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.
Big picture: there have been a lot of new preferred issues this summer especially from financials and REIT’s. These issues are very profitable to the inv banks not only for the management fees but also the sales commissions that are part of the u/w commission. Aren’t the mezzanine bracket and specialty houses getting a disproportionate share of these non tech, non utility issues? Which “small” firms are publicly held?
As “Adam Smith” once responded to rumors of heroin usage at the old Youngstown assembly plants: “ I wonder who makes all those needles?”
Very simply it’s created a bifurcated world in banking. “Banks” that have a big capital market presence and have underwritten all those deals have made very good money. so, too, some of the more fee-based banks, those big in trust and custodial services.
The balance sheet lenders have been hurt, some very badly. Lots of charge offs and loans in forbearance. As time goes on a lot of forbearance will go to charge off. More hurt to come.
Just look at the 424s at SEC, and see whose name is on them. It’s a fairly small club.
NLY-D It’s 3 yrs past call– any thoughts on it being called since it is the highest coupon? High was 26.02, and back to 25.22 now. Next ex should be 11/30
thx
Gary, I’d say the market is pricing NLY-D as thought it will be called. Will the market be proved correct? Who knows.
NLY certainly has strong motivation to call the D issue. Both highest rate and no fixed to float like the other NLY issues.
But given the recent savaging of m-REITs I think they will be cautious about any capital market moves. D is a very big issue and the company would have to get $400 million from somewhere to do a full call.
I own a lot of the issue so I’m hoping it hangs around longer. I don’t want the NLY F2F issues, at least until they have gone floating. 7.5% in the Roth is just fine.
I was surprised NLY didn’t call D earlier. They had much more reason then than they do now. I think they won’t consider it unless we have a stronger and more permanent recovery. The market may be pricing in that possibility but not much more.
B0b-in-DE…I’m in the exact same position. Would like to keep this one as long as possible. At this point staying far away from anything that floats. BOE trying to figure out how negative interest rates will work, but talking heads say FED would never go there.
I think this new issue is interesting…NEE is doing a 4 for 1 stock split –
NextEra Energy, Inc. 6.219% Equity Units Due 9/1/2023
Ticker Symbol: NXEGU CUSIP: 65339F739 Exchange: OTOTC
Security Type: Mandatory Convertible Security
QUANTUMONLINE.COM SECURITY DESCRIPTION: NextEra Energy, Inc. 6.219% Equity Units stated amount $50 per unit, initially consisting of Equity Units which include a stock purchase contract and a 5% undivided beneficial ownership interest in a NextEra Energy Capital Holdings, Inc Series L Debenture due September 1, 2025, issued in the principal amount of $1,000 by NextEra Energy Capital Holdings, Inc.
The stock purchase contract requires the holder to purchase for $50 a variable number of shares of NextEra Energy, Inc. (NYSE: NEE) common stock no later than 9/1/2023 and pays a contract adjustment rate of 5.71% per annum. The stock purchase settlement rate will be 0.1353 shares per unit if the then current market price is equal to or greater than $369.63 and 0.1691 shares per unit if the market price is equal to or less than $295.70. For market prices between those values the settlement rate will be $50 divided by the market value. Prior to the IPO of this security, the last reported sale price of the common stock on 9/15/2030 was $295.70 per share. The stock purchase contract may be settled any time at the holder’s option and the company will deliver 0.1353 shares of common stock for each purchase contract.
The Equity Units pay quarterly distributions of 5.71% ($3.1095 per annum or $0.777375 per quarter) will be paid quarterly on 3/1, 6/1, 9/1 & 12/1 to holders of record on the record date which is one business day prior to the payment date while the securities remain in book-entry form (NOTE: the ex-dividend date is one business day prior to the record date). Distributions paid by these securities are derived from interest paid on the underlying debt securities and therefore are NOT eligible for the preferential 15% to 20% tax rate on dividends and are also NOT eligible for the dividend received deduction for corporate holders.
The Series L Debenture will initially bear interest at a rate of 0.509% per year and is due 9/1/2025. The Series L Debentures are subject to reset and remarketing on the fifth business day preceding 03/01/2023 and ending on and including the ninth business day preceding 09/01/2023.
The holder has the right at any time to convert the Corporate Units to Treasury Units by the substitution of a specified zero-coupon U.S. Treasury security for the Notes and to later recreate Corporate Units. The Equity Units are unsecured and rank equally with the company’s other unsecured senior indebtedness. See the IPO prospectus for extensive additional information on the equity units and their mandatory conversion provisions by clicking on the ‘Link to IPO Prospectus’ provided below.
Stock
Exchange Cpn Rate
Ann Amt LiqPref
CallPrice Call Date
Matur Date Moodys/S&P
Dated Conversion
Shares@Price Distribution Dates 15%
Tax Rate
OTOTCn
OTOTCps
6.22%
$3.1095 $50.00
$50.00 Not Callable
9/01/2023 Baa1 BBB
9/16/2020 0.1353@$369.63+
0.1691@$295.70- 3/1, 6/1, 9/1 & 12/1
Click for MW ExDiv Date
Click for Yahoo ExDiv Date
No
Go to Parent Company’s Record (NEE)
IPO – 9/16/2020 – 40.00 Million Units @ $50/unit. Link to IPO Prospectus
Market Value $2.0 Billion
Click for current NXEGU price quote from the PINK SHEETS
Click for current NXEGU price quote from the NASDAQ
Thanks Mseni19, picked up a small position in NXEGU as a potential flip @ $47.65.
No problem 😉
Thanks to all replies- my inclination is to hang-on for now–got a little bounce today. Cash flow might be the hindrance- recovery could take quite a while.
Office Properties Income Trust (OPI) ….
I don’t recall this company ever being discussed here. They have 2 baby bonds yielding 6% or so and a BBB- rating.
Anyone out there love them?
Bob, OPI is a “Portnoy” aka RMR managed REIT. The Portnoy’s have a long history of NOT managing for investors interests. If there was an award for worst managed REIT, they would be in the running every year. These two baby bonds might be fine, but would suggest doing careful due diligence to see how they could turn out badly.
Bob
I certainly recognize and have concerns about the Portnoy factor here, but FWIW since these are baby bonds and not common shares, I have shares of both of these. Do I love em? Wouldn’t go that far but I think I’ll get paid on time for income and on time for call or maturity.
Have some OPINL. Love would be too strong a word. CY ~6%. YTC ~5.3%. IG, but seems to be much skepticism out there. IMO, OPINL, even at higher price, is better value than OPINI. Risk bucket holding.
Thanks for the insights all. The Portnoy connection had slipped my mind. They are right up there with the Garfunkles (sp?) at Amtrust.
It seems that CenturyLink has “rebranded” as Lumen. From their news release: “Effective with the opening of the trading day on Sept. 18, 2020, the company stock ticker will change from CTL to LUMN.”
They have a few baby bonds around under the QWest name. I didn’t see anything on changes, if any, to the BB ticker symbols.
Tim-
In the fixed-to-floating list, GS-J comes up as Citi C.
Don’t see it elsewhere as C.
News today…..Libor may go negative……..
Ok. Negative rates are usually a prediction of something very bad coming up.. Nasdaq at this level held up by only a handful of issues could be bad news..
Going neg- source?
Hello all,
Do you know data provider which has OHLC data for preferred stocks which have been called already. For example preferred stocks like ARE-C, BML-Q and so on, which are no longer tradable at this moment.
Vasil there are expensive services like Center for Research in Security Prices (U Chicago), Mergent Online, etc. If you have an academic connection some schools are subscribers through their library dept. If in the USA your public library may have newspaper archives that will work. There’s a chance a filer’s 10-K (or 10-Q) could list quarterly OHLC but that’s hit or miss and not precise.
Vasil – I tried replying earlier but don’t find my post so maybe something went wrong so I’m trying again… Just for kicks, I tried to see what happened if I typed AREpC into TDAmeritrades’s ThinkOrSwim platform and then tried to find historical Open/High/Low/Close information on the symbol for a few years prior to its call on April 13, 2012. It looked like I could get the info, HOWEVER, one would have to play around with refining the search periods in order to make the data large enough visually to be of much use… I bet it can be done, though…. Out of curiosity, why are you looking for info such as this?
Anyone seen anything on AFGE yet? Nothing on TDA!
AFGE not listed yet, should be friday
Tim-
Not sure what the problem might be, but the big gray boxes with the new issue info is showing white blank with a small ? mark in the center- if I’m using Safari. It works fine in Firefox. Started about a week ago- recent changes?
It seems to be ok today.
Spoke to soon- only some.
A number of folks on this site are interested in Century Link and they have renamed the company and seem to be seperating into three customer facing organizations. The article below from fierce telecom provides some details.
https://www.fiercetelecom.com/keyword/centurylink
I just bought APRDO, Alabama Power 4.64% Preferred QDI Cumulative, for $102.50.
This issue goes XD tomorrow, for $1.16.
It is immediately callable, but at a redemption price of $103.14.
Present ask is $103, below the redemption price.
Inspy, Thanks for the wake up. Somebody is selling to avoid divi. I bought 150 at $102.25. Love the small sub $4 tight illiquid float… In honor of your CA locale, A signed autographed poster of Jerry Brown and Linda Ronstadt is on its way! 🙂
Very timely gift, Grid.
The liner of my pet rabbit’s cage needs to be replaced !! Just perfect!! LOL
Inspy, I know I am getting old when I crack a joke with a 1970s reference to it, ha.
Hey Gridbird, Where can I find more info on these $100 Alabama preferreds? I noticed most do not have a maturity date. On Quantum, ALPVN was issued just a few months after I was born! LOL Will any of these ever get called? Thanks for any info you can give me.
Puck, the ones you see on Quantum are all the Alabama Power preferreds. I long ago cross referenced the redemption prices and such and they are correct. The float sizes of each are a little light on Quantum but that is largely irrelevant. Later tonight I will dig and see if I can find you more info. But they are pretty standard QDI perpetual, but callable old preferreds..
BTW, Alabama Power is largely credit independent from Southern having their own credit lines and very solid high IG debt ratings. I beleive AP had about $1.7 billion in net income last year which covers all preferred payments by a substantial margin.
Thanks Grid. I have mostly been into the $25 preferred for the last ten years or so, but just never looked much into the $100’s. Any insight or info will be greatly appreciated!
Puck, I have been mostly in the opposite with the old $100 and $50 preferreds issued from yesteryear. They key is not getting gouged on bad ask prices and “know the charts” before buying and the relative yields of these compared to the newer $25 sister issues.
For example when Inspy posted Monday ARPDO was laying there for the taking in $102 Range and going exD next day that was a RELATIVE steal. I rounded up all the cash and went on margin even to get my shares. Its always easy to sell something else being everything is up basically. The key was to jump while the iron was hot with no bid chase games to get them.
Here is your Alabama Power preferred link that covers all of the Alabama Power issues including the newer $25 issue.
Notice how the one $25 preferred issue dwarfs massively the entire series of the $100 preferreds combined.
https://www.sec.gov/Archives/edgar/data/3153/000009212220000017/x4b5-q42019.htm
What are your thoughts on Ameren Ill. old preferreds? I ran across these while on Quantum. Also found several more old utes, but looks like most of these are thinly traded. Thanks for all your help!
Puck, you just have to be patient with them. I am in and out of Ameren all the time and usually floating around always owning.. For example a couple weeks ago I bought 300 of UEPEN in low 87s and sold out at $88.50 ave. later. Today I reentered UEPEM only buying a token 100 shares at $96 ($105 redemption price). Its largely trading at its 5 year ave. See these old illiquids wont get punished on rate increases to the degree a liquid issue will. But you have to be patient.. Ameren issues have covered ratios via profits by over a 100 times. Most reits or typical liquid preferreds have coverage ratios in single digits and some below that.
Another one that if bought properly is IPWLK which I own a decent amount. Look at its 5 year price chart. Almost always stays in $100-$104 range. Probably the most stable trading perpetual preferred of all…Remember the March preferred collapse or December 2018 rout? I do, but IPWLK, UEPEM, and others of same ilk dont because it never happened to them. Just remember entry points matter…IPWLK is above redemption price though if that is of concern to you.
Remember, it’s Illinois. While it’s more of a risk to the common stocks of the related utes, I fully expect the state budget situation to be very negative on allowed capital return and allowed cost reimbursements. Other states are probably heading that way too absent directed stimulus.
Also 30 year bond is lower and that can impact ROE allowed going forward also. But none of this will really impact the preferreds. Ameren Ill last year had over a half billion in earnings and $350 million in net income. The AI preferreds cost them less than $3 million a year. Cut their earnings in half and the coverage ratio would still be better than 95% of any company I suspect. This is why the preferreds are so safe. It just isnt any meaningful amount of their capitalization.
The Union Electric preferreds have nothing to do with the Ameren Illinois ones though. But their coverage ratios are both about the same with Ameren Mo ones even a bit higher. But they are exposed to power generation risk being a triple vertical. Unlike AI which is just T&D.
Gridbird, Awesome info! I greatly appreciate your input and insight. I will start watching and researching these and take your advice.
Anytime, Puck. Just wish the discussion centered around 6.5% QDI utes, not 4-5% issues, lol…Speaking of I just out of boredom and previous frustration bought 100 shares of the venerable PNMXO at $103. I have had invisible “jumpers” take mine several times past couple months when I assumed they were bought by me. Goes exD end of month. Largely in 5 year trading range ave price…Not a path to instant wealth issue though.
Inspy, I went in and bought 300 more shares at $102.25. I will figure out later whether I want to keep all 450 for an extended time or not. I could tell with that ask sitting more was wanting to be dumped. Beats the hell out of a 4.125% bank issue 8 days a week.
Geez. I was down on Blue Bayou today, too. Seems it was fairly busy down there. Bought a little APRDP, but had to sell some UEPEP to do it. I think that’s called shuffling the deck chairs. Still, a penny here, a penny there, it adds up, don’t it, Grid? Well, don’t it? Grid? 😉
JMO
Camroc, You have graduated at the top of the class with a PHD in Nickel Stacking. Im very proud to have been part of your learning process! In fact you bettered me today. I didnt see the APRDP myself at all. Its on my list but I was too lazy to look…Good snag at $102! Now, Im more of the “When Will I Be Loved” than Blue Bayou type…Youtube, The above live tv version with Andrew Gold on back up vocals.
Nah, here it is..
https://youtu.be/rztAvYAxlVE
Grid,
Uh I guess I flipped today. But first, thanks for interacting with George Fisher,
not the Science Guy but maybe the Utilities guy on SA. In looking at some of your posts on SA I discovered GF. I think I like what he says. And he even mentions preferreds of Utes at times. So I’ve been reflecting on his recent columns on the Best Utilities. As a buy and hold investor, I’ve decided to build a position in DUK common. Used to hold lots of utility commons back in the 1980s but gradually switched to preferreds. To start buying some DUK I unloaded some shares in PFH and FRCLL that I have acquired in the last 30 days more or less. Had a profit on both sales – thankful for that. So am I a flipper now? Or did I just go through hazing?
Hey Razor, George seems like a reasonable guy to me. Anyone who recognizes the difference between the hold co and its subsidiaries and the subtle differences is alright in my book. Im just not a common stock jock. Im just not suited for it. But I did buy a few hundred share toe in Friday at $53.60 of my local gas ute Spire. So anything is possible….
Congrats also Tim.moore for your snag. I think you got in on the lows right before I read Inspys post and tossed my bid out.
Grid – Closing@52 today, SR is 40% off its high of 88. Today’s volume was X2 normal volume of 700,000 vs. 300,000.
SR-A is quietly trading practically at its high for the year.
Are we seeing tax loss selling, or are there unseen larger problems for SR ?
I ask because I would like to confirm that SR is a good value and not a ‘Value Trap’.
Thanks
Alan, I think its a general gas ute thing. SJI has been pummeled also while SJIJ stays above par. They have acted bad since an unrelated company got smoked on some gas futures trading. Not unusual for common to sag and preferred stay high. Many big banks are like that. With Spire at 5 year lows I started toeing in small at 53.60 and 52.60. Will add more if it drops more. In it for long term. Im not a common stock jock, my only common I own.
I’m surprised, given its still anemic yield. Feels a lot like me and my Texas bias toward energy. I hope your hometown bias doesn’t bite you.
JMO
Camroc, If it goes to zero, it just slightly dents my gains a bit from this year and I am no high net worth guy. Like I said I am no common stock jock. Besides they cant be totally broke, as I just electronically sent my monthly bill to them today. 50k on an Alabama Power preferred trade and hold yes…50k on a common stock of anything for me? Not so much, ha.
I got fills on 100 of APRDO at $102.05 and 50 of APRDP at $102 to go along with what I already owned previously of APRCP.
