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1,291 thoughts on “READER INITIATED ALERTS”

  1. Started a small position in MFAN at $24.8 . Seems cheap compared to the preferreds since it is senior and slightly higher yield.

  2. PPI ~ Up
    * PPI ~ up 0.3% m/m, above expectations, largest increase in 5 months
    * Core PPI ~ up 0.5% m/m, above expectations

    CME Fedwatch Tool ~ Down
    *March rate cut probability ~ 10%
    *May rate cut probability ~ 31%

    10yr T yield ~ Up
    *Intraday high ~ 4.326%
    *Currently ~ 4.297%

    Mortgage rates ~ Up
    *30yr Jumbo ~ 7.4%
    *30yr Fixed ~ 7.14%
    *15yr Fixed ~ 6.55%
    *5yr ARM ~ 6.88%

    AAA National Average Gas Prices (Reg) ~ Up
    *Today ~ $3.284 / gallon
    *Last Month ~ $3.07 / gallon

  3. Link to Seeking Alpha article I wrote (as a guest author) about the new 6.7% STT preferred. Still available below par.

    https://seekingalpha.com/article/4671027-state-street-preferred-6-7-percent-from-a-too-big-too-fail-bank

    Headline details for those who can’t access the article

    State Street Corporation (NYSE:STT) recently issued a par $1,000 preferred stock with a coupon of 6.7% that is attractive. Below are the key details of this fixed-reset preferred.

    CUSIP: 857477CH4.

    Coupon: 6.7% until March 15, 2029.

    Reset: On March 15, 2029, and every five years thereafter, the coupon will reset to 5-Year US Treasury plus a spread of 2.61%. For example, if the 5-Year is 4% at reset, the coupon will be 6.61%.

    Rating: Baa1 (negative) / BBB / BBB+ — Moody’s / S&P / Fitch.

    Taxes: Qualified dividends (15% rate).

    Dividend Frequency: Paid quarterly.

    Call Date: March 15, 2029, or any dividend payment date thereafter.

    Maturity: None (perpetual).

    Issuance Size: $1.45 Billion.

    1. Unfortunately Fidelity doesn’t have it their inventory. Maybe I’ll call them Tuesday to see if they can get me a few elsewhere. FIDO has done this in the past for me.

  4. The new Synchrony Financial (SYF) issue is trading with the temporary symbol SYFPV. I was not able to purchase it at ETrade. I was able to purchase it at Fidelity.

  5. I was able to find ownership details for CTA-B on Bloomberg terminal. As of Q1 2024 the two largest holders were Blackrock and Invesco with 162,032 and 78,670 shares respectively.  So, recent seller was either Blackrock or both.

    Blackrock’s historical ownership:
    Q4 ’22    125,768
    Q1 ’23    126,887
    Q2 ’23    137,929
    Q3 ’23    141,039
    Q4 ’23    159,296
    Q1 ’24    162,032

    Invesco’s historical ownership:
    Q4 ’22   85,453
    Q1 ’23   85,253    
    Q2 ’23   85,949    
    Q3 ’23   84,848
    Q4 ’23   81,507     
    Q1 ’24   78,670    

      1. Bought 200 at Ally. Had to call in and use temp symbol. 24.94ish. I think that is all I need of this preferred. A taste.

  6. BANC.F is down over 2% today on much larger than normal volume, and going ex div tomorrow for .48 cents. Common is up strongly today up 7%. Seems over done by a motivated seller. . . . unless they are bringing a higher coupon new issue to market.

    1. It’s been perplexing. As of this morning, BANC-F had a higher yield than NYCB-A, which seems crazy. (Yes, it’s not exactly a like-for-like comparison, but still.)

      Looks like someone dumped 100,000 shares shortly after lunch. I bought a few of them.

        1. Hmmmm..

          Seems like the debt is better relative value, tax considerations aside, assuming you are comfortable with 60 bps lower yield but better protection. I know, I know, it’s not a lot of protection, but it is something.

