Sandbox Page

I will be adding a new link titled “Sandbox” in the right hand menu.

That link will get you to this page.

I had originally set up the “Reader Initiated Alert” page for ‘alerts’. I was thinking this, for instance, might be when a preferred stock is undergoing a temporary selloff and someone wants to let the population know about it quickly. Of course we all (including me) use the ‘alert’ page for general messaging.

I am requesting that we start using the Sandbox page for all general talk, and try to preserve the ‘alerts’ page for ‘alerts’.

I have had a screen up on one of my monitors all week where I see all comments – no matter where they are posted–it is a great page and I wish everyone had a page like that–believe me we all benefit from all the knowledge being shared. I don’t want to stifle any of the exchange of knowledge, but hope to get things a bit better organized by adding the Sandbox page.

451 thoughts on “Sandbox Page”

  1. Any CUBB fans here?
    Well, i just sold my 900 shs at 25.38
    I had bought them 2-3 weeks ago at 25.05
    The old hit and run. I took my .33 gain instead of the div because i want
    cap gain to lower my still large deficit from March. Why pay tax on the div when the cap gain will be untaxed.
    I didn’t hold for 60 days before ex-div, so the Qualified div would not get favorable tax treatment anyways.
    Hey folks, have a safe and a full filling Thanksgiving.

  2. I did a little selling this week on a few things as prices went higher than I felt they should, or that I could buy them back cheaper in time.
    IPLDP @ 26.63
    GOODN @ 27.15
    WELPP @ 97.50

    Had bought some LANDO in the lower 24’s so felt I could, but now sitting on more cash than i’ve had in a while.

  3. A simple arbitrage ……..

    This is aimed more at those new to fixed income investing than the grizzled vets. Today, I sold out a large position in AGM-D for an equal size position in AGM-E. The trades were done essentially simultaneously at the bid on the sale side and the ask on the buy side.

    By making the trade I picked up 15 bps in current yield (not much) but 101 bps on YTC (quite a lot). Usually, same issuer trades mean giving up current yield to get better YTC but not in this case. No tax considerations as I have losses to burn due to April tax loss harvesting.

    Small ball, but it adds up.

    1. Bob, I know nothing about AGM, or indeed about mortgage corps. I see consistently rising debt on the balance sheet. Is that built into the business model: are they financing their purchase of loans with debt (and pfd issues)?

      Looks like their pfd issues are not rated. Is that a matter of not wanting to pay for the credit rating? Any idea how I can judge their credit-worthiness?

      1. When repeated arbitrage turns a 6% yield into a 12% gain then it’s more palatable to take some risk.

      2. It’s a federally sponsored ag bank, part of the far credit system.

        Capital ratios are good. That is a good way to compare banks. Comps would include Cobank and Agribank. Both of those have BBB+ rated preferred.

        Credit ratings are expensive and exist mainly for institutional buyers. I would imagine AGM doesn’t feel they need them in order to sell their preferred.

        Their straight debt is “Investment Grade” per Trace.

  4. anyone see anything on GLP-A today
    moving towards par and down about 6 percent today??

    i believe they raised there div not long ago on the common

    1. Is there an easy place to see CEF’s with their net asset value to see if their price is at a premium or discount

        1. M.R.
          BIF was displayed on Morningstar without logging in; the data can also be seen at CEF CONNECT. I am familiar with the CEF but do not hold it.
          Howard

          1. Howard, I like CEF CONNECT thanks. BIF is my berkshire hathaway exposures with a dividend. May not be a good fit for a taxable account. Mike

    2. Bob; This had been hovering around par but had a 6% spike yesterday. So, today is just a return to its recent range.

  5. Today Global Partners preferred jumped $1.81 to $26.97. Last week Gladstone Commercial preferred experienced a similar jump, only to recede the next day. Is this a sign of big orders being executed by clumsy buyers? Both issuers are junky, Global more than Gladstone, so maybe we have clumsy yield seekers chasing the last of the “bargains”?

  6. Thanks guys for helping me realize to take advantage of the “dumb money” in the preferred space. Sold my second to last IG preferred (PSB) with a negative YTC next October. Sold my NNN/PR at under 1% ytc last month (thanks to forum) and bought it back 2 weeks later. I’m no trader (and wont get rich doing it) but feels like taking candy from a baby with the preferreds I like.

  7. I’m normally a buy & hold guy, but this recent preferred rally has me actually selling. This past week I sold 2000 shares of VLYPP (6.25% until 6/30/25 and then 3 month libor plus 385 BP). I bought it in March this year at $25 and sold at $28. It sold within 2 days at my limit order in chunks of 100-500 shares. Obviously many different people thought it was a good buy as I was worried that it was way over priced. What do I know?

    1. Andy, Go to Quantumonline, then go under tab that says “Special Lists”…Then select “Securities with distributions suspended”. That will snag you some of them I suspect. You will have to register (free) if you havent with Quantum yet.

      1. In addition to the QOL list, here are a few that I show with suspended payouts. It is darned hard to keep up with these so you should verify they are suspended before making any investment decision(s).

        AFHBL
        ATPGQ
        CBTRP
        CCOMP
        CETXP
        CHKVQ
        COTRP
        CRLKP
        SENEM
        USATP
        WGNAP

        In addition, QOL still shows the three MITT issues as suspended and they have resumed paying. MITT-A,B,C

          1. That was my understanding too. It never did when I owned it in the past. But airport parking isnt exactly where the action is now concerning this. Plus it sure appears do to company being bought out the redemption price at maturity is now $19.18. Based on how it is written in SP annual filings anyways.

            1. Re: CRLKP
              SP Plus has had the confusing $19.18 references for a long time. That is the price at which they are obligated to buy back if a holder decides to exercise the conversion option, but the redemption value is still $25. This can’t change because CRLKP is backed by a bond, not a preferred stock (see below). I checked with the trustee, BNY Mellon, on this years ago just to be sure.

              My understanding (maybe there are some very unusual exceptions, and I wouldn’t assume this anywhere outside the U.S.) is that the terms of a bond contract can NEVER be changed. That is why companies do exchange offers into a new bond issue when they are in distress and want to reduce the principal, coupon, etc. Holdouts to a bold exchange always retain the exact same rights as they used to (though they may be subordinated if the new bond issue is giving seniority in the capital structure.) This is different than preferred stock, which usually provide the ability for the terms of existing preferred stock to be altered for EVERYONE if, for example, two-thirds of shares are voted in favor of a change. In such a case, you can hold out by voting against the change, but if the change in terms are approved you are in the same boat with everyone else and have no choice but to accept the new terms.

              Also thinking about the logic with CRLKP, the $19.18 came about solely from the conversion option – key word is “option”. No convertible security holder gives up any of their other rights just because they choose not to convert. A company may have terms in which conversion will be forced, but that’s a different scenario. So until CRLKP is redeemed at $25, an investor will continue to have the option to convert at $19.18, or the option to hold onto their bonds.

              1. I know nothing about CRLKP, but the way you describe it, it sounds similar to the SLMNP situation where, because of the acquisition of Schulman by LyondellBasell the holders of SLMNP now have a put at 802.674 on that $1000 issue….. Is that a fair yet far too simplified comparison??? And CRLKP has a ’28 “maturity?” I’m not trying to compare credit qualities here, only present structure of the issues…

                1. 2WR, yes the conversion situation is identical between CRLKP and SLMNP – you can convert at the conversion value that was available at the time of the buyouts.

                  LYB’s 10-K is clear that SLMNP’s liquidation preference didn’t change: “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.”

                  Of course, since SLMNP is not callable or redeemable, the only scenario in which it matters is if A. Schulman is liquidated (not very likely, and in most scenarios it will be an involuntary liquidation and you won’t get $1,000!)

              2. Karma, I used to own this, but dont anymore. When KKR bought out Central Parking the language stayed clear about $25 at maturity and $19.18 early redemption.
                But when SP took it over it the terms changed wording wise in the annual SEC filing. It clearly doesnt imply that anymore. One really has to dig into the factors of an acquisition in prospectus and “change of control” to figure it out in a legal protection sense. Something I cant do on this issue.
                As here is the present language…And it clearly has traded the past couple years like it is not a $25. Im not suggesting it wont redeem at $25 but the words dont indicate it. It indicates a change of control triggered something.
                Its just not worth the risk to me. And airport parking lot business is not exactly a quality investment near term so I dont monitor it anymore. Notice below it says $19.18 “upon stated maturity”.

                The Company acquired Subordinated Convertible Debentures (“Convertible Debentures”) as a result of the acquisition of Central. The subordinated debenture holders have the right to redeem the Convertible Debentures for $19.18 per share upon their stated maturity (April 1, 2028) or upon acceleration or earlier repayment of the Convertible Debentures. There were no redemptions of Convertible Debentures during the years ended December 31, 2018 and 2017, respectively. The approximate redemption value of the Convertible Debentures outstanding at December 31, 2018 and December 31, 2017 is $1.1 million and $1.1 million, respectively.

                1. Gridbird,
                  Yes, I know the language in the SP+ filings has said that all along, which is why I reached out to the company several years ago. They directed me to the trustee, who confirmed that maturity value was still $25 (I would have rather heard it directly from SP+, but as an individual investor I felt lucky to get a response at all.)

                  You made a curious statement: “And it clearly has traded the past couple years like it is not a $25.” It has traded between $22-24 most of the time over the past few years, so I don’t know how that implies $19.18 being a more likely redemption value than $25. Even moreso, if the redemption price is truly $19.18, then it should never trade much over that price because it’s been callable since 2003. It would make no sense for the call price to be $25, but the maturity value is $19.18.

                  But it actually has a very curious trading history that doesn’t lend itself to many conclusions. For example, the KKR buyout was in 2007 which established the $19.18 conversion price. This should have logically set a floor to CRLKP around $19.18, but it most definitely didn’t. In fact, it spent most of the next 7 years consistently trading below $19.18, with many thousands of shares trading under $15 for a multi-year stretch despite a clear arbitrage opportunity. I wasn’t involved with the security until more recently, but it seems like few knew or cared about the conversion price. So for whatever reason, CRLKP has always seemed to trade at too low a price. I know it’s illiquid, but there are plenty of illiquid securities at much higher valuations.

                  P.S. I first learned of this one on the following blog post: https://otcadventures.com/?p=1728
                  You can see the $19.18 issue was discussed, with some people sure that it was only the conversion price and others sure that it was the redemption price, too. And oddly enough, someone just posted 2 days ago (on a 5-year old blog) saying they had reached out to SP+ about it with no response. Maybe a few others who have been curious about this should reach out, too. Should make it more likely they’ll respond to someone.

                  1. Karma, I think we just have different values of risk assigned to the $25. As I was a frequent holder of CRLKP UNTIL that blog came out, and the further discussion on that blog was the reason I decided to sell it. As the writer clearly offered no tangible response to the $19.18 date. He clearly had no response as the filing clearly says what it says. And there is no denying that fact it says $19.18 redemption at maturity.
                    It may well mature at $25, I dunno. But for me and my comfort level, I never go against what is said in an SEC filing unless I can counter with language in prospectus which I personally cant. I only use verbal info from management or others to support my suppositions. not as a change in my thinking unsupported by what SEC filing says. As those words are not worth a plug nickel come 2028 if it doesnt pay $25.

                    FWIW, CRLKP is actually a preferred security and says so in prospectus. There are voting mechanisms in place many times for these issues also. But this also happens to ETD, too. Terms can be altered by vote of existing shareholders if so stated in prospectus. So in some circumstances one has to know who owns the shares.

                2. Grid – I found and almost posted the same language you did, but given it really didn’t definitively clear anything up but did raise the questions you brought up, I didn’t…. And assuming I was also reading this correctly that there’s only $1.1 mil outstanding, I decided to take the Brooklyn approach on it going forward and fuhgettaboutit.

                  1. Justin, yes that is what Gridbird is saying: the KKR language from the first buyout was clear, but then after SP Plus bought them out the language becomes murky. I’ve looked through all of the SEC filings SP Plus had during the merger period and could find nothing that implies any changes to CRLKP and logically, I can’t understand what could have changed – certainly holders of CRLKP wouldn’t have voted to have their principal reduced even if such a vote was possible (and I don’t think it would even be possible).

                    But I will admit it is strange that SP Plus has kept the language as is despite what I assume have been many inquiries over the years. My guess is they don’t really care much about this $1 million debt.

        1. AFHBL has not suspended payments either. It delayed paying their Q2 dividend, but eventually paid it plus a small interest payment for the delay.

          Where are you getting your information on suspensions?

          1. Citadel West asked: “Where are you getting your information on suspensions?”

            CW, in the case of these 11 issues I checked two different brokerages and neither of them showed that dividends were currently being paid. Since I do not own any of the 11, I have no first hand experience with their payments.

            I track ~ 1,000 issues and find it very hard to determine whether these OTC/Bulletin Board/Pink Sheet issues are paying or not. This is why I added the disclaimer that investors should verify the payout status of the 11. My apologies for not being more accurate. Like Tim, it is difficult for me to be 100% accurate on all things preferreds/babys/terms. This is why I usually keep my database to myself.

            Sometimes the simplest items have conflicting data. A few times a year, I check closing prices on a few different sites and always find a few discrepancies. If we can’t agree on closing prices, accuracy of everything else is suspect

            1. Tex, you are correct some of the OTC/Pink Sheets are very hard to confirm and some just nothing is ever mentioned again once its delisted and acquired by another company that buries it. So definitely no shame in not determining all the “goofy” and “opaque” issues floating around out there.
              CRLKP is a prime example. Try finding anything new and its impossible. A brief mention is listed in the SEC financials of SP but that is it. When I have owned CRLKP in the past I just anticipated when payment was due based off last official declaration when it was listed. It continued to pay at same interval it had previously paid.
              PFX is one I still own and though it was delisted to the bond market same principal applies. No public declaration is ever mentioned. Of course one most know subordinated debt issues like CRLKP and PFX never need any official declaration because the Board never has to declare anything as it is a contractual payment.

                1. Yes they do, that is where I bought them. They were delisted to bond market after Phoenix got acquired several years ago.

                2. How exactly PFX trades is another story. It clearly trades based on TRACE, but I have asked for bids a few times over the years (at Schwab, ETrade) and have never actually gotten a bid back. So if you manage to get in, don’t plan to ever get back out.

                  1. You have to be persistent and have the brokerage go to another bond desk if they dont have access to inventory. I had to ask for a 3rd party bond desk to get my quote and purchase. But I agree the bond desk will fleece you on a sale or purchase. So when I bought it was intent of holding until 2033 redemption or bankruptcy, whichever comes first.

                    1. Oops, I guess its Jan. 2032 maturity. Decreases ever so slightly the chances of bankruptcy, ha.

                    1. Ha, probably not, Justin, this one actually trades pretty much daily and has long before this website ever opened shop. Considerably more than most illiquids I own. They are easily available, its just one has to know how to buy and then not get fleeced from bond desk in the process. It was a $300 million issuance. But it is of very poor credit quality. B range at best.

              1. I am thinking of solving this “what issues have suspended payouts” problem a different way. I might set up an account that buys every single issue then waits for the payouts. Simple to set up the account. The only challenge is that I am not aware of any off the shelf portfolio tracking program that will notify you IF a payout is missed. All of the programs will properly record payouts that come in, but if one is missed, you are on your own to figure it out. Kind of ridiculous to have to go to this level, but conceptually it would answer the question with proof one way or the other. We have the same problem with bonds, where missed interest payments are fairly common, particularly with muni bonds.

                1. Suspended payouts are extremely rare. Buying these issues may also be close to impossible, as they are the royalty of the thinly traded issues.

            2. That Central Parking Trust is nuts. No payment announcements. FINRA is blank.
              Their filings don’t contain anything, and the data is non-existent after 2011.
              Does anyone know if they suspended and resumed payments at any time after 2011?

              1. Justin they never have up until this year anyways. KKR bought it and essentially took it private. Then SP Plus bought it later from KKR.

              2. CRLKP has always paid. You can never be sure what the ex-date is, though, so be careful trading around the periods that it is supposed to go ex-div.

        2. CETXP is a preferred that can switch back and forth between stock and cash dividends (though almost always in stock)
          Here is the SEC filing for CETXP showing the most recent payment in additional shares, so it has not suspended dividends
          https://app.quotemedia.com/data/downloadFiling?webmasterId=102436&ref=115242920&type=HTML&symbol=CETX&companyName=Cemtrex+Inc.&formType=8-K&formDescription=Current+report+pursuant+to+Section+13+or+15%28d%29&dateFiled=2020-09-18&CK=1435064

          1. Justin,
            Wow, is CETXP actually paying $0.50 in common stock for each preferred dividend, or is there some funny math where they give shares that are worth a lot less than that? Just looking at the stock price, it looks like the company may be circling the drain but the preferred appears to have maintained a massive yield for quite a few years now.

            1. “pay its dividend on Series 1 Preferred Stock in additional shares of Series 1 Preferred Stock”
              So you can sell the preferred stock once you get it.
              This one is odd, though.
              NCR’s preferred pays in additional shares, but instead of recognizing a dividend, the company is instructing to allocate the additional shares to your original cost basis.
              https://investor.ncr.com/irs-form-8937-3

              1. Screwed up the post.
                The preferreds that pay in stock are not dividends.
                They are non-taxable stock dividends, so the stock received is just allocated to the original cost of the tax lot because of the application of 26 USC 305. I don’t believe this rule would apply if the company has no E&P.

