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.
Watch those CEF premiums ………..
I have more than few nickles in select income CEFs. Played well they can buy you a lot of steak dinners but you have to be diligent with them. Specifically, you have to watch both the price cycle of the underlying assets and the premium/discount to NAV of the fund.
Case in point: ARDC. It’s been a top NAV return fund for a long time and also displays a lot or price movement relative to NAV. Right now, it’s at a 4% discount to NAV (52-week high) vs an average of a 12% discount and a low of a 17% discount. Z-scores 2+, etc. Very richly priced.
Good time to bale, which I did on Friday. I will gladly reenter when discount gets more into a normal range. Meantime, may buy into BGX, VTA, and AIF, as these are similar funds with good earnings records not trading so richly.
Hi Bob,
I have been looking at CEFs. I do not currently own any and will only take partial positions relative to capital I put into high quality securities. So your post is timely. I view them as an alternative income alternative.
For my own education and in reguard to ARDC, I see the price discount your are speaking of but the NAV is lower since 2012 using cefconnect.
So my first question is where is the “top NAV return” of ARDC? I think I’m missing something.
Second question, in your opinion is it better to buy CEFs with large price to NAV discounts or ones with price and NAV historically on par like EVT? Large discounts sound like investors view too much risk or something, even in this low rate environment when they are looking for yield.
Cheers,
Pickle – I buy good funds when they are cheap. My primary screening/research tools are cefdata.com, cefanalyzer.com and cefconnect.com, plus the funds’ own sites. For each CEF catagory I find 3-5 funds that I like based on 1,3,5,and 10-yr NAV return versus peers, fund construction and the strength of the fund manager in the category.
My favs in the loan participation category (I use the cefdata categories) are ARDC and the other 3 funds mentioned earlier.
Then, I want it cheap. The price of a CEF reflects both the prices of the underlying assets and the discount to NAV. They tend to move in tandem, i.e. when the underlying prices are low the discount is wide, so you get a lot of price movement over a cycle.
ARDC NAV went up in the last year from about 14.50 to about 16.75, or about 16%. And the discount shrunk by an additional 10 percentage points or so. The combination gives you a 1-year return on price of 30%+. I will take it.
But it is now, for me, time to go to the sidelines. If you want to look at one single number go to cefdata and look at “Discount Rel Range” (and also Z-scores). At 99.6%, it’s telling you that it as richly priced as it gets. The “Discount Std Dev” of 3.48 is telling you the same thing.
With CEFs, chose a good fund and a good entry point and it’s hard not to make good money.
All works much better in a qualified account than taxable. Income oriented CEFs generate lots of taxable income and lots of capital gains when you sell, so I would not do this in a taxable account.
Awesome.
Sounds like I have some noodling to do but appreciate the informative response.
Cheers my friend,
Anyone have any thoughts/info on WTREP? It goes XD on Monday. When the new owner declared the $0.48 dividend on 6/07, I didn’t see any notice that this issues was being called. I bought it from early December through early May at an average price of $25.41. Just hoping that, as a small issue, it’s not worth the time/energy/cost for the acquiring company to call it. Probably just wishful thinking on my part.
Arch looks to be pretty aggressive on redeeming preferreds. Recently they sold a 4.55% issue (ACGLN, $500 million) so they could redeem another one at 5.25% (ACGLP, $450 million) when it’s callable on 9/29/21. WTREP will probably be called as soon as they close the Watford deal.
Coaster—thanks for the input. I was under the impression that the Watford acquisition was closed.
Randy – the merger with Arch could be consummated tomorrow and WTREP called in 30 days. 30 days divi is 16 cents. If you are paying more than 25.16 tomorrow you stand to lose money.
Friday’s close of 25.95 was nuts in my view.
SESCF
The below security was affected by a Full Call.
CUSIP: 81254U403
Description: ATLAS CORP 7.12500% 10/30/2027 PFD
Call Date: 2021-07-12
Oh well-
So having purchased this on 5/5, I believe I will be getting the partial dividend. From the last payout date (4/30), would that be (30+31+12) / 90 * .45 = $0.365? Is my math correct? Thx
Proto, My thought also….Oh well…. I knew it was a strong possibility. Was trying to figure out what to sell to free up some cash for next possible opportunity. Now I dont have too..
I dont think you get paid interest for the payout day, so your figure may be one day too much.
If any interest payment date would otherwise be a day that is not a business day, that interest payment date will be postponed to the next date that is a business day. If the maturity date of the Notes falls on a day that is not a business day, the related payment of principal and interest will be made on the next business day as if it were made on the date such payment was due, and no interest will accrue on the amounts so payable for the period from and after such date to the next business day.
Thanks Grid. Appreciate the clarification. While the payout will be small (for me), I consider it a learning experience. Meanwhile it’s tough to find things to buy. With inflation loaming, I am trying to keep my head above 6% issues if possible, better yet term preferred or maturity within ~8 years. not much to pick from with those constraints. Any ideas? Thx
Yes it is. I prefer issues to bounce around up and down. Not just be at nose bleed levels. I own many I am not interested in selling, but would have no interest in buying at these prices if I didnt own.
As you know your criteria is a tough place to find value, let alone avoid risk. I still think in the high risk bucket SB-C trading in lower $25.20s is decent relative value for yield. But its at top pricing also considering sector. Dry Bulk shipping rates are bouncing around 10 year highs, so cash flow is good. In fact they just prepaid some debt this month. I own 400 shares but wont risk anymore here. I dont like it when I look at issues I own knowing they are basically “topped out” and just relying on coupon alone. I will have to think some myself and reevaluate some.
SB-C and SB-D are basic arbitrage opportunities because they are identical, no adjustments to make. Can be slow because of low volume but doesn’t take many swaps to be earning double digits instead of 8%.
I have done it a few times myself, most recently this week. Though from my observations D tends to trade higher more frequently.
I’m newer to SB as I’ve been avoiding shipping lately. If D typically trades higher it may still be playable I’ll just make that adjustment I said you didn’t have to make. Won’t stay in this risk for “only” 8%. Got in at 25.19 so it could become just a straight Sell.
It will climb minimim to 25.50 range as it approaches exD next month. They are doing well with bulk shipping pricing at 10 year highs. I will keep playing in it for as long as shipping is strong. I own GSL preferred also but its climbed to high to consider a flip being past call.
I was late to the party for GSL-B. too much negative YTC. Could still work if I didn’t have other irons in the quarter-ending fire. Bought too much stuff this week and didn’t have much dry powder to buy a huge amount of AIRTP when it struck.
I am in GSL-D (BB). Past call but call is currently at 25.50, then 25.25, then 25. Really like this issue.
Proto, I kind of moved up the risk chain as prices moved. I originally started with GSLD myself at par then rode it up to 25. 75 or so then flipped into the preferred of GSL and have rode it up but kept it for time being. To be honest I wasnt aware of the early call price premium GSLD has.
2 days too many…. normal interest calculated on 360 day year with all months considered to be 30 days long. Also doesn’t include the day of call… I think correct amount will be 25.35625. .00495/day for 72 days =.35625.
It’s a very tiny point but if you want to get the calcs precisely you have to check the prospectus and see what the day count convention is. Some are 360, others actual # of days. The day of redemption (Hallelujah!) as 2wr indicates is never counted.
So true, Bob, so true…. but as you know, “actual # of days” is very much the exception vs 360 days, but you forced me to look…. SESCF is not one of those exceptions…. lol
U.S. Regulators Press Banks to Transition Away From Libor by End 2021
Officials warn financial firms aren’t moving quickly enough to replace the benchmark
https://www.wsj.com/articles/u-s-regulators-press-banks-to-transition-away-from-libor-by-end-2021-11623440640
2wr = problem is that SOFR is a poor replacement for LIBOR. SOFR is a zero risk overnight rate that is being applied to risk securities with a longer tenor. Yellen et al are pushing SOFR out of pure self interest.
I don’t want anything to do with SOFR based securities. And neither do a lot of others. That’s why adoption is (very) slow. Investors, who are mostly “smart” money institutions don’t want them.
It really would not be that hard to come up with something better than SOFR.
Indeed, Bob…. I hadn’t realized there was a push by regs to replace LIBOR sooner rather than later…. sure wasn’t pointing the article out as a positive….. It’s potentially bad news coming on faster than expected…. and each LIBOR based F/F issue has to be examined individually to see how or if they’ve spelled out what they’re going to do when LIBOR goes away… If it’s SOFR as your new base, right now, you lose 12-13 basis instantaneously.
2wr – it’s a big issue and you did a service to put up the link.
SOFR, as I said, is a terrible sub and the explanation is lengthy. If I can find a good explanation I’d rather post the link than author my own.
What Yellen is doing is bullying financial institutions around the world into adopting an index they don’t want. She is making threats. This is the way the US Treasury department has operated for decades, especially so when it comes to foreign governments and financial institutions.
The 15% min tax rate world-wide on corporations is a recent example of Treasury tactics. She’s out there browbeating countries with low tax rates to raise theirs so that countries won’t have as great an incentive to avoid the US. It’s perverse in my view. It would be like NY lobbying FL to institute an income tax so that New Yorkers won’t continue to flee NY.
Competition is good, even where it comes to fiscal regimes.
This may be appropriate for a weekend post: I have been sitting on the sidelines and can’t help but make a considered reply here regarding the thread here. Seems the US realized its bully stance with a Big Stick Posture a long time ago. We have NOT changed our behavior in the face of changing circumstance, hence a distorted Myth, Identity and backwards-looking Policy. We routinely bully social order, capital flow, faux religious sensibilities and ultimately our personal participation.
I “feel” this is exactly where “something happens”, call it a black swan or social disorder or?? Study the follies that History points out, these themes and understanding of lemming Human Nature. I am not interested in Crystal Ball gazing into the next few weeks. We wait for things to break, we are generally NOT forward looking creatures. Seems we love a great drama and with it identity through some sort of honoring and passing-the-pain.
I can not afford to put my responsibilities in the way of These Old Myths.
This is an investing site. So what’s my take?
– What’s going to be here for the time on my last good two decades? This limits my duration and interest rate risk management.
– Do I have the wherewithal to go thru another miracle financial reckoning? This limits my IG consideration.
– Who’s in the room with me and can a rely on them or am I just fodder to be stampeded over?
– If I have enough cash to make it thru my actuarial divisor or at least a portion for an insurance of say ten years, why continue the spec game under fear of inflation and politics? Five years beats a three month outlook.
– Can I create a win-win-win?
– A few well considered personal questions answered just for ONE’s SELF can cut thru a lot of unnecessary permutations. The problem is then follow-through.
I am encouraging deep, personal, quiet decision making with no explanation to anyone else and peace in Life. I see little of this around me right now…I smell fear, see decades of lack of real leadership/guidelines in our culture and extended risk.
Joel – I share the concern expressed in your last sentence. it is very difficult (as in impossible) to talk investments without getting into public policy, and in turn politics. The greatest investment risks I see today are all rooted in public policy. Not to mention political correctness at never before seen levels.
“Yellen et al are pushing SOFR out of pure self interest.”
Where do you people come up with these bizarre ideas? We all found out NINE YEARS AGO that Libor rates are fictional, yet we have continued to use them ever since. And that’s the way you like it, having your investments rely on whatever numbers the banks make up?
If it’s so simple to come up with something better than SOFR, then why are we still discussing how to phase out Libor after nine years?
Geez, I read a lot, I’m smart, I understand economics and finance and politics. I have the academic and work credentials to back up my thoughts. That’s where “you people” come up with this.
Nice chatting with you.
So what’s your replacement for Libor? Sounds like anyone can do it.
I didn’t see you acknowledge that Libor rates are fake. Read all you want, but if you can’t figure out why having huge portions of the economy based on made up rates is a problem, then quantity of reading isn’t the problem.
This kind of response is more suited to SA
Sofr is a reaction to the libor price fixing scandal.
Big problem with sofr is a lot of finance has nothing to do with the rate. Swap market and rate hedging markets are not liquid enough to handle the amount of transactions. This could leed to some non-orderly market behaviour.
That is why you are seeing products come to market pegged to 5yr treasury rate. Or 5yr country note.
Micahc – Treasuries would be better that SOFR. So, too, would be a LIBOR rate or LIBOR-type rate with a fix applied so it couldn’t be gamed. Improprieties happen in markets all the time and are fixed, not abandoned. If we abandoned everything that was manipulated at some time in the markets there would be no markets. Why single out LIBOR?
To answer my own question the US Treasury didn’t want London based banks setting US interest rates. They wanted to set them themselves. Let markets decide. Markets are not clamoring to get rid of LIBOR; they aren’t clamoring for SORF. To the contrary, acceptance of SOFR is almost non-existent. That’s why Yellon brought out the sledge hammer. If the markets won’t move there on their own she will beat them into submission.
The other reason why Yellen is pushing for the replacement as it appears the rate can STILL be gamed by member banks and even with a decade and multiple criminal actions, they still haven’t fixed the underlying susceptibility.
The underlying susceptibility being that LIBOR isn’t a market at all. It is a self reporting system. So while SOFR has its issues, it is a rate set by market transactions.
and in any self reporting system, honesty does not seem to be policy in all cases.
AATRL making another crazy jump- 3 trades higher – up $4.98 – 8.58%.
vol 569 for the 3 higher prices
Some kind of baiting?
New Issue – HCDIP 8%
This is a convertible preferred at 8%. I looked at the financials and I think I’ll pass (too speculative for me).
It is a Puget Sound Washington, developer, builder, flipper, of RE.
YMMV
The nagging thought in the back of my mind is that since the preferred market is following changes in the ten year rather than inflation news, then the potential for a sizable “temper tantrum” grows in size as the ten year reflects Fed Policy (and the desire of Powell to get re-appointed) rather than inflationary expectations. Given the perpetual time horizon of most .preferreds, the tantrum will be greater for preferreds than bonds. In the short term rates don’t have to follow inflationary expectations but the data indicates that real rates don’t stay negative in the medium to long term?
I don’t know enough to definitively promise that inflation isn’t transitory but if inflation proves not to be transitory, the negative consequences are growing as the ten year seems to elude “price discovery.”
The problem with predicting Inflation levels is much of it depends on the whim of the Fed with their policy changes. Meanwhile Fed policy is partially dependent on Inflation. The tail wagging the dog.
Is it a mandatoy convertible? That’s more like buying common stock with a kicker.
The whole “transitory” talk is a canard. Other than volatile energy and some raw materials, things like rent and wages rarely decline, they may stagnate or rise at a slower pace, but they don’t retreat to prior levels. Wages are up 8.8% over the last 2 years, 4.3% annualized. They may slow but really hard to see them retreat.
When people say “transitory” they’re talking about the pace of change in prices, not the absolute level. If prices stop rising after going up 5%, then the change in CPI drops to 0% even though prices have not reverted back to their old level.
A lot of the rise in wages over the past two years is a result in changes to the mix of those who are employed. Fewer low wage people are employed while high wage earners remain the same. Average wage could actually go down as the economy reopens and more low wage jobs come back. Avg hourly earning are about $30/hour. Doesn’t take too many new $12-15/hour jobs to bring down that average.
Where will PSA-P aka PSALL trade? Several III’ers have commented that they bought this issue to flip. We also bought it in several accounts PLANNING to flip. Two questions:
1) Where will it trade after it gets its permanent ticker, settles out and assuming the UST 10 year stays the same at 1.49% . . .it works out to be ~ 26.59, which would be a nice gain if you bought it at 25.0*
2) Where will it trade when the UST 10 YR moves about?
UST 10 YR PSA-P
1.00% 30.58
1.50% 26.53
2.00% 23.42
2.50% 20.96
3.00% 18.98
The major risk is if the 10 YR rate go up which would case a major haircut. Important note to newbies: issues with lower coupon yields will fall more than those with higher coupon yields. This means this issue with its 4.0% yield would be one of the hardest hit. And yes, this ignores call/convert issues. Also important note to newbies, assuming rates rise to say >=3.00%, this issue will become a “perpetual” meaning that it will theoretically NEVER be called. You would suffer a loss of capital if you decided to sell it for any reason.
Footnote: This is a based on a simple spread model assuming PSA-P tracks the UST 10 YR.
Tex, For me, Im not hanging around this party long. I will give it a month tops and win, lose, or rainout, Im gone. Mostly for reasons cited. I can get a good illiquid ute for 4.5% that wont be the first to get routed on a rate jump scare if Im so inclined to want or need more low yield IG.
Grid I hear ya, but being dumb I bought a slug of the PSA-L IPO one year ago under redemption price. There were the same discussions about future rates and that the issue would shortly be crushed. It’s TR is 15.12% since then. But might be time to roll it over into the illiquid ute holdings.
Maddening is the point being made by Potter and Randy; why in the name of every grad school portfolio theory course ever written, and in the face of what “appears” to be compelling intel re rising inflation, is the TNX languishing and the yield curve flattening? Like others here, I’m looking at it every day waiting for what “should” happen. But it never does. Well, not so far.
Alpha8 asked: “in the face of what “appears” to be compelling intel re rising inflation, is the TNX languishing and the yield curve flattening?”
Alpha, the answer is pretty simple. The bond market is NOT buying into the “inflation is here to stay” story. Collectively they are buying into the “its transitory” story. The two leading advocates for transitory are Lacy Hunt and David Rosenberg. You can find several recent posts/interviews that lay out their reasoning.
Remember the bond market and inflation arent always tethered together. The Fed has manipulated it in past to where we have had double digit inflation and 2% ten year bonds at the same time. Wouldnt that be fun to see again… not
For sure Tex, though when hearing “bond market”, I now also reflexively think: “don’t fight the fed”, and “manipulation”, though recognize that may be too simplistic. Though unaware of anyone anywhere that would buy TNX at these levels, and despite record job openings and climbing CPI, TNX was bid up again today pushing the yield down (currently) to 1.487%.
It’s possible we’re still in a LT deflationary trend, that recent headlines are short-sighted, that rates will stay lower for longer – and maybe the larger bond market is correct and more organic than it appears. We just do not know – so “mistakes” like PSA-L (and now PSA-P) may continue providing over-sized returns. We just do not know. If PSA-P drops to $18.62, I do know I’ll be buying more.
Alpha, your hidden point is “nobody knows nothing”…. Its just impossible. Where is that 6% 10 year, Gundlach, ya promised a couple years ago? That is why I stay 100% invested and just tilt. Even if Im wrong tilting Im still making money (worried over rates rising) instead of being wrong in cash.
We will never guess right on any consistent basis will we? But you know what? No matter what SBNC will always pay us our preferreds, and we can eagerly wait each spring in eternal hope for that special invite to the annual picnic Rib Fest BBQ extravaganza!
I would be 6% if the Fed wasn’t buying 1/2 of them the day after they were issued…. /s
They have monetized debt since 2008 crisis. Nothing has changed but the amounts. Fed manipulation aside, look at the 40 year 10 year bond chart and we are still in the secular decline entering the 5th decade now.. Should we be? Of course not, I agree with you. But traditional metrics have failed us for some time now bond yield wise, so it doesnt surprise me and I keep plowing forward. But I admittedly dont worry over inflation. I actually like it since my pension is COLA’D.
Grid, We know the math for one investor may not be the same math for another investor. An income-focused investor (less so TR) needs to keep cash busy.
For the income investor, 4% for say four years beats the heck out of staying in cash at 1% for a year holding out for say 5% next year. The holdout would take four years to simply break-even with the income of the 4% investor. And that is IF the available yield jumps to 5% in 12 months and IF the holdout coud obtain a loss-proof 1% in year one.
Of course we’d have a different discussion regarding TR but as we know that involves a lot of guessing by the Gundlachs.
Yes, knowing anything is a fools game, because we know nothing. If I had acted on market concensus of yield expectations or my own predictions past 10 years I would have lagged badly.
But its still an emotional game also for our sanity. What works for me is a mixture of high quality low yields, high yield with growing earnings and outlook, some adjustables, term dated, and non correlating illiquids. At least they have proven time and again not to all get pummeled at the same time.
A long term buy and hold strategy appears to have an extremely poor/reward risk when compared to equities — much less potential reward in a bull market, and plenty of downside risk during a panicky market. Warren B. did not stick to preferred stocks. On the other hand, there is a huge potential for high probability trading profits in preferred stocks and baby bonds associated with capitalizing on market inefficiencies. It like things happen in slow motion, with plenty of time to execute — so much less stress.
Thanks Tex – appreciate ( and agree with) the perspective on the impact of rising rates. I am just unwinding some IG positions at 5% and lower. Trying to hold the line at nothing lower than 6%. Better yet, been trying to stick with term preferred’s or short term BB’s that I can hold to maturity (assuming they don’t get called).
Maybe I am too cynical or too dumb but I don’t understand why the ten year rate has dropped 30 basis points in the last month. Is the Fed doing another Twist without announcing it? According to FRED, the Fed is now selling reverse repo’s at up to the rate of $ 500 B a day. Say that reverse repo’s are out an average of two days, that’s $1 Trillion of additional cash for the Fed. Does anyone know what the Fed is doing with that short term cash?
There is a relatively large school of thought that believes inflation in the post pandemic world economy is temporary. That once supply chains are firmly re-established and consumers with extra money in their hands have satiated their appetites, our over heated economy will settle down. Who knows what will eventually happen, but this school of thought is currently prevailing as noted by the 10 year T-note rate. Personally, I’ve slowly lowered my cash position and moved into preferred stocks that I think (hope) will be okay if inflation continues. Stocks that will be liquid and relatively easy to sell. I’m definitely avoiding investment grade preferred stocks with low coupons as I think they will get badly hurt if inflation continues. Everyone has to make his/her own decision in these very uncertain times—and hope for the best.
Thank you. It seems like a lot of observers agree that we are going to experience significant inflation from restarting the economy, commodity inflation, wage inflation and Chinese inflation. The only dispute seems to be over how large and how long the inflation will persist.
The direction of the preferred market has followed the ten year pretty closely but common stocks for financials have not followed their traditional direct relationship with the ten year rate. The ten year has fallen 30 points but bank and financial common stocks have increased 5 to 10 percent over the same period. Rates dropped 5 bps today but the financials only fell by 1 percent. Buyers of financial common stock seem to disbelieve the recent changes in the ten year?
The other possible way to look at it, P, is to keep in mind from whence bank stocks are coming from…..on practically any fundamental stat you can think of, they have all been so far out of whack under the rest of the market that all they’re doing even now is just finding their way back to the norm… I don’t think any of them (and I, of course, hold myself out to be an expert among experts on the whole sector – LOL!) can be said to be at stretched valuations, even now, so with the supposed swing to value from growth also going on, it’s not difficult to rationalize their relatively standing up to a relatively large single day or single week slide in rates…
2WR, PSA-O (3.9%)is over $26 with a 24 cent divi coming next week. PSALL is 4% IPO under $25.10. You a playa for a fitty cent piece flip here?
