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.
ATLC was upgraded by JP Morgan. I entered ATLCL in the fall and have a gain. Today the price dropped at end of closing and I picked up more under $23. I watch this closely. Matures in 2026 so no doubt poor economic conditions during the duration is likely. I think Mr. Diamond’s hurricane headed towards China but I read the Atlantic is heating up.
I bought ATLCL about two and a half years ago at $25 because of the relatively short maturity date. I am always a little bit nervous about it and somehow worried that ATLC will suddenly have problems. Maybe it’s irrational, but it’s how I feel. If it gets back to $25, I’ll be gone.
Yes in the high risk category. I watch it closely. Sad to say but they are in a “hot” market. People live on debt to lease cars, etc. Yet, some truly (working poor) have my heart. If you look at all the subsidiaries it might make you feel better. Cash advance is a lucrative business. TN, AZ and other states allow ridiculous high fees. In TN case, it is the crooked legislature that takes the donations, bourbon, steak and honkey-tonk bars in Nashville. I think you will be all right with it; there is always a market for the poor.
There was a massive sell-off in CMSC in the last 10 minutes of trading. Shares closed at 24.21, down 39 cents for the day. There was a smaller sell-off in sister CMSD, closing at 24.77, down 19 cents for the day. Both issues have a nominal interest rate of 5.875% and mature in the late 2070s. CMSC just went ex-div on March 27th, so it should sell for 18 cents less than CMSD since CMSD will go ex-div on or about May 14th. At today’s close, CMSC is 56 cents below CMSD. I was buying as fast as I could once I noticed this but my average purchase price for CMSC was in the low 24.40s. My guess is that on Monday morning, either CMSC will go sharply up, or CMSD will go sharply down, or perhaps some combination.
Selling on the day after x-div and the div was .365 and the sell off was down .39 cents. Not sure I would go all in on an investment for 5.8%. There might be an arbitrage here… but I wouldnt necessarily bet the bank on it as it could go either way. Both are near par so you cant go get screwed in an environment where rates are supposed to change in the coming year. Me, Im focused on higher yield opportunities as rates come down in future. Looking at investments that are under par and could rise.
Current bid on C-J is $25.05 LOL
I saw it got up to 25.09 before the close. So strange.
(To clarify for anyone who doesn’t pay attention to C-J: it was called, is ex-div, and will be redeemed for $25.00 tomorrow.)
Question on this –
How can anyone sell a called preferred on open market and skirt the delivery requirement on the call day? When any preferred is called in my Schwab account, it’s designated for call and set for delivery, so I dare not sell. I once did sell a called position and it was a big “”to do” rectifying that I had a negative share number on delivery day. So, how do folks work around this and sell so many long after it’s known that a preferred stock is called? Or, are there really that many dummies like I was, oblivious to the delivery requirement? Fan
As long as the trade settles before delivery day you should be fine. I made that mistake myself at fidelity, selling the day before delivery, and it was a pain. But I buy and sell things marked as called in the weeks before delivery with no trouble. Some brokers will sequester it for call in advance, but then it shouldn’t even allow you to place the trade.
and there is a difference between ones sequestered for a partial call versus a full call.
Tim,
Don’t know if you know, but the page: IPO – Preferred Stock and Baby Bonds (Exchange Traded Debt) has the wrong current yield for the last 11 offerings. For older offerings, the current yield looks correct.
Thanks for all you do,
Cliff
Are you the same Cliff who used to post on Morningstar?
Just discovered this website https://www.bankregdata.com/ for looking into the guts of a bank. Not free.
If you’re interested in a video reviewing the data for NYCB, watch here:
https://twitter.com/TheBondFreak/status/1772707939956007193
Question for anyone—where do you go to find listings for new issues of corporate and agency securities? If it’s on finra, I can’t figure it out. Thanks.
