I will be adding a new link titled “Sandbox” in the right hand menu.
That link will get you to this page.
I had originally set up the “Reader Initiated Alert” page for ‘alerts’. I was thinking this, for instance, might be when a preferred stock is undergoing a temporary selloff and someone wants to let the population know about it quickly. Of course we all (including me) use the ‘alert’ page for general messaging.
I am requesting that we start using the Sandbox page for all general talk, and try to preserve the ‘alerts’ page for ‘alerts’.
I have had a screen up on one of my monitors all week where I see all comments – no matter where they are posted–it is a great page and I wish everyone had a page like that–believe me we all benefit from all the knowledge being shared. I don’t want to stifle any of the exchange of knowledge, but hope to get things a bit better organized by adding the Sandbox page.
For playing in the sand. Want to talk about inflation and rates. No interest in what the feds are doing, unless at some future date they decide they need to raise rates to cool the inflation but by then closing the barn door after the cattle get out may only cause a downturn in the economy.
Been talking about this for a time and also on SA. Today in my travels what I heard and saw just confirmed it. I paid 20 to 30 cents more then 2 weeks ago at Costco for gas. I was looking for bolts at the hardware store and asked why they so low on stock. Salesman told me the suppler’s rep for Hillman said their sales are up 30% this past year and having a hard time getting wire stock to make the screws and bolts. My customer who makes commercial steel doors and frames said his costs have went from .48 cents a # to .78 for steel since last June, same goes for my customers who make steel studs, not just has the price went up but getting the steel coil from places like China has been hard to get. Then you can also look at the cost of Cu and Sn. My cost on 50/50 tri-bar has went up because of the Sn.
Can’t tell you how this plays with stocks or their preferred maybe someone here has some good ideas.
A local bike shop can’t get bikes from China- is that production drop, metals shortages, or trade war?
Gary :
Heavy demand during the pandemic is one reason. I receive an outdoor newspaper covering the Adirondack Mtns in NYS and bicycle shops have waiting lists and state the reason; also, re: other comments, gasoline is up 50 cents per gal since the election where I fill up ( 2 diff stations ).
It is demand that was driven by Covid19 and the restrictions. Anything associated with bicycling is hard to get. I wanted to purchase a smart trainer late last fall and was put on a local bicycle shop waiting list where I might get one of the more popular ones in April 2021. I shopped around and found one available at one of the major on line retailers (for full retail price of course!) that I ordered on line. The smaller bike shops are getting squeezed out of supply by the big ones on a lot of stuff. They have more leverage with the manufacturers.
Charles; Here in the northwest Costco gasoline is up about 35 cents from a month ago. Lumber as well as building materials of all types have really jumped the past few months. Also, my son is with Costco corporate. He is involved with international logistics. Says supply on many items are quite tight and very long delays and backlogs using California ports to Asia and Australia. To your point, inflation is coming like a freight train.
Gas: https://www.macrotrends.net/2516/wti-crude-oil-prices-10-year-daily-chart shows WTI crude up 75% May-Dec 2020 (in other words, even stripping out the crash). Isn’t it inevitable that prices would rise at the gas pump?
Lumber: https://www.macrotrends.net/futures/lumber shows lumber futures nearly doubling in the same period.
Yes inflation has continued apace in 2021, but it started in earnest many months ago…
Logistics are an issue. There has been considerable press on a shipping container shortage. An uneven country-to-country pandemic recovery has left a surplus of containers where they are not needed and created a shortage where they are. Premium prices are being paid, so more than usual number of containers are being shipped back empty on the return leg of their trips. And more than the usual number of products are left stranded on the docks.
This is hurting food shippers:
https://financialpost.com/commodities/agriculture/the-global-food-trade-has-been-upended-by-a-container-crisis
There is a relatively short list of container companies, some with publicly traded preferreds. Whether they will be good long term investments depends on how the shipping container markets settle in after the pandemic distortions subside. Just my opinion.
Charles – I think that we are going to see real inflation in the coming 12 months. People want their mobility back and when that happens all at once look out. I’ll be amazed if rates stay depressed.
I’m travelling in May and My wife and I have already booked travel for November. I am sure we are not alone.
Bill & Bur,
Why I like talking to people here. We all are looking over our shoulders these past couple months and saying the boogie man isn’t here but we are preparing all the same. Beginning to warm up to those Edison shares, but with a 5 yr reset ? might be better entry points down the road Why I am hoping my BRG-C and WTREP stick around for a while longer.
Trips ? OMG I can’t wait. My wife getting antsy and so is daughter, they had planned to go to Santa Barbara next week to see the granddaughter, but something happened. Think the GD didn’t want old foggies hanging around !
Daughter half kidding said 6 days all inclusive in Mexico with air is 2,000 told her no way Jose.
Try buying ammo, practically non-existent here in CA. I can get some for my Glock .40 but no 9mm anywhere around here. The manufacturers say it is a combination of demand and material shortages (brass/lead/primers). Most are adding some manufacturing capacity and hoping material suppliers do the same. A box of 50 rounds of 9mm now sells for $50, was $19.00 a year ago.
Yes, it’s difficult to get ammo of the popular calibers. I have resorted to using reloads when I go to the range.
New comment thread,
Anyone here been holding NML CEF long term for income ? or a similar mlp fund like a tortoise CEF ?
Its a monthly payer, Just seems like its gotten kind of rich in value compared to the distribution it pays unless there is a expectation its going increase the distribution as the price of oil goes up. Considering its invested in the companies that transport the oil with fixed contracts I don’t see how the price of the commodity affects the distribution.
Just looking at it as a income stream with a play on oil
I thought about gambling on MDLQ on Thursday when it dropped below 3. I didn’t. If anyone did they where up 26% on Friday.
anyone know what’s causing RILY to tank? It’s not ex day yet. Down way too much, but no news I can find.
Probably just profit taking on the big run-up?
volume on AATRL over 30,000. Maybe a reco somewhere. Since I sold last week will wait for possible pull back to 50 ish range,
Tim-
What happened to the specific symbol search? For quite a long time there has been only the Parent ticker search.
thx
Search is under the Tweets on the right. At least on a PC.
Ah… thanks. Thought they were together. Seems like related posts/comments used to come up with the searched stock.
Gary
It’s on the right hand side, farther down than ‘ parent search ‘, but a little hard to decipher; It just says ‘search’ ; also, there should be an explanation of how the preferred symbols need to be entered. I believe it is ‘ yyy-x ‘. I entered one in that manner just to see if it worked, and it did. RE: donations. That would be recommended. Many folks do not want something for nothing and this site offers excellent information that the readers use to make $$$, including me.
Thanks
My experience is that the Search box (now below the Twitter feed) is what I would call an “open text” search: input string ‘xyz’ and it will find all occurrences of ‘xyz’ in the blog. Doesn’t have to be a ticker symbol, can be any text. In that regard, if you enter ticker ABC-D, and someone has referred to that issue as ‘ABC.prD’ somewhere, it will not find that occurrence; it will only find occurrences of the string ‘ABC-D’. If others observe different behavior I’d be interested to hear.
Real sandbox here …..
Many here know of the train wreck that is HDO. The most amazing recommendation that they came out with was WPG bonds (touting the 20% yld) about a month before the company missed a payment on a $750 million bond issue. In a very long comment thread HDO defended the recommendation. Much of it was highly amusing, notwithstanding that probably 90% of the “good” comments got cut by SA.
https://seekingalpha.com/article/4395964-2024-bond-yieldplus-20-washington-prime
The best comment came from Sam Hain. If you don’t know his work at SA you might check him out. His suggestions for new HDO articles:
“How about an article titled “Bankruptcy offers a 5th Way to Profit” or “The More WPG drops, the More We Buy”?”
Bob,
I don’t think I have seen a article on SA generate 626 comments, If they wiped 90% that makes it even more.
I said it before, SA hitched their wagon to this group, if something ends up in court and they try to deny responsibility I think that’s going to be a tough one.
On the other hand doesn’t seem to have affected my BFS-PD!
Charles – I know that almost all my comments were screened out. At worst, they were occasionally a bit sarcastic but easily within SA boundaries. Stuff like “should I be selling my NGL to buy WPG?”
But positive comments, no matter what was said or how it was said, were published.
SA is fully complicit in the train wreck.
Just looked through HDO reports on WPG. How about this one from last August:
“Washington Prime Offers 3 Ways To Achieve Enormous Returns”
In the holdings report:
“Disclosure: I am/we are long WPG, WPG.PH, WPG.PI, WPG BOND”
Ouch.
Did they mention shorting, or front running the poor people who would buy based on an HDO recommendation?
I just posted a comment: I’m waiting for the next article. “The More These Enter Bankruptcy, the More We Buy.”
And it got published!
Bob-in-DE–you saw this?
https://www.cnbc.com/2021/03/04/mall-owner-washington-prime-reportedly-prepping-to-file-for-bankruptcy.html
I did, thank you. The missed interest payment had a 30-day grace on it but the grace is ending soon and I can’t see WPG being in default on such a large debt without BK protection. WPG is obviously looking for some kind of lifeline but the lenders aren’t giving.
The 2024 bonds are trading at 52 and change. It’s an opportunity to make a killing or be killed. For what it’s worth S&P suggests a 25% recovery, meaning much risk to the downside.
So a spin off of Simon property group in 2014. Once economy got better after recession they got rid of the poorly performing malls by creating a hold co instead of trying to sell off one at a time.
Smart
Bob, Keep jabbing away at those ship of fools on the WPG article. I cant get in on the fun. I snuck a brief one in that they didnt block, but they got me under wraps there again. But you have to give those balance sheet know nothing dimwits some credit…They pulled off a rare triple play in investing…They recommended hard and often PEI, CBL, and WPG and they all went into bankruptcy. The investing dart throwing blind folded monkeys are very jealous and impressed. They said they have never been able to hit 3 companies in same sector that went bankrupt on recos with darts.
I saw the comment! Back when HDO was pushing all the dead man walking REIT preferred they defended all the criticism by explaining how REITs never go bankrupt and how there hadn’t been a REIT preferred default like ever.
Well, guess what?
From all the backing up the truck he did pendy must own 80% of the CBL float.
Not sure why you pay so much attention to Rida/HDO, etc. when you know it’s garbage. I had one comment a while ago that was meant to help other investors understand something better about an article, and it was removed from SA so I decided it wasn’t worth fighting a losing battle. SA readers, be damned if that’s how the site operates!
I still see some of the article headlines on SA, but never look at them anywhere. As bad as the ideas usually are, one of the most baffling to me was the recommendation to buy a 2x leverage Mortgage REIT ETF. They talked up the whopping yield (which was probably 16+% or something like that) but somehow managed to not talk much about the risk of being leveraged. This was sometime before mREITs blew up last March, so I have no idea if they were still recommending it at the time. But the idea of a leveraged equity fund as a reliable income vehicle was just so dumb that I can’t forget it.
Two reason:
1) amusement. Been locked up for too long.
2) hope that others will see what a train wreck their “recommendations” are. I I fell badly for those who blindly invest based on what HDO publishes.
Ya, Bob…We pay attention to it.. Not to learn anything but to throw shad from the Peanut Gallery any chance I can. I wouldnt bother if they were just modestly honest and admitted they suck. But they wont give an inch on any bad trade, so I enjoy reminding them when I get the chance.
Edison preferred ………..
Structurally, this is a highly desirable issue for many investors. 5-year reset, no built in rate drop (current reset rate = initial coupon), callable only every 5 years (not continuously), and cumulative.
It is trading and available to buy at IBKR, at a price of your choosing! I have a buy in for 5 shares and will buy more on weakness. Last reported sale was 99.859.
281020AS6
Executed at 99.87 against an ask of 99.925, a 5.5 bp improvement. Last trade 101.875.
Thank you Bob. Much appreciated.
Just snagged some thru Vanguard Bond desk at 99.7
Good price. Have a new buy in at a lower price in case it trades down. It’s a big issue so there may be some discounting to get it all sold.
Bob and Adrian, I decided to join you guys with a small 12 share purchase of the $1000 par preferred at $99.87. Vanguard warned me they say it will compute incorrectly on my account. None the less its a bit disconcerting to see I am showing an almost negative $1.1 million balance in my small Vanguard account. Do you know how many years as a door greeter that will take for me to pay that deficit off?
Im doing a bit too much California dreaming in Uteville as I have PCG-A also. But it is what it is….
Grid..likewise. I went for 15 thru Vanguard and now over a million in the red. At what point do I call the kids and tell em they’ve got to come home from college?
Adrian if it doesnt change, I own 12,000 shares of this. And its going to take about 50 years of door greeting to get this paid off. And that is assuming all taxes are waived from my wages, and Vanguard doesnt slap late payment fees on me, ha.
Grid – If you had bot this thru QVC, you could have spread the payment out over 5 Easy pays with no interest adn been home free…… she knows all the tricks……… lol
Same here: Vanguard rep said “we’ve had some interest in this issue today” (at which point I’m thinking, “ah yes, the III effect”) and then warned me the site was miscalculating the value (“it’s causing our tech guys headaches”). As I type this, Vanguard is showing the position but assigning it no value. Not too worried; I assume they’ll sort it out eventually.
I would suggest bagging groceries at Trader Joe’s would get it paid off faster.
The 100 mile round trip gas cost to Traders would eat me alive… And I dont think 2WR suggestion will help either. Spreading out $1 million over 5 months isnt going to help a lot, ha.
What do you make of the Ba2/BB+ rating for preferreds that are subordinate to SCE’s BB+ rated preferreds?
The reset rate makes it very attractive, though, in this rising rate environment. I’ll have to think hard about swapping my SCE-L for these EIX preferreds.
LI – I don’t know if rates will rise and stay risen but I like all my bases covered. I sold off most of my F2F issues that had big coupon drops coming that were not (my view) adequately priced in.
I swapped much of that exposure to 5-7-10 year resets without the built in rate drop. It’s not a big universe (yet) but enough for my purposes. Many of those issues are institutional, which is why I got to buying bonds at IBKR.
Bob – Could you share the Cusips on some of those 5-7-10 year resets? I’d like to take a look at them. My Etrade account will only screen for all floating rate securities, which makes it hard to find these in particular. Thanks.
Here’s a few. Most need better entry points as the genre is very hot right now. Research at EDGAR and FINRA.
BNY 064058AJ9
HBAN 446150AT1
SRE 816851BK4
CFG 174610AU9
RF 7591EPAR1
SCHW 808513BD6
ATH-C
Bob, oh great advocator for IBKR that you are, you’ll be happy to know that Nanny Fidelity believes all its customers are too stupid to be able to understand resets and apparently, based on searching their fixed income site for all the CUSIPs you listed and by attempting to go their regular route to enter an order on ATH-C as a test, apparently ALL RESETS are off limits to Fidelity customers. not surprising….. Yes, they do have a good fixed income platform offering a lot of flexibility, Nanny does prevail there as in f/f baby bonds and the like.
I did not notice whether or not you’re allowed to waste a half hour or more to buy via call-in
So silly. Even futzty old Vanguard just gives you a variable rate warning on resets or floaters before taking your online order.
Bob – Thanks for the list, I’ll be checking them out.
2WR – Fidelity has been a nanny state for years. You’ll never find any floating rate security there, step coupon bonds, unrated bonds, bonds in default, or convertible bonds. They also screen out a selection of preferreds that doesn’t have a consistent logic for screening. That’s why I also have an Etrade account, which lets me buy anything albeit at a higher price for bonds.
Coaster – What always gets me about Nannydom is though they won’t let you buy any of these bond vehicles,, they’ll be happy to let you in on the by definition more risky underlying stocks of the same issuing companies… again, the Nanny must assume I and her other clients are all just too stupid to understand…. They also used to not let you buy or sell a listed baby bond once it was called either.. At least that seems to be allowed most of the time now. I remember calling into their fixed income department one time to buy a called bond at a premium to its par (or maybe it was a preferred and its liquidation preference – I don’t remember for sure) and having the FIXED INCOME SPECIALIST, the EXPERT in bonds mind you, ask me, “Why would you want to do that????????” And I’m the one who’s too stupid?
Oh yes, they do come up with some weird stuff. Just this week I was looking at a premium bond on offer at a yield that showed as negative 20%, because it was callable in 30 days. Fidelity would let me buy it at that big of a possible loss, but when I tried to make a bid at a break-even yield, they wouldn’t let me do it because my price was too far below the ridiculous offer.
However, I do give them credit for at least letting me make my own bid/offer even with their limitations. Most brokers, including Etrade, won’t let you do that.
Coaster – it comes down to what you buy. I find I need 3 brokerages. TDA, because they will trade all the issues that other brokerages won’t. IBKR for TSX and other foreign exchanges and institutional issues. Vanguard for everything else. Maximum access at minimum cost.