Yeah, I saw……..looks like an easy game/gain in the making…. even for you the PSA hater… hah…. should be a no brainer but I’m a pass – just a nasty stubborn streak in me I guess not jumping in on this kind of stuff when I know it’s not something I’d want to own… there’s no good reason/excuse for my inflexibility.
Well at least you arent digging in the dirt for pennies like me. I have humored myself a couple times in past week flipping back and forth between SB-C and SB-D on a couple of 15 cent swings lol.
2WR—I agree that the large cap banks were tremendously under valued last year—-relative to the rest of the markets. I bought a bunch of call leaps on them throughout 2020 and have been fortunate in the markets seeing this discrepancy and bringing them back to more of an even keel. I’ve sold about half of them at 4x to 8x my cost. (As the saying goes, even a blind hog can find an acorn if he roots around long enough.)
I am keeping the rest of them, because if long interest rates start rising, it’s good for the big banks—as their cost of funds will stay steady and their lending rates will increase.
Did the same, but I was late to the game and only got in on WFC. I have been selling some shorter WFC calls to sweeten the deal since the call LEAPS I own effectively cover the shorter ones.
I did however, trade options on the Canadian banks all the way up before I became familiar with the LEAP strategy so have good gains there. Nothing like yours though, and congratulations on those BTW!
If I may ask, how far out did you go on your LEAPS and at which broker? I bought mine at Fidelity about 1-1.5 yrs out with a strike at about half the price WFC was trading at the time.
Scott—I use Schwab. In the Fall of 2020, I starting buying January ’22 leaps. In 2021, I switched to January ’23 leaps when they first became available. I bought BAC, WFC, C, JPM, & MS. With experience, I learned to buy only the most popular strike prices with the most open interest. After I bought a particular leap, I always entered a GTC sell order as various price multiples of my cost. Eventually, I stopped adding to my positions and just waited to see what happened. Right now the large banks are just treading water. If the 10-year eventually starts moving up in yield, I think they will take off again. Who knows?
Scott—I meant to say I started buying leaps in the Spring and Summer of 2020, not the Fall.
It is a good strategy I intend to use again during the next downturn. I didn’t trade in and out of the LEAPS. Just bought and held figuring banks would return to around their previous level and I would just roll them until I got there if it took longer than the LEAP term.
But I sold shorter term call options against them every week or so since holding a long term LEAP acts like owning the stock. Strike price was half of whatever the current value was at the time since that gave me two times leverage and was a popular trading point with some liquidity. I would have went with the cheaper options and more leverage if I had gotten in earlier, but directionality is iffier the longer the recovery has been going on. Best I can do is a three bagger. And I am happy with that. Beats picking up nickels.
Does anyone know if SCHW-D the 5.95% coupon preferred has been called? As per what I recall, it is callable on or after Jun 1,2021.
is this callable ‘continuously’ or only on dividend pay dates?
Either way, isn’t it nice 5.9%-ish yield till they call it (typically with 30 day notice)?
The prospectus states callable on dividend payment dates.
“Optional Redemption
We may redeem the Series D Preferred Stock at our option, in whole or in part, from time to time, on any dividend payment date on or after June 1, 2021, at a redemption price equal to $1,000 per share (equivalent to $25 per depositary share), plus any declared and unpaid dividends, without accumulation of any undeclared dividends. “
I spoke with a Schwab fixed-income trader just now who confirms series D hasn’t been called yet. But it certainly is priced that way, isn’t it, with the J at 4.45% already at $26.34, while the D at 5.95% is down at 25.33.
Is anyone having weird slowness getting to a site, or if in, moving around the pages? Spectrum shows no problem here. I know that earlier there was an outage at cloud service Fastly- supposedly back up.
Can’t even run a speed test.
Aha- it’s Safari ! I changed to firefox- no problems, althou speed test shows running less than 1/2 normal. Must be some cloud problems too.
TDA showing incorrect info again. This time it’s TGH-A (My previous comments on DTJ being off by a few pennies). This time, they show $1.21 in annual dividends and a current yield of 4.62% at $26.15
Either I’m “lucky” to come across these inconsistencies, or TDA is having a much wider spread issue than I had previously been aware of.
While I know to check the prospectus, it is still bothersome that a platform the size of TDA can’t seem to get basic info correct. TDA is really all I know, so maybe other platforms have similar issues…?
Broker yields are just a suggestion for me. If I need a good estimate I do a quick calculation in my head, if I absolutely positively need accuracy to calculate it myself the old fashioned way.
As bad as it is, I suppose there’s some logic to the number they come up with…. TGH-A’s first coupon is a short one, not paying for a full quarter… It looks like TDA’s computers simply annualized the first coupon payment to come up with that number of $1.21… no human interaction in coming up with the computer generated stat I suppose…
I’ve noticed that TDA and Schwab often do not agree on last price or B/A, even tho they merged.
I have a couple preferred at Schwab that today are showing the #7 next to the issue in my portfolio- 7 being the quote is as of 6/4 ! So no value as of today. WTH?
You will also get variances among schwab’s trading products (website, streetsmartedge, etc.) that existed pre-merger.
Crazy as it sounds, they maintain multiple independent data bases (some from vendors) that are out of sync. This is also why you can trade some securities on one trading platform and not on others (meaning that if you can’t get something to transact at schwab, try a different platform and it might just work).
Astounding to me that they can keep the wheels on with so much complexity, but it does seem to muddle along….
Thanks all. Not comforting, but glad to know I am not the only one who sees these deficiencies. Being an entity that deals with numbers, I would think they would “get the numbers right.”
Good point Private – with all the moving parts, it is pretty impressive when you think about it in that context.
I guess I’ll cut them a little slack and be more diligent in my own research.
An idea for those of you willing to take some equity risk. NextEra Energy NEE is probably one of our best utility company’s and is a leader in the clean energy movement. Stock is close to it’s 1yr low. Stock yields about 2.13%. A more enticing option, IF YOU LIKE THE COMMON, is their mandatory convert NEEprP, yielding 5.49%. Mandatory convertible on 3/1/23. If the stock doesn’t move between now and then your return on the stock is 3.71%, and the cvt is 10.63%. If stock is up 25%, total return on stock is 28.71%, and cvt is 18.27%. If stock is down 25%, total return on stock is -21.29%, and cvt return is -9.42%.
A day in the life of Newman:
At the Casino last night, there was a guy in the bathroom telling all tinklers to stay the course on AMC and Game stop and don’t sell till they are 100.
We’re all lucky not to have turned to face him.
I think he was referring to price, not age.
Also, yesterday, a family member closed on a condo and two hours later his realtor called and said “I have an offer for you that’s 100k higher”
This FOLO (fear of losing out) hysteria will eventually bite us.
Then there are people like me. I am retired — but despite being incorrectly and prematurely bearish time and again — the markets have been undeservedly and incredibly generous. I have significantly more than 50% cash, and I still am experiencing severe cases of FOLA (fear of losing assets) and PLA (paper loss avoidance). There just may be as many or more investors sitting in cash like me than there are chasing higher prices. Older investors appear to be far less bullish than their younger counterparts.
The tighter the rubber band stretches the more nervous I get. The past two weeks I have gone from 12% cash to 40% cash. Most of the liquidation has been in muni ETF’s and CEF’s. On some of these positions I had cap gains that equaled nearly two years of income from the distribution. I am happy to sit and wait while monitoring the remaining 60% of the portfolio.
The higher my percentage of Cash goes the more profit I make on what I still hold. If I didn’t know better I’d conclude Cash is the key to Success.
The Volatility Index has been slumping, close to its 52 week low. There doesn’t seem to be too much sentiment out there yet for a risk off market. The Fed may decide to take away the punch bowl, but until then laissez les bons temps rouler!
Hello “NEWMAN”; When I hear your story about the guy upping the ante on the condo by $100K I can’t help but think of my old partner of 40+ years. His famous line was and I quote: “There are people out there with more money than brains”. When I see what some of these houses sell for I think to myself that exact line.
That’s funny Jerry… err, Chuck.
Or “Brains runs out before money…”
I’ve been patiently putting excess cash at $25.00 into SCE/G this past week. It will go ex-dividend in a week or so.
Will be interested if it heads lower thereafter or continues its slow upward journey.
I could not resist taking the $0.31 though.
For even better live exprience I am starting Discord group for Preferred stock and Baby bonds. Let me know if you want to join.
Sounds interesting. How do we join?
you just need an invite from group. You can also create many voice channels. Let’s say you want bonds, preferreds, or common, or … you would then get access to those and can move from 1 channel to the next. I have used Discord for gaming for the last few years. You can also chat and post as well. There are apps for the phone as well as computer platforms.
DTJ strategy–I am roughly estimating about .11 for DTJ final interest,
so are you holding until redeemed or moving on now?
I sold DTJ today actually and bought CLNY-H and I. I read the transcript and G/H will be redeemed this year. H is basically at par so you get another payment or so. H seemed like a better deal (didn’t spend much time analyzing) so I grabbed that.
Was actually going to load up on NUAN, but it spiked hard on me today, so that play is not as profitable as it was.
MSFT and NUAN got anti-trust approval, hence the spike. Might want to look at AJRD being acquired by LMT for $51 cash, also PPD by TMO for $47.50 cash.
I sold all my DTJ on Tuesday for $25.09. I bought a few shares of RILYK and today some PRIF-H, rounded out my position from 800 to 1K shares of PBI-B. Not sure what I will buy with the rest of the DTJ money, nothing too exciting at the moment. I am just leaving the 500 shares in wife’s IRA until redeemed. I am much more conservative with her money as I value my life : )
I tried to post this in RIA, didn’t seem to post. So here is my third attempt.
I have not come across any recent discussion about the clny pref shares so thought I would bring it up and see what everyone thinks. CLNY has 4 pref issues that go ex div in July and pay mid month I believe. All have dividends over 7% the highest coupon and lowest coupon are currently callable. The other two are callable next year. According to the last earnings call the CEO was asked about pref, he stated they will be called soon. I think they said the two callable were 372million at par (check seekingalpha Q! earnings call). Right now all can be had below par if you strip the accrued dividend according to my calculations. CLNY itself seems to remaking itself into a digital REIT play, they are getting rid of the hodge podge investments and focus on fiber, 5G and edge computing assets. Their FFO is almost non existent FFO but projecting big growth in the future. I understand the new CEO will get a big payday if stock stays over 10 for a specific number of days. I am sure he does not want to sell common and drive that down, but issuing common and buying back pref would likely help common cash flow going forward. My GUESS non of the current pref exist in 2023 based on CEO statements, until then 7% plus if you act now.
I am a brand new owner of CLNY-I @24.95.
https://www.businesswire.com/news/home/20210607005417/en/
He seems to be a very patient seller of SLMNP. Has anyone here been buying it or hoping for a lower price? I am getting tempted to buy a few shares.
kapil, I said a few days ago that the obvious thing to do would be to lower the bid price due to the presence of a consistent seller over the past couple weeks. But buyers aren’t taking the hint. So it’s a tough call – maybe buy a little now and put in a limit order at a lower price in case the seller decides to get out more aggressively.
Since every trade is occurring at 1045, it seems that buyers are nibbling away. The question is if that is all he has left to sell or if there are more shares that he is holding back. Would you consider this a sock drawer candidate?
It looks like every sale brings down the amount being offered equivalently… right now only 382 left. The strategy being used sure wouldn’t make you think he’s hiding more behind what he’s showing imho.
This is exactly what I have done. I bought a few shares at $1045 and have lower price limit orders in. Just wondering if that’s a workable strategy. The yield differential at $1035 is almost irrelevant in the big picture.
Same here – I put in a lower bid, hoping for the price to come to me, but apparently it’s not working.
Also considering going a little higher on the bid.
I have a number of layered bids in place – will be interesting to see what happens.
What I’m saying is don’t put in a bid of 1044. Just pay the 1045.
As long as buyers are stepping up to buy at 1045 the seller will never lower his ask. It’s only if all the bids above (guess) 1030 go away and stay away for some time that the seller will lower his ask.
https://quotes.freerealtime.com/quotes/SLMNP/Time%26Sales
Depends on the seller. Doesn’t look like this seller is a lazy fund manager.
Not lazy at all. Letting the air out of the ballot very slowly. I think the same seller has been at it for months.
They can be deliberate. AILIM has had a sell order out at $104 for 4-5 months now. It has only been whittled down a couple hundred since it was first put out.
That of course would be assuming everybody on this planet interested in buying this issue reads this website.
Grid, no, not at all assuming that. I watch SLMNP pretty casually, but have seen unusually high selling volume for weeks now. Rational buyers would lower their bids to see if the seller will come to them. That hasn’t happened, so it doesn’t seem likely to happen. The only likely way you’ll get a lower price is if the seller decides to dump the rest quickly.
Anyone-
Since this is now owned by LYB, is the Schulman conversion still in effect- and if so at what price ?
If no conversion, then this won’t go away at all ( barring a buyout of LYB)?
thx
I guess there’s really no need to open this can again- found a lengthy discussion from 10-26 and 27 of 2019 by Grid and several others. The consensus seems to be there is no sensible way for it to be converted, short of lawyers discovering that the shares of A. Schulman were carbonized for future revivification (RIP).
– I feel better…
But then I think of at least one resurrection possibility…nah!
Still better / ok .
Gary, I don’t think you read those old conversations correctly. It can be converted into about $848 cash.
I’ll go with this 10/27/19 summation by Grid ( and some other comments):
“2WR, I think our “Spidey Sense” is just over stimulated from reading too many numbnut Moron articles. It is what it is. Company wouldnt be stating “owner optional” redemption wording and accounting wise using “Black Derman Toy Model” on their balance sheet if it wasnt. And Steve is a sharp cookie and he had an extended conversation with the Big Cheese of LYB IR confirming this all.
The only wild negative scenario I can fathom is being its a rolled up subsidiary from one of their companies (its still called A Schulman) they somehow quarantine that subsidiary off if it got into trouble and just suspended payments. But there is the 25 bps penalty and put still there. Besides that division is doing fine. I cant manufacture a reason to worry and I tried my best….”
With people buying now, they don’t seem to be concerned with a $800+ redemption.
Gary, we have some newer info, and you may misunderstand something so I will clarify to make sure.
The convertible feature is gone, as there is nothing to convert to. LYB offered a tender of around $1000 and change at acquisition a few years ago. But only 9,000 tendered out of 125,000. Since then SLMNP owners (not LYB) can tender their shares at about $848ish (its a formula based on A Schulman common shares that were acquired by LYB, plus a lawsuit gain) back to company if they desire (but there is no reason to, that is why no one has done it).
Several people have contacted IR and management and they have confirmed SLMNP cannot be redeemed. No one has really explored angle of if SLMNP is just solely a subsidiary only obligation or if LYB would assume payment if subsidiary ever got in trouble. I do not have that answer.
Gary, there are some terminology issues here. It is, in fact, still convertible. But it is now convertible for a fixed cash amount, not stock. We often refer to it as a put option because you have the ability to exercise it and limit your downside risk.
Gary this is not a convertible stock, the company even deleted that reference. If we trust the actual company to know what its stock is, this is not a convertible…It quit being a convertible at acquisition its now called a redeemable stock. You can redeem it to the company for cash. Note the “convertible” word is gone and is now referenced as a “redeemable non-controlling interest stock”. From the horses mouth….
Redeemable Non-controlling Interests
Our redeemable non-controlling interests relate to shares of cumulative perpetual special stock (“redeemable non-controlling interest stock”) issued by our consolidated subsidiary, formerly known as A. Schulman, Inc. (“A. Schulman”). Holders of redeemable non-controlling interest stock are entitled to receive cumulative dividends at the rate of 6% per share on the liquidation preference of $1,000 per share. Redeemable non-controlling interest stock may be redeemed at any time at the discretion of the holders and is reported in the Consolidated Balance Sheets outside of permanent equity.
The redeemable non-controlling interests were recorded at fair value at the date of acquisition and is subsequently carried at the greater of estimated redemption value at the end of each reporting period or the initial amount recorded at the date of acquisition adjusted for subsequent redemptions.
https://seekingalpha.com/filing/5393829#LYB-20201231_HTM_I7723250B619848A8986037473E3E87E6_169
Grid-
Ok- redeemable I get, but I don’t see a variable value amount in the attached statement- so is it just whatever the current market price is? It seems to be a non-issue at this point, but am I missing something?
Sorry to be dense on this- appreciate the info.
thanks again.
Gary, I assume you are asking how they come up with the “redeemable price”? That part is tied into the “convertible price” before AS was acquired..Here is what it was prior to LYB buying them…
The preferred shares are convertible any time at the holder’s option into 19.1113 common shares of A. Schulman, Inc. (NYSE: SHLM), an initial conversion price of $52.33 per common share.
LYB bought AS for $42.. It cant be convertible because there is no AS stock to buy anymore. But the conversion value still applies in receiving cash for redeeming. So the formula was 19.1113 times $42 which equals $802.67
But….. A. Schulman shareholders will also get one contingent value right per share that will give them net proceeds, if any, from the ongoing litigation and government probes related to Schulman’s Citadel and Lucent acquisitions.
So the owners of A Schulman also received a CVR (Contingent Value Right) for litigation settlement A Schulman shareholders received for a lawsuit they had on another company. The holders of the convertible preferred received that also. Apparently it was worth $40 some dollars in addition to the $802.67 cash redemption value. Mr. Conservative a while back posted from his brokerage account the exact redemption value the brokerage stated it was, but I cant locate it here on the search forum.
LYB does not go out of its way to post it for some reason. It was buried deep somewhere. I originally was led to believe the redemption value was the $1000 liquidation value since nothing was mentioned I could find but the generic mention of owner redeemable. But several people contacted LYB, and one even talked to CFO I believe and they all stated the $802 value using the formula. Plus the CVR that apparently is added on.
Yes, it would be nice if it was all there in black and white in 10k filing, but it must be buried in some link addendum. I am not an expert on this but definitely feel 100% comfortable the redeemable value is that $800 plus range. And I also hope that would never need to be exercised either, lol.
Holders who convert will receive a total of $ 848.2742 per preferred stock ( $ 42.00 plus $ 2.386 ( $ 1.477 distributed on
2/4/19 + $ 0.909 distributed on 04/01/19) in place of issuing the CVR per share) .
Below is an example of the payment breakdown for holders who instruct one ( 1) preferred stock to be converted
1 Pfd share = 19.1113 common share * $ 42.00 = $ 802.6746
1 Pfd share = 19.1113 CVR * $ 2.386 = $ 45.5996
Total Cash Payment per Pfd share = $ 848.2742
According to my broker this option to convert is available until Dec 2025
Mr. C – Well that’s something new….. Available only until 12/25???? Never heard that before….. anybody else know of a limited time horizon for this provision?
I wonder if that means… 1) The CVR rights expire then and it reverts to $802 2) It totally loses redemption to cash option 3) Or it is some clerical error from brokerage assigning that date.
Thanks Grid- I’ll have to let this go into the realm of the great financial indeterminancy principle, hoping it never happens.
The 1045 offer on SLMNP is gone. Is the seller done or will the seller return on Monday?
I don’t know, but I am seeing transactions down to 1042.5
Hmm- that kicked-in at 15:45:37 4 sales – total of 15.
End-of-day looks good- but not something done recently.
Grabbed some at 1043.5
I ended up buying 30 shares at 1045 over several accounts. Hoping to buy several unbreakable plastic jugs of Kentucky brown water!
I got all of mine at 1017 back last March when there was still hope it would be a little dip and I was trying to get into better issues.
I sat on it throughout the whole downturn and it held up fairly well. Probably should have bought more at some point, but with lots of issues still depressed where you could get 60% riding them back up there was just never what seemed a comparatively good enough entry point. There was already more money to be made elsewhere.
SIPC Review:
https://www.sipc.org/for-investors/investors-with-multiple-accounts
Things are going well right now. That’s the best time to review. It’s a PITA to flip back and forth among brokerage accounts, but TITLING is the key. Here’s a quick, easy review (esp for cash mongers who may be selling a WAY over priced piece of real estate or a yacht or something).
All Ways the best, JA
Thank you. That was enlightening, if not surprising. As I read it, if you are an individual, SIPC insurance is essentially personal (to you) insurance not (separate) account insurance. Kind of like having two cars with State Farm insured under combined single limits coverage. (Rule 101a)
So if you are an individual with two accounts both at insured limits, one held at Broker 1 and the other at Broker 2, you are only SIPC insured for half your assets. Or if you are a “glass half full” type, one of your accounts is uninsured.
Whew, we are sure lucky that there will never be another financial crisis. “Stock prices have reached what looks like a permanently high plateau…I expect to see the stock market a good deal higher within a few months.” – noted economist.
Thanks for your post.
BHJ, Re-read the example on the SIPC page.
Using the car example make sure the TITLING (described in the article) of the accounts at any ONE BROKERAGE does not exceed the limits if the brokerage goes down and SIPC insurance is needed.
Most brokerages also have a Default you can CHOOSE which is to retain all settled CASH in a FDIC account which is different from SIPC. FDIC insures separately and differing guidelines which are easy to find.
Just a good check-up. Make sure you understand your defaults and choices.
Apparently with Lehman, 100% of client assets were made good…AFTER about a five year wait.
Clever use of that quote…. He said it on the eve of the 1929 market crash. But the Fed wasn’t printing money hand over fist back then (otherwise known as quantitative easing”.
Has any account holder ever lost money from a major broker going bankrupt? Anyone know what happened to the bigwigs with prime brokerage accounts at Lehman?
Here’s what Schwab has- beyond SIPC: https://international.schwab.com/account-protection
$600mm (after SIPC is exhausted) spread over 12.3 million accounts might not go too far.
A few Universities, etc, at up to $150mm coverage would wipe it out very quickly.
Bye-bye extra insurance moola.
An interesting end to me chasing the new ABR preferred ABRRP on the day it began trading. Since I owned one of the ones they were going to call I sold it (ABR-B) and put in a GTC order for ABRRP to replace it after gritting my teeth and deciding to accept the lower coupon. Watched ABRRP take off and keep going. At the end of the day I decided what the heck what is a few cents more and raised my GTC order to $25.55. It keep going up to$25.65 and stabilized and I forgot about that GTC order. Got an email that my brokerage transaction had executed and lo and behold I now own ABRRP. Guess I will have to buy hamburger and cheaper beer for the cookout now as the coupon is 1.375% less! Welcome to today’s world of investing with the ZIRP policy folks…..
Not sure where to post, but this is interesting:
Fed to Sell Corporate Bonds and ETFs Purchased During Covid-19 Crisis — Update
DOW JONES & COMPANY, INC. 4:30 PM ET 6/2/2021
The Federal Reserve will soon begin selling off the corporate bonds and exchange-traded funds it amassed last year through an emergency-lending vehicle set up to contain the Covid-19 pandemic’s economic fallout.
The vehicle, known as the Secondary Market Corporate Credit Facility, or SMCCF, held $5.21 billion of bonds from companies including Whirlpool Corp.(WHR), Walmart Inc.(WMT) and Visa Inc.(V) as of April 30. In addition, it held $8.56 billion of exchange-traded funds that hold corporate debt, such as the Vanguard Short-Term Corporate Bond ETF.