W ISLANDER
This might help, not sure who uses what here.
https://www.sec.gov/cgi-bin/browse-edgar?company=&CIK=&type=424B5&owner=include&count=40&action=getcurrent
There’s been some chatter here (or on Readers’ Alert) about TPTA v. TFSA, as there’s quite a discrepancy in yield, despite their apparently having merged in 2022. Today TFSA jumped quite a bit and TPTA fell further, both on much higher than normal volume. I had put in what I thought was a decent sell order on TFSA, then went out for my morning bike ride and saw it had reached > 27.50!! before settling to 25 at this moment. I can’t find any news. Anyone? TIA
CR see below…haven’t a clue on price discrepancy between the two (TFSA ~38 mil outstanding , & TPTA ~85 mil) and the run up today in TFSA. No return call from CFO Terra as yet…
Terra LLC guarantor of TPTA appears to be ultimate guarantor of TFSA as referenced in “Terra Property 6” 10 Q dated March 15 ’24… I have a note into CFO of Terra at ir@mavikcaptal.com seeking confirmation. DYODD
Senior Unsecured Notes
On February 10, 2021, Terra BDC issued $34.8 million in aggregate principal amount of 7.00% fixed-rate notes due 2026, pursuant to an indenture between Terra BDC and U.S. Bank National Association, for net proceeds of $33.7 million after deducting underwriting commissions of $1.1 million. On February 26, 2021, the underwriters exercised the option to purchase an additional $3.6 million of the notes for net proceeds of $3.5 million, after deducting underwriting commissions of $0.1 million. Interest on the notes is paid quarterly in arrears every March 30, June 30, September 30 and December 30, at a rate of 7.00% per year, beginning June 30, 2021. The notes mature on March 31, 2026. The notes may be redeemed in whole or in part at any time or from time to time at Terra BDC’s option on or after February 10, 2023. In connection with the issuance of the notes, Terra BDC incurred deferred financing costs totaling $1.0 million, to be amortized to interest expense over the term of the notes.
On October 1, 2022 in connection with the Merger, Terra BDC, Terra LLC and U.S. Bank National Association entered into a second supplemental indenture pursuant to which Terra LLC assumed the payment of the notes and the performance of every covenant of the indenture, to be performed or observed by Terra BDC.
The indenture between Terra LLC (as successor to Terra BDC) and the trustee contains certain debt limitations and asset coverage covenants. As of December 31, 2023 and 2022, the Company was in compliance with the asset coverage ratio requirements under the indenture.
XBRL Viewer (sec.gov)
I took a quick look. Extend and pretend on debt except US Bank declined. I wonder if the covenants for the preferreds are truly in good standing. Note the lenders allowed Terra to change covenants (so they would be in good standing). The trustee for the preferreds is US Bank which declined financing. Perhaps reaching out to the trustee might be helpful?
This is another high risk IMO.
I’m probably dead wrong, but since price has just recently moved up could someone have some advance knowledge of a call for TFSA? I’ve noticed an interesting trend…. Over the past three months, the price movements of two issues TPTA and TFSA have been closely correlated, trading in closely to each other on a percentage basis. However, in late February, they diverged. It’s possible that some investors holding TPTA may have strategically shifted their funds to buy TFSA at a discounted price. Although I could be mistaken, the timing of these moves seems peculiar.” 📈🤔
i added to SPNT/PRB 8 preferred callable 2/26/26 FTF 5y + 7.7% at 25.25
7.44 ytc I expect issues to be called
mjtroll—if they don’t call it they are fools–and from what I have seen they are NOT. I would add more but am pretty much full of that issue.
its not callable until 2/26/2026
Exactly—I meant I have a full position and for diversification I don’t want to add more.
S&P Global Downgrade For 5 US Regional Over Commercial Real Estate Concerns
https://www.benzinga.com/markets/equities/24/03/37950136/s-p-global-downgrade-for-5-us-regional-over-commercial-real-estate-concerns
https://finance.yahoo.com/news/outlook-5-regional-banks-lowered-133900442.html?fr=sycsrp_catchall
And, they are up nicely today…go figure.
Ab I saw that yesterday. Not surprised VLY is on the list.
For you that like SLM Corp and rolling with that perpetual floater, you should really check out their corps. You can get a duration as low as 5 year and lock in 10.30% yields right now.