          The 02/02/2033 7.25% coupon is being offered on Fidelity now at 97.545, or 7.63%. Cusip: 87165BAU7

          I have no position and don’t aim to. They could be a good credit, I just don’t feel like spending the energy to fully research.

    1. J always appreciate a heads up on new issues; buying in the first few days of trading has proven to be a winning move imho.

      1. Usually is. But buying early when interest rates were rising hurt me for obvious reasons. Trick is getting your broker to buy for you on grey market before it moves to the big board. Fidelity waxes and wanes on this–sometimes will, sometimes not. In one case, it let me do so on the first day but not after that (lawyers took awhile to shut it down?). Does IBKR let one buy on gray market under temp symbol? Other brokers?

      1. Thanks, Steve.

        Coupon’s 8.25%.
        DEPOSITARY SHARES EACH REPRESENTING A 1/40TH INTEREST IN A SHARE OF 8.250% FIXED RATE RESET NON-CUMULATIVE PERPETUAL PREFERRED STOCK, SERIES B

  7. RE: FHLB 6.25% BOND

    for those interested, FHLB is now offering a 6.25% bond. these all, of course, are callable within 3 months or so. i have had more luck with FHLB than FFCB bonds in terms of calls. fidelity offers these new issues at no markup.

    FEDERAL HOME LOAN BANKS BOND 6.250
    CUSIP 3130AYZJ8
    semi-annual 02/23/2044
    AA+ 6.250

    best, avi

  8. MMFs today…

    VUSXX ~ 5.29%
    VMRXX ~ 5.28%
    VMFXX ~ 5.27%
    AGPXX ~ 5.23%
    SWVXX ~ 5.22%
    FUGXX ~ 5.21%
    SNVXX ~ 5.09%

    Other…PACW stock down 2.71%

  9. RE: 6.15% FHLB Bond

    for those interested, FHLB is offering a 6.15% bond:

    FEDERAL HOME LOAN BANKS BOND 6.150%
    CUSIP 3130AYZN9
    semi-annual 02/16/2039
    AA+ 100.000 6.150
    Settlement: 02/16/2024

    1. I have found those FHLB bonds usually have a relatively short time period to the call.

    2. It’s callable 5/16/24. At Schwab the ask is currently 100.1, for a YTW of 5.74%. For that call date you would currently be better off with FFCB 3133EP2X2 or FHLB 3130AYYH3.

      I wish the Schwab bond screener would let you sort by call date 🙁

  10. Midday Ups & Downs…

    5yr T ~ up, 4.27%
    10yr T ~ up, 4.28%, 50bp higher since Dec 26, intraday high 4.291%
    20yr T ~ up, 4.56%
    30yr T ~ up, 4.43%
    CORE CPI ~ unchanged, 3.9%
    CPI ~ down, 3.1%
    CME Fedwatch Tool for March rate cut ~ down, now 8.5%
    CME Fedwatch Tool for May rate cut ~ down, now 37%
    USD ~ UP, $104.8
    30yr Fixed Mortgage ~ up, 7.08%
    15yr Fixed Mortgage ~ up 6.42%
    5yr ARM ~ up, 6.66%
    XLU ~ down 2.31%
    WBA ~ down 4.64%
    Crude ~ up 7.6% m/m
    Gas ~ up 11.28% m/m

    1. It’s trading around the same levels as when the 10 year was around 5%. It looks like a bargain here.

      1. Thanks!
        I’m guessing it’s a liquidity type trade. i.e. a large seller that needs to sell a less liquid name.

        I am def not an expert on Corteva but it looks good enough.

        Happy to be a market maker. That’s half of what I do.

