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.

293 thoughts on “Sandbox Page”

  1. Can see COF issues heading for a group call., prob announced end year. ARR in this interest rate environ. may catch two divys before year end for a qual plan?
    Lastly, There is NO way there can be a reconciliation of :
    – low-to-no vanishing returns,
    – real rising or even stable asset values (this excludes magic-mark-to-market mathematical bond calcs which are an adolescent game)
    – indebtedness especially at the municipal level where most people live (can’t print money, have no Fed, have monster pension and infrastructure liabilities and can only push the higher tax button over and over)
    – and some sneering claim that, “America will never be a socialist (undefined term) state…” Then what are we doing and for whom?
    These items are IRRECONCILABLE. My hackles are WAY up. Go ahead, shake oil and water together, try homogenization, try emulsion, shake harder…harder

  2. Germany’s govt bonds now have negative yields on all maturities. Japanese debt has gone negative out to 15 years. good grief.

    1. Meanwhile, the US dollar is reaching record highs…rates need to be cut to keep the playing field (somewhat) level.

      1. Interestingly the overnight funds rate is the highest yielding income along the yield curve. That is backwards. Its a pretty good sign you will eventually get your wish at some time.

  3. To A4I Thank You for your insight. I will consider that.
    And Now for something completely different;
    I was just reading SA article today about MBINO and NRZPA and i read that the ETFs are always “rebalancing” and may buy these issues.
    All we have been disgusting lately is the Calling of our higher rated issues.
    That may mean many new issues will have to be bought for that ETF.
    So, maybe the 5% and the 5.5% issues will get higher bids these next few months.
    Lately this place resembles a “Call center”

    1. Hi Newman–expect the “call center” to continue. We have been through these periods before where you can’t hardly keep up with the redemptions–unfortunately for all us investors this will be with us for the foreseeable future.

      1. Personally, Tim, I’m much appreciative of the “call center” going on…. I’ve mentioned before I’ve been doing a lot of picking up pennies with called items and considering them alternatives to money market funds and/or sock drawer no risk alternatives…. Bot KIM-K, KIM-I thanks to the “call center” and GLADN as well this week all providing better than 3% annualized risk free yields… t’aint nothing to brag about but it’s keeping me out of trouble. Gotta have free trades though.. In the meantime somebody please tell me why NEWTZ keeps trading at 25.41 to 25.52 when the call notice for 8/29 clearly says you’ll get 25.00 plus .3073 approx upon call….

  4. What am I misunderstanding about MCX. It is under par, 6.5%, due 2021. What is the reason it is under par….I would think it would be in the lower $25 range. Is this a risky venture?

    1. RayDaBoz – So the question I have for you is how far back do you go in your experience with MCX or anything with the “Medley” name attached to it??? The soap opera’s been ongoing now for over a year on the names (MCC and MDLY) and no matter how far back you go beyond that in trying to understand the two, the more you realize just what a horrible track record the Taubes have had as managers. With the apparent end to the soap opera being continued management by the same people who ruined so much shareholders’ wealth over the years, it’s highly understandable why skepticism remains despite what the 3 way merger supposedly will do for MCX holders. Thankfully, I’ve only been watching this from afar after having owned MDLQ (the other Medley) up until a year and a half ago.

      1. Thanks for the info on MCX. I was looking at term preferreds and had read about the merger and thought that was a good thing….but didn’t know about the management problems. You confirmed my suspicions that something must be happening for it to be under par. I appreciate the replys.

  5. The question is whether financial stability really leads to morality and more fulfilling lives or perhaps we actually lose our souls once our bellies are fed?

  6. WFC/L & BAC/L shares have been on run (up $200, with yields approaching 5%). Makes sense…busted so long duration when rates are cratering. Yet, SLMNP has barely moved. Thoughts?

    1. Yes, odd. The spread on SLMNP the other day was $13, so I bid $1 more for a few shares, but the ask stayed firm @ $1047 & let my bid expire.

      That rush seems to be mostly over…

      1. I know this is a soliloquy, but I wonder if the common dividend is relevant here. BAC yields 2.6% so the L shares at, now, 5% seem attractive. In contrast, LYB yields 5.6% so the 5.8% from SLMNP is relatively less attractive. If you take the credit risk into account, since there is no call risk for common or preferred, then maybe 5.6%, which can grow on an absolute basis, is more attractive then a flat 5.8%.

        1. Mrinprophet, these type of issues generally wont appreciate like BAC-L has the past year. Various reasons…1) Bank QDI preferreds from all banks are treated like they are backed and guaranteed by the Almighty himself. Its quite an interesting trend considering they were the preferreds having most bankruptcies and near bankruptcies a decade ago.
          2) Its a small float, illiquid, and misunderstood… Heck I didnt have the total info correct when I was suggesting it here whenever that was. I would suggest quirky issues like these there may be little connection to SLMBP and LYB itself. They just dont have the name recognition and “street cred” that say Dow has. Which then reflects that in their old preferreds.
          If LYB had the “cred” that Dow has (they are industrials and chemicals though not sisters by any means) SLMNP would be around $1300. Im not holding my breath, lol. But on the positive, I have no worry of a call or worry of being paid,

  7. DCUD holders will see that today their shares were exchanged for D commons. I had forgotten that 8/15/19 was the date. The final div was paid today. I had 1200 shares of DCUD, and received 794 D shares in exchange. And D will go ex for .9175 on 9/5. And to boot, D was up $1.72 today. I will miss the DCUD div, but I am not displeased.

  8. Dark humor du jour from SA…the UST 2s/10s curve inverted today – first time since 2008 which some call a recession signal. Well, Germany’s 3s/10s also inverted. 3-month yield -0.558%, 10-year yield -0.593%. An SNL skit for financials.

  9. The speed and severity of interest rate declines have been tough on our fixed income holdings. Consider though the potential effect on real estate as an asset class and purchasing power in a declining mortgage rate market.

    We first recognize going from 4% to say 3% is a lot different than going from 8% to 7%, 7% to 6%, or 6% to 5%. The drop from 4 to 3 represents a whopping 25% reduction in annual interest. Buying power is seriously enhanced.

    Say a family qualifies for a $500K mortgage at 4%. All else being equal, and no change in income – they will qualify for approximately $560K at 3%, $640K at 2% and $735K at 1%. And while we may not get there, 0% – mortgages are now being closed in the EU – close to $900K. All this assumes zero change in the family’s finances.

    If the rate trend continues, the total return on real-estate assets or real-estate financials owning hard assets have the potential to be substantial.

    1. The issue I see with real estate is that many home buyer’s circumstances may change should interest rates continue much lower and mortgage lender’s qualification parameters may also change. Why would a European bank lend to a home buyer at 0% if they thought the asset was going to appreciate? Maybe they think the asset will depreciate or flat line and would rather have the money paid back to them over time? While 0% interest rates may cause a burst in real estate appreciation, how can landlords raise rents in the face of no inflation? No rent appreciation is a pretty scary issue for most commercial landlords given what municipalities will need to do regarding taxes and infrastructure.

  10. St. LOUIS

    I’ve seen a number of references from folks regarding “The STL” (as the kids call it) and wondered how many of us on the forum live in or around St. Louis. If there are a couple of us, is there any interest in meeting at a public watering hole? I’m sure we all enjoy the anonymity of the internet, but I also know I could learn a lot from a gathering. I know this isn’t the intent of the board, nor should it be, but thought I’d check. I’m a talker, less so a typer.

    I’m in O’Fallon, MO and work downtown.

    1. West County, if I’m in town anytime basically anywhere (somewhere quiet enough to hear and converse).

  11. In response to content on other pages recently:
    I have seen that in my own city. Capitalism is great when there is demand for nat resources and a build out. Money/debt/labor can be manipulated by interest rates to meet the Fed’s mandate. The situation changes though. Now as we have way too much Supply-side; we’re junkies. Now they are trying to deny the natural evolution into social maintenance, structures, infrastructure, debt not good for consumption, etc. NOBODY wants to maintain anything it ain’t no fun. We develop sell and move on. Same is true of trading, some chump bot it, ain’t I bright?
    Welcome to N STL. Here whole swaths of the city are ‘bombed out’ just like post two world wars, destruction of supply. Supply is bulldozed and dumped into the river. The money men moved on to virgin planet instead of being governed to be part of a social fabric. (read: bluelining in Portland) There have been lost generations sacrificed on the altar of waving the flag of dogma. I am lucky I was born in a virtuous cycle., but I admit I have a biased ego about how successful I am because of it.
    Yes we have a magnificent buildout for millions globally (the Growth Phase), but nobody wants the responsibility to maintain the multi-faceted social impact and need. Perhaps our own stubborn intrangecient mindset based on politicization of ‘certain words’ has us stuck outside the range of creative solutions. Or, is there a purposeful stubbornness of mind in our controlled leadership? Sound like Roosevelt?? Same problem, different day, same old mind set though. I think these are fair questions to ask out loud. The generation behind us certainly IS. Managers need to manage through every cycle.

    1. Dave, my TD account has it as Qualified (which it is), and my Ally doesnt clarify it either way. But they are buffoons, so it doesnt matter. Things may square themselves up by tax time. Heck all my NI-B dividend payments in Vanguard account are listed as “interest” and not QDI and that is clearly wrong.
      They will have it corrected by tax time, or I will manually override it myself when I fill the forms out.

      1. Thanks Grid. You are right. It is the 1099-DIV that matters.
        Seems to be a sellers strike with SLMNP presently. Eventually that may change.
        – Dave

        1. Dave it went almost 6 months without trading before.So it can take time…Speaking of time..Im waiting for this Kansas tribute band to get over Night Ranger can take the stage… Free concert and $3 Beer. A cheap date tonight with GF, lol..

          1. That’s all part of the cost of living in an area. Our area is pretty good and varied. I also enjoy off season in the Ozarks and cons areas. Speaking of no trading vol, I just cancelled my order for AGRIP at $100. Kansas’ music can help put all this stuff in perspective. I just scattered some ashes into the wind the other day and their song rang all day for me.
            I’m setting up a new percentage allocation of funds in taxable area: a high confidence IG, non-callable, real annuity type alignment with about 20% of taxable account. I figure this will be an time-insurance policy if everything just has to get put into suspended wait for awhile. What I am seeing is a 4.5% range with about ten, QDI securities that are shoppable right now. I think we are going to be moving onto a low volume arena for a while, steady win the race as is said. Never hurts to weight in some high IG….if even that does not get called!

            1. Joel-Such fertile ground in the mind of Kerry Livgren .
              I wonder what you’d think if all the changes didn’t come
              For growing old is only going back to where you’re from
              Everything you’ve seen is waiting patiently within
              For growing old is only going back to where you’ve been

            2. Joel, The Kansas tribute band was actually very good and of course they played that song. Night Ranger brought it last night. No mail it in performance. Even dusted some songs out of the vault they rarely play anymore onto last nights set list. The town Pontoon Beach Ill is less than 6000 people. I bet there was 10k people crammed into the fairgrounds. And the sound system was awesome. Everybody loves a free concert and cheap beer! 🙂
              I always reflect at end of week to see where I am at. Im a bit shallow on higher yield. So I have a relative safe one spotted Im gonna try and snag tomorrow.

            3. Yeah, perspective, Joel, perspective. My brother and his wife dropped by yesterday for wine & cheese. Over a really good cab, they related the story of some of their friends who are in trouble financially. And, oh btw, those friends live in a 20,000 sf house. Twenty. Thousand. Square. Feet.

              https://www.youtube.com/watch?v=zpl4wkWMJtE

    2. Can anyone help me with a site or a book to understand more about preferreds? III really helps but I was wondering if there were any other options? Thx

      1. Tatala, here is a very quick link primer basic read that is good as it keeps preferreds in perspective to a total investment plan.
        https://www.cnbc.com/2019/05/17/invest-like-warren-buffett-a-guide-on-preferred-stock.html
        I own this book…Though not a “preferred stock book” It has a nice 12 page little primer on types of preferreds issued. It is only $10, and is something you can physically hold in your hands if that is important.
        https://www.barnesandnoble.com/w/the-preferred-way-bill-orr-lll/1111978377
        Dont be afraid to just google…Why are preferred stocks good investments AND Why are preferred stocks bad investments……You read enough articles from both perspectives you get a truer understanding of them. Everyone has their twist, so more reading gives more exposure to peoples perspective of them.
        After you know the general ins and out, and pros and cons then you will have to decide all on your own these types of decisions…% of portfolio allocated, sector exposure, credit quality risk, duration risk (perpetual or term dated), price entry points, etc. etc…
        Also, you could just research on preferred funds, which can include, managed or Index based…Closed end funds, leveraged and unleveraged.
        Much of this info can be found on internet searches. I initially tried the “book route” and found it unsatisfying and preferred internet researching to help assist my knowledge.