              2. Ah, I see, they pay in preferred stock based on $10 value, but it’s only worth $2. I figured it was something like that.

  8. Anyone know anything good or bad about AEB (AEGON N.V., Floating Rate Perpetual Capital Securities)?

    Prospectus at https://www.sec.gov/Archives/edgar/data/769218/000104746905027219/a2165248z424b5.htm.

    It floats at the greater of (a) three-month LIBOR plus 0.875%, and (b) 4.00%. So 4% for the foreseeable future… IG… First call well in the past (15 dec 2010). Climbed out of the March chasm and recently bouncing around par.

    But what’s weird is that it’s essentially flat-lined at $24.95 for the past day and a half. Any guesses why?

    1. Aegon is a long tenured well respected insurance company. AEFC trades at some 3.5 ytc. It’s appreciated and moved above 26 firmly. It has volume and you can trade effectively in and out w/o your trade moving the market.

      As for their floater w that old structure I never touched em. I believe you’d find it’s been callable for awhile. So there’s next to no chance of significant price improvement. But down side is limited too.

    2. Does anyone know if there be withholding tax on dividends from AEB in a taxable account? I’m a US resident…probably the best kind of US resident (Texan). TIA!

      1. Hmmm. Prospectus is silent, but I am guessing no because the underlying security is a perpetual bond. (And this guess is 50% certain, not 90%)

      2. I report…You decide…Good luck…
        Dividends will be income from sources outside the United States for foreign tax credit limitation purposes. The limitation on foreign taxes, if any, eligible for the U.S. foreign tax credit is calculated separately with respect to specific classes of income. In certain circumstances, a U.S. holder may be unable to claim foreign tax credits for foreign taxes, if any, imposed on a dividend. The rules relating to foreign tax credits are complex. You are urged to consult your own tax advisors regarding the availability of a foreign tax credit under your particular situation.
        Page S-43 from prospectus.

        1. Yeah, I should have said not definitive, because of that “if any” hedge.
          That is also support for my contention that it is a perpetual bond under EU law, and not considered a withholdable payment.

          1. Justin, it certainly didnt exactly spell anything out specifically. I dont think Dick is gonna feel any smarter after reading that is he, ha.
            …Just anecdotal but my experience from these foreign issues that were underwritten here, didnt have any withholdings. But I have not had AEG. I have owned both of Englands PUK preferreds issued here in the past and they didnt have any withholding.

            1. The UK has a fairly straightforward withholding scheme.
              UK REIT’s get withheld at 10%, everything else is exempt.

        1. Wow, that page is wrong in a lot of respects.
          the US does impose a tax on non-US investors, Ireland is 0, Switzerland is 15 after the refund, and the list goes on and on.

            1. So it is still in force unless you have significant ownership, since the US doesn’t have an MLI with the Netherlands.
              And there is this little nugget from the prospectus on page S-6.
              “We will pay Additional Amounts to you to gross up Interest Payments upon the imposition of Dutch withholding tax, subject to customary exceptions.”
              That tells me they don’t expect the withholding tax to be applied.

              1. Thanks all! I bought a small lot of AEB for $24.90 this morning. The ex-date is coming up and the price has fallen recently. This should hopefully work as a dividend capture if nothing else.

  9. So what are one’s thoughts on the Price appreciation?! I see PFF spiking which is indicative of most.

    Started selling heavily going into Wednesday. Heck I even had THINLY traded pfd jam to 27 and let me liquidate thousands of shares high 26’s. Normally the issue had a 50-60 cent bid ask with 1×1 showing and you had NO IDEA where 1000 at market would go off.

    Of course every issue is different. But in general the 6’s are at 28 and a 3 to 3.5 ytc. 5’s are at 27 1/2 w 3.5-3.75 ytc. And some sub 5’s are pushing 27! My approach is that all positions will peak, and hitting that peak is not consistently possible. SO if something else has potential are we willing to sell coupon in order to get a higher YTC??

    1. As you said, every issue is different. I make my buy/hold/sell decisions on an issue by issue basis. Involves a number of judgements, including are the fools going to bid it even higher, the likelihood of a call, years to call, YTC. Some are obvious, like negative YTC, a year or less to first call, and high likelihood of a call. Others are less clear. I also don’t want to be all-in or all-out so I will sell part of a position and hold part.

      Trading between issues of the same issuer is a good way to keep exposure while enhancing long term yield. I often trade a lower current yield for a better YTC (50 basis points or more), especially if the issuer has a history of prompt calls. Just have to be cognizant of taxes unless the issues are non-QDI or it’s in a qualified account.

      1. Thanks Bob in debelaware! Yeah I hear you it’s just that I’m getting that sell all feeling! In general if I’ve gone over a year holding period and I’m up 5% or more I normally ring the bell. Did you ever see a trading floor with a bell?

    2. If you Prefer – I sold my last IG Preferred today with a YTC of under 1%. I have full positions in non rated good quality reit preferreds that still make sense but this portfolio has been cleaned up and has 25% cash waiting for next dip to pick up my list of IG preferreds. No rush may be next week for next year but patience is now king.

      1. That was a great trade!!! I’ve got plenty of reit exposure too but can’t claim mine are good quality. I still remember that night in March……

    3. It has been quite the month for preferreds and babys. The median preferred is up 3.17% and the median baby/term is up 1.83%. Year to date preferreds are still off -1.4%, while babys are -1.49%, so on price alone they are still down. However with dividends/interest, they are above water.

      155 preferreds are up >=6.0% MTD. 57/155 have suspended payouts. For example the five AHT preferreds are up 70% to 100%. I don’t get this. It is almost like investors think AHT is going to pull out of the nose dive before hitting the ground.

      I am going to fine tune the sell list this weekend. Some of these issues got an irrational exuberance shot IMO.

  10. Mr. Conservative & Landlord Investor–I think both of you own SCE-L. With some other SCE pr issues recently being called, it appears that SCE-L is next. Consequently, it seems like a good short term investment. Do you agree?

    1. It looks like there’s still a good chunk of G left outstanding and assuming QOL is right, SCE-L isn’t callable for almost 2 years. With the 5.10% G trading at a discount and with the call 2 years away on L, why would you think that? Understand I don’t follow SCE at all – just took a looksee for the exercise…..What am I missing?

      1. The next call date for SCE-G is 12/19/20. I’m guessing the balance of the G issue will be called. I would like to be able to hold the SCE-L issue beyond the 6/22/22 call date, but it appears to me it’s at least a good two and a half year investment. Just looking for other opinions from people who own it.

    2. Randy, your thoughts are ill placed. EIX (SCE) made an intentional decision to go from almost 10% preferred stock capitalization to 5%. Thus the reason they did what they did…. It had nothing to do with yield or call ability. So you buy and hold not based on call probability. I also own some SCE-L myself.

      1. I own both the H & L all of it is just speculation, but I don’t remember SCE doing one call after another. Its usually been lulls between one wave and the next. Couple things, people don’t like Calif ute’s but SCE isn’t PG & E
        The fire season is over and SCE hasn’t had any major claims against it were as every city, county and individual is piling onto another lawsuit against PGE for the Kincade fire.
        What I can tell you is about price movement and history. H doesn’t seem to move as much as L has. As a matter of fact compared to other ute’s these haven’t approached par or went over. Kind of disappointed me in that respect. Now people looking for yield have been bidding it up.
        Looking as history and everyones general feeling there is still a drop coming in the market I may sell the L. I purchased the L at a higher price and I am still underwater. I wish I had more resources when it was under 23 to buy more as that seems is were the support is at and flip my higher cost shares. As for H will continue to hold unless there is indications of rates starting to rise.

          1. Randy its possible to get that price, just keep an eye out. I have been in and out of it often. And was out again until less than 2 weeks ago and reentered in the $22.90s myself.

        1. Charles, back in the day they would call and reissue as normal companies would if they could reissue lower. They were really the last of the utes that had an intentional meaningful amount of capitalization set aside for preferreds. But as is case with most, they are going the other way and reducing.
          The last redemption was purely on lowering preferred capitalization. Going forward one will have to assume an ability to reissue at a meaningful lower yield in future, otherwise one should conservatively assume that these will remain outstanding.
          Useless sidebar SCE info…Most people worry about effects of long term yields rising and the effects of it on perpetual preferred pricing. The best we really have now are 5 year resets which are tethered to 5 year Tbill. This is really false hope as the 5 yr is anchored to the low end of the yield curve not the long end (this is another “gotcha” feature of preferreds that still kick the asymmetric risk in our lap, not companies)…Anyhow, SCE had the only true protective preferred on the market that I used to own, SCEDN, which was redeemed in 2015. It reset with 1.45% adjustment plus the highest of Libor, 10 year TNote, or 30 year T Note, whichever of the three was highest.
          Gee, I wonder why no company ever issues that type of preferred? Maybe its because they are content with the asymmetric risk dumped on our laps? Surely not, lol…..

  11. Hello,

    what is your opinion about ngl-c and ngl-b preferreds?
    Currently, they are yielding above 20%, but maybe the trust in the company is quite low since they keep selling.

    1. I own some preferred sad to say. I decided to hold. It’s a bet on the company’s survival. If they cut the common distribution further and roll their debt successfully they should squeak by.

      If this is new money you’re talking about it may be better going to the common as it will have a better risk/reward profile. Personally, I would sell the preferred (for the loss) and buy the common if the accounting wasn’t such a nightmare for the number of shares I hold.

      1. yes, good thinking. I will probably wait for the dividend announcement, which might give them some boost

  12. Last question from a newbie. How often does the list of baby bonds get updated with new issues? Thanks.

  13. Back to LANDO. I have a full position in LANDO at $24.10 and have this in the “sock drawer” but recently heard an interview with David Gladestone where he was disappointed/surprised at the market price of this issue. I think his thought was that so much was not able to trade for the 2 years that there is excess selling in the short term on the issue. Some of the big volume days seems to bear that out. Is there also medium term value trade in this issue? What do you feel “normal” price should be on normal volumes? Thanks

    1. My eyeball reading would be that the price will go higher on the merits (not taking account of interest rate changes or a market crash). I bought a full position soon after it started trading and doubled it when it went to 24. I still hold all the shares. I may lighten up if it gets to 26.

      I get it wrong often so this isn’t gospel.

      1. In theory the price lid on this issue should be about $25, since the private placed LAND “C” series is available to buy at 6% $25 concurrently.

        1. I will take the other side of the bet, grid.

          Access to the C is limited and will the issue will have poor liquidity options for years, putting the B at a considerable advantage. The B should go above 25, especially after LANDP is gone in 10 months.

          LAND is going for $500 million on the C and it’s going to take them years to sell it, then up to another year to list it. If you want to sell it before it lists, it will be at 22.50, back to the company.

          1. Bob, Lol, I made no such assertion so no bet can be made. I said “in theory” and “about” $25. As we know, theory and reality do not always hold hands together in the stock market movements. As we know from March and any other rough preferred market patches issues of same IG quality got pummeled 40% or more while illiquids of same quality never blinked.
            Plus, me being an owner of LANDO I would never want this to happen, but if the company ran into trouble or yields spiked and LANDO dropped to $17, I bet the series C people would be flooding the office with calls trying to get a piece of that $22.50 redemption price, LANDO was not afforded. Though I would suggest they would most likely find out at that point that the fine print shows LAND doesnt have to buy them if they deem they dont have sufficient funds to do so.

            1. Yeah, without even looking at it I’m sure the right to require the company to redeem has limits. But it’s quite a haircut you have to take. If you buy now I would say you better be prepared to wait 3-5 years for a liquid market. It’s really a private equity style of deal.

              1. Yes, it will take a while. LANDO (Series B) took two years to fill out and was a smaller issuance. I suspect it largely depends on Gladestones appetite to acquire more properties. I have read terms before but there are restrictive limits in place on what and how much they will buy back. So I doubt it would provide its only positive feature. Backside price support during market upheavels.
                They use these preferreds to acquire properties. Being its land investments and its historical return, its hard to see how 6% preferreds provide any assistance to the common. I have been involved with LAND preferreds since LANDP IPO. I havent checked but I wouldnt be surprised if LANDP out performed the common since the IPO.

    2. I bought between 23.66 and 24.17. Sold 100 shares on the last rally, bought 200 on the drop and sold 200 today. I anticipate it will go higher but that’s how I play the game. Gradually sell on the rise and buy back on any dips.
      If it’s in your sock drawer keep it.

      1. You guys did way better than me, my average cost basis is $24.38.

        This is a “sock drawer” resident, have no immediate intention of selling, unless some huge spiking occurs.

  14. TRGP to redeem its 9% series A preferred issue

    HOUSTON, Nov. 19, 2020 (GLOBE NEWSWIRE) — Targa Resources Partners LP (the “Partnership”), a subsidiary of Targa Resources Corp. (NYSE: TRGP) (the “Company”), today announced that it intends to redeem all $125 million of its 5,000,000 issued and outstanding 9.00% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (the “Series A Preferred Units”) (CUSIP: 87611X 204). Series A Preferred Units held through the Depository Trust Company will be redeemed in accordance with the applicable procedures of the Depository Trust Company. The redemption of the Series A Preferred Units is consistent with the Company’s ongoing efforts to simplify its capital structure and to identify opportunities to generate additional free cash flow by enabling the Company to realize significant annual cash savings associated with both the redemption and the lower general and administrative expenses attributable to reduced administrative requirements, with 2020 being the final year tax packages, including Schedule K-1s, would need to be prepared by the Company.

    The redemption date will be December 21, 2020 (the “Redemption Date”). The Series A Preferred Units will be redeemed at a redemption price of $25.00 per share, plus an amount equal to all accumulated and unpaid distributions thereon to the date of redemption, whether or not declared (the “Redemption Consideration”), which will be payable in cash on the Redemption Date. After the Redemption Date, Series A Preferred Units will no longer be deemed outstanding and all of the rights of the holders of Series A Preferred Units will terminate, except the right to receive the Redemption Consideration. Furthermore, because all of the issued and outstanding shares of Series A Preferred Units are being redeemed, trading of the Series A Preferred Units on the New York Stock Exchange (the “NYSE”) will cease after the Redemption Date. The Series A Preferred Units currently trade on the NYSE under the symbol “NGLS/PA”.

    1. interesting theoretical question on NGLS/PA – I see it’s a monthly pay, F/F rate issue starting “on and after 11/1/2020.” According to QOl, “On and after 11/1/2020, distributions on the Series A Preferred Units will accumulate at an annual floating rate equal to the one-month LIBOR plus a spread of 7.71%.” Was the first floating rate payment on 11/1? Or does that mean that the first monthly pay on floating rate basis will be Dec 1 and a second/last one from Dec 1 to Dec 21. How does anyone accurately know in advance what either one of those monthly payments will be? Valuing accurately what this should be worth on a short term YTC basis seems next to impossible

      1. 2wr – the answer is in the prospectus. I don’t know this one but the one I see most commonly is the rate is determined if 2 days BEFORE the start of each floating rate period. You also have to check the protocol if that day falls on a non-business day. But you don’t have to guess. You can know what the rate is going to be even in the absence of any announcement.

        On resets the new rate is usually determined 30 days in advance.

        1. Bob – Yeah, I figured it’s in the prospectus somewhere as to how and when the float is calculated for the first scheduled coupon on 12/1 and thereafter, but what about the period between 12/1 and the call date? Until 12/1, one has to theorize a rate up until 12/1 until you can calculate it exactly I suppose…. all for the sake of a few pennies either way…… I’m doing this kind of thing all the time as an alternative to money market rates, I’ll pass on this one………it’s not worth the trouble imho. Of course it’s also easy to theorize it’s not worth it to do on a normal called issue, but it keeps me amused.

          1. Also, I think this is a K-1 issuer and if so it’s a lot of accounting to go through for a short term holding.

            On the “live float” issues that I hold I keep track of the rate determination dates and update my spreadsheets when the rate changes even though the rate is not formalized until the company declares it. I don’t want to be trading based on a rate that has been superseded. Things like ALLY-A.

  15. Around this time I look to see how much I can withdraw from my IRA (or convert to a Roth) without going over the Obamacare cliff in my taxable account. Going over the cliff means I have to give back my ACA subsidies. As I now stand, I have done too well this year. I’ll be $2000 over the cliff after upcoming dividends are paid. I can’t sell for a loss…already done that on available securities.

    So…I need to book at least 2,000 dollars of losses this year. I could easily do this by buying way out of the money calls, but I’d like to not actually lose money…just push it into next year. I”m thinking I could buy securities that go ex this year but pay next year, wait for the ex date (or buy just before) then sell for a loss and collect the div next year. Any thoughts on securities or other strategies? Perhaps buy a group of stocks now and sell the losers on December 31? Securities need not be qualified dividends.

    As a side note…joke around the office used to be if a client lost money we would say “That’s not what I meant when I said I wanted to reduce taxes.”

    1. Man that is a tough one. I just started looking into that now as I will be taking advantage of the crazy Obamacare rules next year since my wife is retiring this year. And I have been planning how to manage to keep my taxable income below the cutoff for subsidies and cost sharing reductions. Something I will need to monitor closely as Dividends and Interest will put my close to my max target, leaving room for perhaps just $3K or so in capital gains. But that is a next year issue for me – which I plan to monitor during the year. Since I can live off of savings, I won’t necessarily need to sell any stocks for money. But if I find I am getting too close to the obamacare subsidy limit, I would try to reduce the amount of dividend / interest coming in by switching out of those investments

      In your situation, have the dividends you expect to come in the rest of this year already hit their ex-dividend date? If not, can you sell those stocks now (assuming there are no big cap gains on them) so you don’t bring in the dividends?

