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READER INITIATED ALERTS

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1,292 thoughts on “READER INITIATED ALERTS”

  1. Another week, another bankruptcy ~ this time retailer Joann. Highest corporate bankruptcy rate for the Q1 since GFC.

    1. I am not sure how a lot of these business types hung on as long as they did. Bed Bath and Beyond and all their ilk. I mean Joann might have been fine if Hobby Lobby did not ?out compete? them. Too much competition for such a niche area. Even stores like Walmart, Target, and Home Goods all want a piece of the pie in some aspect.

      They had a chance to develop a new strategy, concept, or what have you but failed to deliver. Also not like they are disappearing. Current investors just got hosed.

      1. fc, just to bring some clarity to the Bed Bath & Beyond Chapter 7 liquidation. BBB would still be with us, but they misspent their “safety net”; they destroyed a whopping $11.8 BILLION on buying back their own equity since 2004. These precious dollars could have been better than spent buying back stock and/or not issuing the $5.2 billion of debt that they had on their books when they filed for bankruptcy protection. In 2014 I was part of a team that spoke directly with senior management and their board of directors about NOT taking on $2 billion of debt to finance their share buyback; BBB had little to no debt before that juncture. Even M&A would have been less risky (that was our presentation) than taking on this $2 billion to buyback their inflated shares. Last year Chevron announced they were going to buy back $75 BILLION of their equity, I sold my position immediately and bought more KRP and other energy companies equity.
        In the USA 🇺🇸 our national motto is ‘In God we Trust,’ reminding us that faith in our Creator is the most important American value of all.
        Peace, Azure

        1. Bed Bath & Beyond didn’t need to spend a dime, simply clean up their stores and present their products in a attractive manner. Anybody who went to their store would most likely never return to such a disaster, I know my family didn’t.

          1. Bed Bath Beyond is now Beyond ticker BYON this is new growth play if you will. It includes Overstock.com and they have just added Zulilly. I am not much for cool retail brands and online shopping “experiences” but I am told they are cool. There is some other crypto businesses in there as well which is a hangover from Overstock.com. I am not nuts about that part, but it has upside and no downside (they paid nothing for this portfolio of businesses as far as I can tell).

            Marcus Lemonis (of CNBC fame) is now the executive chairman of BYON. I like this aspect of the story quite a bit.

            It looks like the business plan is to roll-up defunct retail brands and build up a portfolio of value oriented brands sold online.

            FWIW I have recently put on a leveraged long term long position in the name from a common equity standpoint using both common stock and options.

  2. MMFs today…

    VUSXX…5.28%
    VMRXX…5.28%
    GABXX…5.27%
    VMFXX…5.27%
    SWVXX…5.19%
    PRTXX…5.07%
    PRRXX…5.05%
    SNSXX…5.04%
    SNOXX…5.03%
    SPRXX…5.03%
    SPAXX…4.96%

      1. I parked some cash into it also. Do not want to deal with early call and roll into another CD kind of things.

  3. Will 10yr T test 4.4% this month?

    10yr T ~ now at 4.33%, up 55bp since Dec 26, let’s see JP’s impact this week.

  4. Folks anybody on here track agency mREIT ARR? It looks like there are some things going on there in terms of exiting CFO and co-CEO also internal investigation into reporting non GAAP metrics and also finanical controls.

    They NTed 10K on 3/1 but filed 10K on deadline which was 3/15.
    This is an externally managed agency focused mREIT which I don’t pay much attention to, but this news could be interesting.

    1. I previously owned one of ARR’s preferreds. I got out of the entire mREIT sector once I realized that they tend to be pretty good money furnaces (the ARR share price is down 80% since covid, for example). They’re probably just not going to be good businesses until the yield curve un-inverts.

      I look forward to reading the 8-Ks about those departures. They will indicate if there were disagreements with company policy that happened.

