenex Harvest States) 7.10% Class B Reset Rate Preferred (NASDAQ:CHSCN).  This is in keeping with our thoughts that rates could have peaked for now and we can go with a few perpetual preferreds with the corresponding higher yields (compared to our term preferreds and short maturity baby bonds).  We paid $25.35 for our shares.

This particular issue has fallen over $2/share the last couple of months and $4/share in the last year caused by the issue being perpetual and also by the recent issues CHS has had with financial oversight at the coop (fraud by employees).


26 thoughts on “Personal Buys/Sells for Last Week (Ending 12/7/2018)”

  1. Tim, how were you able to evaluate Cenex and decide to buy the preferreds. I see its a private company. I can’t find anything but headline news.


  2. Closely held companies always need to be closely scrutinized. Some will deal with outside shareholders honestly but many won’t. The families that control MHlD & AFSI will sacrifice the outside shareholders at every turn. Totally dishonorable bunch. By taking AFSI private they effectively wiped out the $450 million of Maiden preferred. That was the plan from the beginning. Makes total sense for the same to happen to the AFSI preferred.

    1. So, Bob, I am correct in assuming you dont own or plan to own any of those preferreds? 🙂 I own 2 closely held public companies preferreds. But are laying in the same bed as I am as they largely own all the preferreds themselves. So if they screw me, they will be screwing themselves.

      1. Scrutinize, then judge. Yeah, I’m very deep into FIISO. Maybe you can sell me some at a good price?

        Just check to see if the dog has fleas. The Maiden bunch is totally infested.

        1. Hmm, I forgot about that one Bob…The Humphrey family which were part of the banks founding own the vast majority of them since 1998 inception. I guess I will hold also. I was thinking about CNIGO, CNIGP, and SBNCM.. But FIISO is one too…This is one of my favorite CEO comments when addressed about those FIISO preferreds…

          So just a question on the preferred, I understand it might be a delicate subject you have embedded some generally owned by the Humphrey family, but to what extent is refinancing are taking out the preferred a part of the conversation either at the Board level or just kind of from our management team?

          Kevin Klotzbach

          Yes, so there is not condition upon which we can cause the preferred to be automatically redeemed………and we have a preferred that we have no control over…..

      2. If you lie in the same economic bed and you are dealing with principled people, you are almost always fine.

        But when management has divergent interests and management has flees, you have a problem.

        How I can get screwed by management is part of the analysis of every situation I go big on.

        1. Bob, that is one thing I learned from SA…(the comments section, not the writers). So many commenters seemed “in the know” about those people and harped on it for a long time. That left an impression on me.

  3. Question on the AmTrust preferred’s. The company was approved to go private, and the preferred’s having been dropping like a rock. The board approved of last month’s dividend payment. What kind of risks are involved with their preferred’s at this time, other than non payment. Does anybody have info of what’s going on?

    1. Hi Modelawn–I think the biggest risk is that the Karfunkels who will control the company simply do not ‘declare’ the dividends. Dividends for preferreds have to be ‘declared’ by the board–when you have no external company common share owners your motivations change–if times are tough there is a compelling case to be made to ‘snag’ new money by simply not declaring the dividend. And of course these are non cumulative and if not declared-never have to be paid.

      I am sure some others will jump in on this as I am not following AmTrust (and related companies such as Maiden Holdings) closely at all.

      1. Hi Tim, what about AFSI baby bonds? Can they stop paying the interest due without declaring bankruptcy?

        1. MFZ, Tim missed your comment so I will take a swing…Yes this is debt and does not have to be declared like a dividend. So they just cant “not pay”. But these are deeply subordinated debt (meaning about every liability is above it in claims). The debt is trading a wee bit “stressed”. So there is some market fear about the means to pay. Different things would happen at that point. And its too varied to get in weeds. But if a true bankruptcy would occur, I wouldnt hold out a lot of hope of getting a lot of recovery in a reorganization due to their subordination. Keep in mind I am not making any value statements on their present ability to pay… JCP 7% $25 baby bonds are down to around $7 a share. And they havent missed a payment….yet anyways….

    2. Mow, If you notice you have also seen sister relation MH and preferreds are just destroyed. And even cousin Nat Gen have sagged hard in last week also. Their underwriting and financial restatements (MH and AFSI) have been in question some time as well as same controlling family. Remember these are holding company preferereds and if the subsidiaries have to hold capital back to protect payments to customers the payments of preferreds from hold co are more at risk.
      Of course the whole preferred universe climate of even safe ones hasnt been rosey either.

      1. Many thanks Grid for your generous input. I am learning something everyday, what a great site and great people.

        1. MFZ–for all of us learning something new each day is what I hope we accomplish here. I learn as much from you and others as I do from my own research.

          Glad you are here.

  4. Did a little tweaking myself last week. Added some more NISOP at $24.73, reentered CHSCN at $25.07, added more PLDGP at $60.60, and added EBBNF at $17.93.

    1. Grid–still waiting for some stability–hope we aren’t too early on buys. With the DJIA down 350 right now maybe we will see the final ‘flush’ soon–maybe. I am will to take a little hit to capital if I am too early–such is life.

      1. I forgot, Tim I also bought 400 shares of UBP-H at $22.07 also last week.
        I have actually increased yield, and also locked in more long term holdings as I am moving ahead planning for next rate cycle downward. I in past had a lot of call exposed issues that held tight to par. Started getting newer issues I have avoided past couple years, because I knew they were more exposed to price drops. When possible, I like to get a half step ahead of the next cycle. And of course more recent purchases of KTN, KTH, and PLDGP cover my backside no matter what happens with a maturity date attached to them.

  5. I own CHSCL(CHS) preferred at 7.5% which has fallen around $2 per share also. Would like to add after ex-dividend. Still concerns about management.

    1. Thanks forENBA. I was watching the Enbridge common for an entry but I like this one under par instead. Good thought. Thanks,

  6. Good morning Tim,

    Nothing new for me last week, but was pleased to see my latest purchase XAN-C (+.25) hang in there amidst all the volatility. I may also do some more portfolio trimming to raise cash for next year. Feels like its going to be a bumpy ride.

  7. I added positions in new offerings – NISOP ( now at 75% of my planned purchases) and BC-B (now at 25% of my planned purchases).

    I also moved Ally-A to an overweight position so that if its is called AFTER next dividend, I break-even. At risk of loss, if called before next dividend payment

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