      I am not sure about buying a group of stocks now and selling any losers by 12/31. What happen if you don’t have $2K in losses from those stocks you buy?

      1. I can’t sell anything, as the cap gains would be greater than any upcoming dividend.
        Worse case..buy really out of the money calls in late December and sell before end of year. Either a huge spike happens and I make more money than the subsidy or (almost certainly) I lose it all. Still better than paying the subsidy, but I want to do better. I’m eyeing such securities as my old friend RPT-D….still like that one after buying in the 20s and 30s. Could buy one day before the ex date then sell a day later. But I think i need several securities with that strategy.

        1. Ahhh, I see. Yeah, maybe the best thing then is what you are considering with RPT-D. Buy several of the stocks that pay dividends in January right before their ex-dividend date in December – and then sell the day after they go ex.

          There are a plethora of preferreds with dividend pay dates in January including a group with pay dates in the first 6 days of January with ex-Div dates in December. You would need to check the spreadsheets for all of them but here are a few I know of: AQNB, VNO-K, VNO-L, CFG-D, ALP-Q

          Then after seeing what trading losses they generate you would still have time to do the option strategy if need be to make up any difference

          Only problem is assuming say a 5% yield, you are looking at temporary purchases of around $160K

          1. Actually with the right timing you don’t need $160K – just recycle the same $40K over and over. You can probably make it work by buying and selling say $40K of each issue if they can support that trading volume

            Ex Div dates on

            AQNB 12-14
            or VNO-K 12-14
            or VNO-L 12-14
            ALP-Q 12-16
            RPT-D 12-17
            CFG-D estimated 12-18

            Assuming the stocks fall the day after ex-Div roughly the same amount as the quarterly dividend

          2. Does this work with REIT’s? The dividends that pay in January most of the time get pulled back into the prior year and is near impossible to tell which don’t ahead of time, because in a year like this, where rental payments have been in flux, even standbys like BXP which almost always had the January dividend taxable in the following year.

            1. Justin – I can’t answer that as I have not looked into it for REIT common. I think the issue you run into there is REITS are required to distribute 90% of their taxable earnings so they make make adjustments when needed to hit that

    2. You could overpay for an illiquid with a wide bid ask spread and turn around and sell for a loss . Remember if you are buying to sell for a loss you need to meet the cap loss holding time period which I think is 30 days I think….

      1. Grid – I think you are thinking of wash sale rules when you mention 30 days.

        There is no required holding period to book a loss on a regular sale

        1. I bet your right Maverick. That would make it easier… As far as buying exD issues my only concern would be quick recovery from exD on a mid December exD. Many of these recover quickly….I got ACA issues too.. I wont ever get a subsidy and pay rake rate for crap insurance. So I moved GF this week and I will get on her insurance and Ameren will pay for it, lol.

        2. Correct Maverick. Only issue is one cannot rebuy for 30 days…not an issue for me. I have cash to handle the buy and sells…in any case margin debt would be a minor issue for just a few days.

    3. Retired Broker and Maverick61 , read all the dialog on the ACA Obama care cliff was intrigued. I myself never had to deal with that stuff, but wait til your on medicare and then the SS tax trap grabs your check? then latter “the required minimum distributions” on IRA’s. some advice for what it’s worth, is get what every you can stand out of a traditional Ira while its feasible. I’ve been working that aspect since I was 59 1/2 and got a gift this year even though I’m 72. Looks like it’s possible they might even change the RMD rules again. Its a constant battle? Good luck with your current “CLIFF” Mike

      1. Mike – thanks for that info. My problem right now as I will turn 59 1/2 near year end is I can’t draw funds from my traditional IRA and put them in a ROTH as an IRA withdrawl will count as income and thus will negatively impact the ACA subsidy and ACA cost sharing reduction.

        So I have to choose my poison – lose the ACA subsidies and CSR now or take advantage of that and deal with RMDs down the road when that occurs. I plan to choose the bird in hand and maximize the ACA. So until we hit 65, I probably can’t do the IRA to ROTH transfers

        1. Maverick61, There are new rules for Retirement plan withdrawals if Covid related. I think you can space out for 3 years the withdrawal amount.
          Eg, If you take out 15,000, you can just show 5,000 a year for 3 years.
          Also there is a gaming trick with the ACA for CSR for those expecting major surgery or testing.

  16. New to baby bonds. I see many have a comment about “…withholding interest payments for up to five years.” I’m assuming this is cumulative. Does the price of the bond change as the interest payment accumulates? I wouldn’t like not having any interest payments for five years. Thanks.

    1. Yes this is cumulative. It’s pretty standard…I can’t recall a single issue that has deferred interest payments….maybe someone else can.

      1. A few have. Only 1 is still around, the rest were called or went bankrupt. Hillman Cap. It has deferred and reinstated more than once.
        And while the price doesn’t reflect the deferral, your cost basis will, as they have so called phantom income starting the day after the last interest payment once they defer. And it is a one way trip, for the rest of the bond’s life, the interest is ignored and is a basis adjustment, and the income is original issue discount.

    2. The 5 year deferral is now standard in sub notes. i don’t even look at it. Focus on the credit worthiness of the issuer.

      As much as you may not like the feature it’s worse in most of the rest of the world. In most of Europe and Canada, you don’t get deferred you get converted to worthless common in a crisis.

    3. Maverick, I got Retired Broker an idea. Buy some of those mid December exD issues and sell next day. And then total total up cap losses. Then if short, load up on NGHCO that goes exD 12/30 and flip 12/31 to clean up any shortfall. NGHCO is very liquid.. There is the plan Retired Broker!
      Retired, We have been together 14 years…No marriage…Gonna do the domestic partner clause, even though its a guy and girl thing, lol…

      1. Thanks. NGHCO has not been on my radar.

        Grid…where I live, utilizing the domestic partner clause means you have jointly declared that you are for practical purposes married…giving the end effect that one partner can sue for divorce and division of assets. Just sayin’…..

  17. Another HY bond for you guys. Just added 36159RAK9THE GEO GROUP, 5.875%22 DUE 01/15/22 at $97 for 8.5% ytm. I’ve have owned Corecivic for while and like their move away from REIT status and overall operation better than GEO but the ’22 looks like a no-brainer to me. ’22 debt is less than available on resolver, GEO has also been picking up the bond on the open market, and they have high cash flow, no need to reissue debt to pay off this bond. I am not as excited about the ’24 or ’26 issues because they may have refinance issues by then.

    1. Thanks SDMarc,
      Still enjoy the odd bond purchase every now and then if it makes sense..which this certainly seems to, so scooped up 5 for 97ish. This despite Gridbird’s accurate warnings of the “Thieves” on the Bond Desks..sure wish they traded more like our favoured preferreds.
      Actually I wonder if there is enough interest in corporates to warrant a sub-category. Tim? Not wanting to add anything to your already v overloaded plate. As always, very grateful for your amazing site

      1. Adrian-
        Prob easier to get a good corp bond sub-category going when Tim gets his new forum system up and running.

      1. Tim, Last weekend I did drive with a few friends up a bit closer towards your northernly direction…An extended weekend trip to the vacation destination mecca of Burlington, Iowa where we camped out at a sports book for 3 days betting and drinking.

    1. Hey Mikeo, doing well. Been a bit busy with some things and the modest trading I have been doing past couple weeks has been in the higher yield trash as that has been where the momentum has been. Illiquids are all very tight lately and I have no interest in the new issues…. Bob has been getting a good nights sleep lately and providing great assistance lately. There is never a pennies difference in our thoughts so I havent added anything to them, ha.

      1. Gee, and I thought you must have had such a great year that you ran off to an isolated Caribbean Island with no cell coverage but plenty plenty golf courses to build ice skating rinks and introduce hockey to the natives..

        1. 2WR, I am on the Sprint network living in a rural area. I dont need to travel 2 miles from home to get no cell reception, ha!

      2. Oh my! Glad to hear you are still among us. If you don’t have at least a couple posts a day you are not living up to your exalted status here on III. 🙂

  18. Anyone playing the TCO preferreds below stripped par as a money market alternative? Seems like it would be one of those Gridbird specials like the NGHCN/O preferreds.

    1. LI – I have looked at it. I’m pretty sure the merger will go through this time. As long as you don’t overpay it’s a nice return for short term cash. They will be called simultaneous with the merger.

      1. Thanks Bob. Any idea if typically they issue a 30 day call notice simultaneously with the merger or is the merger close date the date of redemption?

        1. LI – Having just gone thru this with Jernigan and NexPoint, it’s most likely to be an instantaneous call with the close. I also expect it will be the sane with MVCD when its merger with BBDC closes… Only with MVCD, they do have to do something related (I don’t remember exactly what) two weeks in advance of the final stockholder’s vote so that will signal the call date… I’ve not read the TCO docs thoroughly yet, though.

          1. LI – Having found this language in Section 6.8 of the Amended and Restated Agreement and Plan Of Merger [https://www.sec.gov/Archives/edgar/data/890319/000114036120025574/nc10017028x2_ex2-1.htm], the point of whether or not the 30 days notification language in the original preferred prospectuses would remain in tact is in fact as clear as mud as far as I can read. I will assume that they can call immediately upon Closing Date because it’s the more conservative assumption. If we get an extra 30 days out of the preferreds beyond that, it’s all good…….

            Section 6.08 Redemption of Preferred Interests and Titanium Series J and Series K Preferred Stock. On the Closing Date immediately following the Silver OP Preferred Contribution and the Titanium OP Payment and prior to the Effective Time, (a) Titanium shall issue a notice of redemption of each of the Titanium Series J Preferred Stock and the Titanium Series K Preferred Stock compliant with the Titanium Charter and otherwise in form and substance reasonably satisfactory to Silver and (b) Titanium shall deposit, or cause to be deposited, with an escrow agent (reasonably acceptable to Silver) for the Titanium Series J Preferred Stock and the Titanium Series K Preferred Stock, cash in immediately available funds in the amount of $25.00 (the “Titanium Series J and Series K Preferred Stock Liquidation Preference”) plus all accumulated and unpaid dividends to, but not including, the redemption date set forth in such notice of redemption, per share of Titanium Series J Preferred Stock and Titanium Series K Preferred Stock, respectively (collectively, the “Titanium Series J and Series K Preferred Stock Redemption Amount”). Following the Closing, Surviving Titanium shall consummate the redemption of the Titanium Series J Preferred Stock and the Titanium Series K Preferred Stock in accordance with the Titanium Charter and the notices of redemption issued under clause (a) above.

            1. Thanks for looking that up 2WR. Will be interesting to see if we get that extra 30 days from a call notice. Good learning experience. 30 days actually makes a significant difference when we’re only talking about possibly just a few weeks until merger close. I picked some more up at 25.11 this morning.

              1. Nice buy, LI – My wishful thinking buy order was in at a lower prx this AM so nothing done, but hey if someone can get a sell @ 25.27 this morning I guess a buy at 25.09’s must not be out of question either.

    2. LI – I bot TCO-K @ average of 25.136 with an assumption that they will NOT close the issue in 2020 but early ’21….. With SPG issuing shares today for purpose of paying for the acquisition of TCO, you would think the risk is about out for this not closing but that could be “famous last words” as far as I really know. Not really wanting to be in the space except to take advantage of the “to be called” state of these 2 issues, this will not be a big position for me but at this price below par stripped, it seemed worth a shot.

      1. I think the risk of it not going through is deminimus. The common is trading 0.5% from the merger price.

    1. GLV – the tender gives Maiden just above 50% of the preferred and I am pretty sure the plan is to squeeze out the remainder for nothing or next to nothing. Then the company belongs to the common shareholders, which includes all the insiders. I think it’s a case of you either tender now or get left holding the bag.

      I dislike the organization and I’m glad I don’t own any of their paper.

  19. Watch out for the media snow storm that has been launched to convince everyone how bad a shape the economy is in. The virus is bad and getting worse but now the media is making forecasts of total deaths in the 450,000 range. They also want everyone to believe that the even now the economy is bad in general and fail to note stock market, the housing boom and other strong signs of a V recovery. A more cynical observer might conclude that the media wants to talk down the market before the inauguration and to justify a mega stimulus package?

    1. I would guess a K shaped. Tourism related industries and some other sectors are getting the hammer put to them. This feels more like a Wiley E Coyote economy where the Fed is keeping the economy in the air over a cliff.

    2. The economy is actually quite bad if you’re someone who depends on a job for income or for many small business owners who are closing down in droves. The economy is very good for owners of capital and for big business, especially big tech. As stock investors, it’s easy to lose sight of what it’s like on Main St.

      1. I am in Michigan right now where the governor uses small business as a whipping boy for her vision of saving the people of Michigan despite themselves. Main street is hurting and will hurt even more. I expect daily new cases in the US to reach 250,000 to 300,000 in December. Daily fatalities will also set grim records. Bankruptcies to small business will also rise a great deal.

        What I am pointing out is that the ‘background’ or meme to the media is intentionally grim on the overall economy to set the stage for the new administration to ‘turn the economy around in 2021.’ It’s theater just as in a lot of romantic comedies, they start with an actress with no makeup and gradually add to the makeup as the movie progresses until she is glowing.

        1. You can put all the makeup you want on this economy but it’s just putting lipstick on a pig. Jobless claims are still insanely high. I have a tenant who was laid off from an animal hospital back in May and still hasn’t been able to find a job. It’s been a few months now since her pandemic unemployment bonus expired and now she’s behind on rent. It’s grim out there for the working class.

    3. Potter, regarding the mortality stats: 450k deaths in what timeframe?

      Based on the previous 14 days of data, we are currently running at a doubling rate of 160 days (see https://en.wikipedia.org/wiki/Doubling_time for the formula I am referring to). According to the Covid Tracking Project (https://covidtracking.com/data/national), total deaths stood at 238k yesterday, which would mean 576k deaths by 27 apr 2021. BUT… based on recent history and given vaccine propagation, that rate will slow mightily.

      Regarding economic effect, I second Landlord Investor’s comment.

      1. I am in Michigan right now where the governor uses small business as a whipping boy for her vision of saving the people of Michigan despite themselves. Main street is hurting and will hurt even more. I expect daily new cases in the US to reach 250,000 to 300,000 in December. Daily fatalities will also set grim records. Bankruptcies to small business will also rise a great deal.

        What I am pointing out is that the ‘background’ or meme to the media is intentionally grim on the overall economy to set the stage for the new administration to ‘turn the economy around in 2021.’ It’s theater just as in a lot of romantic comedies, they start with an actress with no makeup and gradually add to the makeup as the movie progresses until she is glowing.

      2. The business program I saw was projecting 450,000 cumulatively by the Spring of 2021 or about 200,000 more. Roughly, they would assume additional cases of 10,000,000 to 15,000,000 cases or roughly a doubling. I have compared fatalities to the number of new cases added 22 days previously and keep coming up with a fatality rate higher than 2% but who really knows?

        You may be right about the shorter cycle of high growth rate. It seems like most of the European countries have plateaued in daily cases and started to decline (except the UK).

        I just don’t like business channels loosely throwing around a large number of projected fatalities. It seems like a scare tactic. After the last two national elections, you would think that the ‘science’ of statistical projection would be more circumspect.

        1. Potter, I agree with your comment about throwing around large numbers. As a rule I ignore projections I see in the news.

          I have found https://projects.fivethirtyeight.com/covid-forecasts/ to be valuable. It aggregates projections from 13 various institutions (mostly universities), each of which maintains it’s own range of projections.

          For 8 months now I’ve been recording daily stats in my own spreadsheet and from time to time comparing the projections on that page to reality. They’re in the ball park.

    4. Just to show the difference in location, here in NE Indiana the last unemployment rate was only 4% and we are back to almost every factory with help wanted signs. You don’t see that mentioned on the national news and I know this can’t be the only place like this.

      1. I don’t know about NE Indiana specifically, but generally speaking the reported unemployment rates are quite misleading. The workforce participation rate has plummeted this year, which means a lot of people who were working early in the year but are currently not are not included in the unemployment numbers.

    5. With 41% of Iowa’s tested population being positive, what can go wrong?
      Time to buy pork belly?
      Other states getting higher results every day/week too.

  20. Took me awhile but I finally exited my PFF position at the same price I bought in about a year ago. I’m done with preferred index buying.

    A lot of dry powder now…..:)

    1. those type of funds are tempting but with this forum that Tim has created I find that there are better opportunities…….. you do have to hunt a little but it can be rewarding
      although I have taken a few beat downs with recommendations found on SA

      but the question remains…………. with all this dry powder, what to do now?

      1. Good question. Preferred space seems awfully pricy at the moment.

        Bought a little more UBP/H this morning. I think these guys will be fine and its under par.

        I’ve also benefitted tremendously from this site.

        1. The biggest advantage an individual investor has over a professional is “time”. Most professionals must be fully invested and are measured quarterly or more often. Individuals can wait for the opportunities. Identify those names that you like and the price you would like to acquire them and wait.

