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It took me a while to get my head around the KTN trade. It has these features:
– safe investment for almost 2 years
– high yield on four payments
– YTM of ~6.5% at 26, satisfactory considering the safety
I called it safe without knowing why. Why is it safe? There are other short maturity plays with a better YTM.
YTM = (3.10/price paid) * (365/days held)
Ask Siri for days held.
“There are other short maturity plays with a better YTM”
Please list these, esp those with ~2 year maturity.
I can think of two…in no particular order…TFSA, TPTA…lol
SWKHL, EICA, NEWTZ, OCCIN, SPLP-A, SNCRL, ATLCL
R2S the SWKHK I am not sure about. My understanding is the original investors want out so they want the managers to now liquidate the business since it hasn’t been successful enough to generate cash to operate and to pay their investment off. In a perfect world the assets should be worth enough to be liquidated but they still need enough to allow the preferred to be called. My understanding is the investors are not willing to add money to grow the business. If anything outside their control causes a loss it could be a problem.
At least that is what I thought so I bought it then had second thoughts and sold
Prospectuses for all these because the income they generate is wildly different (as is their creditworthiness)
https://www.sec.gov/Archives/edgar/data/1089907/000155278123000394/e23404_swkh-424b4.htm
https://www.sec.gov/Archives/edgar/data/1587987/000121390021002536/f424b20121_newtek.htm
https://www.sec.gov/Archives/edgar/data/1754836/000110465921127299/tm2130458-2_fwp.htm
https://www.sec.gov/Archives/edgar/data/1716951/000171695121000135/occi-seriesepreferredfinal.htm
https://ir.steelpartners.com/node/10506/html#a_065 (page 157)
https://www.sec.gov/Archives/edgar/data/1131554/000110465921086906/tm2120310-2_424b5.htm
https://www.sec.gov/Archives/edgar/data/1464343/000143774921027101/atlc20211118_424b5.htm
Anyone else get in on KTN recently? Massive volume last Friday and today. The underlying bond is trading at 105.8 or 4.85% YTM. YTM on KTN is above 6% when including accrued div, at current prices… have been buying 25.85 to 26.25
https://www.quantumonline.com/search.cfm?tickersymbol=KTN&sopt=symbol
I did, Maine.
I just missed last Friday’s opportunity. I was making up my order but was literally a couple seconds too late.
Today I swapped some EP-C for it. I paid 26.19, 26.09, and 26.08. I have a 25.81 bid out there.
Mbg, kind of rare for a name like this to be on offer two (trading) days in a row. Whelp, I will take it! Plus, buying a 6% issue allows myself to think I am a smart yield investor, not just a yield hog!
Ha!
Yeah, after Friday’s close I set up a GTC order to buy some (my 25.81 bid). I doubted I’d get any at that price today, and I didn’t. But when I checked, I was surprised too that prices were still at Friday’s level. Today’s volume was almost twice as much as Friday’s!
On days like today, I’m glad I have ~10% in cash.
The safer stuff didn’t fall as much as the riskier stuff today, but sooner or later … just hope I’m fishing in the right pond when the fish come out.
Ahhh, you were the 25.81 bid.. apologies in advance as I skipped you by a few pennies at times! Actually, my best fill was a fidelity market order when it was (your bid) 25.81 by 26.01 ask. I was able to get 25.83, but sadly it was only 55 shares. I had a few other orders fill in 25.90’s but most of my purchases were closer to $26.10. Hopefully we get another chance tmmrw.
Here is the link for the underlying, in case it anyone’s doesn’t have it handy..
https://www.finra.org/finra-data/fixed-income/trade-history?symbol=AON3675835&bondType=CA
Nice work, Maine!
good comment assuming 26.27 i get a stripped price near 26.09 which quantwolf.com calculator using clean calculator gets a 5.69 yield
https://quantwolf.com/calculators/bondyieldcalc.html..the ktn/sjnk price pair has seen ktn undperform since 3/2022 ..current absolute price level has supported prior pullbacks since july 2023
Bad calculator. It’s approximately 6%. I’m holding out for a little lower price.
Keep in mind and in your calculation KTN is a semi-annual pay.
Martin, per 2whites comment, I am showing 34 cents accrued for KTN, assuming 1/3 of the div has accrued.
For simplicity sakes, let’s say the price is 26.14 (25.8 div adj), or a 6.3% YTM per the fidelity yield calculator. At a price of $26, YTM is 6.6%.
A true “2whiteroses special.”
I wonder what the assumptions are in the FIDO calculator with respect to price deterioration as time moves forward to 7/1/27 and thus the resulting income reinvestment?
same as any (most) YTM calculator.. dividends are re-invested at the same yield. You can argue this aggressive and then build your own calc. I do this at times via excel, learn the math, then proceed to forget it!
BNY prices $500M depository shares with interest in preferred stock.
The Bank of New York Mellon (NYSE:BK) priced an underwritten public offering of 500,000 depositary shares, with a liquidation preference of $100,000 per share (equivalent to $1,000 per depositary share), at a public offering price of $1,000 per depositary share ($500,000,000 aggregate public offering price).
BNY (NYSE:BK) intends to use the net proceeds from the sale of the depositary shares for general corporate purposes, as further described in the preliminary prospectus supplement.
Dividends will accrue on the liquidation amount of $100,000 per share of the Series J preferred stock (equivalent to $1,000 per depositary share) at a rate per annum equal to 6.300%.
The offering is expected to close on March 10, 2025.
https://www.sec.gov/Archives/edgar/data/1390777/000119312525043537/d854146d424b2.htm
https://www.prnewswire.com/news-releases/bny-announces-pricing-of-public-offering-of-500-000-000-of-depositary-shares-representing-interests-in-preferred-stock-302390731.html
5 year fixed rate reset.