Bob – I agree, all the brokerages have pluses and minuses, and you need access to several to optimize what you’re trying to do. I may add another sometime.
2WR – you can call in to Fidelity to buy a floating rate issue. Yes, it takes 10 minutes or so versus the 10 seconds you would spend entering it online but I never had an issue calling in to get them when I wanted one
Thanks, Mav – Or you can use my solution – use Fidelity for what they allow you to do online and TDA for what they don’t….. Then again, I doubt that solution would work well on bonds trading by CUSIP# only as I wouldn’t trust execution price at TDA on any non-listed bond, fixed, f/f, reset or other.
They also have another $1000 perp, but this one going floating (LIBOR+4.2%) next year.
Anyway if someone interested, here you go: https://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C568741&symbol=EIX.AA
Yuriy, Thanks for the blast from the past, as I looked at that one a couple years ago and forgot all about it. Its not set up too well going forward being over par a bit and adjusting to Libor 4.2%. The new issue seems better going forward, though you have to eat the initial yield difference for a year.
To expand Yuriy’s point there are a large number of live floaters in the institutional pref market. Almost all float off 3mL. Lots are investment grade with little or no call risk. Ylds generally 3.5-4.5%
They make good short term cash subs. Easy to get in and out of, pinned to par, sort of. Better ylds are available in exchange traded issues but with a lot more work, more credit risk, and often with call risk. Pick your poison.
You really need an IBKR account to trade these efficiently as the bid/ask spread can be large. You just can’t be giving up 50 bps on each trade and expect to keep any money. The 5 bp spread on the EIX issue I traded this morning was much tighter than customary due to large volume traded.
Bob, I assumed as much as that being the reality, so I bought small for now and will consider it stranded next to my delisted bond exchange Phoenix issue I have owned for years. Although I noticed it is rising from the ashes, I would never sell because of the bond scalping I would take. So for it its 11% per annum or bust or 2032 maturity with sizeable cap gain; whichever comes first.
Phoenix is a tough one. I bought some at Vanguard years ago with a call to the bond desk. I don’t know of anyone that will trade it online. Pays its fat interest payment like clockwork. I plan to hold it forever.
I tried to get a bid on my Phoenix bonds recently through Tradeweb, an institutional bond platform. Left the bid open for an hour and there were no takers, which is highly unusual for any bond. It trades often enough, according to TRACE, but I have no idea where or how to do it.
Phoenix – it will trade 10k shares in a day no problem but it is still very elusive for some reason.
I can’t figure out just what Tradeweb is. Doesn’t seem to be a broker but rather a trading platform operator or have I got that wrong? Does an individual investor open an account with them?
Tradeweb has a network of many brokers, all tied into a web-based trading platform. I don’t a retail investor can set up an account with them. A version of their platform, Tradeweb Direct, is used by some retail brokers – Etrade had it, although I haven’t had an account there for a couple years. It is not as good as the institutional platform, but it does have a different inventory of bonds than you can get at Fidelity, Schwab, etc.
Several years ago TradeWeb bought another platform, Bonddesk. Bonddesk inventory shows on Fidelity, Schwab, IBKR, etc. Each brokerage has their own filters about which bonds they will show or not. For example not surprisingly, Fidelity is fairly restrictive on what they show. So even if TradeWeb/Bonddesk has inventory to move, you might never see it or be able to place an order for it.
I am not sure how inventory shows between Tradeweb and Bonddesk.
Tradeweb bought Bonddesk in 2013. I used Etrade as recently as 2019. If Etrade still uses Tradeweb Direct, then I stand by my claim that you will find inventory there that you will not find at Schwab or Fidelity.
E*TRADE uses Bonddesk, which makes sense given that they used to use Tradeweb.
is there a temp symbol for it, or do you have to buy through the bond desk with the cusip?
private – thread got a bit confusing. what issue were you asking about?
281020AS6
The cusip is above curtesy of Bob..
Here is the prospectus for light bathroom reading material.
https://www.sec.gov/Archives/edgar/data/827052/000119312521067286/d312913d424b5.htm
I had to call bond desk as it wasnt loaded online in any of my brokerages.
So you most likely have to call your bond desk. And tell them Bob sent you, and you may get a 3% discount at purchase. 🙂
Bob, you wrote, “5-year reset, no built in rate drop (current reset rate = initial coupon).” But the way I read the prospectus, the current reset rate will be 4.698%+5yrTreas.* Have I misunderstood?
(*https://www.sec.gov/Archives/edgar/data/827052/000119312521067286/d312913d424b5.htm says “On and after the First Reset Date, the dividend rate on the shares of Series A Preferred Stock for each Reset Period … will be a per annum rate equal to the Five-year U.S. Treasury Rate … as of the most recent Reset Dividend Determination Date … plus a spread of 4.698%….”)
Bur, what he meant was the initial yield of the preferred equals the adjustment plus the current 5 year tbill yield. But technically 5 year is already higher now since issue was priced a few days ago, so its technically better.
Because it was issued at 5.375%. If it reset today it would be 5.498%.
(4.698% plus .80% current 5 year tbill).
Grid has you covered.
Institutional preferred are almost always F2F or more recently fixed to reset and seldom if ever are issued with built in rate drops.
Not always true with retail (exchange traded) preferred. Not uncommon for the initial rate to be 100 bps or more above the reset rate. Increases the chances you end up with a low yielding perp after reset. To be avoided.
Bob, Grid–thanks for the info.
So given that the reset is 667bps lower than the initial coupon, one hopes that the 5Y Treas hasn’t dipped below that amount when the rate resets. If I’m reading https://www.macrotrends.net/2522/5-year-treasury-bond-rate-yield-chart correctly, it was below that rate for most of last year.
I admit I am picking nits: if we’re in an environment where the 5Y is that low, I’m actually okay with the base reset rate of 4.698%.
I misspoke in my reply: I wrote “reset is 667bps lower than the initial coupon…” I meant “reset base rate” (if that’s the right term). I get loud and clear that as things stand today, the reset (base + 5Y Treas) is *above* the initial coupon.
New Issue: AES
$100 par convertible
Price range 6.375 – 6.875%
https://www.sec.gov/Archives/edgar/data/874761/000119312521067594/d144709d424b5.htm
Re : AES new issue
To be clear, this is a mandatory convert issue.
Just got a “corrected” 1099 from TD. Held a few shares of AATRL in a taxable account there last year. Interestingly, no OID shows in the account. The only interest income was the actual cash payments. And when the AATRL shares were sold, the cost basis was the same as the original purchase price. I’m not going to argue.
Was the ordinary gain box marked?
I doubt they will be correcting it at this point. I am really surprised that someone as big as TD got that one wrong.
I have the same thing with vanguard-my ordinary gain box is checked, and it only appears to be the normal gains.
Ordinary gains is correct, so they got that right.
Yes, gains are ordinary.
BTW, the majority of my AATRL shares are held in a Fidelity retirement account. As it’s a retirement account, I don’t get a 1099. But the AATRL accounting appears to be correct, as the cost basis is shown as accreting by the OID. (I suspect that this doesn’t come as a surprise.)
I don’t know is this ELC or not …
https://www.sec.gov/Archives/edgar/data/1348952/000006598421000116/d122995d424b3.htm#stoc122995_4
I don’t believe so J–the coupon and maturities don’t match up
it refers to this bond 29364WAN8
Short term cash …………
https://www.sec.gov/Archives/edgar/data/38723/000003872321000021/prospectussupplement-sdn.htm
It’s not what I do do but 2.02% is better than most I see.
A subsidiary of BAC….guess that makes it a bit more secure
Which Charleston are you in?
Maybe I’m missing something here but the First Franklin SDN (senior demand notes) are *only* available to residents of the state of GA. I perked up at the 2.02% rate (better than the GM Right notes rate of 1.50%) but sadly I can’t take advantage. Thanks for the pointer anyway!
BWSN …..
If there are any HDO subscribers out there can you advise please if they out out a “buy” on BWSN on Monday?
If you’d prefer private reply my nic at SA is the same as here.
I bought BWSN last week at 25.00 and flipped it this morning at 25.65. Quite a junky issue. I will take the 65 cents and run.
EBBNF was down 14.8% to close at 16.45 if you are interested. First call date is 9/1/22, have no idea if it will be called or not.
It was a one off trade. I’m pretty sure it’s not being called.
Tim – Reader Initiated Alerts is stlll closed
SARATOGA – Another BDC going institutional @ 4.375% for 2026 – new money no calls.
https://www.sec.gov/Archives/edgar/data/1377936/000121390021013215/ea136995-497ad_saratogainves.htm
Ooops… Just saw you beat me to it, Gary
New SAR note
https://seekingalpha.com/pr/18217729-saratoga-investment-corp-prices-offering-of-50-million-of-4_375-notes-due-2026
Hi there income folks.
Blockfi is paying like 8.6% on stablecoin right now. Not without risk, wanted to pass along.
GUSD is tied to USD. Blockfi due diligence recommended. You can pull out interest earned 1x/month w/o any transaction charges.
Looking for more short time trashier issues that pay well.
I loaded up a couple weeks ago on a few thousand issues when ECCB dipped near par. I put a high sell order out, and someone wanted them all. And… there they went after owning some trash for a couple weeks. I’ll be dumpster diving again on some play money.
Thanks for the heads up MrC
I went to dump my 500 (I bought around when you did I guess) at 25.80 when bid was 25.75 and ask was 25.85
After a couple of minutes with no action, I changed my sell to 25.75 and was rewarded with an immediate fill at 25.82
go figure.
Mr. C you like trash, here is a couple of Waste Management issues to research while in the bathroom.
Senior note GSLD, shipper, with 8% par first call end of this year and maturity in 2024. Container ships are doing well now. Common stock up 47% past 3 months. SESCF has been a very stable issue I own that also, but bought them mostly around $24 when it began OTC trading.
SPLP-A from Mini Me conglomerate Steel Partners. The senior vice president just keeps buying these preferreds the past week at random prices.
https://www.sec.gov/Archives/edgar/data/1452857/000092189521000605/xslF345X03/form404197006_03022021.xml
https://www.sec.gov/Archives/edgar/data/1452857/000092189521000526/xslF345X03/form404197004_02222021.xml
This one is interesting to me because this 2026 maturity is going to have to be dealt with in time. Its trading now at market yield, but come 2025 the market is not going to give you a freebee 30% YTM for the taking if company remains viable. Negatives are this a K-1 (though a simple K-1) and could redeem in PIK if so desired.
CEO Lichtenstein personally had almost a half million preferreds a year ago on annual filings… I own then both, myself as I have signed a lease with Waste Management myself. I even own PCG-A in the trash pile too!
The SPLP-A buyer is using a 10b5-1 plan. It is likely pre-set to buy specific share amounts or dollar amounts during specified time periods.
Karma, He very well maybe on auto pilot for his martial trust. Good ol VP Gordon bought almost 2000 more the other day yet again and now is up quickly up to 50,000 of near constant dabbling purchases. He didnt have any it appears at the first of the year. He is quickly catching up to his common share count.
Doesnt appear to be too price focused as I got in better by a few cents each time I bought around his earlier purchases.
A broker executes the trades for a 10b5-1 plan. So if he set up the plan to buy for say, anything less than $21.0/share, then the broker will execute the buy as long as the limit is met. The broker probably also charges some pennies per share for each trade.
After pondering, he better be doing it in the manner you stated. These trades are going off during working hours. He better be attending to the daily needs of the company instead of pecking away all day on his computer buying the preferreds like I do, ha.
Hey Grid, yes I bent over and picked up some SESCF when you recommended them earlier. It paid the divy and didnt drop. I should have thrown some more coins at it. I might have to throw some more since it is still close to par and they have stabilized their ship 🙂
Not sure if this has been picked up.
https://www.businesswire.com/news/home/20210303005349/en/
Thanks for that. Does anyone know how EIX preferreds rank in comparison to SCE preferreds? My understanding is that EIX is a holding company and SCE is an operating company, therefore SCE preferreds are structurally senior to EIX preferreds. I don’t see a credit rating in the PR. Should be BB since EIX has a BBB- corp rating. SCE prefs are BB+. But what I don’t understand is why SCE preferreds aren’t structurally senior to EIX debt. Doesn’t SCE have to pay the preferreds before they send any divs up to the parent company? So, SCE could continue to pay the preferreds even if EIX defaulted on their debt.
Finally, how does a $1.25B preferred offering provide only $625M of equity content?
Ba2/BB+ expected.
https://www.sec.gov/Archives/edgar/data/827052/000119312521065586/d124362dfwp.htm
Thanks, TIm. The 5 year + 4.7% reset is quite attractive for a Ba2/BB+ rated preferred. Too bad it’s an institutional issue. I have to say that SCE-L doesn’t look good in comparison unless you factor in structural seniority.
I answered my own question on equity content. Apparently preferred equity doesn’t have full equity content. That’s a new one for me.
Preferreds generally count part equity part debt for credit rating since they are a qusi bond from fixed coupon.
Landlord, You are one to it… It seems at first glance to be counter intuitive, but it is correct none the less. Holding company preferreds and even senior debt is subordinate to subsidiary debt and even their preferreds. That is just how they are structured being the vehicle holding companies are.
For example below it an EIX 2022 2.4% senior note. Notice how in the prospectus it labels it subordinate to all…
The notes will be our unsecured senior debt obligations and will rank on a parity in right of payment with all of our other unsecured and unsubordinated indebtedness. The notes are our obligations exclusively, and are not the obligations of any of our subsidiaries. Because we conduct our operations primarily through our subsidiaries and substantially all of our consolidated assets are held by our subsidiaries, the notes will be effectively subordinated to all existing and future liabilities (including indebtedness) and preferred equity of our subsidiaries. At June 30, 2017, our subsidiaries had total consolidated liabilities of approximately $36.5 billion, and preferred equity outstanding with a total liquidation value of approximately $2.6 billion.
https://www.edison.com/content/dam/eix/documents/investors/sec-filings-financials/prospectus-eix-senior-notes-due-2022.pdf
“Holding company preferreds and even senior debt is subordinate to subsidiary debt and even their preferreds. ”
Thanks, Grid. That makes total sense to me and the quote from the prospectus backs this thinking up in writing. However, what I don’t understand is why SCE preferreds are only rated BB+ while EIX debt is rated BBB- and their preferreds are rated almost at the same level as SCE prefs. What are the rating agencies thinking here? Given the wildfire risk, structural seniority should matter a lot here.
Landlord I bet it ultimately is mostly academic time passing if things go bad. Look at PCG. The holding company and the actual subsidiary went down in flames together.
PCG initially toyed with trying to wall off some of the gas part, but gave up and just let it all go into bankruptcy.
I think PCG preferred holders will be made whole in the end, so I wouldn’t say it’s academic. The question is where PCG preferreds will trade after they pay accumulated dividends. That will entirely be dependent on their level of safety and rating and that will be dependent on where they are in the capital stack.
Interesting article on interest rate moves here: https://www.guggenheiminvestments.com/perspectives/global-cio-outlook/a-drunk-man-in-the-snow-random-interest-rates?
This is in-line with my thoughts and experience over the last 40 years of investing-particularly the drunk man in the snow!
Thanks for the link Fryman–interesting read.
Interesting read, but after the last week I’m very skeptical of their prediction based on the long term trend never changing direction.
“In our model of 10-year Treasury yields, the sine regression of 10-year rates since the mid-1980s, actual yields have generally stayed within a two standard deviation range of the model estimates. Currently our model suggests that while yields may drift up from here, there is still more downside. The model estimate for a trough of -0.5 percent in early 2022 is bounded by a two-standard deviation range of a high of 1 percent and a low of -2.0 percent.”
I watched an interview with Warren Buffett on a business channel sometime back, where the host asked/pushed him for his forecast on interest rates and how that affected his investments. Mr. Buffett said he didn’t try to estimate where rates were going and didn’t base any decisions on that. I’ve been following his lead, trying to cover a range of scenarios. As a fixed-income investor I’ve been buying what the market has to offer that fits my quality criteria, laddered from near-term to far-term. The long-term stuff will gain in value if rates drop, and the short term can be rolled over at higher rates if rates are jumping up. I also live in a 5-bedroom inflation hedge for that contingency.
If you think you know where interest rates are going next there’s a 50% chance you’re right. I agree with buffet here, just be prepared for a move in any direction and react accordingly.
Thanks. I marked that for a re-read in a month.
Thanks for posting this. I had no idea that “The Biden administration has decided to use more than $1 trillion of … cash to pay for stimulus rather than borrow new money.” I had assumed they would *have* to use borrowing for all of the stimulus money. Do I correctly infer from that sentence that they will not be *printing* new money either? In other words, they’re primarily using a pre-existing asset rather than having to issue new debt or equity? (I admit I have only the foggiest notion how the Fed’s balance sheet works.)