        Just hope I don’t get caught…

        1. Yeah, this certainly appears to be liquidity driven. The common stock of the parent (CTVA) is up 2.3% today.

      2. Dick, which could happen again (10 yr returning to 5%), all the more reason to dump CTA-A

        1. I have already swapped from CTA-A to CTA-B; there is a big difference in yield from the same company. The common is up today, so it seems a big seller wants out.

          1. Huge volume on B while A has relatively small volume and the common trading up 3%. Definately has the signs of someone unloading and causing squeeze on the price.

            1. I set up a buy for a small amount last Friday hoping there would be another dump today and I did have it hit at 67.57

        2. I asked about these last year and they are still a mystery.
          I gave up because I usually do. Bought GS 4.3% bonds which pay monthly.
          There are 2 of them call in 12/15/32 and 12/15/ 37.
          One more thing? I am usually wrong.

          1. Which part of CTA-B is a mystery?

            CTA-B is a preferred of EIDP, Inc. EDIP, Inc. is a subsidiary of Corteva (Ticker symbol is CTVA).
            ===============================================================
            “EIDP, Inc. (formerly known as E.I. du Pont de Nemours and Company) is a direct subsidiary of Corteva, which, on June 1, 2019, became an independent, publicly traded company through the previously announced separation of the agriculture business of DowDuPont Inc. Corteva currently conducts substantially all of its operations through EIDP.”

            https://www.bloomberg.com/profile/company/1715651D:US
            ===============================================================
            “As a result of the Internal Reorganization (defined below), on May 31, 2019, EIDP was contributed to Corteva, Inc. and, as a result, Corteva, Inc. owns 100% of the outstanding common stock of EIDP. Shares of EIDP preferred stock, $3.50 Series and $4.50 Series, issued and outstanding immediately prior to the Separation remain issued and outstanding and were unaffected by the Separation. EIDP is a subsidiary of Corteva, Inc. and continues to be a reporting company, subject to the requirements of the Securities Exchange Act of 1934, as amended. Prior to March 31, 2019, Corteva, Inc. had engaged in no business operations and had no assets or liabilities of any kind, other than those incident to its formation.”

            https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/30554/000175567224000004/ctva-20231231.htm

            1. Also, CTA-B is BBB rated. Compare that to other BBB rated issues and CTA-B looks like a relative bargain.

              For example, SCHW-J is BBB rated with a current yield of 5.3%. ALL-I is BBB rated with a current yield of 5.1%. On the other hand, the current yield of CTA-B is 6.6%.

    1. Isn’t it more of a rehash than an update?

      Meanwhile, RILY is up 10% this morning for some reason.

      1. Thanks OP for sharing….. Unless I overlooked it, nothing new in the article from what was already known and reported months ago. The comments are interesting and new. Must have been a slow news day.

    2. RILY shorts are 62.5% of shares according to Fidelity. Got to keep the bad vibes coming or the shorts are in trouble.

    1. This is that odd one that was discussed here as being known as early as Jan 30 when a few on here (apologies for not remembering who) said IR was telling people that NI-B had been called for 3/15. So in a way, although this is an official announcement it’s old news… Go figure..

    2. Well that sucks about the “NI + B”. I own a boatload and right now the pickings out there are very very slim to find any bargains.

      1. Yes, it is not going to be easy to replace the 6.61% I was earning in NI-B. The dreaded call risk.

        1. New, may I suggest CTA-B to help replace your NI-B? Decent dump Friday afternoon but unsure if that price ($68.70 ish) will hold come Monday morning but maybe worth a look. Corteva preferred’s BBB rated and actually will provide you with a slight bump in rating for very close to the same yield.

          1. Yes, I already own some of it at 70.065/share. That is not a bad idea for a replacement at all. I may just do that.

          2. Can’t believe how much B has dropped, acts like it’s junk but it’s not
            I own the A which has been down too. Bought some UEPEP but it’s so hard to get, 10 shares can move the price, Strange market.