“March 20, 2030, at the “five-year treasury rate” (as defined in the preliminary prospectus supplement) as of the most recent reset dividend determination date plus 2.297%.”
FWP contains the CUSIP for those interested (DYODD). Credit ratings of BAA1/BBB (Moody’s & SP)
https://www.sec.gov/Archives/edgar/data/1390777/000119312525044478/d854146dfwp.htm
I bot DCOMG ftf 9 7/15/2029 3 mo sofr + 4.95 at 26.17 (25.97 stripped) for a 7.93 ytc ..good article on S/A Dime Community Bancshares: Baby Bond Offers An 8.1% Yield To Maturity.. DCOMG/IGIB pair has gone from near 2 sigma rich in december to near 2 sigma cheap today with horizon going back to inception in july
Feb. 03, 2025 9:09 AM ETDime Community Bancshares, Inc. (DCOM) Stock, DCOMP Stock, DCOMG StockDCOM, DCOMP, DCOMG
Jeremy LaKosh
MJ, one thought. If you waited a week or two you might pick it up cheaper as it is past last ex-divy date and we might get a market drop if the government has a shut down.
anything is possible.. I’ll stick with my model
RILYG still moving up today. Up 25% in the last 5 days to $14.49. I don’t own it.
The prices for CMSD and CMSC are seriously misaligned.
Disclosure: I have a large position in CMSC at the moment.
Retired, I’m holding a smidgen of CMSA bought @ 22.39
RS, how are they misaligned? CMSD 6.24%, SMSC 6.29% this morning.
CMSD should be 18 cents cheaper than CMSC. Instead, it has been as much as about 40 cents more expensive.
according to my mean reversion model the mean spread of cmsd/cmsc price pair is 11 cents (cmsd over) with one standard deviation being 23 cents (1yr horizon)
mjtroll, does your mean reversion model account for the six week difference in ex-div dates?
6.5 weeks to be exact.
Thank you Retired. You are right. I swapped all my CMSD for CMSC in non-taxable account. CMSD just paid quarterly interest whereas CMSC’s pays on April 15 so pricing should be the other way around .
There should be caution with wash sales in a taxable account.
Nice call!
Ready Capital cut the dividend on the common by 50% will this give them enough breathing room to pay off RCB and RCC in 2026?
RCD is down pretty sharply with this news. If you think cutting the common puts them in a better position for their debt, this might be a buying opportunity. I’m unfortunately already holding, but at 24.37 I’m calculating 10.75% YTC in 2026, 9.9% YTM in 2029. Note that’s it already dropped last Friday after ex-div, so today’s drop is additional.
After last week’s dismal quarterly report and lowered distribution, I knew this was coming. Now at a 52-week low.
Raymond James Downgrades Kimbell Royalty Partners to Market Perform From Strong Buy
Rocky, that was quite a miss they reported Feb. 27 and the stock dropped today on opening. Should have dropped Friday. Perfect short for some people.
RPTP (Rithm Property Trust 9.75% preferred) changed it’s temp symbol today from RPTCV to RPTCP.
.I paid 25.11 for WHFCL (7.13 YTc 9/15/2025) maturity 9/14/2028 ..the whfcl/sjnk pair is near bottom of 1year range..good article on S/A
Yield Hunting Part 11: 7.92% YTM With WhiteHorse And Its Baby Bond WHFCL
Feb. 22, 2025 3:14 AM ETWhiteHorse Finance (WHF), WHFCLWHF, WHFCL
Arbitrage Trader
OXLCG is trading at Schwab.
CHSCL has been dropping. It may be a good opportunity to swap out of CHSCM or CHSCN.
JTrader, all of the CHS preferred shares are beyond their call date. I am comfortable holding on to my CHSCM shares with a cost just under $25 per share at 6.75%+ and the unrealized capital gain vs buying CHSCL at a greater than 1 dividend premium to the call price and the risk of a potential call and capital loss. The CHSCL shares may never be called, but the uncertainty associated with the risk is more than I am willing to incur.
If CHSCL is ever called, it will be the barometer that I use to potentially sell CHSCM and take the associated capital gain.
I would think CHSCP and CHSCO would be called before CHSCL, but perhaps they are contemplating redeeming all three of those issues and it may explain why CHSCN and CHSCM are performing better.
There’s a great write up from Tim from 2024 on these. It’s worth checking out. I didn’t dive in enough to see if the redemption price would actually be $25 or at a higher level due to call date extensions. More digging may be prudent if buying above call price + accrued dividends.
https://innovativeincomeinvestor.com/will-chs-preferred-holders-get-whacked/
And many are still are not expecting CHSCP to be called. It’s at 27.93 today.
I’m content with CHSCM &CHSCN for 0.5% less.
Dan,
Read this
https://www.chsinc.com/en/news/2025/01/02/chs-and-west-central-sale-closes
Tim, might be interested in this also.
Earlier in the week, I mentioned an SA article warning that ALL-B likely peaked recently, and it would be a good time to exit as it is falling. Has dropped almost 2% in a few days, ~1% today- off 26¢ and falling.
I might re-enter if it gets closer to par.
MSBI had a bad earnings report on Jan 23, which hit the common as well as MSBIP (7.75% non-cum, perp preferred, first call/reset 2027). MSBIP had been par hugging, now under 23.
good comment…excellent articles on S/A by Jeremy Lakosh recommending avoiding common and preferred going back to march 2024
good comment…excellent articles on S/A by Jeremy Lakosh recommending avoiding common and preferred going back to march 2024..the msbip/vclt pair is trading near bottom of range in place since september 2023
Anyone else having trouble logging into Fidelity? I’ve tried 3 times and can’t get in. I would have posted this on the Broker page but this seems important as I have never had this problem before.
