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Per Fido – Full call on BC-B on 1/16/25. Bummer
It’s a shame that because this comes from Fido, my first reaction is to not believe it…….. I don’t see confirmation on either their website or EDGAR…
I am always annoyed by company investor website pages and how it is almost useless for this type of news. One would think they would actually use it for these types of things. I cannot find anything about it either.
I really did not expect this to get called. I will be left with just a bit of BC-A but only half as much as I had of B. Now I need to decide if I should just replace it with A or go find something else. It was one of those types of babys I rarely thought about. Felt reliable.
ECCU and GAINI now trading at Fido.
Bid/ask:
1. ECCU = 24.63 / 24.70
2. GAINI = 25.27 / 25.30
Bought MBNKP (8% non-cum perp junk preferred) just under par. Call 4/1/25, then float at 3mL + 6.46%. Call likely? Chart of parent bank MFIN looks okay.
Bought TDS-U, CY ~8.5%. Junk, but the common is doing well. Telecom.
TDS loved but not TDS-U.
TDS up 86% for the year. TDS-U price up 8+% for the year. In the past month TDS price hasn’t changed but TDS-U has dropped 11%.
It’s price was dropping as it approach ex-dividend. Didn’t expect that. Dividend was $0.41.
IIPR-a down to $25 – stock getting hammered on rent issue
very low debt to assets here maybe 10-15% i believe
IIPR-A (9% cum perp preferred) has a 56 cents ex-div on Dec 31.
IIPR’s portfolio is almost entirely composed of leases to companies within the cannabis industry. This raises an important question: does PharmaCann’s rent default signal broader financial challenges within the cannabis sector, or is it an isolated case of poor cash flow management on PharmaCann’s part? Historically, some of IIPR’s tenants have faced difficulties meeting lease obligations, which could suggest an industry-wide pattern of financial strain.
The silver lining is that IIPR appears well-prepared to weather short-term disruptions. However, if this reflects a deeper, systemic issue in the cannabis industry, the current 9% yield may not adequately compensate for the heightened risk.
(Had trouble posting this in the Sandbox where it should have been.)
Every time we buy a baby/term, we are making an assumption whether it will make timely interest and principal payments. In every case there is a greater than zero chance of a default, otherwise they would be priced/yield the same as US Treasuries. We all intuitively understand this risk, but sometimes do not build a detailed model that considers the default probability. In a better world, we would have Moody’s and/or SP ratings. Those firms are not perfect as proven in the GFC, but they are usually better than nothing. Since many babys/terms are unrated, we need a better model to help us estimate the default risk. Unfortunately, on a good day, my default risk estimation IQ is about one tenth that of 2WR and Grid. On a bad day, well you don’t want to know. . .
In studying babys/terms, one aspect stands out: the quality of the underlying company as manifested by the common stock price performance. In a year that has the SP500 up >+20%, a common that has lost >50% looks very ugly. It typically indicates a lack of faith in the company and certainly makes it harder for them to issue non-dilutive equity. I decided to systematically look at how the common has performed for all babys/terms. I calculated the ratio of today’s (12/19/24) price to the 52-week high. Then I assigned a III rating:
50%)
.50 to .75 implies questionable quality (Common off 25% to 50%)
>.75 implies smooth sailing
Another indicator is the common stock price itself. Traditionally prices less than $5.00/share were considered low quality. Obviously, a company can do a reverse split to achieve any common price they want, but if they leave it under $5.00 it is not a good look.
Here are the 50 babies/terms with the nearest mature dates, sorted by mature date.
CSV format is: ticker, common ticker, mature date, common price 12/19/24, ratio of price to 52 week high, comment
BLACK BOX WARNING: Obviously this analysis is mechanical and does NOT consider any specifics about the company. Plus, I might have the dates and/or prices WRONG This list should be used as a starting point only. If you own a low ratio company, you should make sure you understand why your model forecasts it will pay off. OTOH, companies that have high ratios might be strong candidates to consider owning.
SACC,SACH,12/30/24,1.17,0.25,Fail price & default likely
TRINL,TRIN,1/16/25,14.36,0.93,All good
MDRRP,MDRR,2/19/25,13.99,0.93,All good
RILYM,RILY,2/28/25,5.09,0.13,Default likely
GDL-C,GDL,3/26/25,7.95,0.96,All good
SBBA,STNG,6/30/25,47.24,0.56,Questionable ratio
LANDM,LAND,1/31/26,10.51,0.68,Questionable ratio
NEWTZ,NEWT,2/1/26,12.61,0.81,All good
SPLP-A,SPLP,2/10/26,42.5,0.88,All good
RCC,RC,2/15/26,7.1,0.64,Questionable ratio
BWSN,BW,2/28/26,1.61,0.54,Fail price & questionable ratio
HTFB,HRZN,3/30/26,8.83,0.65,Questionable ratio
TFSA,None,3/31/26,NA,NA,Quality unknowable
XFLT-A,XFLT,3/31/26,6.55,0.84,All good
HROWL,HROW,4/30/26,14.15,0.24,Default likely
OCCIO,OCCI,4/30/26,7.19,0.92,All good
OXSQZ,OXSQ,4/30/26,2.48,0.75,Fail price
GAINN,GAIN,5/1/26,13.08,0.87,All good
FCRX,CCAP,5/25/26,16.3,0.81,All good
GECCO,GECC,6/30/26,10.25,0.91,All good
PRIF-G,None,6/30/26,NA,NA,Quality unknowable
TPTA,None,6/30/26,NA,NA,Quality unknowable
SNCRL,SNCR,6/30/26,8.9,0.58,Questionable ratio
METCL,METC,7/30/26,10.43,0.46,Default likely
CHRB,None,8/31/26,NA,NA,Quality unknowable
EICA,EIC,10/30/26,15.24,0.91,All good
GREEL,GREE,10/31/26,1.89,0.2,Fail price & default likely
ARBKL,ARBK,11/30/26,0.6062,0.14,Fail price & default likely
ATLCL,ATLC,11/30/26,57.55,0.89,All good
FOSLL,FOSL,11/30/26,1.77,0.68,Fail price & questionable ratio
SSSSL,SSSS,12/30/26,5.71,0.86,All good
HNNAZ,HNNA,12/31/26,11.84,0.85,All good
KTN,AON,1/1/27,353.75,0.89,All good
