Sandbox Page

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.

322 thoughts on “Sandbox Page”

  1. Apologies for a duplication because I originally posted this on the Stocks page but it probably has more relevance as a Sandbox issue:

    I have a generalized question about trade executions, but I’ll use a trade this morning on RILYL as an example (even though it’s not a stock). This morning there were 2 trades executed for 1000 shares and 400 shares at 25.23 at 9:44.33 AM. Simultaneously, 1000 shares and 400 shares also show up as being traded at 25.2375. Can anyone explain why this frequently happens? I was the buyer of the 400 lot at 25.23. Was the execution of 400 at 25.2375 and sale to me at 25.23 an example of my broker being willing to execute on my behalf while eating .0075? Certainly these were related trades and not coincidental. Anyone have an explanation?

  2. Added to my position in IPWLK, 2 days before XD. Paid $103, a little higher than I would like, but since my first batch was bought right at par, average cost is $1.50.

    Call risk is ever present, but I’m taking that risk.

    1. Inspy, remember when IPWLK had some huge crazy controlled liquidation this spring? I was selling everything I could later buy back to get them under $99. I think you got some then also. I sold pretty quick for $3 profit. I already had my permanent fill of IPWLO, so I didnt need to keep IPWLK. I doubt redeeming IPWLK is any priority, so I suspect you are just fine here.

      1. Grid, yep, I feel pretty comfortable with IPWLK. And you are correct that the first lot I bought was during the unexplained sell-off below par, sometime in April or May this year, IIRC.

        Today I picked up another 100 shares of EP-C at $50.06. Very strange that the selling took EP-C below par, to $49.90. Why would anyone do that 2 days before XD of $0.59? And selling is ongoing even as I write this – last trade at par $50.00. Strange, indeed..

        1. Its hard to tell, but somebody didnt want to pay interest income tax. This issue rises and dives on liquidity. When it dries up it heads up. When a seller comes out it drops. It has had a lot of volume past few weeks overall. It will go periods where it wont trade at all or very very little.

          1. What I’ve found out while being convinced to get into EP-C kicking and screaming is that Kinder Morgan says, “We [KMI] provide a full and unconditional guarantee of the Trust I Preferred Securities” in the 10k and yet it is rated one notch below KMI’s Baa2 rating at Baa3 because of its original subordination clause… On an ongoing basis, that means to me that EP-C should be considered of equal credit strength as KMI except in the very worst of circumstances, i.e. bankruptcy. Comparatively speaking, a 2028 Baa2 KMI bond, cusip 49456BAP6 4.30% due 3/1/28 trades @ 3.10% bid 3.06%YTC and 3.09% YTM offered. That’s one large spread between essentially equivalent credits.. Thanks, Grid… bot today at 50.09 and 49.91. The 2028 maturity appeals to me.

            1. 2WR, If it was 1% yield you would be fine as long as it is IG and a sub 10 yr maturity, ha!
              I can hold no problem until 2028 also. But if it jumps over 52 like it recently did on a 2 dollar quick flip, I will kick it towards the door. I like owning issues that I am comfortable holding long term or flip. But I own a few yield chasers doing well now that I will not hold indefinitely though.

              1. Whoaa! That settles it…. It’s time for me to change my evil ways…. Tomorrow I will begin a pilgrimage to wind up sitting at the feet of the almighty Rida and load up on the likes of CBL, etc… What the heck, I don’t sleep much at night anyway so I might as well completely eliminate peaceful sleep from my chakra…

                1. 2WR, You could do worse than Rida. After all Pendy just said they get outsized returns from their “superior analysis”. Im assuming that superior analysis includes… 1) Recommending a bond and not knowing the buyer pays accrued interest. 2) Calling B rated debt “high quality debt”. 3) Not knowing the difference in cap structure from a preferred vs trust debt preferred 4) Not knowing par, liquidation value, and redemption value, are not interchangeable words.
                  What a fool he is….

                  1. Just in case you’re not familiar with this one BSA is Brightsphere Investment Group Baa2/BBB- 5.125% note due 8/1/31 and it’s currently trading at 24.92. 3 years longer and 40 basis points cheaper the EP-C and you get a higher Moody’s rating… There’s a difference of opinion between Moodys and S&P though, as Moody’s considers it stable and helped by a recent redomiciling to the US plus recent Paulson & Co involvement with 25% ownership of BSIG. S&P on the other hand is more concerned about outflows and has it on negative credit watch while commenting on its leverage being comfortably below 2X. I’ve owned it for 2 1/2 years and it’s always been cheap, but it’s tough to touch its yield on a 12 year IG note.

                    1. Their revenue is climbing, but their operating incoming is declining because their expenses are increasing at a much higher rate with no signs of reversing as of yet. And with a small market cap… i would lean towards concerned until they can get their expenses under control. This probably explains why their common stock is cut by by 44% over the last few years.

                  2. What Pendy is really good at is being an attack dog. He does not listen to anyone else’s thoughts. If you differ from his opinion (which he thinks is a fact) then he berates you until you stop posting. I think Rida must like that. Otherwise why keep the fool around? You can’t help anyone there at all, because if you disagree with them, you get beat with the ugly stick, which is unfortunate. Most of the posts are simply watered down replies with confirmation bias. Just because another investor invests in your investments, doesn’t mean it is a good investment. Just take a bunch of sheep and go over the cliff and see how that turns out.

                    In my opinion, this is one of the few sites in the world (maybe the only one) were you can have a respectful dialogue, quality and educated discussions, etc. My guess is that we have about 100 posts/day. Thank goodness for RSS feeders to show me the new stuff 🙂

                    1. Mr. Lucky, yes, confirmation bias is what they want. I appreciate opposing opinions. It may hit a blind spot I have. The key to getting Pendy is not challenge his opinion, but to lay a trap that he responds to and then he steps in it trying to grab the cheese. I embarrassed him good him last week when he thought par price was liquidation value. He didnt even respond again as he knew I would get him again.

      2. I’m mostly tapped out, but I bought a bit more CBKLP instead. Cheaper than IPWLK, more yield, and I might not get to buy it again after Schwab takes over TDA.

        JMO

  3. Looking for yield, I never thought of looking at China; however, I found this article from Jim Jubak interesting and thought you might also:
    China bond defaults head for another record year
    December 5, 2019 @ 7:50 pm | Breaking News | 0 comments
    China bond defaults head for another record year
    With 15 defaults in November, total onshore bond defaults have hit $120.4 billion yuan ($17.1 billion)in 2019, according to Bloomberg. That’s close to the 121.9 billion yuan record set in 2018.
    While the $17.1 billion in onshore defaults seems insignificant compared to the $4.4 trillion size of China’s total onshore corporate bond market, they’re enough to throw a solid dose of worry into China’s bond market. That’s because the corporate bond market is supported by a complex arrangement of cross-company and government guarantees that, historically, have protected companies from default. But now that defaults are rising and are a real possibility, bond holders and issuers are left wondering who will get rescued and which guarantees can be trusted.
    The defaults stretch across an array of sectors. On Monday, for example, Peking University Founder Group, failed to repay a 2 billion yuan bond. The same day, Tunghsu Optoelectronic Technology Co., a maker of photoelectric display components, failed to deliver early repayment on both interest and principal.
    The stress seems to be spreading to the off-shore bond market too. Tewoo Group Co., a major commodities trader from Tianjin, looks likely to default on a $300 million bond due December 16. That would make the company the most high profile state-owned enterprise to default in the dollar bond market in more than two decades.
    In a report on Tuesday, Fitch said the default rate for bonds issued by non-state Chinese companies increased to a record 4.5% in the first 10 months of 2019, China’s corporate debt hit a record 165% of gross domestic product last year.
    The other “interesting” implication of the rising level of defaults is the possibility that it will affect the thinking of Beijing officials negotiating the U.S.-China trade deal. With defaults rising, this wouldn’t seem to be a good time to further stress China’s export economy.

    1. If you read only this part from the above,”…cross-company and government guarantees that, historically, have protected companies from default. But now that defaults are rising and are a real possibility, bond holders and issuers are left wondering who will get rescued and which guarantees can be trusted…”, who and when and where would your expectation fall?

      1. Joel, I read it and it is largely a nothing burger. All that means is KMI the parent is sole responsible guarantor of payment, not any subsidiaries. KMI net debt to net adjusted EBITDA is 4.4 projected to 4.3 next year and anything under 5 is very very solid. That is why this subordinated debt has the Baa3 rating. In fact it was B1, 5 years ago. KMI fully acquired it and its rating went up…Then KMI went C Corp and heading self funding status and the rating just kept creeping up. People might have gotten “Kindered” owning the common, but the debtors benefitted from the change in corporation model to C Corp.

      2. Ooops, moved sections on site, and forgot I want on last page, Joel. You will have to disregard my last post as I thought your cross guarantee comment was in relation to EP-C, not in general terms as you were replying too.

    2. Investing in China either equity or fixed rate is very complex because political considerations play a very greater role than here. As such it is not something which people should do lightly as they probably do not realize the full extent of the risks involved. Be very careful should you want to explore this area. SC

      1. Whenever Fidelity kills a ticker there is usually a corporate (usually a call). They killed CORRPRA this morning. I hope I am wrong.

              1. I think I know what you did to get $25.09 but given it can’t be called until 1/27/20 and the next quarterly dividend would be declared near the end of January with an ex-dividend date of around 2/10 to 2/13 and given the quarterly dividend is .4609, you are pretty much locked into most of that even if a call occurs. Of course you would have to hold til the potential call date but . . .

                BTW – Corr-A was not locked for me at Fidelity

                1. Mav – I’m glad you responded because it made me realize I screwed up in arriving at 25.09 as a potential bottom… When saying 25.09, I was double counting the amount of “accrued,” so what I should have been saying was I believe it should bottom out at 25.14, NOT 25.09. At 25.14, taking into account an amount of accrued totaling 4.6 cents (thus the 25.09 or more accurately 25.094), a purchase as of Friday’s trading would equate to approx a 4.50% YTC. Having been playing this picking up pennies game recently by purchasing called securities upon announcement of the call, with a few minor exceptions, that’s about the best you can expect to achieve on a YTC basis of a called issue these days. What’s good about playing this silly game on an issue like this one where the call is only expected not actually announced yet, is that assuming fear of an imminent call is the only reason why it’s been declining in price, the consequences of you being wrong about the call actually happening on the first available date only enhance your results, not make them worse. So you win if you’re right and you win bigger if you’re wrong but it’s all counted only in pennies not dollars. It’s an ultra conservative strategy in the extreme to be playing, that’s for sure, but if you’re playing with money you’d have sitting in a money market account for safety’s sake anyway, it’s a great way to enhance your returns… And incidentally, it’s the great sleuthing done by many here on III such as mcg’s constant discovery of “incoming” issues that frequently are precursors to calls of existing issues that makes this strategy possible… That plus the constant and continuing flow of calls in today’s environment. So this is just another reason to say thanks to Tim for this site and for the super sleuthers on here in so many different areas to exploit from here to Canada.

                    1. Tim, If I had an edit button I could correct half of mine before others got a chance. 🙂

        1. Kapil – CORRPRA works for me on Fidelity but I agree with you about what it means when Fidelity kills a symbol. Recently, though, they seem to be faster to bring a called issue back into play again under a new symbol like CORRPRACL (which they do not recognize). In the past, once they killed a symbol and it pretty well stayed killed..

        2. Very often, the first indication of a call will be when a ticker is shut off from trading. Happens before any press release, any SEC filing, even before its on (cough) Bloomberg.

          Got such a notice about BBT-G right after close of market today. When the 5.2% issues are getting called it’s not good news.

          1. this will probably have something to do with the BBT/STI merger. Like for example, STI-A will become BBT-I.

  4. Hi Tim,
    I’m seeing a fair amount of weakness in many of the preferred names. Does this typically happen towards year-end?