      2. Chuck – You might want to take a look at CTA-B if you haven’t already. It’s BBB rated and had a current yield of around 6.5% yesterday. It trades way below its call price of $120 so there’s not a lot of call risk associated with this one.

        1. I added to CTA-B yesterday between 69.80 and 68.90, which unfortunately turned out to be catching a falling knife.
          But thankfully, I had sold some shares a week earlier, at 71.26, so the net effect was a lowering of cost basis to 69.32 for my entire position. A 6.48% yield with no call risk for an IG rated company is relatively safe and acceptable.

          Hopefully, the price will recover going forward, as others have stated this appears to be a dump by someone who wanted out badly, nothing company specific.

  11. NYCB . . . quite a bit of insiders buying High so far of $4.84 …. last at $4.66 …
    any legit reasons for the Friday move up ….. TIA

    1. Jim ;big buys of the common by the CEO and CFO yesterday; two execs who
      should best know where the Ship is headed; bodes a ray of hope for NYBCpA
      and NYCBpU which i have 300 sh at 30.78.

  12. Friday Midday Ups & Downs…

    US 10yr ~ up, intraday touches 4.193%, up 41bp from 12/26
    German 10yr ~ up, at 2 month high
    Fed Watch ~ down, probability of March rate cut 17.5%
    Commodities m/m change ~ up, crude 7.5%, up, gas 11.4%
    30yr Mortgage ~ up, 6.98%
    XLU ~ down, $59.89
    Dog Yields ~ VZ 6.8%, 3M 6.5%, DOW 5.2%
    Finnair ~ wants to weigh you before flight, fast before boarding!

      1. @danzeb ALLL

        I’m trying to pick up a few more shares then no mas por favor!

        Trading has a weird choppiness today, in general. Maybe no one can make up their mind on interest rates, inflation, or the economy.

        Is it options expiration, re-balancing, or the AI’s?

    1. the story is under ABL ; parent ; issuing more debt ; i think its an addon to ABLL; i got out of my 200 sh as soon as i saw the news ; at 24.95
      i’m not tempted to buy again;

  13. I know nothing about TPTA – I am just commenting on this

    ‘The numbers on the 10Q FS are GAAP and require estimates which the accountant has discretion over.”

    Two good accountants can take the same company’s financials and give you two very different looking financial statements, both of which are in compliance with GAAP. Don’t get fooled into thinking the numbers can’t be “managed” within reason – they can.

    1. @Maverick61

      “Two good accountants can take the same company’s financials and give you two very different looking financial statements, both of which are in compliance with GAAP.”

      Yeppers…usually whoever is in charge will pick the method if there is a discrepancy.

      “Don’t get fooled into thinking the numbers can’t be “managed” within reason – they can.”

      Yeppers…I taught accounting/finance at the collegiate level for ten years and always made sure students understood this. I focus on cash flow for the reason you mentioned like most analysts.

      1. No fat or meat on the bone with 11 cents for a little over a month. Using the back of the envelope to calc, that’s about 5% yield on short term funds. Can do better with one of the money market funds and not be locked in for the month.

  14. Following up on a post 2 days ago by rocks2stocks, BC-B has now dropped to $24.30, which is down nearly $1 in 3 days. Yield is now 6.8%. The crazy thing is that volume in 3 days is over 800k, which is over 16% of the total outstanding shares of 5M. BC-A and BC-C are also down and yielding about 6.5%. The common stock is up 1.5% today.

  15. There is more selling in SR-A today. Also they dumped 100k shares in CMSD. I guess someone is offloading utility pfds. any thoughts?

    1. CMSD is behaving oddly. The ex-Div date is 2/9 and it took a tumble today equivalent to the quarterly dividend. 250,000 shares traded today vs avg 49,000. Is the ex-Div date I’m pulling up incorrect?

        1. Thanks for confirming, one of the dividend sites was showing 2/9 so with the sell off I had lost confidence that I had the correct date. I don’t mind picking up a few of those shares at this price.