      1. Yes… in this case the CFO seems to have been fired (it would seem). I have never seen that end well.

  5. (CUSIP 21871NAB7)

    CoreCivic, Inc. (NYSE: CXW) (“CoreCivic”) announced today that it is delivering an irrevocable notice to the holders of all of CoreCivic’s previously issued $675,000,000 original aggregate principal amount of 8.250% senior unsecured notes due 2026 (the “2026 Notes”) that CoreCivic has elected to redeem in full the 2026 Notes that remain outstanding on April 15, 2024 (the “Redemption Date”). The 2026 Notes were otherwise scheduled to mature on April 15, 2026. The 2026 Notes will be redeemed at a redemption price equal to 104.125% of the principal amount of the then outstanding 2026 Notes, plus accrued and unpaid interest on such 2026 Notes to, but not including, the Redemption Date (the “Redemption Price”). As of March 15, 2024, the principal amount of the outstanding 2024 Notes was $98,774,000. CoreCivic intends to use a combination of cash on hand and available capacity under its revolving credit facility to fund the Redemption . .

    My apologies if someone has already posted this. I did not see it.

    1. Tex, does this seem to be a trend? companies seem to be issuing new debt and the market seems to be buying it. Even with rates seeming high right now, companies like ATH and AMG are coming to market and the offerings are being quickly bought out and the yields driven lower as buyers are paying more than par to own them.

        1. The article I notice, states what I have been presuming to happen…”It is more cost-efficient for companies to issue junior subordinated debt whose interest payments were tax-deductible to refinance taxable preferred stock that is becoming callable,” Botoff said.
          Of course this is all on a relative basis though. Financials constitute 70-80% of all preferred stock anyways because of capital regs. And also because of those regs, they cant issue sub debt for Tier 1 anymore. So the refi’ing from any perp preferreds to sub debt is just materially dealing with smatterings from the other ~25% of the preferred world. And thus the long term downtrend of less ute preferreds continues.

          1. Your expecting more of your favorite ute preferred’s to be called and replaced with riskier long term junior subordinated debt. But look at the sunny side, it may offer higher yield.

            1. Well there really isnt much exchange traded utility preferred outstanding to begin with. Even EIX last issuance last year was a sub debt and CEO on CC was bragging out it being a “rate payer saver” being it was tax deductible over preferreds. No Im not expecting any of mine to be called. But, me being a small bit player, I have plenty of room to maneuver around in whats leftover.
              Added thought….Why would you consider long term junior subordinated debt riskier than a perpetual preferred from the same company? I consider them the same, with the only real difference being new issues are more liquid and thus more market sensitive in general than old institutionalized issuances.

          2. BTY Grid, I have put in a few bids on some of the new offerings but I am really not enthused about the market lately. I really don’t have any warm fuzzy feelings. Actually more a feeling of unease. We all know the market can go higher for longer than anyone expects. There is a lot of money sitting on the sidelines and it’s getting impatient to get to work. Evidenced by the demand for the new offerings coming to market.

            1. With credit spreads really low both at IG and junk levels who can blame them sending it out if there are takers? Relatively speaking a moment in time snap shot, one was getting better yield off treasury yields in ZIRP than they are now with 5%+ Fed Funds and ~4.3% 5 and 10 yr treasuries.

              1. Grid,
                I was reading (last week? – I think I posted a link to the article???) that there is an uptick in refi offerings because it has become a bit cheaper for companies to refi now, and it helps them start reducing the wall of expiring debt that many face. Not sure what to believe about it.

                Sorry – I am working from a “loaner” computer and I don’t have my history/notes.

                1. Private, it doesnt surprise me. Its not because interest rates are coming down, its because credit spreads have dropped and are bouncing around 20 plus year lows. The spreads are horribly tight. Meaning one isnt getting much “yield juice” moving up the “risk ladder” from treasuries. This encourages companies tapping the debt market from eager participants.
                  https://fred.stlouisfed.org/series/BAMLH0A0HYM2
                  https://fred.stlouisfed.org/series/BAMLC0A4CBBB#0

            2. Charles
              Your intuition is telling you something.
              My Sunday reading is full of warning alarms.

              Most immediate potential is upcoming BOJ (Bank of Japan) central bank meeting 3/18-19. If BOJ raises/releases the ceiling on Yen T-Bill rates, they may strongly rise. Historically, if yen bond rates rise, US bond rates follow.