Yes . but successfully logged in now.
Thanks Bigbear, I finally got in and I called them.
I got the usual responses, they have been upgrading, and there is a glitch they are having trouble figuring out. He asked if I had ATT service and suggested if I turn off the wireless and turn it back on it might help or just use the mobile date ( phone) I don’t do banking or my finances on my phone due to paranoia about security on mobile devices.
They sometimes have a weird glitch that you can workaround if you type in manually instead of using autofill.
Thanks Bear, I do use auto fill
I have no problems
YES… unable to log into Fido. Spent 1/2 hour on phone. They did this/that/whatever… NO GO!! Now they say I must wait until at least tomorrow to ‘try again’. Unacceptable; but, have been w/Fido for ~40 years. Performance deteriorating. Takes 1/2+ hour to exercise rights, tender shares, etc.
SAD!!!
I read elsewhere that FIDELITY has had a massive increase in AUM which means a large increase in customers; That would account for slower reaction times to requests.
Howard, I am more concerned with all brokers about the attacks on customers accounts. I think Fidelity has had more than its share and may be part of the reason for the limits on low volume BB’s and stocks. The reason they gave me about glitches related to upgrades in their system seems understandable.
The 1.5 billion hack by North Korea of a Meme coin trading clearance house gives you pause. Note, I don’t think N. Korea denied it.
If backers of digital currency admit that the system isn’t safe and can’t be backed by a government no one is going to trust digital currency. This is why I don’t want to see governments get in the digital currency business. Also why I don’t want to see brokerages like Fido getting into it.
CpN …Citigroup Cap trust ….. Qtr Fltr …. just reset ……
Have been in long time, and like.
Low on Wed mkt @ $30.05 … Now @ $30.28.
Any current holders comments. Thnx
KRP down on earnings. Dividend from 41 to 40 cents gives a CY of 10.5% at 15.2.
Rock, I have it up on my screen all day. I do not own it currently, I trade it as I am wary of oil explorers. A lot of investors don’t understand KRP pays a variable rate based off the last 3 months and other factors like if it buys out other mineral rights held by another company and pays the owners in shares then there are more shares to spread the profits around. Fracking requires more acreage as the oil production declines to keep replacing or growing production. Even with hedging prices to lock in the price they get there is a risk. There is talk in the market of making deals with Russia and Iran which could flood the market by driving down the price of oil.
I write this from experience and to let other readers know they need to stay on top of any news that might affect the price of this stock.
There are some long time holders of this stock that probably got in below 14 or 15.00 a share and are ok with the stock price going like a roller coaster. If you can’t stand these price changes or are not a trader you or don’t have a good entry price you might not want to consider this.
They made an acquisition and to pay for it diluted the shareholders with 10 million new shares. All the while knowing they were going to blow up the 4th quarter earnings report. Then they reduced the payout, although on more shares outstanding. Share price is at a 52-week low. CEO says 2024 was a great year and Texas Capital, part of the shills that peddled the new shares, says a fantasy $24 price target. A bunch of BS in my humble opinion.
Rocky, I don’t count any income coming from the NG. The commodity is so plentiful and abundant it’s hard to get more than $2.00 a million at the well head then the traders are making $4.00 a million BTU and the end user is paying $4.00 a gallon. Someone is making money but it’s not the producer. So that leaves the profit on the oil.
Kimbell Royalty Partners press release (NYSE:KRP): Q4 EPS of -$0.48 may not be comparable to consensus of $0.18. (analysts were calling for this average)
There was a non-cash ceiling test impairment expense of $56.2 million recorded during the quarter, primarily related to the decline in commodity prices.
Revenue of $66.72M (-32.7% Y/Y) misses by $12.6M.
I don’t know how anyone could trust the management at KRP.
Rocky the people in charge have been in the business a long time and probably been hardhats at some point in their life. I just think there are too many moving parts that they can’t control. I ran across a comment by Bea where she posted a link saying property bought in Nov. would be counted towards the production for that qtr. Yet could be production from that purchase hasn’t been what they thought or were led to believe. Then they increased the number of shares outstanding. You also have the price of oil from Oct, Nov. and Dec maybe being lower than expected. Payout was about 75% which seems low. They are not actually a Royalty trust but a (PTP) publicly traded partnership that elects to pay taxes.
I might be playing the devil’s advocate here, but personally I want a lower price entry point for a better cushion.
My understanding is that production from the latest purchase wasn’t counted in the latest quarter results. Also worth mentioning that it is very tax friendly distribution – a lot of it qualify as RoC. In fact, based on today’s conference call, 100% of the latest distribution is RoC.
Sorry, but this is clearly stated in the closing presser: The purchase price of the Acquisition was funded through a combination of an underwritten public offering of common units and borrowings under its revolving credit facility. Kimbell is entitled to all cash flow from production attributable to the Acquired Assets since October 1, 2024.
Plus, who cares if the next distribution is RoC when you just wiped out 5% of shareholder value in about 24 hours?
Victor, You are correct about the property and leaseholds they added in Jan. that will be on the next qtr’s divided. You need to understand KRP pays from the past 3 quarters as Rocky pointed out. You need to understand the payouts for this stock if you invest in it.
As a suggestion, keep track of oil prices from Jan to the end of March then compare that to the prices from the 1st of Oct to end of Dec.
This method is kind of a close way to estimate what it will be.