Bur Davis, you are confusing the Fed for the Treasury. Treasury sold lots of debt in advance, based on expectations the money would be needed for fiscal spending.
https://www.reuters.com/article/us-usa-treasury-borrowing/u-s-treasury-slashes-first-quarter-borrowing-estimate-due-to-higher-cash-balance-idUSKBN2A13IY
KC, I saw this too. V interesting regardless of stimulis. Hoisington, who has been right for about forty years has the same rationale in their most recent quarterly newsletter, which goes public after one month after their clients get it. His is a WAY lower call yet to come.
I thought I was going to get a breathe-out by the bond market a couple weeks ago and went long, got stopped out in three days at a 3% loss.
TOUGH PLAY. Looks like long and fixed prefs are part of that “yield still down’ scenario as well. It’s easier to play as it unfolds. I went fishing last week for three days and didn’t even turn on my phone…I need more of that, slow method.
Stimulus money is getting cut back, bond yields were up today anyway. I don’t try to predict market moves because they usually don’t make sense anyway.
https://www.cnbc.com/2021/03/03/covid-stimulus-update-biden-backs-lower-income-cap-for-checks.html
Not sure where to post this but I was just informed that GAINM and OFSSZ are being called. No surprises but some, like me, might own. Steve
BANC-D is being called for March 15.
Banc of California, 7.375% Dep Shares Non-Cumul Perp Preferred Stock Series D
Ticker Symbol: BANC-D CUSIP: 05990K882 Exchange: NYSE
I tried to put this in “user initiated alerts”, but is is showing “comments closed” again.
Private
Yes, you are correct.
READER INITIATED ALERTS is ‘closed for comments.’ I just checked to see if it was the
same way on my computer. Perhaps Mr. M. take the steps to open it back up or advise if it will remain as is.
Howard
This is getting to be a habit, like the fourth one I’ve lost in the last month.
SITC-K under pressure
https://www.sec.gov/Archives/edgar/data/894315/000119312521064181/d135153d424b5.htm#supptoc135153_7
Issuing equity to repay debt. How novel.
I thought this one (SITC-K) would be called soon. Interesting that they are issuing common.
This makes SITC-A an even more solid holding.
J – So few called or nearly called issues are now even allowing much fun in the buying called bonds space, but this one sure did today…. I was too early this morning buying at 25.21, but did load up at 25.11 when it dropped… So thanks for the post.. If I figure right, were SITC-K to announce its call today, they’d be paying out no less than 25.33 30 days hence….. So score!
Also I see where GAINM DID end up getting called today… Though original announcement was on 2/23, there was a whole lot of trades made in the interim with market expecting a 30 day call…. GAIN screwed a lot of GAINM holders by skirting the 30 day period….
TPVY under pressure
https://www.sec.gov/Archives/edgar/data/1580345/000121390021012607/ea136686ex99-1_triplepoint.htm
Thanks J.
STAG-C called
https://www.sec.gov/Archives/edgar/data/1479094/000147909421000009/preferredseriescstockredmp.htm
WTREP had its dividend declared today, with unsurprisingly no accompanying redemption notice so it will live on near term anyways.
https://seekingalpha.com/pr/18213447-watford-announces-declaration-of-quarterly-dividend-on-preference-shares
I was counting on getting a minimum 9 cents from buying STAG-C Friday and the minimum is all I am getting as they served notice for redemption on 3/31 pay date.
https://www.sec.gov/ix?doc=/Archives/edgar/data/1479094/000147909421000009/stag-20210301.htm
RILYZ has been called as of 4:01PM today. Received email from BR Riley
B. Riley Financial Announces Full Redemption of 7.50% Senior Notes due 2027
LOS ANGELES, March 1, 2021 /PRNewswire/ — B. Riley Financial, Inc. (NASDAQ: RILY) (“B. Riley” or the “Company”) today announced that it will redeem all of the issued and outstanding 7.50% Senior Notes due 2027 (the “Notes”) on March 31, 2021 (the “Redemption Date”). The Notes have an aggregate principal amount of $128,155,700.
Well, I’m not sure if I’m glad or sad about this call… I own a whole lot more than I should, all purchased on expectation of call but RILY’s slowness to call has worked out well for all holders. To everything there is a season and a time to every purpose, under heaven I suppose, turn turn turn.
‘
Anyone looking to play the buy called bonds as an alternative to MM rates game, be careful calculating accrued…. With the stated maturity of 5/31 but quarterly interest payments being made on 1/31. 4/30, 7/31, and 10/31. accrued should be figured from 1/31 to 3/30.
Well 2WR can’t say I wasn’t expecting this as this was the reason I stashed the money here. But I was hoping to make it one more qtr. I looked at Tim’s spread sheet and thought 1st call wasn’t to occur until 5/31?
I have a full boat of WTREP but maybe I will stash some more there as that one seems safe for now
Right month, wrong year, Charles! LOL First call was 5/31/20…. lol. WTREP seems to be a decent play for continuing the picking up pennies strategy and I’m in there too, but you might also want to consider what’s next for RILY. There’s a whole slew of other RILY issues that are currently callable or callable in the near future and a whole slew of them callable at various premiums before declining to par as well…. it makes choosing which one’s next a fun game to play, especially at a time when RILY’s knocking the ball out of the park. My guess is they do the foot dragging thing for sure on any that are close to call dates at a premium and they might hone in on the next one callable at par. Either that or they begin to think about extending out their debt maturities and possibly focus on the earliest maturities, That being said, I’d think the next target will be either RILYG or RILYH.. that’s a pure guess on my part.
Yeah 2WR I realized my error on the call date after I left the page and re-checked the chart. Brain was getting fuzzy that time of night.
I feel like a Vole out in my garden. everyone here is trying to find the same rock to hide under and it keeps getting picked up by the gardener and we all go scurrying trying to find another rock to hide under.
Fully agree, Charles… even the pennies are getting harder to pick up or at least the spreads are.. the number of issues isn’t.
MDLQ down 20% today. Mostly at end of day. Haven’t seen any news.
MDLX down 22%
Apparently the grace period on Medley’s non-payment runs out on Wednesday.
From QOL
…Medley LLC did not pay the approximately $1.3 million quarterly interest payment due on February 1, 2021 in respect of Medley LLC’s 7.25% senior notes due 2024 (the “2024 Notes”); the missed interest payment on the 2024 notes is also subject to a 30-day grace period which extends through March 3, 2021. Approximately $69 million in aggregate principal amount of 2024 Notes are outstanding. The 2024 Notes and 2026 Notes trade on the NYSE under the symbols MDLQ and MDLX, respectively.
Yet the common isn’t priced for imminent bankruptcy. What am I missing?
How can they pay a common share dividend on mdly but default on the mdlx and mdlq baby bonds?
You might want to ask “Preferred Stock Trader” that recommended MDLX/MDLQ on Seeking Alpha. On 9/29/18 he said: “No BDC bond has ever defaulted on its bond obligations including during 2008.”
. . .
“MDLQ/MDLX could provide those who are looking for a safe, very short term, very high yielding bond a real opportunity.”
Two more days to prove his statement correct. . .
Link to PST endorsement:
https://seekingalpha.com/article/4208613-mispriced-baby-bond-bargain-7_6-yield-to-maturity
Up 50% from the low today at 1 pm.
BAMH
I vaguely remember someone saying that BAMH was qualified through some Brookfield alchemy even though it is technically sub-debt (although it ranks as preferreds in bankruptcy). There’s no mention of this in the “free writing prospectus” (whatever that is) linked at QOL. Does anyone have a link that documents BAMH’s tax status?
Debt
https://www.sec.gov/Archives/edgar/data/1001085/000104746920005171/a2242512zsuppl.htm#bb17
BAMH is debt.
BAMI, for convoluted reasons, is a subordinated note that should be QDI for tax purposes.
On F2F preferred stock issues which become floating, how is the 3 month libor rate calculated? Is it the 90 day average of the daily 3 month libor rate for the current dividend? Is it fixed for 12 months at the current 3 month rate when it goes floating? I’m just attempting to calculate my return if/when I buy issues which are currently floating. Thanks for any feedback.
Randy, I don’t have a definitive answer to your question, but
a) I am guessing that there is no single answer, that each company will do it somewhat differently,
b) you should be able to find your answer in the prospectus. For example, the CUBI-C prospectus at https://www.sec.gov/Archives/edgar/data/1488813/000095015915000141/customers424b5.htm says they will use the “three-month LIBOR on the related dividend determination date” (a single data point, no averaging), and finally
c) practically speaking, what I do is just assume 3M LIBOR = zero. Sure, it’s 19 bps this week and that’s not zero, but I’m sure not making any grand retirement plans on that addition to my income.
Regarding b) above, the CUBI-C prospectus further specifies the following (I’m mildly interested to know how often they actually will have to resort to plan B (calling four major banks in London) and then plan C (calling three major banks in NYC)):
“For any dividend period during the floating rate period, three-month LIBOR (the London interbank offered rate) shall be determined by the calculation agent on the second London business day immediately preceding the first day of such dividend period (which we refer to as the “dividend determination date”) in the following manner:
“(i) Three-month LIBOR will be the rate for deposits in U.S. dollars having an index maturity of three months in amounts of at least $1,000,000, as that rate appears on Reuters screen page “LIBOR01”, or any successor page, as of 11:00 a.m., London time, on that dividend determination date.
“(ii) If no offered rate appears on Reuters screen page “LIBOR01” on the relevant dividend determination date at approximately 11:00 a.m., London time, then the calculation agent, after consultation with us, will select four major banks in the London interbank market and will request each of their principal London offices to provide a quotation of the rate at which three-month deposits in U.S. dollars in amounts of at least $1,000,000 are offered by it to prime banks in the London interbank market, on that date and at that time, that is representative of single transactions at that time. If at least two quotations are provided, three-month LIBOR will be the arithmetic average (rounded upward if necessary to the nearest .00001 of 1%) of the quotations provided. Otherwise, the calculation agent will select three major banks in New York City and will request each of them to provide a quotation of the rate offered by it at approximately 11:00 a.m., New York City time, on the dividend determination date for loans in U.S. dollars to leading European banks having an index maturity of three months for the applicable dividend period in an amount of at least $1,000,000 that is representative of single transactions at that time. If three quotations are provided, three-month LIBOR will be the arithmetic average (rounded upward if necessary to the nearest .00001 of 1%) of the quotations provided. Otherwise, three-month LIBOR for the next dividend period will be equal to three-month LIBOR in effect for the then-current dividend period.”
Randy – Good stuff from Bur…. In addition, using CUBI-C as an example of a f/f that’s been floating thru a few quarterlies already, you can see in hindsight how the amounts paid have varied each quarter by using finance.yahoo.com, and going to Historical Data for the symbol. 3/15/21 will pay .344781, while 12/15/20 paid .350753 and 9/15 paid .357778 vs the final 7% payout on 6/15/20 of .4375. Hence f/f with quarterly payouts float quarterly, this one calculated specifically via the formulae for CUBI-C as per the prospectus Bur has quoted.
Whether you’re looking for already-floating or to be floating, the prospectus for each security is generally the best place to start. IMHO, you might want to a look at what happens on the re-set if rates go below zero (floor?) and what happens when Libor is phased out. Just my opinion.
Tim has posted about preferreds/babys that have been hard hit by the upturn in long term rates. I show 112 $25 issues that are down >=5.0% year to date. Seven issues are down >=10%, including BAMH and BAMI. None of the prices move are surprising considering the increases in rates.
What is surprising to me is that the five AHT preferreds are up anywhere from 38% to 65%. The market seems convinced that AHT will survive without going bankrupt. Their monthly cash burn rate is $18 to $20 million. In yesterdays conference call the CEO said:
“So we’re about $18 million of monthly cash burn. Assuming that and assuming the various liquidity that we have via the Oaktree financing and other cash on our balance sheet, we’ve got probably two and a half to three years of runway just if nothing else changes and we don’t access any more capital than we sit here today. So that’s a lot of runway, a lot of liquidity, and we feel very good about it.”
If they really have a two year runway, hopefully that will get them past the COVID mess and business might return to at least a break even cash flow. We currently do not own any AHT preferreds or have any open buy orders, but I am considering buying a few shares in ONE high risk bucket. Upside would be if they pay the cumulative dividends and resume regular payments. Downside is bankruptcy and use the stock certificates as wallpaper. Not for the faint of heart.
RILY up about 6% AHrs- paying 50¢ plus $3 in March. Already has included the whole 3.50 from the day’s close. 62.77 would be B.E. unless price continues to rocket.
General Comment, I’ve read several opinions lightening up on the investment grade lower coupon stuff and concentrating on the higher coupon possibly callable shorter durations to somewhat protect against this interest rate escalation. Looking in that same neighborhood any opinions on senior floating loan etfs example Invesco { BKLN}. Same type portfolio as some of the “junkier” issues discussed here recently. Just looking for another alternative. Thanks to anyone in advance
AATRL – crazy, an >8% trading range so far today!
BAMH https://innovativeincomeinvestor.com/security/brookfield-finance-inc-4-625-subordinated-notes-due-10-16-2080/ erroneously(?) listed as a monthly payer.
Could someone double check my math on YTM for KTH:
Close today at 33.24
Maturity on Apr 6, 2028
Coupon: 8%
Redemption price is $27.10, and not $25.00
I am getting YTM of 4.29%.
Is that correct? Thank you, Jay
https://gpi.fidelity.com/ftgw/interfaces/pyc/
Might help?
If anyone is holding PPWLO someone was paying $175 for it this morning.
I let my shares that I picked up at $120 last year go and will try to repurchase at a lower price down the line.
AATRL- Very tempting given the gain I’m holding- along with 8 others that are $26-27+ with nice gains.
Not sure what the best sell point might be- 5 or 10% over par…or?
Pretty sure this ‘bubble’ could loose air before too long.
Comments from old hands here in the preferred/notes would be appreciated.
Love it when that happens.
I keep an open sell order on lots of my issues at very high prices, and somebody bought a handful of my PPWLO for $185 today. They didn’t take all my shares offered at that price, so I assume I must have been the “final fill” of their order.
I am assuming someone accidentally put in a market order, but you never know.
I only had 80 shares. If the last two digits of what they took from you were 20 then it was probably the same order being filled out.
I bought these on my birthday last year and took every share available so happy belated birthday to me!
Unbeknownst to me at the time, that was a good day because I have had big scores on some other things I bought that day in addition to this one.
And congratulations to you on getting the higher price!
AATRL perky again–I sold at 54.
I bought a small position in EP-C, when today’s dip took the stock price below $50.
It’s been a long time since I owned EP-C, having sold it years ago, so memory of the takeover by KMI and details are fuzzy.
Can someone re-educate me on whether KMI can call EP-C at $50 par + accrued dividends? And if conversion into El Paso common is now history? Is there even a convertible feature left at all?
Inspy, yes they can redeem at anytime at what you stated. The conversion has been changed to KMI stock. But the KMI stocks needs to approach somewhere near $40 to create a conversion. And at that point its a partial cash and stock conversion. Im not going to dig into annual filing to get correct numbers but its roughly a little more than half stock, and less cash. KMI doesnt appear it will get anywhere near strike point by 2028 to be anything more than a busted convertible.
Thanks, Grid.
At current price of $15, it would take eons for KMI to reach anywhere close to $40.
I think EP-C should be a comfortable hold until maturity. I will look to buy more should it dip below $50 again.
If one is so inclined to follow Board member trades here is one that just occurred. He bought about 7,000 past couple days and now owns 33,000 of the preferred SPLP-A and 70,000 of the common.
https://www.sec.gov/Archives/edgar/data/1452857/000092189521000526/xslF345X03/form404197004_02222021.xml
I just banged out another nice gain on a less than glamorious issue so I replaced it with this ugly sister at $20.71. This isnt your basic QDI preferred and in fact issues the dreaded K-1 albeit a simple one. And of course company is a mini me conglomerate with moving parts. Study hard if interested, lol..
PSEC is getting spanked good today and I dont see any news. It had slowly ran up. Anyone know why?
Wahoo! for CWGRP, within 10% of conversion territory now.
Sorry – this probably should be in “illiquids.”
What’s the scenario when a preferred falls by double digits and the common goes up by a couple percent?
Specifically, PEI-B down 16% and the common is up about 2% Dividends have been suspended on both since about June, so dividend cut is off the table. Shares are cumulative, so shouldn’t be a factor. No imminent BK filings that I can tell. I didn’t look at SEC or EDGAR, but PEI’s website doesn’t show anything new.
I know this is a junky issue. I have a very small position that I have held for a few years. Just wondering. I’m still kind of new to preferreds, so maybe there’s something obvious that I’m missing
There is no imminent BK filings on PEI, because they already filed a pre-packaged BK on 11/1/20.