        1. Tatala, I also own the book that Gridbird just mentioned and there are also a few other preferred stock books for sale at Amazon. Mostly, I like REIT preferreds and found the following book useful. It is out of print now, so you may have to wait a little while until you can get a used copy at a reasonable price – or check listings on Ebay. Bought my copy a few years ago, but was able to pick up a copy for my brother last year for $25.

          https://www.amazon.com/gp/product/0692013962/ref=ppx_od_dt_b_asin_title_s00?ie=UTF8&psc=1

          1. Kaptain, I dont normally play in your Reit playpen. But Im looking for yield and seeing some relative value in a few.

            1. Grid – the current interest rate environment is probably the worst I have seen in almost 20 years of investing. Little value in some of the REIT preferreds, but actually may look at the common stock on a few . ….ugghh – tough choices now.

    3. Can anyone help me with a web site or a book to understand more about preferreds? III really helps but I was wondering if there were any other options? Thx

      1. Tatala
        I suggest that you just key the words ‘explanation of preferred stocks’ into a search engine and choose one to start. If it isn’t helpful, choose another one. Once you have a basic understanding, you can then come back to this site, go to ‘quantomonline’, or find other sites that deal with preferred issues. Note there are many websites that discuss preferred issues, including ‘Investopedia’. Keep it simple. Thanks

  12. Anyone with opinion on CLDT Chatham Lodging?
    The CEO Fisher has done this before, namely buy low and sell high.
    His last Reit was sold in 2006.
    He started to buy properties again in 2010, so if he intends to sell at the top..it may not be long now. Meanwhile collect 7% plus while you wait
    I did see their future revenue forecast being lower.

    1. I am deep in to DCUE, same as CNP-B. I also own the common of both. For me, I’m fine with buying at these levels (the convertibles). I already have a full boat of both – going back to when they IPO’d. Both have been good for flipping as they gyrate up and down quite a bit IMO.

    2. DCUE keeps coming up from time to time but the comments get lost in the shuffle. I wish we had our own article to preserve stuff in.

      DCUE is $100 par investment in two things. First, a contract that pays 5.5% ordinary income coupon until 2022, obligating you buy $100 of D common in mid 2022. (If D is below 73.91, you’ll be buying at 73.91, so in that respect it’s kinda like selling a put, you have agreed to buy at 73.91. But unlike a put, if it’s above 73.91, you’ll be buying at market price.) Second, there’s a non-trading convertible preferred paying 1.75% (QDI) which D will “attempt to remarket” in early 2022, and if “successful”, you’ll get a share of the proceeds from that, and $100 will be used to satisfy your contract to purchase common (described above), and any excess cash will be given to you somehow. There are many other scenarios that could play out in 2022 but these are the basics.

      I bought a handful of these not really knowing how it will play out, or how they will trade. I asked D’s IR to explain the “remarketing” stuff, and they punted me to my broker (Schwab) who had no clue. So I’ll just collect my coupons and take my chances for now.

      D has also done these “equity units” using bonds instead of preferreds.

  13. Anybody else worried about the health of CLNY? I own CLNY-B, but the financials at a cursory glance – look horrible. Common share price down ~77% over the past 4 years. Earnings getting worse. Not seeing much reason to hold this althought the yield is nice (for now).

    1. I (unfortunately) have 250 of the common, 100 of the I series, and 200 of the B series. I put more into the B in the past because it was already half-called. But then the shoe dropped (along with the common) many months ago, and have just let it ride since. Hoping they make something of a recovery. Am holding the preferreds for now.

      1. Ouch, Moore. I’m essentially flat on the B series and just treading water. A downturn will not be kind to these folks so I’m just going to go ahead and sell it off. No room for a yield chasing mistake to smack me in the forehead when there are many other things to buy from companies that haven’t lost arguably 1/4 to 1/3rd of their common stock value per year for the last few years. But that’s just my thought.

        1. I tried a dividend capture on one of their issues and it is the 1 that did not work out–I am sure very long term they will be fine, but there is almost no doubt it will be a rocky ride.

          1. If I recall the earnings they just released, they announced nearly a 1/2 BILLION loss. Actually, let me post it…

            • Second quarter 2019 U.S. GAAP net loss attributable to common stockholders was $(468.9) million, or $(0.98) per share and Core FFO was $57.1 million, or $0.11 per share; and for the six months ended June 30, 2019, U.S. GAAP net loss attributable to common stockholders was $(571.0) million, or $(1.19) per share and Core FFO was $104.8 million, or $0.20 per share
            o U.S. GAAP net loss included impairments and provision for loan losses totaling $353.1 million for the Company’s share, including: (i) a $227.9 million noncash write-down of the carrying value of the Company’s 48 million shares of Colony Credit Real Estate, Inc. (NYSE:CLNC) to a value based on CLNC’s closing stock price of $15.50 on June 28, 2019, the last trading day of the second quarter, required under generally accepted accounting principles as a result of the prolonged period of time in which the carrying value of the Company’s CLNC shares has exceeded CLNC share trading prices; (ii) $47.0 million for the Company’s share of impairments and provision for loan losses incurred by CLNC; and (iii) $78.2 million of impairments and provision for loan losses in other segments

            1. Not trying to put too much lipstick on this pig – but you have to look at it in perspective. A large part is non-cash. Yes, it impacts NAV – but I think NAV is still substantially above common trading price. ALso, one other thing to keep in mind: when a company has taxable losses, and makes preferred distributions, many times those preferred distributions are RETURN OF CAPITAL (i.e. non-taxable, lowering your cost basis). If you are an unfortunate person like myself, who still has carryforward capital losses, if you hold the preferreds in a taxable account, you can have a situation where a preferred stock distributes non-taxable return of capital…and when you sell your stock, that lower basis creates a capital gain (i.e. tax-free, using up capital losses). Or, if you have no taxable losses, it could be a long-term capital gain if held over 1 year. Big difference between marginal tax rate ordinary dividend vs “capital gain at sale”.

              I had this happen to me for iStar’s preferreds, when iStar had ooodles of insane losses from 2008/2009 they carried over for years until I think 2017. All that time, the distributions were return of capital, and not taxed, only lowering the basis. So I sold the iStar preferreds in my tax-deferred and held in my taxable accounts until they used up the losses and started distributing ordinary dividends again.

    2. I’m still holding a small position of CLNY-E which was originally NRF-E (Northstar Financial, I think), 8.75% coupon, callable back in May, trading a little above par.

  14. PPX having a late dump today… Its a great flip opportunity or walk into a call smack in the face…Im going to the well again. Got in under $25.30 bigly for me. Took another 400 share bit of the BFS-C apple this morning at 25.15. Higher than my 25.07 purchase the other day. Its screaming call too. Not suited for commons. Took my easy money flip and went back to preferreds where I belong, lol.

    1. Grid, sorry for the newbie question – I too followed suite and picked up some BFS-C. Seems like a reasonable risk / reward. Question is can the call occur anytime before the next ex-div date – meaning that we would miss that div? I suspect the answer is going to be yes.

      1. Proto, never be afraid to ask questions…That is how you learn! Yes, they can call it anytime…But it has already been accruing daily the next divi since July 16. So even if they announced a redemption tomorrow, one would get about a 55 day dividend. Since it has went on this long already, the most probable outcome would be a redemption of October 15th, and one would collect the 42.9 cent divi to offset any purchase price amount above par.
        I have no insight but this really reeks of people knowing to sell and move on. The disparity in price between this issue and the D issue along with the liquidity makes it smell of a call soon.

        1. Thanks Grid! Really appreciate your informative response.

          Regarding your example of it being called tomorrow – does the “clock” start after the ex-div date 6/29 or the payout date 7/15? Not sure how you go to 44 days?

          1. Proto, it starts the day after payment (or day of payment as they typically dont include payment day as part of divi payment). So for this situation lets assume July 16. So tomorrow that would mean 25 days. They must give 30 days notice, so that would give you ~55 days minimum accruel.

            1. Thanks again Grid for elaborating on the details. I always look forward to reading your posts as well as others here. A great source of information.

  15. Anyone notice the opening days of TCFCP ?
    Didja notice the bid kept adjusting upwards before any trades were done?
    I wanted to play with it but had to watch the bid go to 25.90 before any trades were executed. At that point, i left.
    If this becomes the norm…then we will not be happy.
    I’m trying to figure out how it’s manipulated and if legal.

    1. I’ve seen it run ahead on AONs. Believe it or not, all orders and bid-asks records are retained and actually pretty easy to look up. I’ve had traders angry on the phone, look up details and quote back the orders, keystroke changes and the concurrent bid-asks. It is truly astounding how much info is preserved and retrievable easily. Try a call over if you think you are correct. You will notice on the order entry detail alot of the info (expand the order history usually + sign. AONs get treated as tail end fills, but I use them alot with thin trading symbols. Last week I got a 29 share fill on 400. I hope you know it carries over for a new commission the next trade day. Just cancel and see the next action the next trading day. Liquidity is really the HALLMARK of the American Exchange system which created such a hugely profitable brokerage industry for ordinary Joes. The Capitalist System really is NOT about trading, but creation of Liquidity, Flow and Capital Creation and prudent placement. It swings with history and ABUSE. It’s on steroids today. In the ‘old days’ the managers had to manage first by buying correctly and maybe having to hold for a very long time. The history is actually v interesting. We couldn’t take sustained very low volumes, that is why we are seeing these liquidity measures from the Fed.

  16. Global Ship Lease GSL-B can be called on 8/20/2019. 8.75%. Anyone have an opinion on if this called?
    Thanks

    1. Hi David, looking at their latest earnings report GSL has about $800M in long term debt against assets of about $1.1B, and they just announced the purchase of three new ships. I think it’s unlikely that management exercises the option to call GSL-B any time soon. What they might do instead is buy shares back on the open market, especially if the price plunges into the mid teens like it did Q4 2018.

      I would not be a buyer at this price (too much volatility), but if you’ve got a capital gains cushion, it might be worth holding.

  17. PPX, is a drug I cant resist, it got down to 25.40 today, so Im risking the call and sopped some up again….After selling out yesterday again around 25.65 to buy the common PPL. Thought I was done as it sure treats me well the way it bounces. Looks like another small battle with it again. So now I own the common and the baby bond. I also added another 100 of LXP-C on a dip this morning. Probably shouldnt have done that. I really should be culling that herd instead of adding more. But I fell in love with their continued improvement and goal reaching of being an industrial reit instead of office reit.

    1. PPL is my home utility. I added yesterday. Keep looking at PPX too. I ve had it at times. Might be cheaper for them to repurchase common rather than call the note.

      1. Tim, its a close call here. I wouldnt be surprised if it gets redeemed. But its worth a shot again for me anyways being basically one payment above par. Who knows. You guys need to get your utility bills jacked up and help the bottom line. The British part of the ute brings in way more profits than the US side despite being about roughly equal. Maybe you can start a petition drive to raise your monthly bill and help the bottom line? It might help a divi increase for us too, perhaps. 😀

        1. Uhhh, no on to the rate increase. Nice try though. On my home golf course, I can see windmills operated by Nextera in Ppl’s service area. I actually buy the energy from Dominion but PPL gets the transmission. Free market at work in PA. Good utility though. Think it s held down by brexit

          1. Tim, I suspect that is part. They are hedged out through Oct. Brexit. But of course an economic downturn would be a drain on profits…Additionally though The Motherland is imposing regulatory reviews designed with intent to make PPL work harder to achieve profits. So this is a question mark also. The Labour party still barks nationalization but they have been minimized a bit lately. So there are ongoing concerns that has held the stock back from the gains most Utes have had the past year.

            1. Buy low, collect 5.5%, sell if it gets high, cash the checks meantime. Selling puts on D as well, currently holding the October $72.50 and 75 shares of DCUE. Would like to build a position there too.

  18. can anyone tell me why fido passed over my bid at open for 25.27 on a preferred issue when over 1400 shares traded at 25.25? my bid was for 200 shares aon.

