Picked up a Full Position in New Residential Preferred

I was quite surprised to find the NRXPP ticker set up for the new New Residential Investment (NYSE:NRZ) F-T-F preferred on eTrade right away this morning.

I picked up a position with the hope (or intention) to likely flip out in a few weeks. Owning much related to mREITs for the long term would not be something I normally do–but this one is fairly tasty with the 5.802% spread when floating begins.

I paid $24.94/share for the position and likely would be open to a sell in the $25.40-$25.50 area. Alternately if it doesn’t achieve that level I would hold up to the 1st dividend and see where it stands then. Either way a 2% gain in 3 months or less would keep me happy.

33 thoughts on “Picked up a Full Position in New Residential Preferred”

  1. Someone earlier said they wanted this for their taxable account? This isn’t a qualified dividend as it was issued by a REIT. Or am I wrong?

  2. Was out this AM and did not put orders in (E-Trade) until lunchtime.

    Bad move on my part. Had to pay $25.15 for all my lots across multiple accounts. Still happy with that as I think this one is going to >$25.50 sooner rather than later. The volume was amazing given OTC only and temp ticker.

    Need more new issues like this to replace my recently called issues.

  3. I was a fence sitter on this one. Of my 3 part test, I like the issuer, I like the issue, I don’t like the entry point. In the end I did not buy.

    No fat at all in the pricing. I don’t look for it to trade up a great deal. Be happy to pick some up when it’s trading lower later in the year, which I’m (almost) sure it will be.

    Also, for me, this belongs in a qualified account, and there is no room at the Inn presently. Nothing I would sell to buy this one.

    1. No commentary here from the regulars which is surprising. Bob-in-DE, why do you expect it to be trading lower later in the year, given that you like the issuer and you like the issue? If those two things are true, why isn’t it leaping up past $26 like most of the new issues have of late?

  4. I see a several folks will sell an issue if they can make 2 or 3% in a short period of time. I suppose it depends on what stage of your financial life you are in regarding holding it for the income possibly forever or making a few dollars and move on to the next one. I would be interested to know at what point you might sell an issue strictly because it has gone up in price.
    Reason I am asking is I have a couple preferred’ s (one is a BB and the other is stock) that are worth $3.00 and $2.75 a share more than I paid for them. One yields 5.75% and the other 6.75% based on the price I paid for them. I am 70, still working, but setting up an income stream for retirement hopefully soon. My question I guess even though I bought them for income and not expecting them to appreciate, they did, so should I sell these ? The profit would be about $1150. which would be about 4 years worth of dividends. I am pretty sure I could replace them with issues that are near par, possibly not quite as good of quality, but ones worth the risk. As you can tell, I am fairly new dealing with preferred’ s, sorry for the length of this post.

    1. Welcome, Bill! You’re likely to get many different answers to your question because there are so many folks here investing in different ways and for differing reasons. Some have said that when they run up to 1yr worth of dividends – they sell. Others, have said 1.5-2yrs triggers a sell. Some will just let the waves of price rise and recede, rinse and repeat. Personally, I don’t have any rules that trigger sales based solely upon gains. Lately, I’ve been liquidating some non-QDI/non-IG rated holdings in favor of more stable securities. I’ve also been liquidating some lower yielding preferred’s simply to jump on the IPO’ish bandwagon and realize a quick gain. The financial related items have really shot up quickly these past 4 or 5 months or so. And then you have a number of folks liquidating simply because of fear of calls. Better to cash out and realize the cap gains then to be caught in the call fire if you will. I totally agree with that as well. Good luck to you… If your trigger finger is itching, scratch it. That’s my new motto.

      1. Thank you for reply. I am glad you brought up the point about the call dates. One issue is eligible to be called June 2020 and the other is in 2024.
        I have an on paper profit of about $600 for the one in 2020. I believe I will sell that and hang on to the other one. Lots to learn here just by ready the posts. Many knowledgeable investors willing to share. Thanks again.

    2. Hi Bill,

      If you check out Tim’s master spreadsheet of preferreds, baby bonds, etc. you’ll see a column for Yield to Worst.

      Yield to worst would be your effective ROI if the issue were to be called at the earliest possible date.

      Generally speaking, if the Yield to Worst is a low number or negative then I would consider selling it.

      Jacob

    3. Bill – answer usually lies in the yield to call, but it’s more subtle. If you care to post the tickers I’m happy to give you one man’s opinion.

      Bob

      1. Bob-in-DE : I was a bit off, the one eligible to be called in 2020 is RILYI, but in Sept. not June 2020. I have a $600 paper profit in that one. The other in 2023 is ALL-G.

        Thanks !

  5. Got some at $24.90 at Fido, limit $24.90. I have not done any careful DD on NRZ, so this may be simply a short term capital gains play. However, the yield and LIBOR spread are very appealing, so this may turn into a long term income source.

    1. Did Fidelity enforce the new rule of not selling F2F’s unless you call in and convince them that you know what F2F means?

      1. Larry, Fidelity have never blocked me on new issues trading OTC. This is probably because they haven’t vetted them yet.

        1. Fidelity required me to call when I added to my CHSCM at the end of 2018. They said this was a new requirement, however I wonder if grey-market issues are excluded because they just aren’t aware of what it is. When it starts trading under its real NRZ symbol, I wonder if they’ll require a call then.

          Seems like this has been discussed before on this site but I have no idea where.

          1. Fidelity will let you trade F-F preferred stock when they are newly issued and trade OTC before going to NYSE. After the trade on NYSE you need to call Fidelity and go through disclosures before you can buy F-F. Once you own you can sell online

      2. Larry,

        No, but as others have stated, Fido doesn’t ask when it is trading OTC. I did the same with the new NLY f-t-t on the OTC market, no problem with that either.

    1. You can buy @ Schwab under NRXPP. I bought 200 earlier @ 24.98. Though of course they wouldn’t let me when I tried to get it @ $24.88. They are always slow.

      1. Turned out they did not have it on their list of approved securities (as of 6.30am CA time), had to call them and ask why, they told me to wait for the next 10 mins while they were approving it. Got a thank you and 10 free trades out of them… 🙂

          1. Gab,
            See if they can look it up by the CUSIP# 64828T300
            I frequently have to get the bond desks and what not to find things by the CUSIP.

          2. Log in to the Schwab website (not StreetSmartEdge) and click on trade. Enter the NRXPP for the symbol. I just bought 300 with this method.

  6. I picked up shares as well on Etrade. I will take 7.5% for 5 years all day long. Replaced my NLY preferreds with NRZ preferred.

  7. Fidelity also had it available. I put in a limit order @ 24.90 as soon as the market opened. It actually filled at $24.87. Fidelity has been pretty good at price improvements lately.

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