OXLCZ,OXLC,1/31/27,5.05,0.87,All good
SWKHL,SWKH,1/31/27,16.47,0.89,All good
SAT,SAR,4/30/27,23.71,0.91,All good
GEGGL,GEG,6/30/27,1.85,0.87,Fail price
RWAYL,RWAY,7/28/27,10.25,0.75,All good
ATCOL,None,10/30/27,NA,NA,Quality unknowable
LTSL,None,11/30/27,NA,NA,Quality unknowable
EP-C,KMI,3/31/28,26.24,0.91,All good
CRLKP,None,4/1/28,NA,NA,Quality unknowable
KTH,EXC,4/6/28,37.19,0.9,All good
ECCX,ECC,4/30/28,8.71,0.83,All good
TVC,None,6/1/28,NA,NA,Quality unknowable
CSWCZ,CSWC,8/1/28,20.85,0.77,All good
GLADZ,GLAD,9/1/28,27.65,0.97,All good
WHFCL,WHF,9/15/28,10.44,0.79,All good
CNFRZ,CNFR,9/30/28,1.1,0.58,Fail price & questionable ratio
PMTU,PMT,9/30/28,12.95,0.81,All good
Interesting list, Tex…. I assume :Quality Unknowable” shows up when there is no publicly traded common shares, right? ….. That TVC shows up as “quality unknowable,” just goes to show that humans do always need to interpret the data in their final due diligence….. LOL… I’ll go out on a limb and say TVA’s quality is pretty knowable as a GSE and also as a standalone… Great list! I admit to owning 11 names on your list, including TRINL which I added to today, more than I would have expected to show up on a list like this…. BWSN is the one I have no excuse for still owning…
2WR, I heard they have put TVA on Credit Watch negative since you moved out of their service, so it truly is ‘Quality Unknown” at this point! I specifically did not want to inject my opinion into any of the ratings. It was purely mechanical.
I should have noted whey I did not list all of the issues out to the last maturity of 2081. I think making any judgement on whether a company will default in the next 57 years is fools gold. We can speculate about SACH and RILY making it for the next 5 years, but even if the metrics were all good on a 2081 maturity, I would NOT put any credence to it.
2WR, BTW don’t look know but TVE is currently DOWN for the year by a little, with TVC holding a gain by it’s fingernails. TVE has a lot of friends with ~ 300 out of ~900 also down for the year. All on a price only basis. Gonna have quite a few ~ 100 down for the year on a total return basis. Need a hail mary to get them all positive in the next 7 trading days. . .
Yeah, I have to look now because I own them both….. Bot some TVC recently at about 5.10% YTM. And although the absolute ytm sounds dreadfully low for most, it’s been averaging near 100 basis points higher than its comparable TVA bonds in the institutional bond market…. For me, it originally was a way to mentally match up my 2 1/4% mortgage commitment with an offsetting bond with “set it and forget it,” or sock drawer qualities to it…sort of offsetting liabilities with assets rather than just paying the mortgage off….. Now that I no longer have a mortgage, they will be part of a new portfolio designed to also have “set it and forget it” qualities to offset my new rent liability.. Rent where I am is so inclusive, meaning it includes all utilities, internet, TV, telephone and food, that if I dedicate the proceeds from my house proceeds to generate enough over time to cover my rent, then all my current portfolios can be freed up to attempt to build wealth…. TVC and TVE work well enough for me for my limited goals for this hopefully SWAN portfolio … Oh and BTW, GO VOLS! I’m not figuring on bleeding blue now that I’m in NC….. And a pox on The OSU Saturday!
LANDM is an interesting one. The REIT, which you would think be a no brainer simple concept of owning farmland, has turned into something of a stinker. Like they are buying water rights while selling land. Not the best ran REIT it appears based on long term performance. Yet I would not be terribly worried about getting my money from LANDM on the maturity date. They have desirable assets that sell pretty easily if forced to do so.
I would not even own LANDP if it was not for the sell off in the recent past due to interest rates. Hard to say no to an almost 8% yield back then based on a REIT owning farm land. Yet somehow this REIT has managed to make the purchase questionable since it has no defined maturity date. So the data above does make me question this purchase over a very long time frame. Maybe I should exit with my 12-13% gain and find something else.
The data above really had me agreeing with quite a few I never touched with a ten foot pole due to just a glance at the common stock performance. Like I never once considered SACH material as a possible purchase.
I have a small holding in LANDO/P only because they are the essentially the same making it easy to trade between them on unexpected price divergences. Boosting the 7% return making it worth the risk. Wouldn’t want it in a sock drawer.
I do not agree on the HROWL default likely. They are going cash flow positive and have a few offerings to market now – before this cash burn city. I do agree that traditional metrics on an emerging drug (dry eye and others) are high risk. Debatable, I suppose, but they seem, in this timeframe, able to covert the debt and I feel good about it, and just bought some on the recent HROW drop off. But I am way up on the stock and HROWL older purchase,
Per Marketwatch, HROW closing price 12/19/2024 was $34.43 and 52 week high seems to be 59.23 circa 10/18/2024, so the data may be wrong on that one. This company has a market capitalization of $1.21B and is up 223% over one year ago.
Disclaimer: I have held both HROWL and HROWM in the recent past but do not currently hold either one. HROWM is a really good “flipper.”
RS, thanks you are correct. Here are the corrections on 2 issues:
HROWL,HROW,4/30/26,34.43,0.58,Questionable ratio
FCRX,CCAP,5/25/26,19.34,0.97,All good
It moved up HROWL from the “Default likely” to “Questionable ratio” and left FCRX unchanged as “All good.”
Tex-
The J. Geils Band sings “first I look at the purse,”
https://www.youtube.com/watch?v=jqIwPQs6qW4
and so it is, before getting too involved in an issue, first I look at the common.