At the time of the restructuring PEI had $2.2 billion in debt, $384 million in preferreds, and approximately $3.45 billion in assets.
My guess on the large selloff today of the non-paying PEI preferreds is that one of the larger preferred ETFs (maybe PFF?) is blowing out of them, as they are fearful of ever receiving dividends again. In the past, this was the week the PEI preferreds typically went ex-dividend for the 1st quarter.
Fund dumping makes a lot of sense. Also, they haven’t announced, but I think earnings are supposed to be out this week, or at least soon.
And Karma, Yes, there’s lots we don’t know till after S#!^ hits the fan….unfortunately. Aaah, what it must be like to be an insider…
Mark in CO, that’s a pretty unusual scenario with PEI. If there is no news, it’s just speculation. My first guess would have been that a large holder of the preferred needs/wants to get out immediately, but the typical pattern you’d see there is that the stock opens up at a similar price as Friday, then the selling pressure takes it lower throughout the date. In this case, all 3 of the preferred series gapped lower at the open. This tells me that someone knows some news, just not you! What that news could be that would be favorable for the common at the same time, I don’t know.
The PEI preferreds falling is NOT a fund like PFF dumping them IMO.
a) The overall volume is still low, ~ 50k shares today so far, so the position size is too small for a fund.
b) I see no large block trades, which is opposite of funds dumping
c) When PFF decides to exist a position, it is done off market. You never see an ask quantity say of 250K shares. The funds have professional traders that “work” the order and negotiate a sale in private for the entire large block. After the price is agreed to, the trade is consummated and reported on the “tape”
Bottom line IMO is a small group of individuals decided to sell them for some unknown reasons. . .
Its always hard to tell on these things. Volume seems robust to me as D series is about 120k which is already triple daily volume. Transactions certainly occur in manner you described. But bigger transactions can be hide in multiple continuous small lot transactions all while the complete sell order is being hide from level 2 view showing. If one cant see the dealers book, which we cant, one really never knows.
Well, if it’s in bankruptcy, are you following the bankruptcy filings? Is there anything new? If not, there might be soon that some already know about it.
Karma, I wouldnt have a clue. I was just suggesting its possible it could be anybody or still yet a fund selling them. And it could even be for unrelated reasons concerning future hopes or fears of the company. Sometimes things just are for whatever reason. PW-A a couple months ago for example was being dumped by the thousands, it dropped like a rock, and it is a tiny float and I bought down to$25.07. I have already sold but today its right back at around $26 and has kicked out a divi since. One really never knows without proper info.
HDO issued a sell alert on PEI B and D shares Feb 21st. Might be the reason.
Interesting. I do not see anything on SA. Was this through their subscriber service? I Don’t have an SA account either, so maybe just not seeing it.
What was their reasoning?
Yes it was a subscriber alert. I don’t own any so I didn’t pay much attention to it. Below is the post.
2/21
2- Sell PEI-B & PEI-D Preferred Shares
The recovery in malls continues to drag, with even SPG and MAC indicating in their guidance that there will be no beginning of a rebound until the second half of 2021.
As part of exiting bankruptcy, Pennsylvania Real Estate Investment Trust (PEI) entered into an agreement with their creditors that they will not pay any dividends except for those required to be paid out to maintain REIT status. With the recovery being as slow as it appears to be in malls, it is unlikely that PEI will have positive taxable income in 2021. Since our primary goal is current income, we are initiating a SELL on PEI-B (PEI.PB) and PEI-D (PEI.PD) for the purposes of the Model Portfolio. The share prices are up 700% from post-COVID bottom, more than doubled from the prices seen during the bankruptcy filing when we were recommending averaging down and are 25% over our last Buy Under prices.
I am selling my personal shares. HDO authors Treading Softly and Beyond Saving have both said that they intend to hold their shares and will continue to follow-up on the company for members who decide to keep holding.
PEI preferred dividends are cumulative, and I believe that eventually they will be paid, but it will be another 1-2 years. My goal with HDO is to provide a high level of current income and PEI preferred are no longer serving that purpose and the prices have found some stability, so I am selling.
Occasionally I see a reference to a good website for Canadian preferreds and Canadian FF’s. Could I get a repeat? Thanks!
Potter, go review the Candian discussion page, https://innovativeincomeinvestor.com/canadian-securities-discussion/, and if you don’t find what you are looking for, ask your question there.
A little homespun news from StL to throw out there:
Info right off of Spire’s website:
Two rate increases have gone into effect in Alabama and Mississippi jurisdictions in last few months. Missouri rates under multiple reviews for infrastrux and ROC increases (note: plural). Bet they go up too. Also, Expansion into Hattiesburg MS as regular util client base to compete with all electric utility there. Spire ramping up top line. Always helps. Good for common price outlook with a short term conversion and/or possible common div increase?
As a side note/FYI: Did you know that Mississippi has some of the best geology for salt dome gas storage combined with proximity to new sources and existing large delivery infrastrux in every direction, this includes an existing import facility that is being reversed to supply export of LNG? Don’t quite know what this means yet, but a piece of a puzzle.
Just read through the SRCU prospectus and have to ask: Does anybody really understand the provisions so that actions and reactions are fully understood? It’s a real legal contortion. Seems like it is NOT a basic convertible.
Figured I might as well look more deeply into the two utilities that we actually pay into (as Grid suggested), but it ain’t going in.
Joel, We are fortunate our electricity and gas is so cheap here. Anybody who complains in our service area about cost is severely mentally challenged. I blast it hot in winter and cold in summer and 11 months of the year my cable bill is higher.
My wife’s sis and bro-in-law just move to Woodlands area in Houston from StL, just in time for rolling blackouts, frozen gas meters and infrastructure and a frozen kitchen water lead in…UNDER a slab. Great construction codes. Nice. Looks like the threat of a minimum $450 pass thru bill to the utility for all this pleasure to pay for all the wonderful Bush/Perry/Richards/Cruz (in Mexico) visionary years of deregulation. Hey, did you read the contract? Do ya get it now? Prob not.
Not making a political statement, but EVERYONE, at every level likes these broad and basic social functions to perform, I don’t care who polices them for real risks. Certainly, self-regulation is now a naive mythos., esp when you wave the flag then have to deal with a social crisis….that means pay up…to utilities, private contractors and an HOA special assessments and it ain’t over yet. DHOOOPE!
PS: Looking for two small whisper generators for furnace and fridge.
Greetings. I’m new here and discovered this site through a Google search in a quest to find a parking spot for short term cash. I recently sold a house and it will take some time to find a new house so I have a need to park around $750K in equity for up to 18 months. Obviously banks are paying next to nothing these days. Someone posted a while back on this site regarding the Dominion Energy Reliability Investment (DERI) program, which currently pays 1.5%. Another person mentioned a similar program, Duke Energy PremierNotes which currently pays 0.86%. I did a bit of research to see if there were any other of these corporate variable rate demand note programs. Turns out quite a few of the car manufactures have them (sorry if this is old news to many of you):
GM Financial Right Notes – 1.5%
Ford Interest Advantage – 0.85%
Mercedes First Class Demand Notes – 1.1%
Toyota IncomeDriver Notes – 1.5%
Some others:
Caterpillar Financial PowerInvestment Notes – 0.2%
Ally Demand Notes – 0.30% (Note: Ally just terminated this program)
Clearly these last two are non-starters since you can currently get better rates at a bank.
To me, the Toyota program was the most attractive due to it’s ease of use, corporate financial stability, and rate. I’ve already put some money into the Toyota program but putting all my eggs in one basket seems imprudent though I think the chance of Toyota defaulting on these notes seems rather remote. So basically, like everyone else I would imagine, I’m looking for rate, liquidity, stability while minimizing risk. Any thoughts on these variable rate demand note programs or alternate investment suggestions?
Vanguard lets you buy short term bank CDs off their platform and IBKR has its own note program paying 1% (annual) for 30 day notes. Advantage of both is no money transfers are required. Downside is the rates are low.
If you can stand some price risk I’d rather mess with the various pinned to par issues paying 4-5-6%. Just have to know that they won’t be pinned to par if the market crashes like it did in March.
Thanks for the input Bob, I did come across the IBKR program and 1% was on the low side. There seems to be quite a few options right around the 1% level. Another is T-Mobile Money that pays 4% on the first $3k and 1% on balances there after for current customers, which I am. They are FDIC insured as well.
Pinned to par issues are tempting, but that’s just more risk than I’m willing to take. I’d be happy to eek out 2-3% on a lowish risk proposition, yields beyond that seem to have a risk profile that won’t suit my purpose.
The corporate funds you mention are uninsured obligations of their corporate issuers. I am not a fan of putting all my eggs in one uninsured basket. Not much upside and a lot of downside at today’s rates.
If it was my money, and it was reserved for a special purpose, I would put it into bank insured CDs or MMA’s even though interest rates are low. I would not fret over lost interest income.
If you are looking to add a bit more yield than a pure CD portfolio offers, you might consider placing a portion of your funds into an ultra short corporate bond fund, like PGIM Ultra Short Bond ETF (PULS) or JPMorgan Ultra-Short Income ETF (JPST) with distributions in the range of 1.4% to 1.85%.
These funds are diversified, hold 1 to 3 year paper, and have relatively stable asset values. (Caveat: They are securities with fluctuating prices and not “fixed at $1.00 funds” like MMs.) You can find a list of similar funds on any ETF site. The blended yield on your 750K portfolio would be higher than CDs while still somewhat limiting risk.
Wherever you put your money, you want to be sure that your account does not exceed insured limits.
Just my opinion.
I actually have used JPST in the past and it did not have much fluctuation, that is until March happened then it had a more than 3% quick meltdown before the Fed stepped in to support the credit markets and it slowly healed up. But it may be worth putting a portion of the money into it for a blended yield as you suggest to get some diversification.
Point taken though about chasing yield with special purpose funds, perhaps it just isn’t worth the risk, but getting next to no yield is disheartening and painful since the real estate market where I’m at went up 10% in the last 6 months.
An almost pure agency Mortg etf is JMBS- it did go down 5% vs 3% on JPST, it has paid about 2.5% /yr until now– the 30 day rate is .71% and JPST is .32% – so nothing great unless it comes back. JMBS has recovered better and has about 2% price gain yoy vs ~ 0% for JPST.
Sallie Mae has an FDIC 0.4% for taxable accts.
MA: For whatever it is worth:
I am a fan of AIC, 2.2 years to maturity, which is the only BB in the 100% Agency Mortgage REIT realm. Solid management. All other instruments, at every All-Agency REITs are prefs, no BBs anywhere else. Got a slug of short term money here and half in sister BB AIW. Both in a tranche above paying common and prefrrreds. Do PLENTY of DD. Surprise…both still below par, decent yields: 6+%. May make sense for a portion?
I may have mentioned Canadian IG retractables before. Max 60 days to holder-notification to retract at par. I like the terms. IG available, pretty much pegged to par. Need IBRK account here or CN brokerage. Do all DD to your clarity. Yields about 4%. I use a few of these as first-go-to liquidity pools if needed to supplement cashflow (unseen need/emergency).
Thanks for the suggestions Joel. AIC looks interesting at first glance, I’ll dive in for some deeper DD. I don’t have a IBRK or CN account, but I’ll take a look at your IG retractables since it piques my curiosity, something I’ve never heard of and learning is always a worthy endeavor.
For those that setup Google Sheets to track investments:
When working with Google Sheets the formula
=GoogleFinance(A1) doesn’t always work. ‘A1’ (or any other cell number) refers to the cell that contains the stock symbol.
Tim uses a formula that works as a substitute in his sheets. The following is different possible substitute. Again ‘A1’ can be any cell number that contains the stock symbol.
=MID(Index(ImportHtml(CONCATENATE(“http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=”,A1), “table”),3,1),7,9)
danzeb – I did a cut and paste into one of my sheets and did not get the formula to work for me. Any ideas what I may be doing wrong?
This is strange. When I paste the formula into this message and then copy it from the message and paste into the google sheet it works. BUT AFTER I post the message and do a copy and paste it doesn’t work.
Finally I figured it out. The posting of the message changes the style of the quote marks in the formula.
Here is the formula again and it works until I post the message!
=MID(Index(ImportHtml(CONCATENATE(“http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=”,A1), “table”),3,1),7,9)
The solution is the delete and retype the four double quotes in the formula once it is pasted into google sheets.
Thanks danzeb. By golly it works. Should prove helpful because, as you know, Google won’t pull some prices and some of those it does pull are wrong.
danzeb-
Not quite following-
1) If it changes when you post it here, how do we get it so it is correct?
2) We need only what you show, nothing about hyperlink, as in the google format? Do we enter yours after the hyperlink info?
3) Do we have to copy, remove & re-enter the 4 quotation marks, or is this one ok?
4) If we enter the symbol in a new row, do we have to enter the line number instead of the A1, or does it pick it up on its own?
thanks
The formula will work exactly as shown except that the III message software screws up the quotation marks. I type it correctly into the message box and the message software changes it when it displays it.
Since posting changes the quotation marks in the formula it will be necessary to delete and then retype the quotation marks once the formula is copied and pasted into the spreadsheet. Once it is correctly in the spreadsheet it can be moved around with no problem except that A1 must be changed to point to the cell with the stock symbol. So if the stock symbol is in cell B2 then A1 needs to be changed to B2. That part of the formula is ‘relative’ so it changes when copied and pasted into a different part of the spreadsheet.
Honestly I didn’t create the formula. I found it, tried it, and it works. If Marketwatch changes their website it may stop working forcing me to figure out how to rewrite it.
The other trick as I found is you have to change your tickers from google format to marketwatch format. ABR-A becomes ABR.PRA, etc.
Thanks- that’s what I did first- no go then and now.
In the catagory of beating a dead horse, two posts from SA: Let’s see if the first remains up and the second ever makes it into print.
https://seekingalpha.com/article/4395964-2024-bond-yieldplus-20-washington-prime?v=1613661332#comment-88054467
From “bason”
The deletion of comments on SA is getting out of control. You can not provide constructive criticism of any content and god forbid you ask for authors to be transparent about their positions and performance. Not sure how you can trust anything on here anymore since you are not allowed to question anything. WPG is speculative junk at best and not suitable for the vast majority of individual investors.
From me:
Spot on. SA scrubs most of the critical comments. They can be thoughtful, respectful, truthful, etc., but if they don’t cheer lead they will probably not make it. If SA wants credibility for itself and its authors it will stop cutting all the critical comments.
It’s clear they do not care Bob, and can’t be shamed into caring.
WOW Bob is all I can say.
Talking about a safe investment and then talking about covered calls and shorts and margin. This is not what retiree’s need to hear.
Pendy might be young enough to make it up and recover, but someone older with 750K will never see it back without taking more risks. They should rename themselves HRI ( High Risk Investments )
Charles – to update, comment from “bason” still stands (pendy must be in convulsions) but my comment didn’t get published.
Real people actually buy based on what HDO publishes and given the demo of most fixed income investors that is mostly people who can’t afford large, permanent capital losses. But that is what one after another HDO recommendation has produced.
Just think, you could have a portfolio of NGL, AHT, CBL, WPG and so on. You know the seniors you see bagging groceries at Trader Joe’s? If you want to join their ranks then HDO is the service for you.
Not sure if it has already been mentioned but unfortunately Banc of California called it’s preferred D. Not a surprise since it carried a 7.375 QDI coupon but sad to see it go..
If I bought at $25.51….I will get the dividend 2/25….then $25 par, plus accrued interest on 3/15? Seems like it should be about a breakeven…
Thanks I’m advance.
That should say “in advance.” Lol
Also, I can sell after ex-date, even with the announced call? I am never quite sure about when to sell and when not to, on called securities.
Graust – Normally you can get all the info you need from either SEC filings that announce the call or from a company’s press releases… In the case of BANC-D it’s here – https://www.sec.gov/Archives/edgar/data/1169770/000116977021000007/q42020dividenddeclarationa.htm
The redemption price for the Series D Preferred Stock will be $1,000 per share (equivalent to $25 per Series D Depositary Share). Because the redemption date is also a dividend payment date, the redemption price will not include any declared and unpaid dividends. The regular quarterly dividend, in an amount equal to $18.43752 per share of Series D Preferred Stock (equivalent to $0.460938 per Series D Depositary Share), for the full current quarterly dividend period from, and including, December 15, 2020 to, but excluding, March 15, 2021 will be paid separately in the customary manner on March 15, 2021 to holders of record on February 26, 2021.
So your numbers are off but your theory’s right… yes you can sell after the ex-div date but the mkt will adjust price accordingly and what you can buy today for 25.44 or so you’ll be able to buy at or around $25 after ex-div.
Has anyone done any work on SRCU Spire Inc 7.5% 3/1/24?