Good work, Tim. Very comfy feeling to buy below redemption price.
I suspect I’ll be keeping these for a while.
Thanks Inspy. These are going straight into the sock drawer.
Inspy, I knew better but was lazy and looked at Quantum which is usually wrong. Its still small but a slightly bigger 60,000 share float. About 8% of float was dumped today and 1100 more is sitting at $103.49.
Grid, I bought another 50 APDRO shares at $102.25 as well.
Now the ask is back above redemption value. Got it just in time.
Now, you said earlier that a seller was avoiding the dividend – why would anyone do that? I cannot think of any logical reason why someone would sell below redemption, just a day before XD ?
Inspy, this happens quite often actually. But I dont have a very robust list to watch and when I do sometimes I dont pay attention. But generally when “goosing returns for the divi”, I find the best time to buy is often a month out before it drifts up and then a day or two before exD as they avoid the possible short cap gain tax on divi. About two weeks out is the worst time to buy where I look. And thus as a seller that is the best time to dump or often the day it goes exD. Like today, I sold some EP-C today exD at $49.14 before it started to actually drift lower from exD. I kept some because I wasnt chasing the lower sell points.
I am wondering if this is a non-US investor or a trust, since a cap gain isn’t subject to withholding tax like a dividend for a non-US investor, and similarly, an income and principal split trust beneficiaries, one would get the dividend, while the other would get the short term gain.
But that is a ton of shares. A third possibility is an estate selling it because they don’t care about the dividend.
Justin, its anybodys guess on any individual sell. These old illiquids arent very prominent in most individual portfolios though, especially at the volume produced today. Another possible explanation is a fund manager selling. Many of these old utes are institutionalized in older preferred or income funds. They may have been eliminating a position as its usually an insignificant part of the portfolios. The fact that two of these relative dormate issues suddenly saw liquidity together may not be a coincidence.
Though the price received is a relative steal compared to credit quality and what IG banks are IPO’ing now. However, the real positive was the fact one could actually get a decent amount without waiting forever to try and snag, or having to chase up.
I was fortunate that with today’s purchase of APDRO, my average cost basis has been brought below the redemption price.
So now, it’s simply a hold until redemption. Or unless something unexpected arises and I need the cash bad.
Kudos to all who were able to get APDRO and/or APDRP today. Who knows, there may be more on sale tomorrow, I might pick up a few more.
Inspy, you may get your chance. Typically the sell size is hidden behind a 100 share lot. That 1100 share ask at $103.49 never budged. It may be part of the dump volume left to go. You wont get any competition from me. I bought too many at 450 shares at $102.25. Too many being I am $11,000 on margin now in one of my accounts. So my focus Wednesday (tomm is golf) will be figuring out what to sell to get off margin or shuffle money around.
I forgot, tomorrow is XD day. So APRDO should be adjusted down $1.16 before any further consideration.
Will check the ask tomorrow and if around $100.00, will add a few more shares to the portfolio.
Inspy & Grid – I managed to pick up 100 shares of APRDO yesterday @ $102.25. Thank you both! Your thoughts are very much appreciated … I constantly learn from you.
Dittos on BigBear’s comment, I also grabbed a piece of APRDO @ $102.25…its trading now with a $103 bid.
Looks like XD today did not result in any decline in price of APRDO. In fact, the price went up – now bid at $103 ( ask $106 )
Had a stink bid in at $100.98, it was a long shot, would have been great if it had hit.
Just to take a step back, at $103, you are getting a yield of 4.58% and paying a bit above the redemption price of $102.18 from a utility rated A3/BBB+. Personally, I think it’s a really good buy here.
Dick, you mentioned that APRDO has a redemption price of $102.18. QOL shows as $103.14.
Is QuantumOnline correct? If you could advise where you found the $102.18 redemption figure, would be much appreciated.
Dick, my bad, you were talking about APRDP. That has a Redemption price of $102.18 as you said.
I thought you were talking about APRDO, the sister issue. That is what I own, don’t have any APRDP, but will keep it on the watchlist from now on.
Sorry, I did mean APRDP, which I think should be a buy for a lot of people at $103.
It would be difficult for me to jump on APRDP today at $103 when yesterday at 102.00 its stripped price was about 101.02 (4.67% yield). We are now in the “XD to pay-day” interval. JMO
best regards, No. 12
Hi, Green-n-Gold. So nice to hear from you.
I have APRDP on my watchlist now, we’ll see if future opportunities arise and they sell off again. Buying below redemption value makes it a low risk investment, the real risk is rising interest rates, which honestly I feel is unlikely to happen anytime soon. Maybe in a few years, but not now.
Inspy, low ball trade of the day…Sold off 100 of APRDO at $105.80 after buying 450 shares Monday at $102.25, plus captured dividend.. Still wanting my 450 total, I took proceeds and bought 100 of APRDP at $103.10.
Very nice flip, Grid. Yeah, catching that APRDO dividend for 1 day of holding is great.
I was not watching APRDP today. Will watch tomorrow to see if seller is still around.
Brookfield Infrastructure has filed a new preferred that is expected to offer 5 1/8 to 5 1/4. BBB-, K-1 partnership. I am not interested.
RE: BIP preferred …..
To those that may be interested, this represents a first for BIP – a US$ denominated preferred unit that will trade on the NYSE. No OTC symbol required. All the other BIP prefs are C$ issues trading on the TSX, some with OTC symbols.
The issuer is a Bermudian partnership and as pointed out will issue a K-1. If K-1s scare you, you won’t be interested either. But if not, the best place to put this would be a qualified account (IRA, etc). Assuming the taxes are handled properly, you will have no withholding, and I can tell you there won’t be any UBTI. Brookfield entities are very tax savvy and understand the tax implications and structure their companies for best tax consequences for investors.
You should read the prospectus on the subject of taxes in any event. The risk of US tax treatment is raised in every Brookfield prospectus.
I own large amounts of another Brookfield Bermudian partnership in a Roth.
Got it Potter
Bot some SOJA on Friday at 25.39. Will break even if called next month. Otherwise, will have a nice 6.25% coupon for as long as possible.
TIM-
Your chart shows Ford’s F-C to be IG of BBB-
I’m not sure if that means it was IG at IPO and as QOnline shows, on 6-2020 it is just BB, and was downgraded, but you keep the original?
Or QO is incorrect?
thanks
Gary~
If one is considering this bond, I would suggest instead something like the Ford 7.75% June 2023 bonds. from Fidelity: Ba2/BB+ asking 109.40 for a yield of 6.922. The bonds you asked about yield 6.3, have a longer duration, and are callable to boot.
As good as QOL is, if ratings are important to you, one should never rely on QOL ratings without checking directly with the agencies directly because they are frequently outdated ratings… Registering for free @ S&P, then you can punch in the CUSIP number and find out F-C is currently BB+ and on negative credit watch.
And Retired I – I think you have a typo as Ford 7.75 = 2043 maturity… doesn’t negate your point, though.
Moody’s too.
And given my fat fingers, I like to copy the CUSIP from QOL to the Moody’s/S&P sites. Sometimes that doesn’t work, so I’ll punch in the “entity” name.
The Ford bond RetiredBroker is recommending appears to be CUSIP 345370BM1, 7.75% coupon matures 6/15/43. The bond was originally issued in 1993. When the GFC hit in 2008, 2009 and it appeared all Detroit carmakers were headed for BK, the bond traded down to 14.75, and this is on a 100 par bond. Ford did a tender and bought back about 2/3rds of $200 million outstanding. Quite a good buy for Ford considering they did NOT go BK, unlike GM/Chrysler. If you buy the bond, you are making a 23 year bet that Ford will survive and pay the bond at par. If you buy F-C which matures on 12/1/59, you are making a 29 year bet. Personally I would not bet on Ford surviving without BK for the next 23 years. If you buy either of these as a trade without the intention of holding to maturity, that is a different scenario
Yes, that is the bond I was suggesting…not necessarily as a buy recommendation…but as a better buy than F preferred C.
Yes, 2WR…thanks for pointing out the typo. Tex the 2nd has pinpointed the issue I was thinking of.
F-C seems to be a note- maybe higher up the stack, but in a BK not safe?
I wouldn’t but it any time soon- price would have to go way back – then as a trade. Hope Ford & others get away from BK country.
Thanks to all
How can one “Play” CTZ.
IMO, I believe it can climb back at least to 25.35 .
So, is it better to initiate purchases now at 25.08 and weather the call, or wait?
If my math is correct, buying 1,000 shs at 25.08 is akin to paying 25.20 on Tuesday for the remaining uncalled 400 shs.
Question is.. Wait or buy now?
It was ex-div today so that is why it dropped between yesterday and today. The shares have already been assigned if you held them. Buying it today you are free and clear of the call and will not get the dividend. I’m buying now it that matters.
I hope you are right.
I will buy some today.
I bought some CTZ today to replace the shares I own that they are redeeming.
CW, My 1000 shares were not sequestered yet at Fido.
Has anybody had theirs sequestered in Fido yet?
CTL CenturyLink is changing its name to Lumen, no info so far if symbol will change.
RNR-E looks like a decent cash alternative at 25.15-25.20. With 30 day notice for call , you get at least 25.15 if called. Current yield ~5.3%. Not bad for an IG these days. Should provide good protection against general increase in yields.
The selloff in SJIJ seems to be continuing. The ask is currently $25.15.
I’m buying. There’s some concern about their nat gas trading activity but looks to be a common stock issue if anything.
I got some at 25.12 as well. Though I’ve been buying more CTZ to back fill what portion was called. I picked up some at par today, so couple that with 6.5% and I’m pretty happy with that. I know it’s short-term, but 6.5% ain’t bad these days on a series that is actively being called.
SJIJ has always been more bouncey than most utes. It went to 24 not too long ago for no reason. I bought 400 more myself on golf course at 25.16.
My VER-F shares at tdAmeritrade are not showing any as segregated. Does that mean I am keeping all my shares?
Jay
Jay re: ver-f
mine were segregated about a week ago. unless you bought yours very recently you should have had the carved out shares show by now. if that’s not the case i’m guessing broker error and you should call them.
Jay –mine were segregated at Fido and eTrade a week or two ago. No sure how TD handles it but recent purchases would not be included in the partial call.
On a related note, does anyone know when the cutoff purchase date is for partial calls in general? Generally, it’s announced after hours in a press release. Is it the day of the PR, day after or the day the brokerage receives the official notice (which can be many days after the PR). For example, would buyers of WRB-B today get any shares called?
LI re: partial calls.
Should be an easy answer to the question but isn’t. Some companies announce calls but others don’t. Same with SEC filings.
The procedures for calls and partial calls can be found, in part, in the prospectus but to get the whole picture you need to find the indenture that governs the issue. The indenture, a trust type agreement between the issuer and a third party (bank, trust co), is almost always filed as an appendix to the final prospectus.
Buying into partial calls can be tricky as it can be difficult to know if called shares have been segregated. I’ve had times when I called the IR department of the issuer, my broker, etc. and not been able to get a clear answer. If you own the issue you will see the segregation in your account but if you don’t, be careful!
Maybe someone with a Bloomberg terminal has a better answer.
I had an order outstanding for an OTC traded preferred and someone else’s order got filled because it was 0.0001 above mine. My order was for 100 shares but less than 100 got filled. I remember there being some discussion on here about fractional penny orders but I can’t find the posts. Can someone please point me to where that was?
https://innovativeincomeinvestor.com/a-nice-common-stock-selloff/#comment-37862
Dick Whitman:
Just offhand, was your order ‘all or none’ ? That might account for the
other order being filled. Just thinking out loud.
Howard
No, it was not all or none.
I called Schwab and they told me they didn’t think I was due a fill but weren’t able to give anymore explanation. Would it be silly to file a FINRA compliant and ask them to look into it just to be sure? The FINRA form looks pretty straightforward.
Yes, I wouldn’t pursue a finra complaint. especially if you care about your relationship with your broker.
The price the order was filled was above your bid, not below it. So there was someone willing to buy at a better price than you so they get the fill. OTC is murky, reg nms protections don’t apply so even less of an argument on that front.
This discussion reminds me of alpha. Have not seen alpha post in awhile. I hope that alpha is ok. I try not to miss any post from several (quite a few actually). alpha is one of them.
A few weeks back I was wondering on Bob-in-DE but he resurfaced … sigh.
Definitely miss nomad.
Best regards, No. 12
Your broker sells order flow to a hedge fund like Citadel. Citadel knows you’re a willing buyer at X, so they have a dark pool order for X+0.00001 in the hope of reselling those shares to you at a higher price. Selling order flow is how your broker can afford zero commission trades. You get what you pay for.
So Gridbird,
Where does one put a sports comment on the III site? I want to say I was sad to learn of Lou Brock’s passing. My wife, then 5 y/o son and yours truly were at the Cardinals game in 1974 when Lou broke the record for stealing the most bases in major league baseball. He held that record for many years. Although I live in Northwest Arkansas now and graduated from the University of Arkansas, I grew up and lived and worked in the delta of Eastern Arkansas until moving to NWA when i was 42. We always loved our trips to St. Louis. And btw my now 51 yo son lives in KCMO and we love going there. Just saying. Now I’m a Cardinals, Royals and Chiefs fan along with being a Razorback fan.
Im with you Razor! Lou was my sports idol growing up. I always imitated his closed batting stance as a lefty. I lived near Columbia and only got to go to a game a year. So in 1979 I did the math a few months prior and ordered the tickets and guesstimated when he would get his 3000 hit. It worked out perfectly as he needed 2 that night to get to 3000. He got them in his two at bats and then left the game if memory serves. I got lucky there.
razorback, using this reply since you opened up this page about sports? to post a general comment. I read most of the archives over weekend waiting on NFL next week. there have been comments over the years on most assets I hold, in taxable and both roth and trad IRA’s. Mlp’s, Reits, dividend etf’s, common & prefffered stocks , Municipal bonds, BAB’s, CD’s, short term treasuries and fixed annuities. From comments from many it’s obvious that Tax strategies play a some part in many of your’all’s transactions. I find that asset “location” by type of account is perhaps more important than asset allocation. any “cpa’s” or tax folks out there that have any view or ideas on this topic. “Tim” sorry if this is out of line or off topic.
Commenting on tax strategies across type of investment portfolios seems well within the range of acceptable topics here Mike, and my understanding is the Sandbox is a catchall for those comments that don’t fit neatly elsewhere. Maybe Tim can open a 19th Hole section for sports talk!
https://www.fmsbonds.com/news-and-perspectives/how-to-fuel-the-nations-economic-recovery/
Mike,
I was unable to post to your last comment on the Cap One thread. So I will here. You asked about a possible resurrection of BABs. So the above link will take you to fairly recent comments by James Klotz of FMS Bonds re BABs and the current usefulness they could offer. I think a resumption of these instruments would be very beneficial as does James. And as far as Innovative Income Investing, BABs may have been the most innovative investment I’ve seen in my years of income investing. Tim, do we need to expand the boundaries of this site? Thanks
Razor great article I agree totally. I’ll ad these comments, I also help my 93 year old mother in assisted living, living in isolation since MARCH. Poa of her modest assets that my dad “Saved” for her needs “now”. Had cd’s ladder up to 3.5% but they”ll all mature in a year or two. sitting on $75m cash now with no places to earn anything, a bab program would help all conservative savers as well as seniors that pay there own way!! lets all get on washington and do the right thing.
Mike,
I am sorry to hear about your Mom’s situation during this pandemic. I have friends whose older relatives have been alone in assisted living during this time and it makes me very sad. My parents both died in 2003 so my wife’s mother is our only surviving “parent”. She’s in her 90s and lives with my wife’s sister. They are about a mile from us. I help my MIL with her investments which have been in preferreds and BABs. Fortunately she has a military pension (her husband was career Air Force) plus SS and some investment income, but she is by no means rich.
Razor, thanks for your thoughts, mom’s a real trooper she should be ok financially, savings, SS, small pension, with any luck. miss her “hugs”. Lost my dad 8 years ago at 88, we fished at least once a week for over 30 years. learned to be a saver from him, he was my hero, take care of your family. Mike
Bob-In-Delaware: If you are still interested in the Gladstone Land 6% preferred shares, there is actually a back-door way to buy the shares if you don’t mind spending some time and opening up another account. There is a website called MY IPO that does some small offerings for companies. Many of these are quite risky, but turns out they do offer the Gladstone Land issues. I already have too many accounts, so I’m not going to open another one – although I would have been interested if the issue was traded in the market. MY IPO appears to be a division of Cambria Capital and they list some smaller issues that are not available to the general public. However, there are certain restrictions such as minimum amounts, holding period and most of the securities to do appear to be liquid and need to be held for a period of time. Here is a link to the Gladstone Land offering once you click on the icon called “View Details”:
https://www.myipo.com/offers
Thank you lou and I will definitely look into it.