It’s interesting that you led off with “we are making an assumption whether it will make timely interest and principal payments.” Any dividend payment can be skipped, common or preferred. I often take a minute to review the payment history before buying. I think the only skip I ever came across was PCG-A, a cumulative preferred that was eventually made whole. There must be others; skips are rare. Interest payments from babies can’t be skipped.
In RARE cases, the interest payments can be skipped.
I can think of 2 that did.
Old Colony Bank and Ford back in the GFC.
But a good chunk of baby bonds outstanding have that deferral feature, they just have never exercised it.
Justin,
Oops, I meant senior bonds can’t skip. Thanks for the correction.
R2S. here are the 36 issues that are still trading but not paying interest or dividend payments. Ten of them are Fannie and Freddie’s that stopped paying after the GFC. That leaves 26 others that are not paying. Some of them use the language “deferred” while others say “suspended.” This is out of about 900 total prefs/babys/terms that I track so ignoring Fannie/Freddie this is about 3%. And it does NOT includes issues that literally went bankrupt. It also does not include ones that halted payouts then resumed, like SOHO’s, PCG’s, NGL’s. Rest assured that investors bought all of these thinking they would get timely payouts, only to be disappointed. Nobody buys a newly issued pref/baby/term thinking “the probability of missing payouts is greater than 50%.”
AMTPQ,Pref,
AUVPQ,Pref,
COMSP,Pref,
CSSPQ,Pref,
CTLPP,Pref,Convert
DSHKN,Pref,
DSHKO,Pref,
DSHKP,Pref,
DTLAP,Pref,
EHPTP,Pref,
FMCCI,Pref,
FMCCN,Pref,
FMCCT,Pref,
FMCKI,Pref,
FNMAL,Pref,
FNMAN,Pref,
FNMAP,Pref,
FNMFO,Pref,
FRCCL,Pref,
FRCIL,Pref,
FRCJL,Pref,
FRCKL,Pref,
FRCLL,Pref,
FRCML,Pref,
FREGP,Pref,
FREJP,Pref,
LEHLQ,Baby,Trust
LEHNQ,Baby,Trust
LHHMQ,Baby,Trust
MCLPF,Pref,Convert
NMPGY,Pref,
NMPRY,Pref,
OTRKP,Pref,
SLHPF,Pref,
TEUCF,Pref,
WHLRP,Pref,Convert
Well, Tex, there goes my fantasy. It looks like the best thing to do is avoid all preferreds with five letter tickers, especially if one of the letters is a K or Q.
Tex, here are two more for your list:
SICLQ (formerly SI.PRA),Pref,
FBIOP,Pref
Don’t ask how I know.
MREITS, Banks, Shipping, Some REITS and could be more of all of these in the future.
Tex-
I’m interested in the list of the ones that halted and resumed. Thanks.
I own 6 of the good and am watching 2 others for a drop. I own none of the questionable or likely to fail.
New at Schwab from JPM
48130CXD2 6% 2054, call 12/23/26, pays annually
As usual, JPM leads the pack when yields are rising.
A one-year call protected agency is going for 5.82%. I expect higher soon.
R2S ~ I wouldn’t be shocked if we see more bank issues in the 6.0 – 6.5% in the next few months. Whether one respects or rejects his opinions, JPM’s Diamond has said 6-8% rates a strong possibility with lack of fiscal restraint & chronic inflationary pressures. Apparently, he has been preparing JPM for that possibility.
Got a notice this morning from Fidelity saying that TRINL will be called for $10 on January 16, 2025 which is the maturity date. Now I have to decide if I should sell early assuming I can place the order or fight to get the $25. Fidelity has really gone downhill between mistakes in call notices and not allowing trades to go through on low volume stocks. Maybe they have a bunch of DEI hires messing things up. Fidelity used to be great.
Pretty sure the $10 is just a placeholder value and you’ll be redeemed at $25 dollars par. This is what Fidelity told me last week in reference to another redemption notice. Agree, their customer service is getting worse and these notices are confusing.
I just spoke with a Fidelity rep and he confirmed that it’s a $25 redemption. He didn’t know where the $10 amount was coming from. I suggested they try and discover it and correct it since this is about the 5th instance in recent times. He said he would forward it up the chain…….
I’ve been told that they only pay the amount that is forwarded to them (no matter how much proof you provide to the contrary), and to fix it you have to call the financial company yourself to get it corrected. I noticed a $10 redemption on RiverNorth and just assumed it would be automatically corrected. It wasn’t. It took a lot of work.
Was Jackie Robinson a DEI hire? Just sayin…seemed to be a crude comment in III
Jtrader, you give up the partial div. of what? .21 cents? They already did a partial call. I would lose about $60.00 if I sold over par today.
Seems worth it to get almost 3 weeks to re-invest it.
Oh well, I just tried. It’s restricted. Came up MA5008 at Fidelity. Broke it up into several orders and it went through. PIA
I decided to sell TRINL and redeploy the cash. I also sent a message to Fidelity about it. There is no excuse for putting a placeholder of $10 when the redemption is $25. So Fidelity tells me they will pay me $10 when I expect $25. So that could put someone in a quandary. What if they do get only $10 when they were expecting $25? Could they end up paying margin interest or worse get a margin call? A firm like Interactive Brokers might just start liquidating if you have a margin call. Can you imagine getting liquidated if you have a bunch of illiquid stock in your account. Somebody might be making interest off these supposed mistakes if the right amount is not credited right away.
Jtrader, I had the same conversation with James over this exact same issue. The both of you have the same writing prose, and wonder if it is the same person, and also have the same fear that your broker drives the price of the investment when it is redeemed… Here is my last repeated response.
It’s interesting that you have so much trust in Fidelity and other brokers, despite how often they provide incorrect information. It doesn’t matter what price Fidelity or any broker shows for the investment. The bond has matured, and no matter what price your broker lists, you’ll be paid $25/share on the distribution date. If they ever paid $10/share, it would result in numerous lawsuits—although, frankly, that scenario is unimaginable and wouldn’t happen.