    2. My only thought was I have been out of this a while, but at $23.48-.50 I was officially back in for the zillionth time.

      1. Rocks, sorry that was in reference to SR-A, VJ mentioned first. I should have specified since that other was mentioned too. I didn’t have any interest in that one.

  16. NYCB-A . . . Any thoughts on this item of NYCB during the rout.
    March Divi declared @ .3984c for March 17.
    Maybe the common has found a level in the low $4.00’s
    Thanks, Jim

    1. With bankers, your best bet is buying a ton of far out of the money puts to go along with that preferred, so you are hedged because bank preferreds either recover or go to 0 with no notice.
      example
      March 15th puts with a strike of $2.5 had open interest as of yesterday- ZERO contracts
      Volume today on that same contract with zero open interest?
      Over 31,000!!!!

      1. It may make some sense to buy OTM puts before it hits the fan but once it does as with NYCB, the implied volatility skyrockets and options get pretty expensive. It’s 240% now for NYCB and when a stock gets sub $5, it often makes more sense to trade the stock rather than the options.

    2. My thoughts on NYCB are…they’ll be lucky to survive the weekend!

      IF they fail the ramifications on prices will be far and wide. But possibly not for long. A day or two. Then firming. Selling begets selling. If they hold on, and don’t fail its going to be a long slow recovery. I don’t think we;; see 20 on the pfd anytime soon!

      1. What is your reasoning for thinking NYCB won’t survive the weekend?
        Not a holder myself, but I’d be interested in the ‘U’ if this thing stabilizes.

        1. I have come to the conclusion that anyone who says that it will fail is counting on a bank run. Basically almost every dollar of uninsured and some insured deposits are all yanked in a matter of a few business days.

          Otherwise what else could it be?

          1. Any evidence yet of an imminent bank run? The Feds backstopped all the FDIC+ depositors on the failing banks last yr. Pretty good indication that is the MO going forward, at least thats the assumption I’m going on. All hell will break loose on more than NYCB if they don’t. I see a bank run possibility as pretty remote. So I’m interested in why others have buried this bank already.

            1. Pig, for me it just doesnt fit my profile of risk and too much work to see if I could feel comfortable. I like issues that if they drop I want to load up more. If this dropped harder and I owned, I would be worried its going down the toilet. The CRE is already one black eye and the write downs, but rent controlled is having troubles too. But now you got a bank with sub investment grade with a penny stock price. What if they need capital to shore anything up? How can they meaningfully tap that? Then they have all sorts of debts on the books. Are they floating debt? When is maturity? That is in their filings but that is just scratching the surface of knowledge needed, and I dont have the brains. And maybe management doesn’t either, I dunno.
              Yes this could be big gain stuff, I freely admit. I certainly no nothing. But since its not in my wheelhouse I would only ever consider a small purchase, so it wouldnt move the dial if it did succeed. But it would piss me off losing a small amount in something I personally shouldn’t have been in to begin with. Besides if I was looking to get into something like this, I would have thought NYCB-U was a bargain at $35 and been in a big hole already, ha.

              1. All good stuff Grid, and valid concerns. Yes Banks special consideration when picking the pieces off the carcass. Rent control thing is a big issue, but a far cry from a bank run, or maybe not. It sounds to me like if anything this thing might end up in a slow agonizing death spiral. But thats also from me, who knows very little. Noticed this bank wasn’t included in the list of banks that last did the famed stress test. Perhaps they need to improve their methodology to finding these ticking time bombs sooner.

  17. Can someone explain why these 2 Terra Property Trust baby bonds are trading so differently? Both mature in 2026. TFSA has a 7% coupon and trading at $23.40/share. TPTA has a 6% coupon trading at $17.00/share.

    YTM on TFSA is 9% but YTM on TPTA is somewhere around 35%.

    Why would anyone not swap TFSA for TPTA??? Arbitrage opportunity, anyone?