    1. kapil–the answer is yes and no. I believe that at this moment (actually the last month) we are seeing a combination of individual and institutional selling brought about by the very rich selling prices that were in the market–on a relative basis (compared to historical–although I don’t have historical numbers available) many preferreds were 5-10% over valued–and those have seen some downward pressure.

      For instance the CHS perpetuals, which have always been darlings of investors, were trading very strong. Look at this chart–

      https://innovativeincomeinvestor.com/security/chs-inc-7-10-class-b-reset-rate-cumul-redeemable-preferred-stock-series-2/

      It was trading at $28.30 or so and after just 10 days is now at $26.72–a loss of $1.50/share. There was no big ‘dump’ of shares–somewhat elevated volume, but nothing dramatic. Selling begets selling–the more it falls the more folks with nice capital gains are looking to lock down those gains–and on and on.

      Additionally individuals–and more likely institutions are looking to take their gains and move on as we reach the end of the quarter/year–no one wants those juicy gains to evaporate like they did last year when portfolios came into December up 6-10% and ended the month with annual losses. Of course last year we were in a rate hiking cycle which is not the case now, but there are always things that make folks ‘panic’ and lock down gains.

      Personally I have seen really no losses (maybe 1/10%) because I typically would sell an overvalued issue and not be holding it. Additionally many of my base holdings are short dated term preferreds and baby bonds which mostly do not move nearly as much as perpetuals and long dated baby bonds.

      1. I’m reluctant to take profits this month because I’ll owe too much tax. I had a good year. Maybe I’ll struggle next year and profit taking won’t cost as much.

    2. Kapil, yes, preferreds tend to be seasonally weak at the end of year. Probably tax loss selling. Some years, it’s limited to select preferreds. Some years the entire preferreds market tanks. Check out the 10 year chart of PFF and you can see what I’m talking about. Usually the hardest hit end of year are recent IPOs trading below par.

    3. I find more arbitrage opportunities when prefrred are falling, because they never fall in tandem. I pay more attention to the divergence in prices rhan the actual prices themselves. Take those profits while riding out the storm.

      1. In the past 2 days sold NLY-I and bought NLY-F 19 points lower, traded CIM-D for CIM-C 74 points lower, and swapped NRZ-B for NRZ-A only 39 points higher. the deals are out there, you just have to watch for them.

  5. Anyone know when AFGE will be paid when called?
    Is it 12/30 ?
    If so, then buying it here at 25.30 is better than a sweep account yield.
    My math skill says it’s a 5.2% annualized yield.
    Am i wrong?

  6. Yesterday, I opened a 25% position in CORR-A at $25.26. Coupon is 7.375% The last dividend payment was 11-30. The call date is 01-27-2020, so it has another 2 months to its 1st call date. So, it should have about 0.28 cents due if called if I did my math right. Will they call it? From their last earnings presentation,

    019-2020 Initiatives
    CorEnergy anticipates:
    • Completing one to two acquisitions
    • Continued strengthening of the balance sheet through scheduled debt
    repayments and opportunistic repurchases of preferred equity

    So I would say this is their stated direction. But since they used the term
    “opportunistic repurchases”, I am thinking it may not be 01-27-2020 or may be in stages. Might be over thinking this as I often do. But, in actual dollars, I risk nothing.

    1. What the heck happened to CORR-A? I sold it at 26.30 a while back when the common stock was going up like crazy and I assumed there was leaked info of a buyout. Then I took it off my radar. It’s come down quite a bit since then. Only reason I can see is the approaching call date.

      1. I would bet that it is called – either full or partial. The company had a been repurchasing some of the shares and they had $120mm of cash on their Q3 10-Q

  7. My investment thesis on TDS and USM (owned by TDS) was too conservative.

    My thought process on US Cellular was it would become the 4th largest wireless company in the country after the Sprint/Tmobile merger. Less competition meant more pricing power which is a core belief of mine, So, I saw and still see some benefits to financial benefits to US Cellular from the long-awaited Sprint/Tmobile merger.

    Both of these companies have high coupon preferreds that are callable. But they have not called them. I invested in TDA at 5.875% below PAR believing that may survive any call. I still think that this is a reasoable assumption.

    However, I convinced myself that they would do the call in Dec 2019 covering as a minimum UZA 6.95% (callable 5-2016), UZB 7.25%(callable 12-08-2019), TDJ 7% (callable 3-2016), TDE 6.875% (callable 11-2015). My belief was they had to be waiting for Dec 2019 to include the UZB 7.25% coupon.

    Since this did not happen and we are approaching 12/08/2019, why am I settling for 5.875% ? If I could get the others without a big call risk that’s a better investment. So I flipped out of TDA after the 11-27 ex-dividend and received a small profit. That’s because TDA has bigger price swings and can be brought at decent discounts to PAR. I flipped into UZA because it’s ex-div is 12-12 at a small call risk since they are required to do a 30-60 day call notice by the prospectus. But that is well covered by the small profit from TDA anyway. So, in reality, I flipped in at no call risk.

    I don’t know why so many high coupons have not been called by TDS and USM. But then again ALLY-A, and Wells Fargo have above-market coupon rates also.

    So why do I mention this? I still think in this market, TDS and USM offer a good risk-reward scenario with lots of different ways to approach it. TDA paying a 5.875% coupon is currently down to $24.73. If it is called you have a 1%_+ profit anyway in addition to any accured dividends. Will I buy it again? No, I limit my company exposure to 4% of my assets and I consider USM and TDS to be the same company. UZA is also has low risk-call risk currently at $25.67. Ex-div of $0.434 is 12-12, payment is 12-15. With a minimum notice period of 30 days and a maximum of 60 days, a very small call risk.

    Just idea’s for a low coupon rate environment.

  8. Is anyone out there following Seritage Growth Properties, SRG-A, a 7.00% Cum preferred for the self-managed REIT that was formed in 2015 to unlock the underlying real estate value from Sears Holding. They have suspended common dividend but financials look OK, common stock price is basically stable, management seems experienced, Berkshire Hathaway provided $1.6 billion in term debt, and the preferred’s continue to pay quarterly div . I didn’t see it anywhere on III and wasn’t sure why not. I think I will get my feet wet on this one.

    1. I looked at the books for a minute, and can’t find anything positive about them. There was a metric climbing, and that was its ever increasing debt payments. So for me it is a no.

      I was wondering how they were keeping the heat and energy turned on. That question is answered, if you go to their investor site. They have pictures of them burning investor’s money. If you look closely, you can see a conveyor that loads the cash from the trucks that drive up. This in turn generates heat for the stores, and some of it is used for electricity. If you invest in it, you should probably count the # of trucks that drive up with cash every day to and compare against next month. I am probably sure their statisticians are creating linear regression charts as I write this that is predicting the decline in the revenue.

  9. PleSe due your OWN deep due diligence before investing and never follow anyone blindly as they may not have your best interest in mind…
    From Simon Black on gold:
    Over the last 12 months, the price of gold is up 21.1%, handily outperforming everything from the S&P 500 index in the US to stock markets in China, Europe, and Canada, plus bonds, real estate, and even major commodities like oil.

    Gold has even outpaced the stock prices of many of the world’s most popular tech investments like Netflix, Tesla, Amazon, etc.

    (One of the more interesting exceptions has been Bitcoin, which has more than doubled in value over the last 12 months. We’ll talk about that another time.)

    But while gold’s investment performance has been great, I want to tell you today why that doesn’t matter one bit to me.

    According to data published by the World Gold Council (WGC), in the last quarter alone, both retail investors and a number of large hedge funds have been piling into gold.

    That’s certainly been one factor driving prices higher. But to be frank, that sort of demand is extremely fickle.

    The WGC data show that most small investors are buying into gold ETFs (which as I’ve explained previously is probably the dumbest way to own gold.)

    Gold ETF buyers are NOT long-term investors. They’ll most likely sell the minute gold prices start to fall.

    Hedge fund managers won’t hesitate to sell either, especially if they need to boost their quarterly returns.

    So, long-term, gold prices won’t be driven higher by fickle investor demand.

    The real demand that’s worth watching comes from foreign governments and central banks– institutions with such a heavy appetite that they buy gold by the metric ton.

    In the third quarter of this year, Turkey bought 71 metric tons of gold. Serbia bought 9 metric tons of gold in the month of October alone.

    Poland doubled its gold reserves last year. And China has been gobbling up not only gold, but gold miners too.

    It’s critical to understand that foreign governments and central banks tend to be buyers of gold. They’re rarely sellers.

    In fact up until very recently, there was even an agreement among some of the world’s largest central banks to not sell their gold in order to ensure price stability.

    And according to freshly-minted international banking regulations, gold is now considered to be a “zero-risk asset” for central banks and large financial institutions.

    This is important– because a number of central banks and foreign governments are really looking for alternatives to diversify away from the US dollars.

    Right now the US dollar is still the world’s most popular ‘reserve’ asset… meaning that just about every foreign government, central bank, and large commercial bank on the planet holds US dollars.

    China alone has TRILLIONS of US dollars in reserve.

    But for the past 20 years or so, the US government has increasingly used its currency, economy, and financial system as a weapon to threaten foreign countries.

    If you cross the US government, you’re threatened with sanctions, tariffs, and all sorts of financial penalties.

    Think about it– with so many problems and disputes looming, why would a country like China continue accumulating US dollar reserves? It doesn’t make any sense.

    And that’s why so many countries are starting to stockpile gold instead. It’s the best alternative to US dollars, and they’re buying up as much as they can.

    These foreign governments and central banks do tend to report their gold purchases. But it would be remarkably naive for us to assume they’re giving us the full story.

    Why would China willingly tell the world precisely how much gold they’re accumulating? There is absolutely no benefit for them to be transparent. So the real numbers could be far, far greater than what the official statistics say.

    This is ultimately what’s going to keep driving long-term gold demand.

    Individual investors and even big hedge funds will come and go. But foreign governments and central banks are very likely to continue hedging against the US dollar… and gold is literally the ONLY sensible alternative right now.

    This is definitely going to have a positive impact on the gold price. But it doesn’t guarantee higher gold prices over the next year or two.

    Roughly half of all gold demand comes from industry (primarily tech manufacturing) and jewelry. And both of these will take a big hit in the next global recession… which could cause the gold price to fall.

    And that’s the point I want to convey today. Yes, it’s possible to make money with gold. But frankly there are far more lucrative potential speculations out there, including gold miners.

    If you bought gold today and the price soared to $3,000, you’d double your money.

    But if you bought shares in a gold exploration company that discovers a huge gold deposit, your shares could increase in value by 2,000%.

    The decision to own gold should never be about the investment gain. Gold is a hedge against uncertainties and risks. And there are a lot of those in the world.

    We gladly buy insurance policies to protect our homes, cars, boats, and businesses against various risks.

    Plus we buy life insurance, liability insurance, and disability insurance to protect our families against the unknowns.

    This is a great way to think about gold– it’s like a private, fully redeemable insurance policy with steady cash value and zero counterparty risk.

    And when combined with a properly structured retirement plan, it can be very tax efficient.

    To your freedom,
    Signature
    Simon Black,

    1. “Gold ETF buyers … most likely sell the minute gold prices start to fall.”

      And that’s why they lose money. Buy when it falls, sell when it rises.

    2. “The decision to own gold should never be about the investment gain. Gold is a hedge against uncertainties and risks.”

      Not for me. Gold is worth whatever somebody will pay for it. Let other people buy it for funky reasons. I’m trading it for the same reason I trade anything else, to make money on price movement.

  10. Does anyone know the record date for the VER.F partial call? My position from before the call was announced has not changed, none have been segregated. What I would like to know is if new shares are purchased now, are they exempt from the partial call on 12/21? Thanks

    1. VEREIT® Announces Partial Redemption of 6.70% Series F Cumulative Redeemable Preferred Stock
      VEREIT is a full-service real estate operating company which owns and manages one of the largest portfolios of single-tenant commercial properties in the U.S. (PRNewsfoto/VEREIT, Inc.)