I don’t understand why you think it’s so crucial for the listed value to be accurate. Is it just sentimental value for you? The money would be in your account soon anyway, regardless if they list it at $1/share. Since the bond has matured and passed the ex-dividend date, if you were actually paid $10/share at distribution, it would be a huge scam. Such actions would indicate that every debtor is colluding with brokers to repeatedly defraud investors. But, again, this won’t happen because the debt agreement doesn’t allow it. There are various rules, processes, and procedures in place to prevent such occurrences.
Jtrader, I had the same conversation with James over this exact same issue. The both of you have the same writing prose, and wonder if it is the same person, and also have the same fear that your broker drives the price of the investment when it is redeemed… If i repost my comment, then this system thinks I am duplicating my comments, and hence will not allow my post. You can search on my name if you have an RSS reader, and find the post.
I will try to write a different text response to fake out the web server. It does NOT matter what your broker lists as the price. You should not care what the price is for anything that is being redeemed. It is like you paying off your mortgage or some type of loan. If you owe $50,000 on a car loan, you MUST pay $50,000 on that loan. You cant say that the car is really worth $5,000 and just pay the bank that. It is similar with investments. You have loaned out $x to a company, and when it is redeemed you get that back and the price agreed on. There are laws and processes involved to ensure that redemption processes are followed. If debtors pay what the broker lists an amount as, then it would be the biggest scam in all of history. It will never happen.
I agree with you that the bond will be settled for the redemption amount, but I worry that they may not pay in a timely manner if there is some back office mistake. I used to be a very active day trader back in the day and I have used just about every broker and they do make mistakes. I always maximized my buying power and have actually had margin calls on back office mistakes mostly due to late reporting on fills. There is just no excuse for reporting an incorrect amount when issuing a redemption notice. Somebody is just not doing their job somewhere along the line and Fidelity should figure out where the problem is and make sure it is fixed.
Sorry if this thread has evolved into Broker/Brokerage Info, so I won’t comment further here. BTW I am not James. Thank you for your insights.
Red & Green Preferred & BB Movers Today…
Red…..GREEL (-$2.24), TPTA (-$2.14), AHT-H (-$2.11), AHT-I (-$2.02), SACH-A (-$1.86), AHT-G ((-$1.60), AHT-F (-$1.46), CDR-C (-$1.21), PRIF-K (-$1.21), SCCE (-$1.02), CUBB (-$0.99)
Green…..AFSIC ($1.02), MNSBP ($0.87), AFSIM ($0.74), EAI ($0.65)
Finally getting some red in some stocks. Good day to buy/increase positions. The good deals were the ones that had a recent divy, and then they went down today. I have been sitting for a good while, and it is nice to buy some things for once. Probably should have posted this in sandbox 🙂
The Fed Spoke & the Market Reacted…
DJIA ~ day 10 down again ~ first time since 1974, (-1123 drop)
VIX ~ jumping, up 10.44 to 26.31, up 65.78% today
10Yr T Yield ~ jumping again, now up another 12bp to 4.51%
Any suckers for monthly payers??
GOODN is being sold aggressively, down $2 from a few weeks ago on higher than avg volume, from $24 to $22. ~7.5% at $22.1, goes ex on Dec 20. Very cheap relative to its sister issue, GOODO, which trades at 7.1%.
Their portfolio isn’t the best, but not the worst.. about 65% industrial IIRC, longer term leases. plenty of equity cushion ahead of it, including $40m in common recently issued.
https://d1io3yog0oux5.cloudfront.net/_9fb7e7e5a0809515980fb562de5d5e84/gladstonecommercial/db/858/8272/pdf/GOOD+Investor+Presentation+9.30.2024+-+v1.0.pdf
https://www.quantumonline.com/search.cfm?tickersymbol=GOODn&sopt=symbol
New issue GAINI is now trading.
25.32 is a little high. Not too bad for a hold but as a trader I’ll wait to see if it drops.
I agree. I don’t see a big enough advantage over GAINL.
Thanks Stacking.
GNT-A has sold down to current yield of about 6%. Moodys A2 (equivalent to S&P A). Granted, it is ex-div today but pricing in the 21s with 6%+ plus yield and higher grade credit rating seems attractive for now. I just added yesterday to get to a full position and my basis is now about 22.10.
Yaz,
Thanks!
I looked back to see where long bond rates were when this was issued, and the 30 year was ~2.81. 10 yr was ~ 2.36.
So, the yield premium was a LOT higher at issue.
6 ish seems like a “do” but I wonder if longer rates balloon upward again after today’s short rate cut, just as happened the last time the Fed cut.
I’ve recently purchased GAM-b, so I’ll hold off on more a little while .
I do love preferreds that are based on a broader asset base than 1 company
BTW, If you add to an already full position, what is it now called, “double full?” and is that like Animal House’s “double secret probation?”
Just kidding
“Was it over when the Germans bombed Pearl Harbor?”
ha! Yeah, I rode this up and then back down to my original entry before adding. It certainly could drop some more but I’d rather have my A credit rating doing that than BB+ I guess.
good comment..gnt.pra/pff has seen gnt underperform since may 2023 ..pair had a brief rally from july to september but has given all back and is now testing july lows …am expecting for it to break it had continue its underperformance..3yr low on pair was set in december 2021 from which point it rallied
DJIA…records 9th consecutive down day, a feat which has not happened since the Carter administration back in 1978.
Trump rally was overdone, there’s only a partial pullback so far, market is still a good amount above nov 6 level. No reason to panic. Wake me up when we have a 15% drop. Which could happen but hasn’t happened yet.
Agree…just noting the “rarity” of the 9 day decline in the DJIA. The DJIA pop & subsequent drop now below the 11/6 post election closing.
* 11/6 ~ 43,729
* 12/3 ~ 45,014
* 12/18 ~ 43, 449
I seem to recall the Dow Industrials being down 10 straight days right before the 1987 crash. Anyone with data?
I remember the Friday before the crash the Dow fell ~108, which was a good 6 % ish, and everyone on the elevator at CBOE went home long paper, thinking we’d rally. At that time OEX, the S&P 100 pit was the big thing.