      1. thanks for the info bob. You’re so smart. my problem is fido charges me 4.95 per trade and i’m cheap and don’t want to pay it.

        1. Understand fully. My cost is 2 bucks per trade so it’s a different calculus.

          That said, I look at the number of times I get stuck with a small fill versus the better price of not using AON. If I’m trading 200 shares, a 1 penny improvement in price (by not using AON) equals the 2 buck price of the trade.

  19. Bill, thank you for raising the question. Will be very interested to read what the more experienced among us have to say on the matter. I mentioned in another thread recently that I’d moved into a similar GS issue back in February – GS-D – which is now up about 12% despite the market action on Monday, and opened positions in GS-A – floor is even lower, 3.75% – in the past couple of weeks. Rationale is locking in a rate of return above CDs and money market with the possibility of capital gains going forward as fixed income seems to be trending toward the lower bound — not even calling it the zero bound any more. I am keeping an eye on BML-L, MS-A and there are several other similar preferreds. Very curious to learn what others may think, so thanks again.

    1. D, Bill S, and P: Gridbird responded to this question. You can see and learn
      his thoughts by looking at Reader Initiated Alerts Page.
      Thank you all for the discussion. I learn so much from this community.

  20. I have a question concerning preferred bank issues like BML-L. It appears it could have been called a long time ago. It is trading at 21.73 a share with a yield of 4.6%. It is a floating rate issue with a minimum of 4% payout. What I don’t understand is will it ever get called or will BAC just buy back the shares on the open market under par and retire the issue ? If that were the case and it never gets called, would this issue be an equal to an investment grade relatively high yielding bond ? It seems like a good parking place for excess cash in lieu of a money market or CD only double the payout. Am I missing something here or is it just below par because the payout is only $25 per quarter ? I see WFC has similar issue.

    1. Bill, I’ll answer because nobody smarter took a shot at it. I bought BML-L on 11/21/2014 for $20.30 still have it in the last year it went from $18.60 to $24.98. That is not a parking place unless you want to be looking up and down the block for your car. Is it a good investment I don’t know.

      1. P: Thanks for the reply. I think as long as you are getting 4%+ interest you made a good investment. Far more than CD’s or MM’s or most investment grade bonds. Although, I would have really been tempted to sell at $24.98 🙂

        1. A god alternative to BML-L would be the busted convertible BAC-L. No possibility of call, only a conversion to the common at a price far higher than presently.

          Yield at current price is not good; only about 5.2%. Interest rate risk definitely there, especially if ( when ) rates go back up.

          But if you are looking for a stable and reliable income stream, and not too concerned about capital gain ( or loss ), this bears consideration – as a retiree, I find this a SWAN stock.

          I hold both BAC-L & WFC-L. Both have very similar characteristics.

  21. 100% cash after selling at the open this morning. Too much uncertainty and the typically weak part of the year around the corner.

    It’s going to be more fun to be a spectator at the roulette wheel than a participant.

  22. For those who do like security and the constancy of an annuity-like portfolio for a portion of their funds, and it is mentioned here often, I have a bold prediction. Sooner than we may think, fixed rate, long term debt will be back in vogue! SAY WHAT?! I was taken by the terms of the ALL-H deal:
    – Can be called prior to the call date, for a pissy premia,
    – will not float,
    – No mention of LIBOR (which will be another reason for another Y2K-type frenzy just in case we need one soon and we all need a media rationale for saving the nation… again
    – non-cum, emergency suspensions of payments (that universal clause for ‘special’ institutions got stuck into our minds during the last crisis instead of the land of the free and equal bankruptcy proceeding…wish I could get that kind of coverage!)
    – perpetual, but by whose call?
    How can they LOSE?! Pretty one sided relationship. Think about how this is arranged. Sometimes it is what IS said as well as what in IMPLIED.
    I am not being a non-productive complainer, but must, like you. make real choices in a baited shark tank. Some bait sees the situation clearly, evolves and survives in the tank.
    This is NOT your father’s American System.

    1. Joel, preferred stock with real protections? That is sooo 20th century. Get with the times, lol…You wont see this insert below anymore…This is the Indianapolis Power and Light preferreds still trading…

      IPL has five separate series of cumulative preferred stock. Holders of preferred stock are entitled to receive dividends at rates per annum ranging from 4.0% to 5.65%. During each year ended December 31, 2018, 2017 and 2016, total preferred stock dividends declared were $3.2 million. Holders of preferred stock are entitled to two votes per share for IPL matters, and if four full quarterly dividends are in default on all shares of the preferred stock then outstanding, they are entitled to elect the smallest number of IPL directors to constitute a majority of IPL’s Board of Directors. Based on the preferred stockholders’ ability to elect a majority of IPL’s Board of Directors in this circumstance, the redemption of the preferred shares is considered to be not solely within the control of the issuer and the preferred stock was considered temporary equity and presented in the mezzanine level of the audited consolidated balance sheets in accordance with the relevant accounting guidance for non-controlling interests and redeemable securities.

      1. Yes, we are in the dregs of the pfd market and scraping the bottom of the barrel for a decent, sustainable yield. Rates seem to be headed lower as far as the eye can see. What is it Grant said? Some 13 trillion globally in negative-yielding bonds. I have been looking for IG noncallables in the ~5% range. Ha! Good luck with that. Check out the asks, even on quality callables.

        And I’ve still got a bunch of MTBs that will go away this month. Where will those $ go?

        I have topped off my MLP holdings and love what I have, but enuf is enuf for a continuing good night’s sleep.

        The cash keeps mounting up in my question box. But, of course, all this is a first world lament. Things could be sooooooo much worse in my life.

        JMO

        1. Camroc – Love the comment about all this being a “first world lament.” I have a good buddy who worked for me way back when and went on to far surpass me in our chosen field and whenever either one of us would lament about failing to maximizing our investment decisions he’d always remind us both that what were commiserating about were “mink coat problems.” Guess we should all keep these things in perspective, but I know it’s something I all too often fail to do…

          1. BTW, I’m also reminded of the sage words of Captain Beefheart who told us, “A carrot is as close as a rabbit gets to a diamond.” Maybe there’s nothing wrong with being a healthy, happy and comfortable rabbit…

            1. I can not help but reply re: Capt Beefheart, nice and obscure, way off the mainstream for sure. I quoted a Zappa to someone the other day and all I got back was, “Zactly!” I was brought up in a deep tracks rock town StL and it is still alive here TG! Cpt B is known by fact to have made the historic first music-video (art) which launched the likes of MTV and such. Fun, Money and the chicks for free? I’ll have to go to Youtube now!

              1. Good thing we’re in the Sandbox, huh? Actually if I remember correctly, the quote is really only the name of an instrumental Capt B made, not a lyric but for some reason or other I’ve always remember it… The other song lyric I try to keep in mind when I get too uptight about all this crap we (aka I) take so seriously is another obscurity this one by Blues Traveler with Joan Osborne in background, “It won’t mean a thing in 100 years.”

        2. I can definitely relate to that. Had a friend who was very successful, reaped a bonanza when the startup he was employed by, went IPO. More money that he could ever spend in a lifetime.

          He decided to work for another year and retire. Unfortunately, he collapsed and died at his desk just months before that date. Doctors said it was stress that did him in.

          So now his wife and 2 young daughters have lots of money, but no husband and father. I know they would happily give up most if not all of that wealth to have him back.

      2. I see. Nice contract legal work. That’s what I am saying, the Contract has to be seen for what it is. The word ‘security’ is commonly used in a ‘specious’ way. It’s all starting to sound like an Arlo Guthrie song….just waiting for the chorus to come around again!
        I’m not SUPPOSED to be thinking. I’m hanging out waiting for an offer on our house out here and the western weather is nice, so I think I’ll start working on some fishing rigs for tom morning!!

  23. I own THGA and it looks to me like it is trading as if it might be called soon (it is callable now). Looking at the prospectus I don’t see any mention of a 30 day notice requirement, so I was wondering if anyone has had experience with a call in this type of situation, how much notice do they usually give?

    1. Anyone have any thoughts on AIC baby Bond? Im a new , is this worth investing in?
      I hear the have liquidly problems?
      Thx

      1. Tatala,
        My personal feeling is that there are so many other places to invest besides this train wreck. Their financials, to me anyways, are downright scary. I would never invest in this company. This company seems appealing because of the high yield, at least on the common – but I think you are taking a very big gamble on this one. We routinely discuss many issues of high quality here on the board so I would recommend keeping up with new postings to see what people are buying and what is coming out for sale as a new issue. The Monday Morning Kickoff’s that are posted each Monday morning are a great way to catch up on what happened the week before if you were not able to keep up. Otherwise, the new “sandbox” page over on the right side has a lot of good discussions on what folks are buying and selling. This may help give you some ideas on alternatives to AIC.

  24. Noticed the SLMNP dividend (thanks Grid) shows up as non-qualified in Schwab. Anyone have experience taking this up with Chuck?

    1. Same… but I had bought it within the last 30 days, so I assume it’ll flip to QDI after my holding period extends to be qualified. There was a good discussion on this a week or so ago if it applies to you.

    2. Yep. I’m in a major conversation with them about this now (after suggesting that they don’t know what they’re doing re QDI (See JPM-C, purchased 1/22/19). However, it seems that this probably gets corrected in year end 1099. Probably.

      1. Not too surprising that SLMNP is mis-coded, but would not have guessed they would get JPM-C wrong!

        What was their response? Did they acknowledge the error and working to correct it?

        I’m guessing that getting SLMNP fixed will be even more difficult than JPM-C.

  25. I am seeking some guidance. If you have a preferred trading at 26 to 27, do you sometimes sell it prior to the call date because it is approaching that date? If so, how far in advance? I know a new issue with the purpose of raising cash to call it can torpedo the price, I just don’t know how often, how early or under what circumstances one might protectively want to sell weeks or months in advance the call date. Thanks for any insight you can give.

    1. Wilson….It depends…Yield of the current issue, time until first call notice, current credit quality of issuer and if it has changed since the preferred went to market, size of issuance, potential cost savings of reissue, size of issuance, who owns it (if its largely inbreed they may not redeem it to feed off the trough).
      In 2016 rates went lower than today, so instead of accepting those yields I burrowed deeply into 6% past call illiquids, I knew management had no incentive to redeem. But those issues, though all still around, have greatly been bid up this time around as opposed to then. So I went a different route this time as I cant play in that sandbox anymore.

      1. Hi Grid, Please can I get your thoughts on OSBCP (Old Second), $10 issue?
        I still own couple hundred shares. Closed at $10.76 last night, paying 7.25%
        It’s way past call, with a maturity date of 6/2023. Is it time to let go?

        1. Hi Bear – I own also and believe the maturity is 2033, same as the underlying debentures. I’ll be interested in hearing what others have to say, too. I have that, ALLY-A (small amount), VER-F and BPRAP as past call issues and I’m on the fence with all.

          1. Tim- you are correct … the maturity on OSBCP is 2033. Thanks for responding, and I hope we get some thoughts on this

            1. Guys this is a borderline one and not as slam dunk to redeem as most normal type preferreds. See this is “outlawed” debt that is banned from future use anymore in Tier 1 capital. Small banks fought to get this stuff exempted in the overhauled banking laws from 08 crisis.
              So they wont be quite as eager to redeem these. To call and redeem with a new QDI issue (they cant reissue trust debt) it would really need to come to market in 5.375% range to make it worth their time. Their lower credit quality would not yet allow this. Plus you got the “good old boy” system in small banks where certain individuals own this with influence and dont want it redeemed. Many small banks have these issues on their books in private untradeable transactions to the good old boys.
              CEO about 3 yrs ago in conference call said they were “looking at it” in terms of redeeming. But he has since retired and nothing ever happened. I have frequently owned but not presently. A year over par. Its a tough call. They could just redeem at some point as it really isnt that big of an issue. There will be time decay here as it gets closer to maturity it becomes “very expensive short term debt” instead of long term when originally issued. But in terms of yield this one is a lot higher than some other call exposed issues with lower yields so it may be worth the risk to hold for the outsized yield.

          2. I sold VER-F yesterday at 25.76 and will continue to watch it. If it falls back to 25.35 range, I’ll repurchase assuming there’s no news on it being called.

            I took a small loss on MTB/C after buying it last month. I’m considering NTRSP if I can get it below 25.30. Maybe I’m being too cute.