          1. Very true, Chris, plus individual investors can play in much smaller, more thinly traded issues. Not the gridbird specials that trade one a decade but issues that don’t trade tens of thousands of shares per day.

            Great money to be made just playing small ball.

    2. RE: PFF

      Anyone who has math aptitude and takes time to learn about preferred securities will beat PFF. An individual investor has many advantages over a fund, especially an ETF.

      If you want to go the fund route use CEFs. BUT ONLY BUY THEM WHEN THE PREFERRED MARKETS ARE IN A SHAMBLES AND FUND DISCOUNTS ARE NEAR THE LOW END OF THEIR RANGE.

      In other words, March was a great time and now is a terrible time. Timing is critical for most income oriented CEFs, much more so than buying the underlying assets.

      FFC and FPF are two of my favorites.

      1. Bob-in-DE,
        But CEFs usually only trade at deep discounts when the broader market is down, too. So anytime you might want to buy a CEF cheap, you will most likely be able to find lots of other investments that are cheap – and don’t come with an expense ratio.

        1. Karma – that’s the point! You want to buy preferred CEFs when the price of preferred is way down AND the discount to NAV is large, and both happen at the same time (most of the time).

          If you had bought FFC at its March low, you would be sitting on a 150% gain today. That’s why you wait. $9.01 at the March low, $22.39 right now.

          As to fees, I have done long answers to this issue in the past and perhaps I’ll post permanently, but in a well managed fund the fees cost you NOTHING. These funds can borrow at 2% to make 5-6% and the return added to the fund through the use of leverage will exceed the fees. This is not true in all asset classes, or all funds, but in the better performing funds in most income oriented funds it is true.

          1. Bob, very good advice, wish I had followed it. I bought a small position in FFC end of February missing the huge gains if I had waited a couple of weeks. Still, I’m happy with 7.5% annual yield and current 9.3% cap gain–beats almost all my individual preferreds and baby bonds. I plan to add more of this 5-Star rated CEF if it ever gets below my entry price.

          2. Well, I can’t invest based on cherry-picked bottoms (e.g., JSM traded as low as $7.01 that day – you should have bought that instead of FFC!). You’re also relying on a lot of hindsight. FFC and other leveraged CEF’s like it were at considerable risk of breaching their asset coverage levels and, if the market hadn’t bounced back so quickly they would have been forced to start liquidating holdings in order to de-lever. So sometimes when you take more risk, you get more return. But the next time around, you may get wiped out. There were leveraged CEFs in 2008 that just kept going down (those managed by David Dreman come to mind) as the holdings kept dropping and they kept liquidating to cure the asset coverage.

            I don’t buy leveraged CEF’s, or use any type of margin, for this reason. I don’t know want the success of my investments to be path-dependent, i.e., I don’t want to rely on market prices working favorably in the short run to avoid getting blown up. If I buy a bond/preferred, I will take on the longer-term credit and interest rate risk willingly, but am not interested in anyone else liquidating my holdings because they failed to price at a high enough level.

            If, of course, you knew that March 18 was the bottom and that everything would rip higher for months to come, then congratulations. I didn’t know that, so I’m happy with my buys around that time.

            1. Agree Karma…if the March bottom was knowable, there were plenty of choices besides closed end funds with which to make money. The combination of leverage, fees, and relative lack of transparency that CEFs employ make them seem like a poor choice for the average income investor.

      2. Bob – Thanks I learned the hard way but at least I got my principle back!

        This site in invaluable to those of us still learning.

  21. I don’t currently hold any but what happens to the Taubman preferreds with the buyout? Just curious. Thanks

    1. Haven’t looked for a current document, but for the prior buyout it said they would be redeemed. I bought a tiny amount in April, so a nice short-term gain, percentage-wise.

    2. RE: TCO preferred

      The generic answer is that the post-merger status of preferred will always be addressed in the Merger Agreement, which will be filed at SEC the day the merger is announced or with a few days after.

      Without even looking I would be stunned if SPG were leaving them outstanding.

  22. New Guy Question regarding buying above Par for BB’s and Preferred’s:

    I would like to tread into the above par arena but don’t want to get smoked in the process. Up until now I have only purchased items below par. On several occasions those holdings have been called at par resulting in favorable sale price.

    Can anyone recommend a calculator/spreadsheet to run the #’s (YTC, etc.) to make smart decisions when looking at above par? Additionally, if you purchase above par, then the item gets called at par, do you get to take the delta as a capital gains loss?

    Any advice on this would be greatly appreciated!

    1. SDS – There are many calculators out there and also there are those on here with expertise in Excel who have created their own. This is the calculator that works best for me – https://gpi.fidelity.com/ftgw/interfaces/pyc/ . It will calculate YTM and YTC side by side and works for bonds of par amounts of
      $25, 50, 100, 1000 and 5000 and 25000. It also shows accrued interest which you can then use to adjust the price you use to account for baby bonds and preferreds that trade without accrued. BTW, although it does not directly calculate yields for a $10 issue, it’s a simple matter of interpolation to get there if you happen to be dealing with an issue such as GJH.

    2. I just look at it and make a quick estimate in my head. After some practice it’s not that hard. When I’m seriously considering buying one I might do a more precise calculation if it’s not obvious. Prices fluctuate too frequently to rely on static lists.

    3. This is the formula I use to calculate the annualized yield to call on a $25 issue:
      YTC = (D*(C-A)/365+25-P)/(25/2+P/2)*365/(C-T)
      D = Annual dividends
      C= Call date
      A= Dividend payment date after the most recent prior x-dividend date
      P = Current price
      T = Today’s date

      This gives an arithmetic approximation of what you get using XIRR but saves the effort of having to enter in each dividend with its payment date.
      If you purchase above par and it gets called at par, that is a capital loss.

        1. The discrepancy is less than 2 basis points over a period of about nine months. So as a practical matter, it’s not really meaningful.
          From what I can see, the difference comes down to the implicit assumptions regarding compounding. That is, XIRR appears to implicitly assume daily compounding, while the YIELD function appears to assume no compounding over the period used in the example. To me, this doesn’t necessarily make one method right and the other “wrong” as a general matter when calculating the annualized YTC.
          I would also note that the cited example is not particularly useful, as it assumes one payment annually. This means that you don’t recapture the upfront outlay in excess of par (whether due to premium or accrued coupon) until the end of the nine months in the example. With quarterly coupon payments (which is more typical for the issues we follow), you recapture the payment in excess of par earlier. This reduces the average investment over the holding period, and thereby increases the YTC – again immaterially. Perhaps this all can best be described as putting the anal in analysis.

          1. I don’t disagree, nhc – the differences are minor and not decision making, earth shatteringly yay or nay type different answers using one vs the other. I was merely quoting the article when talking about “right” and “wrong.”

            1. Yes. I didn’t mean to imply that I thought otherwise. This was just a theoretical diversion.
              On a more practical note, do you have any guess as to when the MVCD that you mentioned a while back might be called?

    4. Surfer, to answer your cap gains question: the call is a sale (albeit forced), so if the call price is less than your purchase price, then yes, you will realize a capital loss. That’s how it works in the U.S., anyway.

  23. Has anyone looked at GSLD bb’s, the 8’s of 24 ($24.30)? Doubtless a thinly traded issue. This one leases container ships out of London and the stock has recently done okay despite the spike in covid in Europe. Two container lessors, CAI and Triton, seem to be doing fine so maybe the ship lessors are solid. Good operating record with no bumps or bruises for 2020.

    1. Potter: Yes, GSLD did not get beat up too much this year. The YTM is quite impressive. I have a full position (plus a little more) in this one and I am comfortable with holding it.

    2. Global Ship Leasing (GSL) reported another profitable quarter last week, beating the estimates by a good margin. Common share prices are trading close to pre-pandemic levels and trending higher. The baby bonds are callable 12/31/21 and mature two years later. There is a big balloon payment coming due on some secured debt in 2022, which will need to be refinanced. This makes an early call on GSLD less likely before 2024 (imo). Current yield on GSLD is about 8.25% which represents good value in this interest rate environment. The company has performed well until now, so no reason to think they’ll suddenly crash and burn in the next four years. I’d recommend opening a starter position and adding to it on any weakness.

    1. Justin, interesting article. One of the most significant points was that Jerome Powell understands the Fed has to help smaller banks that get into trouble. The Fed clearly understands how they made the Too Big to Fail problem much worse in the GFC by making the big grow bigger. By definition the Fed can keep any bank on life support ad infinitem by giving them access to the discount window. You don’t even need any special Fed programs to do that. Each regional Fed president has the final approval on discount window loans. My pure guess is that they will not force banks to do a true mark to market for all of the paper just like they did in the GFC. That way you show on paper the bank is still solvent, keep them open for business and eventually they will earn their way out of it.

      Related to this, the future of NYC/NY/Chicago/IL hangs in the balance. If the Repubs control the senate, it is difficult to see how these municipalities get bailed out. The Fed put in a new program to be lender of last resort to municipalities. So far the only two that have used it are Illinois State and the Metropolitan Transit Authority (NY/NJ.) Even with that, these entities are in deep budget trouble. I wonder if we will see another NYC bankruptcy scare like 1975? Lots of muni bonds involved here, but not many preferreds.

      1. I don’t see NY with their AA+ credit rating as anything close to bankruptcy. However, they could get a credit downgrade.

        1. I don’t know if we have seen the end of this and it may end up where commercial office building owners default in large numbers on the property tax payments, which is what will cause a lot of previously safe credit bonds really precarious. I know my employer just renewed their lease and went from 4 floors to 1.
          NY, SF, DC, NoVa, Atlanta, Chicago, Dallas.

          1. It will be all over in six months. PFE vaccine will be in wide distribution by that time. Moderna should be releasing results any day now and Fauci has said the results look really good. So, we’ll have at least two vaccines in production/distribution in the next few months. Commercial real estate isn’t going to get back to pre-pandemic levels any time soon due to structural shifts but they’ll be able to service their mortgages. Even if they default on their mortgages, unpaid taxes rank very high in bankruptcy (above all secured debt/mortgages) and get paid in the end.

            That said, I think NY ultimately gets downgraded to AA but I think market is already anticipating that. There was no discernible market reaction to S&P’s downgrade of NJ from A- to BBB+ because it was already priced in.

      2. Ignoring the source of the article, I think that capitalism is still the name of the game and good stewards of their investable capital are usually rewarded commensurate with the risks that they take. The biggest problem we have is this infiltration of pseudo welfare capitalism – where excessive risk taking and very poor stewardship is just expected to be bailed out with fake Monopoly money and protective laws meant to not hold these atrocious executives accountable for their actions. There’s a theme/obvious reasons why certain geographic areas have continued to pile up unrepayable debts and as usual, millions of us will be put onto that good ole’ hook to bail these morons out. Odd how there’s rarely anyone willing to bail out the mom & pop shops that have and continue to, close by the thousands every year – but plenty of state governments willing to give multi-year tax breaks and incentives to the big boys in order to bring them into their areas. This system is broken beyond repair and it has been for a very, very long time. You learn the most when you make the biggest mistakes – or at least that’s how it’s supposed to work. But then again, you also have to be held accountable for said mistakes – and that’s not really happening. The gov just keeps throwing fistfuls of cash at the bozo’s to continue flushing it down.

        1. Your description is still very much capitalism. Unfortunately it is a variance of it with its own separate name… Crony Capitalism

        2. Is the airline industry a capitalist enterprise or a utility? I remember in 2009 how Ford turned down government help. Is anybody turning it down now? Maybe Southwest?

          I believe that Washington will demand concessions from corporate America (Not just airlines) when this is over. Maybe that is why corporate America is acting so woke on BLM and global warming right now: to avoid being excluded from the trough or to keep a low profile when the progressives seek pay back.

          Maybe it’s all crony capitalism.

          1. IMO, the airlines are overweight babies with government passifiers and Pampers at the ready. Wasn’t always like that, that’s for sure. When they got into trouble in the good ole’ days, they either consolidated or went under – the way it should be. Now, the Monopoly money is printed per diem and there are very few consequences for some of them and their drunken debt/spending issues. Some are better than others. They should never be classified as a utility.

            Ford did a better job of handling their business and didn’t want/need to bend a knee unlike their weaker rivals. That was a pleasant time to live through, watching them drive the ship thru those troubled waters and look at them today…

            You’re right about the concessions – or do you mean reparations – or is there really a difference? The latter term is the right one I think. Funny how the woke cancel culture mobs roaming around burning and looting rarely say a damned thing about the progresses we’ve made nor many ill words towards the world’s worst polluters like ole’ Joe’s buddy China and their surrounding neighbors. Ironic isn’t it? I guess they don’t say much because they’re not likely to see many of those folks on a bended knee or writing multi-million dollar checks to fund, hmmm…exactly what again?

            I don’t think there is such a thing as a low profile anymore, Potter. That ship seems to have sailed as well. Cell phones and social media have ruined this country – along with a few other things that if I discussed here, would have the mean girls coming after me if you know what I mean. So we just play the cards we’re dealt but the cards quite honestly, suck. Take the last two days for example. Yesterday, the restrictions/lockdowns were coming one after another and the world was shutting down again. Markets were down. After hours, Disney and Cisco reported good numbers and today, it’s like Covid matters not a hoot! Splain that one to me!!!

            Reparations? I paid mine, day after day, night after night in that glorious place called the ‘public library’, where I taught myself several vocations that have yielded me a very comfortable life. GLTA

    2. Justin, Thanks for the link and sharing. Caused me to go over to SA and read NYCB transcript. I own the NYCB-PU
      Banking sector is not going to go away, but Keep a eye on the sector. There may come a time when there is panic selling and as everyone knows the babies get thown out with the bath water. There are a few good regional banks that have preferreds
      I am not adverse to selling something I like and buying it back at a lower cost basis. If I like it when it was 45.00 I would buy it again at 35.00

  24. Not a lot of bond talk on this site, but I spent a lot of time in past few years in HY bonds. One good value I have owned for a while and I wanted to share is the Corecivic 5% ’22 bond. 6.8% ytm. BA1 rating. Because it is private prisons, lots of institutions stay away now and I wouldn’t want to own the stock but check out the bond. Corecivic has improved their value to bond holders by recently deciding to change to c-corp from reit (effective in January). They generate almost $300 million a year in cash flow and the reit structure forced them to distribute. They could payoff off the ’22 notes with cash flow alone if the market doesn’t want to cooperate with them. Hated stock but confident they are not going anywhere for a while.

    1. i own that as well i like that its short term. i would think even if they eliminate private prisons, it would take many years with all the contracts allready signed

        1. Mr. Market really thinks GEO is in for a rough 4 years..
          And they are converting back to a common stock after years as a REIT.

  25. Has anyone else taken a look at GLP or GLP-A? The common yields more than 12.5% (the dividend was recently increased) and the 9.75% FF preferred is selling just under par. This is a MLP that wholesales and retails oil products with 1500+ gas stations and strong earnings for 2020. I bought the common and preferred this week. I still haven’t found the fly in the ointment other than the small market cap which is a low multiple of FCF.

    1. A consideration is the B2/B+ ratings for their senior unsecured bonds. The preferred would be rated a notch or two below these. Also their debt/equity ratio is high at 245%.

    2. I have owned the GLP-A preferred since the IPO date. I have been comfortable just holding it and collecting the dividends

    3. It’s a debt heavy company. D/E ratio is understated because the company counts preferred as equity, which it isn’t. In liquidation, preferred are likely to get nothing, so these isn’t much “preferred” about it. For that yield difference may as well hold common.

      The bonds would have some recovery in liquidation but yield a non-QDI of about 6%

  26. After my evening classical guitar practice (My retirement pledge and Covid19 activity to keep me sane) I cruised my portfolio and decided to check up on AG Mortgage Investment Trust since I own MITT-A and MITT-B. It was time to read the dismal earnings call quarterly transcripts on SA, which is all I ever read on that sleazy website. Bought the two preferreds in 2014 and really enjoyed the quarterly dividend until MITT drove off the cliff this spring. Knew these guys were way over leveraged, but amazing how quickly they crashed and burned. Suspended the preferred and common dividend and got hammered with margin calls, losing a lot of their equity to them. Thought the preferreds were going to be consigned to the waste can with my other investment mistakes when they went BK, but lordy, they have risen from the ashes! Found this in the transcript:

    Finally, given our improved liquidity position, we have decided to declare the accumulated and unpaid dividends from the second and third quarters on our preferred shares and to declare the fourth quarter dividend on our preferred shares. All dividends will be paid on December 17 of this year.

    Boy, that made my evening! I can pay for the indoor cycling center I am setting up in the basement for the winter and have money left over for a lot of steaks. Did anyone else here own these? If there was a post about this I missed it!

    1. I was pretty much in your situation (except I can’t play anything but the radio, and can’t make myself use an indoor trainer) with a substantial amount of -B. I hadn’t heard/read anything, and couldn’t find any info, even on AG’s IR page. Skimmed through the transcript of analysts’ call, but must have missed what you saw. Still not priced with a great deal of optimism, and below the recovery prices of similar mReits, perhaps reflecting their fire-sale giveaways of assets?
      Same ex-date as Q4 for missed 2 and 3, I’d guess?

      1. I found the information in the Seeking Alpha transcript of the quarterly earnings call. Here is the link:
        https://seekingalpha.com/article/4386255-ag-mortgage-investment-trust-inc-mitt-ceo-david-roberts-on-q3-2020-results-earnings-call

        It is in the comments by David Roberts, the CEO of MITT, on page 1.
        They don’t specifically mention the ex-date, but the payment date of Dec 17th matches up with what it should be. I am going to guess the ex-date is the same as usual also.