David Gladstone did a podcast with Meb Faber a year or more ago and he is definitely an interesting fellow. A very good salesman.
Lou – I had a real good look at LAND-C and decided against. The bigger issue for me is that I would want this to go in a Roth, which means I would have to transfer an account out of Vanguard to Folio, liquidate the holdings to raise cash, then buy the LAND. Too much for what would be $25k at the most.
For the benefit of others, I would also point out the somewhat (very!) unusual plan of distribution. This is essentially a private offering. Until it is listed, there is zero market in which to sell the issue save a once a year sale to the company at a deeply discounted price.
I could have lived with that except that the prospects for it ever being listed are unclear. The company will not look to list until all shares are sold, and that’s $500 million worth. The last issue (“B”) was $150 million and took 2 years to sell out and still hasn’t been listed! it is quite possible the issue will become callable before it ever gets listed anywhere, including OTC.
Assuming the B shares becomes available at some time I would consider it for a Roth purchase. It’s too bad that LANDP is going away.
Thanks again Lou for the lead.
CLDT Insider buy is compelling.
Insiders have bought almost $ 700,000 of the stock these last few days.
This may portend better times for the hospitality industry.
Am I missing anything on CTZ? You can buy well under stripped par and won’t get any of your shares called at 25.41 on 9/15 as redeemed shares have already been segregated at broker accounts. So, you’re getting a juicy 6.625% coupon with very little risk as the remaining CTZ should be called within the next few months. Seems like the equivalent of getting VER-F under stripped par. I loaded up below stripped par averaging down continually from 25.33 a few days ago all the way to 25.18 today and can’t figure out why the market keeps giving me this gift. 62% of my shares bought when I first started will get called at 25.41 on 9/15 but now none will.
But, Landlord, isn’t there nothing to strip? With x-div having already happened you’re not accruing anything until starting 9/15, right?
I see ctz x on 9/11, I’ve been buying too
2WR, ex-div is 9/11 and pay date is 9/15. I’m 99% sure that shares bought today will not be redeemed but worst case is that you buy today at 25.20 and 62% of shares are redeemed at 25.41 on 9/15.
Ooops! you’re right…….. I thought I saw 9/1. So now my eyesight is disappearing as fast as my brain cells.
There may be a concern that they’ll want to call the CTAA 7% when eligible on Feb 1/2021 instead of prioritizing the calling of the rest of CTZ, which may mean having to hold on to CTZ a little longer than expected. But I agree that CTZ looks pretty good here and bought some on Friday.
LANDP …..
Am I missing something? I get YTM at 1.21%. Other than it’s better than a 13-month CD why would anyone hold at this yield? I can squeeze 3-4% out of past call, pinned to par issues.
Also, does anyone have an update on the mysterious LAND Series C? I can’t see where this can be bought or even find a CUSIP. Gladstone is one strange fellow when it comes to sales and listings of securities.
Bob, this came directly from the horses mouth when I inquired a few months ago…
Thank you for contacting Gladstone Land Corporation and your inquiry is appreciated. All purchases of the LAND Series C preferred shares must be made through a participating broker dealer or registered investment adviser. Please contact your broker dealer or registered investment adviser directly to see if you are eligible.
Bob & Grid – I received following reply from Director of Gladstone Management & Securities on April 16, 2020 after first inquiring in late February:
“Thanks for following up. We are working on building our network of participating broker dealers and RIAs, and currently have selling agreements in place with the following partners: American Trust Investment Services, Capital Investment Group, Center Street Securities, Kalos Capital, SCF Investment Advisors, SCF Securities, and The Strategic Financial Alliance (SFA). I expect this group to expand in the coming weeks.”
I let it go at that point due to my work schedule and not wanting to pay the freight with any of those outfits. It’s still in the back of my mind though.
Bean
Hi Bean. You are confirming my suspicions. I called Vanguard and they said they dont participate in these offerings. TD was unaware of it. I knew where this was going quickly and am not dealing with yet another outfit to buy a limited amount.
It’s not exactly the All-American team. At this rate it will take him years to close the offering and list it. I do not see the advantage of this method.
But thanks for the info.
Bob, that is their intent…It is a when needed ATM offerring. They limit availability of shares issued monthly based on their need. They intend it to take years to close.
If you are, Bob, I am too… Sold what I had 2 coupons ago at 26.35.
I sold all of mine (LANDP) 3-4 weeks ago as well Bob. It didnt take long, and I was surprised that my buyers were happy to take the 1% YTM. I was then happy to re-invest the funds.
Regarding LANDP, what is the likelihood that they will call?
Oh, nevermind. I see that it is past call, but matures 9/30/2021. I’m still new enough here though, that I have another question.
Is it mandatory that a company redeem it’s shares on the maturity date, or are there instances where they will leave them outstanding?
bankruptcy is one
Mark – if there are alternatives to redemption, and there occasionally are such as an extension possibility, they’ll be spelled out in a case by case basis within each prospectus…. This is far more possible on a preferred than a note. And of course, there is what mcg suggests as well, the draconian effect of BK
The NHL Stanley Cup semi-finals start today (8pm est) and my adopted team the Las Vegas Golden Knights are playing the Dallas Stars for the Western Conference Title. The winner will face off against either the NY Islanders or the Tampa Bay Lightning in the finals. Good luck to the Stars who upset the Colorado Avalanche in their quarter final series, but my money is on Vegas to go all the way!
I gotta go against ya, CW. In February I put $100 on Stars and $100 on Bruins to win the Cup. Bruins are toast, but my 15-1 $100 Stars bet is still alive. Even if it wins it wont be like my 50-1 $200 bet on Blues to win the Cup that cashed bigly.
For the past few years, I have used CBS Marketwatch as my home page. Recently, they have installed a paywall, stopped me from reading anything on their site unless I subscribe and pay.
Have any of you folks encountered this as well? It is disappointing, but I can find other financial news sites.
Inspbudget :
‘Seeking Alpha’ has a good deal of financial news coverage.
Be wary of articles by authors, which are separate
from genuine news.
Also, contact your library system to see what financial
products they link to ( for free ) on the internet.
Lastly, do a search for the ‘ list of best financial news
sites’ and many will display.
howard
Howard, yes, am familiar with SA. And cognizant of the many authors pushing their own agenda and pushing their subscription products.
I get most of my info from reading the comments rather than the articles themselves.
Thanks for the suggestion.
inspbudget,
Any suggestions on financial news let us know. Yahoo entices you and then redirects you to another website that tries to sell you a subscription to finish reading. I think the days of free are shrinking. SA news just seems condensed from other sources and I used to read the comments for additional information but so many people with political comments or no intelligent input except its going higher !
Reminds me too much of that Canadian website Stockhouse.
Inspbudget:
Prior to offering my initial answer to your comment, I did just what I suggested you might do. I used an internet search engine and keyed in ‘ list of best financial news sites’ and many were displayed. I didn’t open any up, but there were multiple choices. ( So, I do not know how many were worthwhile and sure some were pay-for sites).
Give it a try when you get a chance.
Thanks, howard
Tim
Have you considered distinguishing the price changes in prefered’s between the majority of issues that trade above their liquidation or stated value and those that trade at a discount? Given the yield to call problem I wouldn’t expect issues that trade at a premium to increase very much. In the last few weeks I have noticed that the prices for some of the discounted issues have been increasing 5 to 10 percent to approach stated value.
Potter that was the game I started easing into several months back. Selling the big winners going over par and eating the less stated yield and buying ones below par, or non callable… That is why I loaded back up on LXP-C several months ago for example when it was still over 6% and basically IG. With no call restraints it is free to climb up to true market yield without an anchoring effect that an issue with a call date would have.
Compare the RPTD trading at 38 percent discount to Site Centers SITC PK at 25.
Sorry RPTD at 38 vs SITC PK at 25
Hi Potter–I consider a lot of things but realistically at this time I can do little. I want to do my website full time instead of maybe 1 hour per day–but my ‘real job’ keeps me working 24/7 right now–I’m just about 67 so the length of time I will kept working my real job is limited (of course I said that 2 years ago also).
What you are noticing is that over time the discounted issues will gain larger amounts as investor roll down into lower quality–I have seen this in the past–relatively predictable.
Tim
It wasn’t meant as criticism. I am very grateful for the website as it provides the single best shopping list on the Net.
I grant your and GB’s point about trading down in quality to seek yield. I resemble that remark. I also wonder if some money managers aren’t willing to accept minimal yield to call’s to dress up their portfolios with good named issues with attractive nominal yields. In further pursuit of the “Loser’s Game?”
Hi Potter-no offense taken at all. Lots of good ideas (yours and others) out there and hope I have time to address before too long.
Pimco Income Fund ($122B). has adjusted their monthly payout
down 1.5% to 3.8%. Where is all this headed?
In looking at Tims CEF page and those income funds have redemption dates and amounts that are considerably higher than the current price. Even if their dividend rate goes down will the redemption price be at risk? Or, will those fund companies back up the redemption price even though the portfolio may have a lesser value.
PONAX is a multi-sector bond fund, not a CEF. While I also have CEF’s,
I do not recognize any of those listed on that page and am not familiar
with that type of CEF.
The target redemption amount on the common units of a target date closed end fund means nothing. It is only the original issue price less selling commission. The target has zero baring on what you will actually get when a fund winds up.
Not the case with term dated preferred.
bob-
Hmmm…
You mention ‘target’ CEFs. I’ve seen a couple SA articles on term target CEFs- they do seem to be saying they are supposed to payout the original NAV & that the distribution is likely to decrease as it approaches the term. With just a term CEF, they pay the ending NAV.
EX: IHIT The Fund’s investment objectives are to provide a high level of current income and to return $9.835 per share (the original net asset value (“NAV”) per common share before deducting offering costs of $0.02 per share) to holders of common shares on or about December 1, 2023 (the “Termination Date”). The objective to return the Fund’s original NAV is not an express or implied guarantee obligation of the Fund or any other entity.
Nuveen has info-
https://www.nuveen.com/en-us/thinking/closed-end-funds/closed-end-funds-structures
Gary –
RE: term dated CEFs. I have written volumes on the subject both here and at Shrinking Alpha. I have neither the time nor inclination to do a repeat here but this is it in 1 sentence: Don’t buy term dated CEFs, and if you’re going to do it anyway be sure to get rid of them at least 2 years before the redemption date. It’s gimmicky, retail buyers eat them up, but they are still inferior to the alternatives. Nuveen is the big sponsor of them so consider anything they say as tainted.
When a term dated CEF is formed it is sold (for example) at $10.00 per share, which the sponsor then turns around and buys $9.50 worth of assets (the rest goes to commissions and fees). The “objective” of the fund then becomes to pay wildly high distributions and then return the $9.50 at termination.
The 9.50 may end up being 6.00, or 5.00, or 12.00, or any other figure, but it will never be 9.50 except by total coincidence. Almost always, the funds return much less than their stated objective. Only then does the investor figure out that their life of fund return, assuming they held if from birth to death, was poor.
If the goal is to manage duration risk, instead buy a well managed fund with a duration about that you are seeking to achieve. One can even ladder different duration funds in this fashion just as one ladders individual bonds.
In June Retired Investor wrote an SA article on EHT (https://seekingalpha.com/article/4352871-eht-provides-high-yield-bond-exposure-ends-in-2021) and in it, he differentiated between a “term bond” CEF and a “target term” CEF…. Have you ever heard of this differentiation? He quoted from EHT’s prospectus – “To limit the Trust’s exposure to interest rate and reinvestment risk, the longest maturity of any Trust holding will be not more than six months beyond the Termination Date.” If that is part of the definition of a “target term” fund, which is what EHT is, then paying attention to which type of stated maturity CEF you buy becomes important if you wish to have a fund that acts more closely like an actual bond ….. Obviously, the likelihood of being able to return the stated target amount increases greatly if a “target term” fund takes interest rate risk essentially out of the equation, right? thus limiting the anticipated amount of variation in return of principal moreso than you’re describing… Personally I’ve never owned a term fund or a target fund to maturity so I have no personal experience on seeing what actually happens as far as final payout amounts go and in fact I did essentially follow your strategy with EHT by having sold out in June ’19. I’ve figured the sponsor’s name is at stake when they state a targeted return amount, so they do their best to at least make an effort to make that happen in a “target term” fund but I have no evidence to either prove or disprove that. Is your experience different??? Also obviously, payouts are not going to be constant but declining during the term as bonds mature and are not replaced the closer the fund gets to “maturity.”
bob-
Ok, nothing was said about the merit of buying either type- target or none.
It seemed that you mentioned target, and also in the reply (3d para) it sounds like you are talking about those without a target.
Nuveen also says that it might not meet the objective- without reasons.
But, no need to labor further.
thanks
The yield to call on most “quality” issues seems pitiful if it’s even positive. But I just noticed that B of A, ATT and Goldman all have FF issues with floor rates of 3 or 4%. These don’t trade at a premium and therefore the relevant yields are in the 3 to 4.5% range. Without reading the various prospecti, does anyone know why this condition exists? Are there conditions or limitations to the floor rates?
Big bucks to be made (still) in WPG !! At least per more hawking of it by Rida.
Sheesh.
Is he still backing up the truck on CBL?
Gary, I read today a poster said it would have to jump 1100% to get the price back to where Rida Moron first recommended it, ha. I wouldnt read too throughly to find in the article where they admitted they have been wrong. 🙂
I recently received an invitation to subscribe to the Value Line investment research newsletter. Value Line is a name I recognize from the past, but am not familiar with their current approach to the markets. Are there any Value Line subscribers out there, and if so how would you rate their research?
Citadel West:
I suggest you locate a library with the ;Value Line; PAPER publication included in their reference section.;
that is, if one exists in your locale.
I used to read it in our local library, OR, they may have the online issues available at no cost. Our library system has various online publications available that would be at sizable cost if purchased as an individual. I hope this helps you.
Thanks for your response. I used to read Value Line research at the library also…back before the world wide web existed. Nowadays there’s not too much demand for that sort of thing, even if the libraries in my area were open. I’m really more interested to know if anyone on this forum reads Value Line currently, and what they think of the content.
Citadel West
Re: Value Line
Yes, I understood your initial point.
I just accessed my library system online.
Under ‘research’, I can access Value Line, but of course it is internal and I cannot send a link.
So, suggest you give it a try that way, or call your library system to see if they make it available online.
I don’t use that feature, but our library has a large number of financial products available online.
Hopefully others will respond to your specific question.
Howard
I had the pleasure of meeting Warren Buffett in his office once about 10 years ago. I recall being amazed at the modesty of the space and the fact he had no computer.
On the floor next to his desk were a couple editions of Value Line open and stacked up on one another.
That is pretty cool Bill.
Did he have a rolodex on his desk or a typewriter? 🙂
He is definitely one of a kind going down in the history books, and glad you got to meet him.
Citadel,
I dropped my one-year introductory subscription to VL back in the 80’s and haven’t been tempted to re-up ever since (yes, I’m still on their mailing list). In my experience their approach to security analysis is the same as it has been since the 1930’s when they introduced “momentum” into their ranking system. If I couldn’t get it for free thru my library system, I wouldn’t bother. You may know that there are a number of mutual funds actively managed using VL methodology. I’m not familiar with their performance, perhaps someone who has access to Morningstar can comment.
Here comes the inflation that Jay still can’t see:
https://fredblog.stlouisfed.org/2020/08/supply-and-demand-shocks-to-food-prices-fred-data-a-la-carte/
Disclosure: long ADM, CHS, HRL, TSN.
Ahl-d and ahl-e down more than similar issues in last few days. Any news I missed? Rebalancing of EFT or a rating downgrade?
Potential insurance claims from a Category 4 hurricane.
It probably wouldn’t explain the dip this week, so this is really just an FYI, but earlier this year both S&P and Moodys downgraded the three AHL preferreds from IG to their highest non-IG ratings (Ba1/BB+). I informed QOL and they just udpated their site.
Update on RPT-D:
The preferred has finally decoupled from the common. They were moving in lockstep, which makes little sense with the convertible feature being so far out of the money. The common should trade on business prospects, which remain murky. The preferred should trade on the dividend which I consider safe. The October first preferred dividend has been declared. I continue to hold the preferred and think it is worth mid forties…with a high dividend while I wait.
Speculative? Of course. But I like the risk/reward.
I only recently came across this security. I have a limit order in for 35.99 and its moved away from me. I think, I will stay on my price and hope for some bad news. Many REITs I follow seem to move down together. I agree that the risk reward appears compelling. I have to admit, I wonder if I am underappreciating the risk when I compare yield to peers.