I bot IMPPP 8.75 cumulative perpetual at 24.91 as the impp/vclt pair and the absolute price are testing the 200 dma’s which have not been breached since december 2023…good article on S/A
Imperial Petroleum Series A Preferreds: Solid, But Not A Bargain Anymore – Hold
Sep. 14, 2024 4:35 AM ETImperial Petroleum Inc. 8.75% CUM PFD A (IMPPP) StockIMPP, IMPPP
Henrik Alex
Thanks for the suggestion. But it is a no for me. A micro cap (my ceo’s annual salary and stock perks is equiv to their market cap), illiquid trades, too much short interest, etc. It was a $100 common stock and is now a couple dollars and descending.
good comment .. short interest is about 16% of the float.. I liquidated after further review
Been in the IMPPP for more than three years. The company has solid financials: cash on the BS is 3x the Market Cap, 2024 Profit $70m vs Market Cap of $77m and zero debt, and they are still (Q4/2024) profitable despite tanker rates dropping.
The short interest in the company shares reflects the current tanker market conditions, not the company’s creditworthiness.
My 2cts and DYODD
Costamare Inc. (CMRE) today announced its intent to spin-off the Company’s dry bulk business into a standalone company, Costamare Bulkers Holdings Limited…
https://www.globenewswire.com/news-release/2025/02/27/3033664/0/en/Costamare-Inc-Announces-Spin-Off-of-Its-Dry-Bulk-Business.html
Apologies if duplicate post.. I posted a link in my prior post so I assume it got flagged by Tim’s security.
NEW YORK–(BUSINESS WIRE)– Rithm Capital Corp. (NYSE: RITM; “ Rithm Capital ” or the “ Company ”) announced today that it will redeem $50,000,000, or 2,000,000 shares, of the Company’s outstanding 6,210,000 shares of 7.50% Series A Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock (the “ Series A Shares ”) at a redemption price equal to $25.00 per Series A Share in cash, plus $0.274091 per Series A Share of accumulated and unpaid distributions thereon to, but not including, the redemption date of March 28, 2025 (the “ Redemption ”). The Series A Shares trade under the ticker symbol “RITM PR A.”
A Notice of Partial Redemption for the Series A Shares describing the Redemption procedures was sent to holders of the Series A Shares on February 26, 2025. Additional information related to the Redemption procedures, including copies of the Notice of Partial Redemption, may be obtained from Equiniti Trust Company, LLC by calling 718-921-8317.
Maine, Z posted it on the litter box page
You have to wonder why just a partial redemption and not a full…. Coupon ought to be around 10.42%, right? You would have to think the rationale is that’s all the cash they want to utilize for the purpose at this time…. So if nothing else, I guess that means CIM-B is safe from call for now and probably thru to the end of the year and the rest of A will not be called thru its next coupon payment date at least.
I bot a small position on A this AM at 25.23 and own B
CIM-B correlates with Rithm? Or RITM-B ?
CIM-B is in the same sector as RITM-B. CIM may be a little more risky so preferreds pay slightly higher and perhaps have lower call risk,. Not exactly the same investment strategy but Yes they are somewhat similar.
2wr, did you mean “RITM-B” when you wrote “CIM-B”?
“… So if nothing else, I guess that means CIM-B is safe from call for now and probably thru to the end of the year and the rest of A will not be called thru its next coupon payment date at least.”
I thought you meant “RITM-B” and made a typo, but Gary asked if CIM-B correlated with RITM-B.
Yes, mbg Thanks for pointing out my faux pas…. I meant all along RITM-B and never caught my mistake in our 10 minute review period….
Was hearten to see the call, but also wondering why not a full call? The common stock trades at a ~8.4% yield. They also have a Senior Unsecured Bond due in 2029 that trades, best I can tell, at ~7.4% yield. https://www.tradingview.com/symbols/FINRA-RTCC5781735/
This bond was originally rated B- by S&P. https://disclosure.spglobal.com/ratings/en/regulatory/article/-/view/type/HTML/id/3133903
I have been holding a small position in RITM-D, a 7.00% Fixed-Rate Reset Series D Cumulative Redeemable Preferred Stock for sometime. It is callable 11/15/26 or resets on the same date at the 5 year treasury plus a fixed spread of 6.223%. At current prices I should earn ~7.25%, and a bit of a capital gain, if called.
For holders of RZB and/or RZC baby bonds.
Moody’s affirmed their Baa2 ratings, but changed the outlook on RGA from stable to negative.
https://www.moodys.com/research/null-Moodys-Ratings-affirms-RGAs-ratings-outlook-changed-to-negative-Rating-Action–PR_1000010950?cid=GAR9PTU7VKT2671&emailToken=eyJ0eXAiOiJKV1QiLCJhbGciOiJIUzI1NiJ9.eyJVc2VySWQiOiJkYzVkYjczMC01NTBiLTQ3ZjctYjhjZi05NzY2ZjAxZmU0MzMiLCJEb2NJZCI6IlBSXzEwMDAwMTA5NTAiLCJjcmVhdGlvbkRhdGUiOiIyMDI1LTAyLTI1VDEwOjM1OjAyLjM1NjE0NTUtMDU6MDAiLCJleHAiOjE3NDA3NTY5MDIsIlVzZXJOYW1lIjoiY3BhbWlrZW1iYUB5YWhvby5jb20iLCJVc2VyVHlwZSI6IjIifQ.8x4_JawajJYC3LqBur5KjYsH9IkOO6joNp61uWQahz8#0572b961dceedc105347b4ba6f05cd6f
Interesting read for sure. I read the entire article. Sometimes a person says to themselves is anything out there really a safe investment??? I own a pretty large amount of the RZC.
I am not currently interested in long dated bonds, but this one from FHLB has 3 years of call protection. FHLB cusip# 3130B5CJ5…paying 5.5%…due 03/10/2045…1st call 03/10/2028…pays semi-annual.
The best to you all…Beware the Ides of March….
Tks.vanguard has none to sell.
Is this cusip correct seems to be missing a digit? tia sc
sc4,
It’s correct. At Fido, the CUSIP pulled up the bond. 3130B5CJ5
CUSIP has 9 characters, which I believe is the norm.