      Company Release – 11/21/2019 4:15 PM ET
      PHOENIX, Nov. 21, 2019 /PRNewswire/ — VEREIT, Inc. (NYSE: VER) announced today that it intends to redeem 8,000,000 shares of its 6.70% Series F Cumulative Redeemable Preferred Stock (“Series F Preferred Stock”), representing approximately 20.58% of its approximately 38.9 million shares of Series F Preferred Stock, on December 21, 2019 (the “Redemption Date”). The shares of Series F Preferred Stock will be redeemed at a redemption price of $25.00 per share, plus accrued and unpaid dividends from December 15, 2019 to, but not including, the Redemption Date in an amount equal to $0.0279167 per share, for total proceeds of $25.0279167 per share (the “Redemption Price”). Payment of the Redemption Price will be made on December 23, 2019, the first business day after the Redemption Date. As previously announced, VEREIT will pay the cash dividend on the Series F Preferred Stock of $0.1395833 for the period from November 15, 2019 through December 14, 2019 to holders of Series F Preferred Stock as of December 1, 2019, which is the record date for such dividend, on December 15, 2019.

      Dividends on the shares of Series F Preferred Stock that are to be redeemed will cease to accrue on the Redemption Date. Upon redemption, the redeemed shares of Series F Preferred Stock will no longer be outstanding, and all rights of the holders of such shares will terminate, except the right of the holders to receive the cash payable upon such redemption, without interest.

      All shares of Series F Preferred Stock are held in book-entry form and will be redeemed on a pro rata basis from the holders of record of such shares. As specified in the notice of partial redemption, shares of Series F Preferred Stock held in book-entry form through the Depository Trust Company (“DTC”) will be redeemed according to DTC’s procedures and shares of Series F Preferred Stock held through the records of Computershare Trust Company, N.A. (the “Redemption Agent”) will be automatically redeemed by the Redemption Agent. Payment to DTC and the registered holders for the redeemed shares of Series F Preferred Stock will be made by the Redemption Agent.
      The address for the Redemption Agent is as follows:
      Computershare Trust Company, N.A.
      250 Royall Street
      Canton, MA 02021
      Attn: Corporate Actions
      Telephone: (800) 546-5141

      1. Nomadicmist,
        I bought 685 shares ex-div on 11-27 with a settlement date of 12-02.
        I won’t lose any of those to the recall, i presume?
        Just in case, i did a sell on all my VERPRF shares at a higher price than ask and Fido allowed it, so does that means i’m okay ( financially speaking)?

    2. rk160, I owned VER-F prior to the first call some months ago. The morning the call was announced I added shares on the price drop. At redemption, 10% was deducted only from the shares held prior to the announcement. On this second redemption, I’m expecting 20.58% of currently held shares to be redeemed. Wanting to keep a full position, and again due to the price drop, added 20.58% to the position (under $25.20) on the “assumption” it will play out the same.

  11. RILYL – If anyone’s looking to park some money until 12/30/19, the market right now for RILYL is 25.23-24. With RILYL having been called for 12/30/19 a purchase at 25.23 today, using today as settlement instead of 12/6 (it’s a more conservative way to figure actual yield) a purchase @ 25.23 is the equivalent of a 4.495% YTC. Purchase at 25.24 = 3.95% YTC…. Beats sitting in money markets and essentially risk free given the call is announced, therefore funded.

    1. hells yeah, brother,

      i parked some in rilyl few months back cause i couldnt figure out what to do with sum of ma cash

    1. Thanks Gary–good read. As I have suspected the CLO equity tranche is at high risk–we have to watch Oxford, Eagle Point, Prospect and Priority Income Fund issues closely.

  12. Regarding the CBL notes below:
    Goes to show how important DD is! Just because rewards come from recognition by some quantities of clicks it is NOT equivalent to being correct.
    Comment on a company like CBL, CDR:
    1) CDR-B is shown here on III being redeemed, but it was only a partial.
    2) Both CDR-B&C are rated here on III as D. I feel this is now an inaccurate assessment. Perhaps the legacy of the previous managers and premature announcement of the demise of all things retail by Amazon demanded that rating and lingering reputation, but the very disciplined turnaround and success of CDR’s management since 2011 has been successful and considerable.
    2) I have held CDR-B by doing my own DD about a year ago and since it was past call and below par hoped for a call on the rest of the issue. I sold out when it got just past par and flipped over to CDR-C which still has some call protection and is selling below par.
    The example is to point out that I am comfortable with these actions because of my own DD not a click-shark. How many times do we have to see these killers take the public to the cleaners. Read up on what GS and Northern Trust just got absolved for doing to the Teamsters Pension…400,000 members at 50% reductions. My brother-in-law is one and retiring in April under this legal judgement. Stay TOUGH, do work, don’t follow anyone or anything you don’t understand completely! Also pray you are correct for the effort.
    CDR has worked out…so far for me. I TRY to vet anything and to tell the truth if I was not retired, have lots of time, skills and just like the discovery process I would probably index like Jack Bogle advised. Maybe I should look back at that for a portion now that I mention it, but the yields just kill the thought of that approach.

    1. PS: I just reviewed CDR and feel okay with it even if it gets hit in a REIT storm tomorrow. Shall see! No stop limit placed.

      1. I spent a few hours last week doing DD on CDR and decided to start a small position. Time will tell.

        1. been in cdr for about 2 years. i checked out there properties, and i noticed one of em was just down the street from the in-laws. not a busy location as far as i’ve been able to tell the few times i’ve visited, but it was good enough DD for me lol. And CDR-B past call but paying a good divi so i assumed in a downturn it wouldnt get hammered too bad

  13. CBL common/preferred’s down 30-50% after hours on news it’s suspending all future dividend payments. Remember when this was an SA darling. Wouldn’t be surprised if other ‘SA reit darlings’ suffer a similar fate in the future.

    1. On June 14, 2018, this headline appeared at SA:

      “CBL: It Dropped, We Bought More And We Were Right”

      https://seekingalpha.com/article/4181277-cbl-dropped-bought-right

      At the time, CBL was selling at $4.18 per share. At the moment, after hours, CBL is selling at $0.88 per share.

      Are you still right, Rida, or are you going to tell us that you posted a (secret) message to your paid subscribers long ago telling them to get out of this dog? Did you buy CBL before your post and dump (or short) later?

      According to Rida, referencing CBL:

      “The stock still yields a generous 14% with the potential for the price to double in the next few years.”

      To the readers here, if you want to understand why there are such negative thoughts expressed to many of the authors at SA (most especially the HDO group of Rida Morwa), just go back though history. Look at all the great opportunities they pushed and look at all the financial carnage.

      The HDO group destroys capital one subscriber at a time. Problem is, by the time the subscribers understand this, the money will be gone.

      1. Bob, that was the “Infamous Victory Lap Celebration” article that got me put on permanent post screening. That article is the quintessential example of misleading people. They were bragging it bounced up a few quarters all while refusing to mention they were “pounding the table” at $8 on down. So they were losing their arse and yet bragging about this purchase. He is a despicable person….One poster asked him in an article what his 2018 pick of the year was…He flat out lied and said he didnt have one. Yes he did right in the title 2018 Reit Pick of they Year was SKT… Of course it was an over 20% loser and he wanted to run from it.

        1. Quick question Grid…if I bought 100 shares of CBL @ $8.00 and 200 shares @ $ 4.00, do I make money if I sell all my shares when it bounces to $ 6.00?

          In gaming, I think that’s called doubling down.

          1. We will never know because it never made it back to $6, lol. Not that it should matter, but I have no problem with increasing a position in a decent issue, but doing it with weak companies chasing yield is problematic for people not understanding the risk they are incurring. There has been one commenter who kept talking about how he kept buying and buying CBL on the drops and it looks disastrous.
            The point isnt the purchase of anything but the deceit. He was down and had to get a verbal beat down in comment section before he admitted he was down. The point for me was don’t brag about something your up 50 cents on a last trade (which it quickly dropped back and not a peep was heard then) and try to ignore all the purchases made going down to $4.

            1. “We will never know because it never made it back to $6”

              Actually…CBL did make it back to $ 6.00 in June 2018, the same month the HDO crew posted their ‘we were right’ article. This after it crashed from $8.00 to $ 4.00 from October 2017 to April 2018. Not sure when they finally gave the sell signal, but if you followed their advice for that interval and doubled your position properly, you would have had a positive total return in the mid teens. A break even for that period was well within the range of most investors, plenty of time for them to bail out relatively unscathed. The folks who stayed long after that experience (imo) probably don’t deserve much sympathy.

              1. My apologies, I went by a bar chart and it showed a peak out at $5.50. Pendy later stated over a year later they lost money and sell order went out around $4 from someone who has access to forum told me.
                When one invests in a stock that peaked at $45 over 10 years ago, timing winning trades on a long term price chart like that is very hard and left a trail of tears for most. I can go back and have bought under a buck a few months ago and sold at $1.60 too by chart reading. Any stock can be traded well by looking at past opportunities with hind sight of history. But in the real world a tough go for any investor to make money consistently. As they didnt make any money on it either and finally admitted losses.
                But again as referenced above, that wasnt my point. Dishonesty is my beef…I dont criticize stock trades as I have no knowledge of ones purpose. Even though I personally think the double down strategy on falling knife stocks is a poor investing strategy. Who am I to say its wrong if they did it out of their mad money and doubled down $500 after initially investing $250…..Its all in the allocation size and intent and strategy.

      2. Bob – You’re understating your case witness, Jan., ’18 “The More It Drops, The More We Buy This 14% Yield REIT,” Feb., ’18, “It Dropped, We Bought More Of This 19% Yield REIT,” Aug., ’18 “This High-Yield REIT Dropped Again, We Are Buying More,” and then their March, ’19, coup de grâce, “Should I Sell My CBL, CBL-D, And CBL-E?” that just says they’ve “moved on” without even a hint of quantification of the severity of their pick to their recommended portfolio’s performance over time and that’s the rub.

        1. 2WR – I wanted to be charitable. This morning, I was looking at some of the new comments posted on CBL over at SA. The one that took my breath away was the fellow who was thanking Rida & Co. profusely for their CBL pref recommendation and saying how it was now the largest holding in his portfolio.

          Bye, bye retirement.

          That is the damage the HDO people are doing. There may be some hedge fund type investors who can work the preferred and make a profit on them but for most it will be a graveyard.

          That possibility rarely seems to enter HDO’s thought process.

  14. Chalk up another one ……..

    Dominion Energy is coming with a Canadian-style 5-year reset. 4.65% going to 5-year treasury + 2.993% in December, 2024. It’s an “honest” reset in the sense that it isn’t a teaser rate, like some other resets.

    No listing but can be bought off the bond desk.

    Retail isn’t getting many bones thrown its way these days.

    1. How generous of them Bob! No, thanks, I will take my chances with the 3.5% adjustments off CAD 5 yr, and 30% plus under redemption price instead.

  15. I am trimming some issues that showed weakness today.
    I don’t know if these last 2 days are a start of a trend or an outlier.

    QVCD and Gnlprb are weak and i will take a small loss less the gain on SACC that i sold.
    WRB-B has my bid at 25.24

    btw: does anyone actually list each trade on their tax return?
    I only put the totals on one line and call it portfolio sales.
    The IRS computer will check the total proceeds and if my numbers match or higher, they move on to other returns.

    1. I did the opposite. Sold a couple that held their price so I could buy a couple bargains. Unfortunately I sold SACC this morning before the runup so i could redeploy the money.

      IRS says if you have one wash sale you have to list each trade from that broker. So that’s what I do. Most of my trades are in IRA so I don’t have to worry about all that record keeping.

      1. Tax software consolidates that information separately for each account, no need to list individual items.

    2. Tax software imports it automatically so it is no trouble to e-file. Then they can’t claim I am hiding anything and the tax software has audit defense (which probably isn’t worth all that much but is better than nothing I guess).