Silver spreads…
Without Nomad posting, I’ve paid less attention to precious metals but know they’ve been running. I’ve bought a few coins and so I’m on a mailing list. I received an invitation to a sale… Silver Eagles for just $6.49 over spot. That’s right… unlimited number available at ONLY ~24% over spot. I shake my head as its just another sign that something is amiss.
yup
better prices for bullion
to pay a premium for coined money is silly
PickleNick,
I owned it this way before and your correct on the spread. I tried to buy some 50oz bars earlier in the year when it dropped to 16,00 or so but the dealers were not willing to take a bath on their inventory or maybe the demand was too high but both Kitco and JM said sold out on their websites.
Precious metals has been a big winner this year. The median PM stock I track is up 42.2% without dividends compared to -2.6% for preferreds, -1.8% for baby bonds. And they might just be like the FAANG’s and go up beyond rationality. I heard the stat that Tesla is valued at $1 million per car sold, compared to $10k per car for Ford/GM.
We do have a small allocation to PM’s in most accounts. It has been a drag most years until this year. While they are up compared to the original cost, I am not too sure they have beaten preferreds held over the same period.
Bottom line is who knows, they might go up another 42% in the next year.
Since this is the sandbox and a largely fixed income forum, maybe someone will find this something to consider. Does anyone have a perspective on what will happen to floating rate bonds and preferred that float based on LIBOR once it goes away? I know more recently issued securities have used language that switches to another index with similar characteristics, but it seems older securities have not always considered this. Would an investor in such a security have a reasonable expectation that the security needs to be called if no language to a new index exists? Would the issuer simply change the indenture to define a new similar floating index? My basic premise is to buy some non callable floating rate securities that are well below par and hope that they get called after LIBOR disappears. Does anyone think this strategy is worth exploring? I have read that LIBOR is going away at the end of 2021 so I have a few months to try and identify a few securities that might benefit from this issue and get LTCG treatment.
Here a link to a C&S white paper on the subject. My take they won’t call the floaters, just move to the new standard (likely SOFR).
https://assets.cohenandsteers.com/assets/content/resources/insight/Preferred_Securities_in_a_Post-LIBOR_World_MP880.pdf
CW
I regret that I posted the video format of the Cohen & Steers discussion on LIBOR. You had already posted that info in print format and I’m sorry
I “doubled up” on the same thing.
No regrets RB…that video link was great and there’s other videos available on that site as well. In fact, your link was the one I went looking for before I found the white paper.
Thanks for the link, that is pretty much exactly what I wanted to consider. I don’t think I have given up on the topic and will try and see if I can find something with some potential return. However, after reading this report it is doubtful that I will find anything with much potential if the pros are writing about it. Thanks for the information.
XYZ, I have dug through quite a few preferreds over the years including these adjustables. My personal experience is I have not encountered one (even considerably older ones) that does not have one if not multiple “back up” provisions. None which offered a redemption that I encountered. Every issue has a prospectus and should be evaluated before pressing with this thesis would be my suggestion.
Citi management did some non binding “musings” when asked about potential of Libor going negative and its impact on issues. They suggested they may do something to protect the intentional integrity of the issue, but offered no solutions. And of course this was in direct reference to “going negative” not Libor disappearing.
This might be a bit long winded, but there will be a question at the end. I recently bought Amtrust preferred and read a long thread over on SA. In that thread, I think you mentioned the former PNX BB. In trying to learn a bit more about that security, I eventually found the Nassau investor website. There I learned that about the changes to the bond indenture and that they provide financial data if you are a security holder. Back to Amtrust, I started to try and learn if the Amtrust indenture should ensure access to financial data. In searching for indenture opinions/analysis I found some conversation that has bounced around in the back of my mind for a couple of days that led me to post this topic. I thought a little about expanding some research to heavily discounted securities that might have fallen in credit quality (as I love the google sheets that I came across here). Seems this might be a difficult topic to explore if the pros have researched it already. Now my somewhat unrelated questions, for PNX bb have you taken Nassau up to check out their financial performance? Do they give GAAP financial statements or statutory insurance reports? Do you kind of get the impression that they have equity, earning and/or a plan to pay off the bonds? Do you or anyone know or think that Amtrust is obliged to make financial data available to bond and preferred security holders based on bond indentures? I requested data from Amtrust via email and so far radio silence. Thanks everyone, I am finding this a great forum and hope I can contribute to the community in some small way.
XYX, Ok, sorry you threw me off as that is the wrong ticker symbol. You are referring to the old PFX issue. Yes, one can go through a portal and register. I have someone else look who owns as I aint messing with it. Accounting and true financial health of a company especially with a zillion moving parts from weaker insurers are beyond most peoples comprehension. If 100 people think they know something about interpreting financials 99 really dont. That is why SA is wrong all the time dumpster diving. And I am part of that 99 but at least I am smart enough to know I am. This is a small high risk bucket issue I have owned for years and its maturity or bust for me..And I ignore it…
Amtrust is still in litigation over delisting mess. They have or will eventually have a portal set up where legitimate shareholders can access. But largely it dont mean much for most…For two reasons, the above and they just paid a fine for shady accounting practices, ha! The proof is in the pudding assessment of financial health of Amtrust is watching the quarterly financial statements of Enstar. As Enstar is an equity owner of Amtrust and receives quarterly dividends from Amtrust which show up in their filings. Preferreds get paid before Enstar. If Enstar starts getting their Amtrust divis cut or eliminated, you know you are next. 🙂
Might need another place on this site for “high risk” or… maybe “dumpster diving?” Everyone is reaching for yield, and there are many posts on this site where people are asking, “what do you think about x?” Many of these are really high risk. I get that since we are passing out free money, and it seems new bonds are being created in the 2% range for some companies where I thought it was impossible. Everyone I know is starting to buy a cabin (million $ cabins), and ones with rental property are grabbing more. I feel this is the mortgage crisis all over again because of the cheap mortgage rates. What i need to figure out is how many years it took for the mortgage crisis to blow up.
Or… maybe i just know people that are rich… and it is simply the rich getting richer.
Mr. Conservative, The trouble is yesterdays Investment grade yield is todays high yield chase! But…I take my medicine and stay within my long held boundaries. It gets tempting but thankfully I always sober up quickly.
I actually havent done much past week or two. Bought a slug of CNTHO at $52.75, some IPWLK at $103.75 (that I sold at $105 and $106.50 a few weeks prior and essentially bought them back) and a last tranche of GJH at $10.18. That has just about been it, and just hanging on to what I own. So I am not reaching out on the risk scale myself.
Mr Conservative–everyone I know is getting richer by the minute as they save tons of cash not being spent on vacations–school tuition etc. The haves are getting more–the have nots are bleeding.
Based on how many poor investments that I have made, I am sure that I am in the 99 percent as well. However, I do feel obliged to try and understand how the company operates. I have invested in quite a few companies with stale or next to no info. But I still want something to keep me around. I kind of feel like if I don’t get access to info, they don’t see me as a stakeholder (which makes me feel like they are just trying to get rid of me or anyone like me, which almost never ends well). I have read that unless I am forced to pay a premium for a bond desk to make a call for PFX, I just wanted to know a bit about their operations. On Amtrust, I followed since prior to delisting but never got excited enough to pull the trigger. I have read each Enstar 10Q searching for Amtrust and get their alerts. I was planning to buy the bonds, but when Enstar filed their last 10Q it mentioned they were part of an entity that was buying pref. That changed my mind and I decided to take the riskier position in the preferred. If they are buying it, so am I. I have be following comments on the lawsuit and will be interested in the outcome which could have more news soon. Personally, I am fine if they trade on pinks I just want the occasional report to confirm how they perform.
8675309.xyz, I bought PFX just before it delisted. I look at the financial statements, but they are incomprehensible to me. Mostly I look for clues. For example, they have an outstanding buyback program on these and they have periodically bought some back. Normally, you would view that as a positive sign that the company has liquidity and the expectation of future solvency. Given the trading prices however, Mr. Market is clearly unimpressed by that logic. I’m going to sit on what I own, but don’t have any compelling reason to buy more.
Thank you KarmaChameleon, that is honestly all I would need to move forward with a buy. Can I ask, how much they have bought back? At recent prices, I would think they would buy aggressively if they have the funds. Thanks again.
From August 2016 through March 2020, maybe around 10% of the bonds have been repurchased. Since they’ve traded at less than 75 that whole time and have been under 60 quite a bit, it hasn’t been a very aggressive repurchase program.
6/30 report is not out yet and seems to be later than usual. Typically not a great sign. Will be interesting to see buyback activity in Q2.
Glad Karma came up with the numbers as people “experts” have said for YEARS on SA they are buying up the debt. That is largely fairytale info as Karma stated. This is a weak capitalized company with legacy issues. Dont think for a second there is some kind of “delisted discount” as that isnt true.
Fitch rates the debt old PFX bond B as of this year, and it really hasnt got any better past few years including a capital infusion a while back. Its an is what it is investment to me. Im not buying anymore and not selling.
https://www.fitchratings.com/research/insurance/fitch-affirms-nassau-financial-group-ratings-outlook-to-negative-on-coronavirus-risk-22-04-2020
Gridbird, the curious thing all along has been that the yield of PFX has never been in line with the credit ratings. For example, the average B-rated bond has a yield of 5.5% right now, while PFX is over 15%. Even “CCC & Lower” has an average of 12% (https://fred.stlouisfed.org/series/BAMLH0A3HYCEY). So there is a heck of a discount on this bond compared to supposedly comparable credits, but I don’t know why.
Karma, I suspect because of its poor recovery status in default. Holding co debt of insurers especially from private ones will be a bit mysterious also. The actual subsidiary claims paying arms of this outfit arent exactly a bulwark of strength either compared to others.
I personally like the relative risk reward of the income it generates. But you, like me have seen the price never show that. In fact like me, I suspect the price is lower now. I bought after it delisted. Im above water in terms of income received over price loss. But I suspect past 3 years or so this is the worst investment I have ever bought. But I will know the answer for sure in about a dozen years, ha!
Grid, “adjustables” has become a four letter word in my book. Several years ago it seemed smart to buy individual corporate bonds tied to libor or US treasury. It worked OK until the year when all rates have collapsed. I have many bonds where the interest paid has dropped in half or more. . . So there can be a downside adjustables aka floaters. .
To me, the real issue is that pricing of adjustable has not dropped inline with the coupon at which issues are going to reset. The market is partly blind to it. Unless rates go back up there will be a lot of price drops when the reset rates become a reality.
For example, there is a State Street issue that would drop by 285 basis points if it reset today, from a 5.63% coupon to 2.78%. The issue sells above redemption price so the adjustment is hardly baked into the price.
Exactly same thing happened in Canada with resets.
Tex and Bob, I monitor often, but for me, I only own one adjustable or reset and its presently WCC-A. I do evaluate often. But have largely been out of those for a long time and it paid off. But via a bit more price appreciation of fixed perpetuals or drop off of others, I am willing to change if necessary.
I have largely sold out of my US F2F and resets, especially those that were issued some time ago. When they drop in price by 30-40% I will buy them back. I like floaters and resets when they are priced properly.
There are a handful of recently issued resets that were issued off of very low 5yt and 10yT that I bought heavily. Huntington Bank 446150AT1 is 5.63% to 10yT +495 bps that was issued a few months ago and has traded up to 12% above issue price. Wish I had bought ten times as much.
https://www.cohenandsteers.com/insights/read/preferred-securities-in-a-post-libor-world-video
This link should take you to a discussion of preferred securities in a post LIBOR world in video format presented by Cohen and Steers earlier in August 2020.
xzy – can’t help but suggest while in a silly mode that your odds of finding many good candidates to work for a strategy of “buying some NON CALLABLE (emphasis added) floating rate securities that are well below par and hope that they get CALLED” are going to be very low…. haha
2whiteroses, when you put it like that I do sound a bit crazy. I still think we will see litigation on securities that don’t expressly identify a backup index to determine a floating rate. I think the Hedge Funds will see the litigation as a free call option. I would like to ride along on their coattails if I could figure out where the call option has the most value.
What do you guys think of AGO? They are traded at a good premium to par, and these are very old issues, the first call has passed long ago. Do you think they are likely to be called?
I like the AGO issues for safety, provided you can buy on dips to give a manageable yield to worst risk.
I have a big enough position of them with an average below par. The only thing I’m afraid of is that they can be called (in general, it is very strange that this has not happened until now). There are now about 1 1/2 years of dividends in the price, would not want to lose them )))
headquartered in Hamilton, Bermuda
this gives me pause……….. if things get really bad do you think you would ever get the money back? Just my opinion.
But the last dip to par this past march – yeah I was foaming at the mouth for IG 7% – but I flinched – added to DUK.A instead
That’s true PickleNick, but don’t many companies headquarter in the islands for tax benefits? Of course, if things get really bad many U.S. companies will go bankrupt causing losses for investors.
The credit rating Baa2/A still swings it for me. But I only have a tiny position in AGO-E at $25.38.
Are any foreign taxes withheld on dividends? Do you get a 1099? Thanks.
Looking for help in total clarification on a bond…Am I correct to assume this means if they redeem bond early, they will in turn basically pay all the interest owed up to maturity anyways?
The Notes may be redeemed, in whole or in part, at our option at any time or from time to time prior to maturity. The redemption price for the Notes to be redeemed on any redemption date will be equal to the greater of the following amounts:
•
•
100% of the principal amount of the Notes being redeemed on the redemption date; or
the sum of the present values of the remaining scheduled payments of principal and interest on the Notes being redeemed on that redemption date (not including any portion of any payments of interest accrued to the redemption date) discounted to the redemption date on a semi-annual basis at the Treasury Rate (as defined below), …..
Ahah! A topic I can help you with, Grid.. Yay. What you’re describing is commonly called a “make whole” provision…. It’s meant to make the consequences so draconian under normal circumstances that the bond could be considered non-callable, however, also allow the issuer to call if need be for usually other reasons than economic… It is being used now more frequently by issuers primarily because rates are so much lower than they ever expected..
The math is this – the prospectus will normally define that the calculated rate as being X over the comparable Treas, with comparable meaning comparable to the number of months left to maturity on the bond being called… So let’s say you’re talking about a bond due in exactly 2 years that is now being called under a make whole provision… The provision says it’ll use a formula that’s based on US Treas PLUS, say, 50 basis. So that means if the bond was called today, it would be called at a price as if the bond was yielding .16% + .50 = .66/%. So you would be called out of your bonds at a price equivalent to what you’d get if you sold it in the market at .66% YTM. . Make sense? It just happened to me on a QVC 5.125% bond due 7/2/22.. QRTEA had a tender to buy at 108 1/4 which proved the math, then subsequently announced the make whole call for all that weren’t tendered. Given the call would be 30 days later, assuming no change in US Treas, you would get slightly under 108 on the call, but of course, you would have accrued interest at 5.125% for the month so all in all it would have been a wash.
Grid, I agree with 2WR’s explanation on how “make whole provision” work. The simplified version is this: because all US Treasury rates are low, close enough to 0%, it means a make whole bond can be redeemed early and you get close to no extra interest. It makes a lot of sense for corporations to do this because they can likely reissue new paper with a lower coupon, and redeem the old paper with close to zero penalty. . .
Thanks Tex, I get the particulars, the specific math maybe not… But a bond with about a 20% premium and 7% par for a dozen years or so left is still kind of left hanging out to dry is it not with a Treasury rate plus 30 pbs?
I’d add to this that because of the dynamic aspect of the calculation, the actual date to figure the actual call price is normally set at a date close to the actual call date, so with a normal 30 day notice of call, you’re in limbo subject to the movement of Treasury bond prices as to what you will get at call until closer to the actual call date…
2WR, Ha, Ha…I originally was thinking of you and wanted to slap your name on my post. But, I wanted you to freely step up on your own uncoerced. 🙂
Thank you…I cut it off too quick as it finishes out your example.
Treasury rate plus 30 basis points.
Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.
So that explains why the bond is so far above par. I can get in backdoor, a lot cheaper, but I wanted to make sure it was likely to be around. At a 28% premium buyers of the bond I guess are believing so anyways. Thanks!
Hey, we wonks have to stick together don’t you know, Grid… If it helps on the math side, in your example of a 12 year 7.00% where the make whole formula would be the comparable USTreas + 30, were it to be called right now, the issuer would have to pay around 164 1/2, probably a bit more since the only 12 Year USTreas I see is a 0.00% at approx .90%YTM and a couponed issue would trade at a lower yield and would probably be the one that would have to be used as the base. It’s math like that that really makes it onerous to call under make whole except when a bond is much nearer to maturity than 12 years. I can’t think of an example of a make whole call being exercised on a bond longer than 3 years out and I’d be pretty sure that if it were it would be more as a result of a corporate event rather than an economic one.