A Fed official said the sales should be completed by the end of this year. Net proceeds will be remitted to the Treasury Department.
The Fed’s corporate-debt holdings are distinct from its $7.3 trillion balance sheet of Treasury securities and agency mortgage-backed securities. The central bank under Chairman Jerome Powell is continuing to purchase those types of assets to the tune of at least $120 billion a month as part of its monetary-policy goal of holding down borrowing costs until the economy recovers further from the pandemic.
The SMCCF was set up in March 2020 as part of a broader suite of programs established by the Fed and Treasury to shore up liquidity in financial markets. Stock and bond markets at the time were reeling from the fear and uncertainty regarding the coronavirus and economic lockdowns to contain it.
The Fed’s announcement of the SMCCF and a related vehicle, the Primary Market Corporate Credit Facility, quickly restored investor confidence in major corporations’ ability to issue debt. As a result, the latter vehicle never made a purchase, and the SMCCF’s holdings peaked at around $14.2 billion last year, a far cry from the two programs’ combined $ 750 billion of firepower.
“The SMCCF proved vital in restoring market functioning last year, supporting the availability of credit for large employers, and bolstering employment through the Covid-19 pandemic,” the Fed said in a statement Wednesday.
The corporate-credit programs stopped buying assets on Dec. 31 after then-Treasury Secretary Steven Mnuchin declined to extend several of the Fed’s emergency lending programs.
In Wednesday’s statement, the Fed said it plans to sell the bonds and ETF holdings in a gradual and orderly way that seeks to minimize “the potential for any adverse impact on market functioning.”
The New York Fed, which manages the SMCCF, will provide additional details soon and before sales begin, the statement added.
I saw that on CNN, According to the CNN article the Fed “saved the economy” with these purchases. Hmm, need to think on that one! Also according to the CNN article they own a huge amount of money (22 billion total in comparison to the 7+ trillion they now own) in this program and will carefully sell it in small amounts to not shock the markets. Oh boy…… Wait till they unwind that 7 trillion+ and growing by the month they have run up, if they ever do! The CNN article is worth a laugh if you care to read it!
https://www.cnn.com/2021/06/02/business/federal-reserve-corporate-assets-program-pandemic/index.html
I was just wondering if anyone out there has bought “KREF+A” as a long term hold. I still have not bought it but I somewhat like it and somewhat feel comfortable with the name, etc. I can’t find any ratings on it as well. Would love to hear others feelings on it. You won’t hurt my feelings because I don’t own it but thinking seriously about it.
I bought KREFpA at ipo and flipped out of it about $26.2x a couple of weeks later. I was happy for my $1.20 profit – but never considered it for a long term hold.
I seem to remember that KKR did some strange things with their REIT a few years ago that severely capped its distributions – maybe someone on the board has a better memory (or maybe I am remembering wrong)?
I have been in transactions with KKR several times over the years. I wouldn’t trust them an inch – but maybe they treat investors better.
Private; THANK YOU for your input. I do appreciate it. I’m still waffling on it somewhat. Just need to do more reading on it and as you know that takes time.
I have my eye on it.
My full position is only 250 shares or so not a lot of risk and if it gets called in 5 years minimal capital loss.
The common pays a high dividend and should provide cover to the pref. dividend as the common would get cut first.
I doubt rates will rise any time soon as there is massive spending planed and the Fed is part of the plan with the asset purchases.
In this low rate environment 6% does look good to me. So I will be accumulating shortly as other options for my risk / income plans are limited. I do want to find some type of credit rating first.
My KCAPL was redeemed yesterday. Did anyone get notice prior? I did not, to the best of my knowledge. Very odd that notice was not given to current bondholders.
Bill
NEW YORK, May 03, 2021 (GLOBE NEWSWIRE) — Portman Ridge Finance Corporation (PTMN) (the “Company” or “Portman Ridge”), a business development company, today announced that on April 30, 2021, it closed a private placement of $80 million in aggregate principal amount of 4.875% senior unsecured notes due 2026 (the “Notes”), which were initially assigned a BBB- rating by Egan-Jones. The net proceeds to the Company were approximately $77.7 million, after deducting payment of fees and estimated offering expenses.
The Notes bear an interest rate of 4.875% per year, payable semiannually and will mature on April 30, 2026 and may be repaid in whole or in part, at Portman Ridge’s option, at any time or from time to time at par plus a “make-whole” premium, if applicable. The Company intends to use the net proceeds of the private placement to redeem in full its 6.125% Senior Unsecured Notes due September 2022, make investments in portfolio companies in accordance with its investment objectives, and for general corporate purposes.
https://seekingalpha.com/pr/18306956-portman-ridge-finance-corporation-announces-first-quarter-2021-financial-results-declares
Bill – Though my notes don’t show it, it was probably picked up on here but it was also on EDGAR – https://www.sec.gov/Archives/edgar/data/0001372807/000119312521147557/d321827dn23c2.htm
Perhaps more importantly check to see if you got your accrued… Fidelity has not yet applied in my account though they posted proceeds from call yesterday.
Thank you, both. I was interested in whether bondholders were notified. I missed the PR and the SEC filing, but I thought the issuer was *required* to notify me individually as a bondholder. Perhaps my broker failed to pass on the message.
They are not required to notify you because you aren’t the bondholder. Your broker is the holder of record
Does anyone know whether RF-A has been called or not? As it has dropped below par price. Thanks
I did some further research and did confirm that RF-A is being called on 6/15 per a 8K filed in early May. So sad as another hits the dirt.
CEQP-, Just keeps on climbing. When they announced they sold their joint owned pipeline to KMI yesterday they stated the proceeds would be used to deleverage more and buy back both common and preferred units. It was odd for two straight days the premarket open ask was lower than yesterday’s close, so I bought more again premarket.
Well, just collected my last $335.94 dividend from DTJ, outside of a few crumbs at the end of the month were calling it quits. Feeling sad, I think I need to be alone for awhile.
I’m curious… I had 60 shares of DTJ before last ex date. If I multiple 60 x .3397, I get $20.38. Now I know I am literally talking pennies, but TDA deposited $20.16 into my account. Anyone have a theory? Also, if I divide the $1.36 annual dividend (all this is according to TDA), I get $.34 (which only makes the discrepancy worse)
I guess the bigger question is… Should I not rely on TDA for accuracy in this department?
I calculate the annual div as 1.34375. Based on that, 20.16 is accurate.
Mark,
Copied this from Quantum : ($1.34375 per annum or $0.3359375 per quarter). You have $0.3397 a share listed.
$0.3359375 X 60 = $20.15625
I suck at math, so double check this.
Like I said, I was just going off the info provided at TDA. That is where I got the .3397 and the $1.36 from. I guess I’ll be more diligent in the future and look at more than 1 place. I haven’t really noticed this to be an issue in other cases, so maybe just someone fat fingering the keyboard with regards to the distributions.
Thanks for the replies and clarifications.
I am with you Bill S. I was hoping for a few more dividend cycles. I also saw my last-normal DTJ dividend hit brokerage acct this weekend which made me smile then reality hit and I was sad. Coincidentally my divie was $335.94 also.
Hi Tim:
RE: AMH-D & AMH-E
Thanks so much for the watchlist. Great idea. Notice you have AMH-D and AMH-E on the list. FWIW unfortunately AMH-D scheduled redemption is on 6/7 and AMH-E scheduled redemption is on 6/30. Did you want to yellow them out?
https://investors.ah4r.com/press-releases/news-details/2021/American-Homes-4-Rent-Announces-Intent-to-Redeem-6.500-Series-D-and-6.350-Series-E-Perpetual-Preferred-Shares/default.aspx
Thanks for sharing the watch list with us. The universe of call anchored pref’s is gradually shrinking.
Has anyone else here besides me ventured into the BKEPP tar pit?
Not on my radar. Should it be? Not a normal preferred I avoid issues with unusual clauses. If anybody can figure it out, it’s grid.
Looks like they got a boost from the anticipated infrastructure bill and from preferred buybacks. These could be for a limited time?
It is one of those “1 line K-1” preferreds and don’t appear to have any weird contract language like the Brookfields.
I already went down the morass of owning a K-1 with CEQP- and SPLP-A so one more aint gonna kill me now, ha. They sold off their crappy pipeline and just are focused on asphalt, and leveraged down very nicely with that sell and they lowered their debt considerably.
But there is a quagmire with the preferred. Its technically not callable, but it actually can be converted if GP can control a certain percentage of the preferred. They dont have it though. And it would be a detriment to them if they did. The common/preferred is a chicken and the egg thing. The common cant get its true value until something is done with the preferred as it eats up most of the equity value.
There are some good articles on SA that explains the situation with this issue. It needs to be read to understand the pros and cons here on the issue. The company is actually buying up some of the preferreds in the open market also.
Grid,
I have a significant position (for me) in BKEPPP in my after tax account. I’ve been adding on dips and have been very pleased with the performance and strategies of the new CEO.
I think it’s significant that they bought some of the preferred @ $7.50 from an institutional client and I think that puts a floor on the preferred shares.
Greg, do you have any worries about any type of preferred “take under” shenanigans?
Take under is always a concern in the world of MLP’s. but I feel like the company is trying to treat the issue fairly and purchase them in the open market.
It’s worthwhile to note that the bulk of the preferreds are owned by the GP and senior management.
I only recently got into it a bit below $7.80. When I last looked at it the leverage and pipeline were too much for me. But they really have the ol finances in order going back to just the asphalt business. It sure appears to be a solid 9% paying issue going forward though doesnt it.
I got into the issue after the weeks of rain in Houston a number of years ago. After Katrina, Louisiana was rebuilding roads (and using lots of asphalt) for years.
Their product (storage of asphalt) will be in great demand in the coming years so I’m not as concerned as I was when they were a hybrid outfit with Cushing storage and a pipeline that needed to be built.
I have a very diversified portfolio and it’s ~5% of the income component. I’m comfortable with it and would not be sad if it grew to 7-10%.
Greg (and Camroc the Carbon Polluter), Speak of the devil, an article just a few minutes ago came out about BKEPP.
https://seekingalpha.com/article/4432653-the-9-percent-yielding-blue-knight-preferred-is-one-of-the-last-reliable-sources-of-big-dividends
I like the author — Bowler generates al lot more respect from me than Rida.
Very nice note from Mr. Bowler on BKEPP.
While I have some risk above $6.50 in my acquisition cost in BKEPP, I am in line with Ergon, and they are driving the show.
Yes, Greg, a pretty nice overview. As far as scenarios, I wouldnt be as worried over the $6.50 liquidation. Liquidation is a legal event and term and is not usually aligned with merger or acquisition. And as you know better than me, the other possibilities are actually counterproductive to Ergon’s on self interest. They tried that low ball buyout and that got blocked, so maybe they stay on a good path now.
Me, too, Greg.
Rida and his crew are a train wreck. Yes, they will come out with a good piece now and then but taken as a whole HDO is a wealth destruction machine. I wonder how many people bought the 20% yielding WPG bonds on his recommendation …… weeks before they defaulted.
I can’t say it better than Sam Hain, so I defer ……
https://seekingalpha.com/instablog/50596004/5594824
So, grid, are you Dane Dane by day and grid by night or the other way round?
Dane does a nice job. He is one of the reasons I pay money to the people at Shrinking Alpha. Turns my stomach some but I do it.
Bob, My attention span lacks too much to write an article. Though I love working for free making fun of Pendragon and watching them delete my posts. Are you paying for any certain service? Im asking because I get everything for free. There was a period of time where some things were blocked off, but now all old articles are open for me to read.
Grid – I pay for the most basic SA subscription. Not entirely sure what that gets me, other than aggravation.
I am sure 99% of the adverse posts get deleted by HDO. People reading HDO posts without understanding that never hear the other side. They never hear about WPG, AHT, PEI, CBL, and GEO.
I have done PMs with a number of the HDO non-fans and they all say the same thing, that they either get 99% deleted or they have been banned from HDO posts entirely.
I have to be creative. For example, I posted to Pendragon that he was a great investor. He was the NFL’s equivalent to Rich Kotite….So that snuck through as moderator had know clue Rich Kotite is viewed as one of the top 5 all time worst NFL coaches. So it stayed posted a few hours until some Morwa boot licking lackey actually knew who Rich Kotite was and got it removed.
They are such low life scumbags, but more importantly not overly intelligent market wise. I wont miss a chance to remind people of that.
Pendy could also be to investing what Andre Deveaux was to hockey. 31 games, 0 goals, 2 assists, 104 penalty minutes and one suspension.
Attractive- but I hate to be held hostage to the post tax day receipt of the
K-1 paperwork from the brokerage- one line or not..
Gary, over the years I’ve received well over a hundred K-1s and not one came post tax day. Also, I’ve never had one come from a brokerage that I can recall.
And they’ve always been fairly straightforward to plug into TurboTax, even ET’s, which have been some of the most complicated due to KW’s penchant for building empires.
JMO
Not going to claim I’m a friend of K-1’s, but I’ve never received a K-1 post tax-day either. And my life became (somewhat) simpler when I discovered these resources for retrieving K-1’s online:
https://www.taxpackagesupport.com/
https://www.partnerdatalink.com/landing/landing.html
Yep. You can set up an alert for whenever something you hold releases its K-1. Then you can download it and have it entered by the time the hard copy arrives in the mail.
I enter all tax documents into TurboTax as soon as I can access them. Way easier than waiting until they all come in. I’m generally finished weeks ahead of the deadline and just wait around before filing in case any material corrections come in. Generally, nothing significant ever does. K-1s have always been easy-peasy for me and the IRS has never questioned any return.
JMO
Hmm- the first is a pay service, the second very limited.
thanks
No, its not a paid service for the end user (tax doc receiver). Once your account is set up, your K-1 will show up there.
Gary, my experience matches mcg’s: I’ve never had to pay to obtain data from either service
I haven’t looked at BKEPP in a while. Coverage is pretty terrible. $168M of common stock tries to cover $273M of preferreds. Perhaps the common is way undervalued due to factors that don’t impact the preferreds but for a 9% yield, seems like you’re much better off with CEQP-
Landlord, I do own considerably more CEQP-, than I do BKEPP. But this is where I believe the error lies in one looking behind the preferred for info instead of in front of it. The common is held hostage to the preferred, value wise, not the other way around. Look at the leverage ratios that have been halved since last year. They have 99% take or pay contracts. This isnt a Microsoft balance sheet, but I dont think many 9% issues are, lol..
See they are also buying the preferred in the open market, buying $5 million worth last quarter. As this continues, the common then benefits. It all works downstream in this scenerio.
They eliminated $500,000 in annual cash distributions in that preferred purchase alone.
If the leverage ratios have come down so much and they have take or pay contracts, then is the common vastly undervalued? Perhaps the common is the better play then. As for common being held hostage to the preferreds, that’s true in every case. However, with other companies, there’s a large buffer of EPS/FFO/DCF/FCF/common equity that protects the preferreds. Unless the common is hugely undervalued, it appears there is very little buffer here.
I have no idea what is BKEP’s EPS/DCF/FCF after paying the preferreds, but either it’s not very much or the common is hugely undervalued. Basically, common trades at some multiple of DCF/FCF and either the multiple is very low for BKEP for no good reason (implying undervaluation) or there isn’t much excess DCF/FCF covering the preferreds.
I think that is where we differ (though you know I love ya and respect the opposing viewpoint). I never analyze that way. I use common only as cursory to see if its under duress as I dont like that (That being said the common stock is up 25% past month and 100% YTD). BKEP just got out of their ball and chain “bad” part of their business, and sold it off. Its back to its core roots.
The common cant benefit much from anything until that preferred gets knocked out or reduced as the money isnt flowing down far enough. The fact company is buying the preferred back puts semi natural “floors” under the issue. I worry about what is above me as that effects my payment. They can cut the common or dilute to pay me, but it wont work that way often above me.
BKEPP – LP so K1 – CUSP 09625U208 – ISIN US09625U2087
Call not possible only conversion. Conversion is possible if common stock is greater than $8.45 for 20 trading days.
If buyout occurs redemption is possible with unit holders receiving $6.5
Issue Price $6.5 Converts to Common $8.45.
Rate Change 8.5% 10/25/2010
Rate Change 11% 10/25/2011
Strangest security. Do not buy above $8.45 and watch out for a buyout or take under.
Just took some profits in the new JPM preferred at 26.21 and LBRDP at 27.79. I already miss them. Hopefully, I get a chance to buy LBRDP back before x-date.
Looking for (what I consider) a low risk place to park cash….consider SITC-A. Goes ex this month, will very probably be called at $25 June 2022. I consider it a low risk low return nickel stacker anywhere under $26 prior to ex dividend and a possible flip above 26.50 or so which it has traded at last month.
Were the two other SITC preferred issues redeemed on their call date? If so, it would follow a pattern for them to call SITC-A next year. Not a fan of shopping center REITs in general, but this one might be worth a look.
The other two issues were called a couple of years after the call date. But…inasmuch as the K shares were called in April and those had a lower coupon than the A shares, it is reasonable to assume the A shares will be called next year. If they are not, then the A shares represent even more value in my opinion.
RB – Just taking a quick look at SITC-A, this looks pretty much like a standard fare pinned to par kind of sitch where if you’re right, you’ll get about 3.20% YTC for a year hold at a $26 purchase, so I guess it boils down to how comfortable one might be with SITC as a credit and what kind of cushion you consider you have with a 6.375% coupon for this issuer should interest rates be much higher a year from now? Just another opinion, but this looks just kind of there there at this level – even as a nickel stacker – unless you’re thinking there’s a chance for credit upgrades as well over the course of the next few months….
2WR– Your analysis is spot on. I am very comfortable with SITC as a credit, but I don’t think there will be a credit upgrade. Just looking for a place that is better than cash. I have an order in to sell at 26.80, and someone actually bought a 100 shares from me at that price last month.
I heard a firm pontificating on interest rates thru 2023. As usual a range of outlooks based on factors that are variable. In other words while they felt/hoped rates might move lower it was not strong conviction.
There was one item though. “If the 6 trillion dollar budget/stimulus goes thru watch out ALL bets are off”
If you Prefer ; You mean rates can go lower from here ? Guess that is where you go negative like Europe.
1.4 on the 10 year. Hey they are talking their book. Someone once asked me “Have you ever heard a MF wholesaler who wasn’t bullish?”
Another area of concern are the money markets breaking the buck. We earn very close to 0 and P is at risk.
Yes, there is some wiggle room on the 10 yr, but Cd’s and MM’s are like you said, pretty much zero already. Tim’s U-Haul investor’s Club is looking pretty darn good right about now 🙂
“ I heard a firm pontificating on interest rates”
Analyst opinions on future rates are generally useless. The best source for where rates will be in the future is the futures market.
I wonder if the dumping of GMLPF has begun. Will watch this until the close.
Definitely under pressure now. But if they try to dump 400,000 shares in 20 minutes on a holiday Friday afternoon – oh, boy that would be crazy!
Volume way up for sure including a 50,000 share block 1 minute before the bell. But it hung tight at 22.90. Still a lot to come out so I think lower prices will be available in the not too distant future.
My own buy is at 22. I already own a 75% position so I’m not going to go to a full position unless it’s cheap. If it drops to a really silly figure (teens?) I may go bigger.
Actually TWO 50,000 share blocks traded – the one you mentioned 1 minute before the bell and another one 5 minutes before the bell
I started a small position right before the bell and will add if it dumps more
Good eye! The numbers were going by so fast I didn’t catch all the trades. If those were both PFF they still have a long ways to go. At 22 it’s an even 10% yld. I can live on that.
the users of this site will probably crash the Ishares site on Tuesday morning checking the Golar position…
They had 440,000 as of this morning..
Vote for their position at the Tuesday morning update:
1. Still 440,000
2. 340,000
3. Between 340,000 and 440,000
4. Less than 340,000
As you have probably seen, PFF sold ~65% of its holdings on Friday – they sold -169,906 and have 271,091 remaining. This is a good lesson about how things get handled when the calendar month ends on a US holiday. PHGY has not yet published its June, 2021 constituent list, but you can be certain that GMLPF is no longer in it.
Dammit, first couple of posts on III and both have needed corrections. (Yes, I saw the five minute edit window!)
Correction:
PFF sold ~38% of its GMLPF holdings on Friday. 169,906 sold Friday the 28th, 440,997 held as of Thursday the 27th, and they have 271,091 remaining to be disposed of first thing Tuesday. 😉
22 may be in the cards.
I didnt sell on first foray around 23 plus a divi. I did buy 70 more to round to 400 shares at $23 friday. i may do 100-200 more if it sags to $22. Wont ever go crazy here.
It’s interesting how dribs and drabs of sales totaling 5-10,000 shares would knock the price down 10 or 15 cents, but as far as I could tell, the 50,000 share blocks didn’t move the price much at all.
Anyway, I’ve danced in and out of some shares as the price bounced around the past few weeks, but never went below 400. I’m at 858 right now. I have some commitments that will make me unable to watch the market for several hours shortly after the open on Tuesday, so I won’t be able to monitor in real time. So I’ll be setting limit orders to buy 2,500+ more shares starting at $22.75 and lower. Hopefully PFF paces their sales throughout the day so I get a chance to see what is happening and adjust.
Because that 50,000 share blocks are sold in a negotiated trade through the institutional desk, and not to joe schmoe retail investors.
Will this trade over-the-counter or grey market after being delisted?
af, It already has been delisted. The ticker symbol changed and its OTC now.
Please excuse my ignorance, but why is PFF selling now? I thought PFF was in a hurry to sell before a deep public market disappeared.
It delisted shortly before May 13 and re-listed that day with new OTC ticker of GMLPF. I assume this is PFF rebalancing time. Being a dummy preferred fund they are late to their own funeral. They dont care about anything except following their mandates without a lick of common sense to go with it.
I think I’m better off being a dummy myself. Analysis might get me into trouble. I’m probably better off confining my participation in this area to flipping my allocations of newly issued shares until it stops working.
Fortunately, I have never had a problem accepting that I don’t know what I don’t know. I continue to marvel at the savants (with a positive connotation) and the level of knowledge associated with this website.
Af, it isnt the dummies that lose money. Its the dummies who think they are smart that lose money. Know your risk level, know what those issues of same ilk trade yield wise, differentiate between buy/sell imbalances dropping price and a bad market or company problem and the game is relatively easy in preferred land.
Its the fools like Pendragon who buy sinking preferreds and do “numbers research” to verify it is fine that get smoked because he only knows half the numbers that effect the outcome.