            1. mrinprophet–you can be ‘cute’ with some of your portfolio–it is how we all learn what works and doesn’t. On the other hand when I’m near fully invested and not being ‘cute’ is probably when I do the best.

              1. Thanks All, appreciate the input. The OSBCP is a smallish position. Might be a watch and learn situation. VER-F was bought just below par a while ago, love the yield and the monthly pay. Lost 10% of it on the partial recall but my thought is if they were going to call more, they would have, so hope it stays for another year. All this watching and learning…if it sticks, I’ll be one smart dude…or not : ).

            2. Mrin, What is the draw for you to NTRSP? Strong credit ratings and QDI, but coming up on first call. Love that, but any thoughts on whether they will call it or not?

              1. Yes on credit rating and QDI. I bet M&T wouldn’t call, but they did and it cost me dinner. I have no insight, but I think there’s a better than 50% chance they call.

                If I can buy it under accrued dividend, and they call, I don’t lose. If they don’t call this quarter, then I pick up a good QDI yield for a bit longer. I’m sitting on 2.2% cash yield (regular income on high marginal rate) and I have some LT gains earned for the year that I can offset.

                Edutainment

                1. Good stuff… Thanks Mrin. Went long on it myself this morning. QDI and the credit ratings were a major factor – as well as it hugging par w/divvy baked in. If they call, no biggie.

                2. NTRSP next dividend will coincide with First call date, so as long as you buy for less than $25.36, you will not lose ( except for opportunity cost ). I feel the opportunity cost/reward ratio is acceptable here.

                  The earliest date they can announce a call is August 31st, to allow for the 30 day notice. That is the day I have circled on my calendar. If they do not call, then every day means accrual of interest at a 5.85% annual rate.

                  I own a few hundred shares, bought a few months ago at $25.35.

              2. Buying NTRSP at a 3% YTC would be a nice short term play for spare cash. Would be dumbstruck if it’s not called.

                1. Totally agree, Bob. Any responsible management would call and reissue at a low 5% yield, considering their credit quality.

                  Would love it if they didn’t call, but I suspect that will not happen.

                  I figure the probability of a NTRSP call at 99.5%

                2. NTRSP coupon is only 5.85%. You really think they will call it?

                  I got it Grey Market at issue 8/8/2014 at 24.43 so my YOC is 5.99.

                  1. NT runs a very tight ship. I would vote it the single most likely issue to be called at first opportunity. They could reissue at under 5.

                    YOC is the rear view mirror. Stripped yield (if they don’t call) and YTC are forward looking metrics. YTC at present price is 2%+, or about what you’d get on short term CD.

                3. Hi Bob,

                  Can you (or anyone else) help me out with the math involved with a “3% YTC. ”

                  Since we assured a payment approximately $.36 (7/1 – 10/1) and it is now trading at $25.35, isn’t the YTC pretty much is zero? A breakeven trade if called?

                  1. Amy – thank you for making me go back and look. The 2% was formularic from sheets, and looses accuracy as call date approaches. One needs to do the manual calculation as you did.

                    Agree, just one divi payment on 10-1 guaranteed. So, 25.35 will get you 25.36 on 10-1 if called. No meat on the bone.

                    Buying is betting against a call.

                    Looked at prospectus quickly and did see that he issue can only be called on a payment date, with a 30-day notice requirement. So if no call announced on or before Sep 1 you are good for at least one more payment.

                    1. Bob,

                      Thank you very much for your reply. I mess these calculations up frequently so I was wondering if I had missed something this time… like I often do.

                      With your, and Inspy’s, comment about such a high call probability I will probably pass……but it’s not like there’s a lot of opportunities right now to be missed by investing in a breakeven proposition. I have a chunk of newly acquired cash and I like to be fully invested so this is frustrating…..like it is for all of us.

                  1. As an aside, Amy, my parents had a 4-decade relationship with Northern Trust and because of that I had a deep insight into how they work. It’s the classicist outfit I’ve ever dealt with. If I was ever inclined to pay 1% for asset management I would go with NT.

                    Their client list is the envy of the money management universe.

    2. Wilson; I am fairly new to investing in preferreds myself and I have wrestled with the same issue. Everyone has their own take on this. What I do is add up the dividends I will collect to the earliest possible call date and add the $25.00 par to that. Compare that to what I would have if I sold today. If it is close I sell as long as I have something already lined up to replace it. That is the simple part, the other thing I look at is how likely is it that the company would redeem at first call, do they have a history of redeeming higher interest issues at first call, what kind of financial shape they are in. I am kinda lazy so I try and buy BB’s with relatively short maturity dates (3-5 years) or when possible preferreds with maturity dates so I just hold them until then and have something in mind to replace them with.

    3. Anything selling at 26-27 weeks to months before first call date has something making it very unlikely to be called. 2-3 years in advance is another matter.

      Easier question to address if we had a ticker. Otherwise, “it depends”, which doesn’t help you much.

  26. Speaking of banks, Capital One just announced a huge breach. Looks like ima really need that credit monitoring. Sheesh…

    Boy, this site is really slow today, even timing out on me. Can’t be my gear. Everything else is loading fine.

    JMO

    1. Was waiting to post this but couldn’t as the site was down:

      Capital One Announces Data Security Incident

      Perpetrator Arrested by Federal Law Enforcement

      MCLEAN, Va., July 29, 2019 /PRNewswire/ — Capital One Financial Corporation (NYSE: COF) announced today that on July 19, 2019, it determined there was unauthorized access by an outside individual who obtained certain types of personal information relating to people who had applied for its credit card products and to Capital One credit card customers.

      Capital One

      Capital One immediately fixed the configuration vulnerability that this individual exploited and promptly began working with federal law enforcement. The FBI has arrested the person responsible and that person is in custody. Based on our analysis to date, we believe it is unlikely that the information was used for fraud or disseminated by this individual. However, we will continue to investigate.

      “While I am grateful that the perpetrator has been caught, I am deeply sorry for what has happened,” said Richard D. Fairbank, Chairman and CEO. “I sincerely apologize for the understandable worry this incident must be causing those affected and I am committed to making it right.”

      Based on our analysis to date, this event affected approximately 100 million individuals in the United States and approximately 6 million in Canada.

      Importantly, no credit card account numbers or log-in credentials were compromised and over 99 percent of Social Security numbers were not compromised.

      The largest category of information accessed was information on consumers and small businesses as of the time they applied for one of our credit card products from 2005 through early 2019. This information included personal information Capital One routinely collects at the time it receives credit card applications, including names, addresses, zip codes/postal codes, phone numbers, email addresses, dates of birth, and self-reported income. Beyond the credit card application data, the individual also obtained portions of credit card customer data, including:

      Customer status data, e.g., credit scores, credit limits, balances, payment history, contact information
      Fragments of transaction data from a total of 23 days during 2016, 2017 and 2018

      No bank account numbers or Social Security numbers were compromised, other than:

      About 140,000 Social Security numbers of our credit card customers
      About 80,000 linked bank account numbers of our secured credit card customers

      For our Canadian credit card customers, approximately 1 million Social Insurance Numbers were compromised in this incident.

      We will notify affected individuals through a variety of channels. We will make free credit monitoring and identity protection available to everyone affected.

      Safeguarding our customers’ information is essential to our mission and our role as a financial institution. We have invested heavily in cybersecurity and will continue to do so. We will incorporate the learnings from this incident to further strengthen our cyber defenses.

      We are very thankful to the FBI’s Seattle Field Office and Special Agent Joel Martini, to U.S. Attorney Brian T. Moran, and to Assistant U.S. Attorneys Steven Masada and Andrew Friedman of the Western District of Washington for the speed with which they responded to this incident and apprehended the responsible party.

      For more information about this incident and what Capital One is doing to respond, visit http://www.capitalone.com/facts2019. In Canada, information can be found at http://www.capitalone.ca/facts2019 and http://www.capitalone.ca/facts2019/fr. The investigation is ongoing and analysis is subject to change. As we learn more, we will update these websites to provide additional information.

      1. A4I–I noticed that this site was bad for an hour this morning–I going to contact tec folks, but it was better before I got to them.

    2. Camroc, I should stayed home today. When you fall walking into a steep sand trap that was 99% mud and 1% sand it not going to be a good day. I did get home before close.Wow, LXP-C was active over 40,000 shares. Many days it doesnt break 1,000. I sold some off at 53.85. Last highest price lot I bought a couple days ago was about 20 cents lower and also collected the divi. Still have way too much, need to pare down the lower cost basis ones at some point.
      Got back into PPX at 25.51 late. Sold off last week 60 cents higher, but lost the 37 cent interest payment, but lowered cost basis. Didnt really want out of the position to begin with but 26.11 past call was too high, and LXP-C was screaming my name at the time.

    3. camroc–I noticed that this morning for maybe 30 minutes, but was better before I sent Chad a message to “fix it”.

  27. One of the few offerings, I got close to par within the last 3 months was Ford (F/PRB). 6.2%. It is not a great business. Exited at 6.8% profit. Never was more than a trade for me.

  28. ALLY-A…and call risk…..

    Is anyone still holding this issue?

    It is currently trading at 25.62. I have not experienced any call spankings yet and I am thinking that my luck will run out soon if I don’t start paying more attention to the subject of calls.

    Inspy – thanks for the comment on NEP. I will check it out.

  29. ALLY-A…and call risk….

    Is anyone still holding this issue?

    It is currently trading at 25.62. I have not experienced any call spankings yet and I am thinking that my luck will run out soon if I don’t start paying more attention to the subject of calls.

    Inspy – thanks for the comment on NEP. I will check it out.

    1. I had 200 shares for several years. Started to get nervous last year with the changes in banking regulations and how banks are allowed to allocate formerly-grandfathered preferred equities, so sold half of it. Will keep my 100 until it gets called/maturity – if a few other crazy-high old bank preferreds are still alive, there must be some good reason they have to leave as-is. Holding it for just 1-2 dividend payments more makes it worthwhile vs selling it and redeploying it in a much lower yielding alternative bank preferred.

      1. Thanks, MB. The old ‘where to put the money if I sell it’ issue is always a problem. Of course, if they call it, I will regret not just keeping the proceeds as cash…versus losing it.

        BTW, thanks for your help on the DST issue for my 1031 exchange. I ended up with 7 DSTs and am done with the process…which was a steep learning curve….

      2. Do you mind responding to a dumb question: what did the banking regs you mentioned do and what is the allocation process you mentioned?
        Many thanks!

    2. the older I get the less I know. How it makes any financial sense for the CEO of Ally-A (who has said he has no plans to call it), to continue to pay this kind of cost instead of coming to the market again is mind-boggling to me. I got out earlier this year. Probably means you are safe, Amy, given my track record

  30. I happened to see a new issue in the Google spreadsheet that was posted, which I hadn’t seen discussed before: AIRTP. It’s a Trust Preferred for AIRT, a logistics-based firm that appears to have decent growth and financials. The AIRTP was issued to existing shareholders recently as part of a stock split (don’t worry if you look at a chart of AIRT, and see it dropping off a cliff! – some charts don’t reflect the stock split.)

    The interesting thing is that many small holders may not want odd lots of some preferred that they don’t understand or don’t want, and given the newness of the issue, it’s currently trading slightly under par (par is just $2.50). Currently bid/offered at $2.40/$2.45. I picked up 1,400 at $2.45. Coupon is 8%, for both AIRTP and the underlying debenture held by the trust. Callable 2024, final maturity 2049.

    Seemed like a decent risk/reward for some new cash I had.

    1. Moorebonds, Funny you mentioned that as I gave it a second look study just last night. Risk/reward you probably are right. I just cant pull the plug. They are leveraging up 3-1 D/E at the holdco that would make a regulated utility cringe. Several acquisitions I dont understand either. But I can appreciate your interest. I gave it a hard look so I can relate.

    2. MooreBonds–never heard of this one–will have to check it out and get it added on here.

  31. MLP/Midstream:
    There were a number of posters that had mentioned their holdings of MLPs/Midstreams. I thought it might be worthy of more discussion. Also, Woody had a question on where to hold them and then UBTI ramifications.

    Last year I bought SEP/EEP (after FERC scare) and held them in my taxable account. I sold and took my profits near the end of 18 right before being rolled up into ENB. If it is an MLP (as opposed to c-corp midstream) I would think that it should be held in taxable account given the sheltered nature of the distributions. I’m sure others could comment on their experience.