2WR, My ability to wonk is shrinking daily. The quirky and unusual can get my eye, but many things anymore is “Glaze Over City”. You wonk way better with this than I can and put it in perspective. Ok, at that number it isnt going anywhere.
Never delving in bonds, I was familiar with make whole clause, and its effects, but not the math. I am not figuring out the math steps to reach your number, but I dont need to as you did it and know what your doing. Bottom line then this one isnt going anywhere and that is why its trading as such.
Yikes! Tex the 2nd’s description of a make whole call with low Treasury yields is completely backwards.
Imagine you own a 5-year bond with a 7% coupon. Let’s say the make whole call discount rate is the current 5-year Treasury + 50 basis points. If the 5-year Treasury was currently 6.5%, then your 7% coupons would be discounted back to the present at 7%, meaning the make whole call will just give you par value.
However, if the current 5-year Treasury was -0.5%, that would mean the discount rate is 0%. That means a make whole call would give you all the future coupons up front, without any discount for time value. So in this case the make whole call amount would be par + 35%.
So how you look at this is that very low discount rates make it much less likely that a make whole call will be exercised, but if it does, you can get back a lot more than par.
Karma – as difficult as it is to imagine these days, think about the rest of the fixed income world in a world where the 5 year US Treas = 6.50%. Where do you think the example of an unnamed 5 year 7% non Treasury would be trading? Odds are it would have a spread to Treasuries far greater the 50 basis points. This might be tough to imagine in these days of compressed yields but in a 5 year 6.50% US Treasury world, I’m pretty certain that would be the case. Therefore, exercising a make whole call would still be onerous for the issuer, however, not as onerous as a par call. Interesting point to wonk on, though. Of course, with the issue probably trading at a substantial discount in that environment, any kind of call actually happening on our theoretical 7% unnamed issue would be unlikely.
2WR,
If Treasury rates were actually 6.5%, the issuer’s cost of debt should be higher than 7% and they would generally not want to redeem the debt at par (make whole call can never go under par).
The logic behind a make whole call is make sure the investor can collect on the higher coupon even if the issuer’s credit rating improves and cost of debt declines. If not for this, junk bond investing is heads you lose (you are right about the issuer and they call your bond away before maturity) and tails you lose (you are wrong about the issuer and they default.)
Good point about make whole not going below par that I wondered as I was writing – wasn’t actually sure if make whole could happen under par but it makes sense that it couldn’t..
Guys, I missed these posts. Its the 2034 US Cellular 6.75% bond, bought through GJH. Since I got my last needed higher batch again at $10.18 Im good call wise if the call warrant holders come out. I doubt they do because Wells Fargo probably doesnt even know they can being an old Wachovia issue. The bond trades up near $130 with the make whole clause.
Grid, i do believe so. My guess is that bond jumped up x # of payments. I saw that Motorola was doing that recently, and I see their bonds for sale at 106.17. Not sure much meat is left on the bone.
Mr. Conservative, you having any luck finding anything or is the cash continuing to back up? CNTHO at $52.75 last week would have been a good safer play. It was just a quick dump and I got 500. A writer on SA actually posted that he called IR, on if CLP would ever redeem any of them. Not that they control it, but he said, it has never been in companies plans to redeem them and he doubted they ever will.
Somewhat generalized response but these make whole provisions are common on institutional (non exchange) issues but rarely seen of ET.
The devil, like always, is in the details. Most make whole issues require a triggering event but many do not. You have to go through the prospecti one by one.
Did you want to provide a CUSIP on the issue in question?
PBI-B Looking for comments on Pitney Bowes 6.7% debenture currently yielding over nine (9) percent rate of return at $18.50 debenture. Stock price
has doubled in the last few months as Pitney has surged in providing services to the e commerce business. New partnership with United Parcel Service this month looks to bring substantial rate savings to small business using UPS instead of US Post Office and Fedex. Pitney’s stock price history has not been good in the past. However, surging package volume during this pandemic seems to have reignited the share price and talk of a buyout by a major firm in the package delivery business. Recent article in Wall Street Journal speaks highly of Pitney’s growing e commerce business and its value as a buy out candidate over a much pricier upstart in stamps.com..
The PBI question has been asked here more than once. The company is on its way out.
PBI-B has been on my value watch list for a long time FTM. While the old consensus may have been that the company was “on its way out”, the business dynamics of the covid-19 pandemic and these new alliances/prospects you mentioned may render the old consensus moot.
A change of control at PBI would require the acquiring company to pay investors a 1% premium to redeem the 6.70% notes, if the acquired company doesn’t redeem them first. PBI-B is trading past its call date with a maturity in 2043, and the notes have a B1/BB rating as of May 2020.
Worth a closer look for a possible trade imo…and as you mentioned, a 9% current yield is nothing to sneeze at. I’d be a cautious buyer here for a short term hold, closer to the next ex-dividend date.
CW does a good job of presenting the other side of the argument. PBI has been a zombie enterprise for a long time but survives.
I would just add that if you’re looking at issues for a high risk bucket I would expand the search. There are issues with comparable or higher yields that look more survivable to me. Many O&G issues are priced for bankruptcy even though there’s little chance of it. I’m even looking at some AMTRUST issues.
FTM, CW and Bob
The WSJ article on PBI was very compelling.
Going with the traditional bond might be less risky and the maturity in 2023 looks pretty attractive. The link from FINRA follows.
http://finra-markets.morningstar.com/BondCenter/Results.jsp
Thanks for that information Greg…fwiw the minimum bid for the 2023 bonds this morning was 2000, way out of my league.
Thank you Citadel West and Mr. Gilbert regarding the Pitney Bowes bond. Your comments are much appreciated. Thanks Bob in De for your comments also to provide a different opinion and alternative investment option.
FTW and CW
Happy you found the FINRA site of interest. I have found it helpful to regularly check on the bonds of interest on that FINRA site and my broker (TD Ameritrade) as the prices for the bonds can move, a lot. The PBI bond of interest is ~$10 higher over the past 3 months.
Happy investing.
I know that the wash sale rule will apply if one sells company ABC, at a loss, in a taxable account and buys company ABC in an IRA within 30 days. I can not find any information on the following case:
Sell company ABC, at a loss or gain, in a Roth IRA and buy company ABC in a taxable account inside of 30 days. It appears to me that since capital loss and gain is not an issue in a Roth this action will not trigger a wash sale. Am I correct?
Dinner, I am pretty familiar but never 100% on all of the minutia. There is an accountant or two here that hopefully will respond. One thing I do like to mention that rarely gets said, is a “wash sale” doesnt eliminate your tax loss, it is added to the cost basis of replacement investment. So it can be later used when that security is sold. So it is just deferred, not lost.
I believe that’s correct. The Wash Sale applies to the account where you lost the money on a sale. Irrelevant for IRA.
Dinner, right. Wash sales do not apply to IRA accounts. No benefits for losses on IRA.
Dinner – I believe your interpretation is correct but I don’t believe the IRS has ever ruled on it. Rev Rule 2008-05 governs, I believe.
If the amounts are substantial I just don’t mess with the Wash Sale rule. In most instances there is an alternate security that can be bought giving substantially the same exposure without the rule coming in. It just has to have a different CUSIP.
Even if you are right if your brokerage gets it wrong it’s very hard to get them to change a 1099.
Though I have referenced this before from memory (partial correct memory, mind you), I have never provided the link that established Moodys “preferred notching system” off of bonds. Investing wonks such as 2 White Roses, will appreciate this short one page link..It defines why they dont differentiate between cumulative and non cumulative, and notching system for Ba2 and above and Ba3 and below, along with trust preferred rating rationale. This was instituted in 2001.
https://www.moodys.com/research/MOODYS-RE-CALIBRATES-ITS-PREFERRED-STOCK-RATING-SCALE-TO-PROMOTE–PR_47721
Thanks for that Grid. But it doesn’t explain why preferreds from the big banks are rated three notches below their sr unsecured. For example, BAC has A- bonds but preferreds are BBB-.
Landlord, good question, and I sure dont have a definitive answer. I did a quick check and saw Wells senior unsecured Moodys bond was A2 rated May and preferred Baa2, so its a three notcher also. Maybe banks are notched lower because of their leverage which is by their very nature significantly higher than “regular businesses”.
I always refer back to an online investor tutor for me, who said said long ago, if he ever invests in a bank subordinated note he would expect no recovery at all if the bank went belly up due to their leverage.
IFFT – $50 (6%) mandatory convert (9/15/2021).
I’ve been looking high and low for something wrong with International Flavors & Fragrances (IFF) appears to have strong management attempting to become a market leader in an overall defensive material sub-sector.
Negatives:
Materials Sector (Ongoing Demand Destruction).
Serial acquirer Recent Frutarom / Dupont
slow Integration plan to realize savings (3yrs).
Positives:
Free cash flow will improve with integration. (Frutarom / Dupont)
US Dollar heading lower will improve global sales #s.
85% of materials produced go to defensive consumer staples companies.
Micach
IFFT looks interesting as a call option that pays me interest.
What will be the conversion ratio to shares on 9/15/21?
Thanks in advance.
If IFF > $159.54 CONVERT RATIO 0.3134
If IFF BETWEEN $159.54 & $130.25 CONVERT RATIO: $50/(IFF MARKET PRICE)
If IFF <= $130.25 CONVERT RATIO 0.3839
AUG 21 PRICE:
IFF = 120.55 IFFT = 44.75
IF Purchased today:
IFFT = CONVERT $116.56 + 5x (0.75) = $120.31
Thanks.
Interesting how closely the two securities (IFF and IFFT) match.
The market is always right pricing in no appreciation to redemption.
You need to factor in the common stocks dividend too, so you aren’t really getting $3.75 in excess dividends. The stock is paying $0.77 x 5 = $3.85, then multiply that by the conversion ratio of 0.3839 = $1.478. So you are getting Convert $116.56 + $3.85 – $1.478 = $118.93 true value of the convert versus the common. So you are paying a premium of 1.36% to own IFFT versus IFF.
Seems to be a steady interest in convertibles. i wonder if it would be worth it to have its own section. i know i own several
bob–will put it on the long list. I don’t cover all the converts–but would like to when time become available.
This is a call for “New Investment Ideas Page.”
Just got done selling 16,000 shares for PSA, and looking for ideas.
ok–will add tonight
I sold PNCprQ as it is being called. I replaced it with AHLprD but had an average price of something like $25.38. Still, given the current market, I’m satisfied. Investment grade, 5.6% and not callable until 1/1/2027. I’m wondering if the fact that Aspen Insurance has been absorbed by APO has something to do with the bargain price. Seems to me, legacy preferreds from mergers ‘don’t get no respect’, which might be a good thing for us.
@Jersey I also own AHL-D and am more than happy to hold it until 2027 in today’s environment.
Anyone have any thoughts on JCO, Nuveen 6-1-2022 target term closed end fund?
Currently trading about $8.15. They propose returning $9.85 upon liquidation on 6-1-2022. I doubt if the NAV will reach that level in 21 months. However, current yield is 6.9% and earnings/distribution ratio is 116% meaning they are adding almost 1 cent each month to unii which is now 39 cents or an amount equal to about 8 months of distribution at the current rate of 4.7 cents/month per share. I know the distributions trail off in the last year or two of these term funds. Just seems with the high unii and excess earnings they can sustain the current payout to get much closer to the liquidation date and if the NAV might get closer to $9.00 there might be a nice cap gain. Looking for your ideas on this one.
Gary, Morningstar rates JCO as two stars, with returns Low and Risk Average compared to others in the sector. No ideas here, sorry.
https://www.morningstar.com/cefs/xnys/jco/risk
Too many high risk bonds in concentrated portfolio like Macys & Royal Caribbean. May not survive 2 years
Anyone have otc ticker for the new PRU new 4.25% Preferred that had a post a week or so back?
I did manage to buy some by calling Vanguard bond desk and see it as a weird ticker symbol but eager to see it start trading in OTC market to perhaps add some more.
Incidentally, searching for PRU on this site did not get me to that post about this new PRU preferred – perhaps one of new tweaks when enhancing the site that it brings up past posts based n parent ticker too or just a generic search that searches all past headers of posts
PRU issued bonds, not prefs which don’t trade on OTC. You have to call the bond desk to transact in them till they are listed on nyse
Yes – I mean baby bonds.
Yes, I did call Vanguard and buy them. Just waiting for them to be listed and traded on the exchange and still do not know ticker…
From the prospectus:
We intend to apply to list the notes on the New York Stock Exchange under the symbol “PFH”.
What happens now with LMHB? Went dark after yesterday’s close at $25.80. Thought institutional holders would sell it off so that they wouldn’t be caught holding an illiquid issue.
They don’t think ahead. Now they will liquidate through the bond desk or wait until it gets re-listed on the OTC and sell it there and kill the price for a few days.
If it relists on OTC will it retain the same ticker? Thanks!
I don’t think so. I am almost positive it will get a new 4 or 5 letter ticker, since the 4 letter it had with the NYSE will be reserved by the NYSE.
But I am not very knowledgeable in this area.
Check the FINRA daily list as that’s where the OTC issue will pop up. Sometimes it happens in a couple days and sometimes it takes a month. Given the size of this issue I would expect an OTC listing quickly.
MVCD – Anyone following this situation? I sort of liken the situation to that of NGHCP and O but in the BDC field instead of the insurance field… . MVC is being taken over by Barings BDC with all to be managed by Barings LLC. https://www.sec.gov/Archives/edgar/data/1099941/000137978520000043/exhibit991projectmustangre.htm says, “In connection with the closing of the proposed Transaction, MVC Capital will repay all outstanding amounts under its existing credit facilities and any remaining obligations thereunder will be terminated. In addition, in connection with the closing of the proposed Transaction, Barings BDC intends to redeem MVC Capital’s 6.25% senior notes due November 30, 2022 (NYSE: MVCD) with an aggregate principal amount outstanding of $95.0 million.” So assuming the deal closes, MVCD will be called in all likelihood. They expect to close in the 4rth quarter. Leon Cooperman owns 25% of MVCD and is locked up approving the purchase, so shareholder voting doesn’t seem a problem
Right now you can buy MVCD at essentially $25 stripped price ($25.17), so the only downside risk is the merger not closing… 6.25% annualized until it’s called seems like a good parking place for idle cash for some time probably in the 4rth quarter… Barings LLC is a deep pocket firm and this creates a BDC with $1.2 bil in investments and BBDC is low leverage for a BDC.
Thanks for the heads up. Closed at 25.19 with 16 cents of accumulated dividend. The risk seems small but with short term money risks are more meaningful. Do I want to take the risk to make 1-1.5% in a few months?
Martin – You strike me as a fully invested kind of guy most of the time where what to do with idle cash is never a problem for you because you never have any… lol… makes sense this would not be one for you…..
Thanks 2WR, I’m going to stash some cash for a few months, got some at $25.19.
Assuming, for example, a call date of 12/15 (who knows?), I get an annualized YTC of ~5.7% at a price of 25.20. Looks like it’s worth a nibble.
Thanks 2WR.
Well, I got an unpleasant surprise concerning UGI purchasing the rest of Amerigas LP (APU) in 2019. I had held some APU stock since 2012 in my IRA. When UGI purchased APU they exchanged the APU stock for common stock of UGI plus some cash. Since it was treated as a sale of APU stock, which was a MLP, I got a 990-T from Vanguard for the gain on the APU stock and they hit my settlement fund for the UBTI tax. Went through the 990-T and associated forms plus the 2019 K1 for APU. That was one complicated mess. That was the last of the MLPs common stock I held because it was for many years a very juicy dividend. Had moved on to holding only preferred stock of MLPs and make sure the K1 does not report any UBTI Oh well, I made a ton on it over the years and can pay the little bit of UBTI they got.
Any other investing curmudgeons here get in on the CNTHO seller at $52.78 like I did? Somebody liquidated over 3000 shares today.
Call coming? They just issued $1.2B in senior notes with coupons ranging from .80%-3.45%. Prospectus says the money will be used for general corporate purposes, but can a redemption qualify or do they have to specify?
ken, unlikely they would call CNHTO. If anything the higher coupon issues like CNLPL & CNTHP would go first, but those have been steady. In fact, CNLPL went UP by 4% today, and CNTHP went UP by 1.9%.
Inspy (guess I can call you that)…these are TINY issues. The parent could float a new preferred or bond and redeem them all quite easily. The market is saying not gonna happen, but I’m not taking that risk.
Retired, I really dont know why CLP hasnt redeemed them. Several years ago they wanted to increase short term debt ceilings (these preferreds have strangle hold debt coverage requirements for preferred protection), so they needed preferred shareholder approval. Management said they gave up as they couldnt find enough of the shareholders to vote the 70% or so approval needed. They couldnt even find enough voters to get 70% if all approved they said. All they had to do was redeem them and then do what they wanted. Yet, they shrugged their shoulders and just gave up. Most interesting I thought.