Lets take GMlPF as the example. Its playing out textbook without knowing “numbers”. 1)This Golar preferred was sagging in low $20 range as the fear of Golar not being able to roll over debt was a serious concern. 2) We know New Fortress Energy agreed to buy out Golar LNG and preferred shot up immediately up near “par” because its credit quality of B1 is stronger than Golar. 3) Golar seeks to delist preferred and predictably it drops back down from dumps of entities that cant or wont hold delisted preferreds…. predictable. 4) Time begins to “heal the delist wounds” and price starts creeping back towards par… predictable.. 5) PFF had to dump at some point and that is an overhang. It started Friday and price dropped hard….predictable… 6) When its over it will start creeping back up again…That is inevitable also. Provided the company and markets remain stable, which is where one takes the risk at, as the future is always unknowable.
The above is fairly predictable without knowing any “financials”. But what is not known is the exact price it will sag to and return to peak at. That is all a guess. I have been buying low, but havent sold, and there certainly were flip opps to reenter and buy again. But I dont have a large play here and I need it in stash to serve as a continuous unrelated side goal I maintain of keeping plus 6% yield in total. And I have a lot of high 4% and 5% issues that need “boosted” for me to keep my threshold. But that is just a side goal, that keeps me from drowning in 4% perpetuals and man up a bit.
Looks like 23 my be the best we can do. Heavy selling and stuck at 23. Started a small position, will add on a dip.
Yes quite strong at 23, though only 100k have traded so much more to unload. Like you I started picking it up at this price, but watching the volume.
Looks like the ice cream man is just about out of the free ice cream today. Hold at $23.65 for a 9%+ yield and 13%+ yield to first call 10/31/22, or 15% if you bought at $23.
Yeah, it just confirms again how hard it is to predict prices. I was sure it would drop at least a little bit below Friday’s close as I set limit orders at $22.75 and below…but nope. Glad I snagged a few hundred at $22.90 on Friday, but didn’t get any today until after it bounced. Added 2,458 at an average of $23.60 or so today and might snag a few more if they dip again.
I do think it will be a pretty steady march to $25+ in the coming weeks with the forced selling gone.
Looking at the volume would appear PFF could have sold everything today and without tanking the price. My 22 bid not looking so good.
Maybe the volume Friday caught market off guard and it was prepared today.
I bought 100 more at $23.25 which is right around my cost basis of the first go around a month or so ago. Bottom for me its a yield spicer, but a newish company in a squimish segment for me already keeps the play small. And the B1 debt rating doesnt give me warm fuzzies either. But glad I got 500 and will just sit on them a bit.
I started selling off and will continue to sell into rising prices. Not something I want to keep with this kind of quick profit.
If anybody needs a reason to never buy PFF this is a perfect example.
MartinG, the dump just happened and you’re already selling? You’re leaving an easy $1+ on the table and it won’t take long to get there.
If I was that certain I would’ve bought thousands of shares. I never know so I play the price movements. Sold one-sixth for 4% profit in a few hours. And now the question is when to buy it back on the dip.
PFF officially out. GMLPF to the moooooon!
Don’t sweat the mistakes; it’s a forgiving crowd mostly. I try not to make mistakes of facts – numbers and such – and will self correct if I know of an error. Grammar and spelling; I plead the 5th.
Canadian Preferreds: Shaw Communications redeeming preferred shares
May 28, 2021 10:36 AM ET Shaw Communications Inc. (SJR)
SJR.PRA.CA, SJR.PRB.CA
Shaw Communications is redeeming all of its cumulative redeemable rate reset class 2 preferred shares Series A and cumulative redeemable floating rate class 2 preferred shares Series B.
The redemptions are set for June 30, at $25 per preferred share.
April declared dividends ($0.17444 per Series A share and $0.12956 per Series B share) will be the last dividends on the preferred shares.
And that will do it for Shaw. No more pref outstanding.
Consider how much the world can change in 1 year. Shaw A traded down to 9.13 about a year ago and Shaw B almost as low. An almost 3-bagger in 12 months on a preferred from a well regarded company.
AATRL has been a whack-a-doodle crazy stock lately. Bigcharts and the TDA chart has low on 5/14 of 19.35, but it doesn’t show in others. Schwab & Yahoo have low of $35 instead. Spiked down – maybe a fat thumb error. Etrade doesn’t chart the low, but has the 19.35 as low for TTM.
The price had been hovering between 56-59, then went crazy since- up 61.99 on 5/25, and down a buck since.
Any clue as to what is happening with the reporting and price?
Since I have been holding at a cost of $37 & change, I could get only 12 sold on Wed at 61.94 and 188 today at 60.95, so feeling happy that I hung on.
Now to see if it goes crazy higher or drops back to a good buy.
I owned it for a few weeks. I don’t do crazy so I sold it.
Good chuckle-
Strange reporting & charts aside, I was mainly wondering about the sustained elevation this week.
Probably will never know.
The 14th was certainly a bad print.
Don’t forget that this is a convertible that used to be busted, and with the move from $65 to $165 in AMG over the last 8 months it’s not as busted as it used to be. In other words, its going to trade more in line with the common.
Yes- $200/sh X .25shs = $50 seems like quite a premium unless I’m missing something.
Always a lot of moving parts with AATRL. As a fixed income instrument it’s value is maybe $52 in the present circumstances. The convertible feature is almost like having a call option on AMG at $195. Not in the money but given the life of that option, definitely potential value there. A separate value of $10 for the convertible feature is not clearly unreasonable.
That’s about right, the conversion premium has shrunk to 49% from more than 150% about a year ago, so there is more equity sensitivity in the convert at these levels.
Nhcoast-
I guess I am missing something- how there is $10 value (profit) in the convertible feature. Buy at $60, convert to $50 = a profit??
thx
By value, I don’t mean instant profit. I mean expected value, given the probabilities of realistically possible future outcomes. An out of the money call option has value even if you can’t exercise it immediately for an instant profit. Similarly the call feature of AATRL has value because there is a realistic possibility that AMG will exceed $195 over the course of the next 16 years. Just what is that value is highly debatable. In my own opinion, I don’t think $10 is clearly unreasonable. Others obviously disagree.
nhc – I certainly don’t understand how to value convertibles when they’re not yet in the money, that’s for sure…. I’ve twice exited convertibles in the past 6 months that I bot for their bondlike features when they reached full value sans conversion only to see them move far higher than I could have imagined… AATRL especially with all its other wrinkles has been amazing…. But my question to you now would be this – I also own EP-C…. Within its characteristics, why would you think this one hasn’t taken off like AATRL to be priced above it’s bondlike valuation as a stated maturity preferred? Is it because it’s farther away from being in the money relatively? Last I checked from 10k – “The Trust I Preferred Securities ourstanding as of 12/31/29 are convertible at any time prior t othe close of business March 31, 2028 at the optiion of the holder into the following mixed consideration: (i) 0.7197 of a share of KMI common stock and (ii) $25.18 in cash without interest. We have the right to redeem these Trust I Securities at any time.” I think that means that KMI would have to reach 28.30 for conversion to be in the money.. Does that mean it’s too far away to have value now?
2WR, to be clear, I don’t reckon myself an expert in convertible valuation either. I was just putting out something to consider looking at AATRL.
That being said, not being familiar with EP-C, but going by your description: AMG has to increase less than 20% to get to the conversion “strike price”. KMI has to increase more than 50% to reach $28.30. AATRL has longer to go. If investors are expecting the same total return from AMG and KMI going forward (who knows?), given the disparity in dividend yields, the relative price increase in AMG has to be greater.
Given these differences, I would expect that the value of the EP-C conversion feature to be much less now. Not literally zero, but little significant value. Also as part of any EP-C conversion would be in cash, I would think that it would be less influenced by movement in KMI stock as it gets closer to $28.30.
Thanks nhc…. Good point about the cash payout aspect lessening the impact of EP-C’s convertibility….. I hadn’t factored that in at all………
The AATRL print of 19.35 on 5/14 does not show as being busted AFAIK. There were two trades, 100 shares and 10 shares @ 19.35. There were 12 total trades <50 for 1,390 shares.
11:39:01 ET 36.94 10
11:30:52 ET 39.00 80
11:30:32 ET 19.35 10
11:16:23 ET 19.35 100
11:14:23 ET 36.94 100
11:13:49 ET 34.00 90
11:13:44 ET 35.00 100
11:13:24 ET 40.00 100
11:13:15 ET 41.00 100
11:13:11 ET 42.00 100
11:12:54 ET 50.00 100
11:12:39 ET 49.99 500
The bid at one point did drop down to 19.35, which is another indication the trades stuck. This is a pink sheet issue so it likely has even less liquidity that most other preferreds.
Somebody(s) just got a good price on the buy. .
I guess crazy just happens- and luck, at times.
thx
Has there been any announcement about the UZC call?
https://investors.uscellular.com/news/news-details/2021/UScellular-announces-redemption-of-7.25-Senior-Notes-due-2064/default.aspx
Thanks Ken.
JMPNL partial redemption:
JMP Group to partially redeem 7.25% senior notes due 2027
May 27, 2021 6:17 AM ETJMP Group LLC (JMP)JMP Group LLC
JMP Group Inc., a wholly owned subsidiary of JMP Group LLC (NYSE:JMP) to redeem $10M of its 7.25% senior notes due 2027 on June 25, 2021.
The redemption price will be $25 plus accrued and unpaid interest and the redeemed notes will be cancelled.
As of May 25, 2021, $40M of the 2027 notes were outstanding and the company will use available cash to redeem the notes.
Thanks aview
What is the date of redemption and How much accrued/unpaid interest will there be in the redemption?
If I buy now, will some of it be redeemed?
Given the partial redemption, at what price would jmpnl be a buy?
Quarterly Dividend is $0.45, assuming 25% of what I buy will be redeemed, is a buy @ $25.36 good? (The rest stays until next redemption paying >7%).
Jmpnl is now trading 25.36-25.49, last 25.45
I don’t know how to this math/stat correctly , surely many of you do, pls help!
For 40 days accrual out of 90 on $0.4531 of interest, I’m calculating about $0.20 per note. So, I think you’d lose buying JMPNL @ 25.36.
Thinking further, assuming 25% of purchase gets called away, leaving 75% to receive a full 90 days interest, I get (0.25)($0.20)+(0.75)($0.4531) which amounts to about $0.39. This is closer to the current market price, making a bid of 25.36 more rational.
Tx blkrahn, that makes sense. Of course, if u get more than one div, then it gets a better buy.
JMPNZ better option for parking $
Shocking news Jeff Miller died May 7, 2021.
We have lost one of the more measured and realistic voices on seekingalpha. His loss is a true loss for the investment community.
Michc–I did read him in the past–a reasonable person–of which we have too few.
This might be an age old question and I realize none of this is chipped in stone, but do any of you have a rule of thumb when to sell a preferred trading above par. I have several mreits that are approaching call or past and it seems reasonable they would be called and reissued at lower rates. I’m looking at the above par price being equal to almost two quarters of dividends. All held in an IRA.
It can be hard to predict odds of being called so there is no precise answer because one of the variables is a guess. If YTC is near zero and call seems very likely I would sell. With a negative YTC you need to estimate the odds of a call and also your risk tolerance.
When the price unexpectedly spikes up that might be a good time to sell. You might even get to buy it back after the price corrects. Those issues trade in a narrower range.
I’m thinking along those same lines. I dumped my ABR-c two days ago and not surprised about the call. Time to start looking at an exit point for the half dozen I’ve still got.
Martin, I know you know this, but one way to stretch for yield is to move around and take the gains when presented. And when stabbing one right before exD factor that in. One that I just did was the STAR preferreds. I bought a slug in 25.30s after its previous exD and flipped them recently around 26.20. Not collecting a divi. However, I just slid into STAR-I in multiple purchases in lower 25.60s down to 25.60 today. With a 42 cent divi going ex in 2 days, its already accruing next divi being its paid middle of next month. So not exposed to any real call loss, and ringing out a 7.4% ish yield until flip or call. This is the way I generally play for higher yield. Granted the yield sometimes is in a backdoor cap gain flip, but it is still income.
That’s our game but not what he asked. Issues above par trade in a narrow range so they can be some of the most reliable short term trades. Gains are very small but trading losses are practically non-existent. Not my main play, I always make these easy trades while I’m in there doing other things.
I assumed it was what he asked as his threshold was 2 divis above par past call. He could rotate into similar quality preferreds that have moved under that threshold. It keeps you in the game of higher yield, but avoids the call exposure. Have your list already populated and react accordingly within the price movements up or down.
Speaking for myself, if the issue is higher up on my risk scale, will have to take capital loss upon call and I don’t absolutely love it, then I would cut it lose.
That is a specific situation, however, if I bought under par and feel comfortable with risk, I would just keep it.
I also view that if the capital is redeployed in an IRA to an issue of less yield I can still win as the tax is differed and distributions from the issue can be redeployed as well. However, trying to find good issues 5 1/2% or better is impossible in this low rate environment.
Have to ask after reading a bit here about CoreCivic:
Let’s say they go BK, they are private, n’est pas?
One day they can’t make payroll…do they just open the gates, then try to sell the real estate to Brookfield for work-remote rental office cells?
Most likely path is to sell the prisons at fair market value back to state or federal gov’t making bond holders whole while the equity holders get scrubbed off when the contracts are cancelled.
For prisons to go unused at the state/federal levels America would need to re-write a lot of the tough on crime litigious or draconian sentencing laws. (3 strikes laws and substance abuce). Reform youth sentencing and create a more reform based system.
Not holding out hope this is going to take place within the next 5yrs.
Joel- check out corecivic’s Jan presentation before they did the ’26 bond. Explains the model moving forward. The gov’t will figure out a way to keep them around it just won’t be called “private prisons” I for one would rather be in private prison instead of a govt ran one after dealing with the DMV this week. http://ir.corecivic.com/static-files/7ee893b7-29e2-4183-bc90-f47d02285e39
Sold out of lando at 26, had increased my position at 25.25 a couple weeks ago. Possibly only .66 more available before a January call-are they not going to call it?
First call date on LANDO is June 1, 2022. Yes, SEC filings show several different dates but this date is the correct one.
re LANDO, The Master list here shows January so is does it need to be manually updated?
Sold mine on the spike. Even if they call in June it’s only a 2.4% IRR at this pricing.
So the Tuesday after Memorial day, we finally find out if that Lottery ticket litigation for those hedge funds initiated over lost GSE preferred Dividends bears out.
My broker won’t allow shorting of OTC securities, but they are trading at almost 10 bucks a share, even though they should be trading at 10 cents a share.
Justin, we don’t actually know if the decision will be released next week. As of now, there aren’t any SCOTUS decision days listed for June at all.
As for the actual case, my impression is that you don’t understand it all, because no one actually expects missed dividends to be paid and if that’s your conclusion from following InvestorsHub, you are far afield.
I should have been clearer. It would be for future dividends.
They are not cumulative.
This one is one of the longest since oral argument.
I bought a few of those CoreCivic 8.25% 2026 notes. Liked the narrative that they’re prudently deleveraging. Kind of squeamish about the high coupon but figured the credit market is requiring it because of who they are. Watched it head down down down since it was issued, new low today in the 98s. 10-Q filed on 06 may has good news/bad news (cash up, operating cash flow up, but flipped to a loss primarily due to 51.7M shareholder litigation expense). Wondering whether I made a mistake. Any comments?
CoreCivic, Inc. 8.25% 04/15/2026 Callable. Have been adding to my position. Price is under $99 now. JP Morgan got caught holding some of the debt in their funds after pledging not to fund private prisions 2 years ago so prob little extra selling this week. I Have a double position in this bond now.
Bur D-
Unable to find that ANYwhere – symbol? Not III, QO, TDA, ETRADE, Schwab, BigCharts, Yahoo….etc.
Hmm- using some to redeem 5% and 4.625% issues – strange.
thx
Guess it’s a bond desk issue-
Gary, FWIW, if you’re referring to the CoreCivic 8.25% ’26, it’s been (far too) easy to purchase online at Fidelity, at least since it was recently mentioned here. There have been huge (to me) Ask blocks, often with a minimum purchase of only 2.
No symbol that I know of, just CUSIP 21871NAB7, which I found by looking up “Corecivic” on their fixed income page. (I’m a novice when it comes to standard bonds.)
http://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C972130&symbol=CXW5163033
I was more concerned that I couldn’t find it- except I think I found the cusip- tried it at schwab, no success, even with your cusip.
But, I don’t want to buy.
thx
Gary – to generalize, only a smallish fraction of “institutional” issues can be found (and traded) on most brokerage platforms. Many more can be found (and traded) on IBKR and, I hear, Fidelity.
For most investors, FINRA is the best place to research such issues.
Bob, it is more work (and potentially higher cost too) but in general anytime I called Vanguard they would hunt down any issue for me I provided a cuspid with at the bond desk. They dont show on their online inventory, but they can hunt them down through their bond desk or a 3rd party to provide a quote.
Oops, cusip… But I know you know I am not talking about teeth, ha.
Yeah, I loves to get my teeth into this as well!
Grid – my experience as well. If you have a CUSIP and 20 minutes to spend on the phone with fixed income Vanguard can get it for you. And the pricing is generally good relative to recent trades.
But what steered me to IBKR for all CUSIP issues other than ones destined for my Roth was the ability leave a bid, just as you do with any exchange traded issues. With Vanguard, platform or phone, it’s take it now or leave it and if you leave it calling back when the price moves. 20 more minutes.
At IBKR, at this moment, I have bids/offers in on perhaps a dozen issues, at MY price. If they hit they hit, but I don’t have to babysit them.
Yes, I am certainly not trying to change your method. I was just posting it for people who dont want to add another brokerage or change the one they had. I just put it out there for someone who was only interested in possibly a few issues and not actively hunting many. You can still get some via this method if not interested in opening up another account.
Bob, Have you had much success with this at IB? I have tried the same in the past but almost never gotten a fill even though the price history shows many trades occurring below my bid.
Gary, to date the Corecivic CUSIP 21871NAB7 preferreds have sunk like a rock! The long and short of it is that the mass perception is that the CXW business model of private prisons is headed the way of the dinosaurs. CXW was contracted to build, but NOT operate a new prison in Alabama. There was so much pressure put on the investment banks including Credit Suisse that were floating the muni bonds that the banks withdrew their underwriting. At last count Alabama could not find any investment bank to underwrite the bonds.
We knew when these IPO’ed that they were on the speculative side of the spectrum. CXW had to pay 8.25% when compared ratings were maybe 5.5%. What we were counting on was small investors supporting the price, but that has not happened. They traded ~ 102-103 ish right after IPO. The last trade today was at 98.22. So they have lost roughly 5%. Contrast this to high coupon junk preferreds that have recently IPO’ed and many of them have risen >=5%. I am guessing that funds, endowments, etc that might hold these are feeling the pressure NOT to hold them. Similar to not holding tobacco, apartheid, etc socially risky issues
This is a strong contrarian bet. You are betting that CXW will be able to make the interest payments and redeem them between first call date of 4/15/24 and maturity date of 4/15/26. You are betting against the market consensus for sure. I have not calculated what the market thinks the default risk is, but I am guessing it is north of 10%.
We own them in two accounts and are sitting tight for now. I would NOT and have not added them to any of the other accounts we manage.
Isn’t there another company in the same field of running private prisons?
How do they compare to Core Civic?
I guess it all comes down to current contracts and cash flow. Pretty steady income if the contracts run to term. Talk about a captive clientele…
Seriously though, you don’t want the same entity that puts people in prison, or that oversees the prisons to be the same one that runs them. All of the incentives are wrong that way, and it is just asking for abuse. Contracting out is a much better way to do it from just about any perspective IMO.
Geo Group is the other.
one is a REIT, the other one converted from a REIT to a regular C-Corporation
Yeah, I think Geo Group’s bonds tanked worse than Core Civic IIRC and thought someone here might know why.
I am not really good at reading REIT financial statements so I know better than to try!
Yes Geo has tanked especially their 4/2026 maturing 36162JAB2. Part of that loss is the result of the current political climate. Will that change before 2026. I don’t know. At current price that bond is paying 16+%. I own some at $68 so have a capital loss. Not selling.
Their bonds maturing in 2023 and 2024 are doing better.
Let’s look at the criminal justice system. Penal laws – 100% of them – are passed by elected legislators. They and they alone determine what constitutes a crime and what the punishments will be. Think too many people get sent to prison and for too long? Well, this is where it starts.
Then, police are generally the first line of enforcement. And sometimes criminal investigative bodies, such as the FBI and state equivalents. Looking cross eyed at the police will generally get you arrested. Police will make it up, they will lie, and the evidence of this is overwhelming.
And you have prosecutors, who decide who gets charged and with what. “Piling on” comes to mind. Martha Stewart was convicted of a crime for what? Lying to the FBI. Prosecutors originally charged her with much more, enough to send Stewart to jail for decades if the prosecutors had their way. On the other hand, the police can lie to you all they want and it’s totally sanctioned by the Supreme Court of the Untied States as a legitimate police tactic. Doesn’t seem quite right to me.
Also sanctioned by the SCOTUS is police theft of private property – aka “civil asset forfeiture” – and police immunity to both civil and criminal prosecution in all but the narrowest circumstances – aka “qualified immunity”
Then you have judges, and even juries.
And then, and only then, do prisons come into play. And then only a small percentage of those are “private”. These private prison only come into contact with a person after all the foregoing have had their go – the legislatures, the prosecutors, the police, the judge, and the juries.
And you think private prison companies are the heart of the problems with the criminal justice system?
Tex the 2nd – I’ve been buying the corecivic ’26 bonds on the way down. I feel pretty comfortable with the business model and think they are ahead of the curve with dealing with the future of the business. The 8.25 was easy money to extend their debt and their cash flow is so strong that a couple of extra points will not hurt the business. I will continue to buy on way down. Best and ONLY value in HY bond market.
SDMarc, regarding CoreCivic’s business model, one question/answer from the last conference call (Q1) stood out IMO:
**********************************************************
Joe Gomes (Analyst from Noble Capital)
Thanks for that. And just I noticed you call out you’re negotiating with Montana, and in Ohio for taking on some of the excess capacity you may have if the US Marshal Service does leave certain facilities. Can you remind us – I know, on the federal side, the contracts are, I believe, mostly at will, so to speak, where they can cancel them pretty much anytime. Is that also true on your state contracts that they can – the state can cancel them whenever they desire? Or there’s a difference between the two?
Damon Hininger (CXW President and CEO)
Yeah, it’s very consistent. Good question. But yeah, they’re very consistent. Those provisions and those kind of terms between the federal contracts, state contracts. Yeah, the other key differences really between the two is typically the term, but a lot of the provisions and rights enjoyed by either the government or us are pretty, pretty similar.
**********************************************************
Tex here, for me it is difficult to make a high confidence forecast of CXW’s future revenues assuming the majority of their contracts can be cancelled on short notice. Elsewhere in the conference call they discussed how the contracts typically have a one year term. As we have seen, the political/social climate in the US can turn on a dime. Today we know that anything and everything to do with private prisons is toxic to a vocal group. They pressured all of the investment banks to withdraw underwriting for the Alabama owned prisons to be built by CXW. They have pressured investment funds to NOT invest in CXW/GEO or anything else to do with private prisons. They even got FT to write a negative story on JPM for adding some of this issue to a bond index fund.