FYI beginning March 2029 -> March 2032, SLM has well over 40+ bond floats maturing.
good comment…BA-3/B+ RATED
MJTROLL – I was also to surprised to see the SLM stock price trading 52 week highs here in the $20s again and cap now nearly back to $5B.
BEPJ trading $25, would need to be close to $27 to get the the same yield as BEPH (6.7%), and about $26 to be the same yield as BEPI (7%)
These are the other 2 BEP sub notes perpetuals I see out there… FYI
ALL-B I got this message from TDAmeritrade tonight, HOPEFULLY confusing ALL-B’s Fixed-To-Floating Rate Sub Debentures payment with that of Allstate’s Series H preferred which WILL be paying .31875 on 4/15. ALL-B would be paying .31875 were it not floating but it’s been paying based on SOFR now for a while…. Now I’ll have to bird dog the actual payment more closely than normal.. Grrrrrrrrrrr.
1 Day Before Ex-Dividend Date – March 27, 2024
Allstate Corp ALL-B:NYSE
$0.3188 Dividend Payable Date: April 15, 2024 Record Date: March 28, 2024
Last Price: $26.22 at 6:12pm ET.
I sold mine over 26. The price was too high given call risk or some other nonsense risk.
I checked Market Chameleon, SA, and Preferred Stock Channel; all of them say the ALL-B dividend is 0.3187, xd of 3/28/2024.
So it is likely an error from the feed, because the NASDAQ website ( no info for this coming divy ) shows payment of >0.50 for the past 3 dividends.
Guess we have to wait to see if they correct the info in 2 days time.
Here is what Allstate IR sent me when I emailed them about the upcoming interest payment on ALL-B showing as the 5.1% fixed amount:
“I can confirm that Allstate is not fixing the rate at 5.1%. It began floating in 2023 and will continue to float going forward based on Term SOFR per the email below.
We are in the process of inquiring with DTC and brokers to clear up any communications concerns.
Thanks again for reaching out and bringing this to our attention.”
I sold my ALL-B around $26 also. I bought August 15, 2053 maturity subordinated notes instead (CUSIP: 020002BB6) . It floats off the 3 month plus 2.938% and I was able to get it for right around par through the bond desk at my broker. I preferred the slightly lower yield spread in exchange for less call risk. I was also a little spooked about the dividend amount showing up incorrectly and didn’t want to deal with any potential hassle.
https://www.sec.gov/Archives/edgar/data/899051/000110465913059936/a13-14234_2fwp.htm
Thanks for the Heads up on this one Dick
According to the NASDAQ Div History, the payout for ALL-B this quarter is $0.55235736–slightly lower than last quarter.
I guess QOnline is in error?? Record 4/1, so ex would be 3/29 if “at least one day before record date” – one day before the “new” standard, right?
Guess we will know on Thurs.
confusing dates
Disregard– Good fri intervenes -grr also.
Hmm… no 10 min pause to be able to change
Speaking of floating rate, does anyone have any thoughts on why SLMBP has been trading so strongly?
I bought a little back in January, thinking I would have plenty of opportunities to add to it – whoops. Definitely a blind squirrel buy.
David ; someone here put me on to it , maybe six months ago and I got 120 sh at 67.93 . needless to say its been a roaring success ; I have no plans to sell .
It seems priced normally for what it is.. or am I misunderstanding the terms? Is it a case of it was ignored for a while due to being somewhat of an oddball and it finally caught some stream to bring it up to a market price?
Trading high because floating divvy is high. Doesn’t seem to be much default risk despite the moral hazard of loan forgiveness talk. I took my profit and went home. Don’t like depending on government policy not changing.
good comment ..there is good article about this on Seeking Alpha titled
SLM Corporation PFD SER B: The Time For Big Dividend Gains Is Over
it appears as if preferred was trading like the common
BML-H , Bank America Active Fltr , reset next week, been callbl since 2009.
Closed Monday $21.50 . . . I do own / adding . . . Any holders , comments .
I think 58551TAA5 from BK looks like a better value. It has a minimum rate of 4% and is priced similarly. It should be available to buy through calling your broker’s fixed income group.