    I’m currently only holding KMI (@$16) because I felt that there was a behavioral reason why it was undervalued. There are so many “kindered” comments given how poorly it fared earlier that there were a limited number of buyers. Given how the dividend was rising, debt falling, FCF rising and insider purchases… I felt it made sense. Happy so far.

    The cycle of MLPs moving to the new MLP2.0 regime where they’re converting to C-corps and using current cash flow to fund growth (rather than more debt) is interesting. I’m sure there will be some blue-chip MLPs that keep that structure, but it seems like just using an index fund probably requires more due diligence as there is a lot of movement in the underlying constituents.

    Finally, I’m watching AM (Antero Midstream) closely. It’s getting crushed and I’m trying to understand the reasons.

    1. I also would hold MLPs in a taxable account, whether a K-1-issuing MLP or a 1099-issuing MLP (i.e, C-Corp). There are different MLP types. One may want to avoid some that tend to issue complex K-1s, such as the Upstream type or “Gathering and Processing” type. The K-1 of “some” of the other types tend to be simple. TurboTax does a good job even with complicated K-1s.
      One may want to consider holding a 1099-issuing MLP in a taxable account to reap the tax benefit; their distributions are typically a return of capital.
      Last, IMO the best MLP board can be at investorvillage dot com
      Best regards, No. 12

  32. Who would like a possible $125 for maybe 3 minutes of your time ?

    Go to CNBC.com and read the article under “Business News”. I did and followed the link to see if my info was involved in the Equifax data Incident some time back. It was, as was my wife’s so a quick $250 for almost no effort. Almost as good as a quick trade on a preferred IPO.

    1. Hi Retired, Adding onto your comment: Fill out first page, fill out section 1 (take the cash), skip section 2 and skip section 3. Select “check”, click off two acknowledgement boxes. Then press your nose against front window and wait for check to arrive. Here’s the link. https://www.equifaxbreachsettlement.com

        1. Retired, Good post on this. The Equifax geniuses sat on this info for six months and then some of the insiders traded their own stock around release of the info to the public. Real gutter-level handling. One of their first moves as a company after the data breach was to push a creditlock service. Quite amazing.

      1. Chachingo! Snopes showed it was for real too.
        PS: Tim I have a feeling you have certainly NOT stifled the conversations; rather as as moneys we chatter a lot. You may end up needing an editor!
        Thanks. JA

    2. If you read the fine print, $125 is the maximum payout. There is a fixed pool, so too many claims will result in a lower amount.

      1. I opted for the credit monitoring. Long after the payout is forgotten, I’ll still be monitored. Hopefully, it works as intended. 😉

        1. Thanks Camroc, Your comment reminded me to check the credit monitoring service I received as a result of other data breaches (thanks OPM/Uncle Sam and Experian). Never have had any alerts from the service but considering the large number of major data breaches in recent years (google the list) it makes a lot of sense to sign up for the free service if you don’t already have one.

      2. Indeed. If everyone who is eligible signs up each person will get a grand total of 21 cents.

        Don’t expect to see anywhere close to $125 – that is based on only 248,000 people filing a claim

  33. Okay, my 5 largest holdings:
    AILLL, EPD, a variety of 30-yr US Treasuries that start maturing in 2022, SLMNP, and MMP.

    The only one I’m worried about at all is AILLL due to its call risk, so I’ve started paring it back a bit. A call from its current lofty perch would leave a pretty good hickey.

    I don’t flip and try not to trade much at all unless absolutely necessary. Just pay me. At this point, that’s all I want.

    JMO

    1. I’ve never posted on any website before. So here goes !!!
      Your MLP’s that you have do you hold those in a taxable account or non taxable? If non taxable, are you worried about ubti ? thanks for your time.

      Ok, that wasn’t so bad 🙂

        1. Thanks Tim. You got a great website with a great mix of investors with different investing ideas. I’ve been reading comments for a couple of months now and everyone seems really into investing. Hoping to post more often but it’s not always easy with that full-time job thingy getting in the way. Just hoping i can help some one out with my very limited knowledge of the investing world. But who knows…. anything’s possible.

          1. woody–I understand the job thing that gets in the way, but if you just hang around a bit you will learn a lot. I wish I had these resources available 20 years ago.

      1. Hi Woody,
        You’re going to likely get 2 responses and both sides will fight to the death to swear they’re right about where to hold a MLP. Personally, I hold in both taxable and IRA’s. Have never run into UBTI issues. You really have to hold a lot or be in some very odd ones that issue nearly all UBTI in order to have some probs on your hands.

        The biggest thing that worries me isn’t the UBTI, it’s the recapture crap you have to deal with if you sell units you’ve owned for a very long time or, if the MLP converts into a C corp and you get blown out by the taxes you owe. For these two reasons, I won’t own any new MLP’s in a non-taxable account moving forward and will keep all in IRA’s. Secondarily, I look to hold for no longer than 5 years or so. Actually, I’m considering whether it’s worth it to bother with MLP’s at all since comparable less stressful yields can be had elsewhere. But, that’s just me.

          1. I am in the camp that has avoided MLPs for the past few years. I had a huge headache, stress, and expense ( for a tax professional ) to resolve IRS issues concerning recapture and UBTI years ago, and it has left a scar that will be with me for the rest of my life.

            As4I has said, the additional possible yield from a MLP is not worth the extra stress and potential landmines one has to avoid. There are other investments that can provide close to the return of MLPs with a lot less stress and angst. At my age, with other Real Life Issues to handle, I don’t need this additional source of stress.

            1. thanks for everyone’s response on the mlp issues. i’ve currently own one and just recently sold another one this year. my accountant handles my tax returns so I don’t know how hard a tax return is to fill out. I’m just try to be diversified but i can certainly so things aren’t worth the fight.

              1. Woody, everyone has to find their own comfort level and certainly ‘once bitten, twice shy’ often holds true.

                With that said, however, EPD and MMP have been great tax-deferred income compounders for me over the past 10 years. I’ve never sold a unit; just made several opportunistic buys.

                Look at these distributions over the past decade or so:

                https://www.dividendchannel.com/history/?symbol=epd
                https://www.dividendchannel.com/history/?symbol=mmp

                Solid as a rock. And did I mention tax-deferred?

                A wise man once said that the only thing money can buy that truly matters is freedom. And those two MLPs have certainly enhanced mine. 🙂

                JMO

              1. Amy, the headache was in a Taxable account – not with the MLP or the K-1, but with the IRS who rejected some of my numbers. It was kinda traumatic as I do my own taxes, and I ultimately had to enlist the help of a tax professional ( at exorbitant cost ) to clear up the mess.

                It was several years ago, so I forget the details, but suffice to say I was so shook up by the stress and time/money spent that I resolved to never again invest in that sector.

                However, you might be interested to look at NEP, a LP that issues a 1099 instead of a K-1. I’m writing cash secured Puts on this one, and hope I can one day get it at $45. Not a great yield, but the security is backed by Nextera, as solid a Ute as I can get.

                1. inspbudget, I’m in that same trade. Not a great yield and not QDI, though as you say – solid. The 45 does appear doable –

                  1. Alpha8, I am short the NEP October $45 Puts, sold at $0.60. Just wondering if I should open up another one for August or September, but the premiums are so tiny it doesn’t seem to be worth it.

                    1. I like your strategy. b/a is .70/.90 so you should be able to fill. When you sell puts, is there a certain % premium you are looking to net or maybe an annualized return?

                    2. Gman, I try to capture about 0.5-0.75% for every month that I go out, in this case with NEP, I accepted a lower than desired amount, as I feel NEP is good enough to own at $45.

                      Should I be assigned, will sell covered calls at the $50 strike, and then repeat as often as possible. Usually they don’t work out as well as I’d like, but in the meantime I kind of get paid for waiting.

                    3. I personally like to be at around 12% annualized return on the premium but don’t typically like going out 3 months. At .60 prem this is on the low side. Nevertheless, good luck.

                    4. inspy, I sold the Jan 45s at 1.45. I’m focused on the premium being substantial enough to be an offset to the price if there’s a correction (net entry at 43.55) and I like the divvy-like quality of the premium v time. The annualized on the trade is 6.6%. If acquired NEP will be locked away as a very LT hold.

                    5. Alpha8, great, hope we have an opportunity to acquire the stock. This one can qualify as a SWAN in my opinion.

        1. A4I – a couple things you said I am not sure I agree with. Actually I would have agreed with you 5 years ago but now that I have had to deal with UBTI issues in my IRA I have a new perspective.

          You said “You really have to hold a lot or be in some very odd ones that issue nearly all UBTI in order to have some probs on your hands.”

          Not true in my experience especially if you have any sales of MLPs. I never thought I would hit the limit and I did, and I did not have a huge amount

          you also said “The biggest thing that worries me isn’t the UBTI, it’s the recapture crap you have to deal with if you sell units you’ve owned for a very long time or, if the MLP converts into a C corp and you get blown out by the taxes you owe. For these two reasons, I won’t own any new MLP’s in a taxable account moving forward and will keep all in IRA’s. ”

          You are right that the recapture part is the biggest headache. But you are wrong that you can avoid that by keeping them in an IRA. Assuming you and your broker follow the law, you will get hit with taxes on the recapture when you sell in an IRA. This is the part most people miss.

          I use Fidelity as my broker and they started filing the forms automatically for IRA’s a few years ago as all brokers are required to do (I realize some have not done so yet – but i suspect that is coming). Just an aside, I am a CPA and while I haven’t been in public practice for some time, I researched the hell out of this when Fidelity first told me they were filing the tax form for my IRA)

          I have since sold most of my MLPs in my IRA and instead purchased a couple CEFs to give me MLP exposure. The CEFs obviously do have mgmt fees but avoid the whole K-1 and MLP tax exposure. I still do hold a handful on MLPs in my IRA that I view as very long term holds.

          The bottom line however is you can’t escape the recapture tax by holding MLPs directly in an IRA

      2. Hi, Woody. I hold them mostly in taxable accounts. But I do hold some EPD & ET in IRAs. UBTI is not a problem if you don’t sell them in your IRA because they’ve thrown off large amounts of negative UBTI for years.

        Just don’t sell MLPs in IRAs. All the ordinary income is considered UBTI by Price Waterhouse, who does the 990Ts for Fido and surprise! TD Ameritrade this year.

        So instead of selling in my IRAs, I just transfer enough into a taxable account to cover my RMD. It then shows up as a gift on the K-1 and assumes a new basis @ date of transfer value in my taxable account. Easy peasy. No UBTI to worry about.

        JMO

  34. I am opposed to the sprint and tmobile merger. I believe it will lead to higher consumer prices. It was that thesis that lead me to invest in UZA. I believe they will get some pricing power also. Just a theory I have.

  35. Hi — Can anybody help me out with understanding the implications of Brookfield’s attempt to purchase Teekay Offshore Partners? I understand it is complicated, but if somebody has the time to run through some scenarios and speculate about the possible outcomes for the preferred shares (TOO.B), I would really appreciate that. Thank you!

    1. Matt, this is complicated and you are going to get a lot of differing opinions. Main risk is if Brookfield is successful in taking $TOO private, they will delist the Preferreds to save money on filings etc. They would almost certainly continue to pay the dividends on them but the delisting will lower the Preferred prices even more, at least initially. Since Brookfield had no problem offering a lowball price on the common, people are then afraid that once they are delisted Brookfield will do a tender offer on the Preferreds as well at very low prices. One thing I will say is $TOO Preferreds have very high coupons and a company like Brookfield doesn’t pay those kind of rates. So good chance something happens, how shareholder friendly It will be is the question.

      1. Ken, this is exactly the broad perspective I needed. Just really helpful the way you’ve laid this out. I hold a tiny position and so will have to make some decisions, but until your explanation I didn’t even have a sense of the possibilities. Very grateful.

        Regards, Matt

      2. Ken, you did a nice job of framing this I think. Brookfield buyout was pretty obvious watching them acquire shares all along add to that they secured bank loan half billion $ at +250. They will eventually have their way with common because they control it. Seems to me the question on a preferred tender would be who controls that vote. Coupon payments seem highly likely so who would take a lowball? Seems to me like Brookfield can only take unfair advantage if they control the tender vote. If you check the holders maybe you can find a clue about that. I flipped both B and E so many times since the lemmings went off cliff but always around a core. Seems to me Brookfield buying would save equivalent coupon of ~12.5% at recent prices and potentially add to a tender vote count. If you watch the holders maybe you can find a clue about that. I’m not the brightest pretty sure this isn’t a widows and orphans play but I’m in cheap now.