              Second is a scathing piece on how Fed policy is based on keeping interest rates low. The implicit “Fed Put” increases risks taking based on the assumption that the Fed will bail out any problems. Result is asset prices continuing to rise (home prices, gold, commercial real estate, bitcoin, stock market). History shows such increases cannot be sustained and correct in violent downturns.

              Not saying that either of the above will happen, but they are ominous storm signals suggesting caution is more appropriate at this time than enthusiasm.

              1. Thanks guys, everyone here providing links and tidbits of information about what is going on in the world is very helpful. I see too many people in my daily life not looking outside their bubbles about what’s going on in the world overall. I like seeing opposing viewpoints. I read on that other site about all the positive articles and enthusiastic comments about shipping, then I read an article on Yahoo finance by Reuters
                https://www.reuters.com/markets/europe/maersk-ceo-says-container-rates-have-fallen-unsustainable-levels-2024-03-14/
                This reinforces what others have been saying about the future over supply of all kinds of ships coming in 2024 and 2025 who are warning and are in the minority.
                I’m going to miss getting paid to sit in front of the computer 8 hrs a day and getting to read the news.

                1. Thanks Charles,
                  I have been completely out of anything related to shipping for a while, so I have skin in that game other than I still hold some textainer preferreds that go away in a few weeks.

                  As you mentioned, this oversupply was forecasted a couple of years ago when they started tallying up all the new hulls under construction and didn’t see enough “retirements” to offset. I think I posted about it then.

                  Lots of investment went into new ships when the supply chain froze up (2020-22?), but several people in the industry I talked to (in Asia) at the time said it wasn’t lack of ships, it was lack of containers in the right places (they existed, but were in the wrong places), inability for US west coast ports to handle volume, and other things. there is also a fall off in demand for products from China.

                  Anecdotally, we just needed to move a few containers from China late last year and rates had dropped like a rock since 2022.

                  1. My focus lately was for LNG and to a smaller extent other gas carriers. After the Ukraine war broke out and supplies via pipeline were interrupted these ships became very much in demand and availability was limited. Because of this everyone got on the bandwagon and ordered ships. Now there is the triple whammy of everyone in the world involved, demand is down and supply of ships is going to hit the water this year and next. Also we have the unknown of the economy. I used to invest in NAT and KNOP and I have seen this movie before. I might be leaving the party early, but better than trying to get out of the concert parking lot when everyone leaves. I feel sorry for the retirement funds investing with Stone Peak.

                    1. I still hold some SEAL/PA and SEAL/PB in the LNG space. I think they have long term charters so the presumably the preferreds should be able to be paid going forward but that doesn’t mean the prices will remain near $25. I remember in 2007-2008 the dry bulkers like NMM got crushed even though they had long term contracts in place. MMM went from 20 to 3 where the yield was 45% or so. I averaged about 7 on it as I started buying it at 14. It eventually bounced back and paid the dividend along the way.

                    2. On a related note, is OPEC priming the world for an sizable oil price increase by reducing supply as Russian exports will likely fall because of infrastructure damage as the Ukrainians hit their oil production faciliites?
                      The oil market is always on a knife-edge, and even the highest production in history by the US could be outstripped by demand if supply falls off elsewhere, like it did in 2008.

            3. “I really don’t have any warm fuzzy feelings. Actually more a feeling of unease.”

              Charles,

              Had that same conversation with a friend today – and guessing you read my post last night re same via geopolitical. Many friends say the same thing – and none us can put our finger on it.

              Meanwhile, the loudly predicted and droned on (and on) about “for sure” rate drop has evaporated for now (again) and we’re hearing a growing chorus about the debt. My guess is the debt won’t be a tangible issue until it’s a crisis – like when the next big tax cut or spending bill occurs and the market (finally) retaliates.

              Not because of the above, but just because of my trading geometry have been in sell (lock cap gain) mode for two months+ now and within close range of being fully repositioned. Some issues sold over last few weeks could now be bought back $1 cheaper – though I’m sitting tight until next shock hits prices.