      The only thing I have to look out for is if the brokerage updates the 1099s then I have to re-import and sometimes forget to flush the old transactions first.

  16. SOCGP is looking kind of attractive at a $30 ask (5% yield). I believe these are non-callable and QDI. Curious about any thoughts others may have?

    1. Anything CA utilities is a no fly zone for me. (PCG.PA – yikes)

      IPLDP (trading near par-past call) 5%
      ALP.PQ (trading above par – 2 years to call) 4.8%

      both investment grade in better positions IMO

    2. Tex, I missed you here. Actually I dont have a problem with So. Ca. Gas. I have flipped it several times at $30. And I just recently to buy 200 back at 29.65 pre exD, and 300 today at $29.25. Not sticking my neck out here, but feel comfortable owning 500 and like the uncallable feature.
      A few points that differentiate SCG…First they are committed to keeping A rated debt, and Moodys has preferred A-. They keep a very nice 55% equity/45% debt ratio, and trying to move in down to 43-42% range. So they are very credit quality conscious. Also they separated their cross credit agreement with sister San Diego Electric so that mitigates more the wildfire risks inherent with CA. Plus the insurance fire fund was implemented this year. Being gas lines SCG isnt nearly as exposed to this problem as electrical lined utes are. They had that undergound storage debacle a few years ago, but that isnt going to materially effect them…
      Moodys…Nevertheless, we believe that the challenges of operating in a political and legal environment such as in California requires SoCalGas to report more robust credit metrics to maintain its A1 rating, the highest among LDC peers.

  17. So, any monies that I am holing on to until I make an investment is in PINXX, BLKRCK MMKT A with a yield of 1.64. Does anyone else have a safer liquid, higher paying investment product they hold cash in ?
    Thanks

  18. The History of Interest Rates Over 670 Years
    https://www.visualcapitalist.com/the-history-of-interest-rates-over-670-years/
    I thought this would be of “interest” to many of us and our portfolios that most of our positions will run with moves in the rates…
    “ A system of capitalism presumes sound money, not fiat money manipulated by a central bank. Capitalism cherishes voluntary contracts and interest rates that are determined by savings, not credit creation by a central bank.”
    Ron Paul
    Nomad

  19. Question- I own 1400 shares of RILYL I purchased in May 2016 at a cost of $25.14. The issue has been called and will be redeemed at $25 on 12/30/19.

    If this was a stock there would be a small cap loss of $196. Wondering if the accounting is the same for this type of security?

    Happy Thanksgiving! Steve

    1. Yes it is a Capital Loss. You’ll actually have a profit because of the dividend to be paid at redemption, though dividends are reported in a different column.

      1. Yes, Martin is correct. I have had some baby bonds redeemed in the past 2 years, as I tend to hold ones that are eligible for redemption as to pin them to par.

        It will show up in your 1099-B section with cost basis, proceeds, date acquired and sold. It should also show redemption in the description (at least for TD and Merrill). These then become a capital gain or a loss.

    2. How is your broker handling it?
      I’ll bet they are screwing it up.
      Under the applicable treasury regulations, they are supposed to amortize the bond premium on a YTM basis to offset some of your income at each interest payment, and your capital loss would be somewhat less than $196.

      But you would be amazed how many brokers get this and other rare setups wrong.

      1. These bonds trade “flat” and FINRA even considers delisted baby bonds as “equity preferreds. So I imagine typically they are treated the way Martin suggested.

        1. Thanks all. I guess I am as unsure as everyone on the rules. I’m sure I have something similar in the past that I could look at for the answer. Steve

          1. Skg, Here is an example of your situation in PPX. This based on my understanding reinforces the consensus that they will treat as a taxable gain/loss on a redemption.
            Sale or Other Taxable Disposition of a Note
            Upon the sale, redemption or other taxable disposition of a Note, you will recognize gain or loss equal to the difference between the amount you realize (not including the amount you receive with respect to accrued but unpaid interest, which will be treated as a payment of interest) and your adjusted tax basis in the Note. Assuming we do not defer interest payments on the Notes, your basis in the Notes generally will be your purchase price for the Notes. If we were to defer interest payments on the Notes, your adjusted basis in the Notes generally would be your initial purchase price, increased by any OID previously included in your gross income to the date of disposition, and decreased by payments received on the Notes after the effective date of our first exercise of our deferral option. Gain or loss realized on the sale or other taxable disposition of a Note generally will be capital gain or loss and will be long-term capital gain or loss if at the time of the sale or other taxable disposition you have held the Note for more than one year. Long-term capital gains recognized by non-corporate taxpayers are subject to reduced tax rates. The deductibility of capital losses is subject to limitations.

          2. Skg, Grid and others have applied on how it works. If you have TD, it is brainless as you can use your tax software to connect to it. I think it talks to Gainskeeper. Anyways.. it pulls the data from the 1099-B section (your trades), your dividends are in 1099-DIV, and interest is on 1099-INT. The 1099-B will include the forced redeemed ones and that will be in the description. You will have either a gain or a loss. This will be independent of the what you have received as interest (if it is a baby bond) or it will be dividends if a non baby bond. Those are in separate boxes and sections of your tax forms. It has been done this way for years.

            Again, use tax software if you want to do this with very little thinking. Pull the data and simply audit the data is pulled. I simply review each of them (1099-DIV, INT, B.) and cross them off the tax statement as I go through line by line from the data imported.

            Once you see how the software does it, then you can have the fun by doing it by hand if you want. It is a lot of typing if you do a lot of trading.

          1. I dont think its incorrectly done as they are usually referred to as equity linked notes thus would be treated as such with capital gains and losses.

      2. I trade a lot of preferreds and it’s always been simple. Straightforward gain/loss and dividends are reported on my tax form from the broker and that’s what I put on my tax return. Never been questioned.

  20. This should be of interest to many here as he tells the story of the Fed, the economy and our economic future of a debt based society with digital illusions of wealth
    https://m.youtube.com/watch?feature=youtu.be&v=c1MiFsE-E4M
    All thoughts are welcome and encouraged, Nomad
    Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants – but debt is the money of slaves…

  21. Adding again to monthly paying VER.F under $25.20; I have had 2 separate partial calls and I’m just trying to soak-up some of the cash position I’ve built up with a preferred with a built in floor (because of partial additional/full calls). Any thoughts are welcome and wishing all a happy and memorable weekend, Nomad

    1. I’ve had my eye VER-F for some time and finally opened a new position at $25.17 today. It will be interesting to see if any of these new shares fall under the partial call. And I wonder if in 5 or 6 months they will take another nibble or a big gulp recall.

      1. I bought a few weeks ago, so I probably am sitting here. But a good thing about this issue as a short term play is they appear to be rounding up cash and redeeming in portions instead of a call and reissue. So this may take a while to unwind the entire issue which is a big one.

      2. I find it interesting that I have two IRA accounts at Schwab and they’re both treating VER/F differently. In one, they’ve taken a number of shares and segregated them, assigned no ticker and froze the price while the majority retain the ticket and trade like normal. In my other account, there’s been no segregation. That feels weird.

        1. I have 500 shares of VER-f and they have not been touched at all. I keep expecting some to disappear but has not happened (maybe next week).. I did lose some on the last go around though. I hold mine in a Fidelity ira.

          1. Libero, Have you tried a fake trade with them? Mine looked unmolested Wednesday, and I did a fake sell order at $30. TD at that point informed me all my shares were under house arrest. I have intention of selling was just curious and found my answer.

            1. Correction…”no intention”…
              Finished out my full position in PPX again today at 25.49. Bought at this price a few weeks ago and then sold them over 25.70 and bought back. Just riding the pattern this issue shows repeatedly lately. Of course it could get redeemed at any time, until it does I will exploit it to the max like I have done all year.

        2. Perhaps the broker set aside the total # of shares that VER will redeem from you, which are the ones frozen.

      1. Tim: Thanks for all you do. This site is a wonderful contribution of time and expertise to so many of us.

    1. I am grateful for this site, all the work Tim does, and the contributions of those in this community. I’ve learned a lot, an appreciate all who offer advice to help us reach our goals. Thanks to all.

  22. i have a question about if funds reallocate shares near year end.
    if you’re looking to invest into something for a longer hold period
    would you wait closer to the end of December or is it more about
    interest rates and investment grade spread environment ? i only started
    investing in preferred and bb at the beginning of this year and have seen some price swings near quarterly closes. Thanks in advance

    1. You’re trying to predict what the fund will do? That’s not easy. If you want that much control over your trades you might need to trade individual stocks,

      Many funds do quarterly or annual rebalncing. In some cases their charter requires rebalancing and the fund may be forced to sell at bad prices. They typically wait until the end of the month, and then a large transaction on a low volume stock moves the price. We had a discussion on September 30 and some people on this board made money trading aginst those funds selling low.

      1. End of year for preferred (and less so baby bonds) is often a highly volatile period. “Funds” (which can be ETFs, OEFs or CEFs) do a lot of window dressing at the end of the year and individuals are often doing tax motivated buying and selling.

        Issues that have moved up a lot in price and (especially) issues that have dropped a lot in price are especially vulnerable to big price swings.

        No guarantees, but mid- to late-December is often good for bargain hunting.

    2. Well, yes to everything you asked about.

      There was a panic about rates rising last Dec, resulted in huge buying opportunity as fix income plunged with the rest of the market

      not going to happen this year but there could be some end of year tax loss harvesting

      buying in good fixed income securities is centurion hobby – always need to be on the look out

      reader initiated alerts here is a good source

    3. It’s Thanksgiving! I want to take a moment to thank Tim for this wonderful investment site. And thanks too to all the many wise regular contributors. Just a great site! Happy Thanksgiving All from a lurker.

      1. I also want to thank Tim and all the contributors here on this great site. Good health and prosperity to all, God bless you all.

  23. Of interest for all income investors:
    Powell Talks Up Economy, Recommits to Creating More Inflation
    By Headline Wealth – November 26, 20190273

    Federal Reserve Board Chair Jerome Powell speaks to the Greater Providence Chamber of Commerce, Monday, Nov. 25, 2019, in Providence, R.I. (AP Photo/Matt O’Brien)
    (Associated Press) Federal Reserve Chairman Jerome Powell on Monday sketched an optimistic view of the economy but signaled that continued low inflation means higher interest rates won’t likely be necessary anytime soon.

    Powell said that even with unemployment near a 50-year low of 3.6%, there’s still “plenty of room” for wages to rise and for more Americans to join the workforce. He noted that annual inflation remains below the Fed’s 2% target level.

    The Fed chairman made his remarks in a speech to the Greater Providence (Rhode Island) Chamber of Commerce.

    The central bank has cut its benchmark short-term rate three times this year to a range of just 1.5% to 1.75%. Powell signaled last month that the Fed will now likely remain on hold unless the economy noticeably worsens.

    Powell said the three rate cuts have helped spur more home purchases, which have contributed to the economy’s ongoing expansion, now in its 11th year, the longest on record.

    That long-running growth is benefiting many less-advantaged workers who had mostly seen meager hiring and wage gains in the first half of the recovery, Powell said. Continuing to spread such opportunities is a key reason to sustain growth, he added.

    “Recent years’ data paint a hopeful picture of more people in their prime years in the workforce and wages rising for low- and middle-income workers,” Powell said. “But … this is just a start: There is still plenty of room for building on these gains. The Fed can play a role in this effort.”

    Powell’s buoyant outlook followed a visit earlier Monday to a workforce development program in East Hartford, Connecticut, where he heard from residents who had completed training programs and gotten higher-paying jobs.

    Still, the Fed Chair highlighted a challenge for the central bank: Inflation has been stuck below the Fed’s 2% target for most of the past seven years. While most people prefer limited price increases, the Fed worries that persistently low inflation can become ingrained and force the Fed to keep interest rates low permanently, limiting its ability to combat future downturns.