FEDERAL HOME LOAN BANKS BOND 5.50000% 03/10/2045 5.500 03/10/2045 03/10/2028 AAA AA+
Thanks.I counted eight digits-my mistake. sc4
Wesco intends to use the net proceeds from this Offering to redeem all of its outstanding 10.625% Series A Fixed-Rate Reset Cumulative Perpetual Preferred Stock (the “Series A Preferred Stock”) and all of the related depositary shares representing fractional interests in the Series A Preferred Stock (the “Series A Depositary Shares”) on June 22, 2025
https://finance.yahoo.com/news/wesco-announces-commencement-private-offering-130000019.html
As an aside, not to you specifically but to III’ers in general, show me any other bond calculator other than Fido’s where you can enter all the parameters necessary on WCC-A to accurately calculate YTC now.
https://www.quantwolf.com/calculators/bondyieldcalc.html
have you tried this one?
Sure. IMHO, it’s the second best calculator. But in the case of WCC-A the call date does not coincide with a normal quarterly payment date so if you put in what you do in quantwolf, it will not come up with the correct amount to be paid on the call date but you can in Fido. Granted, in this situation the difference is not great but it will be accurate with Fido and only an approximate on quantwolf
Thanks
Am i doing this right?
Bond Yield to Maturity Calculator
Price $ 25.78
dirty
Face Value $ 25
Coupon Rate % 10.625
Payments per Year 4
Settlement Date Feb 25 2025
Maturity Date Jun 22 2025
Yield to Maturity % 6.779
Annual Equivalent Rate % 6.953
Accrued Interest $ 0.48
Takes into account interest I get from january 1 through today?
If not, should I back that out from the $25.78?
I would also get a short term capital loss of about .78 a share
WCC-A pays quarterly on 3/31, 6/30, 9/30 & 12/31. When you put 6/22 in as maturity, the calculator assumes it pays quarterly on 3/22/6/22/9/22 and 12/22. so you’ll come up with you getting paid more at maturity than you actually will receive…. With fido, you can dummy up a maturity date of 6/30/25 so that it calculates the right amount of accrued and payment at maturity. Then you can put in 6/22/2025 as the call date and now figure YTC…. That way you will get the right amounts of div into the equation to know what you’ll get on call date. The calculator will then figure both YTM and YTC. Be sure to use the YTC number… As mentioned, in this example, the differences are not great and quantwolf might be good enough for jazz, but Fido can give you the more accurate YTC. I also don’t think the very basic calculator Tim has graciously placed on the site has any way to handle this circumstance
This seems like a good test case. Can you give more specifics on what you get for a number and how you exactly you got it? Here’s what I just put into https://digital.fidelity.com/prgw/digital/priceyieldcalc/:
Calculate: Yield
Bond Type: Corporate
Price: 25.78 (sticking with what P used above for consistency)
Annual Coupon Rate: 10.625%
Coupon Frequency: Quarterly
Maturity Date: 12/31/2025 (arbitrary past call but on payment date)
Call Date: 6/22/2025
Call Price: 25
Par Value: 25
Quantity: 1
Settlement Date: Feb 26 2025
It tells me:
Accrued Interest: $ 0.413
Total Cost: $ 26.19
Yield to Maturity: 6.786 % (arbitrary because I chose a fake maturity)
Yield to Call: 0.915 %
Then what do you do from here? It’s assuming that you are paying $25.78 + $0.41 interest, and is calculating yield based on that number. Do you deduct the accrued interest from the price and re-enter with a fake price so you get Total Cost of $25.78? Or something else?
You got it…….. I get the same numbers you do, but yes, you then have to take the final step of subtracting the amount of accrued of .413 that the calculator assumes you pay out but you are owed it at call instead and plug in 25.78-.413 or 25.367 and recalculate… You then come up with YTC = 5.978% for settlement 2/26.
BTW, if you’re looking at this kind of thing right, IMHO ANG-B is a better buy
2WR:
I just use Excel for that kind of thing. XIRR is your friend.
XIRR is identical to what Fido’s calculator will come up with provided identical input is used in both….. It’s just whichever you’re more comfortable with….. me, I’m still just not a spreadsheet kind of guy so I find the calculator easier to deal with.
I wouldn’t be so fast to assume it’s identical. I just tried it with “=xirr({-25.78,0.66,25.61}, {to_date(“2/26/25”),to_date(“3/31/25”),to_date(“6/22/25″)})” and got 6.22%. The first -25.78 is the price we pay on settlement 2/26, the .66 is the dividend we receive on 3/31, and the 25.61 is the face value plus partial accrued as of 6/22 (25 + .92 * .66).
Why don’t they agree exactly? I don’t know. Maybe I’ve got some rounding errors in the dividend amounts? Possible, but the difference seems a little large for that. Maybe I messed up in calculating the partial dividend? Also possible and would explain it.
Or maybe the Fidelity calculator is using a different method for compounding? I’ve seen claims that the standard is for bond calculators to assume semi-annual compounding, but don’t know if this is true. If so, I think the error would be in the right direction and around this magnitude.
Or maybe the black box that is Fidelity’s bond calculator is figuring a slightly different dividend. Is there some way to figure out exactly what payments and timings it’s using for its calculations? I’m not saying the Fidelity one is wrong, but I find the opacity difficult to accept.
AS I’ve said, I have no direct experience with XIRR, However, in the past I spent a good amount of time via email corresponding back and forth with an old III’er whom I miss on here these days who is expert on it. We went back and forth more than a few times making sure that we were both entering identical data in the proper boxes of the two ways… Once we confirmed we were both 100% agreed on Input In, we got exactly the same Input Out. To do this publicly on this forum is too much drudgery and minutiae for this forum…
Makes sense. This was useful to me because it pointed out that my XIRR based spreadsheet in-progress does not yet correctly handle situations where a call happens between payment dates, so I needed to make up a formula by hand.