Just reminiscing now, but on the next Monday, anyone who had signed into RAES at CBOE (the Retail Automated Execution System) was stuck getting filled the entire day. RAES entitled a retail order to either 10 or 100 (can’t recall when it changed) contracts at the bid or offer under the firm quote rule. By the time the trader had received a fill , the options had moved away. It was a sure way to profit by using RAES as a retail customer, and quite a few traders blew out that day.
For KMPB holders:
Moody’s changed it’s outlook on KMPR from negative to stable.
New York , December 16, 2024 – Moody’s Ratings (Moody’s) has affirmed the Baa3 senior unsecured debt rating of Kemper Corporation (NYSE: KMPR, Kemper) as well as the A3 insurance financial strength (IFS) ratings of its leading property and casualty (P&C) and life insurance subsidiaries. The rating outlooks for Kemper and its subsidiaries were changed to stable from negative, reflecting solid underwriting results in Kemper’s nonstandard auto insurance segment and improving capital levels.
https://www.moodys.com/research/null-Moodys-Ratings-affirms-Kempers-ratings-Baa3-senior-unsecured-outlook-changed-Rating-Action–PR_1000010693?cid=GAR9PTU7VKT2671&emailToken=eyJ0eXAiOiJKV1QiLCJhbGciOiJIUzI1NiJ9.eyJVc2VySWQiOiJkYzVkYjczMC01NTBiLTQ3ZjctYjhjZi05NzY2ZjAxZmU0MzMiLCJEb2NJZCI6IlBSXzEwMDAwMTA2OTMiLCJjcmVhdGlvbkRhdGUiOiIyMDI0LTEyLTE2VDE4OjMzOjQyLjE1OTk4NDctMDU6MDAiLCJleHAiOjE3MzQ2NTEyMjIsIlVzZXJOYW1lIjoiY3BhbWlrZW1iYUB5YWhvby5jb20iLCJVc2VyVHlwZSI6IjIifQ.Bfkb8c6vHkkMLVyFOpijV7ZuXGJDt-Mu9Wkt26GdKbU#0572b961dceedc105347b4ba6f05cd6f
The problem with Fidelity orders:
I have determined by speaking with Fidelity reps–who clearly do not understand Rule 611 of Reg NMS, the order protection rule, that Fidelity FDLM–their liquidity management tool– is disadvantaging our limit orders by not representing them at any market center, which means they are not subject to the order protection rule.
I raise this issue because of two trade-throughs in the past 2 days
I’ve asked SEC whether FDLM is also considered a market center under the rule.
The active trader rep I spoke to today condescended ,”the order that traded below your bid was a market order and as you know a market order takes precedence over a limit order.”
This is silly nonsense. It would require a market order on the other side to offset it. My marketable limit order should have traded against the order that filled below my limit price, and unless it was a Fidelity order, the rep would not know what the order type was of the other broker’s trade.
There are 11 exceptions to the order protection rule at last count. My orders meet none of those exception.
The only way to avoid this problem is to use active trader pro to direct all of our orders to an ecn or exchange. Quite a few preferreds cannot be routed to an exchange or ECN. I can’t do it with CTA prfdB
I have emailed SEC division of trading and markets and will post the reply.
Until then, I remain Fidelity’s attempt to make me a LOSINGTRADER.
Grazie, LT.
Quite a few preferreds cannot be routed to an exchange or ECN. I can’t do it with CTA prfdB. I guess it’s IB. I don’t mind paying to get limit fills v not getting filled
Makes sense to me, though I don’t know the precise wording of the rule. Market orders get executed immediately and the buyers might bid for it. I’ve had the same experience with limit orders just sitting there but when I change it to the Bid/Ask price it may get price improvement sometimes better than where my limit order was wasting away. Because they are forced to bid on it now or never.
I may try an experiment. Two limit orders in different accounts. Change one to the Bid/Ask price and see what happens.
Martin, even an AON market order–which I have never placed so don’t even know if it’s an order type, would be subject to filling the 100 I had bid at 71.25 before executing the remainder at $71. Now, an ISO (intermarket sweep order) is one of the exceptions, but I believe the exception is only so the market center can route out part of the order to another market center with a better limit price..I’ll read that part again as I do not place ISO’s and it’s not an order type Fidelity offers..though most orders would be partially routed out to market centers with better bids, if, say you filled the number of shares at a market center with the best bid.
As I said the other day I’m not an expert on NMS, but I know the basics and order protection is pretty basic.
i trade on fidelity and I never saw (or maybe just didn’t look) for an option called bid/ask price
Not an option I meant I just type in that price on my limit order. Same idea as a Market order except I don’t want to risk the price changing against me.
LT, you know better than I do that this question has an exact answer. Every brokerage has their own “routing algorithm” that decides exactly how each order is going to be routed. Or IF it is going to be routed out or not. Some algo’s choose to hold certain orders because of what they see in the market. Even if you specify to Fido where you want the order sent, it is NOT a 100% certainty that their algo will do that. Someone at Fido can unambiguously tell you how each order will be routed, but it might be dependent on what the real time data outside the brokerage looks like. Good luck actually talking to someone in the “algo group” that knows the answer. Regular support people including “traders” may or may not understand the algo to this level of detail.
After it gets routed, the exchange or ECN or internalizer or market maker has their own algo that decides how to handle the order.
So there are two levels of uncertainty. 99.9% of the time for “regular” orders, you do not need to know this level of detail. The orders get routed and you can make sense of why orders get filled or not. And the consolidated tape system (CTS) and consolidated quote system (CQS) record all of the info, so you can reverse engineer any trade. For orders that do NOT get onto the CTS/CQS, it can be more difficult to determine.
There is another III’er that is an expert on market microstructure, which is what this is. Maybe they will speak up.
(In the past I used to spend time looking at CTS/CQS data, but not any more.)
Thanks, TEX.
Let’s see what SEC has to say. I found out I can’t route to an ecn or exchange on many preferreds via ACTIVE TRADER, so I started using IB for orders on these as of yesterday.