    “That is why it is essential that we at the Fed use our tools to make sure that we do not permit an unhealthy downward drift in inflation expectations and inflation,” Powell said.

    Powell also acknowledged that what the Fed calls the “neutral” interest rate, which neither stimulates nor inhibits growth, has fallen for the past seven years.

    That “provided another reason why a somewhat lower setting of our policy interest rate might be appropriate,” Powell said.

    Happy Holidays, Nomad

      1. I buy many things repetitively, usually online and (not always happily) through Amazon. Makes it very easy to track price over time.

        2%? Who the f$%& does Powell think he’s kidding? I don’t have anything in my budget going up only 2% per year. Most especially not anything where the price is driven by government, like property taxes, school taxes, utilities, and the like.

        Well, perhaps, gasoline is the exception. Thank-you Exxon, Shell, etc.

        1. Gas goes up by 4% a year, just not in a straight line. Under $1 a gallon several times in the 90’s then shot up over $3 in a short amount of time. Dropped during the recession then came back somewhat and held for a decade. The average over time is about 4%.

          1. Just paid $1.85 gallon gas today on my trip for family Thanksgiving today. I love sub $2 gas, but I also dont own any oil stocks though either. 🙂

        1. I especially liked the chart about what happens after fossil fuel is mostly replaced, sometime post 2050, I think. O well, I doubt I’ll be driving much then anyway. 😉

    1. Hey 6, I bought 200 more today of SR-A as a base hold. Just about got my original hold amount that I kept flipping every since IPO. Gas utilities earnings wise are more like department stores than electric utilities. Just like Dept stores generally make their money only 4th quarter, Gas Utes make theirs in the first and second quarter. Everything else is just accounting noise, or seasonal normal losses during their “off season”. Looks like the common was up today.

      1. Seems we’re on the same wavelength, and now I feel better about buying more of the preferred today. Always appreciate your thoughts.

        1. Number 6, just to give you an update on SR quarterly earnings loss as just being seasonal accounting noise. Spire just this week increased common stock divie 5.1% this week. That is a very healthy divi boost. SR-A will pay until the cows come home.

      1. I trade it but didn’t own any today. I owned PYT which shot up in the wake of GYB and triggered my outlying sell order. Don’t know if I should be glad I made money or disappointed that I could’ve made a lot more.

    1. Instead of waiting, folks could sell their GYB today & buy some WFC-L, which goes xd tomorrow & yields 5+%…

      JMO

  24. Would anyone know if there is a credit quality difference in the CHSC preferreds? Its not a public company so the little I know about it I got from this site.

    Thanks,

    JB

    1. Jeff–there is not any credit quality difference. They do file earnings reports with the SEC so that data is out there.

      1. Thanks Tim,
        I was just looking at the price difference between CHSCN and CHSCO and thought it was odd.

        1. CHSCN at over $28 is very odd….I have been watching that one….I tried to buy some CHSCM at Fidelity and it would not let me enter the order without calling them….total volume was less than 1000 shares at the time…I wonder if these thinly traded issues create that problem….

          1. Not sure which problem you mean, Craig, but the Fidelity call-in problem is Fidelity created, nothing else… they know better than you do whether or not you’re intelligent enough to know what you’re buying..

    2. JB (are you JB Rader Moonshine Legend?) the CHS preferred paper is all non-rated…
      All the best, Nomad

    1. Maybe.

      I have a small account there. Can’t login, and received some email about my Amazon creditbuilder account….have no idea what that is!!

    2. Found this post:

      Scam emails from Synchrony Bank and/or Amazon Credit Builder
      Credit

      I received 3 emails this morning stating two things:

      A trial deposit had been made to my AMAZON CREDIT BUILDER ACCOUNT

      Action is required on my application

      Since I had never heard of Amazon Credit Builder, I called Synchrony Bank via a phone number I found on their website and verified in an email I know was legitimate from them. (I have a retail CC they manage.) The agent who answered guessed why I was calling before I said anything. She asked if I was calling about an email or text message I received this morning.

      She stated the emails were not sent by Synchrony Bank, and they are still looking into what happened (see edit1). It is unclear if all of their customers received the email, or if my account info in specific was compromised. She stated they would send an email to affected customers when they knew more.

      I would encourage anyone else to also call if you’re unsure, but hopefully sharing these details will help calm some panic. I’m open to advice below if there are more immediate steps I should take.

      Edit1: Others are reporting that some Synchrony agents are saying they sent the emails, but in error. Sounds like they haven’t quite gotten their customer facing message consistent yet. In any case, do not click on any links in the emails.

      Edit2: Commenters are reporting various similar responses from Amazon and Synchrony. All signs currently (as of 2:30pm ET) point to this being a technical glitch on the part of Synchrony, and not a scam or phish attempt. I will update this post again if either company puts out a statement.

    1. No announcement, but yes that is how they have been trading. With a decent quality (not investment grade) they should remain tied to $25. Very little risk in holding these preferreds–just collect the nice dividend while it is available (fingers crossed).

          1. Took my money and ran on LTSL and LTSK late today. That was some real easy money lucky trading. Made a couple bucks a share for a few day hold. Sold the H off for a couple on Friday. They may be fine to hold, but I aint finding out.

  25. Anyone know what’s going on with the hotel REIT preferreds? They seemed to have taken a big dump in recent weeks. PEB-D looking interesting below par. RLJ-A still my favorite but that’s gone in the opposite direction as the rest of the hotel preferreds.

    1. The only one I own is INN-E. It is down $2.00 a share in the last month due to a poor last quarter which was down about 6% from the previous year. The price is $24.85, down from $26.80 in October. I bought it at $24.30 and collecting a 6.5% dividend so not too butt hurt I didn’t sell. I may buy a few more shares if it drops below $24.50.

      1. Sounds like there is something company specific causing INN preferredS to be down but that wouldn’t explain why PEB and SHO preferreds took a dump at the same time. Although they probably had ERs around the same time and maybe they were bad. Nonetheless a $2 drop for a preferred is huge for just a single mediocre report. Plus the common didnt have a big reaction during that timeframe.

        1. I think the real question is why PEB-D was trading around $27 with only 1.5 years to call and YTC below 2%. It has now fallen more in-line with the other PEB preferreds and is definitely cheap compared to the callable PEB-E.

          There might be a little cloud over the hotel REITS, but nothing major going on with PEB common which represents more than $3B market cap ahead of the preferreds

          1. I don’t think a call is much risk with the PEB preferred’s based on where other hotel REIT preferreds trade. PEB is unrated but Ryman which has slightly less leverage is rated B+. So PEB preferreds should probably trade as B equivalent, although that seems low.

  26. Another redemption offer for Bellsouth 2095 7% bonds. yawn….guess i’ll check it out. Wow! This bond has recently traded at around 120 with a yield of 5.75%. the offer is for around 144.40! Checked recent pricing…bond is indeed trading around 144 with a yield of 4.8% I will be tendering at this pricing.

    This offer to redeem makes KTBA look quite attractive.

      1. Oh, so you were the bid at 29.80! I got some at 29.90 and 29.85 and had a bid at 29.80 that didn’t get filled.

    1. Can a separate tender offer be made for KTBA where if accepted they would accept the bellsouth offer? Or are they legally obligated to hold it?

        1. What I meant was can the administrator of KTBA offer their own tender, and then accept Bellsouth tender for whatever amount theirs was accepted?

            1. Justin, Quantum said issue is uncallable from an issuing stand point, but the prospectus clearly states there are call warrant rights out there. The old Smith Barney has dropped the ball here, as usually the brokerage that issues the certificates maintains the call warrant right..
              On any Business Day on or after March 23, 2006, holders of
              the Call Warrants have the right to purchase the Underlying
              Debentures from the Trust at a price equal to the principal
              amount of Underlying Debentures plus accrued and unpaid
              interest. If a Call Warrant is exercised, Certificates with
              a principal amount equal to the principal amount of
              Underlying Debentures being purchased upon such exercise
              will be redeemed for an amount equal to $25 per Certificate
              plus accrued and unpaid interest to the date of redemption.

              A holder of the Call Warrants is not required to exercise a
              Call Warrant with respect to the Underlying Debentures prior
              to their stated maturity. Therefore, there can be no
              assurance that the Trust will repurchase your Certificates
              prior to December 1, 2095. Should the Trust redeem your
              Certificates prior to December 1, 2095, the Trustee will
              notify you by mail at least 15 days before such redemption
              date.

  27. I have noticed some conversations about certain preferreds that people use as “cash alternatives”. I have a few accounts where I could use a few of these. To me the best “alternative” would be a monthly payer with reasonable liquidity and not much price movement. And to be greedy, if in a taxable account, would have qualified dividends.

    I have looked around, but haven’t found anything I like so far.

    Suggestions welcome.

    Thanks,

    1. I’m in the same boat and have been studying several ultra-short term bond ETFs, not Qualified but they are monthly payers.
      PULS
      GSY
      JPST
      ICSH
      Leaning toward PULS at this point. Take a look, your opinion is welcome.

      1. for cash holding, consider paidx. Yeild could be marginally lower but the movement or volatility is much lower. Another fund used by some insurance firms is LUBY. However, their volatility seems higher. Interested in what you finaly select and why

      2. Thanks. They all look pretty similar. I think I will diversify accross all 4; that way I will have more protection on my principal and should have cashflow coming in different parts of the month.

    2. Well you do have to accept a small amount of volatility, which I believe is well worth it for the higher rate. Buy with limit orders a penny or two below average, if you don’t get one buy another.
      WRB-B is a good one though the current price is a bit high.
      I use JPM-G and JPM-H too.
      Maybe grid’s favorite SLMNP though it’s hard to play the spread.
      Look for anything that trades in a narrow range. Typically a solid company with an issue suppressed by call risk but not much loss if called. I like the ones that are callable soon but not now.

      Ultra short bond etf’s are better than money markets but not as good as baby bonds. Check out tim’s list of callables in this post.

      If you don’t spend much time on investments it might not be worth the trouble.

  28. I have a precious metals question. I was looking at buying some 5g gold bars from JM Bullion, or possibly some Mickey Mouse coins. Based on gram spot price, the Mickey coins have a huge premium attached, but even the 5g bars are selling at quite a premium. If I had to shave bits of these off to buy bread, the design’s won’t garner more goods, I’m assuming.

    Is there any place to buy precious metals without all the premium attached? Assuming I won’t need to shave off bits to survive, are there differences in quality or premium of some mints over others? Will the 1/4oz Mickey Mouse coins continue to garner a premium over a 5g PAMP suisse gold bar? I know there is some “collector value” attached to these, hence the premium. I see 1oz gold bars selling for about $30 over spot. Will coins hold more value over bars? The PAMP suisse bars are lunar calendar series. I thought it might be fun to buy one for each of my family members, based on their birth year, but not sure they would appreciate it.

    1. Jeez, Mark, you’re depressing me. If you’re worried about shaving coins or bars to buy bread, why don’t you just buy a bag of silver coins. They’ll always be worth face value.

      BTW, I wouldn’t do either. I’d probably just buy a bread machine from Amazon if I didn’t already have a great baker here who supplies me with all the bread I need.

      IOW, don’t get too scared.

      JMO

      1. Camroc, The strong smell of oil is seeping through your keyboard onto your posts so strongly, I couldnt finish reading your comment without putting on a gas mask. 🙂

          1. Camroc, Just for clarification, are you saying that a 90% silver dime will always be worth a dime? I can buy a dollars worth for just under $17. Doesn’t seem like much of a capital preservation strategy…..

            As a kid, I would go with my dad to the coin store and buy some silver. Our family doctor (probably the most brilliant strategy ever) would accept a silver dollar in exchange for an office visit. If I remember, office visits were right around $20. Dad was able to buy the silver dollars for around $14 or so. I’m guessing our doc. would just claim $1 as income. Can’t imagine how many people probably gave him silver dollars from grandma’s collection that were worth far more than the ones my dad was peddling. Over the years, I’m guessing he got about 50 of them from my family.