    1. Chris,
      I certainly can’t explain the discrepancy here. But it has been persistent. I did just what you’ve suggested and swapped out TFSA for more TPTA a while ago and am waiting for the gap to close somewhat. By the way, the amount of TFSA outstanding is around $78 million vs around $35 million for TFSA. So the market for TFSA is probably less efficient, but we’ll see how this works out.

    2. One is a “Property Trust” and the other is an “Income Fund”. They also have a difference in coupon rate, but theoretically should even out at YTM. At the time of issuance TFSA was rated as BBB (Egan-Jones, um OK) and TPTA was rated as BBB- (Egan-Jones) so something is different in the two and their underlying financials. Obviously the market feels one is more risky than the other and perhaps has a chance of not being redeemed at maturity? I’ve done nothing more than a quick glance so no idea what is fundamentally different.

        1. Chris,
          Agreed. Perhaps some in the market are confused by the word “property.” On the other hand, they do hold on their books about third categorized as Office property mortgages, most in CA. We’ll see.

          1. My unsolicited 2 cents.. I love bargains.. but Terra scares me.

            I did about 4 hours of research when they were potentially merging with WMC. I don’t recall the specifics and don’t feel like re-visiting… but I just recall them as one of the more sketchy CRE lenders I have come across. Be careful..

            1. https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/1674356/000167435623000024/tpt-20230930.htm#ifcdf302597bc4d5f9eb01353a9d279fc_43

              TPTA – I am not seeing a dumpster fire here. I recently have been slowly adding shares and am now up to my portfolio limit on this one. Yes. I’m talking my book on this one, but I did do some analysis on this one already.

              2003 10Q
              I am using back of the cocktail napkin math here (in millions).

              A=756M (There are some intangibles that are being amortized, but it’s only approx 13M). I HATE intangibles in most industries.
              L=489M
              E=267M The equity section does have a negative Accumulated deficit (usually not so good). I have seen this in many entities of this type. Many co’s that do this keep a minimum level of equity and pay out the divvies for the rest.

              CF Statement
              CFO=6M
              CFI=.6M
              CFF=(13M) Paying off liabilities is what is happening here.

              The 10.22.23 10Q FS reflect the merger of Terra BDC into Terra LLC. I state this because comparison’s with the past are made more difficult when their is a fundamental change in a reportable entity.

              Loan Portfolio Property Types (top 4)
              Office=36%
              Multi-Fam=18%
              Industrial=14%
              Mixed=14%
              527M Principal
              471M Carrying Value net of allowance

              Geo Regions
              Cali=30% They already impaired their multi-tenant offices by 12M.

              Liquidity
              “We expect to fund approximately $27.5 million of the unfunded commitments to borrowers during the next twelve months. We expect to maintain sufficient liquidity to fund such commitments through matching these commitments with principal repayments on outstanding loans or draw downs on our credit facilities. Additionally, we had $27.6 million of borrowings outstanding under a mortgage loan payable that bear interest at an annual rate of Term SOFR plus 3.85% with a Term SOFR floor of 2.23%, that is collateralized by an office building. The mortgage loan payable matured on May 31, 2023. In October 2023, we conveyed our interest in the office building to the lender by deed in lieu of foreclosure and the mortgage loan payable was effectively extinguished. In connection with the BDC Merger, we assumed a $25.0 million term loan. The term loan currently bears interest at an annual rate of SOFR plus 7.375% with a SOFR floor of 5.0% and matures on March 31, 2024.

              We expect to either maintain sufficient liquidity to repay the facility or refinance the facility.

              Our line of credit with outstanding principal balance of $50.4 million matures on March 12, 2024 and our GS repurchase agreement with outstanding principal balance of $75.5 million matures on February 18, 2024 (see Summary of Financing below). We expect to extend the maturity of both facilities by another year. ”

              NY=19%
              NJ=17%
              GA=16%

              82% of loans are rated 3 or moderate average risk (531M).