Grid and others, I am seeing a TON of both corporate bonds and muni bonds called. Corps are sometimes being called 1 to 2 months before they mature. Wall Street is open for business to float new issues and the market is eating them up. Just like all of these 2nd tier banks that have been floating preferreds. You have to really ask why any above market callable preferreds are NOT being called. I am sure there are a few special situations, but it seems like a higher risk area these days. . .
I agree, Tex. At one time I owned enough AILLL to give me a 20K hickey if it were ever called. It worried me enough that I finally sold it all for a 20K cap gain. Now I own a basket of illiquids that, if called, would give me another cap gain. Yes, even after rebuying CNTHO above redemption price today.
I learned it all from Grid. Be careful out there. It’s not your father’s market. Or even yours from a couple of years ago.
JMO
Tex, Camroc drinks the blood now, so no need to rehash his logic as it mirrors mine. But yes there are other reasons why they stay outstanding. Utes are the one sector where rock bottom efficiency is not needed. See these preferreds are already being paid for by the consumers and allowed on their return on equity. Unlike a bank or say public preferred stock enemy Public Storage, there is ultimately NO SAVINGS to redeeming these for the company. It goes back to the consumer.
And when the preferred cost of capital is submitted to regulators many submit them as one series. And if you do that with CLP, for example you will get a collective yield of maybe 4.5%. That is still cheap collective capital and regulators will wave the wand and approve all the cost. But, there comes a point where risk reward just isnt there. Why would own CNLPL for 5.25% yield and $10 over redemption price, when one can get a sister at 5% risking a $1.50?
And for me, getting reloaded in relative values, for their infinite times safer payments than liquids is only half the battle. I try to hold a decent amount of these because they are totally uncorrelated to liquid preferreds. When liquids get routed you dump the illiquids, buy the routed liquids, ride them back up, dump them and then reload your illiquids and flip and wait for the next liquid rout. It works everytime….Provided you know proper illiquid entry point.
RB, I hear you, and yes, that is a valid point about the sizes of the issues.
These issues could have been called during recent periods of ultra low rates, but they did not call.
I have positions in CNTHO & CNTHP, and the call risk is definitely there, so if it should happen, just too bad.
Fortunately, my cost basis is not too far above the redemption price, so I intend to hold despite the risk.
One day, the train ride will end, hoping it lasts for a long time more.
Inspy, Been a while since we talked, need to check in on you..I will PM you later on ER site tonight.
Ken, it certainly can, but if there was some dump from it, CNTHP and CNLPL would be screaming right now! CNTHO historically just acts like this. A dump then lock up with no trading for days on end. Usually the dump causes a steeper price decline than this. A couple months ago it dumped Into $52 range and I was selling days later over $54.
One of these days they may all get redeemed at once. And when they do I need to write a letter of thanks in leaving them outstanding all these years. These CLP issues have been venerable money making trading machines over the years. You just cant chase the ask when it sits too high and is locked up.
In the Senior Notes prospectus, this is mentioned under “Preferred Shares:”
We do not currently have preferred shares authorized, although our Declaration of Trust permits the issuance of preferred shares subject
to common shareholder approval. Before we can issue preferred shares we will need to obtain authorization from our Board of Trustees and our common
shareholders. If we issue preferred shares, the specific designations and rights will be described in the prospectus supplement and a description will be filed with
the Commission. The following description of the terms of the preferred shares sets forth certain general terms and provisions.
Preferred shares will have such par value, if any, such priority in liquidation, such voting rights and such other rights, privileges, preferences, restrictions and
limitations as may be established by our Board of Trustees and approved by our common shareholders. In some cases, the issuance of preferred shares could delay
a change in control of the Company and make it harder to remove present management. Under certain circumstances, preferred shares could also restrict dividend
payments to holders of our common shares.
_______________________________________________________
Nowhere in the prospectus does it specify that proceeds will be used to redeem any preferreds. Seems they don’t acknowledge their existence! In any event, the Use of Proceeds section allows anything (“general corporate purposes”) so redemption is possible but, likely, a long shot. Does this sound right?
Oldman, I never checked Kens bond offering, so I have to ask is this from Eversource or CLP? If the bond is from hold co Eversource then there is basically zero chance of it redeeming preferred. This would be separate debt from holding co. This wont be cross pollinated as CLP is pretty tightly ring fenced from hold co.
It’s’ from the “SEC Filings” link under the “Investors” banner on the Eversource Website and the document is an “Eversource Energy” Prospectus pertaining to the impending debt issue. I own CNTHO and agree with you that a call is unlikely. From the filing, I’m guessing that Eversource is stating that IT has no direct outstanding preferreds. Since CNTHO and its sister issue, rests with the CT subsidiary, it didn’t disclose its existence. I think it’s a great Sock Drawer issue since it’s small potatoes to the Parent–possibly under the radar!
Here’s the link if anyone is interested:
https://d18rn0p25nwr6d.cloudfront.net/CIK-0000072741/95f96bcb-9b40-4ced-aa28-56d1f446bc1f.pdf
Thanks for the link OldmanRB, you beat me to the Eversource notes offering. The consensus seems to be that while a call is possible, it’s unlikely. I will have to start paying more attention to above-call-price “untradeds”.
I saw the drop, but by the time I got a bid in, the seller had dumped his load and was long gone.
Good luck with that, Gridbird.
I’m not buying any securities with a negative yield to call in this environment. I see the non callables rising for this (I suspect) reason. I said goodbye to the last of my CBKLP at 102.25…don’t know how much longer any high investment grade company can justify paying out 6% on a preferred that they can call.
Retired, For a large part it has all I have ever done and ever will do, until they are all gone….I just got back into IPWLK today after dumping a bunch about $2 a share higher in average…And havent even missed the dividend either. But, yes this bad boy is still more than $3 over redemption price, too…And like you mentioned, I got me some noncallables, too. But everything I monitor always has a buy….and a sell price too. They arent my children! 🙂
Curmudgeon, pshaw. You have to be ready, don’t you. But you seem to stay that way, you rascal. 😉
Camroc, you kind of infuriated me with your claim of 45% illiquid portfolio. I have been working hard to reclaim my rightful king of illiquids throne you underhandedly usurped from me!
Preferred call notification
With the pending call of PRH I reviewed the IPO prospectus. It states a “notices of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each holder of notes to be redeemed at its registered address”. It also states that the notes may be redeemed “at any time” after March 15,2018, meaning that there is no requirement to redeem the notes on a dividend date.
My questions:
1) Should I expect a USPS letter as a “holder” of the notes? (I don’t recall getting such a letter when a WFC preferred was called a year ago)
2) Is it required to post the “notice” anywhere (i.e. sec.gov) besides the company’s investor website? If posted to the SEC, what form is used?
Thanks and regards.
No, you shouldn’t expect a letter. The letter goes to the agent/depository. An SEC filing is also not required but usually they get PR’ed and 8k’d
Some midweek reading for you:
https://seekingalpha.com/article/4343574-qe-mmt-and-inflation-deflation
I’m 45% in illiquid ute preferreds. Wish I had more because I don’t believe in much else.
JMO
Sabre is offering a mandatory convertible preferred. Pricing is not yet published. The preliminary prospectus says they plan to list it on Nasdaq. If anyone has any comments/info, I would appreciate it.
SABRP is the OTC ticker.
Wondering if it’s time to sell HTLFP ? – bought a little below par, so up almost $2. Only reluctant because of the seeming rush by others to buy & lift the price. I do see a drop coming, but we seem to have some time for it to climb more. Hard to beat 7% – paying 10/15
Gary, I sold 400 of mine at market open at $27.13, and rung the bell. I bought in mid 24 range around IPO. I have never historically been a big bank preferred guy and so that is more a reflection of me than whatever the bank is doing…It has great terms.. Im just trying to drive my bank/financials back under 10% of my stash. Dont think I am finding any special deals with the money…I rolled most of it into 200 shares of lowly CNLTN at $49 today. It hadnt traded in a while and I see it closed at $50 on 1000 plus shares.. Simply amazing…. My eventual plan is just to own a slug of NYCB-U and a bit of AUBAP and ATH-C and basically vacate the sector though.
Grid & all — thanks- not sure the craziness has topped out, but won’t wait long.
UCBIO is also near 27, so same problem.
Grid, What are your thoughts about the credit quality of NYCB-U? The stock has been in a long downtrend and the stock is near lows.
Kapil, On a relative basis I like it. The common muddles because its a high payout low growth divi payer even in best of times. Fitch and Moodys rates NYCB-U lowest rung investment grade (S&P isnt as effusive with a BB-). They overall from what they say (Im no bank analyst) are a cautious investor and know their segment market of expertise (rent controlled housing).
The issue survived 08-09 crisis with no suspension and only hit $30 (equivalent to $15 on $25 issuance) while must bank preferreds hit $3-$9 range then….It didnt tank nearly as bad in March as most other issues, just hasnt bounced back as much. I have made good money trading this thing last year, and only recently reentered in $43 range a month or two ago.
Im under exposed in banking sector, so I can afford to be more aggressive in this issue like I presently am. Not looking to sell either as it unfortunately is one of my higher yielders now. The issue is only about $125-$50 millionish now, as in 2008 crisis they offered cash and common stock tender in $40 range when NYCB-U was around $30. About half accepted the offer and tendered. This issue lags also because of the onerous phantom tax issue concerning original discount/stock offering. Buy it in tax free account if you have interest in it and avoid the problem. I wouldnt own the issue in a taxable account personally.
Thanks for the feedback Grid. The capital levels seen okay and multi-family housing is a relatively defensive sector. I was comparing it to the preferred A shares and it is definitely a better value.
Kapil, the preferred A flat sucks. And makes no sense and never has…It has an almost 100 basis point lower yield, a YTC that basically is bad beyond belief, and Fitch rates it 3-4 notches below NYCB-U in credit quality. Plus its noncumulative, while U must be paid…. The comparison between the two is embarrassing provided U is bought in tax free account.
I’m not really understanding the convertible aspect of nycb-u. Can I own it like a preferred, or is there a conversion scenario I need to watch for?
Irish, if you own it in a tax free account, its just a subordinated debt issue that pays interest. The interest is of course tax free in a tax free account. If bought in taxable you would own phantom taxes which drags down your real return.
The common stock is nowhere near conversion as the warrants for common shares doesnt kick in until $20.04 (originally it was $35 ish, but a few 4 for 3 stock splits 15 years ago lowered it). And stock wont go anywhere as the common dividend drags down any possible growth.
So basically for past 18 years since issuance (sans, the voluntary tender that wiped out almost half of it a dozen years ago) its just been a subordinated debt issue and will remain that way as stock price is lower now than 2002 issue date. Just remember all things in proportion if interested…As its a four letter word…Bank….
Grid, you said you sold 400shares HTLFP of mine, Does that mean you kept a few ?
Sold my 500 shares of SCE-PH Wed. at 23, don’t care about upcoming dividend. Decided to lock in my profits from when I bought it in March at 16.25. Now looking for a place to put the money while waiting for another drop in the market.
Hey Charles. I had left a smaller placeholder amount and then decided to jettison it and just be done with it and not look back. Im not sounding any uninformed alarm bells here on the issue, just getting back to my roots and liquidated all the bank/financials except the three I am willing to hold longer term.
In reality, instead of slapping myself on the back for my “investing acumen” for locking down almost $2.50 a share gain for a short hold, I am chastising myself for yield chasing and conflating investment “risk buckets” to justify those various bank purchases I just cashed in. My goal is to be more disciplined going forward and locking down an incredible years gains while fighting to stay fully invested at the same time.
So long story short dont let my decision impact yours…Speaking of birds in a feather, I recently sold all of my SCE-L shares for the umpteenth time, also. I will let the fire season wind down now, (as its crazy now) before I revisit any reentry point, if ever. 🙂
Grid,
We are on evacuatipn alert. West of town it went to mandatory evacuation today. That zone is about 150 yards from me. Sitting tight, all packed and ready to go.
Looking at that NYCB-U and I had low ball bids on the LMH-A and B but they disappeared off my account at TDA I suppose I need to call the bond desk to try to find what new aymbol will be on the OTC
My LMHA symbol has been replaced with a cusip # at Fidelity. 524901501
In my Fidelity account, too. I wonder, though, if that means it will begin trading under the CUSIP number on Monday? That is the original CUSIP, based on what QOL shows, and it does show up in Fidelity Active Trader Pro when you search Fixed Income by Cusip, but I guess we’ll have to wait until Monday to see if they’ll actually accept trades via CUSIP.
Thanks Martin & 2WR, I want to check Monday with TDA also and see if I can put in a lowball bid.
Yikes, Charles. Hope all goes well for you regarding evacuation zones.. I know how that feels… When we lived in Montserrat our back yard was the border of the evacuation zone for a time, but in our case, it was a volcano evacuation zone, not ground fire, but potential fiery rocks raining down from the sky!
Please do let us know if you have any luck with TDA. They don’t normally let you bid on fixed income anyway, do they? Least they haven’t in the past. So thinking they will on these baby bonds under a CUSIP # seems to be wishful imho… Fixed income is not their strongest area…
Yikes!
reminds me of the people in Hawaii recently who lost their homes to the lava flows.
Just called the bond desk at TDA he said it hasn’t showed up on OTC to be able to trade.
He had to Google it ! didn’t show up in his system.
Martin G – I held a few hundred shares and now are ‘numbered’. Normally I would have sold, but I am certain they will be redeemed when the time comes.
Wow, that is a little close isnt it. Be safe, Charles!
Kind of like people experiencing advance warning of a hurricane. You keep waiting for it to hit. The zone across from me they downgraded from mandatory evac. to warning alert and are letting people back in.
So no evacuation means I have that pesky job to do.
Funny you mention it Gary…I sold my position in HTLFP yesterday for a $2 per share gain. There may be some more meat on that bone, but it doesn’t pay to be too greedy in this market. Won’t be easy replacing that 7% coupon tho…
I own some HTLFP. Although not rated, HTLF financials look pretty solid to me, based on a simplistic review. Not really knowledgeable about bank financials, so any guidance would be helpful.
YTC about 5.5% (based on 26.80 price), which is not bad these days, so at present price, I’m inclined to hold.
I have no special insights here nhcoast…I bought HTLFP at the IPO and sold it as soon as I made a couple of dollars per share. My longer term preferred bank holdings are with JPM and BAC, but I’ll ditch those too at the first sign of trouble. Good luck with Heartland.
USB-H and USB-A both up >3% today with impressive volume for USB-H. Not really sure why.
Gridbird-
You won’t want to miss this 🙂 —
Peny – John Yesford will be presenting for Rida at the Las Vegas virtual Money Show tomorrow. Get your free pass.
Wow–not too picky on who they let speak I guess.
Gary, I will say Noford to any advise from Yesford. He should get on that show and offer a full throated confessional on his meager investing acumen. If there was a Peanut Gallery I would gladly attend and orchastrate the catcalls.
Love it….
Big gallery.
Hey Guys,
Anybody heard from Chuck P recently?
He used to post some really interesting (and definitely colorful 😉 thoughts here on the site… He seemed to be spot on, with some of the bank preferred buying lists he commented about.
GLTA
A4I–I heard from him through numerous different channels, but was not able to ‘satisfy’ whatever it was he wanted me to do relative to some other commenters (I don’t remember the details). Anyway last I heard he said he wouldn’t be posting anymore–certainly he is welcome to make comments.
Tim – How about Nomadicmist.?
We haven’t heard from him in a while. I hope he is ok.
I put out a ‘headline’ for Nomad a few months ago, but haven’t seen or heard from him/her on here or on SA.
Bigbear, Heard through backdoor channel from another poster that he is doing fine and told him to say hi to me. He just decided to “retire from posting”.
Just got off the course and just seen the portfolio of preferreds just keeps on rising. One doesnt really have to do a thing just let them drift north on their own.
Probably a lot more “lurkers” around including some like me who look but don’t post. Used to post in the beginning and haven’t ‘left’.. I am more of a nuts and bolts/due diligence investor so the information Tim provides in extensive lists and compilations help me the most. I am long no pfds/bb bonds at this time and agree with those who want nothing to do w junior income issues that pay bupkiss. I adhere to a golden rule Tim and I seem so share and have seen him post on SA as well- preservation of capital rule #1.. rule #2? see rule #1. Bea
Bea–yes there are thousands daily who lurk but do not post–pretty typical in that regard–most commenting on most sites 20-25% of folks (at most).
Hi Tim,
Appreciate the info. I too, hope he comes back and posts. We all ‘consume’ the info posted here on III differently. I was catching up on some threads today and saw some other posts from frustrated ‘consumers’ of the site. I thought that when you created the Sandbox Page for ‘chit-chat’, some of that frustration would be put to rest. It’s hard sometimes, NOT straying off-topic.