            At any rate, I still have all the silver I bought. Probably about 40 ozs total, including some coins. I don’t think it has kept up with inflation, but I always liked metal and even looked at being a metals trader at one point while going to college. I don’t think I am a buyer of gold at today’s prices, but have seen it mentioned on here a few times and was just curious as to other’s thoughts on bullion vs. coins vs. ….

            1. You were talking about shaving gold to buy bread, I presume because you think there might come a time when no one would take your paper currency for a loaf. I just think the baker might take silver coins before any gold you might shave off for a loaf.

              But I don’t own either one, though I have in the past.
              “Ah, but I was so much older then. I’m younger than that now.” –R. Zimmerman (again)

              1. There’s some very safe FB groups that trade in PMs. All the sellers are verified. Also many states now charge sales tax so this is a way to get around that. The premiums are also much lower than the Apmex/JMBullions of the world. Also, if you ever decide to sell that’s the best place to move them without getting hit with a significant haircut from spot.

                I’d also recommend avoiding a lot of the gimmicky coins. Literally every year some country you’ve never heard of (Cook Islands etc.) will release some sort of Disney/marvel coins.
                Personally I’d stick to AGEs, Maples, Kruggerand’s, Sovereigns etc.

    2. Mark, if you buy a Mickey Mouse coin you are paying extra for the artwork. Buy bars or rounds for minimum markup. Lowest markup over spot generally holds value the best. JMBullion has some of the best prices but they do need to make a profit. For trading you’re probably better off buying Gold and Silver etf’s. For long term hold just pay the markup.

    3. Mark,

      when buying bullion, I strongly suggest you stick to coins. And by coins, I mean coins issued by Canada the U.S., etc….not a private issuer. Ideally, since you live in the U.S., you should stick to American coinage. Good news: premiums are rock bottom right now. Larger purchases (one ounce each) should be current issue “Buffaloes” or the classic $20 coins that were last minted in the 20s or 30s. If you want to buy smaller coins, buy American Eagles that come in tenth, quarter and half ounce sizes. Or you may want to buy the plethora of gold commemorative coins recently issued.

      JM Bullion is good,, as is Apmex. These firms often run specials, and you can “double dip” on ebay with ebay bucks offers.

      1. What is the advantage of coins over slightly less expensive bars and rounds? Are they better quality? Makes sense if you’re a collector. But for an investor I didn’t think the fact that they were money made much difference, it’s all about the physical gold.

        1. Mark,

          The difference comes when you want to sell. Dealers will generally pay 95% or more of bullion value for the coins I mentioned. They will pay (in my experience) 90% or less of bullion value for bars and rounds.

          It is also easier to determine if a coin is genuine vs a bar or round.

    4. No good reason to pay a big premium over melt value unless you’re in love with the artwork.

      To buy gold for gold’s sake Canadian maple leafs are hard to beat. Four or 5 nines purity, exactly a troy ounce, so the math is simple. Very small premium to metal value.

      If looking for birth year coins you may want to look at British (or other) sovereigns. Also small mark up.

  29. Can anyone on this site with a Schwab account advise if they allow trading on the OTC pink/grey/etc markets. My only acct is with TDA and if the proposed TDA/Schwab merger goes through, I would like to know what happens to my OTC board holdings, other than being allowed to sell them. Thanks for guidance.

    1. Howard, I am almost certain Amy who posts here uses Schwab. In fact through her international segment, she is the one that has got many of the Canadian resets assigned a ticker to trade OTC for me.

      1. Hi Gridbird
        Schwab has a Global trading function which allows clients to
        trade directly on multiple boards outside the USA, which would be of use to me, and which TDA does not offer. From that perspective, I would approve of the merger. I phoned Schwab today and they confirmed that they allow trading on the OTC boards. Thanks.

        1. Good deal Howard. Based on Scottrade’s merger into TD, I would assume it will be sometime before the platforms are merged if TD does indeed get acquired. A lot of techie stuff has to be done before they would roll it into Schwab I would suspect.
          Schwab will maintain the physical office aspect which is important to me. That was partially why I opened up a TD account was to have that option if I ever wanted to have a person to person meeting.

          1. TDA has offices in Latham, NY and Saratoga Springs, NY ; Schwab in Albany, NY. I can reach any of these offices within 20 to 45 minutes. Post-merger I would expect at least one to be closed. All are approx 150 to 175 miles north of New York City ( for those of you who are not familiar with NYS ).

    2. Howard – I have both a TDA and a Schwab account, not that I need them both.

      TDA is by far the more “liberal” in what they will allow you to buy. If the two firms do merge, and the merged firm combines the platforms, and follows Schwab rules, you may have a problem on some “gray” issues. My guess is that Schwab would allow you to hold issues but not allow new purchases.

      But that’s a guess.

      1. Bob, can you give an example of an issue that can be traded on TDA, but not Schwab? I have never seen one, but maybe I haven’t looked hard enough.

    3. Yes, no problem, they trade easily online. If there’s something without an OTC symbol you call into the international desk and it’s handled by one of the service people there.

  30. Hi everyone,

    Apologies that this is a bit off topic but do you know any website similar to your that is focused on corporate bonds? Would love to check them out.

    Thank you!

    1. Filip – this is a non-answer to your query.

      I rather doubt it. Except for $25 issues (baby bonds) and a few higher priced issues, all bonds trade on an OTC-like platform. Problem is the bond dealers are *&%*(*(%^$#@ and will $**&*&% you at every turn. Bid-ask spreads are large and it’s darn near impossible to buy them in retail quantities with good economics. You have to go through funds, be they ETFs or CEFs or OEFs.

      Since it’s hard to buy them, there isn’t a big demand at retail for bond info.

      PS – there is zero reason that bonds can’t be traded on an exchange. But absent a push from powerful constituencies it won’t happen. The bond market is ripe for disruption and I hope some Fintech firm figures it out.

    2. Filip, http://www.vanguard.com has one of if not the largest retail corporate and municipal bond inventories at the best prices (low commission/spreads), but to see their inventory you have to be a client of theirs. I have found Vanguards Fixed Income associates to be extremely well trained IF you can get to the Senior Traders and not the initial associate/person that answers their phone on the main number.
      Wishing you profitable investing, Nomad

  31. 730Cap: Came across Tex’s comment and your reply to him while researching SLMNP. Read his links and also IRS Notice 2003-69, which contains a list of countries with tax treaties which qualify for Qualified Foreign Corporation status. Netherlands (therefore LYB?) is on this list. Per Tex’s IRS link, “Qualified dividend income means dividends received during the taxable year from domestic corporations and “qualified foreign corporations.” Section 1(h)(11)(B)(i). Subject to certain exceptions, a qualified foreign corporation is any foreign corporation that is either (i) incorporated in a possession of the United States, or (ii) eligible for benefits of a comprehensive income tax treaty with the United States which the Secretary determines is satisfactory for purposes of this provision and which includes an exchange of information program (the “treaty test”). Section 1(h)(11)(C)(i). So per (ii) above, it appears that dividends from SLMNP should be qualified dividends since the Netherlands is among the countries on the approved list . Notice 2003-69 also says that the tax treaty with the “Netherlands Antilles” does not qualify, which may be causing some confusion with SLMNP’s dividend classification. Just want to pass on what I found.

    1. Moreover, A. Schulman has always been a US corporation.

      I’m still hoping somebody volunteers to take this up with Schwab, which is still coding SLMNP divvy as non-qualified 🙁

  32. RE: RLJ-A
    Just curious. Any thoughts regarding RLJ-A valuing the preferred on the company books at $28.49/share as the issue price on the FelCor merger date and NOT $25/share liquidation value? (Reference: 10-Q, p. 5, “Consolidated Statements of Changes in Equity”, under the columns labeled “preferred stock”, and row labeled “Balance at September 30, 2019”)
    $366,936,000 / 12,879,475 = $28.49/share.
    Then is the cost of capital to RLJ trust for the preferred = 7.8% based on $25/share or is it 6.84% based on the $28.49/share purchased price?
    ($1.975/ $28.49 = 6.84%).
    The presentation slides show the 7.8% coupon and NOT 6.84%.
    That is a big difference on the cost of capital to RLJ for the preferred.
    If RLJ buys RLJ-A below $28.49/share, is that like buying it at a discount to the value on their books? Is there a gain to RLJ at purchasing RLJ-A below $28.49/share albeit a small one?
    JUST CURIOUS. Would appreciate your thoughts.
    Thanks.

    1. Dave-
      I’ll wait (again) for folks with real info on this, but I thought comments below on the $89 would avoid current price if it was being bought/called/liquidated.
      Plus Gridbird says it can’t be redeemed.
      Yeah- rather confusing- when I read the wording it seems to say that it might be done at the current common stock price (rather than 89) and could pay what the common pays.
      Also, they pay 1.95, not 1.975- right?

      1. Gary, I suspect (I havent delved into details in a while) RLJ-A is like WFC-L. Though WFC-L is a busted convertible, you could redeem yourself anytime…But at present terms which you would lose your shirt on. So no one ever does this.

    2. Dave, I cant say anything about likely hood of them redeeming. But as far as the balance sheet goes, this is done on many preferreds I look at. They have the market worth of them and ultimately the redemption worth posted in their also. Some are maturity based and will decrease the value as they approach maturity.
      Even an issue like SLMNP had to be accounted for on a guesstimated worth of these. Based on formulas and scenarios that would most likely cause issuer to redeem.

  33. I have been pondering on RLJ-A. I am sitting on a large cap gain with a large chunk of it. It has finally reaching a level that is getting interesting on this busted one. If anyone owns… are you stuffing in a drawer because it is busted? or you have some limit orders or an idea on a good sell price?

    RLJ has been disposing of properties over the last few years making it leaner company. One thought I had is that it might be sold if they continue to shrink down in size, and hence the nice appreciation I have might go away.

    1. I have an oversized position in this and I am starting to sell around $28.27. This is going up on large volume today, usually a good sign. I feel that RLJ has hinted around that something is in the works on this, both on earnings conference call and their last presentation. I don’t know if they could do a new issue at a lower rate and have some proxy offer to redeem these a same premium over where these are trading. Just my thoughts

      1. Fred & Mr Lucky
        What’s keeping them from calling it – given the current price is so low, and the common coupon is a lower amount? And the price is $16.42–a bit lower than the 89.09 Or am I missing something?
        “The distributions will be the greater of $1.95 per annum or the dividend equal to the common stock dividend into which the Series A shares are convertible. The preferred shares are convertible at any time, at the option of the holder, into 0.2806 shares of common stock, an initial conversion price of $89.09 per common share.”
        Thanks-G

        1. Its in the class of busted. Similar to WFC-L. I dont think too many people knew this, and that was one of the reasons why I bought it, and bought a bunch earlier in the year when it dropped. So the call risk is very low as the common is no where near $89. Reverse splits cannot change/affect it, as it would be a simple ratio. I think the only risk is if the company is up for sale or they go bankrupt. The latter is not happening any time soon. So part of me is simply wanting them to sit there… but I do have a lot of shares and might think about unloading some. I read the prospectus.. and i think the risk is if the company goes for sale and RLJ is sold.

          Liquidation Preference

          The holders of RLJ Series A Preferred Shares are entitled to receive, in the event of any liquidation, dissolution or winding up of RLJ, whether voluntary or involuntary, a liquidation preference (the “Series A Liquidation Preference”) of $25.00 per share of RLJ Series A Preferred Shares, plus an amount per share of RLJ Series A Preferred Shares equal to all accrued and unpaid.

            1. Mr. Lucky, I doubt it matters if they did sell out. Remember the genesis of this issue was a Felcor convertible preferred. RLJ bought out Felcor a few years ago and had to assume it without being able to redeem it either.

