I picked up a suggestion from Preferred Stock Trader over on Seeking Alpha relative to the preferreds of banker Wintrust Financial on my RSS feed this morning. Good logic in his article if one has access.
Both of their issues are trading slightly under liquidation value ($25). WTFCP is a reset issue so will reset to the 5 year treasury plus a fat spread of 6.507%–99% chance of a call of this issue in a year–until then one can capture a nice 7% and a small (1%) capital gain if called.
Here is the article for those that have access.
Users who liked this:
I think it is likely that WTFCM is called at the same time, and this one is trading at 3% under par.
For what it may be worth to you I own 9,500 shares of WTFCP. I can assure you that they will call it on July 15th, 2025. I told this to Charles M. just a few days ago before this post was even made by Tim. In the last 6 months I have spoken to their CFO DAVID DYKSTRA twice. Super nice and super helpful guy for sure. He explained to me that they are a very very “conservatively run” bank & did not do any of the dumb things that other banks did when they went way out into the long term future and buy bonds yielding 3%. He also explained to me that even their “commercial loans” would be considered conservative as well. As it turns out his hometown is only 50 miles from my home town. Iam very comfortable with my share count and will be sad to see it get called in July of 2025. Did you read their last quarterly report—-it was absolutely OUTSTANDING.
Win for the home team Chuck!
Hi Chuck P……What about the WTFCM issue? Float should be at a great rate if not called…..Do you own this as well?
Hello Eyeman; Iam an open book. I have not done any DD on that issue, don’t own it. But I do like the company Wintrust and feel they are a very well run and conservative company which fits my playbook quite well. Hope this finds you doing well.
I have the WTFCM on a watch list, but I need at least a 7% yield on cost to be interested in buying. I purchased 7 or 8 regionals last spring in the bank panic and some I ended up flipping. But even with the expectation of a Fed rate cut I want more than a 1 or 1-1/2% difference between a CD and a preferred.
WTFCM@24,30 ….if called in 1 yr….9.36%…..4payments of .41 + .70capital gain if not called…….yield 3 month libor(sofr?) +4.06 = 8.5%-9% yield
I own WTFCP contemplating buying WTFCM …am i missing something?
Eyeman I do my calculation as annual dividend of $1.625 ÷ 24.30= 6.67% this is what I know I am getting now. I think this is what quantum is showing
P has a higher float rate so priced a little higher. Of course if they’re both called M works out better. P call seems more likely not sure about M so the choice may be a longer term hold or a bigger one year gain. Lots of moving parts to this decision.
Thanks Chuck P
Tex the 2nd – as a former HDO member, you have everything wrong. Preferred Stock trader has not been with HDO for 2 years. In fact they fired him for disagreeing with HDO picks.. MDLX was not a BDC bond so you have that wrong. And he put a sell out at HDO as soon as trouble started to appear and we didn’t take much of a loss on that one. It was a bond from Medley who is an asset manager and not a BDC. HMLPF was slammed because it was delisted and not because it was a bad pick. Nobody can predict that. He made me a ton of money and I am now with his Conservative Income Portfolio Service with Trapping Value. He is generating incredibly large returns on his picks and is the best fixed income analyst that I know of. You should consider following him.
He advocated short term trades which didn’t fit with the HDO investing style.
He did get a few picks very wrong on the service but that can happen to any one.
He’s VERY knowledgeable and a good writer. A good researcher too.
IMHO, he puts his trading first and his writing second. His writing often moves the market. Much more significantly when he was at the prior service. It wasn’t unusual for his weekend picks to open sharply higher on Monday because of all the buy orders placed prior to the market open.
I don’t like the fact that he can trade before he puts out an article. I understand that others don’t care. I have a higher standard for paid services but that is just me.
As a lot of his trades are short term, he can close his position after his article bumps up the price and he doesn’t have to disclose that to you. I really like some of the other authors/services that are more transparent.
HDO has 20 times the membership of his Conservative Income Portfolio. Therefore, his recommendations can now be issued without the kind of large stock movements that occurred at HDO. I don’t believe he can be blamed for HDO not keeping membership at a reasonable level so that recommendations could be made without moving the stock so much. You are correct that that was a problem. I have been a member of Conservative Income Portfolio as soon as Preferred Stock Trader joined 2 years ago, and I cannot remember a losing pick he has made and I remember a lot of big winners. I have been a member of several services and their recommendations were always from stocks that they owned. There is always a disclosure required when an article is posted. But different people see things differently. I am a fan. People can read his public articles and decide for themselves.
And let me add, he had been the same kind of recommendations at HDO for years. Why would they suddenly fire him for doing what he had been doing for years. I saw some of the negative comments he made on HDO picks and it was right after that that he was fired. Of course HDO couldn’t say that tht was the reason
Right, they didn’t fully disclose the reason for the sudden departure. They could have handled that better. My guess is that it was his trading style coupled with some of his comments that could occasionally come off as abrupt. I hope it wasn’t because of disagreement on security selection. Disagreement often makes us all better and makes for a better product. That is why I love some of the commentary here and on SA. One of the issues I have with some but not all of these SA subscriptions is that the writers post too many free articles on SA and many of these articles are the same stuff over and over. I don’t need to read about the same topic or security 10 times. It’s exhausting to keep up. It’s like they are doing this to generate eyeballs and sales. I don’t know if it is a SA requirement. I would prefer if they would spend more time writing and servicing their paid membership.
SA pays more if an article hasn’t been published about a security with sufficient interest in a longer period, like a few months. It creates an incentive to recycle your previous post on a security with updated numbers every few months.