Chris, this guy is pretty good with utes. He has a general overview blurb. Notice its not QDI…
SR just issued a mandatory convertible preferred series (SRCU) with a collared conversion ratio feature yielding 7.5%. SRCU is convertible into common shares on March 1, 2024, at a ratio based on the then-current price of the common. If SR is trading above $78.69 per share, the ratio is 0.6354 of common for every share of SRCU and if the common is trading below $64.24, the ratio is 0.7783 per SRCU. If SR traded between these two prices, the formula is SRCU’s $50 par value divided by the then-current price. As an alternative to the common, income-oriented investors willing to take a bit of capital gain risk that SR will not skyrocket over $85 between now and early 2024 may want to investigate the higher yielding SRCU. At $85 for SR, the capital gains above the top conversion ratio are the same as the added income from the higher yielding SRCU. SRCU does not qualify for a 15% income tax rate. More details on SRCU can be found on quantumonline.com.
https://seekingalpha.com/article/4406646-spire-natural-gas-utility-with-several-strategies
Thanks Gridbird.
I bought some at 52 yesterday. SR is investment grade rated and while the security is complicated and there is equity risk the 7.5% rate seemed attractive. Actually the fixed future purchase obligation part of it is invested in treasuries.
Anyone have an opinion on Energy Transfer preferred stocks in light of the recent merger?
Moody’s Investors Service (“Moody’s”) says that Energy Transfer LP’s (Energy Transfer Operating, L.P., Baa3 negative) announced acquisition of Enable Midstream Partners, LP (ENBL) is credit neutral, with a minimally positive effect on leverage supplemented by the additional size and scope the acquired midstream assets contributing to its consolidated asset base. Therefore, Energy Transfer Operating’s (ETO) Baa3 rating and negative outlook have not been affected. The acquisition is being structured on a 100% units-for-units basis; the minimally positive effect on ETO’s financial leverage comes through ENBL’s slightly less negative financial metrics being absorbed into the much larger ETO. The total value of the transaction is about $7 billion, including debt assumption, about 10% of Energy Transfer’s total $70 billion enterprise value.
Grid and or Tim, would you have an opinion on DCUE.
Thank you for your time
JB, I am sorry but I am no help here. I dont mean this disparagingly towards these types of issues, but they are “fake preferreds”. They are a bet on the common stock only with a yield tease thrown in at IPO. One has to know the direction of the common at conversion point to know if its going to work out or not. These are just out of my wheelhouse and comfort zone.
Thank you, as always
I am not Gridbird or Tim but….
It all depends on what you think of D common as DCUE is a mandatory convert at a price of 73.91 at par. My opinion is that if you like the common you should love DCUE. If you don’t like the common, stay away from both.
I own DCUE and plan to nibble if it drops further.
Appreciate your time.
Just had a small buy for CUBI-E fill at 24.92
Seems small lots and odd lots fill faster. Not going to complain with free commissions
Charles,
FYI.
In 4 months (6/15/2021), this floats to 3-mo Libor + 5.14%.
At the current 3-mo rate of 0.1915%, that’s a 5.3315% coupon (1.1185% less than the current 6.45% coupon).
I see 2 more divs at the current coupon, before it floats or gets redeemed:
a. 2/25 ex-date (3/15 pay date), and
b. ~5/25 ex-date (6/15 pay date).
Charles, I’ve had the same experience. Most recent, DX-C @ 25 today and last Fri. Order Fri was for 75 shares. Got 34 in 11 hits. Today, 50 in 1 hit. Works for me! No hurry for a full position. Bid/ask @ TDA never showed trades @$25.
Is anyone holding CUBI-C? Curious what your experience was when it started floating (as of 15 jun 2020, if I’m reading the prospectus accurately). Did it pay the reset rate as of 15 jun, or on the next div date? Any issues to speak of (with the way the broker handled it)? I’m new to floaters, looking for input.
Bur,
Building a position in both C & E now. For the reason MBG said above. CUBI has no common dividend. Better return than what I can get on new IPO bank fixed PFD issues, is way I am looking at it.
Not worried about how broker handles it, that’s CUBI ‘s job.
Talking heads ( news ) are saying rates are moving up in Europe and making people nervious there, could stall their Stock market with the composites having moving up like DJIA has.
Look at it from a business point of view, if the Competitors start raising prices and you don’t, you gain market share until your margin gets squeezed and your forced to follow. Of course, you could be betting costs level or drop and you retain some of the new customers. Markets are moved by rates. People move their money to where they get a better return. Rates go up in Europe investors move there. World markets are all fighting for a share.
Just scratching thru the chicken yard again today, mixed with a bit of snow.
Anyone follow thru on the recent Spire Converts? OTC? Can’t find, prob being lazy.
PS in the thread here: Here is a nice article on EV buildout. Some info on the new ultra-fast charging and lots space needed.
https://www.power-technology.com/features/full-charge-the-ev-infrastructure-providers-to-watch/
SRCU is listed on the’ Quantum Online’ and the ‘OTC markets’ websites. I didn’t look elsewhere.
Thanks, went to AEE page , not on there yet. Gotta make some more coffee.
Joel, Drink more coffee, Spire aint no part of Ameren (AEE). I can assure you of that because I pay them both separately each month. Go under “SR” not AEE and you will find it listed at Quantum.
Dear Gridbird,
I swear, My arteries HAVE hardened with this lockdown crap. I LIVE in STL!! This is a new mental low. Yikes! Somebody bury me when the ground defrosts!
Signed….Zombie Poster
Joel, I thought I remembered you saying that, but hey I cant trust my memory either. Heck, it could have been worse you know. You could have said “I looked under Union Electric and couldnt find SRCU or Union Electric, ha.
Wow, just read this. Fellow Luddites need to accept things are changing quicker than I thought already.
H2 2020 will be remembered as the time when the serious EV disruption of ICE began. In yet another stunning record month for electric car sales here are some incredible stats on electric car sales market share for December 2020: France (19%), Germany (27%), Sweden (49%), Netherlands (72%), Norway (87%) and for all of Europe (an incredible 23% market share)… Global electric car sales finished December 2020 with over 500,000 sales for the month, up 105% on December 2019, with a market share of 6.9% for December 2020, and 4.0% YTD (EV-Volumes has it at 4.2%). Full year 2020 sales of 3.24 million were up 41% (EV volumes at 43%) on 2019.
……it will mean that starting probably in late 2022, Tesla (TSLA) may be selling an electric car with a purchase price equal to a similar comparable Internal Combustion Engine vehicle, but with 3-5x lower running costs and 5-10x less maintenance costs. Given the production restraints Tesla has, I would expect initial volumes to be low and the more expensive optioned up variants to be produced first.
…If they can get the prices of what I will drive within ear shout, and 400-500 driving range, my days of owning an ICE is over. Being a Luddite, I never thought this would be coming a possibility.
Gridbird, as a fellow Luddite I have watched the stories on EVs. I suspect the majority of cars on the road will be EV sometime in the 2030s. Every car manufacturer is moving that way. I have always bough a brand new car (don’t want to own someone else’s lemon) and owned it for 10+ years.
Re Tesla stock…valuation at the next nine manufacturers combined??? Not with my money. I read one research report recently recommending Tesla giving an optimistic number that they could manufacture in 2030. Problem is..the number was less that Toyota manufactured last year!
RB and Grid,
I keep putting off buying a new truck and all that happens is prices go up and availability goes down. Yes repair costs are not cheap on a 23yr old vehicle, but when I read stories of in San Francisco of battery jacking, ( not car jacking ) tells me its expensive to replace what is essentially the engine ( power plant ) of the vehicle.
After having 2 backouts here last year because the grid was overwhelmed and yet Calif cities are banning any new gas connection and requiring new homes to be all electric. Their answer ? ” we need to buy more electricity from outside Calif. , OH, it has to be ” Green power” also
I am not saying the day isn’t coming, but for now the convenience is not there yet. My brother-in-law bought a Tesla and we all planned to meet in Portland for a family gathering. All I did was look for hotels to stay at, while he spent hours researching where he could stop to charge, hotels that had hookup’s where the Tesla power stations where at and what was around there to do while waiting for the battery to charge.
I heard my grandfather tell stores of doing the same thing when in the 30’s and 1940’s taking canvas water bags, shovels, etc. to be prepared if you had to drive a long distance
Retired Broker and Charles, Yes, Im not looking to buy yet that is sure. But, I just kind of figured around 2035 maybe. But I was surprised at the true percentage volume of these being bought already. I just bought a new vehicle 2 years ago, but it now seems within reach that when I look again in 5 years buying electric may be a strong possibility. This could upend a few industries though that is certain, least being the car parts business….Im at least connecting the dots now with GM’s recent stated goal of being out of the ICE business by 2035.
In regards to a national commitment to what it’s going to take for EV. Some times it is appropriate to ask the right set of questions, juxtaposed on what past experience has shown in regards to new technologies. I began thinking about this as I have a smart friend in Colorado who is a Nissan (read: Leaf) dealer service manager, but also ran his own construction firm before 08 wiped him out there.
-We have built about 10 million new housing units in the last decade. There are about 140,000,000 existing housing units. THAT is JUST housing.
– How many have charging stations mandated for these new garages? None. That would be some commie plot against the flag!
How many charging stations are available , even on the mystery app?
– How long are the waiting lines at existing charging stations? Long at hios dealership. Everyone come in to watch TV and eat the snacks while in line.
– What happens when you get stranded with dead batteries. A tow. Common issue in Denver Metro. Traffic jams, airport and distances are a real issue.
– How much does it cost to have a 220 amp, high amp charger retro-fitted into your home? Many homes need a whole new service and then we can start. Read: Permits, inspections, costs and tax increases.
– How many rentals have this capacity? Haha.
– 110 chargers are trickle chargers and require 12 hour to full charge (back a few years ago). This comes FREE with the car by the way. Sales will NOT tell you the rest of the story until you come in pissed off.
– Batteries do NOT retain capacity and curve way down in charge retention in about four years eventually requiring new battery units.
– Grid capacities in dense urban areas will need attention, even the new areas of Denver and Boulder (city).
It is very difficult to conceive of what a “Biden Infrastructure Rebuild” may consist of, but it is a very humongous deferred liability in the US, will take a very long time and immense material. Our Leadership has been missing in action for a very long time.
It is very difficult to conceive how extreme our dependency on the heavy lifting that oil performs. It IS INDEED a generational miracle and now is taken for granted like taking a breath in and out. That IDEA is ENTRENCHED.
It is going to take an INCREDIBLE EFFORT unlike ANYTHING man has done as a group before. Yes, the larger the population grows and flows over and onto each other, the more social modeling it is going to need to expand to be successful. What is the result if we ignore it?
– Opportunity exists here. Me? Long Oil and Materials. Both are going to build the new structure and they will be global, not national.
Our Old Paradigm is either already over and we 1) Embrace Change or 2) Embrace Stupidity in the face of Facts like these. We always have bombs and police actions. Where’s the Leadership? Laisse Faire ain’t gonna get it.
There ain’t no more virgin continents to steamroll.
Here’s to the Next Generation!
Lastly, I have another friend who just retired from managing offshore drilling platforms for RIG. Here’s the way he described it to me ten years ago. “Look, take six billion people all wanting to have a quart of petrol a week for their scooter, an air conditioner and a fridge/stove. YOU do the math.
All that searching sounds like something Tesla (& all others) should have as an app. Hard to believe they don’t.
It would seem to me, the obvious answer to the range dilemma for EVs would be a plug-in hybrid which are presently coming on the market. Will run on battery when charging is convenient and on gasoline when it’s not. I don’t own one yet but am eyeing a hybrid for my next car mostly to wet my toe with the technology. Not in our lifetime, but eventually, we’ll run out of fossil fuel.
100yrs+ coal, 100yrs+ oil, and around 50yrs of natural gas at current extraction rate.
EIA is predicting 10% of total cars by 2030 will be electric world wide.
Does not seem bullish but EIA has missed quite a lot of predictions.
Last year we installed a solar system plus a Tesla powerwall. It was not cheap but we got incentives from the state, feds, and the power company who use the powerwall during peak demand.
I have to say so far I am impressed with the amount the solar system generates – we have gone net positive in power use (generation) and have skated through at least a dozen power outages with the battery backup. The power company has used the battery around 10 times during peak demand and then a few hours later replaced what they have taken.
We live in the north where it’s cold and snowy. I cannot imagine doing a new construction in the mid or southern latitudes without considering solar as a primary means of power generation.
Maybe my ’95 Ford explorer will make it a bit more until I buy an EV. Over 300,000 miles. Getting things fixed on it has been cheaper than buying several new cars over the years. I wonder how EV’s work in -20+ weather with batteries and all. I haven’t researched anything.
Mr. C – Don’t you mean Ford Exploder??? That’s a close relative of the Ford Bronco we had that burned down our house in 1994 thanks to its history of spontaneous combustion stemming from the ignition at the steering wheel… At the time, fire investigators blamed it on an old refrigerator in the garage that mysteriously had the ability to create a spark capable of jumping 20′ from its location on the wall to the Bronco that wasn’t even right next to it.. Yeah right… At the time there was a website we discovered after the fact called the Flaming Broncos club so we weren’t the only ones… Naturally, when we moved away to the Caribbean, we bot another one to take with us…..
Keep your Ameren, Grid. Gonna need a lotta ions moving around for all those EVs. 😉
I got three different series of them, Camroc. They just declared next round of dividends again so all are safe. They raised the common divi 7% this week also. We arent exactly in the cutting edge of technology part of the country. I suspect down the road, the last remaining ICE vehicle on the road will reside in Amerens service territory somewhere.
I’m impatient. Charging at home for 8 hrs or more or driving to a charging station and waiting 20 minutes minimum is not attractive to me. Maybe I’m lucky but I’ve had zero problems with combustion engines or transmissions in the last 20 years. The few problems I’ve had have been electrical or mechanical but not the engine or transmission. I won’t be going EV until charging is quick and convenient.
I am one who believes in EV but am not convinced America will be ready with the necessary infrastructure by 2130. Friend of mine under estimated the distance between charging stations in South Carolina, ran out of juice and so had his Tesla towed to the nearest station. That was a costly recharge. That is the story on major highways in South Carolina which is not a large state compared to the western states.
For Moron bashers – I wonder how long this thread of comments will remain up????
https://seekingalpha.com/article/4405870-opportunity-and-risk-in-mies-liquidation-proposal?mail_subject=stanford-chemist-opportunity-and-risk-in-mie-s-liquidation-proposal&utm_campaign=rta-author-article&utm_content=link-1&utm_medium=email&utm_source=seeking_alpha
2WR, If you like that one you will love this one! :). A lovely pic of your idol is there too, ha!
https://seekingalpha.com/instablog/50596004-samhain31/5490019-9-seekingalpha-should-change-name-to-seekingsubscriptions
Grid,
And Mr. Hain even has his own trolls !
Hey Charles. Admittedly, I really dont know much about him. Someone sent me the link yesterday. I could tell he was on a mission when he wrote that. Im not sure what that mission was, but it was funny.
I have read Hain’s comments before. He is correct on many statements. The last go around HDO deleted over 100 comments and all along they kept saying, “We don’t delete comments.” lol.
I suspect they try to have a technicality of truth. When they say they dont delete comments, they are technically correct in that they dont manually do it themselves. Or they may have people like that lackey pom pom cheerleader Phil do it for them. He could go broke from their picks and would still think they are the greatest. …I do remember that blog post a few weeks back where that Lynn lady said she was teaming up with the Clowns. Negative comments were coming out of the woodwork until Pendynut and Lackey Phil showed up, then they are mysteriously began to be deleted.. I think you got a couple nice body blows in there too before they got deleted, ha.
Yeah, 9 of my comments got deleted. Lynn and everyone else is trying to make money in this world. It comes at a cost when you have to sell yourself to the devil.
Wow–crazy stuff and it is still up.
SamHain31 deserves something for his passion around the HDO club. He spares nothing of his review on Pendynut. Still laughing.
Unemployed wireless installer living off his realtor wife.
https://i.imgflip.com/4f8v1g.jpg
Geez, my comments on HDO are much tamer and on point yet they get removed 99% of the time.
Take this post, from only 2 months ago:
https://seekingalpha.com/article/4395964-2024-bond-yieldplus-20-washington-prime
Yesterday, WPG announces default (OK, non payment, it’s not a default for another month) of a $750 million note issue. The common is trading down 20% this morning.
HDOs MO, for those not familiar, is to recommend a high risk “investment” and when it blows up (which it often does) to blame COVID, Trump, the weather, the XP pipeline, orange juice futures, or whatever.
Then they get 99% of the bad comments scrubbed so anyone looking at their record sees nothing but sunshine.