I bought a few of Chuck’s picks Affinity…so far so good. He definitely rubbed a few folks here the wrong way, but I didn’t mind him.
Hi CW,
I think they call it “brutal honesty”? Yeah, I miss his posts. He really knew his financials and seemed to be going bigly into the WFC and JPM’s of the game. I’m there also and have been for a few years, but personally prefer BAC offerings over the WFC’s. JPM preferreds are my best performers in the banking space. I also own a large amount of the CBKLP and it’s been rock solid.
Speaking of solid (and bizarre), my GLIBP almost hit $30/share today. I’m thinking somebody fat fingered a market order on that one!
Regarding Chuck P..
He had bought a sizable position in NI-B and some commenters basically said it was a poor decision. I don’t think anyone was rude or anything like that…people just laid out their reasons. Unfortunately Chuck took the comments personally.
That was a month or two ago, and NI-B was at 26.50…now at 28, so I guess Chuck is rather happy with his purchase.
I would certainly like to see Chuck post here again.
He was thin skinned and got upset anytime anyone disagreed with or corrected him.
That was precisely the problem, Maverick. And then throw in a few uncomfortably weird open post cries to Tim every couple hours, because Tim didnt check his email to answer an investing question he had at the moment.
Yeah Grid. Not like Tim doesn’t have enough on his plate with his full time job and the website – if he had to answer personal emails with investing questions from every member of this site, the poor guy would never be able to sleep.
No Maverick; I just don’t like Pricks such as yourself. Its really just that simple.
Really Chuck? You have to resort to childish name calling?
STT-D was another preferred he got into at $25.50 that now trades above $28 for a double digit total return.
CW; Its very refreshing to see that most folks on this site are actually very decent and nice folks. Its really the same 3 that are very condesending ———s.
ChuckP, I agree with you about some condescending posters and know who you mean. But i no longer read their posts.
Tim, what about a blocking feature?
My best performers this year have been PPP and EIDL
newman–will look into blocking feature when deciding the new commenting system
Discretion is the better part of valor here, but suffice it to say I’ve been in your shoes before Chuck. Just ignore the “boo birds”, as I call them.
-btw kudos on your earlier picks and willingness to share them in real time…has anything changed from your perspective?
CW; Don’t know how to get ahold of you but I have a very good one. I actually was going to post it here and about 20+ reasons WHY I love it but after seeing a couple of the posts this morning by chance I decided not to. Someday, we’ll figure out how to exchange emails or something. We all have great ideas and good ideas but like I said its really just the same 3 that have no manners whatsoever. I was very lucky in life and landed a great paying job and made more $$$$ that Iam probably worth. So thru the “fact” that I read and research over 4 hours daily I like to think I learned atleast a few things. As one other poster above noted back when the market was puking its guts out in March I did load up big time on all the Super Mega Banks. I have no regrets whatsoever. But my idea is NOT a bank but it is a good one. I’ll figure out someway to share it with you. I think we’ve reached a point right now where really “Great Ideas” are in extremely “short supply”. LOL PS Iam at that point where Iam NOT going to buy these companies that are financially losing their ass and willing to pay you 7%+ or 8%+ on their new preferred. I’ve been to that party before and it usually does not end well. Plus I will just add that Iam NOT a flipper Iam an investor. There’s a difference.
Who knows Chuck, maybe this site will get its own messaging system in the future. Meanwhile, I’m still active at Seeking Alpha…if you have an account there.
Searching on threads:
Just a hint for those that do not know about the following function.
Once in a section, such as the Sandbox page, if you want to find
locate all instances of a thread, no matter how old it is, just key in ‘Ctrl – f ‘ at the same time. This will bring up a search box at the bottom of the screen. Key in what you are looking for and it will go to one instance of the words you are searching for. Then you can arrow up or down to find out all other instances of the specific words. There are also other options in the same search box along the bottom. Just trying to be helpful.
Nice shortcut Howard, thanks for sharing!
Thanks Howard. This is a great time saver.
Howard-
Not sure where you key the control-f. Could you explain where?
thx
Hello Gary
On your keyboard, you strike the control ( ctrl ) key in the lower left hand corner, while at the same time you strike the letter f ( F ) key – that will bring up a search box along the bottom of the screen. In the farthest left hand box it says ‘ Find in page ‘ – so key in what you want to find in that box – then strike the up or down arrows to brings up all instances of the words you are looking for- or strike ‘ highlite all ‘ – the first option to the right – there are also a few other options to the right of that box which are self explanatory – this ‘trick’ is just one of many you can find if you searched for ‘keyboad shortcuts for Windows ” – I am unfamiliar with the Mac products so cannot help you there. Sorry I was not clearer in my original posting .
Happy hunting !
Howard
Howard-
Thanks for trying- I do have a Mac- doesn’t work ( if you just type any old place on the screen. There might a way, but not sure how to even search for it, other than the infinite number of monkeys typing method.
No problem.
G
Hello Gary
On your keyboard, you strike the control ( ctrl ) key in the lower left hand corner, while at the same time you strike the letter f ( F ) key – that will bring up a search box along the bottom of the screen. In the farthest left hand box it says ‘ Find in page ‘ – so key in what you want to find in that box – then strike the up or down arrows to brings up all instances of the words you are looking for- or strike ‘ highlite all ‘ – the first option to the right – there are also a few other options to the right of that box which are self explanatory – this ‘trick’ is just one of many you can find if you searched for ‘keyboad shortcuts for Windows ” – I am unfamiliar with the Mac products so cannot help you there.
Happy hunting !
Howard
If you are sitting on cash and concerned about yields going back up, PSA-W might be something to consider at about 25.30.
The thinking in the other comments seems to be that the X will be called with the proceeds from the new issue, but the W lives on. If that’s right, you get the 5.2% on the W net cost until it’s called, which is not bad these days, considering the PSA credit quality. So probably not a lot of downside risk immediately.
Even if the W gets called tomorrow, you lose only about 1.5 cents per share (by my calculations). If there’s a partial call of the W, there will probably be a bit of a bump in what remains.
Not a whole lot of upside here and not for everybody, but the return might be worth the risk of the small loss, depending on your circumstances.
The proceeds from the recent issue is about $200 M, just enough to retire the PSA-X series.
Since both PSA-X and PSA-W have identical coupon rates. It would just be a waste of money for the paperwork to do partials for both, as opposed to retiring the X totally.
I bought another 100 shares of PSA-W last week at $25.29.
Last I looked, PSA has about $1.2B in cash and equivalents on its balance sheet, so I don’t think a partial or full call of the W is totally out of the question, in addition to a full call of the X.
For Howard Phil?????
Sorry didn’t copy your name before posting
Example of correct way to start new thread.
Hi Bob in Thailand
” Howard” is just fine.
Is your comment the example ?
If not , where is it at ?
The point is, any comment after
yours today can discuss ‘anything’.
Each thread isn’t segregated by subject.
Isn’t that what your original point
was about ?
Thanks,
Howard
“Never before have I seen a market so highly valued in the face of overwhelming uncertainty.”
-James Montier, behavioral economist
Attention please Tim McPartland
I have been reading and learning from your excellent web site since the early days of it’s creation. I have noticed an increasing problem of posters “hijacking” a topic thread. Even though the web page clearly states that to start a new topic thread one should go to the bottom of the page and not click “reply”, people do it all the time. For whatever reason people are continually clicking “reply” and posting content not related to the thread. It is annoying when someone replies to an otherwise interesting topic thread with “I just bought 100 shares of xyz” and then everyone chimes in with posts regarding company xyz on the “hijacked” thread. I know it is impossible for you to monitor all the posts as they are submitted but maybe a little bit of “authoritative” education from the site owner is in order. Another possibility is adding a statement that you have to acknowledge if you are indeed replying to a thread, such as “I acknowledge that my post pertains to (subject pulled from topic heading)”. If so click box YES if not click box NO and a new thread will be opened. Your web site is exceptional in my opinion and could be even better with either user education or nudging users to post correctly by the forced YES or NO click option. Thanks again for all your fine work.
@Bob in Thailand, I agree that this would be a good policy in the absence of conversation threading. The site is sure not optimized for user interaction which is why I don’t interact anymore. Very hard to find anything beyond the last few posts. Great information tool, interaction not so much.
Qniform–I will think on this – the biggest problem I have is working 24/7 on my real job all year long.
Bob in Thailand
I agree with your problem, but there are only two main sections that get activity, ” Reader Initiated Alert ” and “Sandbox page “. The other 8 or so have very few comments and sometimes nothing is posted for long periods.
I am unclear how your proposed suggestion would work, except that it would consolidate comments about each subject
presented. One would still have to go ‘way down’ to find what one was looking for, and if you did not keep up daily, you wouldn’t even know a subject existed. What am I missing ? Where are ‘new’ threads
segregated ? Thanks, Howard
If you click your comments are placed indented in the thread you are reading. So I if you are reading and replying to a thread your comments are placed in that thread. If you want to start a new thread then your comments are correctly started at the top not within another thread
Notice how my reply is under your post and not at the top of the sandbox page.
Kool, I get it now, but you have to click on the person’s moniker/name in the comment. and yes, it works well.
Bob–will give it some thought.
UBI taxation issues on preferred MLPs
Having invested in traditional MLPs for over 20 years I am familiar with the often repeated warning regarding holding MLPs in an IRA due to UBI taxation issues. In the last two years I have purchased prefered stock of MLPs such as DCP-B and DCP-C. I have never read of a distinction between a traditional MLP that reports business income and a preferred MLP that reports no business income. UBI is reported on a traditional MLP K-1 in block 20v. “Business income” is reported in block 1, “Real estate income” is reported in block 2 and “other net rental income” is reported in block 3. Using DCP-B and DCP-C as examples. These K-1 have no entries on lines 1, 2, 3 or 20. The only K-1 entries of DCP-B and DCP-C are 4b (Guaranteed payments for capital), 4c (Total guaranteed payments) and 19 (Distributions). Having no business income (blocks 1-3) and no reported UBI income (block 20v) it appears that UBI taxation issues in an IRA are not applicable. Is my thinking correct? Any CPAs out there wish to comment. Thank You.
It falls into a gray area, and could easily be challenged by the IRS at some point in the future, as the distributions for both the common units and preferred units should not be treated differently for partners who fall into specialized categories, like tax-exempt investors, or non-US investors, thereby allowing them to avoid the punitive rules by investing in a different class of security.
Their income is 100% active, as they mention in their distribution notice.
https://www.globenewswire.com/news-release/2020/07/21/2065325/0/en/DCP-Midstream-Announces-Common-and-Preferred-Unit-Distributions.html
“100 percent of DCP’s distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business”
Soi they hedge in the prospectus.
“The treatment of guaranteed payments for the use of capital to tax exempt investors is not certain and such payments may be treated as unrelated business taxable income for U.S. federal income tax purposes.”
Passive partnerships don’t have this problem, so a Compass Diversified B and C doesn’t have this problem and it only comes up because publicly traded partnerships can’t restrict who buys the security, whereas a private partnership can and do and will prohibit IRA’s from buying certain partnership classes.
Bob In Thailand – The information you have posted is generally correct. When holding a MLP in a retirement account, the only box I would be concerned about is the amount in box 20v. Depending on the nature of the business, income in lines 1, 2 or 3 may cause income to be generated in box 20v. However, if the income is on line 4, it should not create any amounts in box 20v. Income listed on lines 5 and 6 probably will show up in box 20v and just checked an old K-1 of mine and this was the case.
However, while this information is generally correct, there are probably a few exceptions out there.
Bob in Thailand – I’m a CPA, but want to correct my last post and state that income on Line 4 may or may not go over to line 20v. It probably depends on the nature of the business and may go on a case-by-case basis. Just found an old K-1 of mine from 2018 when I had some holdings in Teekay LNG Partners Series B preferreds. The amount listed on Line 4 as guaranteed payments also showed up in Box 20v in the same amount. So for this particular partnership, Line 4 was UBI. However, the operations of DCP are different than Teekay, who leases out ships and is considered an active business.
I’ll bet the partnership themselves make that determination and it is a case of a judgement call by the CFO.
I wonder if it falls generally between foreign and US because foreign don’t worry about US tax advantaged entities.
The list would be enlightening to say the least.
Thank you both, Justin and Kaptain Lou. I appreciate your replies, especially as they were documented and not simple opinions. I wish more people would take the time, both physical and mental, to comment in such a manner.
Kaptain Lou: Just to confirm my reading, there should be no UBI issues with a preferred MLP in an IRA if there is no amount in box 20v.
Justin: You stated “the list would be enlightening”. By this I assume a list of preferred MLPs with data reagrads K-1 block 20v amountts. I have K-1s of a few other preferred MLPs beside DCP. I seem to recall they had block 4 amounts but no block 20v amounts. If you are interested in such a list let me know and I’ll review the K-1s and post the data later today.
Regards.
Bob in Thailand: You are correct, there should be no UBI issues with a preferred in an IRA if there is no amount in box 20v.
I’ve found the reporting can really vary. For example, I held preferred shares of Landmark Infrastructure in 2017 and 2018. In 2017, none of the preferred dividends showed up in box 20v. In 2018, about 1/3 of the preferred income showed up in box 20v – even though I held the same investment and nothing had changed on my side.
Now, here for the tax planning tip: The first $1,000 in a retirement account (per each account) is not subject to the UBI tax. Personally, I have seven retirement accounts: Roth and regular IRA accounts at Schwab, Vanguard and Fidelity and then another 457 plan account at Schwab. So, if I spread out a preferred MLP investment over all the accounts, the first $7,000 in UBI would actually not cause me any tax problems and I would not have to file the 990-T for my retirement accounts.
Landmark is a special case. I believe they are the only partnership that owns a REIT and also invest in active businesses. Their payment notices indicate most of the time their distributions are REIT dividends but occasionally are ECI.
See this announcement from 2018.
http://investor.landmarkmlp.com/news-releases/news-release-details/landmark-infrastructure-partners-lp-announces-cash-9
So you know a few weeks ahead of time what is coming up
Justin: I see your announcement from 2018 and while it does mention foreign owners, it does not mention UBI in any way. Back in 2017 and 2018, there was no way for me to know if any of the income was subject to UBIT until the K-1 was issued. Bottom line is that investors holding MLP preferreds in their retirement accounts may have to pay tax on the income listed in box 20v, if it exceeds $1,000 per account. The best tax planning strategy I see around that was mentioned in my post above: hold shares in different accounts so that no one account has more than $1,000 of UBI.
You can infer from the ECI designation in the notice that it is UBTI, as both are considered active income.
I am surprised that the multiple account trick works, as they have the same SSN and can be tracked by the IRS.
Justin – I learned this strategy about 20 years ago at a tax planning seminar I attended. Each IRA/Retirement account is technically considered a separate “entity” this strategy is perfectly acceptable to use.
Plus, it would be very, very difficult for the IRS to track – even if they wanted to. I had forgotten that I also have a small SIMPLE IRA plan at Morgan Stanley as well – so think how difficult it would be to track my SIMPLE at Morgan Stanley, 457 plan at Schwab, Roth IRA at Fidelity and regular IRA account at Vanguard if each of them had a K-1 with UBI.
Justin, I dont think UBTI limits has ever been a per person issue, but a per account edict.
ok. I see why. IRC 408 h)
But they aren’t at the account level, they are at the trustee/custodian level.
“Each account of a type listed above is treated as a separate trust for unrelated business income tax purposes (even if there is a single owner or beneficiary for multiple accounts). A custodian is treated as a trustee. See section 408(h).”
https://www.irs.gov/instructions/i990t
So the limit is applied at the custodian level, so if a Roth and regular IRA are with the same broker, the limit applies against both accounts, but if they are at different brokers, they are treated as two different entities.
Ack. I completely misread it. Yes, it is account level. “each account”.
I am not having a good day…
Justin – just to let you know, most of the posters on this board are here to help and educate others. No harm, no foul. Always a good conversation and hopefully the topic has been educational for other investors. We all have a bad day from time to time – so no problem. I’ve certainly had my fair share of bad days too.
FAT has become very popular in the past few days. Still too hot for my level of risk tolerance but maybe it’s time to come in?
Tim, You have mentioned Uhaul notes for cash. Barron’s just mentioned Mercedes Benz and Dominion Energy programs paying 2%+ for liquid cash. Anyone have experience with these programs?