        I also went to the website and read the press release of 11/06/20 where they released their 3rd quarter earnings report. I copied the juicy part if you own their preferred below:

        DIVIDEND

        The Company announced today that its Board of Directors (the “Board”) has approved, and the Company has declared and set apart for payment on December 17, 2020, the next regular payment date, all accrued and unpaid cash dividends on its 8.25% Series A Cumulative Redeemable Preferred Stock (the “Series A Preferred Stock”), 8.00% Series B Cumulative Redeemable Preferred Stock (the “Series B Preferred Stock”), and 8.000% Series C Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock (the “Series C Preferred Stock”) that were in arrears as well as the full dividends payable on the preferred stock for the fourth quarter of 2020.

        In accordance with the terms of its Series A Preferred Stock, the Board approved and the Company declared a cash dividend of $1.54689 per share on its Series A Preferred Stock.

        In accordance with the terms of its Series B Preferred Stock, the Board approved and the Company declared a cash dividend of $1.50 per share on its Series B Preferred Stock.

        In accordance with the terms of its Series C Preferred Stock, the Board approved and the Company declared a cash dividend of $1.50 per share on its Series C Preferred Stock.

        Dividends for the Series A Preferred Stock, the Series B Preferred Stock, and the Series C Preferred Stock are payable on December 17, 2020 to preferred shareholders of record on November 30, 2020.

        As of September 30, 2020, the Company’s book value does not include any accrual of accumulated, unpaid, or undeclared dividends on its Cumulative Redeemable Preferred Stock. As such, the Company’s book value as of September 30, 2020 will decrease by the amount of the dividends declared during the fourth quarter. The Company’s book value per share as of September 30, 2020 would be $0.31 lower after deducting the accumulated and unpaid preferred dividends outstanding as of September 30, 2020.

        It appears to be real! I will be looking in my Vanguard Settlement account on Dec 18th and will then know for sure!

        I need to read more what they have been up to as I am absolutely amazed they have recovered to this point. They lost a bunch of stuff to margin calls and then sold off a bunch to stay alive. I had been preparing myself for a BK and eating the capital I had in the preferreds. At first glance it appears their mortgage originator ARC is providing a good part of their earnings. I am still mulling over if I should ditch the preferreds if they recover some more. I am not that far underwater as I bought them well below par in 2014, about $21 or so. There is a lot to be said for buying things when they are on sale, but it is sure hard to pull the trigger sometimes. Tim has had many articles on not overpaying on this site. As I have gotten older my risk tolerance has gone down.

        Hey CR, my guitar skills are not to the point I will be giving concerts, but you can now easily recognize the music after instruction from an excellent instructor for the last year. All done over Zoom. I have a lot of satisfaction from it. Better than watching TV! With the technology out there on bike trainers these days it is amazing. I went the route of scenic rides all over the world without doing the online training / competition you get from Peloton, Zwift, etc. Last night I dd the 9 mile loop around Her Majesty’s Windsor estate outside of London. It was gorgeous. Since it is raining today I am thinking of the Capetown Africa ride I saw. The way this works is I have a 4K flat screen TV on a tripod in front of the bike, a nice cycling desk that holds my Apple TV stuff, water bottle, etc, and smart trainer. The software displays the ride on the TV as shot from a camera on the handlebars of the bike and adjusts the smart trainer resistance automatically for the grade. The video speed is also adjusted for our speed, but you need to stay within 20% of the filmed speed. Too slow and it jerks some and too fast everybody is flying. There are adjustments in the software you can fiddle with so you can keep up with the folks who film the rides. A lot of them are really high level riders who can fly. You have a heads up display or a choice of a bike computer type display that gives you a bunch of info such as your speed, power output, grade, time riding, etc. Really hi tech! It is great exercise also. Didn’t mean get into this so much! It is one of my passions including golf, which I really suck at.

        1. Thanks, DJ. Obviously I skimmed too quickly–chronic brain fog from chronic poor sleep?
          A lot of my Strava (and now ex-)riding buddies use Zwift, but I’d have to do some serious re-arranging. Where I live, San Joaquin Valley, there aren’t that many un-rideable days outside, if you can tolerate a bit of heat or chill. Having been told to cut down on my riding intensity for a recently discovered genetic heart issue, Zwift may be less boring than my same old local flat rides. Maybe after all us geezers get a Covid vaccine, I can rejoin friends in the hills, with an ebike (bought with unexpectedly smaller losses and ongoing divis from MITT-B?)

    2. Ha! I sold out after they clawed their way back to 14. I’ve made good money trading them plus some interest I nearly broke even in the long run. I even bought some at $3 but quickly sold those shares at $4.

    3. Yes, DJ, small position in one account, held through the wipeout, they’ll pay 3 dividends in December if I got it right, go ex-div in a couple of weeks.

    4. I own 400 shares of MITT-C. Was gonna sell at the end of the year and take the loss to offset some gains but now that they are paying the dividends will hold onto them. I was thinking of maybe adding to my holdings.

    1. You cant “redeem” common shares in the same sense as prefs. The press release you linked refers to the B Riley SPAC “BMRG” which comes with a put option at the trust value based on certain events

  27. Interesting day, here are the median returns for a few asset classes:

    Equity REITS: 9.1%
    MREITS: 4.0%
    Utilities: 2.0
    SP 500: 1.3%
    Preferreds 1.1%
    Baby bonds/term: 0.6%
    Muni bonds: -0.1%
    Precious metals: -5.5%

    Not surprisingly lodging/hospitality preferreds turned in a great day @ 13.3%, but “curb your enthusiasm” because they are still down -29% for the year. . .

      1. Bob-
        Probably will- on 11/7 he pumped PEI, EPR, CLNC – calling them phoenixes.
        Partly right- they burned.

  28. Easy come easy go. Schwab blew it today big for me. Bought a lot of beaten down reits in past month to hold for long time. They got to 75% of my long target price this morning so decided to close out all positions. Except Schwab couldn’t execute them.

      1. It took me multiple attempts and at least a 5-minute delay to get an order through at Schwab shortly after the open. I tried a couple different symbols and Schwab “didn’t recognize the symbols”. I finally got an order in and got a partial fill, but instead of my account showing I had bought 1,250, it showed 2,500 and that my cash had gone negative. After an hour or so, it was fixed.

        I also have TD Ameritrade thinkorswim quote streamer and I noticed a lot of securities did not have bid/ask quotes right away, so it seems like there were issues all over the place this morning. However, I put a few trades through thinkorswim and they worked fine.

        Not much you can do about it as this type of thing seems to happen pretty much every time market volume soars, but hope they keep improving.

    1. I had something similar happen with Fidelity in the first 15 minutes of the session. They eventually got my sell order completed, but only on the third try. Merrill Edge had no problem handling a similar market trade a few minutes earlier.

      1. To the gentlemen above:
        – Your orders have time stamps on them. (you can prob see this by expanding the order ‘+ sign’)
        – The ticker runs concurrently recording prices. (Use a daily , minute chart for a look-see)
        – There should be some sort of reconciliation by manual review esp. if you left the order open. Moving, or closing the order would be the reason that you may be given for a non-execution.
        I have used email for these requests in the past with good response. It is easy for then to review the process.
        Good Luck and if you are owed, push it!

    2. Get’s better. Sold my recent shopping center reit positions for big gains by end of day but morning trade got sold “twice” because of system problem. I didn’t know what to do. I could have covered the second sale but didn’t know if the sale was real or not. Tried calling Schwab 6 times and got hung up on the first five after 15 minutes each. Last call got picked up but price had gone up another 10% by then. We covered the sale and put a dispute in to get back my extra $2500. Technology is great until it doesn’t work

      1. This kind of reminds me of Black Monday, 10/19/87 when you wanted to sell but could NOT get anybody on the phone. Plus all of the OTC market makers literally would not answer their phones. Lots of frustrated investors.

        Fast forward 33 years and we have lots of investors frustrated because they could not place their trades, either online or over the phone.

        Interesting that technology didn’t solve the problem. Obviously all of the brokerages that had outages need to install much more peak capacity. They will do that, but will it be enough or does volume keep expanding to fill up all available bandwidth?

  29. Anyone have a guess of the likelihood the PRE issuances will be called in April 21?

    Trying to decide if I move on from the PRE/H while its still at a premium. I know it goes ex in a few weeks.

    1. RE: PRE G&H

      I would say more likely than not. The H would be the first go obviously. Me, I’d be holding the I. Nominal yield is lower but least likely to be called, so the yield is real.

      PS – YTC on the H is NEGATIVE.

  30. Opinions…I have at least 4 Pref/Bb issues with price gains at least two years worth of dividends. At what point does it make sense to just take the profits and reinvest it on some other issues? All in IRA account. Just asking for opinions.

    1. Puck – I think your question is too broad based to be answerable with any authority… Since you’re here on III, you are familiar with such terms as “yield to call,” and “yield to worst,” correct? Knowing those numbers will go a long way toward answering your questions… Then of course, also important is knowing if they’re in taxable accounts or not and/or if they are preferreds with maturities.. All of these factors would go into deciding at what point it might make sense to sell… without knowing them, how are you or anyone offering up an answer going to decide whether or not reinvesting in any particular alternative would be better or worse than what you have?? And I’m sure I’ve left out other factors as well such as your feeling about the direction of credit quality you might think your preferreds are going and your opinions on the direction of interest rates in general..

      1. Thanks 2whiteroses! I used a calculator on duk-a, amh-h, tfc-o, and eti- All these are perpetual, so I used the first call date for yield to worst. I don’t know if that was right or not, but all yields came out well below what my gains already are.

        1. Puck49–that is the correct way to do yield to worst–on perpetual. If they are past the 1st call date the assumption has to be that it will be called tomorrow (the worst outcome).

          1. Thanks Tim, I assumed that was the only way you could determine a perpetual. Just never had looked at Y to W on a perpetual.

        2. I would say focus more on how other available opportunities compare to what you hold, rather on the extent to which you have gains on what you’re considering for sale, especially for an IRA account. For example, you mention DUK-A. At a price of $28.56, I calculate a YTC of ~1.90% for that one. If that’s your most important metric, you can do better with other issues of similar quality.

        3. Puck – Well sure they do, but using that alone as a reason to sell would not really be the right approach. Once you’ve figured out YTC, then the next consideration would be either how does that YTC compare to other issues with similar call dates that you might consider as an alternative OR whether or not you wish to extend your call date with an alternative or buy a non-call, etc….. Don’t forget assuming your YTC is positive, that loss you’re looking to avoid by selling will be more than made up by dividends/interest earned over the time period you hold, so unless you’re looking for flip opportunities where you can sell and start the process all over again with what you hope to be another good cap gain opportunity (hello, Grid!), then looking to lock in that gain becomes less important… It’s always a balancing act… and a nice problem to be faced with…. It all depends on your investment style.

    2. Puck49- Give us little more detail and will be better able to answer question. I recently had the same situation, and as whiteroses stated it came down to the yield to call. I had an high quality (investment grade issue) that I am sure will be called in 12 months at a ytc of under 1% based on the high price. I sold the issue for a 10% gain but then was able to buy it back a few days later when the issue price dropped to a point that it had 4% yield to call (worse case).

      1. Thanks SDMarc, Check out the comment I left for 2Whiteroses. I think I got the calculations right, but if I didn’t I’d appreciate any comments you have. These issues have been trading high for a while now, so possibly I could take advantage of the strategy you used.

    3. Sell and reinvest when it’s overpriced and something else isn’t. Doesn’t matter what you paid for it. What is it worth today.

  31. I have done fine with ALLY-A and want to hold it as a long term float at 5.78 plus three month lIBOR. It is selling at 26.37 and is callable. At what rate do you think ALLY could issue new preferred?

    1. ALLY recently issued 3-year senior notes at 1.45% so the answer is a lot less than the 6% that ALLY-A is yielding.

      1. Were those notes secured or unsecured? 1.45% sounds like a crazy low yield for a BB+ financial. That yield is more like what single A trades at.

        1. Thank you both. I have seen some really low rates for short term credits. I saw that CAI was getting low rates for financing its shipping containers.

  32. Another one at negative YTC …..

    Just sold my remaining KKR-A at 26.34. Between now and when the issue gets called on 6-15-2021 you will collect exactly 26.27, for a loss of 7 cents after holding for 7 months.

    The issue carries a coupon of 6.75% and is BBB+ rated. It could be reissued at sub 4%. Anyone really thinking KKR will let the issue go past first call? Well, someone did, or else they thought they were getting the 6.48% nominal yield.

    1. These transactions hurt. Sad to see issues like this go.
      I sold ARES.A in august. Missed some income but bought two payments above par, better to hold the capital gains. No way this one does not get called nest June.

  33. Hi Tim, just wondering if you’ve taken down the dividend ex-date page? My bookmarked gooogle sheets page comes up “Page not found” and I don’t see the link under Preferreds. No problem if you’ve dropped it, must be a pain to update, just curious. Thanks. D

    1. Hi D–yes I did–was waiting to see who noticed. The amount of time it takes, as you mentioned is way beyond my abilities now–but look forward to automating that some day.

    2. A gentle plug here for CDx3, whose primary value for me is a dynamically updated db which does include ex-div dates (as well as IPO Date, Div Rate, Price (w link to MarketWatch), Volume, Yield (Current/YTC/EAR), Ex-Div Date, Call Date, Maturity Date, Liquid Price, Credit Ratings (Moody’s/S&P), Exchange traded, link to Prospectus, and Status (QDI/not, Called/not, etc).

      It currently covers 926 issues.

  34. Was looking at the wording of QVCC on QO– it seems to have it correct at the top: “6.25% Senior Secured Notes ”
    then down at the bottom: “The Notes are unsecured and unsubordinated obligations of the company.”

    Is this just an example of QO using boiler plate incorrectly?
    Thanks

    1. Re: QVCC, if you look at the prospectus it talks about it being unsecured. It says it is “secured on a pari passu basis solely by a first priority perfected lien and security interest on all shares of our capital stock” I’ll be honest, I don’t know what that means. I think it just means it is secured by the equity in the company, which is really not much security, if that’s the case. I mean, what bond isn’t “secured” by the company’s equity?

    2. Secured or unsecured, that is the question.

      QO is a useful research tool but one has to go to the prospectus (or other original document) to find out what one is buying. Most can be found at EDGAR and with a bit of practice can be found very quickly.

      Also, check S&P or similar for updated credit info. QO is often outdated.

      1. Karma
        I looked at the prospectus- it says Secured & Senior.
        QO saying unsecured in the text is wrong. That’s my point.

        thanks again. – and to Bob

        1. Gary, look at the prospectus again. As I already wrote, it is secured by the equity, whatever that means. But in the Ranking section on page S-5, it says this:

          “The notes will not be secured by a lien on any assets of QVC, Inc. or any of its subsidiaries. So long as the notes are secured solely by a first priority perfected lien and security interest on all shares of our capital stock, the holders of the notes will have only an unsecured claim against our assets and the assets of the guarantors. Any such unsecured claim will rank equally in right of payment with all other unsecured unsubordinated indebtedness and other obligations of us and the guarantors, including trade payables.”

          So it’s secured, but then again maybe it isn’t. It really matters what it means to say that it is “secured by the equity”. Do you know what that means?

          1. ONCE AGAIN LEGAL OBFUSCATION TRIUMPHS- THEY CAN HAVE IT WHICH EVER WAY THEY WANT- FROM THE LOOKS OF IT. –oops sorry about the caps.
            Secured until it isn’t. Equity? Might be anything they want to call it?
            thanks – let’ just close this goober.

    3. I’d have to double check but I’m quite sure QRTEA’s 10Q lists QVCC as one if its sr. secured notes.

  35. I really do not expect Tim to manage it, BUT…
    At this site, sometimes I feel like I am at a bar and one of the old patrons walks in when I see their name…”Hey where ya been? What’s been pushin’ your boat?”
    How about an ‘After The Close Bar Room’ Category Tim? Maybe just on Friday Nites. Hey we can smoke and drink and lie about golf/fishing/cap gains…it’s going to be a LONG winter friends.

  36. General comment – a lot of the time, whether I’m willing to play or not, I feel I’ve got a reasonable handle on what’s going on in the markets… Today not so much…. Interest rates down bigly yet it seems as though reaction in preferreds and baby bonds is muted at best… Stock indices are up bigly too yet breadth seems lousy. I don’t understand the up. I don’t understand the down. I don’t understand the election.. I apparently don’t understand nothing.. I’m going back to bed……..

    1. “The best thing about the bedroom was the bed. I liked to stay in bed for hours, even during the day with covers pulled up to my chin. It was good in there, nothing ever occurred in there, no people, nothing.”

      ― Charles Bukowski, Ham on Rye

      “Sometimes you climb out of bed in the morning and you think, I’m not going to make it, but you laugh inside — remembering all the times you’ve felt that way.”

      ― Charles Bukowski

      1. Bukowski! Unusual that anyone even knows who he is. One of my fav quotes, “The world is full of shipping clerks who have read the Harvard Classics.”

    2. I don’t understand either. According to the experts the market was supposed to decline if there was not a clear winner. So much for that. It seems the market does not really care who wins. It will likely continue to be about the stimulus and the vaccine.