              1. OK, I just looked again for 15 min. Hope this is helpful.

                Big Picture – they are a lender to sub-class CRE borrowers, and use leverage on top of this. So if shit hits the fan, equity can be wiped quickly. Not sure how much you follow the CRE space, but there is lots of stress, not just in office but many others, esp multifamily. The Real Deal and Trepp are good sources.

                32% of their loans are non-performing, 171M of 531M.

                They have a concentrated portfolio, 6 of 22 loans non-performing.

                Conflicts of interest galore: There are also numerous investments with related third parties.

                And oh, a significant portion of their book is financed with repo. Repo is expensive and can be pulled away at the whims of the bank.

                https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/1674356/000167435623000024/tpt-20230930.htm

                1. And here is the kicker…

                  I would be skeptical of the numbers in their filings.

                  These operators have a vested interest to keep this pup alive as long as possible to milk fees.

                  We all know stress in CRE exists, but the extent of it is not demonstrated in the data until its too late. It takes many months to complete a foreclosure, or deed in lieu. Its not just about current occupancy, but also the prospects of future occupancy which can only be observed by touring it and talking with tenants. How much is sub-leased? What are plans for renewal.

                  When the RE assessors conduct their study, they base it on historical data not reflected in reality. This will slowly catch up with them.

                  1. TPTA @ Maine

                    “I would be skeptical of the numbers in their filings.”

                    So basically you are calling the management team liars. I guess you could contact the SEC about this with your evidence or provide some examples of where they have been caught using “skeptical numbers”.

                    The numbers on the 10Q FS are GAAP and require estimates which the accountant has discretion over.

                    I prefer CASH FLOW to GAAP.

                    “When the RE assessors conduct their study, they base it on historical data not reflected in reality. This will slowly catch up with them.”

                    I have done analysis work on RE appraisals. They have a method that they follow from their industry. What method would you recommend to the appraisal society instead?

                    “We all know stress in CRE exists, but the extent of it is not demonstrated in the data until its too late.”

                    CRE is a very broad term. Not everything is doing lousy. Do you have data that suggests otherwise?

                    The shop I worked for did quarterly reviews. So not much time passes before the new FS comes out.

                    On the GAAP side, a good accountant should make adjustments when needed and be prudent with estimates.

                    “These operators have a vested interest to keep this pup alive as long as possible to milk fees.”

                    I don’t know about you, but when I worked on a fee basis it generally helps not to kill the patient. So I tend to think of fees as a necessary evil or clients think everything is free. One could argue whether the fees are high or low, but then we get to the argument of why doesn’t everybody shop at WALMART instead of NORDSTROM for all their clothing needs? Luckily, we still have the free market (of sorts) to help determine HIGH or LOW.

                    Is there another compensation model that you think may be better?

                    1. While it is accepted, some practices that go on with distressed assets really stretch the definition and the executives of some companies push the boundaries while others do not. When to change a loan’s status from performing to one of the other categories is rife with abuse if management wants to abuse that discretion.
                      There are REIT’s I wouldn’t touch with a 10 foot pole because I know the management of those REIT’s do things that I would view as unethical, but still perfectly allowable.

                    2. I know nothing about TPTA – I am just commenting on this

                      ‘The numbers on the 10Q FS are GAAP and require estimates which the accountant has discretion over.”

                      Two good accountants can take the same company’s financials and give you two very different looking financial statements, both of which are in compliance with GAAP. Don’t get fooled into thinking the numbers can’t be “managed” within reason – they can.

                2. TPTA @ Maine

                  You make some interesting points that ring of truth, but my interpretation is different. This is what makes a market.

                  This is not like buying PSA or TVA, it involves risk. Most people will just give up on TPTA and buy something else. I would like to hold TPTA until maturity or until it hits par.

                  “32% of their loans are non-performing, 171M of 531M.”