One other tell from the Q1 conference call was the only analyst from a major house was Kenneth Williamson from JP Morgan. To me it is significant that he is a high yield debt guy, NOT an equity guy. Apparently the pressure was great enough to force the major IB’s to NOT cover the stock.
Bottom line to me is that investors, me included, have assumed a lot of known unknowns will turn out positive. I hope we are right, but I like said we have not and will not add this to any more accounts.
This is re CEQP- preferred
I received the following link in an email
https://reorgdocumentlibrary.broadridge.com/Client/Client?data=0521/E24818/226344307/c
They made it impossible to cut and paste the text, so the below (if you do not want to go the link) is an OCR interpretation of page 1. (Apologies for the gibberish)
Why are they willing to pay me a cent and a quarter per share for my consent? How bad is this?
————————————————————————
CRESTWOOD EQUIT Y PARTNERS LP??
811 Main Stn.-ct, Suite 3400
Hous.ton. Texas 77002
To holdersof our preferred units:
As Mnounced on March25.2021. we haveentered into ag.re,emems with ourfonner sponsor. First Reserve.
pro viding fo r its co mp le te e xit fro m its invc tmcnt in o ur partners. hip a nd tra ns itio ning us to a gov ernanc e
s tructure that incl udes a publicly e lected board of directors. We bc).C\·e the-.sechanges will furtheralign the interests of management and our board of directors with those of our public investors. consiste,u wi1h our long•tc rm ESG strategy . These govcmnncc changes not only enhance the voting righlsof holders of oommon units but also those of holders of preferred units. since holders of preferred units will beentitled to vote with holdersof common unitS in elections of boo.rd members, v.,ell as on 01her matters.
In im ple mentin g these go,•cmancc changes. we have a.,;.sc.sscd the pro visio ns of o ur partnership agreement pertaining to our preferred unitsand. in particular. the c.ha. n ge of control feature and the related redemption and ocher rights of holders of preferred units. Prior to our separation from First Reserve, a change of control could
havebeen triggered upon the occurrence of both First Rese rve having cca. tocontroolurgeneral partner and my having ceased 10 be the Ch ief Executive Officer. Asa result of our separation from First Reserve. a change o control cou ld now be triggered merely by my ceasing to be the CEO.
As the original founder of our predeeessor company, I run very excited about this next step in our life cycle and the enhanced alignment it will ere.ate with our investors. I belie,·e Crescwood has a ,•ery bright future. and although I have no curren t intention to tcp down as CEO. this provision of the change of control feature now unduly focuses on my continued employment as CEO, Consistent wilh corporate governance best practices, the boo.rd should be free to select our executive officers from ti1ne to time based on the best interests of the
Partnership. Unless amended, this changeof control provision may interfere with the board’s ordinary course suc<"..Css io n planni ng and ilS ultima te discretio n in the se lectio n of a CEO otherthan meif circumstances warrant. Accord ingly. we are see king your consent through the accompanying conse nt solicitation statement 10 el iminate this provision of the ch:inge of control definition in our partnership agreement. Our board has detem1ined thnt the ado ption und approva l of thisumcndmcnt is in the best interests of the Partnership und hos d irected that the amendment be submitted to you for approval.
We realize yourtime is valuable, and co nsequently, subject to receipt of requisite conse nts, we arc offering a consent fee of S0.0125 per preferred unit to be p.kid 10 holders of preferred units who validly provide (and do n04 revoke) their conse nts 10 this proposed amendment at or prior10 S:00 p.m.. Eastern Time. on June 7, 2021 (su bjec t to term inat io n o r extension).
Yourconsent is important to us and our business. Your broker cannot provide a conse nt with respect 10 you preferred uniL-o. n your behalf until it receives your instructions. Please provide your conse nt by following the inStruct io ns co ntained in the Consent Solicito.tio n Stateme nt. We l ook forward to yourpru1icipation.
Sincerely,
Rooett C . Phillips
Chairman of the Bonrd, President and CEO
I can get a chik-fil-a sandwich with all that money. Not the meal, just the sandwich. 🙂
I could get a nice meal out of this, but I am afraid that as a result of this change, somehow they are going to make me want to lose my lunch.
FWIW: Rida M. has this in an article about doing away with the Not Callable portion:
@Chamazza Thanks for your comment. I will be posting a full report tomorrow Friday on what the notice is all about, and what shareholders should do. This is a VERY IMPORTANT NOTICE, and each shareholder needs to vote. Please make sure you read it tomorrow! it will explain everything step by step.
If anybody is reading this and is holding the CEQP preferred stocks, please check my article that will be posted tomorrow morning at 8:30 AM eastern time. Or please follow me so that you don’t miss it.
The way I see it we are caught in a pickle. If we vote to approve you lose some future rights. But if we dont this technically triggers a change of control and if they went through with it the issue would have to be redeemed from the change of control (GP changing). So voting approval is best because it keeps issue going. They need 75% approval I think (I already forgot from this morning reading it), so they need the votes.
They don’t make it obvious- but redemption is on p22.
Requires at least 2/3 vote of the issued preferred unit holders to approve. p16
Here’s the article- seems to cover it:
https://seekingalpha.com/article/4430305-crestwood-preferred-important-minus-minus-every-shareholder-should-read-this?mail_subject=rida-morwa-crestwood-preferred-important-every-shareholder-should-read-this&utm_campaign=rta-author-article&utm_content=link-1&utm_medium=email&utm_source=seeking_alpha#comment-88993940
Seasoned investors, would you take this to mean an offer is in the works since they’ve been at it now for at least a year? I can’t remember ever seeing this language in advance of an offer where they detailed the expenses “We began on-going efforts to investigate alternatives to retire or refinance our outstanding debt of Preferred Stock through privately negotiated transactions, open market repurchases, redemptions, exchange offers, tender offers, or otherwise. Costs associated with these efforts have been expensed as incurred in Other expense” It’s one of my failed preferreds that I’m thinking of quadrupling down on.
What’s the security? You imply it is trading well below par, which means Mr. Market has not yet been convinced it will be retired.
It’s RHE-A , formerly ADK-A and yeah whenever a cumulative goes in arrears it’s not a pristine balance sheet especially when the rate rises after they miss, but I see it hopefully playing out the way wheeler is with their preferred’s Don’t plan on getting full amount but they’ve spent 1/2 a mil minimum that they’ve disclosed on trying to get a plan together anyway and from following them they think they can refinance at lower rates so maybe they turn the corner on operations.
Wow, well I don’t know anything about RHE-A, but it is trading at less than 20% of par and, if you were to account for deferred distributions, it is trading for less than a $0 stripped price! So Mr. Market is telling you that the “redemption” option at $25 + accrued is highly improbable.
Might they offer you $6 or something like that in a tender or exchange into common shares at some point? Sure, but can you rule out getting $0 if they go bankrupt before then?
Why has the common price gone up so much this year?
There’s never any guarantees, only risk / reward. For all I really know their balance sheet could be a Worldcom. I don’t have a good reason only speculation why the common has run so much, but I do believe that if the common were truly worth that amount, then a cumulative preferred certainly is too. I just had never seen that wording ahead of time on any of my holdings, usually only with the offer or an announcement that they had already purchased or made a private deal for some shares.
Dufus, I dont know your specific situation, but remember to check the financials of a company. Many companies have other seperate private issued preferreds in addition to public ones that trade. These will have different terms and such. You need to scroll into the actual annual filings and read the notes.
So I just caution before buying more to make sure what they are implying is directly related to any preferred that you own.
Using Google Spreadsheet, I am trying to get a price on PRIF-H using the GoogleFinance function (same as Tim’s). Tried both PRIFH and PRIF-H; neither returns a value. Works fine for PRIF-G and all other tickers. What’s interesting is if I go to the Google Finance website and manually enter PRIF-H, it works fine. Am I missing something?
Proto123–google sheets are always late to the party on these new issues. I use a different scrape I cooked up a while back, but I swap them when the google sheets ticker works.
=importxml(“https://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=prif.prh&insttype=Stock”,”/html/body/div[1]/div[2]/table/tbody/tr/td[1]/table/tbody/tr[3]/td[1]/div”)
Since it is an import it is a slower data transfer.
Thanks Tim for the tip. Coincidentally, it looks like Google Sheets is now picking up that ticker. Guess I need to be patient in the future.
I tried PRIF-H and it worked fine using GoogleFiannce function
danzeb–yes they eventually get things loaded in, but alway a few days late.
Do folks think the below restrictions would apply to OTC securities such as AFFT/AFFS and GMLPF that do not make SEC filings? How does one determine which OTC issues are “pink no information”?
New rules will affect your ability to buy and sell “Pink No Information” securities, including at E*TRADE
On September 28, 2021, new requirements take effect that will impact the market for—and value of—certain “over-the-counter (OTC) securities” you currently hold or have held in the past. The new rules apply to “Pink No Information” OTC securities of companies that fail to publicly report and keep current financial and other company information and will restrict the ability of U.S. brokers, like E*TRADE from making these products generally available.
Some background on the new requirements
The Securities and Exchange Commission (SEC) recently adopted amendments to SEC Rule 15c2-11 governing the submission and publication of OTC quotations. These amendments will prohibit broker-dealers from submitting or publicly disseminating bid/ask quotations for OTC securities of issuers that do not meet enhanced information filing requirements.
Securities of issuers that make the required information publicly available by the deadline in the rule should not be affected.
What these changes mean for you
Starting September 28, 2021, you will no longer be able to buy or sell “Pink No Information”
Put in the ticker at otcmarkets and it will give you the classification.
More comments and Qs in Reader alerts section.
I want to know if this type will cease to trade– if so, what do you do with them.
Somebody will be a bag holder.
Is this the key ? :
“These amendments will prohibit broker-dealers from submitting or publicly disseminating bid/ask quotations ….”
Meaning it won’t be public, & we will have go thru the brokerage phone? Ugh
LMIBL – For those looking to play the hiding out game for a litlle longer period of time than just 30 days, there’s a pretty well defined mkt for LMIBL with an ability to buy shares on the bid side at 25.43 with some patience… LMIBL WILL be called on 9/15 – they just have to wait for their 30-60 day notification window to officially make the announcement. This all has to do with Legg Mason’s acquisition by A2/A senior debt BEN back in July ’20. I don’t believe the call will be subject to market conditions or rates at the time…. a buy at 25.43 today gives you a 3.14% annualized YTC… Even this game is getting squeezed on a YTC basis, so even though 3.14% ain’t much, try buying any of the called major bank issues or GMTA by comparison… Others that seem to be relatively cheap in this world are the 2 AMH issues, AMH-D, and AMH-E.
I added to LMIBL today at 25.43
FGFPP down 3% on very heavy volume. Can’t tell if there’s something wrong with it or just another case of a big seller artificially driving down the price.
Martin:
It was a secondary offering of the preferred FGFPP:
FG Financial Group, Inc. Announces Pricing of Public Offering
6:32 PM ET, 05/18/2021 – Business Wire
ST. PETERSBURG, Fla.–(BUSINESS WIRE)–May 18, 2021– FG Financial Group, Inc. (NASDAQ: FGF, FGFPP), (“FG Financial Group” or the “Company”) today announced the pricing of its underwritten public offering of 169,200 shares of its 8.0% Series A Cumulative Preferred Stock at a public offering price of $25.00 per share, for gross proceeds of $4,230,000, before deducting underwriting commissions and offering expenses. All of the shares of Series A Preferred Stock are being offered by the Company.
Thanks, Bought some 24.60
HI Martin,
I don’t dip my toe into the sub 5% stuff coming out, so this 8% yielder that you bought got my attention. Lower loss in Q2 compared to Q1, but a loss nonetheless. Care to share your thoughts on why you like it?
Thanks
FGF: I took a quick look at FGF–market cap under 40 million. Decided to stick with larger companies that should have better resilience in stormy conditions.
It held up quite well in March 2020.
I was passively following for for the dividend capture next week when the price plunge piqued my interest for a short term trade. Didn’t do a deep dive into the company but enough to know they’re not going bankrupt tomorrow. Biggest risk is a rogue hurricane season. Insurance costs in Florida have gone through the roof mostly because of fraud after storms.
For FGFPP, here is the first paragraph from their last earnings release.
FG Financial Group, Inc. (FGF) (the “Company”), a reinsurance and investment management holding company focused on opportunistic collateralized and loss capped reinsurance, while allocating capital to SPAC and SPAC sponsor-related businesses, today announced results for the first quarter ended March 31, 2021.
Seekingalpha reports they have 3 employees.
I will pass for the time being on this one.
Ending a foolish discussion from last fall. As I recall it was the end of Oct. A foolish “bet” was offered after I gave, only a word of caution regarding AT&T common stock. I held none, my only regret is some of my dividend funds have positions. “Chasing” hat sized dividends or yields in any form is never wise? not a big fan of Cramer but he occasionally makes sense. https://www.cnbc.com/2021/05/17/jim-cramer-att-ending-one-of-the-dumbest-mergers-in-recent-history.html
If anything it confirms my belief that no investment should be put on auto-pilot, like you and so many others here advocate. Thanks again, for being a good sport.
CW Agree totally “no auto pilot”, never advocated that, here or anywhere else.
Been trimming winners when and where I can. Appreciate your thoughts, have a good one.
Q.Online appears to be down- same last evening.
Yes, I checked with a website that displays whether any site is up or down and Quantum Online is down.
Where do you guys look for info when qol is down?
dd depending on what you need, have you looked around here on III? alot of what you find on qol can be found here too.
Last time, I think they said they were hacked. Took several days to come back.
I forgot to check that site you mentioned.
QOL seems to be back up
Does anyone know if DTJ has been called? It is trading at par ($25.00) today. I can’t find any call announcement from DTE. Thanks
Based on quick perusal of their IR site and sec filings, I don’t see a call, but I could easily have missed something. Sure looks like that’s what the market is expecting thought, doesn’t it. They just went ex, so there’s that.
Thanks Bur,
The prospectus states: “Notice of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each holder of junior subordinated debentures to be redeemed at such holder’s registered address.” I assume there is a faster way than “mail” to find out. Or will there be a press release on the DTE IR webpage? Or will there be an SEC filing? Since June 1, 2021 is a little over 2 weeks away, and less than 30 days away, am I correct in assuming that DTE can’t redeem DTJ on June 1 2021 – since June 1 is inside the 30 day window? Or has DTE already announced a redemption of DTJ and I am just not aware of it?
If you’re holding in a brokerage account, the broker gets whatever communication DTE sends. They are supposed to then notify you (supposed to).
Yes, I’d expect a call to be issued by DTE as a press release and posted as an 8-K to sec.gov. And yes, if none of that has happened by now, I’d expect it has another quarter to run.
But I could be wrong on all those counts. As only a nine-year pfd investor, what I expect and what actually happens have been known to vary ;-).
They took 3 yrs past first call on last 5.25% issue to redeem. But they are dumping a midstream and becoming a more pure play regulated ute. Possible to have a short life because they may be able to deleverage when that is all completed. Its a great place to park though when call protected DTB is sitting almost 100 bps lower and priced higher.
“They took 3 yrs past first call on last 5.25% issue to redeem. ”
Yeah, but maybe they were just waiting until they could refi at a savings of at least 80-100 bps. That didn’t occur until recently when they issued DTB.
DTJ and NEE-K are in the same boat. I like DTJ a little better because as the smaller company with a less favorable sub-industry exposure, I think they’re a little less likely to be aggressive at refinancing. Then again, I thought that would be true about OPINI as well and got proven wrong.
I look at ENO as being in a somewhat similar position as well (a bit more in the money), and haven’t heard anything about that being called either.
Ultimately to me anyways, whether and when they redeem is a moot point guessing game since it can be presently bought without a loss (allowing for accrual). This should be bought with intent to just milk whatever milk is left in this cow, with a lean for better backside capital preservation for any near term yield bumps.
I agree but if wants to pay me 26 for the cow, I am willing to let Bessie go.
Ha, Kapil that is definitely an unspoken given. Market tends to get forgetful if it lives on a few weeks down the road. Im not as greedy. Depending on when and how quick, if it jumps to $25.50 I would start jettisoning mine.
Its probably sunken to a new lower range for now, but in time will be like an IPLDP. It sold off a couple months ago near par and I bought, but flipped too early at around $26 as it eventually got around $26.50. But being IPLDP is past call and a late divi declaration issue, I knew in time it would tank before next divi. I got back in today at $25.57. So I still juiced returns with an extra 43 cent return and still in line with the coming 32 cent divi without missing it. Assuming of course its not redeemed. But that danger is what makes it fun. Just like my new preferred stock I bought yesterday… The New England Patriots season win total 9 over. 🙂
I have a bunch as well Grid. DTJ, NEE-K, ENO, PPX, and I’m thinking about picking up some IPLDP but a bit cheaper. It’s a nice place to wait until I see some better opportunities.
As far as I can tell, no notice of call today.
If they announce a call on Monday, the 30 day notice makes earliest call June 16, 2021. This implies around 14 days accrued interest ( from 6/1 div pay date ).
So, should a call happen on June 16, we would get par plus accrued interest ( about $0.04 ) for a total of $25.04.
I bought several hundred more at $25.01. Call or no call, I should not lose. The only question is how long a ride I can hitch on this wagon before the trip ends.
Was going to buy more at $24.99 but the market closed by the time I got around to entering an order.
inspbudget: Actually it accrues at about .37 a day, so 16 days would pay about $6.00, so you would get about $31 a share. I bought it for my wife’s IRA last year, try to get lower yielding but investment grade issues for her account in order to keep out of the doghouse. Glad to see it isn’t called yet, will be hard to replace at this time.
Bill S. I think one of the best tricks I was ever taught about math I learned maybe around 8th grade….. The trick was to always estimate an approximate answer if you can before you solve the equation so when you complete your answer, you’ll know if what you get for your answer is in the right ballpark. In other words, if a $25 bond accrues $6 every 16 days, what would it pay in a year (133.20) and what would that annual yield be??? That would be a 5 bagger… I want in on that one! LOL.. I think Inspy is closer to right… A $25 bond yielding 5.375% accrues .00373/day based on a 360 day year, so 14 days would be 5.225 cents of accrued.. But don’t forget, you’re buying for approx 30 day hole to earn only approx 15 days worth of accrued. That should enter into your assumptions… That makes calculating an annualized yield a little tricky but my ESTIMATE is a purchase on Monday at 25.01 would give you an annualized yield of only 2.16%. That’s actually not bad these days for called bonds and certainly worth the play if a call is not now announced… And every day beyond 6/16 that it remains outstanding only increases your annualized yield so if you can accept a 2.16% annualized yield in the first place, then every day you’re proven wrong in your call assumption, you do better than you originally expected to do.
I hope this isn’t coming across as being snarky… It’s not meant to be..
2whiteroses: Yes, I understand what you are saying. I was referring to a round lot (100 shares). I should have said around $6.00 per hundred shares, my mistake. I only hold 800 shares, so I automatically think in terms of per one hundred shares, but I suspect folks on here might be more in the thousands of shares category, hopefully nobody has 1 share 🙂
Bill, the issue pays at 5.375%, so in a year it would only generate $1.34 or so.
I confirmed this through Quantum Online and info from my broker.
So I can’t figure out how it could earn $6 in 16 days.
But if it were to pay $31, GridBird would be mortgaging his house and golf clubs to buy more!! :-))
Dang right, Inspy. I would like that one way more than my favorite BACRP at $105 purchase!
inspbudget; LOL !!! I hear ya. My bad, I meant about $6 per round lot of 100 shares. for a total of $2506 if called on 16th. I think in terms of round lots, just need to let others know what the heck I am talking about.
Got it! Yes, $25.06 at earliest redemption would be close enough to the ballpark of what I & 2WR have arrived at.
The bet I am putting my investment on is that DTE will decide to delay the redemption for a while – hopefully a long while. We would enjoy a 5.375% annualized return for every day that they do not call.
Would they not call DTY first since it is a 6% vs 5.375% for DTE ?
GB, its very possible and I have previously mentioned that a few times. That, however, cannot be redeemed until this December. Being these costs are already baked in to their returns, they could very well slowed drag this out and wait on the 6% issue to redeem first. But that is speculation, utes can be slow to redeem these.
Speaking of slow to redeem, IPLDP just declared their divi today going exD in less than 2 weeks.
https://alliantenergy.gcs-web.com/news-releases/news-release-details/interstate-power-and-light-company-declares-preferred-stock-31
ENR convertible preferred A share. Yield currently over 7.5%, Current PPS would land alright 8 months from now. Just curious if anyone playin this holding. Current yield on common stock is just over 2.5%
Yes @Theta. ENR-A is among the convertibles I hold. I bought ENR-A, SWT, and several utility converts in the swoon last year to get yield while betting on market recovery. They have all been capital gain big winners in addition to the yield.
Having said that, I wouldn’t buy ENR-A where it’s priced now with such a short runway to conversion. My big dilemma right now is whether I let CNP-B convert.
What does anyone think concerning this? FPI went into open market and buying 8000 shares last quarter at $25.82 price. Trying to cull the herd before conversion this fall, or just lowering dividend cost on amount outstanding and letting it play out longer?
….bought back 8,291 shares of Series B preferred stock at a weighted average price of $25.82 for an aggregate purchase price of $0.2 million;
I just seen conference call came out. More or less same verbiage as last CC.
Turning to Series B, Series B is slightly more complicated, but also a huge opportunity. The first date we have the right to call that is in about October of this calendar year. And when we call it, we can convert it into common shares if we chose to. Again, we have a lot of time. We don’t need to do anything for another 3.5 years from today, but we start to have the opportunity. The accretive value from an AFFO perspective of exchanging a 6% coupon preferred for 1.5-ish dividend yield common is immense.
But again, you got to balance those things and figure out kind of what the right thing to do is. Again, I emphasize we don’t intend to get ourselves trapped with a short fuse on either of those preferreds. And so we feel like we’re in the driver seat to do something opportunistic when the timing is right.
Strange Trading?:
I placed an order to sell BPYUP at 25.40 on April 9, about the time the news came out regarding a potential call.
Since then I have had 17 (not a typo) fills of three or four shares (not a typo) at that price, thankfully with no commissions. Of course, single digit share numbers are commonly seen with high priced issues and there are alot of high priced issues right now. I wonder about the reporting on those very low number of shares transacted versus reporting?
Upon examination, the fills do not even show up on any reporting or charts. I know there are ‘rules’ but computers do not lie unless purposefully omitted in their program. Seems a funny bit of observation and a mystery.
Should see all of them here:
https://quotes.freerealtime.com/quotes/BPYUP/Time%26Sales
They are reported but < than round lots usually don't show up on charts
I have bought or sold more than a few issues and had them transact in dribbles like that. A couple of weeks ago I had a 100 share buy order filled in 65 transactions in a single day.