In general, is it safe to assume that if a preferred or BB is called at something other than a payment date that a partial payment will always be added to the face value at redemption? And should this should be calculated based on a 360 day year or 365 or something else?
I suppose there are always exceptions but I’d say it’s safe to say the former and it’s safe enough to also say that latter, but always best to check the prospectus… There are more exception to the latter than the former but still few and far in between.
So it sounds like this will be a 144A offering. Can someone explain to me who gets to invest in these and what the rules are? I have kind of a nebulous idea of the process, but I have seen some of these leak out into the general public over the years and have even owned some, while others are completely unavailable. How does all of that happen?
Accredited investors get to buy it. So someone like losingtrader might be able to since he has a better broker relationship. If I called my broker.. even though an account may have enough money in it to accomplish the rule to be accredited.. they will just LOL.. and say find a place that you pay enough for them to bother.
As for leaking out. I imagine you have to analyze each situation on a case by case basis for the reason why it happened. Not many out there really that I recall.
AFAIK…144a cant be bought by regular retail investors unless there is a separate Reg S issue with a distinct cusip. This has been my experience on IBKR. And yes, I am retail, loud and proud! altho i used to be employed by instl..
Maine,
Thank you for the correction. So you have to be a QIB. Qualified Institutional Buyer with a 100 million plus.
So say a brokerage like Merrill buys a bunch. Do they just sit on them or do they then turn around and sell them to their extremely high net worth clients as a perk? Or will they end up in mutual funds or some combination of all of the above?
I guess this is all academic for most of us if $100 million is the ante to get in the game. But it is useful to know what one’s limitations are and how the other half lives.
fc,
Yes, I believe it’s 100 mill. I don’t have that kind of change laying around until I can yolo on something like GME options , haha.
I heard a bloomberg discussion yesterday which I agree with. The moderator was saying if you repeated everything Zuckerberg did to make Facebook but did it 3 months later you might have failed. So, following in someone’s footsteps with a start up doesn’t work. Still, I’m sure there are some things you could learn to avoid
> Accredited investors get to buy it.
No, 144A offerings are to “qualified institutional buyers” (QIBs) which require much much more capital ($50MM IIRC) than accredited investors.
RPTP incoming
https://www.sec.gov/Archives/edgar/data/1614806/000110465925016733/tm257300-1_424b5.htm
Any initial price talk?
Thanks J–just saw this one.
RPT is KIMCO now. RITH-C (RITHM) already exists, but is perpetual F-2-F.
Confused.
Sorry– meant the current symbol to be RITM-C. Not sure why they have to switch to the RPT when others are RITM.
Oh well.
Actually RITM and RPT are different companies. If I understand correctly, an RITM subsidiary is the external manager of RPT. RPTP is not another preferred of RITM, it’s a new preferred of RPT.
1. Rithm Capital Corp. (RITM) has RITM-A, B, C, and D preferreds.
2. Rithm Property Trust Inc. (RPT) has just common stock now. RPTP will be RPT’s first preferred offering.
Gary,
When Kimco bot RPT Realty, the “RPT” ticker symbol went away and RPT-D became KIM-N.
RPT is now the symbol for Rithm Property Trust, which used to be Great Ajax Corp.
https://finance.yahoo.com/quote/RPT/history/
Even QOnline has NRZ as the precursor (which I owned before becoming RITM or whatever). Ellington almost bought the old RPT.
Anyway you slice it, this can be confusing Matryoshka doll structuring.
thanks all-
Has anyone heard if there are plans for this issue to be called before it resets: Medallion Bank 8% PFD Callable MBNKP
I am holding for the potential of a near 11% yield.
Tim please note this issue is not actually floating yet. I believe in April.
Me too. Nothing is published about a call.
We may, at our option, redeem the shares of the Series F Preferred Stock (i) in whole or in part, from time to time, on any dividend payment date on or after the dividend payment date on April 1, 2025, or (ii) in whole but not in part at any time within 90 days following a “regulatory capital treatment event” (as defined under “Description of the Series F Preferred Stock—Redemption”). They also must give between 30 and 60 days notice. The first redemption date (and float date) is 1 April 2025, so they have about a week to choose to redeem this stock on the 1st of April. They can then redeem on any dividend date with the same 30 to 60 day notice. So, if they don’t give notice in the next week, we get at least one juicy dividend. It is possible that the issuer is hoping for SOFR to go down in the relatively near future and hopes to avoid call and undergoing the expense of issuing new debt.
This investment grade issue, BAA3/BBB- (Moody’s & SP ratings), has been moved from my Sandbox discussion for those interested. DYODD. It is from TransCanada Pipeline Strip, a subsidiary of TC Energy. It has a 7% coupon. Next call date 3/01/2030. Resets at 5YR CMT + 261.4BP. Cusip is 89352HBG3. Purchased at Schwab bond desk for $99.58
https://www.sec.gov/Archives/edgar/data/99070/000119312525030844/d905971dsuppl.htm
Steve, did you see my questions in the Litter box?
answered in sandbox
Thank for the show .. I paid 99.38 on IBKR
Thanks! Managed to snag this at $99.40 this morning in my IRA.
Tim. You need to create a daily rant page. Up to 200 comments per day at times and various musings. Somehow, the random thoughts simply keep making their way to the “Alert” page.
Tim’s Daily Rant Page:
Feeling the need to rant, rave, or just share your musings over your morning coffee? Welcome to Tim’s Daily Rant Page! This is your space to:
Vent: Got something on your mind? Let it out. Your frustrations are welcome here.