              At current prices for high IG it’s a one way bet – everything is priced for perfection. MMs have higher yields then some preferreds. That the market could produce that outcome is plain nuts.

              Still though holding a greatly reduced but sizeable hand as hedge if opposite occurs and rates reverse to downside and rolling CD/Treasury/FHLB ladder over as they mature.

              1. Alpha you and probably Grid and a few others here have been selling and locking in profits. Actually I have done the same just not as much. I have been selling more than I have been buying but I still feel like I am top heavy on some of the holdings that have risen above par. Like you said, this doesn’t make sense the price has went up so much they are yielding close to the same as a Treasury.
                Everyone has different investment goals. Some of us have other sources of income or enough coming in to be able to lock in profits and give up the other end of the barbell the income that we bought these stocks for. The one account my wife is withdrawing from is producing 50% more then she needs but I still hate to sell off to lock in profits as it’s taken the last 2 yrs to pick up the deals on income with the opportunities that we haven’t seen in decades.
                So I think I will continue to hold most and I am sure I will take a hit if the market falls. But in that account 1/3rd of the money is still in MM and a Ultra short term Treasury fund which until recently had been returning less than 3 months ago, but surprise surprise, this week the yield has jumped back up. When the drop comes I will be buying more and probably buying back some of what I sold.

                1. Who knows, Charles. If one wants to be “risk off” one isnt getting penalized much in short duration. I have maybe 20% or a bit more in perp preferred, but I dont really have anything sitting in MM either. But some CDs, IBonds, and TBills are easily accessed if a real deal popped. And I still have some shorter duration stuff like the usual suspects of KTH, its actual sub bond and the 7% Barings 2029, etc.

                  1. Grid, the MM fund is backing GTC orders. Most are sitting there at Oct. Nov. prices. I went through most this past week updating the expiry dates. I can always wish for some Christmas presents in July.
                    Just my way, instead of using watch lists and alerts.

                    1. I have some cash for that, but largely use my untapped margin for bids. If something hits on margin I figure it out later to either move cash around or just sell something I was comfortable unloading.

                2. Charles, Using CD/Treasury/FHLB 2-year ladder and alt-investments as back-door to preserve optionality as market sorts itself out. Still holding older utes, less liquid pfds like CKNQP, CEF-pfds and excellent balance sheets like REGCO.

                  Topping-off 1.3% fixed IBonds. Not wealth-generating but preserves purchasing power + 1.3% for a corner of holding.

                  1. CKNQP is one I have a small holding of in the Roth and one IRA. Been doing research this weekend with the thought of getting prepared for a market event. Started out pulling up BDC’s and CEF’s and Reits looking for preferred’s.
                    Even started considering ETF’s by themselves as they spread the risk out.
                    REG common is in the retail REIT category and has about a -8.5% return so far this year which isn’t saying much with the overall market up and 110% 10yr return and past 2yrs sitting at zero which is better than a loss. The preferred will give you added safety. REGCO is up about 4% including dividends for the year with a yield of 3% while the REGCP is about even on return including dividends.
                    Buying more REGCO at this point would not make sense as it’s too rich of a price to get a 3% dividend. I admire you Alpha, your continuing to hold and collect your yield to original cost and not selling to move into a higher yielding preferred.
                    I need to quit my research for now. I have a grafting and potting up event today I need to get ready for. Especially since I have the pots for the group. The goal is to create 150 new trees today and sell at a plant sale in July. All proceeds go to a scholarship program for applicants going into ag at Sonoma State or UC Davis.

                    1. Charles, Thank you for your volunteer work! I need to do better in that area.

            1. My mistake Alpha, I was looking at SA and they consider it a new issue and look at the first dividend issue under the symbol as a annual yield.
              Was running out of time to open Fido

              1. Charles, I’m sure we’ve all done that or the equivalent at one time or another. About 7 months ago I miscalculated the yield on a one-year term and have a YTM about 1.5% lower than planned. Eye-rolled myself and just left it sit there. A few months to go!

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