I think a lot of these weird trading scenarios are bots whose algorithms aren’t quite right. Preferred issues (especially thinly traded ones) just don’t work the way most other stocks work, so I think some algo writers just don’t get it. I think they are trying to buy or sell without moving the market too much and it sometimes drives strange results.
For example, a couple of times I have had “dribbles” going on both the buy and sell at the same time – at a nice spread (maybe $0.50 a share). So, I just had to go in every day and set my limit orders and wait for the shares trickle in and right back out. I have no idea why the bots don’t find each other, but I am always happy to be the market maker for them. There was an old Cincinnati bell issue (long gone now) that did this off and on for weeks at a time. It only made me a few hundred dollars a week, but it was sure easy money.
Wish I could stumble onto those more often…
Interesting theory I thought it’s changed mostly due to brokers no longer having fees for the most part, it’s not like it costs $9 to make a trade anymore so even i will go in with odder lots than i used to
I wouldn’t say the algoritms aren’t quite right, more like we don’t understand what they’re trying to accomplish. Maybe they’re floating small trades to see if the price moves. Or maybe it’s a holdover from when there was commission and they were trying to chase off competition. Or maybe 50 other things.
Joel, you are right to suspect an algorithmic trader that does the small quantity trades. In the old days when retail customers had to pay commissions, some algoes did single share trades in an attempt to move you out of the way. Say they wanted to move a price lower than your bid, they would do a one share trade and cost you say $8 commission. After a few of those, hopefully you would move out of their way and let them set a lower bid.
These days some algos have a different purpose for the small trades. Often times there are many buy and sell orders that are NOT shown to the public. They are either “hidden” and/or “dark pool” orders. So an algo will walk the price in say one cent increments in an attempt to see where the hidden/dark pool orders are. Then the algo can decide what to do with that information, be it buy and/or sell.
Quite a few preferreds/babys have algo orders that do show and many of them also have hidden/dark pool orders that do NOT show. Pretty easy to prove to yourself the algo orders that show. I was just looking at one where I set the lowest ask price to say 26.00. In less than one second an algo comes in and sets an ask of 25.99. Lower yours to 25.98 and the algo moves to 25.97. It happens so quickly that a human could not have manually changed the price that quickly.
And MCG is correct that typically trades of less than 100 shares do NOT show up in the daily highs, lows or close. The small trades do show up on the total quantity of shares traded. This does NOT hold for large share prices, say >=$1,000.
Many replies above, Thanks!
It’s not the volume, but the prices. I have NOT changed the order, but fills in dribs and drabs at 25.40…a price I see reported nowhere, not on the tool that Bob sent me too. Just a curiosity. Welcome to the dark(pool) side…but 3-4 shares? Thought it strange.
“…if you control these elements to silence and work the peace of present, we will not hand a rope more…?”
Joel, the plot thickens! Since 5/1, there have been 24 trades @ 25.40 with a total of 96 shares. Every single one of these trades was done “pre-market” at precisely 9:28:00 NY time. So you original order was set for extended hours trading, which is a little unusual. Like MCG and I have previously said, these 4 share trades would not show on the low/high/close for the day, even if they had occurred during normal trading hours. Even if some of the trades were from >=100 shares, they might or might not show on the low/high/close. Some brokerages include these trades in their stats, but most do NOT. I routinely see extended hour trades at prices outside the regular hours prices that do not show up on the stats.
Before the NYSE open @ 9:30, your 300-400 share sell order @ 25.40 is the lowest aka inside ask price. When the regular hours open up, the ask price has fallen below 25.40. Rinse and repeat the next day to get more trades. I still see 255 shares offered for sale @ 25.40
As for why some algo is buying precisely 5 trades, 4 shares each @ 9:28 @ 25.40 on 5 days. . . you have stumped the chumps!
Tex – What’s sometimes interesting to see when you find yourself in that one upmanship (or downmanship) with an algo instantaneously besting whatever you put up on the offer is to then go the other way, meaning raise your offer instead of going down to see if they follow you….. Sometimes they remain fixed at that lowered price sometimes they move up as you do… Sometimes when I see they’re staying at the lower price, I’ll play chicken with them, lower the price to just above where I think it could be executable and then delete my offering instantaneously….. I figure it’s a moral victory if they end up getting taken out at that cheaper price and are then cleared out. revenge of sorts… lol
For all you fans of RNR-E, stripped price now below par.
X-Div 5/27.
Current yield near 5.4%.
I bought more RNR-E at $25.33. Ex-Div is May 27 for $0.33, so no risk of loss since a call has not been announced as yet.
A safe investment, but more of the penny picking variety.
Insp – Yes when I said “stripped price,” that was a bit of a misnomer. What I meant was that the price less the minimum dividends with the 30 day call notice was below $25.
Your description is more accurate.
I got in at 25.35, so you’re already ahead of me.
Tim
A second issue of preferred for HTIA:
BRIEF-Healthcare Trust Prices Public Offering Of 7.375% Series A Cumulative Redeemable Perpetual Preferred Stock
May 6, 2021 , Reuters
May 6 (Reuters) – Healthcare Trust Inc:
* HEALTHCARE TRUST PRICES PUBLIC OFFERING OF 7.375% SERIES A CUMULATIVE REDEEMABLE PERPETUAL PREFERRED STOCK
* HEALTHCARE TRUST-PRICES UNDERWRITTEN PUBLIC OFFERING OF 2.2 MILLION SHARES OF 7.375% SERIES A CUMULATIVE REDEEMABLE PERPETUAL PREFERRED STOCK AT $25/SHARE
CPI for April YOY 4.2%
Inflation is here. Further spending can only point to stagflation. I’m thinking the same results when we ditched the gold standard and expanded the money supply.
But the good news is my green fees remained the same from last year.
MSSEL. went up $47.11 to $150 wow for a 4.44% yield and a call of $104.07 somebody hit the market buy or made a typo. Congrats to the seller. The yield is now $2.96% ouch.
Re: Reset rates:
Does anyone have knowledge regarding resets in Europe or other markets where the base factor rate, like 3 month or 1 year, went negative during the reset calculation? Was the base rate computed as it’s negative value or zero?
I do not know if adjustable mortgage rates MAY have had a negative calculations? I know there were zero percent mortgages for a short time in Europe.
It seems this kind of got ignored now that it seems rates are having a small revertion higher. I think the price premium could revert pretty quickly in a Fed knee jerk, even though Powell says ‘negative-never’.
Looking for how contracts were handled.
Tectonic Financial, Inc. (TECTP) – par is $10. Might not be news for many here but just wondering if any holders here. Tectonic Financial is a privately held company with nearly $4B AUM.
Additionally noticed PCG back up to $25B+ market cap. PCG-H still yielding 5%+
That’s really what some here call a ‘by appointment’ stock- sold 2 shares yesterday.
Whoever is doing the ask keeps it at 300shs – keeps the 9.99 but sells a few at the bid now and then. Weird.
Oh- and if there is a raised offer, say 9.82 over 9.81, the last will change to 9.82, but the volume does not change- more games. Trying to walk it up without any sell.
Without downloading the site’s sortable spreadsheet, even without a Google account, it is fairly easy to do extensive filtering and sorting of the data directly in the web page. This ability is built into Google sheets. I’d wager few are aware of this ability. If people are interested in advanced filtering and sorting , post a comment. If sufficient interest is shown I’ll draft a simple tutorial. Regards to all.
FYI—are you a sheets ‘expert’? Let me know if you have ideas etc that would be beneficial.
Guess I have been asleep at the wheel just collecting dividends! Just got a proxy from Gaslog about voting for a merger because I own some of GLOG-A. Wading through the 76 page merger document attached and I think there is no change as it relates to the preferred stock dividends etc and the preferred remains listed on the NYSE for trading unlike the common. Don’t think it is time to dump GLOG-A yet. Looks like Blackrock is going to wind up with 45% or so of the common shares. I also own some of Gaslog Partners GLOP-C, which I may have missed how GLOP is affected in this merger. Anyone else have anything on this?
There’s an article on SA from February that’s still getting comments. Might be worth a read.
Thanks dlcnws….. At least I know to vote NO on this after reading the article and all the comments. Looks like I can hang on to GLOG-A for a while but looks like GLOP may be in for it if this goes through. Think I may find another home for that money and let someone else worry about it. It has been nice having those hefty dividends for a couple of years though!
My time to bail on GLOP-B is also getting near. I’m still underwater, but it begins to float in less than two years, and I want to be out of it well before then.
I am about one quarter’s worth underwater on GLOP-C too. I am looking for an alternative now and will ditch it in a few days or so. Had planned to hold it until the last year when it started to float, I t was a good ride!
Have a seasonal and maybe off topic comment.
Just finished my taxes and I contributed to my Health Care Savings Account (HSA) with Fidelity in lieu of a contribution to my traditional IRA. I think others in my position should consider doing the same.
I’m retired and soon to be on Medicare. I’ll be pulling money from my HSA to defray some of the monthly cost.
With the HSA, I’ve gotten an up front (Federal, State and Local) tax deduction and will be able to use the funds I contributed for medical expenses tax free. My HSA allows investments and to my knowledge, the gain on my contributions over time will not be taxed.
With the traditional IRA, I get the same tax deduction up front but when I use the assets in the future I’ll be owing federal and (maybe) State and Local taxes. Additionally, for those under the age of 59 1/2, the HSA does not penalize if you pull assets for medical expenses at any age.
Greg, HSAs are definitely a sweet deal. Re “to my knowledge, the gain on my contributions over time will not be taxed”: that is true *if* you use the withdrawal for eligible medical expenses, no matter what your age. If you use the withdrawal for ineligible expenses, you’ll be taxed no matter what your age and, depending on your age, also penalized.
Yes, it will likely be two years before I pull assets from the HSA and I am seeing it as a ~40% discount on expenses I know I’ll be having. I’m seeing the discount as my tax deduction ~30% this year (Federal -22 and State -8%) and a couple of years gains of ~5-8%.
I have my HSA at Fidelity so I can trade inside it. I have lots of the preferreds in it. It’s the best investment vehicle there it.
Greg, An HSA is the only triple tax break available. Money is fungible, I dont contribute to mine for health, I do it for the tax break, and fully invest the funds in trading preferreds stocks just like my other accounts and contribute annually.
I personally have been keeping all health care receipts (mostly general dental stuff as I have no medical issues) the past 11 years and letting the investments grow. Whenever maybe 20 years down the road, I will use the receipts for a tax free withdrawal. But since medicare premiums can be used with HSA monies (and nursing home care if needed also) I will try to draw down some of the account when I turn 65 down the road.
The only thing as good as my HSA account was my $2500 Ottawa Senators season 47.5 over total I bet that cashed tonight!
I see eoz has an HSA at fidelity. I have mine with Optum bank, but I only have mutual funds available to me there. Plus I need to keep a $5000 ‘cash’ balance to avoid a monthly service fee. And they do not allow trading. I can move money around some, but I think they put limits on how many times I can make adjustments.
What are some other options for my HSA? I had no idea that I could have my HSA funds at places like fidelity and TDA. I’ve been pretty ‘meh’ about Optum – especially with their limited (31) mutual fund offerings.
Also, I was not aware that I could just ‘bank’ all my medical receipts for years and ‘redeem’ them some years down the road. I thought everything had to either be paid for from the account or reimbursed within a timely manner. Do some accounts have different limitations on this?
Mark, I have HSA Bank, and it partners with TD. The money has to flow through HSA then to TD. I pay the service fee and keep minimal money in my HSA. Banking receipts has nothing to do with your custodian. Its a separate unrelated tax filing issue. Many people are doing this as it provides longer tax free growth.
Mark: As noted elsewhere, no time limit on reimbursing qualified medical/dental expenses from your HSA.
Grid: Thanks for mentioning that Medicare premiums are eligible! I knew about LTC insurance premiums, but not Medicare.
I switched to Fidelity a few years ago and have no complaints. I am able to trade any stock, preferred, fund so far and never had a fee. I have a larger amount in my HSA, >50k so not sure if that matters, but I doubt it.
They don’t have an annual fee or a minimum in cash. No complaints, just with I had moved there sooner instead of leaving it in cash for so many years.
Thanks all. Optum is going in the trash soon. I’m tired of their limited investment options.
Since I already have TDA accounts, I’m tempted to just go that route, but with the impending changes at some point to Schwab platform, I’m kind of leaning towards Fidelity or another brokerage.
@EOZ, so Fidelity is the holder of ALL your HSA money? Meaning you don’t have to transfer back and forth to use the money? TDA uses HSA bank and there can be a couple day delay in moving money around.
I guess I’m fishing for input. Thanks in advance.
Correct. I just log on to my fidelity account and it appears like a normal brokerage account. They have a cash settling account, but you don’t have to move money between them. There is no delay and except for the account name you would not know it’s an HSA.
My company has our 401k via Fidelity and it’s just one of the accounts like the 401k. I would recommend them.
Mark:
What are the “impending changes at some point” to the Schwab platform that you are referrring to? Thanks!
I find trading with Fidelity minor league compared to the myriad of options and functionality you get at Schwab with their StreetSmart Edge Platform.
Also – when I try to buy a U.S. listed Canadian REIT at Fidelity (like WPTIF or BSRTF), they try to charge me an additional $50/trade that Schwab does not charge.
Fidelity has the Fidelity Active Trader app that has more features than their standard online function.
You need to use the Fidelity Active Trader Pro platform – has all the functionality I need and then some
No broker is perfect – they all have their little quirks. But I have been very happy with Fidelity over the years. And while I don’t typically trade many non US exchange listed Canadian securities, I have bought some and not been charged any fee
I think when Mark mentioned “the impending changes” me meant the changes that will come to TDA as they get absorbed into Schwab.
They haven’t announced what all will change or when. In fact, they have talked about some things that are NOT changing (yet), but I am confident there will be some pretty massive changes coming as they work through their post acquisition integration. In most transactions like Schwab/TDA, there were cost saving (“synergy”) commitments made internally to justify the transaction, and those savings will show up in cuts to service/staff/etc. at some point.
FWIW – we have run integration projects for a lot of companies, and this is almost always the play book – talk publicly to customers about what isn’t changing (to keep customers from fleeing), frantically work on integration actions (to cut costs, etc.), then roll out the changes and hopefully not lose too many customers.
A very big cost for brokerages is the platform itself. Have to believe they will not be integrated. I would hope for the best of both but fear the worst of both. Schwab’s mistreatment of foreign dividends and TDA’s fees on corporate actions.
Hi, FWIW, I’ve been with Fidelity for ~40 years (only actively trading ~30), mostly for historical reasons, including my employer retirement plans. I have taxable, IRA, Roth, and an old work retirement brokerage account (that I have to transfer this year or they’ll liquidate). All on one screen. No HSA. I’m mostly satisfied, but there are definitely items they will NOT trade, although there are inexplicable inconsistencies. For my needs, the issues are with Baby bonds and F-F preferreds. Often I can buy them soon after they’re first listed, but after a few weeks, no can do. However, some stay available, and I can find no rhyme or reason, and there are even very similar baby bonds from the same company and one can be bought, the other can’t.
I had a taxable brokerage account with Wells Fargo (again, historical work-related) as they offered me free trades in the pre-free era, and I’ve ended up buying non-qualified payers there, due to Fidelity’s restrictions. Account has some quirks I don’t like, but I don’t really need it now.
Finally, I had an old mutual fund IRA with Vanguard, and they made it easy to change to a brokerage account, so now I can buy the BBs and F-Fs there that I can’t with Fidelity. Mostly OK, but I can’t get real-time listings on my holdings, although they tell me I can update via browser refresh (but it only gives real time on indices, not my holdings, and I haven’t figured that out yet).
My GTC order to sell PCG-A got hit today – anyone have a clue as to the jump in price?
Thanks
Was only PCG-A that jumped, so I doubt it is a systemic PCG issue.
CAP trade election …….
Any broker types out there know what the term means?
Maybe this? :
https://www.investopedia.com/terms/c/cap-and-trade.asp
MNR buyout. Have been out of town for few days and saw press release but couldn’t find any comments on the board. Can the preferred be called with change of control or is the September call date still the end of the MNR-C. Also, what price does it pay to sell it now. Thanks
If called on 9-15 you get 2 more divis totaling 78 cents. How much are you willing to pay for that? Someone just paid 55 cents for it, meaning a “profit” of 23 cents for holding 4 months.
I sit on a lot of cash and 23 cents and the hope it lives on are keeping me in the position.
Bob – thanks for your thoughts. Yep about 2ish ytc I think. One of main plans of merger is to retire the preferred so don’t plan on it staying around.
timing question: if a higher yielding preferred has a first call date this year, and ytw is hovering around zero, is it generally time to look for the exit?
Depends. If you care to name names you can have my view.
I won’t front run you. I’m not HDO!
Sorry, I missed your response last night Bob. TGP-A.
furcal – you have 2 more dividends before call date, about $1.10. At a price of 25.85, if it’s called, you’ll make 25 cents per share on the deal for holding 6 months. You’re risking nothing except opportunity cost for the chance to continue to get the 9% coupon after October.
If you like the company I’d be a holder. I don’t know the company so no opinion expressed there.
Furcal asks: “is it generally time to look for the exit?”
Unfortunately there is not an exact answer to whether any particular issue will be called on its first call date or not. You have to research each issue and make your best guess. Even when we III’ers think we know for certain whether an issue will be called or not, we are not batting 1,000. Here are a few factors that help guide the guess:
1) Can the company call the issue with another source of funds? Maybe the source is a newly issued preferred or maybe it is cash that is already in their treasury. If they plan to issue a new preferred, can they do it with a lower coupon yield to make it worthwhile? The answer on being able to issue a new preferred with a lower coupon is almost a universal YES at the present titm.
2) Does the company have a desire to call it? Maybe the issue is so small the company does not want to mess with it. Or maybe it was issued by a company that has since been taken over.
3) There are a few companies that traditionally are locks to call issues on the first date. PSA is the poster child for this.
4) I would flip the question and say sarcastically you have to ask what is wrong with a company that does NOT call a higher coupon yield preferred. The implication is that any company that is well managed WILL call the issue in order to save funds. I recommend setting your default opinion to “will be called” and make sure you have planned in advance why an issue will NOT be called if you decide to hold an issue. I show 72 issues that have been called so far in 2021, so the trend is clear. . .
The last time I looked, I estimated ~ 90 issues that will be called in the next 12 months, based purely on a mechanical yield analysis.
The possibilities never end do they Tex. You can also throw in new company variable. Some new companies use them to get instant capital and then redeem and never have preferreds again after their balance sheet has gotten stronger.
I have also seen 4% issues redeemed in a 6% envrionment just because company wanted to be ridden of them.
A study showed when a company wants to reissue generally they are a goner if 50 bps can be saved.
But the decision to cut bait by owner isnt cut and dried. A 2% YTC may sound low, but if company has issues 100 bps lower outstanding and interest rates rise 75-100 bps during that period you will be darn glad you didnt buy the call protected sister with lower yield as your capital losses could sting nicely. That is why I like to have balance… Issues like WTREP and now DTJ hanging by threads all while having noncallables like SLMNP and BACRP for example at the same time..And of course mid duration issues inbetwen those also.
Grid – 2 color adders to your comment – I assume the study that says a company looking to save 50bp is a rule of thumb for a company looking to reissue hopefully points out that this doesn’t mean that if a company can issue 6% to refund a 6 1/2% issue that that saves them 50 bp….I would think given cost of issuance and most likely accounting losses incurred when calling in an issue brings the doable range closer to 100 bp, meaning needing to issue 5.50% paper to call in 6.50% is the tipping point.
The other point is that with your love of issues issued in the year Lincoln was shot or thereabouts, that’s when you’re more likely to see 4% issues redeemed by 6% issues because back in the stone age, issues came with true covenants that could actually protect the shareholder vs actions a corporation might want to later get out from under…. That’s the most frequent reason for low to high refundings I would think… I don’t think you see that these days when new issues come covenant light..
Ironically, way back in the 70’s I did my master’s thesis on this exact topic of hi/lo refinancing on the suggestion and guidance of the Comptroller of the NYS Power Authority… My firm was their investment banker and my first job in the bond business included being required by my boss to talk to the guy no less than once a day. The hi/lo refinancing was a wild concept at the time…. I also remember rereading the thesis years later once I actually knew something about bonds and discovering that I really had no idea what I was talking about in the paper.. Fortunately, my professor knew even less than I did and I passed. And my firm did do some lo/hi refi’s for the Auth, but not thanks to my masters thesis’s deep insights… lol.
Yepper, its the former and not the latter. Remember these are perpetuals so the long term savings needs to be factored in, and is not just compared to the short upfront cost of the underwriting. So no it was just measuring the bps “tipping” point to reissue, not the actual amount saved.
BTW, Tell your wife congrats another fine job with QVC again. On of the best 8% issues I ever bought.
https://seekingalpha.com/news/3693040-qurate-eps-beats-0_20-beats-on-revenue
Tex, thanks for a terrific answer, helped immensely. Exiting in the near future is probably the best choice, but I have some reading to do this weekend. I need to look closer at the numbers.
PSA seems to have broken the clock, and didn’t call the most recent one that just became callable.
Do folks think the below restrictions would apply to OTC securities such as AFFT/AFFS and GMLPF that do not make SEC filings? How does one determine which OTC issues are “pink no information”?
New rules will affect your ability to buy and sell “Pink No Information” securities, including at E*TRADE
On September 28, 2021, new requirements take effect that will impact the market for—and value of—certain “over-the-counter (OTC) securities” you currently hold or have held in the past. The new rules apply to “Pink No Information” OTC securities of companies that fail to publicly report and keep current financial and other company information and will restrict the ability of U.S. brokers, like E*TRADE from making these products generally available.
Some background on the new requirements
The Securities and Exchange Commission (SEC) recently adopted amendments to SEC Rule 15c2-11 governing the submission and publication of OTC quotations. These amendments will prohibit broker-dealers from submitting or publicly disseminating bid/ask quotations for OTC securities of issuers that do not meet enhanced information filing requirements.
Securities of issuers that make the required information publicly available by the deadline in the rule should not be affected.
What these changes mean for you
Starting September 28, 2021, you will no longer be able to buy or sell “Pink No Information”
I don’t think those issues are at much risk of being added to the “Caveat Emptor” list, at least at this time. Here’s how you end up on the list.
https://www.otcmarkets.com/learn/caveat-emptor
Really have to have some dubious circumstances to get on this list. Here’s TD’s list, for example. Odds are there is nothing, or close to it, that you would ever trade (although I do own one). https://www.tdameritrade.com/retail-en_us/resources/pdf/cesecuritylist.pdf
I have some questions about the $50 and $100 Preferred shares page.
In the header, it has “liquidation” and “call price”
While it’s pretty obvious what the numbers mean, I guess I am just trying to understand the terminology. On some level, aren’t those terms interchangeable? Does ‘liquidation’ refer to the original issue amount? And ‘call price’ is obviously what it’s worth today, if called?