Orange Juice Futures!! lol.. made my day Bob! I needed that giggle.. sadly for many it is not giggles tho. Bea
Micahc, I have seen references that Sam is pushing 90 years old. If that is true, it makes it more hilarious because he pounds hard on Moron’s and ‘Nuts soft paunchy midsections.
Bob, see it doesnt pay to be nice, start punching harder and maybe your posts wont get deleted. 🙂
2WR
Thanks for the link. I Respect Stanford Chemist and have recommended him here for others to read.
We’ll see how long it stays up. People need to read what others are saying.
I have said it before and I will say it again, anyone who writes a article on SA and tells you its all rainbows and unicorns and does not cover possible negatives is someone to avoid.
Tim’s post today on 10 yr treasuries hitting 1.2% brought out a lot of discussion by the great group of people here. People pointing out the good and the bad. and talking what direction to go to protect your investments.
I give it 24 hours.
Still there 2WR
All Stanford Chemist is asking that people keep it civil
2WR, You cheap penny pinching nickel stacking Scrooge, I got one you can track, for a possible penny play you love so much…BANC-D has called this preferred for 3/15. Pays a 46 cent divi. It is trading at $25.47 which is dumb, but somebody may figure it out and dump and you may get one of these call plays here if you watch it.
Ha! I saw that one…. You want my list of called issues to follow?? It’s better and much more up to date than QOL’s thanks to all the posts here, but in general, I’ve discovered the called bank issues are just not worth following….maybe a weirdo like BANC will be the exception but in general they always trade too high to even pinch a penny out of… Last two worthwhile issues I saw were TWO-D and E … So thanks but no thanks… Now go back to flipping the world, Grid… lol
What?? You dont want the trash Im passing off to you? Im shocked! 🙂
Hmmmmmmmmmm, let me think for a moment… BANC-D at 25.47 guaranteed to pay me 25.46 1 month from now…. geee, thanks! Did you get this one from your dart throwing monkey friend?
BTW, weird stuff does happen in this kind of stuff too.. I took the anticipated spread for 30 days out of MRCCL in a single day selling at 25.07 on Jan 20, 5 days after the call announcement only to see it trade all the way up to 25.74 before the market finally figured out anyone buying was going to get screwed… even warned about it here… Go figure..
Last trade was $25.43. 3 pennies in your pocket, its getting close to your buy range!
sold this at 25.45 and already invested in something else which will soon pay a dividend.
William, things are starting to get a bit jumpy in preferreds which I like. Lowered my cost basis on PPX buying at $25.46 and selling the amount I bought at 25.61 all in the same day today.
PBI-B dropped 30 cents after I sold this morning, I will be looking there possibly again, but I just bought at $22 the last time a few weeks ago and there isnt up room like there was at $22, so I may wait a bit.
Rat trap PCG-A has been bouncing around a bit too. Sold some for a quick quarter a few days ago and then bought back today down at $29 flat. Compared to its fellow sickly 6 other sister preferreds, this one has been bouncing more. But of course one needs to remember the A series comprises around 40% of PCG preferred float.
UZA dropped under its next accrued payment for next month, so I added another helping of this at $25.41.
Ally preferred is down 3% from its 2021 high. Now at 25.86. Is there word out about Ally calling this issue? I sold mine when it first hit 26 but wondered why it kept going up.
Potter, It just went exD yesterday. You could snag it a week or so ago at $26.25, so really its just about its trading price range post exD.
Good point but why doesn’t Ally call? The FF calls for about 5.8? % and they can sell pfd cheaper than that? Ally is too sharp to miss this
Potter, this is a bit different situation and I would suggest its not so clear cut. Taking your 5.8%, remember this is grandfathered Tier 1 cap that cant be replaced with a debt issue as it presently is. Plus they get about a 30% tax break that they wouldnt get issuing a true preferred to replace it.
So this means they really have to beat 4% issuing a QDI preferred. Throw in the fact the QDI would be rated a notch lower that leaves it as a B+ issue.
So it really boils down to how they want to capitalize if and when they redeem it.
Looking at possibly adding a small starter position in BAC.L. Right now it is pricing around $1457 with a yield around 4.95. Does anyone think this is a bad entry price or think there will be better pricing down the road.
I would rather buy WFC-L. Higher yield and much less call risk.
Excerpt from BRG Earnings Conference Call regarding Plans for Redemption of Preferred Shares (BRG-C)
Gaurav Mehta
Okay. And lastly, I think in the prepared remarks, you also mentioned that couple of other redeemable preferred used. Are redeemable this year – how does that look in terms of capital allocation towards redeeming that preferred stock versus deploying towards acquisitions?
Ramin Kamfar
We’re going to – we’re continuously – we’d like to redeem those. So there are expensive cost of capital and as we sat with a Series A, which is when it came – when it became unlock, we would look to redeem it. Our viewpoint is the same, obviously the timing may shift depending on what opportunities we’re saying in terms of preferred or acquisitions. But my sense is that just based on looking at what we have available in front of us today, it’ll be a matter of quarters rather than a matter of years, where that’ll be redeemed.
Does anyone have an opinion about XAN-C? I rode this down (in about a day or two) from $25 to around $2+. Now it trades around $24. The coupon is 8.625% and it doesn’t float until July ’24. The Board changed managers several months ago. The new manager stopped (cumulative) preferred dividend payments but has since restored them. The common stock will shortly have a 1 for 3 reverse stock split. I’m guessing this is meant to make the common more attractive and/or legally an option for institutional accounts. I don’t don’t know whether to get out or assume that the future is bright and enjoy the high yield. Any thoughts?
I’m in the same boat, Randy… not sure what to think presently but am holding… I remember those March days – I had an order in at 2 something that would have exercised but I pulled it when I left the desk for the day so it never happened. At that price, I figured it was going to be like buying a call which it was…. Don’t forget, somewhat uniquely, XAN-C can only float UP when it begins floating… It never floats down. That doesn’t help you should XAN die, but still, not a floater in the usual sense.
I had 100 shares and sold it last week at 23 something. Risky issue with a high dividend. All depends on your game plan.
There are better REIT preferreds paying in the 8% range. CIM, PMT, CMO, possibly NRZ, NYMT.
Full disclosure: I have not had a position or intend to initiate one in this security
When I get into asking myself what do questions on securities I review the following rules:
1: Protect your principle
2: See rule #1
3: A security should never be held if it causes you to lose sleep
A quick look at the website does not disclose the specific holdings of their portfolio. I would like to find those to determine how I feel about things. For example REXR clearly list their properties.
But XAN is also mortgage REIT with a different strategy than REXR an industrial REIT.
To me, the risks here in the event of another economic down turn are illustrated by the past history. If I had some I would probably hold for my higher risk bucket but not add anymore.
But again that is just me. I like to play safe but sure have had my lemons busted chasing yield a few times.
Tennessee Valley Authority (TVC) Baby Bond question? Just making sure I understand the issue. It can get reset down once a year in June if the rate of the 30 year plus .94 is less than the current rate? It can’t be raised if rates go up? It should be maxed out down because of the ultra low 30 year rate during reset last June? Not exciting but have cash I am OK with tying up for 7 years at about 2% (YTM is about 1.9% if my math is right). Thanks for your insight.
SDM – The two baby bonds, TVE and TVC, can only adjust down in rate, they will never go up… In exchange you get the right to PUT them back for a period of time if the rates go down… Currently, TVE is 2.216% due 5/1/29 and will only reset if the 30 year Treas CMT were to be below 1.376% on a date set in April. TVC = 2.134% due 6/1/28 and 30 yr Treas CMT would have to be below 1.194% on a date set in May for it to reset. Here’s the relevant website – https://tva.q4ir.com/investment-opportunities/putable-automatic-rate-reset-securities/default.aspx
2WR- Thanks for TVC link.
I know this has been discussed many times but I am not sure how to search for old posts. So I hope someone can respond. WFC-L is considered unconvertible. At what price does the common have to hit to make it convertible. Thanks.
Try this-
https://www.quantumonline.com/search.cfm
AzBob, Quantum states the conversion price is $ 156.71. Note however the clause that WFC can force conversion if the price of the common exceeds 130% of the conversion price for 20 out of 30 trading days. Why is this a negative? Because the conversion is based on WFC-L trading at par of 1000. As I read it, this puts a cap on WFC-L upon conversion at 30% above 1000 or 1300….which it is already above. So the conversion “feature” is really useless at best to a holder of WFC-L and a negative at worst.
I hold WFC-L because I like the qualified yield and don’t think the common is going to rise above 130% of the conversion price anytime soon.
https://www.wellsfargo.com/about/investor-relations/preferred-stock/
Non-redeemable at company option; optionally convertible at any time by holder;
Mandatorily convertible at company option after 3/15/13 if minimum market price. Currently converts to 6.3814 common shares (Wachovia-Wells Fargo merger conversion rate of 0.1991 times 32.0513 common shares noted in prospectus.)
Doing the math gets you:
1000/6.3814*1.3=$203.72/share where Wells can exercise the conversion option, otherwise a shareholder can exercise the option and receive the 6.3814 shares, which obviously only makes sense if WFC trades above 156. (52 week high is 50 and it has never traded above 60)
Does anyone here know for convertibles, when the underlying common does splits / reverse splits, does that change the preferred conversion ratio or the price? and how would you tell “appropriate adjustment in relation to certain events, such as recapitalizations, stock dividends, stock splits” appears to be the standard verbage but leaves me guessing if there’s a standard. I.E. if when initially issued it converts to 5 shares, but the stock reverse splits 1:5 does it then change automatically to 1 share at the same conversion price (or do the shares stay the same and the conversion strike price is what changes by a factor of 5) ?
Dufus, usually it adjust in accordance with the split. The SEC filings will confirm that. Off top of my head FCELB was a convertible that adjusted the conversion factor when FCEL common had a reverse split.
It can even adjust for stock dividends Sometimes the prospectus establishes some level of small stock dividends that don’t count to dilute the strike price.
Potter, long term you are correct about protecting the dilution. There are various reasons for that including over paying dividends. Most old veteran preferreds conversions have changed over the years despite no stock splits. One I have started out as .68 and 20 years later it now is a 1.95 conversion.
Any thoughts on NHF-A, mentioned today in SA article. 5.5% coupon less than $22, looks tempting. Couldn’t find it in Tim’s preferred tables. NHF transitioning to REIT status apparently.
Thanks in advance!
Gumfighter, read Stanford Chemist article on SA and prior ones from him. dividend went from 20 cents to 10 to 5
There may be a pop in price once first dividend is paid on NHF-A
But I will pass after it was mentioned here and I looked at what was written about it.
Picked up some BSF-D at 24.99 and some CUBI at 25.05 the other day.
Charles – I have been a buyer of both the BSF and UBP preferrreds the past few weeks. I think they are decent 6%+ payers for 1-3 years.
Has anyone looked at NHF-A? It has taken a beating since being issued and looks like a decent risk reward at this point.
NHF is converting to a REIT and I think the market is discounting that the fund will not be subject to the typical BDC coverage ratio. I don’t believe there is any institutional sponsership of NHF-A and perhaps some who received their allocation of shares after tendering their common are having second thoughts on holding these long-term. Plus, being newly issued, a market has yet to be established for these. Just my two bits, but I have a starter position established and am watching it closely.
Do you know why is it converting to a reit? I guess I’m asking what are the advantages to the company for converting? Is it gaining something or running away from something? Thanks.
I know this is a little late to respond, but if you check out NHF you will see that they own more physical equity than just shares in companies. There working to be property owners, and joint ventures. This would be very reasonable that they would convert to a REIT.
GM Tim..the errors and omissions tab seems to be missing from the additional links section. Is that feature going away?
Oh wise ones I am considering selling my TBB bought last year – wondering if I have my logic right.
Purchased at $23.87, currently trading at $26.64 or so. Basically if you bought more now and its called on time you are effectively collecting a 2% return. I believe I can safety beat that with the proceeds….
Is this how you look at it? Thank you for your tolerance of a basic question.
Bill – It looks like the accurate YTC = 1.55% or so, so that’s even more incentive to sell…. but the call is a year and a half out, so it’s dependent on your view of interest rates between now and then as well and how far up they’d have to go for T to not be able to refinance a call economically. To my eye, 5.35% coupon does not afford that high a cushion that an inability to economically call 1 1/2 years from now might be the case, but even so, were that the case, then your TBB would be sliding in value anyway… no matter what, it does seem as though even today, there’s a good shot you can replace this with something similar that would provide more yield even to a similar call and similar credit quality…. Check out what you can find…
Thanks 2. That’s where I was landing.
Decent article on SA regarding CORR, CORR-A and possible future equity, prefs re: a takeover of a CA regulated pipeline system. They stumbled quite a bit with other takeovers and the environment is tougher now, esp in CA. I popped out of CORR-A recently and will retain a watch.
Plenty of negative comments on SA regarding the purchase of Crimson CA pipelines. Projections for pipeline usage in CA for the next few years predicts an increase in 2021 and then constant for a few more years before starting a slow decline. The claims for the benefits of the pipeline purchase seem reasonable to me. I own shares of CORR-A and expect it to be worth holding for the next few years. At the current price dividend of 8+% is attractive.
I am going to show my ignorance here and ask a question that maybe Tim can answer or anyone else who might know.
Tim posts if you want to find more about a stock click on it’s symbol on this site and it will give you more information. It usually goes to a short prospectus that outlines the terms of the listing.
At the bottom it notes if the stock has a SP or Moody’s rating.
I noticed several had in the lower right hand corner a III rating. Several I looked at had a C and one had a A
What is this rating? or is it something Tim has put in ?
CM, I will say that I have interpreted this as Tim’s III ‘propietary’ rating. It means do some more work and develop an eyeball.
IE: recently, I saw value in his ratings for OXCL. Both Ox Lane and Ox Sq are riggged up (if you look closer: pref under the assets of pooled equity and unsec. bonds under junky, private debt CLOs). They deserve his C rating. Good luck if either go into duress or washout. You MAY be waiting on a court for a very long time…for bad news.
Thanks Joel,
I assumed it might be Tim’s shorthand. In the world of stocks there are probably 3 times as many C’s as A’s and B’s
Although not sure what would make a B. Over the past year Tim has posted a couple comments about OXLC and its preferreds. Last short article I passed just because of the reference to not knowing what they are invested in. GAB preferred’s are a whole lot safer.
Stanford Chemist over on SA does a decent job of talking about CEF and arbitrage IE trading them
Sold WCC-A this morning.
10.625 coupon but its YTC is only 4.5%ish if i did the math right. call date is june 2025 but its trading 31. ill have to find something to replace it though
I was looking to add to what I already own atco-h 1st call 8-11-21. Got a few at 25.03 thinking of adding more being it is close to par. They have 2 d+e are past call, 1 issue g 1st call 6-21-21 and the i issue is FtoF 1st call 10-30-23. I already own sescf which i believe is senior to the atlas. All issues are trading close to par. Anybody have any thoughts on which issue may be better than h. Or just buy more sescf
Personally I avoid F to F that is tied to LIBOR
Unless you can find the provision that explains what happens if this goes away (if ever)
I like F to F tied to a US treasury
But will interest rates increase after 6-23 (I doubt it but 5% is still not bad)
If they still have the D / E outstanding by 1-2 years, I would go with E and dare them to call. And the Atlas issues have slightly more liquidity than the SESCF.
Full disclosure: All these issues are out of my risk zone.
PickleNick Thanks I appreciate your input. It’s definitely a bit on the junkie side. I will stick with what I have for now. If anything it should hold up better if rates start going up a bit.
QX, First things first. Make sure no matter what series or how many you buy, make sure they in total stay within an individual allocation size. I own the note and dont feel the need to take the risk of the hold co preferreds. But they do have their plusses also. They just dont benefit me or my risk.
Thanks grid, I definitely won’t get to crazy. I’ll keep what I have in the H series and keep a close eye on it. May even do a flip. Did take your advice on the sescf. Thanks again.
QX, yes I own SESCF, actually a “full position” for me which is usually reserved for more conservative issues. But the pedal is down here. Seaspan doing fine, its a senior note, and its anchored around par as it could be redeemed anytime as they almost did it earlier last year before Covid hit.
I read about your pricing increases in window business. We have actually had about 15% inflation and 2% 10 year treasuries before. Anything can happen.
I got a silly question.
And the answer maybe just subjective to personal risk tolerance. You don’t have to elaborate too much.
Do you feel better / or the same holding SESCF (unrated, unsecured) Senior Note as you do holding something like PPX (IG, unsecured) Jr Subornated Notes?
There is a pecking order and a capital stack but in the end, in each case SESCF / PPX we are dealing with unsecured paper notes. Is it a goof to be fixated on the “unsecured” part? If so it could mean that I am missing oppertunities.