              1. Grid, thanks for bringing that up. That makes me like it even more. I own it and wish I had bought more. ATB.

    2. Didn’t want to sell but with a gain of way over 1 yr return I sold. Thanks for bring it to my attention. It’s up 1% today. At current price yield is still a nice 6.9%.

  34. These LTS baby bonds have been a riot lately. Anybody else playing these? I bought H two days ago, and K yesterday late at 18.55, and bought L this morning at 18.02. They are popping crazy. I already sold my H today for a nice little $1.60 share gain. This is just fun trading as I only bought 300 of the H and 200 each of the K and L.

    1. Does this now mean that you can say you’re with us in the “it crowd”? lol
      What’s your next move, to buy some of the ‘hated Spark energy’ preferred’s? Sounds like an encore to me 😉 You loathed that sucker too…

      1. A4I, I can hate something and think its a scumbag outfit, and still trade it for a quick buck. Above par and pre merger I had no interest, but a quick 25% drop off from one trash pile merging with another of same smell made this too much of an opportunity to play in.
        Everybody worried about the finances of acquirer have been blind to fact LTS is just as bad. I wont be in these long. And bottom line this is small, in fact I bought about as much UELMO yesterday than I have these baby bonds combined, ha.

    2. Too “risky” for me Grid…Although it does remind one of the quick profits to be made in LTS~A when folks went into a tizzy about Dr. Frost and the SEC.
      The most important take away from the LTS merger (IMO) is the value of conversion rights regardless of your position in the capital stack

      1. No question Citidel. And judging from what I have read, I doubt many who held LTS-A was even aware of the conversion rights as very few know much more besides call date, yield, and QDI or not. I wont be in this position long enough to matter. Heck I may sell the rest before end of the day. I just looked and they keep on rising. The dumpers must be out of their position now.

    3. Grid-
      I thought the notes were dead meat- not going to be traded or whatever with the merger. How long could this go on before the musical chairs stop?
      thanks
      G

      1. Hi Gary…No LST-A will no longer trade and be redeemed per change of control provision once merger consummates. This could be a while since LTS doesnt have a half billion laying around. Now the notes have already been detailed in SEC Filings to be delisted at merger. This simply means they most likely will trade on Pink Sheets. But they could wind up on bond market though. The time length here is still undetermined. But they will stay where they are until then. And they definitely wont be redeemed.

        1. Grid-
          Thanks- couldn’t make-out what was going to happen to them. This seems tradable- might give it a flutter , as they said in the old days.
          Now- just have to figure what’s up with RLJ-A (Q- up above)
          Have a good weekend

  35. Is anybody familiar with the difference between a Moody’s risk analytical score and a Moody’s credit rating? I was doing some research on CORR-A.

    The current earnings report posted on 11-11-2019 says the following:
    2019-2020 Initiatives
    CorEnergy anticipates:
    • Completing one to two acquisitions
    • Continued strengthening of the balance sheet through scheduled debt
    repayments and opportunistic repurchases of preferred equity

    Does this mean a new preferred to pay down CORR-A? Or perhaps a partial call since they used the term “opportunistic” repurchases” which is plural? Time will tell.

    Meanwhile, I went looking to see if I could find any credit ratings on CORR. or the preferred issue. Moody’s doesn’t have one but I found a Moody’s risk analytical score. I found this kind of interesting. Not sure if Moody’s does this for all firms and what the value is. But all pieces of information can be helpful.

    Is anybody familiar with the accuracy of this number from Moody’s?

    Here is the link.

    https://markets.businessinsider.com/stocks/corr-stock

      1. I will say that I have found value in this number.

        Moody’s Daily Credit Risk Score is a 1-10 score of a company’s credit risk, based on an analysis of the firm’s balance sheet and inputs from the stock market. The score provides a forward-looking, one-year measure of credit risk, allowing investors to make better decisions and streamline their work ow. Updated daily, it takes into account day-to-day movements in market value compared to a company’s liability structure.

        I had 3 preferreds that I own in the red zone (7-10 score). I would agree that CTL, SJI and CFG have some balance sheet issues that could merit flagging them high.

    1. small cap companies like CORR generally don’t get credit ratings
      as it can be a long and big expense – lots of paperwork / accounting standards I believe

  36. Nomad, Looks like the charade is over with the Fed supposedly ‘normalizing its balance sheet’. It can never happen so it seems we have now a confirmation of Japanization. Print to buy assets: first bank’s bonds for their liquidity and more persistent Congressional debt stimuli.
    As this is an Income site, I have been holding PM stocks and selling option quite successfully. I posted a CDE options idea on the stock blog back 6-8 weeks and it has worked well. The calls are rolled out to $7 now and I have collected four option premiums.
    Sell cash covered puts to open positions and stock covered calls to roll or let get assigned out. I have been able to roll up calls using calendar spreads. Just an option for holding PMs. If people can understand prefs and resets, options are not too complicated.
    Very best preserving real wealth in a paper faith market!

  37. JCO was whacked today down 2.4% on 3.5x ave volume. I picked up a small position. I play this one quite often usually holding from a couple days to a couple weeks

    1. I took a big position in this one today. JHD is to be called at the EOM and investors may put those monies into JCO so it may move upwards.

      1. re: JCO glancing at CEF connect, how do they have an average coupon of 6.21%, are just a bit under 30% leveraged, and yet the current distribution is 5.8%. As usual, I am likely missing something obvious, but I thought the purpose of leverage was to boost yield, but here the distribution is below the average coupon.

    2. Nice call, Gary! But how come JCO has such a low NAV vs its target payout in June ’22? Assuming cefconnect is accurate, they show JCO NAV at 9.42 vs the targeted payout of 9.85…. Did they have a credit blow up on them?

    1. Is there every a time when there isn’t someone stating now is the time to be in gold and silver? There is always someone predicting what what will happen next in the economy and how to invest based on those predictions. Some predictions will be right and some will be wrong. Unfortunately for me I have no way of telling who will be right. Will the price of gold be stable or go up in value? Will the stock market loss value? Will the rate of inflation in crease? The answer to those questions are yes but will it be next year or 5 years or 10 years from now? Egon von Greyerz interview doesn’t help since he is guessing like everyone else.
      Personally I have become more conservative with my investments and appreciate the practical help Tim and members of this website provide.

      1. danzeb, thank you for your reply and thoughts. No one knows where a stock, bond, preferred, piece of art, stamps, coins, car, real estate, collectibles or gold will go. That’s one of the key reasons why I personally am diversified and my precious metal portfolio is definitely a good part of that variegation. Metals are a safety net and have no counter party risk (like most asset classes). IF you watched the video the man being interviewed said he is not a “gold bug”, but is looking to protect a portfolio from the degradation of fiat currencies.
        Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants – but debt is the money of slaves.
        Nomad

    2. Nomad, Looks like the charade is over with the Fed supposedly ‘normalizing its balance sheet’. It can never happen so it seems we have now a confirmation of Japanization. Print to buy assets: first bank’s bonds for their liquidity and more persistent Congressional debt stimuli.
      As this is an Income site, I have been holding PM stocks and selling option quite successfully. I posted a CDE options idea on the stock blog back 6-8 weeks and it has worked well. The calls are rolled out to $7 now and I have collected four option premiums.
      Sell cash covered puts to open positions and stock covered calls to roll or let get assigned out. I have been able to roll up calls using calendar spreads. Just an option for holding PMs. If people can understand prefs and resets, options are not too complicated.
      Very best preserving real wealth in a paper faith market!

      1. Joel, that is an excellent post and I’m happy you have been successful selling calls and puts (I do exactly the same). If investors would look at http://www.usdebtclock.org and see that the US National debt is now over $23 trillion (!) and understand that the US Dollar has lost over 97% of its value in the last 50 years, I believe they might invest a bit differently. Precious metals will never go to zero and are a true asset protection class (like many stocks, bonds and preferreds); less than 1/100th of 1% of investors own any metals to balance their dollar (or other currency holdings). Investors always seem to buy metals when they run up instead of buying when they are bargains and down from their highs…
        I wish you profitable investing and appreciate your information, Nomad

    3. Gold has returned 2% over 10 years and 7% over 15 years. I am using ETF GLD for these numbers. Nothing wrong with having some gold. I prefer IAU. I have about 1.5% of my assets on Gold. Of course. Gold tends to be boom or bust. 50% in gold? Way too much, in my view. 10% would be my maximum.

      1. SteveA, I agree with you on the IAU verses the GLD. A few years back, I was buying palladium and rhodium when no one really wanted them. I’ve been investing in silver and platinum this year as they are out of favor and I believe there is an opportunity. I have time on my hands, at least I THINK I have time on my hands…
        “Gold is a treasure, and he who possesses it does all he wishes to in this world, and succeeds in helping souls into paradise.”
        Christopher Columbus
        Nomad

    4. I don’t debate the intrinsic value of Gold and Silver. To me they are worth whatever somebody will pay for them. like investing in baseball cards or a famous painting. I trade Gold like anything else, gradually selling on the way up and gradually buying on the way down. A small position, his recommendation is way too extreme.

      1. Martin, I appreciate and thank you for your thoughts. IMHO, you are spot on because 50% in any asset class is just too extreme and can be a recipe for disaster if one follows this advice. The markets can easily move away from an investors large concentration. Each investor needs to do their own deep due diligence and learn before they commit capital…
        Have a great weekend, Nomad

    5. I own American Eagle gold coins as a partial insurance policy in case everything else blows up. As I told the broker when I made the purchase,”This is my only investment where I hope I lose money”

  38. CNP-PB, is it a buy here at this price of 44.94 ?
    I know about the Texas Commission being tough on them.

    1. Newman–I have been pondering the same question. It is a mandatory conversion in about 2 years– Common shares are now at 24.34 and the conversion rate is 1.8349–so shares are at a break even while garnering a nice 7% coupon.

      1. Tim, I dusted off my old chart buy and sell electronic program. This “software” was created by a team of MIT students to chart buy and sell patterns of equities. I primarily only invest in income producing assets (muni/corporate bonds, preferreds etc) so I really never use the program. When I put CNP into the program; it comes back with $23.92 near term support (short term buy area) and $23.43 as the next level to buy. This is DEFINITELY not a recommendation to buy or sell only for reference my friends…
        Voltaire “The art of government consists in taking as much money as possible to a class of citizens to give to another”
        Nomad; Hope with a thirst for happiness my friends

        1. Nomad–I have one of those programs also–never really use it anymore, but did at one time when I fancied myself a trader.

          1. Tim, Thank You.

            I thought the issuer had to convert to common at the $ 50 price of the preferred.
            If not, then we get 7% till 2021 and then at conversion we get the equal amount of common?
            So, there may be no gain back to $50?

              1. I reread your comments and i now understand what the risk/rewards are.
                I won’t be taking that risk thank you

                1. Newman, good for you in assessing your personal interest. Most decent companies a preferred is basically untethered to common. This mandatory convertible preferred is 100% in bed with common. They really shouldnt even be considered preferreds in my opinion. They are really owning the common with a teaser yield attached.
                  I bought 300 the other day and regretted it because I violated a rule of no convertibles (not an indictment, just my personal style). So yesterday morning I sold my 200 share purchase of $46 at a 20 cent loss and moved on. I used part of the money to buy feces smelling LTSH at 17.70 and glad I did…For now, lol.. I did keep 100 just in case A4I gets to brag about a price spike and I can say, I own some too, ha.

                    1. Yeah Tim, you tell him. And he’s making fun of me too… (pouting)… We don’t need any attention from the SEC or FCC over here in our hood…

                      Grid, I’ll have you know that I liquidated all my LTSH in the mid $25’s before the bomb went off. Made out like a king in retrospect. Still holding LTS-A, though. Nah nah nee – boo boooo…. It smelled pretty good when I sold it. lol

                    2. A4I–he is skirting the rules I have set up–some 4 letter words get kicked out automatically–but feces smelling–anyone that can innovate like that to get around the auto checker is ok with me.