Will the call price on some of these continue to move upwards, or are those fixed amounts related to the initial terms of the issue? What causes the ‘premium’? Can the ‘call price’ go back to ‘liquidation’?
And other than low yield, low float, and relative illiquidity, why would issues such as IPWLP, which has a liquidation of $118, be sitting at an ask of $100 on TDA (and a 52 week high of only $106)?
I guess the real question here is, assuming the issue is never called, am I at risk of capital loss if I needed to sell at some point? Even if I had a several month timeline in which to execute a sell?
Mark: In general, ‘liquidation preference’ and ‘call price’ are the same, but they don’t have to be. They both are set in the prospectus, so be sure to read the prospectus before you buy, to understand what you’re buying.
Re “assuming the issue is never called, am I at risk of capital loss if I needed to sell at some point?” I assume you mean ‘at risk of capital loss when I choose to sell.’ You risk capital loss on all preferred issues I am aware of. The probability of that risk materializing is greater or lesser, depending on the issue in question and what’s going on in the larger market.
Mark, in general for most new issues they are the same, (prospectus would state the values of each though) but older ones they arent and the words have very different meanings. Liquidation means the company is liquidated lock stock and barrel. Cease to exist. Redemption price is the actual call price when company no longer wants it outstanding. Liquidation in a perfect world means assets are sold off, bond holders are paid in full, preferreds get their liquidation value in full, then the rest is divvied up amongst the common shareholders. Less than perfect could mean zero for preferreds and common no matter what the liquidation states.
The premium was actually “the norm” back then. It was an attempt to serve as a disincentive to ever redeem them, or at least preferred buyer at IPO would see a small cap gain for the inconvenience of a redemption. Preferreds had more power back then as most were allowed equal voting terms. Companies realized over time they could issue preferreds with less protections and in turn have done so.
As far as IPWLP goes, I see your thought process many times with posters on SA. Dont equate “under par” with value. Current yield environment in relation to issue yield of preferred along with any expectations of a call all factor into the pricing of the preferred. And that is on top of any market volatility and or buy/sell imbalance in the particular issue. IPWLP at $94 is not what I would call excellent pricing value. This issue has been around for 80 years and if my memory serves me, a tender offer well under $80 was offered several decades ago that roached out some of the float. So yes, your capital could be in jeopardy if you needed to sell. One just doesnt know ahead of time. So for IPWLPL, or any other issue, no the redemption price can never be lowered to the liquidation price. They are different terms for different outcomes.
Yesterday, for some reason, after announcing their 50¢ reg div and another 2.50 special ( after last month’s 3.00 spec), RILY dropped like a rock.
Grabbed more & sold for 11% profit in less than 24hrs — off the charts annualized, so to speak. Now, if it can drop over 3 bucks, I’ll have time to buy and grab the div by 5/13 (ex 5/14) This is the 2d quick turn around since 4/21.
Papa needs a third.
HA- # 3 — they dropped again today- another buy for me- probably won’t get to do another sell before the ex, but that’s ok. Wouldn’t mind another jump of 5-6 bucks tho. Crazy movement.
Gary,
Thanks for the heads up, i grabbed a bunch at $68 and made a couple of bucks per share. Thx for sharing👍
And –sold another batch for 11.3% one-day profit – up $8 !! Crazy.
4 more trading days before ex-
yeah that was really weird i am up $7 a share about 11%.
Any news on NEE-K? It is trading as if a call has been announced.
I have the same suspicion but am not able to find any news on NEE-K.
I think it’s another DTJ situation. Folks moving on to other opportunities in anticipation of a call. They called a lower coupon preferred in October.
I picked up some at 25.31 with some spare cash. Worst case it gets called and I make 2 cents per share.
What is the deal with CNIGP?
I noticed it is being bought out, and a change of ownership means they can buy it back at $25, but it is trading at over $28. Quantum says it is a $20.75 issue that pays very little, and matures in 2026 so there would be nothing to be made even holding to maturity.
It can be converted to common shares, but those are just at $23.50 so it is hard to see why it is trading as high as it is. If you add the remaining dividends, and assume you could still redeem at the current price of $23.50 then you would only come out close to even for holding it 5 yrs.
$29.70 + accrued dividends at closing for CNIGP – “Additionally, as a result of the merger: each holder of shares of Series A Preferred Stock will be paid an amount equal to $25.00 per share of Series A Preferred Stock plus an amount equal to any accumulated unpaid dividends then outstanding; each holder of shares of Series B Preferred Stock will be paid an amount equal to $29.70 per share of Series B Preferred Stock consisting of $24.90 in respect of the Series B Preferred Stock liquidation preference and $4.80 in respect of the conversion right of the holders of the Series B Preferred Stock, plus an amount equal to any accumulated unpaid dividends then outstanding; and each holder of shares of Series C Preferred Stock will be paid an amount equal to $25.00 per share of Series C Preferred Stock plus an amount equal to any accumulated unpaid dividends then outstanding.”
I got a relative ass load of this bought when merger announcement first came out. Projected to finish merger early Q1 2022. But if deal falls through look at below!
Yeah – I only have a small amount. As you said, the risk is if the deal falls through it will crash.
That said, I received the annual meeting info a few days ago and Just voted my shares to approve the merger. I know it is a drop in the bucket but made sure I voted
It is trading well off that $29.70.
The former AG of LA is calling for an investigation into the deal so that might be why it has ticked down some.
These deals never trade at redemption price prior to merger. Common or preferred stock. As the deal is never done until its done. The common pretty much has the same meat on the bone as convertible. Its trading about where it should considering its just in the inital fact finding stage.
https://www.dps.ny.gov/Corning-CT_Merger_Fact_Sheet.pdf
Always ambulance chasers out on every proposed merger.
Gambling a bit on GMLPP trades. Had bought 400 at different prices for an average of about $23.40. Sold all today at $24.60. PFF is still sitting on 443,000 shares (they actually added a few hundred shares over the past week) and it seems like they are indeed waiting for the official Form 25 delisting notice before removing GMLPP from their holdings. The Form 25 was going to be filed “on or about May 3”, so it’s behind schedule at this point. But unless they cancel the de-listing, which would seem odd, it seems pretty likely to me that I will have a chance to repurchase below $24.60 when PFF starts selling. If I’m wrong, I at least got a decent 1-week gain.
Also worth noting that ex-div is May 7, so don’t get too excited when the price drops $0.50 on Friday!
Karma these are interesting plays as many scenarios have happened before. Im still holding. It could sell off two additional times. As you mentioned, and if it gets held up for a considerable amount of time untradeable, and then people dump when OTC ticker is finally assigned. Sometimes its assigned quickly and other times it can be months….Sometimes the low point is just after first announcement which means its low point may have already been had.
Bought ’em back for $24.16. Let’s see that de-listing notice already, New Fortress Energy!
If you sell and buy back for a quarter profit every day, that aint bad either!
SCCC had a nice move up. Took some off the table near the close.
Sachem Capital is a great little company and this note has performed well…kudos!
RF-A looks priced for a call but I haven’t seen anything announced. Did I miss it?
Intent to redeem announced a couple days ago. I give a 99% probability to a redemption on 6-15. Should be most if not all.
Thanks to all for the great pointers. I will start my journey.
Bonds- in general:
https://www.treasurer.ca.gov/cdiac/seminars/2008/20081002/1.pdf
I am new to preferreds. I see there are terms used. What is the best way to learn the terms and nuances with preferreds. Books? Web sites?
Go to Quantum Online (QuantunOnline.com).
They have useful info when you’re learning the ropes. The “Educational Information” includes a glossary. Use what you learn there in conjunction with III. Happy investing.
Another thought for Createbone – If it’s specfic terms you’re wishing to understand, you can try taking the term to Investopedia and see if you can get a true definition….. Interesting nhc – I’ve been a subscriber to QOL for almost 8 years – never knew they had a glossary… how about that? I see it now in the dropdown under Information…
Doug Le Du’s “Preferred Stock Investing” has a lot of good info, https://www.amazon.com/Doug-K-Du-Preferred-Investing/dp/B00HTK0Y1E.
… which you can download free at https://www.preferredstockinvesting.com/v5/pages/resources_main.htm
A financial website, Google, or this forum. Quantum Online has the data but no education.
Be aware that most people use preferred stocks for long term fixed income, The discussion on this forum is often geared toward shorter term trades, which is not the norm.
Investopedia. Type the term you want info on into the Investopedia search box.
Createbone: A few REALLY important points about preferreds can be stated with just a few sentences. These are issues that newbies often miss and end up being expensive lessons. These are broad generalizations and there a few exception, but stick with the main rules until you gain more experience. This is FAR from a comprehensive list, but it mandatory IMO before you plan to buy your first issue:
1) Preferred yields are correlated to company risk as perceived by the market. Same as for dividend yields and bond yields. Higher yielding preferreds have a higher default risk that lower yielding ones. There are no free lunches
2) You absolutely, positively MUST understand when an issue is “callable” and factor that into your purchase price. We see people buying issues every day for say $26.00 that are going to be called shortly for $25.00, causing the buyer to suffer a $1.00 capital loss.
3) You absolutely, positively MUST use “limit” orders when you buy or sell them. If you use a “market” order, you might end up paying a lot more than you planned for when you buy one. Stated differently preferreds are relatively “illiquid.”
4) Ignoring default risk and call dates, preferreds fundamentally correlate to interest rates just like bonds. When rates rise, preferred prices fall. And vice versa. Preferreds with the lowest coupon yields will fall the most, which is very pertinent to today’s new issues that are coming to market with record low yield. Financial math determines this in advance, so there is nothing mysterious about it.
Since preferreds with the lowest coupon yields fall the most in rising interest rate environment, is there a way to determine when they are a buy after interest rates have stopped rising or even starting falling? It also seems the investment grade preferreds have the lowest yield. Do they fall more than higher yield non-investment grade preferreds in a rising environment?
Createbone asked: “ . . . is there a way to determine when they are a buy after interest rates have stopped rising or even starting falling?”
CB, lets back up for a second and take a broad brush approach to preferred investors. There are many different objectives that buyers have, but here are three common ones.
1) “I don’t care if the principal value drops, I just want to have a secure income stream.” Investors with this objective have to accept the preferred they buy today for $25 might fall to $12.5 in an extreme case of rising interest rates. And they must be confident they will NOT be compelled to sell out and take a large capital loss. They understand the issue might never be called and will never make it back to $25.
2) “I don’t mind a little bit of principal price changes, but will try to sell out if I think values will fall a lot due to rising interest rates.” Inherent in this approach is the belief that you can correctly forecast future interest rates.
3) “I am going to “flip” preferreds for $.10, $.25, $1.00 a share, maybe collect a few dividends along the way, but might buy a lot of issues that I would NOT consider holding long term.”
Each investor might be a combination of all three types, but must understand the objective before buying a particular issue. The reason for outlining the three broad buying objectives is directly applicable to your question. Implicit in the question is the ability to forecast interest rates. You might stop by the “Interest Rate Forecaster Hall of Fame” someday. It is in Cooperstown close to the Baseball Hall of fame. It is an empty lot because it has NO members! If an investor knew with 100% certainty the future path of interest rates, he/she would be running a multibillion $ hedge fund. To your question, IF an investor knew when rates have stopped rising or even started falling, you would want to load up on the lowest coupon interest rate issues. They would be the largest gainers as interest rates fell. Once again, I am ignoring default risk which is a whole other topic.
You asked: “ . . .investment grade preferreds have the lowest yield.” Yes, there is a direct correlation between rating/risk at a given point in time. Today a high quality, high rated issuer can go out like USB-R @ 4.00%, whereas a company with one foot inside the bankruptcy court door like FTAI-C pays 8.25%. Ignoring the risk that FTAI might default, USB-R will fall a lot further if/when interest rates rise. Once again, this is all financial physics, nothing mysterious about it.
Well said Tex.
When the fed inverts the yield curve, that’s when rates will have stopped rising.
Not a fan of FTAI? Me either. The financials are a wreck but the real problem is the corporate governance and structure. The company exists for the benefit of its manager, Fortress Investment Group.
Thank you.
Thanks to all for the great pointers. I will start my journey.
Createbone- Now is a good time to learn and build a shopping list. Not much value to actually buy now. It is a less “perfect” market than common so you will see things from time to time that make no sense. As was mentioned before their are buyers willing to take a guaranteed loss of 3-4% on issues that will be called in next 6-9 months so if you owned them you would want to sell for sure. Down load the sortable sheet on this site to see the universe of issues.
Potential Flip?
TECTP just declared dividends for May. This is a FTF issue. Trades under par ($10), but not many shares trade. I picked up a few grand to hold and flip. As always, do your due diligence.
Can’t find much about it. 9% divvy is both tempting and scarey.
You can go to SEC filings and research under preferred ticker. A few insiders own over half the common stock float and an 80 year old man rules the roost apparently. But collectively they own only 2% of the preferred float. Had a reverse split a few years ago. Small bank outfit and into financial services. Personally not my cup of tea, but everything that is crap that is thrown against the wall seems to stick anymore. So Im following NWGG for 300 at 9.74. Relative big seller out at 9.75. Useless factoid. It only dropped to around $7.40 during last March preferred crisis. It barely sneezed compared to carnage most liquid preferreds endured.
It’s a flip
It’s a fixed rate and
It’s a floater
It’s illiquid
It’s under par
It’s a hold?
I noticed that there was some buying after my post. Was it Grid? Ha ha
It seems to hit $10 sh then puke down, so 1/2 my position will be sold just slightly under $10 as possible after ex date.
It’s slim pickens right now, so tough to find deals.
300 shares only, NWGG, that was my limit, ha.
Volume went from 4.5k shares to 13k shares in last few minutes. Volume yesterday or was it Tuesday was ZERO shares (ha ha). All the “penguins” are jumping in like they used to say on CNBC Squawk Box. Hee hee
NWGG, Looks like all us penguins earned us a fish dinner on the one days jump. Since this penguin doesnt eat or like any kind of fish, I think I will just toss these shares in the junk drawer and consider it a tiny yield spicer to the stash.
UPDATE
I sold all of the rest of TECTP today at $10.13. I didn’t think it would get this far over par.
I made two steak dinners on this one. Hopefully others were able to benefit as well.
I am thankful to all who contribute and have made several steak dinners on ideas from user posts.
Thank you to everyone who contributes and shares with others.
NW, Good tip on this one. In fact this penquin is still in this one. Gonna hang on a while.
WTREP was being dumped at
25.25 today. I bought some more. Need more like a hole in my head.
I already had a big position in WTREP but added substantially today. There has been a big seller in the market for some time. If buying at or below 25 stripped I can’t find the risk.
Still nothing at SEC that would define merger timing. I think we just wake up one days and it’s done.
Bob, I am still hoping for a gratuitous bonus couple payments in sympathy for the preferreds voting to approve merger. Seems the honorable thing to do. But at $25.25 I dont have to count on or trust them as we are pretty much money good here even on a call notice.
Gridbird, Does SESCF pay interest It doesn’t appear that it does. How can it not pay when it is exchange traded debt and the preferreds pay divs?
It pays interest. Why would you think otherwise?
Probably because notice is not being sent to brokerages of upcoming ex-div dates and pay dates. At Etrade, the ex-div date shows from the last one before being delisted.
Vanguard shows XD of 4-14 and last pmt on 1-30.
Yeah, Etrade shows 4/14 as the last ex-div date too. But it’s 4/14/2020.
I don’t think notices get sent for ex dates for delisted baby bonds. AFFT/AFFS still show ex-dates from 2018, at least at Etrade.
You are right. Vanguard is showing 2020 as last XD date. But from the trading chart it’s pretty obvious when the XD was.
The dividend payments are current.
They get paid by wire and not automated once they get delisted, which is why there is no date information ex-date, since there is no settlement period with a delisted security.
Central Parking is the same way.
Justin that is an excellent answer to a question that abounds with these issues. I own several of these types. It never fails as they always pay. Farmer, for example with SESCF, I got my dividend deposited guess when…Apr. 30, yesterday from TD. I have some in another brokerage too but havent bothered to check, yet.
One may notice delisted preferreds generally have posted ex dividend dates but issues such as SESCF do not. The reason is SESCF is not a preferred, its exchange traded debt. In order for a true preferred to pay a dividend, the board of directors must vote approval to pay it. This creates the date then. Exchange traded debt (they are lazily lumped into preferred category but technically arent) is a contactual agreement. The board does not declare payments on these, they are bound in terms of prospectus.
TECTP ex date? can’t locate it.
thx
Per the 8K
“On April 27, 2021, the Board of Directors of Tectonic Financial, Inc. (the “Company”) declared a quarterly cash dividend of $0.225 per share on the Company’s outstanding shares of 9.00% Fixed-to-Floating Rate Series B Noncumulative Perpetual Preferred Stock. The dividend is payable on May 17, 2021 to shareholders of record as of the close of business on May 7, 2021.”
https://www.t.financial/investors#SECFilings
Unfortunately it chose today to breakout. I guess NWGG’s post finally took care of the big seller at 9.75. I got a half position yesterday at least.
FWIW
I sold some of my “flip” portion at $9.94 sh for TECTP. I choose the “highest cost” lots to lower my basis even further on my remaining shares.
I have gotten no less than 4 corrected 1099 forms now that I’ve ventured into the interesting holdings mentioned on this page. Any tips on how long I should wait to be sure I have all of them so I don’t need to file multiple amended returns?
File for an extension, then you have until Oct 15.
Just be sure to pay projected tax with an extension- or pay the late interest.
Or, file by 5/17 on time, and hope there is no more. If there is, THEN file a revision. Maybe less, or the same paper work.
Not a free ride.
You have 3 years to revise the return. So, as long as the amounts are small, and not affecting the net amount to get back or pay by much, just file after 1/2Q further of dividends and revisions – say near end of the year…
File by the due date – then just wait and file an amended return in November. That is a safe timeline
I use HR Block Tax software (I am sure turbotax works similar) and it is easy to use it to file an amended return near the end of the year.
I have done it for the last 8 years or so
Which broker? Most broker’s are finalized by Mid-March.
if you got 4 corrections in February, i can somewhat understand it.
If you got corrections going out to April, depending on what was corrected, it could have been either your broker or the issuer.
Apollo and ADT issued a correction really late, and then one vendor tripped up over this….
The CUSIP in the document is for the common and not the preferred…
https://catasys.com/pdf/Form_8937_OTRK_Preferred_Dividend_02282021.pdf
I got 2 from tda, 1 from vanguard, and 1 from Robinhood, all after March 8 when I originally filed. Most correcting how dividends/return of capital are classified. 3 making me owe, 1 getting me money back. So it’s ok to just save them up and wait awhile? Thanks!
They should be final by now, with one exception. Vector Group symbol VGR always issues a correction in October.
Which securities? After March 8 is on the late side and only happens to a handful of securities each year.
AM, Cssep, and whf, and from vanguard I don’t know because they didn’t mark the change and took away the original.
You can somewhat prevent yourself from being blindsided in future years by knowing what to expect to be corrected and what will not be.
WHF issued their stuff March 3.
they publish it here.
https://www.whitehorsefinance.com/tax-info
CSSEP is an odd case. Did they have ROC in 2018/2019? That one I expected to be ROC since day 1.
Signature on the form was early January. Not sure when it was published.
They also published it to an unexpected section of their website.
https://ir.cssentertainment.com/corporate-governance/highlights
Search for “8937”
AM is kinda surprising. They publish their estimated rates in January, and it doesn’t look like they have made updates since then.
The IRS requires issuers to publish it within 45 days of the dividend.
They publish it on this page. (see bottom of the page)
https://www.anteromidstream.com/investors/distributions
Next tax season, I can probably provide answers for most securities as to whether to wait or if it is ok to file your taxes because every security has been released or not.
That’s great info to know, thank you!
Most of my corrections are for small amounts and don’t affect the taxes owed. I’ve ignored some of the later corrections in the past and IRS never bothered to follow up for no gain. Not that I recommend it.
There is a safe harbor for brokers for $100.00 changes per form, under IRC 6721(c)(3)(ii) and generally, the correction amount has to be sizable enough where it changes the income tax liability of the investor significantly enough for the IRS to expend the effort to do a correspondence audit.
https://www.law.cornell.edu/uscode/text/26/6721
$3.79 B/A spread on AATRL! Someone grabbed 100 for 60.99 at Ask !!
Sell, hold???? Of course, size is 100 x 900 – ha.
So where can I go for yield? I have ATH AHL BHF SYF USM NLY VNO T etc and a bunch of banks. I need 4% ytc. It’s almost like all that’s left are mcreits. I’m sticking w 25 dollar preferreds……..
OPP-A and GLU-A have 4+% YTC and are safer than everything you listed. The incoming APC preferred should also meet that requirement.
KC- GLU-A? Don’t know how you figure a YTC on that at 4%+ as it’s currently callable, has a 3% coupon and is trading at 45 for a $50 par issue… Isn’t GLU-A a dregs issue with only a small amount left outstanding after holders like me had a chance to put them back before they became a perpetual???? They had 2 PUT options as I remember and then after the final put the issue then got fixed at 3% as a perpetual… I also remember GLU talking about calling it just to be rid of it when they issued GLU-B but clearer heads prevailed since the coupon rate was so low for a perp. YTC should be astonomical, but the likelihood of call being meaningful is miniscule…. This seems to be more like a 3% perpetual trading at 3.33 current yield, isn’t it??? What am I missing? Or is it just my memory that I’m missing?
GLU-A: If you pay $45.59 or so (which was the ask when I looked today) and it is called at $50 any time any time in the foreseeable future, the yield to call will be above 4% because you will pick up about 10% of price appreciation.
I’m not buying GLU-A, but he was looking for YTC over 4%, which technically means anything that is currently callable and trading under par, so I gave it to him. He doesn’t have to like it, but he made the criteria. If you ask me, buying a different 5+% CEF preferred a little over par would be a better risk, but the YTC is negative, so literally every other low risk CEF preferred is ruled out.
I actually hit OPP at 23.75 or so pretty hard recently.
Low 4’s do have me concerned. In general I’m a rate ho and would rather pay a premium and get some protection from the coupon. HFRO A was another one like that I’ve done. I’ve never done any Super Mario’s though!
You could buy 6-8% preferreds. Occasionally one of them goes bust but you still net a lot more than 4%. Unless a Depression causes a wave of bankruptcies, in which case 4% issues won’t be all that safe either.
Martin, the safer CEF preferreds will probably not be impaired even in a depression. Underlying asset prices have to fall really far and really fast due to asset coverage requirements – could happen, but not something I would worry about.
Yeah I hear you MG. Case in point? Maiden Holdings. Aren’t they doing a SPAC too??
I do have lists of all and try to keep current. Just sometimes I’ll forget about somebody. I run lists regularly and of late it’s back to the usual suspects. I might see one w an attractive yes then see it’s at 28+ because of a late call date. A little too much you know. The McReits are screening out but I just can’t……..after last March!!