      1. Today’s market action is consistent with what I wrote on the short-lived “The Hour is Here” post (my comment is at the bottom here, below the asterisk line).

        POTUS election hasn’t been called yet, but right now Biden is the likely winner. However, the Senate is no longer expected to flip to Democrats. Republican Senators will now do the same thing they did in Obama’s term – restrict stimulus during a recession. So Treasury bond yields are down because there is expected to be less debt issuance. While stocks are up big overall because short-term interest rates will remain pinned at zero indefinitely (the weaker the economy, the longer that will stay), more economically sensitive companies (including many small caps) are substantially underperforming as stimulus hopes dry up.

        Note that all of this will change if the election odds suddenly swing another way, which is possible in some cases.

        ***********
        “big, fat, juicy stimulus package soon”

        Maybe not. If Biden wins but R’s keep Senate majority, R’s will decide they really don’t like deficits now (again) and will try to kill the economy so they can blame Biden.

    3. WRoses: I see this everywhere. THAT”S LEADERSHIP today! no clear direction, dysfunctional, swaggering, drunken daddy head of the house. You’re NEVER going to get clear understanding from confusion. Confusion is the GAME now, not Eisenhower’s, not Truman’s, not FDR’s but post Reaganomics Buffoons.
      If it was not for the general good and ‘sticktoitiveness’ of the common man and their balanced intents…well…I suppose the unwashed masses still believe someone else needs to rule them. NOT ME! Why else do we keep looking to all this mess?

  37. Anyone know anything about Dillards Capital Trust? (DDT) I own Dillards bonds and feel good about them but don’t understand this issue. It’s a “trust preferred” but not sure what that means in the capital structure? Thanks

    1. SD, DDT is subordinated debt. It is the lowest whale crap on the bottom of the ocean type debt. Meaning its basically a preferred masquerading as a debt via an interest payment. As long as company stays viable its fine. In a bankruptcy one should never count on getting anything but a pat on the back or pennies from subordinated debt.

      1. SDMarc, to add to what Grid wrote, see https://www.investopedia.com/terms/t/trustpreferredsecurity.asp, from which this quote: “Trust preferred securities are issued by large banks and bank holding companies. The bank opens a trust which is funded with debt. Then the bank carves up shares of the trust and sells them to investors in the form of preferred stock. The resulting stock is called a trust preferred security, or TruPS. It is an important distinction that, when buying a trust preferred security, the investor is buying a portion of the trust and its underlying holdings, not a piece of ownership in the bank itself.”

        1. Bur, good point to fully mention what SD wanted to know as I only explained the debt, not the wrapper it lays in. These are lowly subordinated debt issues, but the debt is laying in the vault of Chase Manhatten (JP Morgan, now), and what one technically buys is certificates that lay claim to the proportional amount of the bonds in the vault.
          Really for the buyer it is a distinction without a difference, as rating companies rate them purely on the debt. They dont view in this case that JPM is a threat to run off and steal the bonds that are in their vault.

    2. Berskshire Hathaway took a stake in Dillards. That provides a backstop from a fire sale of assets. They have some very good real estate that’s weighed down by a lousy department store business. Much better buy before Buffet’s stake.

  38. Tim is SOOOO wise to close polit commentary!
    Hey, CBKLP $100 offer for 100 clicked today.
    A few util legacy prefs are lower toward par, lower annuity holding rates though.
    Idea: Interesting view of a recent new BB issue: CUBB? Below par, long call coverage, 14 year note, Four paying pref tranches layered below. 5.5% area ? So we are all pushed into speculative funding.
    I am going to lunch today to ‘vote’ to spend some electronic bucks at a local establishment. When I get home my vote will have gone thru Smitty’s Bar and Grill, accounted for by VISA, reported to BofA on my statement by the time I get home and credited back to Smitty’s merchant account. All done securely and in a transparent fashion. Do I really think these ‘institutions’ are going to allow any fraud with a single PENNY? Funny EACH DAY 3 billion transactions are made as lunch runs across the time zones…not a penny or ‘vote’ miscounted, misplaced or challenged!

  39. I am surprised by the lack of reaction in this country and our markets to the second virus wave in Europe. Today Switzerland had more than 21,000 new cases today which is around 2500 cases per million population. A cumulative figure of 25,000 to 35,000 total cases per million of population is in the high range. The US is at 28,000 and Switzerland is already at 20,000. Take a look at the jump in daily cases from the first wave high to the second wave: growth of 300 to 700%.

    Some experts claim that the US is 30 days behind Europe. What is the US going to do when cases per day in the US reach 200,000 or more by Christmas? (Our record high for the first wave was around 78,000).

    1. Potter: It depends on who you choose to listen to, doesn’t it?

      The Republican Presidential candidate continues to claim daily (and multiple times per day) that the US is “turning the corner.” Those who lend credence to that (and who ignore the current data) may choose not to be alarmed.

      At the same time, from the data I observe (at https://coronavirus.jhu.edu/map.html and https://covidtracking.com/data/national) the rate of new cases is increasing much faster than the the rate of new deaths.* This could mean, for example, relatively fewer alarming headlines about overloaded hospitals.

      —–
      *Supporting detail:
      1. 7-day average for new cases per day has increased 136% from its recent trough (33.5k to 79.1k)
      2. 7-day average for new deaths per day has increased 29% (660 to 850)

      1. With no objective data, I believe that the US is just finishing the first Wave and, according to the experts, we are 30 to 40 days behind Europe for Wave 2. From the looks of the European wave, it is much bigger than the first although perhaps less fatal. The per capita numbers in Switzerland, Belgium and the Czech Republic are bad. We hit more than 100,000 daily cases last Friday so we will have a yuge mess in 30 to 40 days if we see anything like the growth in cases experienced in Europe. The only out might be that we are already in the Second Wave.

        Even with 200 to 300,000 cases the virus may be less scary than in the Spring because we know that the Fed and the stimulus will help but it will still be plenty scary to those of us who though it was safe to “go back out in the water again.”

        Anyway, it’s not a specious fear and the market shows no current concern. Maybe the election is scary enough?

  40. Question: Will a Democratic win boost Oil and Gas Preferreds?
    It’s a given that Stimulus will be flowing like a flooded river.
    Inflationary hedges should reflexively rise eg Gold,Commodities.
    I ask this because i want to be ahead of the herd.

    1. Newman: I agree with inflationary hedges. The controlling party in the US is just a gust of wind, Fed and Global Banking Power policy is a way-big chasm to jump over now (gradually normalize) for many four year terms of whomever is president IMHO.
      – After COVID, here comes Asian consumption (low debt to GDP and eroding $ hegemony). Seems there WILL be some sort of global competition for capital emerge…at some point.
      – I figure my wife and I have 25 years more to go.
      – Maybe some floats and resets too…? (There are a decent number of American Float and Resets too!) -This site, which someone posted while I was on the road recently has been a GREAT tool for CN Prefs which includes a ‘blended rate upon reset’ column in the spresdsheet! Look this over! Who ever found this THANKS! …in addition to Yuriy’s spredsheets!
      https://canadianpreferredshares.ca/
      I have expressed my prudent outlook for five year IG resets that present a four to five year put premium by paying a fixed interest rate income while one waits for the sea-change in interest rates. Even IF they reset in a zero or negative rate environment in 4-5 years, they will still be producing a decent blended return for 9-10 years even by today’s standards (examine the blend where a 4% at reset will look good compared to a -0.5% five year).
      – Also, look at reset and float nominal average pricing, many (the denominator) in single digits.
      Lastly, in a period Ghouls and Apparitions:
      -It is mind blowing to review global bond rates by maturity: https://tradingeconomics.com/bonds Scroll down and cringe! Spooky!
      JA

      1. Corrpra woke up today, finally!.. Now it needs to put on its sneakers and go running.
        It’s an oil pipeline. Earnings came out yesterday.
        Gold is also awake as is the ten year treasury note.
        My Silver play is slow to wake.
        Maybe tom’w it all reverses or climbs higher.
        I hope you and yours get more than 25 more years.
        Good luck and stay safe

          1. Martin, I like silver too. Have been playing it off the bottom, based at $2 (using CDE as a stock-proxy). Bot a big wad and sold calls in 1/3 laddered lots until it was all called away at $8. This is a very overlooked, misunderstood and underutilized Income, Buy/Sell tactic. I know Lyn Alden Schwartzer talks about it on her site too. Best way to buy or sell stocks. I feel it enforces patience and a discipline on the buy-sell-income triad too.
            Looking for a third wave down here for CDE near $6? Hoping to Buy back in with cash covered puts already sold at $6 by Nov 20? Let’s see if there is a reversal soon, maybe tomorrow, as tempers might still want to make a spoiled-sport dump statement. I want to pick up CDE at $5.75 or lower for adjusted for put income. I will sell calls back around if and when this happens._
            Silver Supply is very narrow to long term demand in solar panels and EV auto industry regardless of it’s possible perception as money and hedging.

            Doing the same with PRU right now too. The Nov 20 put at $60 may get pull away higher from the put by the expected Dec div. OK!

            I use my Roth for these activities. JA

          2. Have more than a double on my physical silver–but it is a hold forever–unless I need a little for a loaf of bread, which is the only reason I have a few hundred ounces.

    2. I am struck by the realization that a Democratic administration would mean normalizing relations with Iran which would unleash a lot of oil on the market. Venezuela is probably incapable right now of increasing production very much and Libya is already coming back.

      Long term a democratic administration might be good for the price of oil except the Democrats are going to work very hard to stamp out the use of oil. I hope that we will still be able to export natural gas but I saw on TV last week that a lot of corporations are voluntarily examining their operations to remove or cut back on oil consumption.

      I am hoping that my holdings in US operations will recover over the next year so that I can sell them without large loss and redeploy them to China and Brazil where oil should still be the preferred form of energy for quite a while.

  41. New Residential – NRZ

    I noticed that NRZ common took a nearly 10% drop after announcing Q3 results. The common now pays close to 8%. But to make things interesting, the company has announced an authorization to buy back as much as $100M of the preferred stock. All three series A, B, C are included. This is not a call but rather open market purchases from time to time as conditions allow.

    This is not the first time NRZ has used this approach to try and build a floor under their stock. I would love to collect that yield, but this is a complicated mortgage REIT with many moving parts. I’ll leave it to the most adventuresome among you to take a chance on this one.

  42. Looking for ideas: Anyone have suggestions about where to park more than 50k and get more than 1.75% (which is what Dominion Energy Reliability Notes are paying now). Need liquidity within about a year time frame.

    1. Franklin, do a fixed income search on your platform of choice. Nothing rated IG with a YTW above 1.75% exists between 9/21 and 1/22 as of today. There are many choices below IG (BB range) though.

      1. Q: Here is a Flyer, exchange traded easy: AIW at 2.3 years to mat. Can possible liquidate as your needs approach with possibly a concurrent rise toward par. Look into the company as agency holdings with a div paying common and prefs as a buffer. Me like it! Send me the interest rate differential over 1.75%! (haha of course!)

    2. I have a good size position in the Nordstrom 4% 10/15/2021 bonds 655664AP5 that are trading at about par now. Wouldn’t want to own the stock but can’t get this quality bond at this price anywhere else in the market.

      1. i’m going to check that one out, SDMarc. If i buy i’ll put it next to my Delta bond that matures next year, in the “hope and pray they hang on” pile! 🙂

        1. Check out HWCPL too. Past call, stripped price now a few cents above par (won’t lose money on call), yield near 6%, low investment grade.

          1. Thank you very much, nhcoast. I like that one for at least some of the cash. It’s been a tough search to not take too much risk and get a decent return for short-term money.

            1. Another one that might fit your criteria is AXS-E, Callable 11/7/2021, YTC about 3.9% by my estimate (should probably verify yourself), IG & QDI.
              RNR-E is another one past call that might be worth consideration. I actually like that better.

            2. If you like HWCPL then check out also bank’s NYCB-PRU(NON-IG), TCBIL(IG). Also take a look at KTBA(IG).
              Just keep in mind that these (as well as HWCPL) pay interest and not qualified dividends.

    3. Franklin, you will have to decide if you want to speculate whether an issue will be called on its first call date, or if you want a certain to mature baby/term preferred. I show only two issues that are not convertibles that mature between 6/1/21 and 1/1/22. Neither of them are rated, so there is some risk there. Both of them are way past their first call dates, so you wold have to assure yourself that they will not be called before maturity.
      The issues with yield to first call and yield to maturity.

      LANDP -31.7% 2.73% (Matures 9/30/21) (Will lose $’s if called in 30 days)
      GFNSL 1.1% 7.33% (Matures 7/31/21)

      We have owned LANDP in several accounts but do not currently own it. We have never owned GFNSL We have open buy orders for both at below market prices.

      1. Tex – Any reason why you don’t include SPE-B? Also, GLU-B has a 12/26/21 put which puts a 2021 maturity in the hand of the shareholder… just a couple to potentially add to your list…

        1. 2WR asks: “Any reason why you don’t include SPE-B?”
          I specifically did not add SPE-B because it is a convertible. There were a few other convertibles and I did NOT list any of them. I would not want anybody to buy a convertible based on my post and then find out it had some unattractive convert features, like being forced to own the common. Since converts come in many different shapes, sizes, some are busted, etc we have to careful recommending them.

          1. Yes, one needs to understand the nuances of any convertible before buying. This one needs the common to get to $22 by August next year. Due to the historical beyond mediocre performance of the fund, I would love Vegas to post an even money bet it doesnt get there, as I would be pushing the chips in hard on that. At 8/19/2021 it becomes basically a term dated perferred. If what I have researched it prior is correct. I have owned it before in past.
            It doesnt trade a lot (though it did have liquidity friday, but many days it doesnt) and has typically a wide bid/spread. Not much meat on the bone here at present $25.33, as the divi is small…. Very little…

            1. Grid – though I don’t disagree with your conclusion, I think your math is wrong….. The current conversion factor changes with each dividend SPE pays out and they’re paying monthly now. they post the conversion factor on their website once a week on Fridays @ https://specialopportunitiesfundinc.com/fund-net-asset-value/ and It’s currently 1.8472. I think, and note I could be wrong, that means the $25 SPE-B will buy 1.8472 shares of SPE upon conversion and that makes the conversion price now $13.534. Am I looking at that correctly? And as far as convertibility, given these do not automatically convert at maturity but will be paid off in cash, I thought that made it a little different than what would be expected with most convertibles. NO??? “In addition to the foregoing, all outstanding shares of Convertible Preferred Stock as of August 19, 2021 (five years from the Expiration Date) will be mandatorily redeemed at a price of $25.00 per share of Convertible Preferred Stock held on such date.”

              1. 2WR, Yes you are correct it has been lowered, but $13.53 (using your math) is the conversion price. But its not the strike price to trigger the action.. For example I will use the June 30 as it provides the then current numbers..Notice the strike price which is higher.. SPE is running on fumes and I will still take a heavy bet it cant be company converted and will be term dated for cash. Neither which interest me here though.

                https://specialopportunitiesfundinc.com/wp-content/uploads/sites/40/2020/08/SOF-Semiannual-f.pdf
                Page 33…..
                These convertibles have to be seriously monitored if one is really interested in investing in them as the factors are always changing as you shown. I generally dont touch mandatory convertibles, but term dated ones with a cash payment feature I will own, busted ones I will, and asymmetric risk convertibles were Im passing that risk to company instead on me I will also own.

                Anyways, back on focus from link above…SPE-B 6/30 for example….
                Stock, the market price of the common stock is equal to or greater than $16.91 per share (as adjusted for dividends or other distributions made to or on behalf of holders of the common stock), the Board may, in its sole discretion, require the holders of the Convertible Preferred Stock to convert all or any part of their shares into shares of common stock at a conversion rate equivalent to the current conversion price of $13.910 per share of common stock (which is a current ratio of 1.7972 shares of common stock for each share of Convertible Preferred Stock held), subject to adjustment upon the occurrence of certain events.

                1. Ahah, Grid – Good point! I’m focusing on the wrong number regarding the COMPANY’s ability to force conversion vs the shareholder’s ability to voluntarily convert. My number of $13.53 is the shareholder’s number but the more important number to be wary of if you’re an SPE-B shareholder not willing to potentially own SPE shares is the number at which SPE could force conversion…. Still, just to make sure, that number, as of your 6/30 example, would be $16.91 NOT $22. Right??? Or am I still interpreting it incorrectly?

                  1. Yes, you are correct that was the then new number, not $22 when issued. So I suspect its strike price is a bit lower now since your conversion numbers were newer than the 6/30 one. This is a good point to remember with these types as they all basically change over time through various provisions. Any old convertible I play or monitor have had provision changes in strike, conversion, and/or owner optional prices to convert. Some can be dramatically different now than when issued. These are usually shown in annual SEC filings.

                    1. Right…. we’re on the same page now and I agree company option number would now be lower than it was on June 30…. Another general point to keep in mind on convertibles in general is that there’s really no standardized formula as to how they change. Each one has to be identified individually.. For example, while SPE-B changes with each SPE dividend paid, RCA, another convertible, does not. And the other frustrating thing, as you point out, is that not all companies make it easy to keep track of the changing conversion factor…. At least SPE notes it weekly on their website, but others like you say only show it buried somewhere in an SEC filing..