Pickle, its all a mish mash. If you just looked at debt to equity you would assume Seaspan has a better financial structure than PPL. But that doesnt factor in the fact that utilities carry more debt because of their monopolistic guaranteed revenue stream. Credit agencies know that and factor that in.
Seaspan is basically BB rated debt, due to the fact its senior secured is BBB-.
And then to compound the confusion you are comparing subsidiary senior unsecured to holding company subordinated debt, albeit in incomparable and unrelated sectors.
That being said credit agencies factor that all in. So by credit quality PPX is “safer” in terms of payment than SESCF. But the utility sector in and of itself is viewed safer than shipping too. Personally one is in my “safe” bucket and the other is in the high risk bucket for me.
Thanks.
It would appear that I have a bias of evaluating risk based on my understanding of the underlying company. It keeps me from chasing yield but I have made mistakes and juice returns with partial junky positions.
Your point about comparing subsidiary senior unsecured to holding company subordinated debt is well noted.
Pickle, you also just have the “market bias” utes have in general over other sectors. The ATCO preferreds at the very worst assumptions have a credit rating at least as good as Pacific Gas and Electric’s B1 rating. The ATCO preferreds (Seaspan) have not been suspended and continue to pay. While PCG preferreds are still suspended and carry stripped yield 200 plus bps lower. Yet I would not consider PCG preferreds safer than ATCO by any wild stretch of the imagination. But the market will give them (PCG) the benefit of the doubt.
Good assessment, actually.
Now you got me thinking about it, I believe I have a “cumulative bias” as well. That along with the market bias of utes could spell trouble for me if I wanted / needed the income because PCG would check both boxes before the disaster. I’m gonna have to noodle on this over the weekend.
Grid, I have a full position in sescf as well bought in dribs and drabs and under par so no harm if called. Hopefully, with any luck they won’t call for at least a couple quarters or longer. We started our business 1979 with Paul Volcker at the helm of the fed. Interesting times. 10% cd’s and free toasters.
Anyone like to guess where 10yr treasuries end for the week tomorrow ?
no real change is my bet
the fed has the printing presses running at maximum
Fed: Scottie, we need more speed !
Scottie: I’m afraid she’ll fly apart.
Fed: Fly her apart then!
I was returning from making a cup of coffee this morning and as I entered the room the end of the sentence I heard was “is prepared to take interest rates negative if needed.”
I assume that the conversation was in regards to the ECB in Europe. Not looking into it further. The thought of the Fed doing that here would push me into a drinking problem.
I don’t see how the long end of the curve doesn’t eventually rise. BoA recently predicted a 10 year of 1.75% by year end which sounds reasonable to me (https://www.cnbc.com/2021/02/03/this-metric-suggests-theres-an-economic-boom-ahead-and-possibly-inflation.html). I’m not holding any of the newly issued coupons in the low 4’s. At that point, I would rather hold dividend paying commons.
Dick, I see that as a fair assessment, and my general assume the worst scenario. BTW, The issue we were discussing with the 5.9% par was issued in 2013 with a then 1.90% 10 year. Its worth the max call risk of less than 40 cents I determined to get 80 basis point protection in 10 year.
A slow drift up to 1.75% ……….
Sure, I can believe that. 1.75% is reasonable like Grid says.
After all the demand destruction from the pandemic I don’t see any actual boom as the article suggest. Hype from talking heads, sure, but no boom.
Inflation?
Yes. You and I buy groceries, we already know inflation happens.
However, my spidey sense says the Fed does not care.
But to your point, I am watching the low IG 4% issues and accumulating higher yielding common stocks. Mainly partical positions in some BDCs I have watched and securities that are close or below their 200 day moving average. Slim pickins out there me thinks. When golf season hits the northeast my mind will be off all this stuff. I can’t wait.
We own a window replacement business. Been in business over 40 years and never had back to back price increases this big in such a short period of time. Since last August 2020 we have had 3 price increases from one of our main window suppliers the first 2 (1-7% 2nd-6%) before the end of 2020. And just received another email today 11% effective immediately. Crazy. How much can be passed on to the customer??? I guess we will find out.
Well, there is a housing boom and they all need windows
so that demand taking supplies from the replacement people making inflation understandable
Classic supply and demand.
but 11% !!!!
ouch
it can make the market look displaced
like trying to replace a single broken window at what you think is such a high price
then ask – whats the alternative
we live in interesting times
Yeah it’s crazy. Price increases from 2013-2017 combined didn’t add up to what we’ve seen in the last 7-8 months. Labor costs, that’s not a treat either.
Q, yes. I have a garage door business. I just got hit with a 5% and then a 6% increase coming in March. Since I started selling this brand of doors a little over 5 years ago, I’ve had almost 25% increase in my cost and yet the ‘suggested retail’ hasn’t budged by a penny. They have reprinted the price book 3 times and have not once changed the list price. They just keep adjusting the multipliers…. I’ve been able to pass on about 10% increase over that time. Thinking of bumping another couple percent after the March increase. I guess we’ll see.
Also, the cost on my incidentals, (nuts and bolts, prepunch angle iron) has risen dramatically. I always struggle with how much to pass on to the customer. Demand doesn’t seem to be going anywhere, so maybe ‘the sky’s the limit”…..?
Mark in CO. I hear you. Our coil caulk insulation trim nails you name it went up as well. Some much for no or low inflation. Yeah right.
I recently bought some TBF which shorts the 20 year Treasury. It’s a relatively small position for me. I had a really good year in 2020 so I’m looking at TBF like buying an insurance policy and hedge against all the fixed rate perpetual preferreds I own.
Currently, I like trades that short Treasury Bonds. However, it is not necessarily a good hedge, because Treasury interest rates and Corporate interest rates can go in opposite directions if the economy turns weak.
CM, I’ll be ballsy and disclose I took a decent long position on Thursday, averaged an equal amount in on Friday. Maybe I am getting itchy cash finger? I usually do not like to spec trade and if I do, I don’t even mention it to my wife if she asks what’s up this week…SHhhh! ( Honey, this is a different Joel A, not me!)
Will see what happens Mon & Tu. So far got some ground to make up if there is a slosh in my direction…if not will stop out at pre-determined placement.
Right now that is my ‘steak-dinner’ possible flip. Looking for an exhalation in the breathing of long bonds yields after three obvious waves of yield up. I will add I usually do nothing on Mondays as a general rule. Too much irrational ‘T’ in the room.
Good Luck Joel
Hard to say if getting in a fund or ETF on T-bills at end of week compared to any other time of the week.
A year ago with the market, it almost seemed you could predict people would bail on a Friday not wanting to see what would happen over the weekend to affect Market on Monday.
Now seems like everyone is placing bets going into the weekend.
Same here on getting restless, I am sitting on about 50% cash but instead of chasing what I think is next big mover, I have a couple low bids in on what might be short term to call preferred’s and some F-F
Got out of the Pharmacy stocks, too crowded a field with everyone making Covid bets the share prices are sinking PFE, GSK, MRK I played and was looking for a bottom to go long term. Instead I bailed with a small profit and keep watching them make lower lows. Maybe its time to go back into oil and lose some more money !
10 yr Treasuries finished at 1.17 see what happens next week
Has anyone seen anything about PPX being called? It’s trading lower today. The ask is currently $25.56.
If it were called it would be lower than 25.56…..
I have a full position but I’m not going to worry about a possible call until there is solid news about divesting their England assets.
Anyone have an opinion on the Energizer preferred?
mandatory convertible ENR series A?
Prospectus is here.
https://www.sec.gov/Archives/edgar/data/1632790/000119312519011586/d629459d424b2.htm
Under par, decent volume, (and converts in about a year)
I know most people hate convertibles on here, but worth it for the income for the next year, and bail before the conversion date?
You’re still exposed to price risk of the underlying. Buy whichever is at a discount
I bought ENR-A when the common was below the conversion range and there was very little premium for the extra yield. I only buy converts if I like the common and would hold it through conversion. Currently long SWT and a half dozen utility converts. I wouldn’t count on a happy trade unless you actually like the underlying.
Did I miss something on SBNC and their two prefs?
Common div up 300% in two years. Prefs look like $15 par with decent yield but NO action, no news and looks like insider stripping? Just a guess.
I thought one of these prefs was a recent issue.
Joel, I need to get you updated quickly as you are off the mark here… No these are not new preferreds. They were issued in 1980s as a convertible that lost their convertible feature over 25 years ago. They were issued 9%, $10 liquidation value, and are non callable.
Company wanted to go “dark” about 15 years ago and forced some minor owners to liquidate at around $15. Which was extremely fair back in that time period. They did this to get under a certain number of shareholders to go dark.
Insiders own most of the smaller N series and it rarely trades. They also own some M series too but not as much. Basically same standing except N gets a few more votes on matters (yes these are voting preferreds) if memory serves.
Doesnt matter anyways as a few big wigs own basically the company which has a family based origin.
I own a nice chunk of the M series and just holding as this stodgy conservative bank (except for the family member salaries working for the company, lol) will protect my payments.
Ask Alpha to dump his, as he has a chunk too, maybe he will sell at the right price. 🙂
Grid, Well there’s divvies and there’s good ol’ divvies. I’m just hoping we get invited to the company BBQ one of these years.
Alpha, I have not been able to procure my Good Ol’ Boy badge that is needed to attend the ‘Q. Maybe this year, let me know if you get yours…. My favorite memorable purchase. Got these preferreds sitting by an infinity pool overlooking Rivera Maya area ocean with drink in hand. All on Mexican open access wifi, didnt get hacked, ha.
Grid:
Do you still own non-redeemable CTGSP? Was buying all I could yesterday when the offer price slipped down to $6.59/share. This illiquid issue (only 27K shares “float”) often has a near 50 cent bid-ask spread.
Thanks!
freeRob, I still own some. Its high quality A3 type, but I wouldnt just engorge here. Interest rate cycle ebb has stopped dropping. So it can be exposed to higher rates due to low yield.
I wouldnt buy with hopes of easy trade money. More of an annuity with a whatever it is residual price value down the road.
Thanks, Grid. Definitely not engorging, very small position. Certainly provides a better yield than the 1 or 2 basis points I get on un-invested cash at my brokerage account.
Just hoping that YOU weren’t the seller yesterday! LOL. I learned a long time ago to never, ever buy from a smart seller.
Rob, ha no, I dont have a problem owning some safe illiquid low yielding HQ that wont trade in lock step with liquids. I also bought some PPWLO at $134.10 yesterday (about 4.5% if memory serves) as 10% of the float (500 shares) went by the board at that price.
And I have even went lower, as I have bought a preferred, that doesnt even pay a dividend, as its suspended. So, I own them from 0% to 11% plus.
Buying suspended preferred may be a strategy. I own 2, both of which I bought after suspension.
If you follow HDO you probably own a lot of suspended issues.
Bob – I’m wondering where the selling’s coming from on BMTXas it sure is acting terribly. I say that because I own it in very small amounts at TDA and Fidelity from owning CUBI and I still couldn’t sell it if I wanted to because neither one accurately describes it yet…. In fact, Fidelity told me that THEY, not me, are restricted from trading in it and I will get a letter in the mail sometime soon explaining why and what I’m supposed to do.. The guy who told me was relatively mysterious about it and wouldn’t or couldn’t say more…. So if nobody can trade it, who’s selling it or is it just those who own it out of CUBI that can’t trade their shares?
Yes, But as you know Bob, they buy them not having a clue they are going to be suspended, ha. Especially if Moron or Pendynut did the actual pencil sharpening with the numbers.
2WR, Ok,yes, I remember…No, I got lucky on Wheeler trash trading a couple years ago before the crash, and havent been back since things collapsed.
Im done with seedy strip malls of Piggly Wigglys with empty broken glass accompanying store fronts, cheap Chinese carry out, and dirty floor nail polish stores… As you know, the preceding comment is just teasing. 🙂
I got my PPWLO back at $120. They were stingy though and only let me have a small amount. Not a bad birthday present for myself though since that is when I got them!
So Grid, did you do the same suspended story I did?
2WR, Which one is that? I never jump too deep in the weeds on something of this ilk, but not a fan of this company either. Its been a few months but I reentered PCG-A the other day in 29.20s. Its off about 7% past month or so, and is now 13 dividends in accrual which puts the true net purchased yield back over 6% at 6.15% for me. Not that it matters as if things go to plan this will be sold long before they resume paying, and probably a few more times if good fortune continues to follow me here.
No, Grid – Your PCG-A is a whole lot more mainstream than what I did. A few weeks ago John Marshall brought up the name WHLRD here. Looking into it I decided to put some throwaway money into, nothing I can’t afford to lose entirely. They’ve not been paying since Jan ’19, it’s accruing at 10.75% and it has a put in 2023. It’s apparent WHLR ceases to exist if they do not deal with WHLRD holders and right now they’ve turned around sufficiently to begin to address the problem by throwing $20 mil in to a modified Dutch auction to buy back shares in range of 15.50-18.00 in a tender ending 2/16. Tender is or was oversubscribed so at midway point they’ll retire about $30 mil of the outstanding “par” value or about 1/3 of the issue. My premise is existing WHLRD shareholders can play a game of chicken and win on this one assuming continued improvement in WHLR’s performance and if so WHLRD would be a double in 2 years… It’s an absolute crap shoot with crap, so it’s only for use with pure spec money. There’s also been some activist buying in WHLR to support the premise and much of the buying has been done using WHLRD as the vehicle of choice, so what the heck…
Too close for comfort to be teasing, Grid – only around here, substitute Mexican food for Chinese food carryout…..and The Pig dominates the skyline ’round these here parts… lol
speaking of suspended dividends, is PGE ever going to reinstate them? I guess when they have a better financial footing.
Justin, that is a great question. They are choosing not to, or taking the strictest interpretation on court ruling of no dividends until all mandates are met. The preferred payments accrued in mass are peanuts. About $45 million accrued in total now. Put it this way in 2017 pre fires they were paying out almost $1 billion annually in common divis.
The preliminary March 2020 post bankruptcy agreement showed a cash disbursement of $42 million this year to the preferreds (they have accrued one quarterly this year already) and this obviously didnt happen. I can info and CC’s and its never been mentioned that I am aware of.
The Family sure knows how to ‘take care’ of themselves!!
Thanks for the fount of knowledge. JA
Guess what? The laws of economics have been repealed! It’s not exactly new to see “academic studies” acting as advocacy pieces but the ignorance of basic economics displayed here is astonishing.
https://outline.com/KkFy9t
The contradictory statements about the effects / no conclusive effects on Black & Hispanic workers is obvious and ignored. Plus, in this kind of ‘research’ if one more person outside of those two groups benefits, then it becomes beneficial to raise wages. QED, as they say in academia.
Gary – to make the point to the absurd, suppose they did a study to find out the effect on unemployment among physicians (or any other well paid group) from an increase in the minimum wage. It would be zero, of course. I then take that result and extrapolate to the entire workforce.
By that reasoning raise the min wage to $200/hr. It will have no impact.
It’s another form of MMT (magic money tree)!
Glad I no longer try to subsist on a minimum wage:
https://www.commondreams.org/node/134113
US minimum wage will never keep up with inflation so long as there is a steady supply of cheap labor. 2016-2019 saw wage increases on the low end rise faster than they had in at least 50 years, in no small part because the flow of cheap labor into the United States got turned off.
https://navellier.com/10-8-19-the-economic-miracle-continuesbut-bad-news-drowns-it-out/
Wait until the number of retirees starts climbing fast because the boomers leave or become unable to work due to infirmity and watch the workforce participation number plummet and you won’t have a supply of ANY labor, low priced or otherwise.
The sooner the better Justin…I’m no fan of what the ME generation has done to the United States.
It must be fun to start with the narrative you want to spread and then find or manipulate a “study” to fit it. Only in academia!
Every now and then you will also hear that raising taxes stimulates the economy. Never mind all the examples where (tax) free economic zones have been overwhelming success.
Depends on the taxes raised, as it just stimulates the economy elsewhere.
But there are loads of examples where the impact of the tax change is negligible, because of inelasticity.
For an example, does anyone on here change their trading pattern because of the SEC fee levied on each trade?
Had nice bumps in some deep value stocks I hold long term (10-15%/day x 2-3 days) and am thanking the Redditors. These stocks had become heavily shorted. They would periodically get hammered for no reason. The short sellers were getting over-extended and no doubt got their come-uppance in the recent Reddit squeeze.
Nonetheless, between fake posts and lurking hedge funds front-running, I think it will eventually be “game over” for some Wall Street Bets plays now that everyone knows the game.
Also, I don’t think all the WSB traders are the “buy and hold forever” type investors that they claim. (e.g., one WSBettor was bragging about paying off his student loans.) As the shares get toppy, some WSB traders will sell, pressuring prices down. Not every pumped stock is a Tesla.
There is an old Wall Street joke about a guy who corners a small stock then calls his broker to unload. The joke’s punchline is: “Sell to who?” It is still both funny and accurate.