Speaking of depressions… I wonder what is going to happen in September when the moratorium on foreclosures comes off.
Assuming there even is a problem, with real estate inventory near all time lows, banks will put them up for sale and a feeding frenzy price war will break out. Unless they are delapidated houses with cement poured down the sewar lines.
The biggest difference is that very few people with kids will be buying in September because school has already started.
And the number of homes that are in forbearance is in the millions nationwide, and a lot of the homeowners would be smart to sell right now, instead of trying to get caught up by September.
IYP – I almost hate to bring this one up but, depending upon how willing you are to pay over par, how about a blast from our most recent past around here? Perhaps at a time when I should be thinking about taking an 8% profit instead of pointing out its worth, I can’t help but think how cheap QRTEP is right now at 104.90. When a Textainer can issue a 7% 5 year reset PERPETUAL that can be trading at 26.40 OR 5.93% YTW in 2026 and 6.62% current, how can a QRTEP 8.00% with its 2031 MATURITY and a first call of 2025 @ 104 but call to worst being to its 9/18/2027 @ 100, not be a bargain at 7.24% YTW, 7.44% YTM and 7.62% current? Credit too dicey for you??? It its of any comfort to you my wife continues to dial them up almost daily, keeping our UPS guy and QVC TV hosts very very busy…….
A lot cheaper at 101.5 when it was a blast from the recent past here.
Hence the reluctance fo bring it up, Martin. Heck it was cheaper still back at year’s end when I bot it kicking and screaming at Grid’s insistence, but let’s face it, this issue, like WCC-A was not originally priced by market forces…. It was a giveaway to shareholders as part of a package and initially, price was held down by the fact that many original owners didn’t know a preferred piece of paper from a perforated one so they sold to monetize their gift from management… Only now is its price coming into range of what it should be worth based strictly on market forces… When you think of the recent issues that have been priced with coupons higher than 7% and with yields remaining above that level now, if QRTEA were to come to market today even with a plain vanilla perpetual let alone a 10 year piece of paper, I personally don’t think it would be included in that group…. but that’s opinion, and one worth just about as much as a hole puncher needed to perforate a piece of paper.
If you’re willing to get over 4% with no call, consider PPWLO and PPWLM (Pacificorp, owned by a Berkshire Hathaway affiliate). Great credits with 6% and 7% coupons respectively. Two downsides. First both, like all of the “UTE illiquids,” are thinly traded with comparatively low outstanding volumes and getting in at a price that generates more than a 4% yield requires persistence and a lot of “watching.” Second, there is minor risk associated with the utility’s liability for Oregon fires last year. They have reserved from this and are well capitalized. Also, the legacy preferreds from Ameren (and its Union Electric subsidiary), Connecticut Light and Power, NSTAR, etc. offer mid to high 4% yields. All are callable and have been for decades. These too are from strong credits and are thinly traded. Ameren recently called its two highest coupon preferreds so more calls may be in the offing. Be careful not to pay much more than the redemption price (most are $100 issues and, if redeemed, the price often is higher than $100). If you want sock drawer issues that yield considerably more than 4% and you’ve got the time to stay on top of bid-ask, these could work for you. Good luck
Oldman, If there is a preferred stock heaven, I just punched my ticket into it today in relative terms of what I just bought. I snagged a 7% non callable, cumulative, Baa3, $100 “par” at $105. And here is the kicker. I can also redeem it at $100 anytime I want. Which I dont plan to of course. But wow, I wish all preferreds had terms like this! I want to see if anyone can guess what one it is. The last time a 100 share block transaction occured was way back in 2009.
Nice Grid! This is why you’re the “Dean of Preferreds” and the master of the “Steak Dinner Quick Flip!” I have no idea what you bought but, like others, will line up for the same deal, possibly in 2033 if the “transaction pattern” continues (then again, I’ll be well into my 80s so I’ll let my heirs know to keep an eye)! Kudos!
Easy. bofa pref
MCG, Please tell me you knew this on total memory without any computer skills and then I will be really impressed!
I’m familiar with the pref, pulled it up and confirmed via the last trade
MCG, you always seem to have good access to info, would you have ability to find out what the tradeable float is left outstanding?
Does anyone want to tell us the symbol?
David its BACRP. Its The Series B preferred issued long ago. BoA delisted it moons ago I assume. Probably from the float being roached out and most were long ago tendered by owners or bought back, or it was acquired by an acquisition. I know all the terms of issue, but havent dug into the actual history of its origin. Some of these were renamed to BoA from acquistions. I dont know if this was one of those from an actual acquisition or was actually issued by BoA.
Yup, that is the BOFA 7% Non-callable preferred with ticker BACRP.
Well done, Grid. I have kept that one on my watch list but you beat me to it!
Also want to give a shout-out of thanks to Citadel West for mentioning the 8.25% FATBP monthly preferred back in February that was issued by fast-food franchisor FAT Brands (Fatburger, Johnny Rockets, Elevation Burger, etc.) in the Summer of 2020.
Been an incredible performer since I got in. Of course, I wish I had bought more.
Thanks, Citadel West!
Rob, I thought it was unbuyable as I had tried. Then I noticed a few 10 share or so squirts so I tried. And then I thought I snagged a few shares a few times only to see some entity stole them by a tenth of a penny. Then today I decided to throw out a big number and see what I could get and I got lucky and it hit for some reason. There never is an ask price on it ever that I have seen.
How does BACRP have a $115 bid and $8 ask? and 100/100 And it showed a ‘previous days close’ the other day of $8 and a 1200% jump in price.
I notice after hours on many preferreds that the ask goes to $4. Is that just a default place holder number when there is no ask?
bad data at your broker, currently there is no ask
Gridbird,
I finally got my SESCF exchange notice from eTrade just now:
Seaspan Corp 7.125% 2027
Cusip: 81254u403
Cutoff Date: 05/03/21
If you wish to participate, please contact ETRADE at 1-800-387-2331.
Terms: 1 For 1 Exchange ($25 Represents 1 Share)
Notes May Be Tendered Only In Minimum Principal Amount $25 And In Integral Multiple Of $25 In Excess Thereof.
Atlas Corp Is Offering To Exchange Up To $80,000,000 In Aggregate Principal Amount Of Our New 7.125% Notes Due 2027 (The Atco Notes), which Have Been Registered Under the Securities Act Of 1933, as amended (The Securities Act), for Any And All Of The Outstanding 7.125% Notes Due 2027(The Seaspan Notes) Of Its Wholly Owned Subsidiary Seaspan Corporation (Seaspan).
Bill, I got mine yesterday finally also. It will be interesting to see how many tender. Since its delisted it would also be interesting to know how many are just in “mom and pop” hands now. A company could tender $100 for a $10 par preferred and 20% wouldnt tender just because they arent even aware of the offer.
I find it strange how this tender offer just trickles in through different brokerages. I still have not received anything from TDA, but then again, I only got notice that COWNZ was being redeemed AFTER I already had my shares redeemed….. (I knew ahead of time because of this site and decided to just ride it out till redemption since there didn’t seem to be any benefit to sell early. Nevertheless, I still find it odd (annoying) that TDA waited till redemption to post notice of redemption)
I’m not planning to tender my SESCF as I don’t have enough shares to matter, but with the expiration on 5/3, it really has me wondering what is up with TDA.
I’m pretty sure I never received notice of STAG-C either. I’m still fairly new to the preferred arena, so I just don’t have much experience with holding called shares until call date.
Are they always this bad at giving notice of redemption / tenders?
Has anyone else experienced this with TDA, or is it somehow related to the number of shares I own. I usually don’t end up with more than 100 shares of any particular issue. Do they treat holders of less than 100 shares differently?
Don’t count on the broker to notify you, often they don’t it’s not a high priority for them. If you want to accept a partial tender you have to notice for yourself and then call the broker. Unless it’s 100% tendered in which case you don’t have to do anything the broker typically does it without asking.
I own SESCF at Vanguard and IBKR. Both notified me of the offer and provided the means to tender online.
I split the baby and tendered the Vanguard shares but will hold the IBKR shares and see what goodies lie ahead.
Anybody trade the new HROW PFD?
I cant find it on ant platform yet but on Bloomberg there are plenty of trades.
No ticker yet. Your best bet is to call into bond desk and give them the cuspid and see if they will round them up for you. It appears to be going at $24.85.
http://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C972869&symbol=HROW5167784
Thanks Gridbird
I have posted observations in the past about the current status of business in my sales area of the western / west coast on here before and sometimes it has been of interest to a few people.
Currently on this website there is a diverse group of investors who fall into certain groups of investing. There are those like Bob in DE and Chuck P and 2WR and others who look to stay invested for the income and tend to not be overly concerned about day to day or even long term fluctuations in the price of their stocks as long as dividends continue to stay the same. Another group maybe like Tim and Grid and maybe myself who have core holding for the dividend income , but have a certain allotment we invest to add to our income. Then there are others who fall into other groups who follow yield etc.
When the next shock to the market comes I don’t know or pretend to guess, But the excesses with digital coin, SPAC’s , New Jersey Deli’s with one location listing stock for millions of dollars with 37 thousand in gross income and the low rates combined with free money something is going to give.
Lately here I have been quoted 80.00 Plus by local suppliers for 1/2″ 4’x 8ft CDX, 103.00 for for 5/8″ 4′ x 8ft fire rated CDX , over 110.00 for 1-1/8″ T/G Studi-foor etc. I just quoted a hospital job to distributors in Utah with a 7 day hold. Some of my suppliers are saying quote is good for 24 hours. How can long term projects that are years out like mult- million dollar hospitals plan to build? New home subdivisions are being put on hold.
A national account roofing distributor, br. manager told me they are no longer stocking OSB and send people to HD even if it means losing the sale because with the limited availability and the time to get they don’t want to be stuck with high cost inventory if prices collapse. Several distributors told me its limited availability for roofing, insulation, steel studs etc. with manufacturing delivery times of 1 to 2 months. Several distributors have even had the wholesaler and a competitor try to buy stock to fill orders for their best customers.
You think of the broader picture, as one supplier said look at the insurance companies, In the upcoming hurricane season, can insurers afford the cost to repair and re-build thousands of homes at current prices? what about businesses locked into long term contracts say with Home Depot , Amazon, Whirlpool etc.? Last time I saw a combination of higher costs , limited availability, and companies committed to long term contracts there was a wave of BK.
Just saying folks, buyer beware
Charles—I’m mostly a buy n hold investor and just don’t have a dividend capture mindset. In this market I’ve been keeping an approximate 20% cash position. Not exactly ideal, but I keep waiting for a decent correction to find some decent buys. The problem is, when does the next correction arrive? Is it in 2 months or 2 years? In the meantime, I make zip on my 20% cash.
The Fed keeps saying (over and over) that they will not be raising interest rates and they keep buying enormous amounts of government securities. They constantly say that current inflation is only temporary. That kind of places relatively small investors like us between a rock and a hard place.
I sort of attempt to keep a balance between lower investment grade and almost investment grade (BB+) on one side and N/R or low rated securities (no large positions) on the other side. Don’t know if that’s a good strategy or not. Unfortunately, I wake up too many mornings wondering if, when I turn on my PC, it’s about to be 3/20 all over again. That’s not a good feeling.
Randy,
The point is, there is a lot of focus on interest rates. Only thing people talk about. My truck just died with 495,658 miles on it. I don’t care at this time if rates are low at my local credit union. A new F150 stripped is over 30,000 if you can find limited availability at the dealer. They can’t force me to borrow.
I can make do ride sharing with my wife or pull cash out of the bank to buy a used truck.
I have seen this all before, and yes the last time between 2001 and 2008 was quite a long run if you waited. But, it’s been a long run now since 2012 and things are getting crazy
Charles, thanks for your color and perspective. I have a couple of friends who run active, fully invested, high-yield bond funds and they are certainly not bullish here. These guys have been around for several crashes in credit and while they don’t see impending default risk, they also know that good things don’t happen in high-yield when credit spreads fall under 400 bps (let alone 325 bps). We may stay here for awhile but the risk is certainly to the downside. Like several on this site, I have been letting my called securities go to cash, waiting for spreads to blow-out. Patience is our advantage.
Charles-
My son is an engineer in the building business in NV– in the last couple months he has noticed a definite reduction in daily phone calls for estimates across the board, and some jobs placed on hold- all because of the high cost of materials.
We’re hoping it turns around and does not get great recession ugly.
I’m at 40% cash & equivalents, so a drop like last year would be a buying opportunity. That said, to maintain my sanity, and to give me a reason for spending time here and elsewhere in the investing media, I have been buying small ~100 share positions in quite a few of the new offerings. even though I know if I held out for the next drop, I could do a lot better. I tend to be a buy and hold type (am probably one of the older readers here), but do a little shorter term stuff like RILY, PRU, RTX (common & a little call selling) that have bobbed around and are going very well now. Also, long term I have a boatload of T & VZ.
Gary,
Been playing in the oil pipeline and services and refining because of the recovery in the economy. But with gas going over 4.00 a gal. and oil over 62.00 in the commodities mkt. its going to squeeze the refiners.
Been in and out of HEP, KNOP and still holding MMLP
Transport doesn’t need higher fuel costs. We get closer to 5.00 a gal we will see the affects.
Charles and Gary,
You’re both spot on, however, I am trying to take comfort in a few key phrases a senile individual told us: “I Will Not Add Tax Burden to Middle Class” and “We’re not getting rid of fossil fuels”.
Builders choosing to pull back on development and building due solely to the ridiculous cost increases in materials, gasoline – which is up close to or more than a dollar in many locations, property value reassessments happening which are driving up property taxes due, insurance costs on the rise, minimum wage mandates and shaming driving up costs and closures of goods and lil guy businesses, etc., etc., etc. All just coincidental timing over the past few months and for the forseeable future. Nothing to look at over here.
The safest bets I’m placing are in the financial, industrial, and tech sectors. 5 yr charts of KMI, XOM, and EPD. The near definition of dead money if cap appreciation was your game.
Charles, thanks for the real-world data points. Another for you, from the world of the homeowner: 8′ length of tight-knot 4×4 cedar = $54 at my local lumberyard (Dunn Lumber here in Seattle). Yeeeee-owch!
About one million shares of GMLPP have changed hands in the past two days. There are 5.5 million shares outstanding.
Anyone else holding BRG.PC ? I fully expect it to be called at first call date of 7-19-21 with next ex-divy date of 6-24 what could I expect at this point for total payment?
Do they announce call 30 days prior? or is it announced on the first call date?
Just wondering if I should hold to call like I have been doing or sell now
Charles – historically based on BRG.PA BRG has not called in 100% of the outstanding all at once, so there’s a decent chance they don’t do C entirely on 7/19. Having said that, if I remember correctly, C’s a smaller issue so maybe the odds of a 100% call are higher. In any event, call has to be done upon 30 days notice.
I hold BRG-C and concur with 2wr and plan to hold in case not all is called.
So if I am estimating it correctly, if they announce a call on June 18th or the 21st ( the 19th is a Sat. ) then I am guessing with the dividend still to come it’s about .60 so as of close today its about .07 over what I would get to hold.
Once it goes ex- on June 24th it would drop to 25.13 if call was announced.
The BRG.PA was a larger amount of shares and it took 2 calls about 4 to 6 months. This is a smaller amount of shares and it goes to current yield Plus 2% in July 19th 2023 so there is a incentive to call it, but they have time.
They have recovered to almost 100% of rent collection but since call of the BRG PA have they accumulated enough cash or brought debt down to borrow at a lower rate to call this completely ?
Talk about sitting at the poker table.
Does anyone know how interest payments from Canadian securities are handled tax-wise to a U.S. investor? I know the Canadian preferred dividends are complicated with Canadian withholding…
Is the same true for Canadian interest payments? I am thinking specifically of the interest earned on the new BPEH perpetual(!) subordinated notes from Brookfield BRP.
The prospectus is here, but interchangeably uses the terms “interest”, “equity” and “dividends” in a way that I do not understand.
https://www.sec.gov/Archives/edgar/data/1533231/000119312521111866/d31499d424b5.htm#supp31499_11
Thank you, Bill
To answer the question specifically as it applies to BEPH, it should be treated as a QDI dividend payment (as if it were preferred equity), with 15% withholding.
GMLPP is being delisted because “NASDAQ has informed GMLP that the Preferred Units no longer meet the listing requirements of NASDAQ Global Market Rule 5450.” Below is a link to Rule 5450. I’m curious if anyone can figure out how GMLPP violates the rule (insufficient market makers?). Would be useful to know to sniff out the potential for delistings in future acquisitions:
https://listingcenter.nasdaq.com/rulebook/nasdaq/rules/Nasdaq%205400%20Series
The problem is going to be somewhere with rule 5450 based on this…
b) When the Primary Equity Security of the Company is not listed on the Global Market or is not a Covered Security, the preferred stock and/or secondary class of common stock may continue to be listed on the Global Market so long as it satisfies the continued listing criteria for Primary Equity Securities set forth in Rule 5450.
This almost seems to happen with any company bought out and preferred to remain outstanding. These make great trades at proper entry point. The company is clearly stronger since NFE acquired. Golar had a serious debt wall they couldnt over come and its behind them now. Guessing the price low point is hard on these as it depends on when the big guys Ptrader referred too dump from being delisted. And then when it becomes delisted one may go through a period of time when it is nowhere to be found. You have to avoid the freakout process of this and let it play out.
Sometimes you get better return buying the day it finally returns on OTC. SESCF was a great example. An opposite example was a 5th Third Bank acquisition that led to delistment of the acquired bank. I bought day before delistment at $24 and first day of OTC trading a month later it was selling at $26. Throw your dart! Im watching myself. Sometimes I blow it and wait too long and dont get in. But that is fine as it isnt like this is a 9% Microsoft preferred, ha.
As far as it staying outstanding…This info isnt exactly telling, lol…
Liam Burke
On the preferred, they’ll stay outstanding and trade normally?
Karl Staubo
Sure. Yes. So NFE intends to keep GMLP as a subsidiary of MLP – sorry of NFE, and they want to keep the preferred equity outstanding. Those preferred can be called from October 22, and they have not given any signals whether they want to keep it or take them out at that point in time. But in the interim, they will remain outstanding and trading as they are today.
Grid, as far as I can tell, GMLPP satisfies the criteria for Primary Equity Securities. So, I still can’t see how it is in violation.
Bob, some companies keep an orphaned preferred listed after an acquisition/merger and some don’t. However, the only case I can think of where investors were led to believe the shares would remain listed but then they weren’t was Amtrust — but that was a special situation involving fraud and they are being sued over the delisting.
If they were intending to delist to save money, the CEO was clearly unaware. From the last earnings call:
Liam Burke
On the preferred, they’ll stay outstanding and trade normally?
Karl Staubo
Sure. Yes. So NFE intends to keep GMLP as a subsidiary of MLP – sorry of NFE, and they want to keep the preferred equity outstanding. Those preferred can be called from October 22, and they have not given any signals whether they want to keep it or take them out at that point in time. But in the interim, they will remain outstanding and trading as they are today.
Me: Trading “as they are today” is vague but I think most people would agree that delisting does not qualify as trading as they are today. That said, GMLP never explicitly said the preferreds would continue being listed on Nasdaq/NYSE, unlike GLOG which did say that about their preferreds.
it appears they violate this rule:
(B) Stockholders’ equity of at least $15 million;
Total stockholders’ equity (1,292,523) (1,498,261)
here is their balance sheet from last month.
https://otp.tools.investis.com/clients/us/golar_lng/SEC/sec-show.aspx?Type=page&FilingId=14885215-650688-655937&CIK=0001207179&Index=19000
I think you might be reading that wrong. The numbers are in 000s, so that’s $1.3 and $1.5 billion, and all the credit balances, including positive equity, are shown in parens.
The reason is contrived. GMLP was acquired by Fortress Energy and Fortress is delisting and deregistering the GMLP preferred. Saves money. And sometimes there are more nefarious motives at work.
Anytime you have an acquisition you have that risk if the preferred are left outstanding in the original issuer’s name.
Bob, that is the one concern. If it comes a “stigma” preferred like say the Amtrust issues, they just cant seem to climb the wall back to par. Look at the suspended dirtbag AHT preferreds. They are pushing back near par. But they are not delisted. And Amtrust are all well below including the debt and they have always paid, unlike the suspended AHT preferreds.
Throw in the fact this is shipping segment makes it a bit more problematic. These are high “T” type trades with caution warranted. One wants to be aware of the good and bad on these types.
The Amtrust issues aren’t climbing back to par because there is zero public info about the financials of the parent holding company. Amtrust’s 2023 sr. notes were trading with a 10% YTM as recently as October.
Good point Landlord. But there was credit analysis almost 10 months later after going private as AM Best issued it. Plus backdoor analysis has been done in past through Enstar (publically traded) which owns part of it. But my point still is this company still pays and always has paid. And yet AHT is still on death bed and preferreds are higher, but it is one big board still.
Anyone buying or holding the Amtrust preferreds?
I bought some of the Amtrust pref in Sept 2020. I try to follow along based on what Enstar reports. My guess is Q4 2020 seemed break even. I don’t know if anyone noted, but an earlier Enstar filing said that a party was buying the Amtrust pref. I think the amount was 10,000,000 but I find myself happy that the insiders are buying the same securities that I am holding. I recently saw the div announcement so they continue to pay as promised.
I have held AFFT (baby bond) since 2019. The dividend has been paid on time and with the current price near $21.70 I have decent capital gains. Amtrust, as an insurance company, has regulators watching so that provides some small comfort.
There are a few authors on seeking alpha who follow the preferreds.
LMRKP – trading at $25.26 down $0.43 – anyone hear any redemption chatter on this issue?
Fred,
I note that it can be called on 4/4/21 but it does not look likely as they have recently putout a press release on the distribution. They refer to it as Series A.
http://investor.landmarkmlp.com/news-releases/news-release-details/landmark-infrastructure-partners-lp-announces-cash-33
Well a further continuation/confirmation of the rally in equities! Transports hit a new high today!!
BPYPN trading now still under par at $24.30s. Any takers here head of buyout and current 6% yield?
Theta – I”m curious as to your take why BPYPN should be positively impacted by the buyout…. https://bpy.brookfield.com/press-releases/2021/01-04-2021-123026368 says “Brookfield is not proposing to acquire other securities of BPY and its subsidiaries, including existing preferred units of BPY and preferred shares of wholly owned subsidiary Brookfield Office Properties Inc., which are expected to remain outstanding.” BPYPN would be one of those, right? I’m not quite sure what that’s to mean for BPYPN, but it seems as though it might turn out to be orphaned by the buyout, whatever that might mean…. Are you thinking BPYPN will be called? That same press release says flat out that “It is also expected that the BPYU 6.375% Series A Cumulative Redeemable Preferred Stock [BPYUP]would be redeemed at its par value of $25.00 per share in connection with the proposed transaction,” so I did jump in on those at 25.15 but felt that was an aggressive entry point.