                  1. Gridbird, i played this issue for a gain early in the year.
                    Someone must have commented about it.
                    I do not like to buy and hold stocks. That strategy never fir my psyche.
                    Real estate was easier to invest in.
                    But at my age 68, i find myself making more money trading issues on this site.
                    I play the spreads on GOODN and WRB-B and others and am making a few hundred dollars a month. I also play insider buys if i’m earlier than most to get the news.
                    Disclosure: I do take lumps from some issues commented upon here.
                    All in all, this has been my best year for performance.
                    Good luck all

            1. Newman–here is the scoop on my page–

              https://innovativeincomeinvestor.com/security/centerpoint-energy-7-00-series-b-mandatory-convertible-preferred-stock/

              Here is the prospectus

              https://www.sec.gov/Archives/edgar/data/1130310/000119312518285695/d623774d424b2.htm

              In the prospectus they have a conversion table on page S-11 which lays it out. If the price is less than 27.32 you get 1.8349 shares. So TODAY with the common at 24.38 you get 1.8349 shares which equals 44.xx.

              So what is the risk? The risk is the common continues to fall-thus the preferred will continue to fall.

      2. Tim,
        You mean break even if you take into account the dividends accrued, correct? Otherwise, break even would need a common share price of ~$27.32 or so.

        I’m holding tight but not buying any additional shares. Boat is already full of shares bought near par. Ute’s and MLP’s are hated in this tape but it will get better as we go from the valley back towards the peak. JMHO.

        1. A4I–no breakeven — without dividends. The CNP-B shares are trading at 44.xx–so at 24.38 times 1.83 gets you to 44.xx.

    2. Newman-as an income investor I decided to just buy the common which is now yielding 4.7%. I can wait it out if the common goes lower while collecting the divy along the way. The mandatory conversion for the preferred adds an element of risk I decided to avoid. Don’t forget that the common was down in the 16’s 3 years ago.

    1. Don’t really know, but I am with TD Ameritrade now and hope Schwab provides the same access to all OTC And Canadian takers. I was with Scottrade previously and the transition to TD went pretty well. Fingers crossed

    2. I have an account at both. I prefer TD Ameritrade’s website, and I get slightly better fills (I think). Not happy about the buyout. Also I like to spread out my money not too much in one place but that may be just superstition.

      1. I have TDA and Fidelity accounts and feel the same way about executions, that I seem to get better executions with TDA… In fact, multiple times I’ve had identical day orders open at both and been completely filled at TDA without a single execution at Fidelity. Maybe once the reverse has happened.

        I sure hope if this merger goes thru that Schwab doesn’t retire ThinkOrSwim… I’d hate to see that disappear.

        1. More convenient to follow a long watchlist at Ameritrade. Schwab has some features and charts that I never use, but could be nice for somebody who wants them. Sometimes it’s just about getting familiar with one style and not wanting to switch it up. (I don’t like driving 2 cars for the same reason).
          I’m satisfied with Fidelity fills and that’s my largest account because of the higher interest on sweeps account. though it’s falling like a rock these days.

    1. This has been addressed somewhere on this site.

      LTS bonds will be delisted after the merger, so that is a negative.
      Another negative…the acquiring company has a credit rating less than LTS, which had a poor rating to begin.

      Who knows how to price these bonds?

      1. Retired Broker: Thanks for the info. Been through the delisting game with AFFS. So far, so good with that one.

          1. It was a bumpy ride initially, Gridbird but it seems to have leveled out with the AFXX series notes.

            1. GLV, I missed out on all the Amtrust fun. About 2 years ago I made a couple quick bucks in a few days when they were dragged down with the Maiden malaise, but I didnt participate on delisting drama. I only got in recently under $19.

      2. I couldnt resist. On golf course bought a puny 300 shares of dirtbab LTSH at 17.70. Might sell tommorrow, ha.

        1. I’m waiting a little longer on LTS babies. At some point they become worth the risk as a speculation on price recovery or a super high yield hold to maturity. The acquiring company does have leverage issues but most of the sell-off seems to be driven by the de-listing – some investment entities can’t own delisted securities due to their mandate, so they dump en mass. At this point I think it is more of a delisting panic than a re-rating of credit risk due to the acquirer, although I am sure some people are selling due to the credit risk.

          1. Probably both combined…But I read they had some ~10% debt on books, so LTS debt needed to go down to reflect that new rerated reality. There possibly could be a second wave of selling drops when/if the actual delisting occurs. As any entity that may need to sell certainly is under no obligation yet, because they are not delisted and merger hasnt been approved. Im not looking to invest in this creaky business segment, and will sell soon with my pocket change gains.

            1. Grid – Thanks for clarification on KYN_F – On LTS notes, were this anything more than the delisting fear being the primary cause for the downslide, wouldn’t it in theory also include the preferred that’s hanging in? Not that I care. I’m not involved either way.

              1. I doubt the preferred has anything to do with it because market clearly knew from outset it had a change of control redemption procedure, which the bonds do not. Delisting is not a fear but already declared in SEC filings. Acquirer has debt yield that was higher so its mostly LTS bb’s being rerated.

      3. I see a news release today that Triad, a sub of LTS has “successfully recruited” a group of four advisors with combined client assets of $150 million. That works out to 37.5 million per rep. Gee…when I was in the business a rep with that few assets was barely hanging on…and no firm would issue a press release that they had recruited such business.
        Things must be different at LTS.

        Think I’ll forever stay on the sidelines with these issues.

    1. Tim,

      I hold this bond as well as KTBA. ATT has a tender for the bonds EVERY year as long as I can remember….always around this time of year.

      Both the bonds and KTBA are non callable. The tender for the bonds will have minimal if any affect on KTBA.

      1. The free trading 2095 bonds despite being non callable can be tendered. This happens all the time. Remember KTBA was only a sliver of the original bond issuance. A broker bought them and repackaged them into trust certificates and the bonds are in trust. A few of the actual bonds are still outstanding however most of what still remains of that 2095 bond is trapped inside KTBA.
        GJO is a separate prime example. Walmart had a non callable bond and tendered at $155 in past year or two. However some of that bond is trapped in GJO. And as you can tell its under par and none of the previous Walmart tenders resulted in any action on GJO because one only holds certificates (like KTBA) that lay claims to bonds in trust, but dont actually own the bonds. As one can see that completely changes the reality of the situation.
        One who owns KTBA should be thankful there are no call warrant holders which was typical for that time era. Because the call warrant holders would have redeemed KTBA at $25. You would have taken a cap loss and the call warrant holders would have received the cap gain from the tender offer instead.

  39. I have seen this question asked before but I could not find an answer.
    What are the risks associated with an A rated bank issuing a below investment grade preferred? (I know there must be concerns otherwise why would investors buy the lower coupon IG shares).
    Would the bank not stand behind its below-IG preferred? What would the failure cases look like?

    1. Libro – the answer to your question lies in understanding the “capital stack” of an issuer. One can visualize the various securities issued as a company as a layer cake of claims upon the assets of the issuer.

      To simplify a bit, secured debt issues are at the top of the stack, followed by senior unsecured debt, followed by subordinated debt, preferred shares, and (finally) common shares. In the event of a liquidation, claims against the assets of the company start paying at the top and pay each layer in full before going on to the next layer. Anything left at the end of the day belongs to the common.

      Obviously, given that payoff regimen, the lower layers of securities have more risk associated with them. This difference in risk is captured by security ratings. It’s not really an issuer that gets a rating, it’s each tier of securities of the issuer.

      Taking KeyCorp as an example, its senior unsecured debt is rated BBB+ by S&P, its subordinated debt is BBB, and its preferred is BB+. One issuer, 3 ratings. (There are actually more, but I’m simplifying).

      The choice of which issue an investor chooses to buy is a matter of what level of risk is wanted. There is a direct trade off between risk and return here. if you want the safest securities issues by KEY, you get a lower yield. More risk, more yield.

      It’s not really a matter of an issuer “standing behind” its issues. With some exceptions, they all “stand behind” them. The intent is always to pay off. Where it gets to matter is when a company become a bankrupt or liquidates, and it comes time to divvy up the assets. The guys at the top get paid first, which is why they get a lower yield. If the assets are insufficient to pay everybody, the guys at the bottom take a haircut. For that, they get a higher yield.

      1. Bob, thanks for the response, I do understand the “capital stack”; where I am confused is that it is very unlikely for an A rated company to go bankrupt, so for example, take JPMorgan, why buy the low interest IG pfds when you can buy the higher yielding non-IG? Is it possible that why the bank is in good health it could still renege on the non-IG pfds?

      2. I’ve been through 2 liquidations and never saw a dime. All the money was gone before it trickled down to lowly investors. And I wasn’t in the lowest layers. So now liquidation rights aren’t much of a factor for me. Invest in companies that don’t go bankrupt or don’t expect much.

  40. Any opinions on SLMBP? Fallen to a tempting price unless the risk is too high. Politicians talking about student loan forgiveness has caused a spike in nonpayments.

  41. But in the report, where the preferred call prices are listed, is the preface:
    After October 1, 2022, or following the occurrence of a rating agency event. Information for each outstanding series is in the table below:

    Does this mean the elevated redemption prices are good through Oct. 1, 2022 or begin in 2022 or neither?

    1. Hi Vg, I suggest you read the first portion of that sentence. That is, read the whole sentence. BR, No. 12

  42. RILYH had a detailed evaluation on seeking alpha by arbitrage trader on November 15….curious what others with more experience think about his assessment.

    1. This is a non-answer but here goes.

      AT is very good with numbers. I’ve not gone through his figures on RILYZ but I suspect they hold water. If I was putting a million into the trade I sure would do the numbers personally.

      Even if figures work out it’s not a trade I would do. In the off chance something goes terribly wrong with RILY you are in deep trouble unless a million is small change to you. If it were a diversified portfolio I would be much more inclined to try something like this.

      The scheme depends on cheap leverage. I have an account at IBKR and would consider big use of leverage, knowing that it’s not a risk free proposition. If rates (especially short term) run up, and prices of your collateral tank, you can get in to trouble. Keep the margin reasonable, and consider the liquidity of the collateral. This can blow up on you.

      IBKR is the only place I know of that this might work. The margin rates are very low and decline as the amount borrowed goes up.

      Also, consider how much of the margin interest you can deduct. The tax code is unfair on this score. Interest income is always taxable but margin interest is not. You have to run the numbers to see how much you can deduct. If you can’t deduct all of it (and you probably can’t) it cuts down the profitability of the trade.

    2. I often trade within a family based on diverging prices. A profitable strategy if you have the time and aptitude for it. But I don’t do it the way he suggested with margin and hedging. I do it the old fashioned way, simply selling one and buying the other. Less risk and no overhead.

      1. Martin – this is a very sound strategy, especially if done within a qualified account. Even when rates are low, there is almost always alpha to be gained by switching between issues of the same issuer.

        If both yield and YTC are higher, it’s a no-brainer. If you are picking up current yield at the expense of YTC, you need to be more of a trader to pull it off.

  43. Tex–there really is power in ‘many’–someone always has the data (or knows where to find it).

  44. Thanks, Tim. At its coupon rate of 4.92%, I have doubts they will call it anytime soon. But one never knows.

    Nice to get confirmation the redemption price is $103.23. I just bought a small amount at $104, intend to keep until redemption, or if the stock price goes to $108+, whichever occurs first, lol

  45. Tex, to clarify–does the $103.23 redemption price apply just to APRDM, or to all of Alabama Power’s preferred stock?

    Thanks.

    1. Its on page mentioned by 2WR in link provided by Tex (as well as on each Southern Co Annual Report e) :
      4.92% APRDM $103.23 ; 80K shares outstanding
      4.72% APRDP $102.18 ; 50K
      4.64% APRDO $103.14 ; 60K
      4.60% ALPVN $104.20 ; 100K
      4.52% APRCP $102.93 ; 50K
      4.20% APRDN $105.00 ; 135,115
      Shares outstanding also provided in each annual report.

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