In 25+ years trading I’ve had a trade through only several times until Fidelity does it apparently all the time.
NMS was supposed to prevent this from happening.
Bought CHSCN (7.1% preferred) at 25.03 on ex-div price drop.
Prospect Capital Corp. slid firmly into junk territory after a second major credit-rating company lowered its assessment of the $7.6 billion private credit fund following a deterioration in the quality of its assets.
Moody’s Ratings late Monday downgraded Prospect to Ba1, or one level below investment grade, owing to a combination of weaker earnings, higher investment losses, an increase in payment-in-kind income and a weaker asset-to-debt ratio for the fund.
While Prospect “has announced measures to improve investment composition by increasing its senior secured credit mix and ease demands on liquidity, we expect that it will take time for the company’s financial condition to stabilize,” Moody’s said in a note. “In the meantime, its performance will likely be weaker than many peers.”
Moody’s decision, which follows a similar action by S&P Global Ratings earlier this month, means Prospect now has junk ratings from both of its main credit graders, which could make it harder for it to raise fresh financing. The fund is structured as a business development company and is publicly traded under the PSEC ticker.
rock-
thanks for the reminder- picked-up a little.
R2S…… That’s a very good price for a very solid equity. I was just checking my portfolio after working on my front steps handrails and saw that. I have a full position myself, but it is tempting to buy some more in the morning if it is still hovering around par.
Dj-
If long-end yields continue to rise, I would not be surprised to see CHSCN trade below par. And I still have room for more. However, that might also bring CHSCL (7.5%) down to par where I will buy it instead.
Odd that Fidelity still has not posted call notice for PRIF-G.
Still puzzled by the ZIONO/ZIONL situation
Brokers and Bloomberg have it as called and Fidelity paid me principal and interest today on ZIONL but I have not seen an official call and I guess I am not the only one since they are both trading still with several prints over par.
Indeed. I have 100 of my 500 shares left of Ziono in Fido that they didn’t pay redemption on because I bought them Friday so they only settle today. This is bizarre.
Seems like Raymond James did a full call for Zionl and Ziono.
Ziono has now traded over 16,000 shares according to Factset today. Have never seen that happen with a “called” security.
Is it likely these trades will be busted?
IB shows these as “DTC chilled” ineligible for opening orders.
https://www.sec.gov/investor/alerts/dtcfreezes.pdf
Did someone mis-read this press release?
30 days notice would put it on Saturday, the 14th.
https://zionsbancorporation.com/news-events/press-releases/news-details/2024/ZIONS-BANCORPORATION-PRICES-PUBLIC-OFFERING-OF-SUBORDINATED-NOTES-AND-ANNOUNCES-ADDITIONAL-CAPITAL-ACTIONS/default.aspx
“Additionally, the Zions board of directors has authorized the following capital actions:
Full redemption of its Series G Preferred Stock (CUSIP: 989701859) at a redemption price equal to $1,000 per share (equivalent to $25 per depositary share), plus any declared and unpaid dividends, without accumulation of any undeclared dividends;
Full redemption of its Series I Preferred Stock (CUSIP: 989701BD8) at a redemption price equal to $1,000 per share, plus any declared and unpaid dividends, without accumulation of any undeclared dividends;
Full redemption of its Series J Preferred Stock (CUSIP: 989701BF3) at a redemption price equal to $1,000 per share, plus any declared and unpaid dividends, without accumulation of any undeclared dividends; and
Full redemption of $87,890,550 aggregate principal amount of 6.95% Fixed-to-Floating Rate Subordinated Notes due September 15, 2028 (CUSIP: 989701818) at a redemption price equal to the principal amount being redeemed plus any accrued interest.”
But the line about “expected to take place in the 4th quarter of 2024” implies there’s not an exact date set, doesn’t it?
Funny you should say that, since the press release says “This press release does not constitute a notice of redemption”, so the date on it is not relevant.
But surely they can give more than 30 days notice if they want.
ZIONL notice was filed for delisting
https://d18rn0p25nwr6d.cloudfront.net/CIK-0000109380/1c11a120-5dbc-4198-aed4-e5495634cec8.pdf
Yeah now the 100 shares of Ziono I had left are gone but that buy (and my $2500) is still listed in my history-I guess I have to call to get that trade reversed? This was certainly sloppily done.
box 2 is marked, which means it was fully called. (No notice requirement for 2)
here are what the boxes mean by the governing regulation.
Examples of #3 are a stock merger, and #4 is the expiration of rights/warrants
17 CFR 240.12d2-2(a)(1)
The entire class of the security has been called for redemption, maturity or retirement; appropriate notice thereof has been given
17 CFR 240.12d2-2(a)(2)
The entire class of the security has been redeemed or paid at maturity or retirement.
17 CFR 240.12d2-2(a)(3)
The instruments representing the securities comprising the entire class have come to evidence, by operation of law or otherwise, other securities in substitution therefor
17 CFR 240.12d2-2(a)(4)
All rights pertaining to the entire class of the security have been extinguished;
FYI. GAM-B is selling for $25.01. Moody’s A1 rating and listed on III as “sock drawer”. It has been consistently selling in the mid/high $25’s.
FWIW – RIV-A trading at $23.73, A1 rated as well. 6 coupon, 6.36% current yield.
Still dropping Larry. That is my concern with the low yield investment grade, we may see them re-test their 52 week lows or even 24 month lows. Someone mentioned last week the CTA PA and PB have dropped and I noticed the same thing as the GAM B they are still above their 52 week lows.
I am not willing to bet I get to collect the dividend and a capital gain right now.
Charles,
What’s your opinion on these (Gam-b for example) at a 5.95% yields v say a utility prfd with the same yield?
Lt I have a cost of 24.49 on my purchase of them. No opinion as to a comparison to a utility preferred except except I want to have some diversity.
bought a bit on a gtc order. It will go in the underwear drawer just to make sure nobody runs out and needs a few socks.
FYI – Per FIDO woof!