BML-H has the advantage of being easily tradeable, but with a 3% floor. Otherwise, amazingly similar at today’s prices.
I hold BML-J. I picked it for the higher min rate. My avg cost basis is $20.80. I’m not looking to add to it at current prices but content to hold.
BML-J is similar to the BK preferred. However, if BML-J were a $100 issue, it would trade at $90.60 whereas the BK issue has been trading around $85. That’s what I meant by “better value”
You’re right the BAC issues are easier to trade. One has to decide if that’s worth paying almost 6% more though.
I bought in a couple of divs ago, close to 7% yield, QDI, makes sense in our circumstances, full position for us, staying with it.
Interesting this pref carries a floor coupon of 3%. Likely added as spread over libor/sofr very low at .65.
I am also a holder and looking to add, but I think you spooked some big holders!
Two 100K blocks, one at $ 21.35 and one at $ 21.40 traded earlier this morning. Just a few minutes ago, a 110K block traded at $ 21.10.
CTM, Stumped. BAC Common UP on day . . . BML-G down .25c on 12k shs so far . . . BML-J up .07c on 3k shs …. and the “H” with 461k shs with a low print of $21.10 at 3pm NY and last trd ( 3:02pm NY ) $21.24 …..
All three should declare new Divis early April …. Fltrs.
Thanks ……
I know this has been discussed before but I could not easily find any previous discussion. All.B goes ex-div on Wed. Do any of the experts here have any thoughts regarding the possibility of it getting called in the near term. I’ve been tempted to let it go so as to lock in gains but enjoy the solid divy it is throwing off. Thanks
For anyone wanting to juice short term yield, with not an overly amount of risk, NSS closed at $25.95 today. Its going exD this week with about a 77 cent interest payment. You are left with an issue that was considerably higher before merger announcement. So if merger goes bad one isnt exposed much there, and if it goes through you have a company with a better credit rating and has already secured financing to redeem them.
Mergers are moving slow these days. If it lasts 3 more months ones YTM is over 9% (annualized) and if it lasts 6 months its over 10% YTM. It would not surprise me if this takes a year. I bought 1000 more under $26 today. I was fortunate to get it in a mini selloff in $25.50s several weeks back and just added. Dont want any more CDs near term, and dont really want to extend duration with more issues yet either. So this is my tepid compromise until something I like breaks south.
Gridbird–I own NS-B which is now floating and trading at $25.43 and yielding over 11%. I would think buying close to $25 would also be a good buy. What do you think?
whidbey, it largely is a math guesstimate exercise in trying to maximize what you get before the presumed call. “B” appears to have accrued almost a third of next cycle around 23 cents. Depending on price at purchase NSS may be a tiny smidge better but that could change tomorrow. I wasnt interested in B or A mostly because I dont want to deal with K-1 for a likely short haul trade. So they were off the table for me. I likely will be clean of K-1’s this year so I want to keep it that way.
A lot of your decision will just likely come down to if you want a short duration hold or in this case add to a likely short duration hold over what other goals and outcomes you want portfolio wise.
i have B , C and NSS ; plan to hold till the merger occurrs ; i’ve been tracking the prices and they are trading 2 or 3 cents over the stripped prices; and will
continue to track the dividend which is ex May 1 .
COUPON IS 7.625 …I presume its callable at 25 how does its yield 9%?
nice call.. nss trading 25 cents higher (25.48) on ex dividend date
MTBA declared 25 cents on Friday. Today, 3/25/24 is ex-div. That makes the third month at 25 cents. CY at 50.9 is 5.9%. In addition to MBS derivatives, the assets appear to include a big chunk of t-bills. I don’t understand how MTBA generates its yield. I did notice recently that the price moves with ZB t-bond futures.
https://www.simplify.us/etfs/mtba-simplify-mbs-etf
Yours truly,
Clueless
I came away with the impression that they short the bond future/derivative…that means they will eventually get assigned the MBS (near 6%) (or collect premium). after assignment, the play is to wait for spreads to revert to historic mean.