                  They already reflected this in their loss provision – Non-performing loans & Note 2. Non-performing loans can be “rehabbed” to perform. The underlying assets are still there.

                  “They have a concentrated portfolio, 6 of 22 loans non-performing. ”

                  See above – Already reflected in FS.

                  You might want to review accounting for distressed assets and loan loss recognition. Accountants are driving the truck here – not CF.

                  “Conflicts of interest galore: There are also numerous investments with related third parties. ”

                  Based on my experience with RE entities, you will see a lot of related entities. For me, in this instance, not a biggie.

                  “And oh, a significant portion of their book is financed with repo. Repo is expensive and can be pulled away at the whims of the bank.”

                  Repos like other ST loans may dry up under stress to the ST paper market. The management has made no statement that they are unable to obtain ST financing or have any liquidity issues.

                  Are you saying you have some insight that management does not?

                  “Big Picture – they are a lender to sub-class CRE borrowers, and use leverage on top of this. So if shit hits the fan, equity can be wiped quickly. Not sure how much you follow the CRE space, but there is lots of stress, not just in office but many others, esp multifamily. The Real Deal and Trepp are good sources.”

                  I have worked in Analysis for an almost TBTF bank. I am familiar with CRE. Ultimately, I am concerned more with the individual performance of TPTA making the interest and principal payment only.

                  YMMV

                  1. Good stuff. I am glad you are going into it “eyes wide open.”

                    I think the biggest distinction on our view is that I put less weight on the accounting in this situation. I don’t believe the actual stress is reflected in that accounting yet, even though the accountants are playing by the “rules.”

                    There will be some bargains within CRE as not all will go bust. Security selection is critical. For instance, I think FBRT-E is decent value here. Very little risk of default long term but could be volatile. On the other hand, GPMT is a name I wouldn’t touch, even with its 70% discount to “NAV.”

                    1. @blkrahn @Maine

                      TPTA

                      I am glad that III’ers can get some benefit from these discussions. That is what the site is all about.

                      Maine, you are a good sport for hearing me out. Everyone here could certainly benefit from differences of opinion or process.

                      Anybody who knows me here should know by now that I know my sh*t. However, I can and do make mistakes. Ultimately, the market will decide if I am right or wrong.

    3. Well, even more weirdness. As I write this, TFSA is up 0.4% to 23.31 while TPTA is down 5.5% to 16.12 (a new 52wk low).

      That said, I think your YTC calculations may be slightly off. Using Google Sheets, and with the above dump in TPTA, I get a YTC of “only” 26.5%.

      1. David,
        I’m hypothesizing that the market for TPTA is discounting all previous payments made and, therefore, the market price is strictly reflecting the probability of default. But I could be wrong . . .

      2. @David TPTA TFSA

        I have only recently been watching TPTA and not TFSA FWIW. TPTA does have a whacky pants market maker IMHO. There have been several days when the spread is a dollar for several hours in the morning. WTF?

        I’ll literally go penny by penny from the low Bid until I get to the “last trade” amount on zero volume. Guess, what? it NEVER fills. Then I change my price back down to the Bid or bottom and try again later.

        But then some wise guy comes in and buys at the higher sucky price. This triggers “The Mad Seller” who hammers price spikes on TPTA.

        Bid/Ask seems to tighten up after Mr. Greedy and Mr. Shorty play in the sandbox. Is this an AREA 51 or Bermuda Triangle situation? I dunno.

        I am not a “trader” in the purest sense. There are others here that can and do manipulate spreads or try to at least. Everybody looking for that last penny……or maybe it’s just me?

  18. Chase just called a 5.6% CD, due 12/2/2024. Call date is 2/29/2024. This may be the beginning of the end for 5%+ CDs. It was good while it lasted.

    1. I had a 5.15 (Goldman) due in May 2024, that they called for 2/12/24. So they are calling for 3 months early.

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