    4. Parking a fairly large sum now might tend to lock it up if the market falls soon–as I expect it will. In that case, spreads and lack of liquidity could be damaging, limiting your ability to buy bargains– or at least that’s what I’m thinking now.
      Covid is in control for quite some time going forward.

  43. B Riley had a very good Q3 2020. Below is from the earnings call transcript. They are raising the dividend on the common stock.

    “That confidence supports our decision to once again increase our regular quarterly dividend to $0.375 a share, up from $0.30 per share. This marks the second consecutive quarter we raised our regular quarterly dividend. For the past six years, our dividend philosophy has been to pay over the regular dividend and augment that with special dividends based on the strength of our episodic businesses.

    As our businesses diversified and become increasingly consistent, we believe that our investors are better rewarded by us to instituting a larger regular quarterly dividend of $0.375 per share, which annualizes at $1.50 per share. While we would consider a special dividend again in the future, we believe a higher regular dividend is more appropriate for our shareholders given our current business model. Our hope is that we will continue to grow and generate greater net profit that we will be able to increase this regular dividend over time. Additionally, our Board of Directors have authorized us with $50 million in share repurchases as another means to enhance shareholder returns.”

  44. Tim—thanks for mentioning UMH-C last week. I bought some this week at $25.20 with a YTC of 6.26%. It’s callable on 7/26/22 so I think it’s a good place to park some money for the next 21 months and hopefully for longer.

    1. randy–I see some real volume today–of course it was trading at 25.20 and goes ex for 42 cents in 2 weeks so was undervalued–guess someone wants that dividend

        1. randy–I own the C issue in a full position, but either is fine. D with 6 months more call protection.

      1. And it all came in the last 15 minutes of trading, on heavy volume. Am waiting on my LANDO divis.

          1. Yes, I certainly agree, Newman. I sampled a couple hundred around par when it came out of the gate, but patiently waited and bought a big chunk around $24 later. My long term intentions arent to stay overloaded in this issue, but struggle to find a suitable replacement for the money anyways, so I will sit tight overexposed for a while until I pare some down.

            1. Gridbird, My opinion is that one or more funds scooped up Lando yesterday because it was opened to trading for the first time in a few years. I imagine a fund board meeting where Lando was discussed and they acted on it. I too bought a few hundred shares at 25.06 at first, then i sat shocked to see it fall to 23 something. I did some research and felt confident to buy more at 23.77 and some up to 24.07.
              Heck i bought my last few hundred at 24.03 Friday.
              I did sell all my shares at varying prices up to 24.90.
              I thanked Tim for that. I would pay to subscribe to III in a heartbeat.
              Tim has unearthed many opportunities for his readers.

              1. Newman, I have always liked the LANDP issue. Past 3-4 years for me every time I bought it to flip it was like being at a dice table with one die all 3’s and the other all 4’s and calling a 7 before I roll. Of course being term dated LANDP had more predictable trading behaviors than a true perpetual will have like this Series B. I had to buy LANDO when it came up because I tried very hard a couple years back to buy the Series B issue privately myself. Just kept hitting roadblocks though, even LAND not able to provide much assistance.

        1. If you look across the board on many issues today there was huge volume on many at the close…. I think it has something to do with end of October month being an important closing of the books for the year type date for many mutual funds however I do not know enough of the details to know what I’m talking about. lol

      2. Almost 400k traded shares at the end of day. Price probably won’t hold but makes the my day look better overall.

    1. Tex, may be switch a/o Sunday from 9% fixed to Libor + 7.7% or so. May be a sign of things to come for F to F issues – just my speculation.

    2. Excerpt from Quantum Online: On and after 11/1/2020, NGLS.PA distributions on the Series A Preferred Units will accumulate at an annual floating rate equal to the one-month LIBOR plus a spread of 7.71%.NGLS.A switched from 9% fixed rate to Libor + 7.7 % floating rate. Hence the price-drop.

  45. Anybody knows if rmpl- is about to be called? It’s callable beginning tomorrow and with 2024term.

    Isn’t it a nice buy under par?

    1. D–I would be surprised if it was called–don’t think they can do too much better unless they get a rating–but the call date will keep the price around $25. I own it now and have for quite some time–as long as there is little to no call risk I’m a holder. They started out buying packages of peer-to-peer loans and then pivoted elsewhere as the peer to peer loan business is marginal–now the do many other things. Begin a closed end fund they have to have 200% asset coverage and were are 340% on 6/30/2020.

  46. Thanks guys for helping me last weekend process how to deal with my overpriced IG preferreds with short call durations (set up a little IRR spreadsheet thanks to the forum). Sold my NNN-F last week at $26.13 because yield to call was about 1%. Confident it will be called but today ytc for this Investment Grade issue is 3.8% ($25.45) and bought full position again (where else you going to get at least 3.8% for 1 year IG investment. Not a trader of these issues but the forum helped me develop my method for how to deal with the relative values of this asset class. Thanks again

  47. Really is a sandbox comment ……

    Today, I had occasion to drive through the economic underbelly of northern Delaware, the “industrial” area. Amazon is building a fulfillment center on the grounds of what used to be a GM assembly plant. Delaware had been trying, in vain, to find a tenant for that site for the last 30 years.

    The size of the thing is staggering. I believe it is the largest building I have ever seen. And I’ve been through the Pentagon, and Boeing’s Renton complex, among others. Really drove home the challenge brick and mortar retail faces. Bezos may be an a++ (that would be my opinion of him) but he has changed the world.

    1. Thanks for this report from the real world, Bob. Mind-boggling. I’d be (idly) fascinated to know the details on that site: did AMZN buy it (vs. lease), from whom, and for how much? Also would be fascinated to know how large the building will be (footprint, volume) relative to other AMZN fulfillment centers and (since you use those examples) in relation to the Pentagon and Boeing buildings (Renton, Everett, etc).

      Saw an item yesterday that AMZN is hiring 100k people for the holiday surge…

      1. Bur – I don’t know the details, sorry. The building is 5-6 stories and the length of many football fields. It’s a huge site.

        As a bit of history the very first Amazon fulfillment center was built in Middletown, Delaware, only a few miles away. Delaware has no sales tax and at the time Amazon didn’t collect sales tax on shipments going to other states. It gave Amazon a huge competitive advantage at the time.

    2. This is easy to achieve when the more their income, the less taxes they pay: https://i.ibb.co/9TfCTHW/jhjkhft.png especially when competitors do not have such a privilege.
      But how viable is this business model in the long run? After all, someday IRS will get his hands on them too…

      1. Amazon deals with precisely the same Federal tax code that every other C-corp deals with. They have no special deals. The business model does not depend on a non-existent special tax deals with the Feds because there are none.

        There are reasons not to like Amazon but special tax deals isn’t one of them.

    1. Yurly: (AHHPRA) Wow, what happened there? Just moments before the close I saw it at $23.30. Then, in the last 10 minutes the bottom fell out.

      1. The common is up on the day and they collected 96% of October rent. Hope it was just a wayward market order.

        1. Looking at the charts on TDA, there was big order (relatively speaking) in the AHH-A in the last five minutes. There was also a spike in volume in the common at about the same time. Have no idea what all that implies.

      2. There were multiple sell orders, at least three large ones. You cannot tell if they are from the same seller or not. They orders just blew through the bid side of the book. Appears they were “market” orders, NOT limit orders. The fact it did NOT go down further is a sign that somebody was happy to buy all of them around 22ish. . .

        It was NOT a fat finger order IMO. . .

        1. Strange movements … their quarterly report comes out next Wednesday, let’s see what they show.
          The company certainly has its weak point (debt), but overall it is not so bad imo.

        2. there is no way to discern the difference between a marketable limit order and a market order effectively they are the same up to the limit px of the limit order. IBKR for example converts mkt orders to wide delta limits

        3. Absent any other info, since the common was up today, it looks like a gift to buyers of the preferred by a dumb seller. Hard to come up with many logical scenarios for the preferred to dive and not the common. Can’t be an expected dividend deferral on the preferred as that would require eliminating the common dividend, which would almost certainly result in the common falling.

          Potential buyout by an over-leveraged firm that would raise the risk of the preferred, but take out common at a higher price? That can happen, but there was no unusual volume on the common and it only went up a couple pennies after the preferred sales hit.

          So the odds are very high that it was just one of those dumb liquidations you see from time to time. Good chance the price recovers tomorrow.

          1. Still some curious trading here. AHH-A is up a little, but on modest volume. Meanhwhile, AHH is very strong on a very rough day in the market overall. Can’t say I know what’s going on, but it does not appear to be a case that someone else knows something we don’t, because volume should be much higher if that was the case.

            I bought some AHH-A in the $22.60-22.70 range this morning. I’m thinking this will be a short term trade as it should bounce back up soon, but we’ll see how it goes.

  48. Guys. When in sell off of common does the preferred market follow. I know there is a point that sellers have to sell anything they can ie gold, oil, preferreds etc to raise cash to cover margin calls. A fast 10% more In common down trigger it in preferred????

    1. Why did the common sell off? That’s more important than how much. If it’s a new long term risk then preferreds fall too, if it’s a temporary problem then it might not matter. Daily news blurbs and large institutional sell orders are examples of the latter. And sometimes there’s no accounting for the inefficient markets.
      When there’s a total market selloff or a total sector selloff, then preferreds tend to fall with the tide even if there’s nothing wrong with them.
      The desperate scenario you described happened in March but it’s not normally much of a factor.

      1. The March sell off in preferred was Mana from Heaven. It gave one the opportunity, in many cases, to sell off issues with big losses (capturing for tax purposes) while buying back economically equivalent issues with no wash sale problem. And buy at silly low prices.

        My only regret about March is I didn’t have enough of a cash position going into the sell off.

        I don’t want to be a Ghoul but another panic would be great for me.

  49. MVCD trading below par plus accrued interest. MVC is being acquired by Barings and the transaction is expected to close in Q4. Barings communicated that they will be calling MVCD subsequent to the closing of the transaction.

    1. A lot can happen between now and then. Some risk figured in the price not quite a guaranteed 6% return.
      If YTC is calculated from pay date to call date it’s exactly at par. Some formulas calculate from ex-div date to call date which is higher.

      1. Martin – How do you figure? MVCD last pay date was 10/15. Even if MVCD was called today with no advanced notification, holder would get approx 25.06.

        1. Ooops, Martin. I misread what you wrote. Sorry ’bout that….I think we’re saying the same thing coming from different angles, but given MVCD coupon is 6.25%, not 6%, don’t you mean 6.25% return, not 6.00?% Even if you bot at $25.06 today, then you’d accrue daily at 6.25% rate until it’s called or matured, right, not 6.00%?

          1. That’s correct. I own some MVCD so I think it’s worth the risk. Just trying to answer the question of why it’s not selling higher.

  50. AHT is trying to get rid of the preferred through an exchange offer for common. Prefs haven’t paid a dividend in almost a year with little chance of ever doing so again. Company is fighting a losing battle for survival that is being played out in SEC filings.

    No matter, HDO likes it, or did once: “Property REIT Yields 7.8%, Dividend Coverage 315%, High Insider Ownership, Bargain Price”.

    Another candidate for the new ETF, HDO.

  51. Did anyone else manage to grab some SLMBP down near $35 a week ago?

    Great news today:

    “SLM Corporation intends to use part of the net proceeds to fund a tender offer for up to 2M shares of its outstanding Floating Rate Non-Cumulative Preferred Stock, Series B, par value $.20/share, at an expected offer price of $45/share and the remaining proceeds for general corporate purposes.”

    SLMBP at $45 today. The company (SLM) is trying to buy $100 par value preferred for $45/share.

    I only grabbed a little in mid October, but both rare and nice to have gains so large on a preferred stock that quickly. It is good to be good, but better to be lucky!

      1. Depends how it plays out. If Uncle Sugar pays off the loans it helps them. Currently it hurts because more people are skipping payments even if they can afford to pay. Why pay your bill if somebody else might pay it for you?

    1. Rob-
      Can you explain the current higher interest rate, given that this is on QO:
      ” After 6/15/2011 the floating rate will be the three-month LIBOR plus 1.70% per annum.”
      That would equate to ~ 1.92%
      Their spin-off of the Fed student loan servicer Navient (NAVI) currently still has JSM Sr Note paying almost the same, but can be called at any time. Got down to $7 (long)
      thanks

      1. Gary:

        The quarterly dividend payment for SLMBP is based on LIBOR + 170 basis points that resets every quarter. But you have to remember to divide that quarterly payment by 4 and that SLMBP has a par value of $100/share (and not $25/share).

        So for the ex-dividend date on 9/3/20, the quarterly dividend was declared as $.5164. That was calculated using LIBOR at approximately 35 basis points. 170+35 = 2.05. You then divide that number by 4 to get the quarterly dividend payment.

        Because this $100 preferred has traded down to $44.50, your annualized yield now based on the 9/3/20 dividend is 4.65%. I sold 95% of my shares in SLMBP as there isn’t much value up here at $44 – $45.

        SLM is getting an incredible deal with this tender offer. There are 4 million shares outstanding of SLMBP that they issued at $100/share back in 2005, and they will likely be successful buying half of them back at a 55% discount. Smart move.

  52. Since I think some SA readers wander over here now and then, I make note of this post this morning (this is the entire post, unedited by me):

    “Bjorn.R
    Comments65 | + Follow
    Hi Rida,

    I’m down 90% on your last PEI recommendation. Should I sell or do you see sunnier days ahead?”

    The issues that the writer was asking about now trade under $6 versus +$22 earlier in the year, when the HDO group apparently recommended them. It was posted in an HDO article flogging the PMT preferred, which now sell at +$22, compared to under $6 in March. Ironic, no?

    HDO frequently pushed people into positions at or near market highs and when they tank they claim that they had advised paying customers long ago to get out. Pendy must have the day off as Rida is running the defense today.

    1. Bob-in-DE
      Investors ? who blindly take the advice of an ‘author’ on S.A. ( or anywhere else for that matter ) should have learned after their first loss to do their own research. It appears this commenter has not. I access S.A. to find opportunities to do further research on, not to buy/sell based on the articles.
      What really bugs me is that many authors are part of ‘groups’ and they support each other by touting each other’s picks/pans, but the name on the article will be a single person. S.A. is there for the $$$, not to help investors. ( It didn’t begin that way ).

    2. I seen you slide in a nice zinger in there. Good job. Rida has me banned from his specific articles. I noticed his insincere non answer to the question posed to him about PEI you referenced above.

      1. I’m thinking of starting a new ETF, ticker “HDO”. Initial buys will be CBL, SOHO and PEI. I wonder if Pendy is still backing up the truck on CBL.

        I find that as long as you stick to facts, don’t use the phrase “front running” and don’t say anything critical of SA (and their total lack of oversight) about half my comments get through. I don;t know if the fact that I’m a paying customer influences the SA censors.

    3. As embarrassing as it is, I admit that I got clubbed like a baby seal on a few securities that were mentioned over there.
      But it is a tax write off from the gains of the stuff recommended here.

    4. i own a couple of the issues hes recomended recently.
      i may have to sell them now that hes recommending them

      (pmt-a and irm)

      1. RDK ………..

        It takes time to figure out who is worthy of trust. HDO promotes reasonable ideas and terrible ideas with equal vigor. It’s all about the subscriptions.

        I own IRM. Least of all because HDO pumps it. I recognize it as a higher risk play. That fat dividend is not free money. It’s a bet on management, actually.

  53. That’s one reason I stay away from thinly trade and or small issues. When I move one way or another on an issue, I tend to move several friends on the same day/week. I can’t be sitting on a thousand share order not going off.

    But that can happen Lurker and I suggest you don’t blow out just to be done with it. WAIT

    1. If you prefer, In this case it wasnt a thinly traded issue. It just got delisted. That can happen to a billion dollar float…. I have to admit, I can care less on whether something is illiquid or not. I dont ever have to sell and on a couple I may never.

      1. Yeah I hear you GBird. Some go into limbo for long stretches. And there’s good money to be made with mis priced issues!

        I’ll look at say a bank issue with only a million float pfd shares…. if I really like the bank’s common. But for a plethora of reasons it’s only going to be an issue here or there.

  54. I really need help from Gridbird & the others who are so darn knowledgeable.
    I own 1000 shares of SSWA-a 7.125%
    baby bond issued by SEASPAN. When they merged into ATLAS in Feb. 2020, this issue was totally delisted from any exchange. I have over $24,000 listed on my accounts but that is FAKE. I cannot sell it-it has not traded-I cannot seem to have it declared as a ZERO & perhaps get some tax credit….Can anyone shed any light on this? of course, I would sell it at a loss! QUESTION: Will they at least redeem it in 2027 when it matures. I am a pretty savvy Pref/Baby Bond investor BUT THIS is driving me nuts, not to mention that I am so angry!

    1. Lurker, Trust me, ignore the visual of $0.00.. Just let it play out and it will be fine..The common is doing fine.. I had same situation with an MB Financial issue last year. It got delisted and dropped to $24 and I convinced others to load up. Some got nervous. I said it will be fine. Over a month later it finally popped up on OTC and started trading at $26. I never inquired or anything. I just waited… It started trading after the dividend was dispursed. This could be same situation happenning. They might want to want until next interest payment is dispursed before trading with different ticker.
      If common was acting bad I would suggest otherwise, but its doing fine. Resist panic urge to sell first day it does start trading again ( it will trade again) as some may freak out and dump. I have all sorts of issues show $0.00 before for days and weeks on end. Ignore it…. As long as common stock is fine ignore the distraction. It will all work out fine… If for some reason it winds up on bond market, be even more patient and let it settle down and trade to its value before doing anything.