Tex took all of that straight from the article he linked. You need to read it. The thesis was that Medley was supposedly merging with two of the BDCs it managed and thus was a hot opportunity due to BDC’s not going under etc…
One of the negatives on PST is his lack of accountability. When with HDO he had a portfolio of fixed income preferreds, etc. IDK why he left. Regardless when he joined CIP he reached out via SA soliciting business. I subscribed for a free trial.
To my surprise and dismay, PST began a NEW portfolio consisting of treasuries. His explanation was there were no good current fixed income opportunities. What had really happened were interest rates rose and his picks were underwater. I had expected him to acknowledge and manage his recommendations regardless of service.
If he and TV have a conflict, I would be weary he will once again do the same to current subscribers. PST mentioned before he wanted his own service but TV asked him to join.
Strong personalities in CIP. And as mentioned earlier, he trades his positions without letting his subscriber’s know.
A few years ago he was posting pro Russia and criticized a subscriber for criticizing Russia. He seems to have gone quiet on that since Ukraine.
He also has a non profit in MI which he has asked for contributions a few times. IDK much about the non profit
I am not saying he is not a good analyst. Just that along with picking ability he comes with issues.
PST runs a separate service within the CIP newsletter. The picks, buys, and sells are clearly named as being either his or Trapping Value’s, and they run separate portfolios and obviously you can follow one, the other, both, or pick based on what suits you of their recommendations.
He is still doing a fairly active preferred stock trading approach based on relative values / prices, will flag if there’s a “big seller” in some cheap issue, etc. Yes, you won’t get the same prices as the buys and sells he posts all the time, since many of the value opportunities in preferred issues aren’t super liquid ones, but we’re not talking MSEXP level of liquidity either.
I’ve been happy with his picks and they have done well for the ones I’ve followed since joining the service around the time he moved (I wasn’t in HDO before). It’s definitely a higher risk but higher turnover approach that seems to work well for him.
He picked NXDT-A, which I hold a small amount of. Absolutely slammed. But may still be good. What do you think?
Derek:
I also bought NXDT-A on PST’s recommendation back in November 2022 (see below). Was done at prices between $15 – 16, so with the preferred at $14.25 today, I’m still ahead about 4%+ after all 7 dividends. But definitely not the 25% gain he predicted.
But the real loser was his recommendation of the common NXDT in the same article. I didn’t buy that one, but anyone who did and has held on is looking at a 50% loss and is a big time bag holder.
Nobody picks all winners. I did extremely well with his KMPB pick in December 2023. Believe he is one of the better preferred stock analysts on SA. But I believe picking common stocks like NXDT (even though it is a REIT) is outside his range of expertise, so I’m glad I stayed away.
https://seekingalpha.com/article/4555770-nexpoint-diversified-stock-9-2-percent-yield-preferred-stock-undervalued
Thanks Tim-
Got some.
Me to Gary.
(Verbatim from original post)
Tex the 2nd says:
08/18/2021 at 7:51 pm
I will take the other side of “Preferred Stock Trader.” He might be better than the rest of the HDO team, but he is mortal:
1) He wrote the recommendation of MDLX/MDLQ, both trading at ~ 45 cents, down from ~ $25 when they were recommended. ~ 98% loss on both. No sell recommendation was publicly published on SA.
Quote from the original recommendation: “No BDC bond has ever defaulted on its bond obligations including during 2008.”
https://seekingalpha.com/article/4208613-mispriced-baby-bond-bargain-7_6-percent-yield-to-maturity
2) He wrote the recommendation on HMLP-A, which closed today @ 16.12, down 39% since July 27th. No sell recommendation was publicly published on SA.
Original rec posted to the public on 2/24/21, less than 6 months ago.
https://seekingalpha.com/article/4408456-stable-hoegh-lng-partners-8_4-qualified-dividend-on-preferred-stock
3) If we stipulate that the overall perception/performance of HDO is negative, PST has wrapped himself in the same clothing. PST, aka Tom, does not need whatever compensation he receives from HDO, so it reflects poorly on him. If he wants to maintain his credibility, he should go back to being independent, even if it hurts his pocketbook, otherwise we have a non-kind term we use for people like that.
Regardless of past narratives, this bank is a $100+ per common share & profitable…yield to Call (WTFCP) is about~8% 1 year….if not called…I’ll be happy to receive the 10%+ Float…….CRE exposure is about 25% of total loans BUT only 3% office (which is what I am most concerned with)…With all that said “I’m In!”…lol
Picked this one up during the great SVB bank scare. Good to know PST likes it too!!! One of the better SA people for sure.
You had me with the first three letters of their ticker symbols.
Morbaine–yes WTF!!
Good one for a taxable account because of Qualified dividend. Most of my dry powder for trading is in retirement accounts. Might be worth it anyway, common stock going up rates going down and high reset rate yet the preferred hasn’t spiked.
Good idea Tim, thanks for sharing.
I’ll mention that even if you don’t have a subscription to SA, you can usually read their articles by using “Reader Mode” in your browser. It’s different for different browsers, and the timing is a bit tricky, but with Safari it works I press Cmd-Shift-R just after the normal article appears but just before the popup blocks it. One downside is that comments aren’t visible with this approach. Has anyone figured out a way to read them without a subscription?
I don’t have a subscription and I can read most articles on my desktop but not on my laptop. Haven’t figured out what the difference is.
My get around to a subscription – I use my iPad. Google SA in Safari. Find something of interest and read it. When done . . exit Safari, go to Settings.
Once in Settings, scroll down left side and select Safari. Then scroll right side and click on ‘Clear history and websites’. Exit Settings.
Once the history has been cleared, you can go back to Google, search for SA again and read another article. Rinse and repeat as often as needed. It’s a bit cumbersome but works.
archive.is usually seems to work to the load the site also but you won’t see most of the comments with it.
Good to know. My method listed just above will also provide access to the comments