Discuss Politics: Debate and discuss the latest happenings in the political world.
Predict the Weather: Share your thoughts on what the weather’s up to – we all know how unpredictable it can be!
Free-Form Thoughts: Had an epiphany after that third cup of coffee? Type it here, no matter how random.
Whether it’s an intense discussion or a whimsical idea, this page is your canvas. So grab your favorite mug, pour yourself another cup, and let’s get chatting!
Mr C. perhaps change the title from the sandbox to the litter box page !
I would still advocate leaving politics out of it. This is one of the few safe spaces and if politics were to be included on a rant (litter box) page, I think it will degrade the overall site, because, as you can see, things like this end up on RIA page when Sandbox might have been a more appropriate place to post the original suggestion.
Or better yet, go to reddit for your rants and leave III as it is without all the extemporaneous BS.
Agreed, overall, that people ought to be a bit more selective about where they post their posts. This post included.
Mr Conservative, please give it a rest and lower your blood pressure, it’s the weekend for God’s sake!
I agree with Mr C. Yesterday’s posts here were particularly chatty. Just a little discipline please, folks.
how did a facebook post end up on our economic discussion:?
No politics- no good will come of it- no need for anger among commenters.
Nothing will get resolved.
Will US & Global Investors Demand More Interest to Buy US Debt??
US Debt Clock ~ 2/22/25, now halfway to 37T!
* US National Debt…36.5T = 323K per taxpayer = 107K per citizen
* US Federal Spending…7.0T
* US Federal Tax Receipts…5.0T
* US Federal Budget Deficit…2.0T (Annual)
* US Federal Spending By Category
^ Medicare…1.6T
^ Social Security…1.5T
^ Interest on US Debt…1.0T
^ Transfers to States (Medicaid, Chips, Educ., Roads)…1.0T
^ Defense…0.9T
^ Transfers to Individuals (SSI, EITC, Nutrition)…0.5T
^ Other…0.5T (Public Health, Vets, Banking, Transportation)
# Interest on US Debt now Exceeds our US Defense Budget
# China, Japan, UK dumped 81B of US Treasuries in a single month this past December 2024.
newbie—medicare, soc sec, debt & defense total $5T and they will not/can not be cut back. Cuts from everything else can’t save more than about $250M. How can there possibly be a significant income tax cut? This whole process is an academic exercise in denying the obvious. The deficit can will once again be kicked down the road (by any administration) until a gigantic financial crisis occurs. Perhaps international investors will require much higher interest rates on Treasury securities. Perhaps the US government will decide that the dollar will be devalued in a way that all issued Treasury debt will be redeemed at a certain percentage on the dollar. Something’s gotta happen and it’s not gonna be pretty. JM2C
Newbie; My question would be at this very monumental moment in time is just how much money could be saved regarding just “TWO THINGS”. How much could we save if we stopped sending money to all these foreign nations around the world of which some of them even hate America. And last how much money could be saved if we stopped spending money on everybody’s pet project and even stupid things. These last 30 days have really opened everybody’s eyes to the amounts involved and it goes well into the $Billions of fraud, waste, & total corruption. So shameful these people.
Regarding the CHSC preferreds, CHSCP has an 8% coupon and trades at $28.28 for a 7.05% current yield. If anything was gong to be called, strictly from a financial basis, wouldn’t it be this one? The rumor has always been that the farmers own this one and thus it was somehow protected from being called. Could the firm call the lower coupon issues and leave this one outstanding? Maybe they would call all three >7% coupon issues at the same time. Anyway, I own a ton of the CHSCL & CHSCN and I’m just going to sit tight.
Whidbey; I too pray that they don’t call these issues. Over the last 3+ years I have accumulated now 18,780 shares of CHSCL. It is “currently” so damn hard to find anything of decent quality & value right now so it would be frustrating to lose this fantastic company. I scroll thru Schwabs inventory probably twice or even 3 times a week. Nothing of decent value, including the new issues they continually keep getting. Really very Long Term paper can get you a 5.70% or so.
Also regarding the CHSC preferreds. Have there been other CHSC preferred issues that were previously called? I’m assuming there have been since the issues I see references to are L,N and P. That’s aways down the alphabet.
It looks like (based upon the LIBOR problem) that all issues are de facto fixed rate. Tim had a good article I found when googling for this and the dividends that have been paid by the reset issues are consistent with fixed rate. It doesn’t seem like they switched to SOFR.
Just my opinion, I think they would be logical if they called in this order:
CHSCP is 8% fixed
CHSCO is 7.75% fixed
CHSCL is 7.5% fixed
CHSCN 7.1% and then LIBOR plus a spread of 4.298% not to exceed 8% but really 7.1%
CHSCM 6.75% and then LIBOR plus a spread of 4.155% not to exceed 8% but really just 6.75%
https://innovativeincomeinvestor.com/chs-reset-preferreds/
Yield,
In January 2024, the company announced that CHSCN (Series 2) and CHSCM (Series 3) will remain fixed. Found this in their 10-Q, filed 1/10/2024 (page 36):
ITEM 5. OTHER INFORMATION
On January 2, 2024, per the terms of our Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 2 and Series 3, and the Adjustable Interest Rate (LIBOR) Act, the stated rates of 7.10% and 6.75%, respectively, were fixed at 7.10% and 6.75% (the “Fixed Rates”), respectively. We will pay dividends on Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 2 after March 31, 2024, and on Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 3 after September 30, 2024, at the Fixed Rates until they are redeemed.
So, if I think the company is playing fast and loose with the interpretation , taking into account the LIBOR Act, perhaps I should ask CFPB to intervene?
Yes…. that’s sort of a joke !