      1. @ Gridbird & the others who responded to my post re SSWA THANK YOU! You chaps are , as far as I am concerned, the best resource area re preferreds/B BONDS on the internet; nice for anyone to know U R here & available. I have written to ATLAS Pub. Relations & I will inform the board if/when I get an answer.
        I must confess that I was in error re not getting the dividends as due…at this time, I have 76 Pref/Bonds in my accounts + some other holdings. In an effort to keep track as to whether I am receiving Int/dividends in a timely manner, I review my Schwab History Pages. In short, the last 2 payments were not listed in ‘history’ but when I checked statements, they were!? —
        made me feel a bit more relieved—2 of the old Seaspan Notes have been listed on the Irish Exchange but ATLAS never even stated they would do so for the highest paying note SSWA. Strange goings in in ‘River City’–THANKS AGAIN!

    2. RE: SSWA ………..

      I don’t know the totality of your situation, but this is what I would advise me:

      Take a Valium and hold on. What Atlas did is quite wrong but they did it. They should either call it, relist it, or facilitate an OTC listing. I don’t know why an OTC listing has not popped up.

      This is a bond, not a preferred, and it matures in 2027. The company does not have a choice. Defeasance of a bond is tough to do.

      As a practical matter you can’t sell this except in a private transaction. Some time ago I checked it out on the CUSIP at every brokerage where I have an account and no one would trade it. Maybe I should make like a hedge fund and buy up all the SSWA from motivated sellers.

  55. Has anyone else notice the trading in Bunge preferred, 4.875% BGEPF. It’s freely callable and has moved from the 98 to 99 range to currently 103 with a high today of 110. At what price is it likely to be called? The preferred is rated BB and seems a pretty strong credit. It’s in agriculture so few are going to understand its business. Do you think it could issue new preferred at 4.25 to 4.5%? This issue is a busted convert that is way out of the money so that would be something worthwhile for the company to get rid of cheap. Thoughts?

    1. i sold out yesterday. had a nice gain. would love to buy it back cheaper but
      not sure i will get a chance. but i hate to gove up capital gains so i normally take them

    2. Potter, this is only redeemable when common stock price reaches conversion strike price which it presently is nowhere near. Please consult Bunge annual SEC filing to see the conversion factor as it has changed over the years. I cant remember off hand what it is now, but it has changed, and this issue is not callable by the company now.
      I do like convertibles especially now, and have very recently bought a couple. I dont own Bunge convertible now but have several times in the past.

      1. Thanks. I like convertibles also. Sempra Energy, Broadcom and Centerpoint, all mandatory converts.

        1. Potter, I like some convertibles, but personally I shy away from any mandatory convertibles, as I have even less control of my destiny there. Im just not smart enough, as one has to navigate through a common equity evaluation by market while under mandatory time restraints the convertible imposes. Plus Im still ticked about the CenterPoint thing.. I violated a principle of mine and bought it. Made a quick buck, and then went back to the well and lost a couple bucks second time around. And thankful I had a quick rip cord then as it is now well below what I sold it.

      2. The conversion price has been adjusted to $81.81 and today’s close on the common is $56. If the common gets much higher, the preferred should start to reflect some conversion premium. Unlike the mandatory issues, there is no limit on conversion except when the common exceeds 130% of $81.81 and there is a substantial difference between the dividend yields for preferred and common.

        1. There is also the owner optional conversion also. This is way out of the money presently.
          Bunge has 6,899,683 4.875% cumulative convertible perpetual preference shares outstanding. Each cumulative convertible preference share has an initial liquidation preference of $100 per share plus accumulated and unpaid dividends up to a maximum of an additional $25 per share. As a result of adjustments made to the initial conversion price because cash dividends paid on Bunge Limited’s common shares exceeded certain specified thresholds, each cumulative convertible preference share is convertible, at the holder’s option, at any time, into approximately 1.2224 Bunge Limited common shares (8,434,172 Bunge Limited common shares), subject to certain additional anti-dilution adjustments.
          And you are correct, convertibles will generally price the pressure in on conversion features that may strike.

  56. Am I thinking about this correctly? I’m not a preferred trader (I buy and hold) but with my NNN/PRF 5.2% at $26.13 and one year to call…and yield to call prob under 1% why would I want to continue to hold it? I can’t see them not calling it since they are investment grade and can do a lot better than this. I’ve been selling some of my investment grade reit preferreds at high prices and low ytc but just checking to see if I am missing something. By the way..who is buying these issues at these prices with short call time frames. Thanks

    1. Yep, YTC sub 0.5% at this point. So if you bought low and yr assumption is correct that they’ll call it (fair), can’t fault your logic.

      1. Thanks Bur Davis-
        Yah. Bought it NNN/PR at $23.50 a couple of months ago so have a nice gain already but who the heck is buying these at this price. Retail buyers who really don’t understand what they are doing??

        1. SD – Though I don’t disagree with your logic, one possible answer as to who would be buying this at this level would be someone looking at it as a money market alternative…. Bur, I think your YTC does not take into account the stripped price so real YTC would be about 1.08% and that’s still too low to be interesting…. However, from a non risk taker’s point of view who’s looking solely to do better than money market, the aspects of buying something like this could be very appealing. For example, practically anything that could go wrong with his assumption other than NNN running into credit problems leads to his results being better, not worse, than his original investment assumption… For example, every day beyond 10/11/21 that NNN-F remains outstanding, his yield improves… Afraid of higher interest rates? With its 5.20% coupon for a BAA2 preferred it has some cushion before it would move down when interest rates rising… All that being said, and not knowing much of anything specifically about NNN, perhaps a company with a name like National Retail Properties doesn’t really have that much of a cushion vs what it could get for a new issue… So at present price, I do agree with you and say “nice sale,” but this is a stab at trying to identify who might like something like this at this price… And it closed even higher too.. Go figure..

          1. 2whiteroses – Thanks for your thoughts. I was thinking similar to your rational for the buyer’s actions of wanting a 1% min return on cash. NNN could prob get 2%ish unsecured money or low 4% preferred if they want to now. With low trade volumes I guess a small number of buyers with the same thought could push the price up pretty easy. Getting used to this low rate world.

          2. 2WR, what do you mean by ‘stripped price’ in this context and what formula are you using? Not arguing, just educating myself…

            1. Bur – I use the Fidelity bond yield calculator at https://gpi.fidelity.com/ftgw/interfaces/pyc/ It’s very flexible in its ability to calculate yields (or price) for any vehicle with par amounts of $25, $50, $100, $1000, $5000, and $2500 and with the use of a little algebra, any other odd par amount as well… By “stripped price,” most standard bonds include accrued interest in their price, however, baby bonds and term dated preferreds trade flat, meaning that they do not include accrued. Therefore, to get a truly accurate yield, you have to subtract the amount of accrued that’s already been earned to date but not paid out to the seller. So in the NNN-F example, the Fidelity calculator shows you that accrued is .1517. You have to deduct that from 26.13 and then recalculate using 25.978 to get an accurate yield to call of 1.079% based on 10/27 settlement date.

              You do have to play with the calculator a bit to understand what it’s providing and not providing, especially with a perpetual such as NNN-F. You have to make up a bogus maturity date that will coincide with one of the quarterly interest payment dates such as 12/15/20xx (and yes I know I’m using “interest” though F pays “dividends,” – the calculator makes no distinction) so it’ll calculate a proper amount of accrued, and then enter the call date which in this case (10/11/2021) does NOT correspond with an interest payment date. Then ONLY look at the YTC calculated because obviously the YTM will be irrelevant/bogus since it’s calculated based on a made up “maturity” date. Does that make sense???

                1. Bur, you can also calculate the IRR (Internal Rate of Return) using Excel if you have it on your computer. It is easy to do. Here are the inputs using the numbers on NNN-F.

                  Settle date 10/27/2020 -26.130
                  Dividend 12/15/2020 0.325
                  Dividend 3/15/2021 0.325
                  Dividend 6/15/2021 0.325
                  Dividend 9/15/2021 0.325
                  Dividend 10/11/2021 0.094
                  Call 10/11/2021 25.000

                  Internal rate of return 1.082%

                  IRR does assume that the dividends/interest are reinvested at the same rate which might not be accurate. In this case, it does not make a material difference. Fidelity’s calculator shows 1.079% and Excel shows 1.082%.

                  If you have a number of shortly callable issues you are interested in, it is easy to set all of them up in Excel with the current prices and closing dates. It would let you quickly see the IRR’s for all of them to make your choice easier. It would save a lot of time instead of having to reenter the numbers for each issue using an online calculator. I show 139 issues with first call dates between 12/1/20 and 1/1/22, so there are a lot of possibilities if you are searching for money market alternatives with obviously higher risk

                  1. I’m too much of a dinosaur way too intimidated by Excel to figure out how or where the template is to set this up… I know a generous III’er gave me a link to use his constructed IRR calculator in Excel and thanks for that but for whatever reason, my Excel now says it can’t find it, so it’s gone. My question to you, Tex, is if you took the time to enter the data for all 139 issues you’ve identified, does the program dynamically update the data as market prices change? And if so, how?

                    1. Hey old friend, when you’re done mowing the back 40, here’s all you need to do: If PC-based, just google stocks in excel and there’s an avalanche of intel. If Mac-based, then within the spreadhseet, click on Insert/Add-Ins and find stock connector. Auto-updates as frequently as you want.

                    2. 2WR, yes this can be automated with spreadsheets to automatically calculate IRR’s as the prices change. Here are a few options:

                      1) If you have Excel 365, it is easy peasy to add all kinds of stock info into the spreadsheet. They added a “Stock” data type that lets you get prices, dividends, market cap, etc. One way to implement it would be to have a single row for each ticker with the dividends, dividend dates, and call date. Then you use the EXCEL XIRR function to calculate IRR.

                      2) You can do all of this in a Google spreadsheet for free. You can either enter the data directly into Google or you can upload an Excel spreadsheet. It is basically the same approach as using Excel 365, but it all online.

                      3) It is more complicated if you use any of the older versions of Excel, like 2016 or 2013. The challenge is automatically downloading the stock price into the spreadsheet. It used to be easy using Yahoo quotes, but they changed their software to make it more difficult.

                      One aspect will take time to maintain. When an issue gets to the ex-dividend date, you will have to remove the price and date for that dividend and change the IRR formula. 100% doable, but it will take some time. Many years ago I did this for several hundred issues, but I have not kept it up to date. And of course the other issue is being certain that the issue will be called. If you get this wrong, then all bets are off as to what your return will be.

                      Hope this helps. . .

                    3. Thanks, Alpha and Tex – you know how far back I go in figuring bond yields? I can remember pre-computer days where we had written tables of bond yields and you used to have to interpolate by hand using those tables to figure out exacts. So when the likes of Texas Instruments came up with their handheld bond calculators in conjunction with the SIA, that was a godsend… I still have mine, but couldn’t even come close to being able to remembering how to use it now having gotten used to the online calculators. This is all my way of saying Excel intimidates the h**l out of me. If I could pull up Grid’s line about to what great lengths he’d go to not learn anything new, I think it might apply to me and Excel…. I love the concept of what it can do especially if within it, it dynamically can update the assumptions when mkt prices and dates change, but this old dog is just not going to feel confident in how to set it up… Back 40’s done, though, Alpha, thanks for asking…..

                  2. Tex2, yes IRR (as well as RATE, PV, and FV) are my frequent friends in Excel. Thanks for putting it in those terms, because that indeed is an easier way for me to figure it out (I am an old Excel hand, so it may not work for others).

                  3. Good summary T2, Might also add for those running a number of issues on a spreadsheet, you may want to use the ex-date rather than the divvy date to obtain truer comparative YTCs on any given day. Especially useful if running auto-updates on pricing.

                    The IRR overstatement of YTC can be defeated (if distributions are periodic and level) by using the sum of distributions remaining (excel can read the current date and exclude prior ex-dates) and the days remaining to call.

                    1. alpha8, I guess I’m not as old a hand as I like to think: using T2’s example can you spell out what you mean by “using the sum of distributions remaining (excel can read the current date and exclude prior ex-dates) and the days remaining to call”?

                      I get this as an IRR input:
                      Settle date 10/27/2020 -26.130
                      Dividend 12/15/2020 0.325
                      Dividend 3/15/2021 0.325
                      Dividend 6/15/2021 0.325
                      Dividend 9/15/2021 0.325
                      Dividend 10/11/2021 0.094
                      Call 10/11/2021 25.000

                      …. but how are you suggesting to restate it?

                    2. Bur, if you wanted to restate the IRR calculation like alpha8 suggested, it would look like:

                      Settle date 10/27/2020 -26.130
                      Dividend 10/11/2021 1.394 (This is the sum of all dividends that would be paid)
                      Call 10/11/2021 25.000

                      Internal rate of return 1.056%

                      This lowers the IRR from 1.082% down to 1.056% which is not a material change.

                    3. Great help guys on analysis of preferred based on call date. Just did a simple XIRR in sheets with every dividend and also just adding them up as one payment. Feel like I accomplished something today.

                    4. This is the formula I use to calculate annualized yield to call:

                      YTC = (D*(C-A)/365+25-P)/(25/2+P/2)*365/(C-T)
                      D = Annual dividends
                      C= Call date
                      A= Dividend payment date after the most recent x-dividend date
                      P=Current price
                      T=Today’s date

                      This gives an arithmetic approximation of what you get using XIRR but saves the effort of having to enter in each dividend with its payment date. I think it’s pretty much the same thing that A8 noted.
                      I enter the values as a record in a data base. To get the price, I use Google Sheets with another field with the ticker and =GOOGLEFINANCE() referencing that cell. For maintenance purposes, I also include another field with the X-date and use conditional formatting that shows a colored fill when the current date gets near the X-date, as a reminder to update the X date and the payment date. If you want to avoid overstatement of the YTC when the price is less than 25, then you can substitute MIN(25-P,0) for the 25-P term.

                    5. T2, Confessions from a reformed IRR (XIRR) amigo…

                      The IRR v YTC yield calc is small in the above short-term example but the delta grows materially as a preferred’s term grows.

                      A more near-term consideration; we know that on ex-date, the divvy is baked-in. For this reason, using ex-dates to calc YTC provides a materially-truer YTC reading days, weeks or a month prior to a divvy-based calc. Especially useful in divvy-capture/YTC-arbitraging around x-dates.

                    6. One note to add here: As our resident bond expert 2WR would point out, be sure to correctly calculate accrued divvy from the dividend dates even when calculating the YTC from the ex-dates.

              1. 2WR – Rre: third sentence, I think I know what you meant to say but it’s stated backwards. “Standard” bonds (aka non-exchange traded bonds) trade “clean” with no accrued interest included in the bid/ask, whereas baby bonds and term preferred (if exchange traded) trade “dirty” or with accrued interest included in the price.

                1. I suspected someone might call me out on the way I wrote what I wrote.. What I was trying to show was that the Fidelity calculator assumes you have paid out the accrued interest one would pay to the seller in a standard bond purchase when it shows you yield. Since you don’t pay that out with a baby bond/term preferred, you have to subtract that out of the market price. I could have done a better writing job, I agree. Thanks, Bob

                2. I understood what 2WR had written, simply because I’ve traded a fair number of both individual bonds and pfds/etd. I was trying to link that term ‘stripped’ to my experience, which I was able to do. Thanks both.

                  1. Think of it this way: “stripping” makes a “dirty” bond (or preferred) “clean.”

                    My wife thinks this is some kind of a chat room.

        2. RE: NNN-R

          This is not the only one. There are quite a few issues that now trade (or recently traded) at negative yield to call. In many cases on issues almost certain to be called. The 2 Schwab issues and KKR, as examples.

          I believe that the people doing this just don’t know what they are doing. They look only at the nominal yield and think it’s free money.

          There are some good places to park cash. One of my favorites right now is an IG non-exchange traded QDI preferred now floating based on 3mL and yielding just under 4% and priced just below redemption amount.

    1. For me it is too risky to hold long term. However, I was an opportunist and bought a small amount during the initial dump and sold a week later for a +8% flip.

      1. Nice Flip. I see that it went from 88 to 106. Appears to be a sound
        company, but, as you say, there is certainly some risk here. Appreciate it.

        1. Outside of a few shares that first trickled out, before people realized they got them and then dumped them, its largely at its highest price now. Appears to be stabilizing around this area. I bought in $93 and $91 range. Im planning on holding through Covid craziness as this is a Covid play. QVC has experienced a renaissance during this time and revenues and income are jumping.
          One generally is going to have to accept risk for this yeild. Its one I am willing to take for time being.
          Heron, remember this wasnt issued for benefit of company, it was issued directly without cost to shareholders as a way to extract value from the company (via means of leverage). Malone and another suit between the two own 8% of the float which is over a $100 million, and have stated they are keeping theirs.

          1. Interesting. Thanks. I think current shopping trends have a good chance
            of continuing for quite a while.

  57. Is UZA anticipating a call? I shockingly got out at the top but maybe I shouldn’t be getting back in?

  58. I bought 300 shares of EQH-A today for around $25.30. It looked like preferreds got beat up a little bit today. I’m assuming that was due to the rising 10 year?

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