R2S, I contacted the company through their web site and the rep said the t-bills collateralize TBA forward contracts to ‘obtain exposure to Fannie 5s-6s’. He also said ‘yield consists of mostly Tbill income + roll yield on pool exposure to the underlying mortgages, rolled monthly.’ He was quick to respond.
good comment..agreed
For those of you that own MLPs in an IRA or Roth IRA, what is your strategy for selling them to avoid yearly UBTI going much over $1K.
We were caught off guard holding MMP in a Roth Account. I also owned it in a taxable account and when doing my 2023 taxes, the accumulated passive losses offset about 50% of the ordinary gain. I wasn’t concerned about capital gain since I have lots of losses carried forward.
My husband and I both own EPD in Roth IRA (and taxable account), since 2015. I would like to start selling off the Roth shares. On the 2023 K1 for the Roth, the accumulated passive losses look to be slightly less than the sum of the distributions. What is the correlation between UBTI, sum of distributions and accumulated passive losses?
My basis in the Roth is still positive (barely). I haven’t check on my husbands K1, but he was having the distributions reinvested where I wasn’t.
I would like to start selling the Roth shares and adding to my taxable account, thereby increasing my basis there. I can do this over a few years.
Any advice would be appreciated.
You are in a real pickle, Barb. I would sell only a round lot or so each year and see what happens with that. (Or take only a small amount out as a distribution. Same difference.)
I will tell you what happened in my wife’s Roth. We pared it down until there was nothing left but a small amount of the MLP. Then we transferred it all out and closed the Roth. The broker considered it to be a final distribution, not taxable, and Tax Pkg Support accepted that classification. But…
YMMV
I was at this Toal Access conference in Mexico City and here is another point of view on what the USA’s 🇺🇸 financial future will bring to this planet 🌎 I am NOT trying to sell you or convince you of anything (PERIOD). YOU are the only one that should decide your journey and investment path.
https://www.schiffsovereign.com/trends/it-looks-like-fly-sht-to-me-150313/
In Latin we say Audentes Fortuna Iuvat , I am Azure
Schiff and pals have been banging the permabear goldbug drum for close to fifteen years now. Someone who followed them closely up to now missed out on a lot of money.
O, why not tell the whole story? It’s not like gold has been hitting new all time highs this year, right?
The trust of the innocent is the liar’s most useful tool.
To a liar, the most dangerous individual is the person who catches lies but doesn’t say anything about it. Then the liar isn’t sure which lies are compromised.
The whole story is that gold is a poor investment unless you have perfect timing. Over the past year, SPY and just about everything else left it in the dust. On the other hand, for the last month it’s been great.
https://stockcharts.com/freecharts/perf.php?SPY,QQQ,IAU
Then there’s that “collectibles” tax rate.
Mexico City is the only place where I’ve been robbed 🙁
And never trust a picky eater.
David, over the last 5 yrs SPY is up 77% and gold up 62% so SPY did better over that interval. What’s import for me is what will happen this year. What do you expect to happen this year regarding SPY vs gold?
danzeb, this statistical site may help you https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart
There are various charts and statistics you might find of interest.
Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants – but debt is the money of slaves. I am Azure
Ab I know you buy and sell and have a good feeling for where prices are going. I know another infrequent poster who follows the miners and does good with trading various names. Due to the high commissions for physical gold and silver I can see the case for trading miners. But that is a high risk game and requires you to be nimble. This year so far has been terrible for mining stocks. I lost more than I made and was actually only ahead when one of my holdings got bought out.
AB, was the food as good as what Schiff says?
SteveH, one of my business partners (I own a piece of the largest Mezcal producing firm in Mexico 🇲🇽) provided all meals at his magnificent home when I wasn’t at the conference, so I really didn’t eat the local fare. I’m not a very adventurous eater, so most of the local food would be wasted on me anyway. I have worked out for 6 days a week and watch mostly everything I eat for many years. Wishing you all the very best, A
Azure,
Sporting a beta of 1.0 to the Fed’s inflation gauge, boring IBonds also maintain an ongoing yield in the interim – and a host of additional fringe benefits.
Annual buy-limits on IBonds require advanced acquisition to be well-positioned if the inflation “event” occurs.