        1. P — Thanks for fleshing this out some more. I’ve been trying to puzzle this out myself. I don’t know if you have time for this discussion, but are you saying that it could go like this:

          Brookfield gains control of a large number of preferred shares, then initiates a tender offer that would be voted on by all holders of the shares, with the outcome binding on all holders. With Brookfield owning so many shares, the vote would then be sort of a foregone conclusion. Finally, in this scenario. individual holders of the securities would have no choice but to accept the tender offer price. I’m probably misunderstanding this, of course!

          1. Matt, lots of layers I don’t know or understand, only Brookfield knows. I try not to overthink things, sometimes that works and sometimes teaches me sometime new. I think you are correct that who controls shares is who controls votes is who picks the terms. None (or minuscule) controlled by Brookfield presently that I can see. I also don’t see where Brookfield is acquiring shares but that may become apparent too late. Could be some other tricks up their sleeve too. I know these guys are a lot smarter than me. I had position at $19.20 before it crashed. I bought the crash and flipping could walk away tomorrow with small profit but keeping for now. Maybe I profit, maybe I learn something new. This ilk is risky stuff.

          2. Matt
            With respect to the common, Brookfield has the right to call common shares once they own 80%. See Article XV of the Partnership Agreement: https://www.sec.gov/Archives/edgar/data/1382298/000119312516637240/d218457dex44.htm They are short of 80%, so they have made an offer. With respect to the preferred, there are no similar rights. They could always purchase shares on the market or make a tender offer, and each shareholder would then decide whether to tender or to keep the shares. There would be no vote. The only way to eliminate the preferreds would be to redeem them at par, which would be unlikely given where they are trading. Difficult to predict how all this will play out, but so far the Brookfield tender for the common hasn’t gone as easily as they hoped.

            1. Roger, thank you that’s even better. I could not say that with certainty given my limited understanding of rights a Marshall Island General Partner might obtain and exercise. The preferred prospectus contains many cautions I don’t fully understand the implications.

            2. Roger

              Thank you. This really advances things for me. Certainly glad to know that this isn’t a matter of a binding vote and that a tender offer would be made at par, as unlikely it is that there would even be such an offer.

              Regards,
              Matt

  36. It’s not an income issue but I did make a small buy of TOKE today. Hoping for new highs down the road but it could go up in smoke.

    1. To all readers who like to share and learn from others:

      What are the 5 largest positions in your portfolio?

      In mine these are: KYN-F FFC KTBA ECF-A SOCGP, each comprising about 4% of the portfolio (5 top positions are ~20% of port.)

      What are yours? Any comments on my top 5? Too conservative?

      Thx!

      1. Agreed.. this could be interesting. Of yours, KTBA is the only one i’ve looked at, own none.

        Total portfolio: Fund of Hedge Funds, Global Multi-Asset Fund, Apple, WFC/L, MSFT… excluded cash as it would be #3.

        Preferred: WFC/L, OCCIP, EBBNF, EBGEF, ERRAF

      2. Daniel, it really depends on your goals and expectations. I know that sounds vague, so let me put a bit of color to it…2WR, and I correspond and he likes income but he likes a bit more back stop protection, and likes to “walk directly into calls”. This will lead him to make purchases (or no purchases) as capital preservation is a bit more concern as perpetuals and wrong price points can do damage there. Nothing wrong with that approach at all.
        Another online friend main concern is a safer flowing permanent income stream with no worries from call redemptions. Kind of like a “permanent annuity” income that will always have residual value if liquidated unlike an annuity. Capital appreciation or loss is largely irrelevant. See how opposite these styles are?
        But both legitimate ways to invest. But they are serving there own individual needs.

      3. Re: How conservative is your list of 5 stocks.

        I would need to know more to make a reasonable judgment about that, Daniel. For example:

        1. Where are you along your timeline? High school? Octogenarian?

        2. What’s in the other 80% of your portfolio? Gold? A hundred growth stocks?

        3. Are you a stay at home dad?

        4. Do you have a pension?

        See what I mean? Also, I don’t own any on your list but that doesn’t mean I think they’re not okay, per se.

        JMO

        1. I should have added BC-B as it is 4% along with APLE that is also 4%. I hope it is ok I listed two non-preferred issues (STWD & APLE), but they are a couple of my larger holdings that I bought for income only, although STWD is up $3.00 a share.

      4. Thx for your replies!
        I agree that “Too conservative?” is not a very meaningful question without context.

        Maybe a more useful question would be:

        Do you have an opinion on any of the securities people report in their top 5? Do you like them/ owe them/ would like to owe them? Do they fit your portfolios/aims/etc? How risky are they?

        Such comments could serve as recommendations (or things to consider) to all of us!

        I am increasingly finding that this is a great website, with very valuable contributions! Thanks to Tim and to the many contributors!

      5. I can’t really say they are “too conservative” because it would depend a lot on why you bought these and how comfortable you are with risk in order to get more income. Everyone is a bit different when it comes to investing for income, I am somewhat conservative myself, but to some folks buying anything other than an index fund is just crazy, so there’s that.
        I hold a fund very similar to FFC, but it pays a higher dividend with about the same risk, you might look at HPS. The only one I couldn’t research was KTBA, one screen said it was de-listed Bell South 7% CORTS and another site said it was a defunct company, could you shed some light on the one please. Thank you.

        1. Its ATT’s baby, they are legally obligated like any other bond they have.If you look under ATT bonds in Finra its there. KTBA is just a repackaged trust shell that has the underlying 2095 maturity bonds in it.

          1. …and we wouldn’t want to throw all our eggs in the KTBA basket though as a diversifier, adds excellent ballast to a portfolio during declining or low rate cycles, but would be under pressure in a rising rate environment.

            An old Bell South debenture, as you say Grid, KTBA is backed by behemoth AT&T, with a 7% coupon, that is near the U.S. LT average rate also at 7%. With additional balancing from other issues, I’m holding equal-weighted KTBA and EBGEF on each side of see-saw, as they arbitrage each other while they offer above average yield and relative safety.

      6. Daniel, I know you are curious about who owns what. I am too… I like the thought provoking info others have given you. I will post you mine this weekend but I want to frame it right so to not send out a wrong message. I will do this this weekend. Meanwhile its off for beer and food at the Cards game. Cant pass up a free all you can eat deal!

      7. I am overweight in these issues: CTBB, AIW, BAC-M, GBLIZ, SHLX, ESGRO, BRG-A, PMs. Added to these positions this Spring to overweight and may sell excess at anytime and am LUCKY they are green, divy cycle is out four -six weeks so they may continue to get bid up.
        Interesting idea, I hold over various types of accounts.

      8. Daniel, I really like this idea but if I listed my 5 biggest holdings, more than a couple people on this site may have heart palpitations just from reading them. I take fairly healthy risks. At the same time, I am very conservative elsewhere in my portfolio if that makes sense. I will say that my largest Preferred Holdings are NS/A+C, TGP/A+B and ETP/D+E. Risky enough?

      9. Daniel, I have owned three (KYN-F, KTBA, SOCGP) . All three pretty safe as far as credit goes (the other two issues I wouldnt know if they were biting me in the leg). Those three above serve alternate purposes. One long term income stream free from redemption, the other a short term capital preservation play. Pretty much the inverse of each other. They are part of my Nifty Fifty group. So I say I own 50, but actually only real money in about 20 presently. That could change day to day or not, mostly exploiting price imbalances of similar quality issues of the Nifty Fifty. As over longer periods of time they all largely track each other so I try to exploit the short term imbalances before they level back out. I have had a brief flurry recently that I have taken advantage but by and large its getting harder to do as more have entered the income chasing game.
        I trade, but in reality I am a buy and holder as they all are the same issues being bought and sold over and over….Currently my purchased ones range from lowly yielding 4%, A rated illiquid perpetual non callable ute, CTGSP, up to 11% plus B rated PFX. And in between is a mix of resets, perpetuals, noncallables, adjustables, and term dated sprinkled into the mix… FWIW, my biggest ones at the moment are LXP-C, NYCB-U, and CNUTF, but its not by a lot. And 6 months from now, I would suspect the former two will be whittled down considerably by then if not earlier. As my preference would be a couple other ute issues, I need to sag some before reentering.

      1. RE: TOKE. Yes and no. I really did step up for 100 shares. I will buy more I am almost sure. Meb Faber is top of the heap in my view on portfolio allocation and long term horizon. I’m not doing this for fun, it’s to make money. Neither is Faber. Solid investment thesis.

        Buying 100 shares of Mustang Ranch, to hang the certificate on my wall, now that was for fun. I didn’t expect any return and I didn’t get any.

        Why, I’m already up 23 cents on TOKE. Hey, man!

        1. I have nosed into 400 shares of GVAL over the this year with divy reallocations toward value, diversification and contrarian bent. (IRA) Faber is a good study for anyone…value and deep value is out of vogue.
          Also initial position in PICK since global consumerism is ramping up and the commodity balance sheets and properties have been wrung dry and tight over the last cycle…fantastic global managers in those offices, yields 5.5+% too. (IRA).

  37. I would like to know where I can find enough money to purchase all
    the interesting products that are discussed on this site ?? Now
    that would be a help ! ( I mostly hold for the long term and therefore do not flip ) . The main difference between my holdings and many readers here is that I don’t hold ‘only’ preferred issues.
    Approx 70% of my portfolio is in them though.

  38. Here goes… some general thoughts requested.

    For context, mid-40’s, I’m looking for the option to retire in 8-10 years, current asset pool is 60% taxable, 40% retirement, current target allocation to preferreds is roughly 10% (thinking of expanding to 20%), given current income tax rate preferreds are all QDI and held in taxable account.

    Portfolio started with WFC/BAC L (3.75% of total portfolio) 2.5 years ago. Found the site after trying to understand where I can add value to the portfolio beyond top-down allocation. Since then, added:
    SLMPN (1.5%), OCCIP (1%) (Fixed rate)
    AGM/D (.31%), BAC/M (.25%) (New Release)
    BECEF (0.05%), ERRAF, EBBNF, EBGEF (2.75% combined) (Floaters).
    Run-up in pricing has made me hold and wait for the pullback.

    Overall, too concentrated?

    I passed on SR/A (ouch) because I was learning… but did pick up AGM, BAC issues which have run up in price. Small $, but do you sell now to capture premium (pay higher taxes), wait one year to get LT rates, or hold indefinitely and reevaluate?

    Is only owning QDI sensible? Are there more opportunities in preferreds, broadly, outside of QDI.

    I find myself most interested in broken issues (WFC/L, SLMNP). Looking for more of those.

    I tried to make the questions generic. Discussion appreciated.

    1. I too am interested in “broken” issues because of callability issues. Some other “broken” issues to look at are BAC/L (similar to WFC/L) and RLJ/A. RLJ/A is a REIT preferred and is not QDI and is better to hold in non-taxable account.

      Although not broken, take a look at KTBA (non-QDI trust containing bonds). It doesn’t mature until 2095.

      1. Tim, LXP-C is a busted convertible industrial warehouse reit. This thing bounces crazy…Up near $55 yesterday, I just bought more at $53.69 a few minutes ago. Over 6% and kicking out over an 80 cent divie next week. I flipped several times and got back. Should have flipped yesterday for another easy buck, but didnt do it…Something to look at if plus 6% perpetual BBB- rated preferred hits your interest.

        1. I bot 3 lots right after you. Glad it crashed for us! Where are you seeing the BBB- rating? Is this on the LXP common?

          1. A4I, If you go into Moodys website and look under LXP, you will see its rated BBB-. It has been that way for several years.

            1. Hey bud,
              I’m seeing this on Moody’s

              New York, June 19, 2019 — Moody’s (“Moody’s Investors Service”) affirmed today the Baa2 senior unsecured rating of Lexington Realty Trust (“Lexington”). The outlook is stable.

              The following ratings were affirmed:

              Lexington Realty Trust — Issuer rating at Baa2; senior unsecured debt at Baa2

              Outlook Actions:

              Issuers: Lexington Realty Trust

              Outlook, Remains Stable

              1. S&P shows
                Rating Rating Date CreditWatch/ Outlook CreditWatch/ Outlook Date
                BBB- 17-Jun-2016 Stable 17-Jun-2016

                Looks like LXP is dual IG rated. Even better if LXP-C was QDI!