Overly-short, overly-long, either way you can be overly-wrong.
Just my opinion.
Recent buys for anyone interested …
https://docs.google.com/document/d/1MjNJ_s11JdCrfM7o2LThV6YT3122ve_b9HHMoFJ8kWY/edit?usp=sharing
Bob, Nice thought process, thanks for sharing. Maybe a bit of conformation bias on my part though, lol.. I think you mistyped one of your buys. I think you meant you bought REXR-A not REXR-C as posted. A meets first call this September, while C has a considerably less current yield well over “par” and call protection until 2024. REXR-C is definitely not the play here based on your strategy, so I think you meant A.
Along same ABR vein, I play the A series, not the B. But at present prices, Im in the hold process and would agree B would be the better buy today for what most people want from a preferred. One needs to keep in mind ABR preferreds tend to have wide bid/ask spreads so one needs to ignore ask price and not chase it. I am not one of the persuasion to hold Mreits (just personal preference), but I make one exception for ABR.
Thanx Bob . I have Rexr-A on my hot list and will add WTREP as well ( a great find Bob)… if I can get a 5-r 6% or more on a near-call pfd I am ok from my usual 7-8% pfd buy requirement. (Arch Capital ACGL is buying WTRE assuming it goes thru which I am sure you know.. actually Arch is a safer co, 4x bigger than Axis. Arch is an interesting insurer, if the reinsurance cycle is turning hard to favor rate increases on these co’s, might be worth a look (no yield)).
I may also add more GOODM to my small position. I don’t hold much in pfds.. FPI.B near par, GOODM bot at par, MNR.PC bot at par for ‘cash park’..nibbling around the edges of the pfd market. Always looking for disloctation for buys. My portfolio is well over 80% cash these days.. I grabbed a few pennies off the BRG calls.. Oh and the BFS and UBP pfds are on ‘watch’ for me.. Bea
80% cash, wow! Is that true cash or do you count cash subs, too?
Hi Bob..yes including cash subs but liquid (no bond funds etc, like MINT none of that no IEF.. no pfds..pure ‘cash’ that could be accessed .. I have a decent balance w a AAA rated insurer pays 3.5%.. I can transfer that to ckg like a savings ac. Guess you’d call it ‘diversifed cash.’ I did about 8.5% total return last year playing around the edges of the market in a barbell strategy..preserving my capital + some. Right now bets include HK deep value div stocks, CTO REIT, some pfds as above, GEO/CXW bonds 2023 maturity and some precious metals miners (no silver tho other than what FSAGX holds in silver miners!) Bea
Yes, meant REXR-A, not C. I have a sell order in on C at I think 27.50.
First HLM-. Help a guy out, will ya? I had to cancel that one.
Now WTREP?! My open orders, placed at a reasonable level, just waiting for a burnout panic, are getting exposed here on Tim’s site! Crap. Yes, I am a selfish, secretive, stealth open-buy-limit order placer and in this yield chasing environment it’s OKAY to let people do their own research and place their own orders…that is until I get my placement! Of course, it’s all about me.
I won’t point out any serial perpetrators!
Now, The Proctor’s Researcher Exam (no!…that one is spelled proctol ..)
Looking for a CD like instrument? Hint, must do some research:
1) 60 day Holder Retractable.
2) Buy at par or below, 4.5% yield range.
3) Probably need an open open buy-limit order to make it effective.
4) Extra credit, name two different issuers and their credit rating.
Pencils up ( no!…not that…nevermind)
Im never greedy Joel. I took my 11 cents 2 day profit on about a quarter of my HLM-, and 22 cents on the rest Friday. Probably more meat there but I am off on another short duration hot money play, ha.
Bob—-regarding WTREP, I was under the impression that if 3 month libor was below 1%, it would be calculated at a minimum of 1% plus 667.85 basis points. Consequently, the yield at $25 would be 7.66785%. Am I wrong?
You are absolutely right on the 1% LIBOR minimum. So the de facto minimum coupon is 7.6785%.
So here’s a simple question on WTREP – When this acquisition of WTRE is completed, what will be the name of the surviving company? It’s as clear as mud to me when reading the proposal https://investors.watfordre.com/static-files/ac1b490a-16a2-423e-a395-d30d73b95260. And after all is said and done, does the statement reading ““as provided in the Merger Agreement, Arch remains contractually responsible for the performance of its obligations under the Merger Agreement” mean that once WTREP survives as is stated, will it definitively become an obligation guaranteed by Arch Capital Group Ltd.? Arch Cap’s senior unsecured notes are rated BBB+ so could the surviving WTREP end up being low IG quality or maybe BB+ even if not rated? I just bot at 25.26, now I’m more serious about trying to figure out what I actually bot… lol
Bob,
I bot some HLM- at 25.26. It will be redeemed sometime after they determine the closing date. See the below text that I pasted from their website.
https://www.hillmangroup.com/us/en/trust-preferred-securities
“At the closing of the merger transaction (currently anticipated for the second quarter of this year), the Hillman Trust will redeem all outstanding trust preferred securities. Each trust preferred security will be redeemed for an amount equal to $25 per security plus accrued and unpaid distributions. Sometime prior to closing, once the closing date has been determined, holders of Hillman’s trust preferred securities will receive a redemption notice indicating the terms of the redemption and any actions required to be taken in connection with same.”
MBG – you are totally right on the HLM preferred. It’s right in the merger agreement. The merger agreement will always tell you what happens to the preferred (of the acquired company) in a merger. In Hillman, they go away. In WTRE, they stay. You just don’t how long.
Bob,
Arch and Watford plan to redeem WTREP. I think Grid found and posted this a few days ago. Not sure, though. Apologies Grid, if I misstated.
From Watford’s prelim proxy, filed Jan 4th (on page 80):
https://investors.watfordre.com/static-files/ac1b490a-16a2-423e-a395-d30d73b95260
Financing Cooperation
Until the earlier of the closing of the merger and the date the Merger Agreement is terminated, at Holdco’s sole expense, the Company will use its commercially reasonable efforts, and will cause each of its subsidiaries and its and their respective representatives to use their respective commercially reasonable efforts, to provide Holdco and Merger Sub with all cooperation reasonably requested by Holdco or Merger Sub to assist Holdco or Merger Sub as is reasonably requested by Holdco or Merger Sub (i) in connection with a potential debt financing in an amount necessary to redeem the preference shares outstanding on the closing date of the merger and (ii) in connection with any equity financing of Holdco, including using commercially reasonable efforts to provide reasonably requested
diligence materials and participate in and cause the Company’s management team, with appropriate seniority and expertise, including senior officers, to participate in a reasonable and customary due diligence sessions in connection with any such equity financing on reasonable advance notice and at mutually agreeable times and places.”
Perhaps I read too much into this wording.
Is this a statement that they’ll definitely redeem WTREP or is this just a notice that IF they plan to redeem then they’ll go about it this way?
mbg – was going to ask how does that language jibe with the language right on the “Dear Shareholder” page, “ii) each of the 8½% Cumulative Redeemable Preference Shares of the Company, $0.01 par value per share (the “preference shares”), issued and outstanding immediately prior to the Effective Time will continue as a preference share of the surviving company and will be entitled to the same dividend and other relative rights, preferences, limitations and restrictions as currently apply to the preference shares.” This seems pretty definitive and the p 80 language pretty opaque and perhaps subject to tracing back definitions of HoldCo and “company,” etc.
MBG, Just keep your pencil sharpened and assume worst case scenario before buying at what entry point you would choose. You know when this dividend started accruing, you know entry price point of interest, you know they stated they expect this merger to be completed first quarter, and you know this is stated in their SEC filing…Its all in the entry point on these things and your goal.
Accordingly, immediately after the effective time of the merger all of the Company’s common shares will be owned by Holdco. None of the Company’s current common shareholders (other than ARL) will have any ownership interest in, or be a holder of, the Company’s common shares after the completion of the merger. As a result, our current holders of common shares will no longer benefit from any increase in the Company’s value or bear the risk of any decrease in the Company’s value. Following the merger, only Holdco and its affiliates (and potentially the holders of preference shares, until those shares are redeemed) will benefit from any increase in the Company’s value and also will bear the risk of any decrease in the Company’s value.
Thanks, Grid.
Yes:
1. In calculations involving redemptions, I start accruing from the prior div’s payment date, not ex-date.
2. I set my entry point around par (stripped price). In the case of redemption at the earliest date, that eliminates chance of any loss.
MBG – I have seen and read the language. What I can say with certainty is that AXS has said, clear as a bell in proxy materials and the merger agreement, that it will reissue WTREP as its own.
What they have not said is whether they intend it to hang around or not. It could be redeemed the day after the merger or any time after. Given the rate, it would make sense for AXS to redeem but the sensical thing doesn’t always get done, especially when a merger is involved.
The language of page 80 doesn’t change that. It requires WTRE to keep some cash on hand for potential debt refinancing, including the redemption of the preferred. It doesn’t mean it will happen.
This is a spec play but at the right price it has no downside. Treat it as if it will be called and if it isn’t it’s a windfall. I saw people buying this at 25.75 last week. I wouldn’t do that. I have an average cost of 25 stripped. I have no call risk. I’m swimming in cash right now so the opportunity cost is zero.
Not sure if this will work:
https://quotes.freerealtime.com/quotes/WTREP/Charts
Bob, 2WR, and Grid, thanks for the replies.
By the way, Bob, I assume the link works for those who subscribe. I haven’t signed up for it so was unable to get a quote. Easy enough to get it elsewhere (my broker, yahoo finance, NYSE … ).
Per MarketWatch, no volume today in WTREP. I opened a small limit order last night so I have proof that there is at least one order ;-). Any guesses why no volume?
Bur – it’s thinly traded. You can buy all the shares you want at 25.75+ but I don’t recommend it. It took me 3 months to acquire 2000 shares at my price (stripped par +/-). 1000 in Oct/Nov and most of the balance just last Friday. I generally used fill or kill orders right at open or near close.
Thanks for the insight, Bob. Why not just set a GTC order? Sure you risk only getting a partial fill, but at $0 commission, and given that you’re confident in your initial bid, who cares?
It’s a bit of a special case. I believe there has been only one big seller for the last several months. I’m pretty sure it’s an institutional seller and it’s actually an algo that you were up against, meaning a computer and not a human.
I saw would be buyer after another come in with a (say) 25.40 bid against a 25.50 ask and immediately the ask would move to 25.60. Then the bid moved to 25.50 and the ask move to 25.60. And so forth. The bid kept chasing the ask and got very few shares by doing so. Whoever was doing the bidding didn’t see this and didn’t adapt to the situation. Had I just done the same thing I’m sure I would have had a similar result.
That said I did have a standing bid out there but at 24.50 or so, just in case a seller fat fingered a sale. It does happen.
Fill or kill and limit at close are easy on some platforms. On others you have to use a do it yourself methodology. It’s more work than a standing bid but not horribly so. I’m almost at the computer for market open and close. At least until lock down ends.
WTREP – For those following this issue and other Bermuda insurers, I ran across this generalized commentary from Fitch:
Bermuda (Re)insurer Results Supported by Hardening Market in 2021
Tue 19 Jan, 2021 – 11:01 AM ET
Related Fitch Ratings Content: Bermuda 2021 Market Update
Fitch Ratings-New York/Chicago-19 January 2021: The U.S. property/casualty (P/C) insurance and global reinsurance markets, including Bermuda (re)insurers, are positioned to benefit from recovering market conditions in 2021, with higher-than-expected catastrophe losses and coronavirus-driven claims driving premium rate increases, Fitch Ratings says.
(Re)insurers’ underlying profitability should improve in 2021, as rate rises across almost all business lines outpace loss cost inflation and the impact of reduced investment income from persistently low interest rates. Tighter underwriting of commercial lines and normalizing catastrophic losses will support underwriting profits; however, adequate or improved capital returns will continue to be challenged by competitive pressures, lower investment income from persistently lower interest rates, and deteriorating asset quality.
The pricing of the January 2021 reinsurance renewal season, while improving for the third consecutive year, was somewhat disappointing for reinsurers. However, price increases have gained momentum through the various renewal seasons since the onset of the pandemic, with the market expect to continue to harden through 2022 as premium rate increases take hold.
The sector’s capital strength remained largely unscathed despite substantial pandemic-related underwriting losses in several segments. (Re)insurers saw sizable new capital issuance in 2020 following the onset of the pandemic, as firms took advantage of the low rate environment and accommodative markets supported by unprecedented government stimulus to raise capital amid market uncertainty and liquidity concerns exacerbated by the pandemic fallout. Fitch-monitored Bermuda companies raised approximately $7.7 billion of capital in 2020/2021, including common and preferred equity, various debt securities and drawdowns on credit facilities.
M&A has been subdued amid improved organic growth opportunities given the hardening market. However, if price improvement is not sufficient to offset the added strain of coronavirus losses, weaker companies could become acquisition targets.
Fitch maintains a stable rating outlook on both the U.S. P/C insurance and global reinsurance market sectors, with ratings headroom supported by solid business profiles, capital strength, reserve adequacy and effective risk management processes
2WR, Hey take a break today from stock researching. Its a legal holiday today…“Washington’s Birthday”. Not the media/retailers brainwashing “Presidents Day”. No such holiday, and never has been. I would if anyone under the age of 50 even knows that, lol.
With the weather sucky, exercise for gimpy leg done, community petition to get Spectrum cable here written, what else is there to do??? Got Pandora going right now on my Canned Heat station… it’s all good…..
2WR, Your weather is probably close to mine…0 degree temp and 6-9 inch snow forecast. Im gonna shovel off whats out there now after I get off treadmill, so there wont be so much to deal with tomorrow.
Musically what is a blast is listening to Casey Kasem’s Weekly Top 40 from the 1970s on Sirius every Sunday morning. In 20 minutes time it can go from Paul Anka, to The Who, Carpenters, Barry White, and Aerosmith. What a riot!
MBG, Yes I posted that what a couple months ago or so, and played this issue for about 25 cents and departed as once this came out and was around previous exD. I pretty much had the easy money extracted without eyeball work on it and determining if a redemption would be served on time or not.
Some people dont want to play the type of trades Bob mentioned, and I get it. But I like these types for a portion of my procedes in various issues as they serve dual purposes in doing so. I pretty much got my money for this ilk already tied up in others, so I doubt I will be back again in the issue. But I do respect the trade and reasoning behind it though.
Isn’t WTRE merging with Arch Capital not Axis? If so it’s even more reason to consider this a great idea.
IYP,
Yes, WTRE to merge with Arch Capital, not with Axis.
https://investors.watfordre.com/news-releases/news-release-details/arch-capital-group-ltd-and-watford-holdings-ltd-enter-revised
BTW, just found that Arch (ticker ACGL) has 2 preferreds. QOL has their details.
My deep review (30 seconds) shows arch as a well regarded co 4x the size of axis with two pfds trading in 1% ytc range. But for me not enough volume on wtrep
Bob,
I’m long the prison trade as well.
I have a small position in the Core Civic common (via long dated put spread) and larger positions in the GEO bonds expiring in 2023 and 2024. The bonds have yields to maturity in the low double digits and I don’t see imminent bankruptcy.
The GEO bonds paying double digits YTM are attractive to me. It will be interesting to hear what they have to say about Biden’s executive order during their Wednesday, February 10, 2021 conference call.
GEO 2023 Bonds: CUSIP 36159RAG8
GEO 2024 Bonds: CUSIP 36162JAA4
GEO 2026 Bonds: CUSIP 36162JAB2
Danzeb,
I added to the 2023 bond position after the recent Executive Order from Biden. While I hope prisons are not a growth business, it seems that many facilities are required and difficult to replace by various governments.
February 10 should be interesting.
Also look at 2 CoreCivic bonds:
21871NAA9 2027
22025YAQ3 2022
Yields are lower than GEO but it’s a stronger credit.
CXW gave up its REIT status recently and cut common dividend to zero, so it’s all about debt repayment now. The 2 bonds won’t be called, it will be other debt they work off. This action strengthened the credit on the bonds substantially.
GEO should look at doing the same. Banks and investment banks are not going to help them with their capital requirements. They are going to have to dedicate their cash flow to debt repayment, like CXW.
Bob
Thanks for sharing.
I’m thinking of starting a position in the 2027 when the price is in the low 80’s.
You’ll be crowding my trade 🙂
There is also a 2023 CXW 22025YAP5
Bob- Thanks for update. Appreciate the info. On the Corecivic bonds, I own the ’22 and the ’23. They got pushed down at beginning of last week but have bounced back pretty fast. Watch for good entry point.
They sure did bounce. But, hey, a few more executive orders and they may be back down.
Shook *me* off the wagon when they did. Didn’t have the conviction to hang on. Oh well.