Notable that the article suggests the inflation event could also occur in a “forced” low interest rate environment.
Alpha, I agree with you 100% and have maxed out my allowed allocation of iBonds for my family and its trusts each year for as long as I can remember. The current 1.3% fixed rate is fantastic for a 5.27% current total yield (tax differed and government guaranteed) is safe money outstanding.
TIM:
Just made my annual donation, but have a suggestion: could you add Zelle, if possible? Most banks use it.
Hi Gary–will look into it and add if possible. Thanks for the suggestion.
Going through my 1099-div and I noticed GNL-A’s distribution is ROC(return of capital). I used to have two prefs from ATCO and their distributions were ROC, but those two were called away long time ago.
I am wondering if there are other prefs paying ROCs and anyone knows a good source recording this? They seem to be the best ones to keep in taxable accounts.
TIA
ROC isn’t predictable for REIT’s like GNL, but can be predictable for other preferreds.
if you want to know about a particular REIT, almost all publish on their IR site the most recent year, with a handful of exceptions.
e.g. For GNL, they publish it here:
https://www.corporate.globalnetlease.com/investor-relations/financials/tax-documents/default.aspx
There are multiple services that identify them, but they are pricey and aimed at financial institutions and not retail clients, (if only to get the 1099 right)
Got it, thanks, Justin!
Analysis of midstream energy
https://www.thespreadsite.com/midstream-energy-yields/
Popular pipeline favorites, ranked by 1-Yr total return vs. stocks vs preferreds. (I call all the midstreams “pipelines.”)
WMB
34% Price Up 1-Yr
5.0% Yield FWD
SPY – benchmark
33% Price Up 1 Yr
1.3% Yield TTM
EPD
16% Price Up 1-Yr
7.1% Yield FWD
KMI
8.7% Price Up 1-Yr
6.3% Yield FWD
PFF – benchmark
7.1% Price Up 1-Yr
6.3% Yield TTM
ENB
3.0% Price Down 1Y
7.5% Yield FWD
Williams WMB has had a banner year. This prompted me to look back. I back tested 5 years. Pipelines did well over that period, performing in between common stocks and preferreds. The 4-pipeline blend generated more income than the preferreds every year in the test period. However, the blend was more volatile than preferreds (most stable of the 3) or stocks (mid-pack). IMHO, pipelines look like reasonable portfolio diversifiers. Disclosure: long pipelines.
Hypothetical $100,000 portfolio. Total returns, 5 years, 2019-2024 YTD, equal 25% MLP blend, no rebalancing, all dividends reinvested,
$100,000 Starting investment, 2019,
Ending results, 2024 YTD
$222,724 – SPY – S&P-500 ETF
$175,189 – 4-pipeline blend (WMB,ENB, KMI, EPD)
$122,736 – PFF – preferred ETF -benchmark
$106,803 – SGOV – cash-like benchmark
JMO. DYODD.
It’s hard to make too much out of a comparison of corp midstreams to PTPs. EPD, for example, can’t be sold to capture cap gains without onerous depreciation recapture at ordinary rates. That’s way different from corps like KMI, WMB, etc.
So, PTPs like ET, EPD, MPLX, et al, are best held for their tax-deferred income only. And if you’re continually reinvesting, you don’t want them to go up. The lower the better when you buy, as long as they continue to pay you. And EPD does that in spades, increasing their tax-deferred distributions for 25 years and counting.
A nice way to compound your income stream and then leave the units to your heirs on a stepped up basis, so that taxes never have to be paid on all those tax-deferred distributions you received.
JMO
Bear, was looking at pipelines today and came across SRV no K1
look at the 5yr return on it.
Looks interesting. I will take a closer look. It’s a fund not an MLP so no surprise there’s no K-1. Nice names in the portfolio. I think MLP CEFs are a good way to access LPs for LP/K-1 shy investors like me.
Relatively low leverage, under 15%. My only questions are why its distributions are Return of Capital and whether it really has a “managed distribution” policy although described as an “income-only” distribution. I didn’t see anything about options strategies in the fund description, although SA commenters say SRV is an options seller. Some ROC (non-destructive) is good, some ROC (destructive) is bad. These days, I tend to like ROC.