                1. A4I, Congrats, I knew you could slueth! See, since everything was “affirmed” that means nothing has changed so you refer back to previous article which had issue as BBB-. Unfortunately Reits are not QDI. But they did get a 20% discount on taxes through new tax cut that was implemented last year. So that narrowed the gap quite a bit for one holding in taxable account.

                1. Seems like many of the major ute’s are down a few bucks over the past week or so. S&P put out a report on D recently saying it was ~3% overvalued. Other than that, nothing of concern that I see. Total buying opportunity IMO. D has some minor issues, but nothing I’m concerned about. Here is what BofA had to say very recently…

                  D: Voluntary Retirement Plan considerations: Ahead of Dominion’s 2Q call, we examine the potential EPS from the Voluntary Retirement Program (VRP). As a reminder, D recently extended its VRP t o it s e mp loye es, and thus far results have been constructed as the company has suggested as much of 10% of the workforce (21.3k total employees at YE18) has opted to participate, similar to the percentage the last go around (although fewer total workers at 17k). While the outcome won’t be a straight 10% reduction in the workforce given incremental costs to replace technology, cost savings that accrue to customers, and backfilling replacement costs, it is expected to be accretive to the plan. That said, we don’t view it as upside to LT guidance of 5+%, but rather as a cushion in the plan that will help offset other negatives rather than pure upside. We could see upside represent $0.14/sh, although do not anticipate that the Dominion will change its guidance on the 2Q call and see it as an offset to recent headwinds such as 1Q19 weather (-$0.06/sh), Atlantic Coast Pipeline (ACP), etc.. This is in contrast to some street expectations that the VRP would lead to substantial upside. Moreover, we see the program as more transitory in nature as the company files its various rider filings in VA, and rate cases at its gas distribution subsidiaries, although this does create headroom in rates. Maintain Neutral rating.

                  1. I have to believe that the complexity of the issue drives down the interest/volume, which is the reason this hasn’t moved. I’ve read the description on Quantum three times and I don’t understand it. If someone else happens to get it, and can explain it, I would be grateful. The 7.25% is obviously attractive, but the lack of price movement tells me I’m missing something.

                    1. mrinprophet, I’m going from memory and a brief reading of the QOL summary, so I hope this is correct. A DCUE unit consists of a contract paying 5.5% (NON QDI) until 6/2022. This contract obliges you to buy $100 of D common then, at a minimum buy price of 73.91. (i.e. if it’s $50, you only get 1.3529 shares for your $100. if it’s $100, you get the correct 1 share.) You also get a non-tradeable pfd share that pays 1.75% QDI. Now in early 2022 they will “remarket” the pfd, which if “successful” will take away your pfd and use it to fulfill your purchase contract, you’ll get the common shares and you might get any surplus cash as well.

                      There were other scenarios which I won’t go into because I don’t remember the details. I remember that I wrote to D’s IR and they blew me off, said to contact my broker, and when I talked to Schwab, their guy was incapable of understanding it in only a few minutes on the phone, which was not surprising.

                      I bought at $101 on the first day. I guess I don’t intend to hold it till 2022 but we’ll see what happens.

                    2. Another explanation is that brokerages are showing an incorrect yield for the issue. Merrill, for example, shows something like 1.8% yield. This is because until the first full quarter of dividend is declared, they are just using the partial declared dividend amount. So this may steer folks away or cause a sell by those too lazy to do DD.

                      TDAM shows no dividend information so obviously when doing screens and such, DCUE won’t show up.

                      The easing of trade tensions with China are also a likely factor. If you believe an answer in coming and tensions will ease, things like DCUE will be sold in favor of more ripping and running in the common stock names.

                      I’m holding. This dip doesn’t mean squat to me. I’m paid to wait and I also a considerable amount on D common as well.

                2. D is down over $3 in the last couple weeks. I expected that DCUE would bounce around in correlation to the common, since it converts to common in 2022 (I think). I had all the data crunched on this but I posted it to the Alerts thread and it got erased.

                  1. D had a nice run up before that though and I made some money selling puts.

                    I don’t do much option trading, but have made some money of D, T, and OZK this year.

        2. I know better than to ever try to match your price…..I ain’t ever that good with my buy points….. so I put in a bid for $53.75 (when last trade was 53.90) and it triggered right away for 560 shares. (I think at the time $53.75 was midway between bid/ask.) 6.0%

          1. Amy, the new definition of ‘margin of safety’ is to buy below Grid’s price, so kudos for playing the game. ;>)

            1. Furcal, right or wrong, I tend to be a bit less concerned in reentry price if I flipped above it already. For example, I recently bought at $53.40 and $53.18 and flipped them all in mid $54 range basically a week or two later. I then repurchased higher day Wednesday at $53.76 market close. Then bought more at $53.69 all while not missing the divi coming next week. So I didnt mind paying “more” because I already lowered the cost basis with the trade. It isnt a flipper per se, but when something like that spikes it usually falls back. Especially when it spiked on limited volume. The volume is heavy today thus lower price is easily accessible.
              Though this one is ”tweener” vis a vis in terms of liquidity/illiquidity, many or more illiquid. And the game is simple…Buy into liquidity, sell into illiquidity..

            2. I’m playing but I never win! I never beat him on pricing. Oh wait…..I did win the contest with TGAPF….by 5 cents….but a win is a win!

        3. Looking for some education from the knowledgable folks here. I’m trying to learn about busted convertibles. What makes LXP-C busted. Thanks

          1. AZ, its busted because it was issued in 2004 when it was assumed it would eventually hit conversion strike price of $26 ish…Then the 08-09 crisis came and LXP (along with many reits) diluted the hell out of common stock shareholders. Being an office reit in a recession economy hit them hard. So now in $9 ish range and the way reits pay out most of income, $26 isnt happening for a long long time. This issue cannot be redeemed, it must hit conversion strike price first. They are transforming into an industrial reit and are 72% there as of a few months ago. The recycling process is ongoing and they stated their goal was mid 80s by year end.

            1. Did that make sense AZBob? “Busted” isn’t an official term. It’s just one we kick around to mean that this thing isn’t redeemable for the forseeable future, if ever. Unless LXP gets back and stays near $26 share, they won’t be redeeming this thing. Same situation for RLJ-A. It also won’t be redeemed anytime soon for the same reasons. We like this ‘busted’ aspect because it gives us more assurance of getting the income we are buying it for. As long as the common stays healthy, we keep getting paid without having to worry about redemptions.

              1. Thank you. Makes sense now. You are essentially saying there is limited chance of stock tripling from 9ish to 26 so unless company goes bankrupt you collect the dividend.

        4. Senior unsecured / issuer rating is BBB-/Baa2, which implies the preferred (which is not rated) would be BB-something

          1. 730, I assume you are using a different rating agency as Moodys has it BBB- rated 2016, reaffirmed this year. Of course being BBB- it is not unusual for split ratings ranging up or down a couple notches. That is why I try to mention my source (sometimes forget though). Usually from whatever agency that is rating, the preferred will be notched one to two pegs below the senior unsecured. So in your case from whatever agency it is, you would be correct based on my knowledge anyways.

              1. 730, No trust me, I am 100% correct as much as Moodys is anyways (since that is where I stole it from, lol). Go into Moodys website and look under LXP and you can find the rating article and affirmation article. Quantum is a lovely scratch the surface source. But I dont trust it at all for OSM (Original Source Material). In fact in this thread I think if you scroll up, look for Affinity’s post. He dove in after I told him earlier this morning and looked. And he copied and pasted some of it this morning in this thread,

                1. Not sure what else I can do lol. I included a link to Moody’s and it states (as Affinity’s cut and pasted) “senior unsecured debt at Baa2”.

                  The preferred is not rated.

                2. Grid, I think his (her?) point is that LXP-C isn’t specifically rated by S&P or Moody’s, only the ‘parent’ company is. Now perhaps, one should presume that the rating for LXP-C is a few notches below the senior-unsecured debt rating – and this I would agree with in theory since the preferred sits lower in the debt stack.

                  Question is, should we really be presuming that LXP-C IS really rated or not and does it really matter? I keep a spreadsheet with all of my ratings in it of my holdings because yes, it is very true, QOL doesn’t always have the correct ratings posted. But I do sometimes struggle with what I should record for the rating when you fall into those gray areas… Sometimes the issuers are willing to pay the have the preferreds individually rated (think the big bankers) and sometimes we are left to presume (as in this case) a trickle down from what the parent company ratings are.

                  Who knows…

                  1. A4I, It was rated. Go back into May 26 article of 2016. You will see the preferred rated BBB-. Since it was affirmed June 2019 that means nothing changed. Notice the same unsecured senior rating for 2016 as it was last month. I suspect you are correct they didnt want to pay for the full ratings package. But nothing has changed and being affirmed that means carry on as it was.

                  2. A4I, my recent posts have been grammatically horrific. And with good reason. I have been reading and responding while walking 4 mph on a treadmill at workout facility. Sweat is running down my readers and I can barely see to read or write, lol

                    1. The bad grammar is a dead giveaway that it is you! You don’t need to bother signing your posts. We would know it was you! LOL

              2. 730, A4I, didnt have it all, so its my duty to clarify instead of dumping it off.
                The following ratings were affirmed with a stable outlook:
                Below is May 2016
                Lexington Realty Trust — senior unsecured debt at Baa2; issuer rating at Baa2; senior unsecured debt shelf at (P)Baa2; subordinated shelf at (P)Baa3; preferred stock shelf at (P)Baa3.

                Just last month in Moodys you can see last month they affirmed June 19 they affirmed, which means, nothing has changed since last rating change.
                Its free to sign up in Moodys and you get some good info in there. I also like the written report bulletins that use “conservative balance sheet” “more stable cash flow” “debt to EBITA well within our ratings guidance”. That is good words for me. But this one has always been in my rotation list so I have a level of comfort here (warranted or unwarranted) as I do naturally not pick from the Reit field much even though there is nothing wrong with Reits in any way at all safety wise comparatively speaking.

                1. Aha, I didn’t look back at the 2016 Rating Action. I wonder why they did not affirm the preferred in the June 21, 2019 Rating Action?

                  So Moody’s had the preferred as only 1 notch below the senior unsecured, probably because the preferred is such a small slice of the capital stack. Presumably S&P would also have it 1 notch lower at BB+

                2. This is why we pay you the big bucks… You’re absolutely right. I only read the first blurb and not further down where the pfd is mentioned. My fault. Good catch. Lesson learned.

                  1. A4I, to be honest my memory was so bad, I thought you highlighted the investment grade rating. But you were onto S&P and didn’t mention it. Don’t know why I thought that…Oh well, my bad…Speaking of bad….2WR, emailed me to remind me I am back to my old rating crosseyed ways….I have this impossible to correct dyslexia of transposing S&P ratings onto Moodys…Moodys uses Baa3 as low rung investment grade and S&P uses BBB-. Same rung, but by different agencies. Moodys would never rate anything BBB-. Even though it means the same. I hate using little letters and numbers I guess, as I just automatically without thinking transpose Moodys ratings to S&P format.

    2. A basic question, prophet: Are you investing for income, CG, or some opportunistic combination of the two?

      If you’re into flipping, a master to follow is Grid, but he loves that stuff and is always on the hunt, even on the golf course, even at the tables in Vegas. So if you are not willing to put in that much time and concentrated effort, you will always be eating his dust, so to speak.

      If you are too busy working now and want income until you can retire and then find out what you really enjoy, you could go for the uncallable or broken pfds, but they are rapidly being bought up and losing yield. For example, the recent changing of hands by FIISO @ 150.

      My favorite sector is never discussed here: the MLPs. You could start putting funds into the strongest, the ones such as EPD and MMP that have increased their well-covered and tax-deferred distributions every quarter for over a decade and just let them compound. (Wasn’t it Einstein that said compound interest is the 8th wonder of the world?) Of course, you’d have the K-1s to deal with, but those two kings are easy and TurboTax can do them for you in less than 5 minutes.

      So my advice, FWIW, is to sit somewhere quiet and decide how you want to proceed that best suits your personality and current circumstances. Then go forth and prosper…

      JMO

      1. Thanks Camroc..
        I’d say it is predominately QDI that I can reinvest and continue building over the next decade. If I can buy smart, that might just come with some capital gains, but I’m not depending on it. I know I can’t beat Grid… but I do enjoy riding the coat tails of the more experienced folks here.