A joke indeed, given that the current administration is shooting the CFPB in the head. No this is not a political statement, just calling the facts facts: all work ordered halted, staff fired, lease cancelled on headquarters.
bought a little CHSCN already owned some so this gives me a full position.
Charles M; Iam beginning to wonder if they are going to call any of these issues. As I suspect you know their CHSCL (which I own in size) is now past the call date. They don’t seem to be in any hurry. I would “guess” that your buy of CHSCN will also be safe as it was “callable on March 31st, 2024”. I see it closed on friday at $25.42 with over 15,000 Volume. I noticed on Quantum they had a line drawn thru a sentence that spoke about the possible reset rate. When I see these new bond issues coming out in size and no one of them worth buying something like this looks pretty darn good. I own a ton+ of their CHSCL so just have to decide if I feel comfortable with even more.
Chuck, I sold EFSCP that I had been getting a yield on cost of 7.4% it was a 5% perpetual non cumulative and I had a capital gain that I locked in. The CHSCN is giving me almost 7% on cost and 7.1% with the upcoming dividend factored in. It is cumulative and as you say it is past first call. If it gets called. I will have to find another rock to hide under.
I have been reading too much liberal propaganda and my gut feeling is telling me something could break in the economy so not sure I am making the safest bet by backing the farmer.
Look at the chart. Prior to Sept 30th this stock would rise into the dividend date then drop. Now the chart is inverse. It falls going into the dividend date then rises after the dividend. Almost like investors are breathing a sigh of relief it survived getting called and are buying pushing the price back up. If this herd theory holds, I will see CHSCN go lower and have to buy another tranche to follow it down and go overweight then hopefully lighten up after I collect the dividend. This means I am trying to look out about 45 to 60 days with my cracked and cloudy crystal ball. Not so sure this is the best idea playing in the water with the waves being kicked up by tariffs.
Charles M. THANK YOU for your very nice reply. I sometimes feel that YOU & I actually have alot in common. Maybe the only difference is I just simply do not trade “in & out” of these preferreds. I just buy em & hold em–LOL. What part of Calif. do you live in??? I live in beautiful sunny all year round Omaha, Nebraska—LOL. PS Just 2 days ago it was a minus 35 windchill index here. When I got up this morning at 3:05am it was 10 degrees.
Chuck, I think I said this before. I live in the Sonoma whine country and enjoy being close to a city that I can get everything I need. It used to be rural but the mountain has come to Mohammad. With the city folk moving in around me I have to be a little more careful of people complaining about things they don’t know anything about. I live along a major road and yesterday I had a ewe die trying to give birth. So I lost the possible twins and the mother. Spent the day hiring some Hispanics ( yes they are still around and not hiding from ICE) to help me drag a 250# ewe from the field and load in my truck so I could take it to the county disposal. Had to pull it out myself to drop in the front end loader. Such is the life of the hobby farmer. At 68 I’m starting to get too old for this stuff.
Charles,
Your story reminded me of something that happened to me back in 1990. We had a horse and a pony as pets and my daughter’s ageing pony died one hot summer day in PA. Called a service to dispose of it and scheduled the deposal but my daughter out of concern called back to ask what will become of her pet and they said dog meat.
Well, that killed that idea and at the time I was working on a construction project at an animal research center and knew the director. I asked what they do with all their animals that pass away. He said we have an incinerator. So, once he heard of my problem, he said bring it in and we will take care of it. Thinking about that I asked how big the door to the incinerator was and his answer made it clear the pony would not fit. But his suggestion was to chain saw it into pieces. That ended that idea, so I loaded it on my truck and hauled it up to my rural property and gave the poor thing a proper burial cross and all.
Yeah Jaberstein times change. The dad of my friend in college had 20 acres in downtown Cotati and had 5 or 6 steers on it. When one died he had a backhoe he would dig a hole and just bury it on the property. County back then was mostly dairy, apple farms and chicken ranches. They boasted they were the egg capitol of the world.
Charles,
Why is chicken cheap, but eggs expensive?
Better: Why are egg whites on sale?
Lt, I like your posts! But I’m going to move over to the kitty litter page
RITM-C is past the call date, either Feb 15 or Feb 18, and floating at 3mL + 4.969%, which is about 9.56%. Last 24.87, CY 9.6%.
RITM reported on Feb 6 and price is up.
Is there any assurance they will replace Libor with SOFA???
Jack,
They said (in their 10-K, filed 3 days ago) they’ll use the fallback language in RITM-C’s prospectus. To me, the fallback language says they’ll use SOFR.
10-K, page 101:
“… and from and including February 15, 2025, with respect to holders of our Series C, at a floating rate per annum which is determined pursuant to the USD-LIBOR cessation fallback language in the Certificate of Designations for our Series C …”
The fallback language, page S-71 in the prospectus:
“Notwithstanding the foregoing, if we determine on the relevant Dividend Determination Date that LIBOR has been discontinued, then we will appoint a Calculation Agent and the Calculation Agent will consult with an investment bank of national standing to determine whether there is an industry accepted substitute or successor base rate to Three-Month LIBOR Rate. If, after such consultation, the Calculation Agent determines that there is an industry accepted substitute or successor base rate, the Calculation Agent shall use such substitute or successor base rate.”
To me, this is pretty close to an assurance without actually announcing that’s what they’ll do.
Thanks, I missed that.
The Series A and B switched to floating last year and for those deals they now reset using SOFR
I liquidated abr/prf at 21.94 on back of 12% drop in stock (ABR) and bearish article published on S/A by Harrison Schwartz on 1/28
Arbor Realty: Short Opportunity As Southern U.S. Housing Glut Forms
additionally..abr.prf/sjnk pair has gone from 2 sigma cheap in august to 2 sigma rich in january (1yr horizon) and seems to have rolled over