John Miller, last November I wrote an article on SA called “Where to Stash Your Cash” and mentioned the Dominion Energy Reliability Investments. My article also mentioned a similar program called Duke Energy Premier Notes. Right now, Dominion will pay 2% for balances over $50,000 and 1.85% for amounts from $10,000 to $50,000. I’m not familiar with the Mercedes Benz program, but believe General Motors has a similar program ( I will pass on the GM notes). Here is a link to the Dominion investment program:
https://investors.dominionenergy.com/fixed-income/dominion-energy-reliability-investment/default.aspx
Treasury Auction
The business press hasn’t given much attention to the poor auction yesterday. The 30 year bonds had to be discounted and only $26 billion were sold at 1.40% rather than the goal of $28 billion. Given the need to raise 2 trillion this Fall and falling exchange rates, it would seem that these auctions will put some upward pressure on the entire yield curve.
My question is whether all upward pressure on yields is positive for equities. In the first week of June, we saw the ten year yield rise to 90 basis points and Dow jumped up, mainly due to economic optimism. Is it possible this Fall that we may experience increases in interest rates unrelated to optimism and therefore not constructive to equity values?
AGM coming out with a new fixed rate preferred in the low 5’s
Thanks Potter
Just noticed Medley made another payment on MDLQ. Always a surprise considering at current price yield is over 30%.
it was down at 2 bucks 5 weeks ago, which is just about 4 1/2 dividends.
I guess sooner or later, bankruptcy is in the cards, and the expected recovery is expected to be poor.
But look at RAIT. The people who bought those baby bonds made off like gangubusters.
Re: LMHA and LMHB
Notice that as of Monday’s close (August 10) PFF is holding onto 763,959 shares of LMHA and 1,511,224 shares of LMHB. Just to be clear are PFF and other similar ETF’s and mutual funds REQUIRED to sell their shares upon delisting with the exchange and termination of registration with the SEC? Is is MANDATORY?
Thanks for any opinion.
Dave, I dont follow PFF rules and guidelines because they suck as a steward of ones capital. But I can most certainly tell you this. The mental midgets owned millions of then named LTS-A and had a change of control opportunity to redeem at $25, before it delisted. But they waited over 3 months after it was delisted to dump them all the way down to $6. So clearly they dont have sell at delistment.
Anybody following the FPI/Rota Fortunae Seeking Alpha soap opera? Though I don’t know if they had released this earlier, it’s interesting to see FPI exposing the names behind the RF mask now in today’s quarterly – “The biggest events this quarter were the unmasking of Rota Fortunae (Quinton Mathews) and co-conspirators Sabrepoint Capital Management, LP, George Baxter and Donald Marchiony, and the Court’s denial of Rota Fortunae’s motion to dismiss our complaint,
Im a big fan of Rota. Made me big money on the FPI preferred when he crashed it and I bought. Wish he would come up with a hit piece on LXP or maybe REXR, ha.
What are people’s thoughts on RMPL, the RiverNorth Speciality preferred? It becomes callable on 10/31/2020 and is mandatory on 10/31/2024. It is 24.88 and yielding 5.9. So a tad under par which is nice and a yield to worst of 7.9.
I own a few shares
Trying to sell around 25.10ish
Financials look pretty decent last I looked
Below par, I’ll hold, gets much above, see ya.
Ready Capital (RC) reported excellent second quarter earnings this morning, partly due to its participation as an originator in the government backed Paycheck Protection Program. Common shares are trading 10%+ higher on the news.
http://ir.readycapital.com/investor-relations/News/news-details/2020/Ready-Capital-Corporation-Announces-Second-Quarter-2020-Results/default.aspx
I am heavy into RCP the Ready Capital 6.50% baby bond maturing 4-30-2021. A nice pop this morning up to $24.80. Still trading under par. Also, the 2026 baby bond, RCB up 5% to $22.52.
I’m with you Gary…RCP seems like a sure fire way to lock in 6.5% yield for the next nine months. Based on how well they did in the second quarter, I’d say the chances on Ready Capital going broke before the redemption date are pretty close to nil.
What’s the perceived knock on RCA? Convertibility? I’ve not reviewed prospectus in a long time, but if I remember correctly the only option of the company converting this to common instead of cash would be if shareholder elected to convert. In that circumstance, RC has the ability to execute the conversion in shares or cash. Other than that it’ll pay cash on maturity and at current prices, it’s the cheapest of the 3 by far…. What have I forgotten about this one?
@2wr Let me just say your memory is not too good when it comes to RCA and leave it at that.
CenturyLink Inc. (CTL) announced that Level 3 Financing Inc., its indirect, wholly-owned subsidiary, plans to offer $840 million aggregate principal amount of fixed-rate unsecured Senior Notes in a proposed private offering.
Level 3 Financing intends to use the net proceeds from the offering, together with cash on hand, for general corporate purposes, including, without limitation, to redeem all $140 million aggregate principal amount of Level 3 Financing’s outstanding 5.625% Senior Notes due 2023 and all $700 million aggregate principal amount of Level 3 Financing’s outstanding 5.125% Senior Notes due 2023.
https://www.prnewswire.com/news-releases/centurylink-announces-proposed-private-offering-of-level-3-financing-senior-notes-301108323.html
So it appears CTY and CTZ are safe for now.
Just a morning musing:
Without doing a dissertation consider this: When to sell, buy, or even go short?
Please understand the minds of the players in the arena. These guys use leverage and derivatives to amplify. They also weight money flows. We throw sand into the pond, they throw boulders.
Take a look at monthly time frames and notice when volatility kicks in. Usually within a few days of regular options expiration, the regular third Friday has the most volume, (read: liquidity chumps). They keep their finger over the button all day. Welcome to a trading subsidiary at a safe bank.
Like I said, no dissertation. Need to sell? The regular options expiration is Aug 21 this month. Let’s see what happens. I have no crystal ball, but humans seem to be creatures of basic habit.
But which direction, up or down? Hint: QQQs up 80%! since end March? Spreads on the SMA lines at huge spread?
How do you spell RISK? M…O…N…E…Y…
That’s what I said in May. And I missed the second half of the rally. It doesn’t pay to be right if you’re too early.
Martin, for me, this is why I rarely have cash until I see some economic change that will materially change the yield market. We can look back and say, dang I should have been sitting in cash and bought SR-A at $17 in March. Except most likely one would have bought at $23 on the way down, or $23 on the way up and not maximized returns anyways. I have found myself the past 7 years to have maximized returns by staying fully invested and trading within boundaries set, than waiting for some event to occur..
But, for buy and holders, just looking for an attractive entry point below par and holding, my viewpoint is generally irrelevant.
Joel A.. FWIW. QQQ is trading 22% above its 200 dma., which is higher than where it was in February before the sell off. Price is king though, until it breaks support, shorts get killed.The week of option exp. tends to be higher and the week after has historically been the worst week of the month. Then you get the 401-k and pension dump and front running of that around the beginning of month. ATB.
Coming to a baby bond near you?
In several respects the Canadians have been ahead of the curve on the Americans where preferred and, more recently, where bonds are concerned.
Case in point, a recently issued Enbridge US$ institutional ($1,000) subordinated note. In form, it’s a baby bond that trades on the bond desk, rather than on an exchange, for 40x the price of the typical baby bond.
https://www.sec.gov/Archives/edgar/data/895728/000110465920081343/a20-24121_3fwp.htm
The novelty is this: this bond (note) converts into preferred if the issuer ever gets in deep trouble. In such circumstances, the preferred are almost certainly worthless. In other words, just when you need the benefit of this debt issue ranking ever so slightly ahead of equity, like a chameleon it turns into equity.
In the mean time, the company gets the benefit of a tax deductible interest payment (rather than a non-deductible dividend), and the investor gets stuck with ordinary income tax rates on what arguably is a dividend.
The best of both worlds, or the worst, depending on what side of the table you’re on.
I haven’t yet seen this type of mandatory convert come widely to market in the U.S. but I suspect it will. I have no doubt a great many corporate finance eyes are watching this issue.
…….wow…….. that is a terrible thought
you are probably right
but it is a terrible thought
Whose in charge of the hen house?
the foxes
Got off the course today and noticed the 10 year closing below 0.51% today. Lowest by far on this cycle (I assume all time). Just keeps heading lower…..
Tim, I just noticed the ‘Reader Initiated Alerts’ and ‘Errors and Omissions’ threads are closed to new comments. Is that a just maintenance issue or by design?
Let me check Citadel–should be no change. Maybe something glitched when they migrated servers yesterday.
ok–got it. Learn something new everyday–apparently after 1 year comments get closed automatically. I refreshed the page date and they are ‘open’ now. Thanks for the heads up.
Noticed CNPWM is trading near par. Are there issues with this preffered other than is low distribution and past call date? 4.2 % is pretty low unless you compare it to my MM funds. Any thoughts would be appreciated. Thanks
Ha, par for that issue is $100 bucks and it has a 2.09% coupon, which is why it is yielding 4.25%.
if they ever redeemed it, the returns would be astronomical.
Gridbird probably has the history of it and will post it after he gets off the golf course.
Justin = I think you said it wrong…. “Par” = 50, not 100, and the coupon = 2.09 which would translate to 4.18 were it a 100 “par” issue, thereby current yield now is 4.21% at last price of 50.03
Ack, boy did I misread that one. it is a dollar amount, which was the practice back then, instead of the coupon, which is the practice now.
I stand humbly corrected…..
Justin, you dont have to apologize for a mistake, heck Rida Moron and Pendy not only make them more frequently than us, they get paid good money to post frequent mistakes and dont apologize either!
I have owned CNPWM before, and others of its ilk and quality. Heck I bought a small amount of a 3.7% perpetual today…ouch! One usually doesnt want to pay ask on these types. Set the bid and wait and dont chase. These 4% old illiquids have been great flippers for me lately. But they can also serve as ballasts when preferred market goes haywire. Many of these types for example basically ignored the March calamity by never trading.
LEVL new pref incoming
https://www.sec.gov/Archives/edgar/data/1412707/000141270720000061/prospectussupplement.htm
Just saw it Eugene–thank you.
WSBC new pref coming
as always thanks mcg
New Issue
WesBanco Inc. Series A (WSBC) 4mm Fixed Rate 6.875%-7.00%
4mm?
thx
TCRD -> FCRD
TCRW -> FCRW
TCRZ -> FCRZ
PSEC to offer it’s first preferred. 5.5% coupon.
Unable to post this in Reader Initiated Alerts (“Comments are closed.” message at the bottom of that page), so I thought Sandbox might be a useful alternative page.
https://finance.yahoo.com/news/prospect-capital-corporation-launches-1-203400441.html
Large issue. Monthly payer.
How did they get 5.5% for their preferred when their 2024-2025 bonds are offered at 5.7%+ YTM?
JCAP, the self storage REIT has been sold and the new owner will be paying off the preferred at par when the close is official. All preferred dividends will be paid in the interim.
Press release follows.
https://investors.jernigancapital.com/news-events/news/news-details/2020/Jernigan-Capital-to-be-Acquired-by-a-NexPoint-Advisors-L.P.-Affiliate-for-17.30-per-Share-in-an-All-Cash-Deal/default.aspx
RF Regions Financial news:
Item 7.01 Regulation FD Disclosure.
On August 3, 2020, Regions Bank is sending redemption notices to Deutsche Bank Trust Company Americas, which will result in the redemption on August 13, 2020 of the Senior Fixed-to-Floating Rate Bank Notes due August 13, 2021 (the “Fixed-to-Floating Rate Notes”) and of the Senior Floating Rate Bank Notes due August 13, 2021 each of Regions Bank (the “Floating Rate Notes” and, together with the Fixed-to-Floating Rate Notes, the “Notes”) pursuant to their terms, at an aggregate redemption price equal to the sum of 100% of the principal amount of the Notes being redeemed and any accrued and unpaid interest to, but excluding, the redemption date. The aggregate principal amount of the Fixed-to-Floating Rate Notes outstanding is $500 million, and the aggregate principal amount of the Floating Rate Notes outstanding is $500 million. The redemption will be funded with cash on hand.
i am guessing the two CUSIP’s involved in the call are 759187CD7 and 759187CE5
Yes, on both of those cusips
Tim-
I noticed that ‘current price’ seems to be current and fairly accurate for most of the searches- but the results in baby bonds seems off/old even tho they are correct in the master list.
Also- what are the numbers in the Q column of the master list (no heading for it)?
thanks
Also- since the BBonds show ratings or NR in the master list, it would be very useful to have it in the BB list itself.
thx again
Gary–the q column is simply a calculated number until 1st call–used to calculate yield to worst. I’ll check the baby bonds—of course everyone pulling google quotes has had issues with baby bonds forever–I’ll do some checks tonight.
Thanks- prices looking good.
I found about 5-6 errors which I corrected.
WTH with AHH-PA? Just sold it at $26.31 (+11% today).
AHH reinstated the dividend on the common. Makes the preferred less likely to have a problem with payments. Although I have to wonder why anyone thought there was an issue to begin with.
Time to put together a list of stocks that might reinstate. Keep in mind that REITs MUST pay out a portion of earnings to maintain REIT status.
My favorite for this is SITC-A which I own. Closed today at 22.92.
Retired – You’re saying you’re looking to SITC-A as your favorite preferred that could benefit from a reinstatement of common divvy ala what happened with AHH? At first I thought you were talking about preferreds with suspended payments
2WR…
Yes, I think SITC will have some kind of common dividend this year, and that will have a positive effect on SITC-A..
Preferreds with suspended dividends? I like to stay away from those.
RE: TCO-J
Will TCO reinstate the common dividend this year? If so, would that have a positive effect on TCO-J?
Current yield on TCO-J = 7.52%.
Am waiting for 2Q 10-Q and 2Q CC with forward guidance.
Leery of retail. Especially after the most recent consumer confidence number.
Any thoughts much appreciated.
Thanks!
I took the EPR-G instead of the sold AHH. Νot sure if it was the right move, we’ll see…
I have a question too on JPM preferreds. Back last November I purchased some of the new JPM-P as my first try at a flip. Paid $25.09 for it. Watched it climb to $26.25 or so and was ready to pull the trigger thinking this was so easy….. Lucky me Covid 19 hit and I watched it sink down to about $20. Well, I held on and now it is over $27. My trigger finger is just itching to pull the trigger. Is it not time folks to finish my first try at flipping!? Maybe I can take the play money and try my luck at the new Truist one…….
Cannot find JPM-P but if the coupon is 6% it trading over $27 means you are getting the next 6 Quarters of dividends right now. Sure, waiting for October and take the gains as long term would be tempting, but if in a tax deferred account that should not matter.
If I owned it, getting the next 6 dividends right now would make me take the profits and wait for the next opportunity…
Oops, it is really JPM-J issued last October at 4.75%. It is listed in my Vanguard Roth account as JPM_PRJ and I left the last part off. I get almost seven quarters of dividends. Yep, it is time for steak dinners!
I am also tempted to sell JPM-J. But I bought a long time back, just below par.
So I intend to hold indefinitely unless, of course, it breaches $28 and at that level, I cannot resist.
I sold off 25% of my JPM-J worried about a second wave. Now, I’m just going to cling onto the rest till call. My energy and appetite for trading in and out too low.
You have more patience than me. I don’t hold out for a $1 gain unless it happened quickly or it’s something I wanted to keep. I sold many of my holdings on the bounceback, some of them before they reached even.
Pull trigger, bank gain, always other opportunities
Anyone have experience with JPM’s propensity to call their preferreds? They have 2 coming up in September and I was curious what the thought was on them calling those issues. I was going to park some money there, but not if people think they will get called in Sept.
they will be called. don’t buy. (in my opinion)
the search field on this site is great!. search JPM and you can see they called a 5.4% coupon and a 6.1% coupon and rates have dropped since then.
they are facing massive write off from Q2 from the covid
as seen by boosting reserves
Diamond has not ruled out dividend cut – but why not call 5%-6% cost of capital in the preferred
JPM.C has call protection – %5 – but way above par
Personally i am holding / building dry powder – the mail in ballots will be a mess in November
Thanks for the insight. I used CTV until that ran its course and might use CTZ since it will probably be called and is under par. I started buying that in the low 24 and it has steadily been marching up.
Side note – I with the search allowed us to sort the results by date, that would make it so much easier!
Yup, I’ve got JPM-Gs I picked up at par in March and the price reflects 100% call possibility. There’s negative reason to keep on paying 6%.
I’m looking for preferred issues with the following characteristics :
A maturity (not a call) less than 15 years.
Priced at or below par.
Yield to maturity greater than 5%.
Quality of or equivalent to a S & P rating of BB+ or better.
I can consider variable or floating rates hopefully with a floor, like GJP.
Thanks in advance for any ideas.
Term preferreds (and baby bonds) can be seen here:
https://innovativeincomeinvestor.com/short-medium-maturity-income-issues/
There aren’t a lot, so I don’t know if what you’re looking for exists. Maybe there are a few of them… It may be hard to get near-IG quality at/near par with a reasonable coupon. Others may have better ideas.
where can I find registration information on enbridge preferred ENBBF