        As for MLPs, I’m definitely interested. However, it’s all in in Kinder Morgan (bought @ 16) and am letting that compound. I bought EEP/SEP and did very well last year but didn’t hold after roll-up into ENB. I’m really focused on Natgas.

        1. Re: “compounding,” years back, EPD could be DRIPped at a discount. I don’t know if discount is still in effect.

      2. camroc: Do you still get K1’s if MLP’s are purchased within an IRA. I know little about K1’s other than some people complain they arrive late, sometimes after the tax deadline. Also there is something about you get them either way if there is any “unrelated business income” ? I have avoided them like the plague, but I do see some pipeline companies I would be very comfortable if it wasn’t for the K1’s. By the way, when a partner and were in business together years ago our tax person first prepared our K1 forms as the basis for our personal income tax, basically it was the “partners” share of the business income. So, I have a very crude understanding of why they are. Sorry if this is way off topic.

        1. Hi Bill, I’ll take a shot.

          Yes, I get K-1’s no matter where I hold them, taxable or IRA. Much easier to deal with if held in the IRA because, well, I don’t have to deal with them. Turbotax asks me if they are held in an IRA and when I say no, they say no need to enter a darned thing off the forms. Next! I love that. No more figuring out basis, recapture issues, nada, nothing. Never had the tax man cometh.

            1. Affinity4Investing : Ok, that sounds easy enough as I would hold any future MLP’s in the IRA and I do use TurboTax. Thanks !

              1. Hi Bill,

                First of all, I am not an expert in this area but I’ve done a fair amount of reading on the subject.

                As I think A4I commented on, where to hold K-1 issuers is a very hot topic. There’s an article by Darren McCammon on seeking Alpha that must have 1 million comments on this subject.

                Before stating that you will keep your MLPs in an IRA, I would dive into it further. You lose some tax benefits when they are held in an IRA, and as someone else here mentioned, when you sell them in an IRA the ordinary gains are considered UBTI.

                I also got stuck in one of those rare cases that A4I discussed. I held only 800 shares of TGP-A in my Roth and I had to sell out of it just before the final quarter distribution because I learned that 100% of the distributions were UBTI and I did not want to get stuck filing a 990 T. Yes, this was a very rare situation but there’s a lot of moving parts to this equation so I would do a bit more research so you can make a fully informed decision about where to put MLPs.

                I do have one in my IRA, and may add another one, but most of my MLPs are in my taxable account.

                Also remember that if you are going to leave MLPs to your heirs, they get a step up basis in a taxable account but is my understanding that nothing in an IRA gets stepped up. This is a significant benefit loss to heirs.

                And on another note, if you want to take advantage of negative UBTI in prior years, to offset any positive UBTI, you need to have filed a 990 T for each of those years so it’s on record. And the negative/positive can only be used to offset each other for a single MLP. In other words, a negative UBTI for EPD cannot offset a positive UBTI in MMP.

                Again, I’m not an expert but I would suggest you do a deeper dive into this subject.

    3. Prophet, Best advantage you have is you have TIME!! You also have time to develop an organic knowledge around all your questions AND you show the incentive to do just that. You are PLANNING. Congrats!
      My bullet points for basic planning (you caught me on AM coffee!):
      – Preserve capital at all focus. Controlled spending is usually a first place to look, then investments. I would bet almost everyone here has a bit of skinflint in them.
      – MAX out all tax shelters: ROTH, IRA, 401k and SEP in any 1099 income. DO THIS! In years when income is low or deferred into other years re-characterize to Roth up to MAGI sliding scale limits. We quit work for a calendar year to rearrange some stuff at age 60.
      – Set up a small biz or if self-emp pay your wife; can put large amts of funds into SEP. Look and account for this carefully and see if it makes sense. Keep all diligence. Start a daily log/diary/mileage as proofs. It get routine and easy. I was audited for four years in two business and the hounds got nothing because I had records! Thanks you Marine Col. Nagel, Examiner.
      – As a general rule: Interest and cap gains in tax shelter. QDI and cash in taxable.
      – There is a real problem with a spend down in retirement and I feel your generation is going to get taken down the alley by thugs. Structure is imp.
      – QDI does work with prefs and commons, even foreign. Know that tax rate is computed on your MAGI. Just study it (Google). Develop list of web sites like this one for accurate, go-to resources. NOT chatter/gossip sites. Ignore the uneducated.
      – Liquidity can be a swing vote on whether to hold a security or not.
      – Wait for price. You make your money when you BUY, on both debt or equity. Also, be aware of holding periods: 60, 90, 360. Study holding periods as this adds incremental gains, especially when the amounts get larger, and it also delays the desire to play with your money; this is in relation to QDI and Cap Gains.
      – Consider some deep value in IRAs at your age. Study this boring field.
      – Really LOOK at an annual compounding chart: retirement comes from the very LAST part of the chart when you are compounding 5-6 digits a year. Don’t stop.
      – If you have investment real estate there is ALOT to know…so seek a mentor and KEEP RECORDS! I have a good, simple, annualized tracking sheet if you need one.
      Lastly, inheritance can make a very big difference. I got none, but my wife got some residual. Make it part of planning. Sometimes this step-up and influx can change your situation (inherited IRA, taxable accounts, retain/sell real estate, etc) We found it a good time to quit work, realign finance, file taxes, and caregive. ‘Mentally Settle’ any estate before death if you can.

      That’s enough, just keep easing in and gain confidence over time. If you can find a good local mentor like a solo-CPA who is already thinking this way IF
      you need it and are not a good self-study. Admit that it is true if it is! YOU can figure whether some of this stuff is useful to you or not as it sinks in. It becomes like breathing in short order. You’re the kind who make it and we need more like you.
      ALL WAYS the Best!! JA

      1. Thanks Joel… great bits of wisdom there that I need to dig more into. Definitely a skinflint…and the Mrs. is worse. I’ve spent the last decade trying to save as much as possible so I could let compounding do the hard work.

      2. Joel – Had I done all this stuff personally in my early days I’d have missed all the great stuff here on III such as your post because I’d have hired somebody to read it all for me. So gracious of you to spend the time to write this summary.

    4. Where I am at now, is where you want to be in 8-10 years. My hand is on the plug and I’m ready to pull it. I started nibbling on preferreds in 2012. Nowadays they are about 5% of my taxable assets where they generate about 10% of my taxable investment income. I look at them only as buying income. In the early days, it was income I didn’t need, I paid my taxes and I reinvested. Made some small mistakes, mostly in reaching for yield. Through Tim’s writings I discovered CEF preferred’s and the safety they provide. They are a significant part of my preferred holdings and I added to them during last December’s market crash.

      I hold only QDI preferred in my taxable account. (Some of the CEF preferreds have turned out to pay some ordinary income and ROC.) Any non-QDI preferreds are in my IRA’s.

      As a rule, I do not flip. I follow this site and a few others for education but I just do not consider myself a flipper. All the flippers are chasing the same issues and I don’t want to play that game. I find it much easier to buy new issues, which itself is a harder game to play right now.

      Hope this is useful.

    5. My thoughts:

      You are way too concentrated. If going the route of individual issues you should be looking at 50+ issues. And don’t make them all banking issues.

      Generally, the naturally tax efficient stuff belongs in your taxable account. Growth stocks, low yielding REITS, QDI preferred, MLPs if they have low or zero taxable distributions.

      The tax inefficient stuff belongs in qualified accounts. High yield REITS, REIT preferred, other non-qualified preferred, BDCs and other yieldcos, CLOs, and so forth.

      Maximize your Roths in every way you can. This will be the best money you have in retirement. If you can’t contribute to a Roth directly do an annual backdoor Roth. Roth conversions make sense for almost everyone, in almost every circumstance. We are looking at what I think will be the lowest tax rates of a generation.

      When evaluating preferred or baby bonds, look past nominal yield to yield-to-call. No point to buying an issue with a nice nominal yield if the YTC is 2%, and these is no good reason for it not to be called.

      Best for last: everything is expensive now. It’s not a good time to be a buyer (always exceptions, yes). But for the most part anything worth owning is trading much closer to 52-week highs than lows. Entry point matter, a lot. Be patient and be selective. And don’t listen to HDO over at SA, unless you can stand large, permanent capital losses.

      1. Always be mindful concerning income issues…1)Single company concentration risk 2) Sector risk 3) credit risk 4) Interest rate environment risk
        5) market pricing risk…..
        Overall for a young person, achieving “Alpha” is closest achieved by hitting market returns, and avoid the drag of high expense ratios, and tax efficiency. Set your correct allocation ratios, and then seek market returns through A rated index funds that specialize in tax efficiency and low management costs.
        Retirees can worry about income more than market returns.

      2. Re: backdoor Roth: Anyone who’s rolled a previous employer’s tax-deferred 401k into a self-directed tax-deferred traditional Rollover IRA, will not be able to do the Backdoor Roth. I’ll explain more if needed but I will stop at that for now.

          1. Bob, sorry for the delay but I was away from the computer for a couple days.

            You said “If you can’t contribute to a Roth directly do an annual backdoor Roth. ” There is an important gotcha to be aware of. The “backdoor Roth” maneuver (in which you contribute after-tax money to a traditional non-deductible IRA and then immediately convert said IRA to a Roth with no additional tax due) does not work as intended if you also have a traditional deductible IRA (such as a rollover IRA of previous employer deductible 401k money).

            example: You opened a non-deductible IRA with $5K of after-tax money and immediately convert it to a Roth. Suppose it is still worth $5K at year end (to keep the math simple). And suppose that at year end, your deductible (rollover) IRA is worth $95K. The “pro rate rule” says that only 5% of your total IRA holdings were converted tax free. Your conversion of $5K which you expected to be totally tax free, is actually a $250 tax free conversion and a $4750 taxable conversion. Which is probably not what you wanted.

    6. I would add to my earlier reply with the following: With retirement that far off I personally wouldn’t (and didn’t) get into individual issues. It’s terribly time consuming to do well.

      What matters more is taxes and allocation. You can add more value paying sufficient attention to those 2 things than by getting the individual issue selection perfect.

      Cannot stress how important a Roth can be. And correctly dividing assets between taxable and Roth accounts.

      For allocation, read Meb Faber. And bone up on factors.

      Spending your time choosing good funds for the income portion of the portfolio will do more for you than choosing individual issues. There are good CEFs in just about every income category you could want.

      That said, everything is still too expensive. Be patient. There is a lot of static electricity in the air and bad things are going to happen at some point. Bad equating to good time to invest. I would rather take 2% on CDs than be looking at big capital losses because my timing was bad.

      1. And, if you’ll have me, so will I. Thanks for everything, everybody, big thanks to you, Tim especially.

  39. It would be nice to be able to find all of a specific poster’s comments or all the comments about some specific security, but I haven’t found any way to do that. Maybe I’m just too new here or maybe it’s not possible on this platform but it’s a feature I value highly.

    1. camroc—I will check and see what the possibilities might be. This master page of comments I have is wonderful–and I can sort by user, dates, topics — you name it–wish everyone could have it.

      1. That would be very nice – it’s a pain to keep checking the “Recent Comments” entries which are only the last 4 or so anyway…

    2. Just this morning I was looking for all comments mentioning a specific ticker. A site-specific google search did the job, e.g. “XYZ site:innovativeincomeinvestor.com”

      1. I tried that. When I clicked on a result, it took me to a 24-post thread. Then I searched on the ticker and found the one post with that ticker in it.

        Then you would go back to google, click on another result and go thru that same laborious process.

        So, it works, but unless I’m just too inept at finding the simpler way, it’s very very cumbersome and time-consuming.

            1. Oh, except now it does. That must be a very recent change. Tim, did you put Alerts into the search universe? Do/will you exclude the Sandbox? Please confirm.

              Yes, Tim’s search will show you a couple lines of the comment where the ticker of interest (to use my example). However to see the comment in context, you’ll still need to open the entire thread and do a browser search. That’s no different from using Google search.

  40. Thanks. I find the Alerts page difficult to read since you need to scroll down to determine where the new posts are.

    1. Hi furcel–yes you are correct. I don’t want all the small talk to go away because there are lots of tidbits of knowledge to be found there–but maybe we can organize it a bit.

      1. Just went and bought my plastic shovel to play in the sandbox, Tim! Now if you could tell me how to use that RSS feed thingy on my ipad…without changing my chrome or whatever it is, as it isnt google, I know.

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