“Priority Income Fund Announces Redemption of its 6.250% Series G Term Preferred Stock Due 2026”
Friday Preferred & BB Movers…
Red…BHR-D (-$1.60), SHO-H (-$1.06), BFS-E (-$1.03), ICR-A (-$0.73), SCCE ($-0.72)
Green…SOCGP ($0.88), TPTA ($0.83), GPUS-D ($0.82), LFT-A ($0.62), ENO ($0.60)
Bonds…
JPM…48130CWW1, 5.75%, $100, Senior, A1/A-, Annual, YTC 5.75% 12/23/26, YTM 5.75% 12/23/44
BAC…06055JHR, 5.5%, $99.73, Senior, A1/A-, Monthly, YTC 5.522% 12/16/27,
YTM 5.522% 12/16/44.
US National Debt Clock…
* Just rolled over another trillion to 36.2T
* Fed Debt per taxpayer = 271K, Fed Debt per citizen = 107K
* Fed Spending = 7.1T
* Fed Tax Receipts = 5.0T
* Fed Budget Deficit = 2.1T
* 10Yr T Yields need to go higher IMHO, as neither party wants to turn out the lights on the party.
Newbie- I noticed a drop in TY-PR early this morning. I had a low ball bid out on BFS-PE I will have to check when I get home if it hit.
The Sachem SCC series went ex today- I have never seen such a mish-mash of varied and inaccurate quotes and variations on the prior closing as this hot mess. Was trying to sell a couple for a frien- to top it off, athe spreads were huuge.
Ex- etrade now show prior close on that SCCE as 24.75 – but it was a 20+ stock, closing down 97¢ to 19.57 – arghh. I got at least 3 diff prior closing on
SCCG and SACH-A.
What’s going on with these sites?
I have noticed that some sites haven’t gotten the daily % change correct on ex-dates. This has happened over the last week.. def seems strange as Fido and IBKR are usually good w that.
Maine – You reminded me of two complaints I had with Schwab today. Related to your point, I noticed that their ThinkOrSwim platform didn’t take into account ANY of multiple x-div price adjustment I had in my accounts today therefore showing a net loss on the day in my accounts… Looking at the same info from their website, my account was UP on the day because they did take into account the x-div price adjustments. How’s that for a confidence builder in Schwab – that they can’t provide identical summaries of my accounts across all their platforms?
Then secondly, they didn’t credit the proceeds of the acquisition of AY by Energy Capital that closed today, until almost immediately AFTER the markets close. They credited the dividend received earlier in the day, but the $22/share proceeds ended up getting stuck in cash for the weekend, earning Schwab money, not me, instead of my being able to move them to SWVXX in a timely fashion Just a coincidence I’m sure (ahem)
I wasn’t going to bring it up on my own, but since you mentioned it……
Fidelity deposited the $22 / share earlier in the day and it was available for trading / MM sweep. As you noted Schwab literally waited 20 mins after the close to post it.
Since Fidelity does auto sweeps, there’s no incentive for them to withhold it till after hours; whereas Schwab gets 2 free days, at my expense, for bogarting my redemption payout. Frustrating! If this was a one-off, I could let it slide, but this is literally their M.O. – post after hours and keep my money for an extra day, or weekend.
TBB about to be called also?? This is up sharply today while rates rise.
Fidelity supervisor said called for Jan 12 per a bbg terminal . Schwab says nothing on a call per bbg .
Aren’t these brokers great?
Traded 449,000 and the 5.625 was called Dec12
Fidelity now claims the bond is callable 1/12 but has not been called.
Idiots!!was looking at this because it rallied nearly $1 at one point
Never mind.
If not called most likely just a redeployment of the funds from TBC …
I have full positions in each as sock drawer issues … no amount of whisky helps seeing these go away ….
If TBB gets called I’m stuck with the T.PA issue … which is fine with me maybe it moves to IG rating as other debit is retired (fingers crossed)
There has been some post pointing out the thin credit spreads … very valid points, however, why?
If this is a trend, eventually we will all be stuck with buying in O ….
PickleNick,
Why don’t you call a full service broker and have them buy expert market KTBA for you.
It’s the Bell South (now T) 7% of 2095 at 22.50 ish
Lt,
Hello, I hope all is well.
Do you own it? I would be using Schwab or Merrill Lynch. Is there a better option for buying this issue?
Yes I have been watching it for a while. I think its the liquidity of the issue that has given me pause. However, since I have diversified my holdings over the last 3 years I may be able to commit this issue to the sock drawer. It would be in my Roth IRA for sure. I would view this as something like a corporate bond. Set and forget. Is there any specific questions I should ask about buying this issue? Should I be setting aside a minimal amount of money to commit to investment? I like this investment it would just me new to me.
Cheers,
Be Safe,
Picklenick,
The only way I know you can get this is a full service broker . Merrill should work. It does have a wide market. 22.18x 23.75 I believe.
Somewhere out there is a broker who won’t charge a fortune to buy it.
KTBA may be illiquid, but you could always hedge if need be by shorting a T bond. Since it’s a trust holding a corp bond, that’s the way to view it. I can’t think of any questions to ask; would just use a limit GTC
I don’t consider a BBB security sock drawer material
PN,
I didn’t answer your question. yes, I own it. About 2% of my investment net worth ( doesn’t include my home).
I’ve got several GTC bids in for absurdly large size and absurdly low price.
My sock drawer is A to AAA muni bonds and a few CEF preferreds rated A or above
Yep. I deployed some tbc proceeds to tbb. Hoping it sticks around. (I also bought a new Engage paddle and a Dinkmaster.)
10Yr Yield ~ up 5bp this morning to 4.38%, was 4.14% only 7 days ago.
Maiden Holdings – MHNC
Ad Hoc Group of Maiden Holdings North America Noteholders Organize With Pallas Partners
NEW YORK–(BUSINESS WIRE)–An ad hoc group (the “Ad Hoc Group”) representing at least 25% of 7.75% Senior Unsecured Notes (the “MHNC Notes”) due December 1, 2043, issued by Maiden Holdings North America, Ltd. (the “Company”), has organized with Pallas Partners (US) LLP (“Pallas”) as legal counsel in connection with the Company’s sale of Maiden Reinsurance North America and related transactions.