IMHO, you really need to look for the exit door when you enter the MLP CEF theater. I did manage to lose money in 2 MLP CEFs way back. They tend to ride along paying good distributions for a long while, then implode for odd and unpredictable reasons. If you look at NTG, trading at $37 today, you will see it once traded at around $300. (After we parted company, I think NTG did a 1-10 reverse. So that $37.00 is really $3.70.) I picked up another CEF some years later. It melted down suddenly for some sort of weird tax reason, like The Wicked Witch of The West in The Wizard of Oz. Caveat emptor.
Thanks for the input Bear. Every couple years MLP’s seem like they take a dump. Actually anything related to oil has it’s ups and downs, Why I watch oil prices real close.
Oh yes Kayne funds, you didn’t get bit holding that one that just went bk did you?
I missed that one…
Today, Schwab has a JPMorgan Chase 5.75% callable CD that matures 09/11/2024
First Settlement Date was 10/11/2023
It is callable each month on the 11th (next call date is 4/11)
Minimum purchase of 10 CDs
Evaluated Price 100.0137
Cost is $100.10 with $657.71 of accrued interest
Estimated Total is $25,682.710
The stated APY is 5.387% with a YTW of 3.377%
How does one determine that the YTW is 3.377% ?
(Be gentle : )
TIA
OTC cost 6.95
I bought UEPEP at schwab and was charged an SEC fee. Not much only a few bucks for a small purchase, but why? That’s not normal. Normally a few pennies are charged on a sale but not a few bucks nt a buy.
I don’t have Schwab, but that was a trade of an OTC and not on the regular exchanges. So perhaps why.
Martin—if you do a lot of trades at Schwab, upon request, they will waive the $6.95 OTC fee.
weird. Where are you seeing the fee (on which Schwab page?)
I bought one share of UEPEP today at Schwab today (apparently I fat fingered the order and set it for 1 instead of 100).
Only “fee” I see is that I got charged $6.95 commission, but they will credit that back to me overnight because about 10 years ago (?) I negotiated to pay zero commissions on all equity trades for 25 years (IIRC). Was great when they charged commissions for all trades – now it really only benefits me on OTC trades.
Here are some current yields taken from my list of QDI issues I see today that seem ridiculous:
ALL-I, 5.18%
CMS-C, 4.95%
ETI-, 5.35%
JPM-J, JPM-K, JPM-L, 5.21-5.28%
MS-L, 5.22%
NTRSO, 5.16%
SCHW-J, 5.21%
USB-Q, 5.24%
On a risk adjusted basis, maybe add CFG-E to the silly list with a current yield of 5.81%.
PFF is trading around a 52 week high. Compare the yields above with CTA-A, CTA-B, BAC-L, WFC-L, and the OTC utility preferreds with several available with yields above 6%.
I’d like to hear arguments that the market for individual preferreds is efficient LOL
Here’s an interesting case study to further the point of inefficient preferred markets.
CMS-C (currently trading for a 4.95% current yield) was issued by CMS Energy. CMS Energy is the parent holding company of several subsidiaries, including Consumers Energy Company (“Consumers”), an electric and gas utility. Consumers Energy Company’s preferred stock, CMS-B, trades on the NYSE and has a current yield of around 5.6%.
Fitch rates CMS-B, the subsidiary preferred of the operating company, A-. Fitch rates CMS-C, the holding company preferred, BB+.
So you get a higher rated, safer security and pick up around 60 bps if you make the switch from CMS-C to CMS-B.
Dick, you are correct. The trouble is it is always that way. A product of illiquidity I suppose. IMHO they both are overpriced!
At the beginning of the current Fed hiking cycle, I think illiquids were trading at richer valuations compared to liquids at certain points. I think the same thing happened during the Covid crash.
I’m getting older by the day so apologies if I’m misremembering.
If I held CMS-C, I would certainly sell, but there are lots better illiquid buys than the -B. Many–okay, a few–over 6% yield.
BTW, I really appreciate your posting about these illiquid rascals.