On behalf of the Ad Hoc Group, Pallas has sent a Notice of Default to the Company and Trustee, alleging that this series of transactions represents the sale of “all or substantially all” of the Company’s assets, in violation of the Indenture governing the MHNC Notes.
Other noteholders are invited to contact Pallas for further information.
https://www.businesswire.com/news/home/20241209940014/en/Ad-Hoc-Group-of-Maiden-Holdings-North-America-Noteholders-Organize-With-Pallas-Partners
The transaction they’re referencing was the $286 million sale of Maiden US to Enstar back in Nov 2018. That sale logically should have triggered MHNC’s asset covenant and forced a redemption.
Maiden reported the following at the time: “The Company’s current analysis indicates that the conditions to redeem the 2013 Senior Notes as stipulated by the securities may exist. Should final analysis support such a conclusion, the Company expects to redeem all of the $152,500,000 2013 Senior Notes at that time pursuant to the terms of the underlying securities.”
However, Maiden’s mgmt then concocted a plan to avoid a covenant breach, by employing a series of intra-company asset transfers among the company’s sub-entities. Upon news of this maneuver in Jan 2019, MHNC promptly fell ~30%.
I figured some larger holders would rightfully challenge Maiden on that maneuver, I just didn’t think it would take a full 6 years for such a challenge to arise..
BRANFORD, Conn., Dec. 13, 2024 (GLOBE NEWSWIRE) — Sachem Capital Corp. (SACH) (the “Company”), a mortgage REIT that specializes in originating, underwriting, funding, servicing, and managing a portfolio of loans secured by first mortgages on real property, announced today that it is appointing board of directors’ member and audit committee member Jeffrey C. Walraven, Interim Chief Financial Officer. Nicholas Marcello, the Company’s Chief Financial Officer, informed the Company that he was resigning to pursue a non-REIT industry opportunity. Mr. Marcello will remain available through December 31, 2024 to provide assistance to ensure a successful and seamless transition. The Company confirms that there are no disagreements with Mr. Marcello regarding the accuracy of the Company’s financial reporting or accounting practices. The Company will begin its search for a new Chief Financial Officer immediately. Mr. Walraven will remain a member of the Company’s board of directors, but will resign as a member of the Audit, Compensation and the Nominating and Corporate Governance committees effective immediately…
https://seekingalpha.com/pr/19946627-sachem-capital-corp-announces-chief-financial-officer-transition
The hits keep on coming! This guy was promoted to CFO only a few months ago.. a few SACH baby bonds now ~17% YTM.
Meh…Marcello was named “interim” CFO back in June. Prior to that the CEO did both jobs. This doesn’t sound unplanned or unusual, coming as it does at the end of the year. It does add some color to the SACC redemption kefuffle though…lets hope they get that straightened out.
He was officially promoted as CFO in August. Check SEC filings if you don’t believe me. Kinda strange for them to make him CFO, then have his departure a couple months later, no? Heck, even Brad Thomas has soured on Sachem!
Sachem is one of the worst mMREITs I’ve ever seen, and that’s saying a lot. check out the yahoo message boards for some further dirt on this name, there’s a lot.
And oh, if you want to see more proof of “unplanned or unusual,” take a look at prior tenure for SACH executives (not named John Villano) over the last 3 years. it’s a complete shitshow, they now have an activist involved, hopefully they can preserve capital for the baby bond holders.
Citadel – check this out for a laugh. People on the yahoo board claim he hired his daughter in-law as well, not sure of her role.
https://x.com/konekoresearch/status/1825988590804848680?s=46
Isn’t there a statute of limitation on this claim? As I’m reading your post the claim is 6 years old.
The trustee (Wilmington) is governed by the Trust Indenture Act. The Act doesn’t specify an absolute statute of limitations for filing a Notice of Default.
Key question is whether the trustee will agree with the ad hoc group as to whether an Event of Default occurred.
I actually thought of reaching out to Wilmington back when this happened (to at least ensure they were even aware of it). Ultimately I didn’t, and if no one else did either, then it’s possible that Wilmington might have been completely oblivious.
Now if Wilmington disagrees with (or doesn’t respond to) the ad hoc group, then the group’s only other option is to file a legal claim.
MHNC is governed under NY state law per its prospectus. NY’s statute of limitations for contract law is 6 years. This means they’re *really* down to the wire here. Maiden’s 8-K announcement that MHNC would not be redeemed was filed on Jan 3, 2019. Presumably this group has merely 3 weeks (less 2 holidays) before the statute of limitations expires.
IIRC, Wilmington notified bond holders that if they legally challenged Maiden, those holders would have to pony up the expenses. Wilmington (as trustee) has represented us in other circumstances, but they never issued another notification like that one. I suppose they found the challenge to Maiden’s position too difficult to win.
Interesting, and good to know Wilmington was at least aware of the situation back then.
I imagine it could be a costly challenge. Presumably a plaintiff would need some discovery / forensic accounting, to determine when precisely the intra-company asset transfers occurred relative to the date of the Maiden US sale.
The Zyskind-Karfunkel cabal that took over AFSI, pillaged Maiden, and got Enstar into bed are (IMHO) scum. They manipulated the companies for their own benefit and screwed a lot of investors. I have said that on this board for years.
one of the funniest things (IIRC) was when one of the scum tried to “paper over” some self dealing by “kind of” disclosing it in a footnote to the company’s annual report – and got caught.
It is possible that folks have waited too long to sue, but I hope this law firm can find a way to get some of the money back and maybe punish the Zyskind-Karfunkels.
Doesn’t Maiden have 100M authorized for note buybacks? At the current discount, why can’t they put that money back to work? Sure many would take a decent tender at this point versus a drawn out legal battle.
Maiden has had that $100mm buyback authorization for their bonds in place for 18 months now, but they’ve been oddly shy to use it (having only bought back a piddling 5,567 notes of MHNC to date).
With the recent drop back into likely the high $15s and 16s from the $19s, it seems a good place to buyback.