JMO
For sure there are better buys than CMS-B. My next incremental dollar wouldn’t go to CMS-B if we’re talking about today.
This was just to show a point since they’re both from the same company.
At various points over the last couple years, I’ve held a lot of CMS-C. I’ve tended to sell as the price went above $20. I don’t have any shares at the moment but I’ve done very well trading it. I have a very small position in CMS-B.
Most of my current illiquid holdings are in Ameren and Eversource utility preferreds as well as CTA-B.
Happy the posts are helpful. I’ve been helped by others here especially when I was starting out with preferred investing.
Dick,
The problem (for me anyway) is that the borrow fees for these preferreds make it basically impossible for you to short them for any significant length of time. So it’s difficult for people to correct possible mis-pricings.
I’ve never shorted a preferred. I don’t even have margin or short selling enabled on my accounts. I’d get myself in too much trouble LOL
Dick,
I run on a different philosophy. I don’t short preferreds either, but I put margin on almost all my accounts (you can even enable “limited margin” on IRAs at schwab).
-In IRAs, it allows you to buy with money from a sale without waiting for the sale to settle. “True” margin on IRAs isn’t allowed, but this makes trading easier.
-In cash accounts, it lets me put in multiple GTC orders for a bunch of illiquids, etc. without holding cash. if a big order fills (above my MM holdings), I can sell something to cover and margin will cover any timing mismatch. That usually only happens a couple of times a year at most. I pay almost nothing in interest – but margin interest is deductible (last I looked).
I should probably think about copying that setup. It sounds smart.
Many years ago I worked for a guy who was big time into gambling on horse racing. He even owned his own horse. Anyways, on several occasions he tried to get me into gambling on horse races. He said “you’d love it since you like to over analyze things” which was probably not a compliment LOL.
I never ended up taking up horse race gambling as a hobby. I don’t know if I’m good at gambling or not because I never started and that’s kind of how I’ve viewed shorting stocks and margin. I can definitely be a risk taker at times and wanted to just stay completely away from areas where I could get myself into a lot of trouble.
These days I over analyze preferreds haha. In my defense, preferreds is probably an area where the little guy has a better chance of winning.
Anyone know the symbol for the new Affiliated Managers BB (6.75%)? I cannot seem to find it anywhere. TIA
Proto, no symbol has been assigned yet, per the Schwab Bond Desk rep I spoke with today at about 1.30pm PDT, still OTC. He said the last trade he saw was $25.14
See-saw
This week feels the opposite of the March downfall.
Then, prices dropped precipitously – anxiety overwhelmed reason.
This week, everything is blowing through 52 week highs.
Everything is selling at top dollar.
We sellers are either brilliant….
Or dopes.
Time will tell
After today’s stock index reaction to the FOMC statement and Powell presser, I’m much less concerned about downside risk. I’d like to see some follow-through to confirm Powell’s “looser for longer” doctrine.
I asked recently what if stocks correct while rates rise? Now I ask, if the stock rally continues strongly, what will rates do? They might trend higher. From a low of 4.1% in Oct 1998, the 10-year treasury yield rose to a peak of 6.8% in Jan 2000 (see TNX chart). SPX rallied 60% over the same time period. (As it turned out, you could have held that 6.8% 10-year for nine years and had an excellent return while the stock market went through two huge convulsions.) Rates trending higher would conform to Michael Howell’s call for the 10-year yield at 5.25% this year.
I can’t predict anything. I think it makes sense that a very bullish stock market could be accompanied by raising rates.
Those last two words should have been “rising rates.”
However, when the Fed tapers QT, as Powell said it would, the Fed will become a big buyer of treasuries and put downward pressure on yields. One writer suggested that Powell announced the coming of QT tapering as a way to keep a lid on yields.
Will the Fed step back into the agency MBS market or try to clear MBS entirely off its balance sheet? Traders of MTBA must think the former based on yesterday’s rally of the stock.
I think this oddity was mentioned recently on this site, but I forgot where I saw it: TPTA and TFSA are two securities brought under the same issuer by a recent merger, but they trade at radically discrepant valuations. I can’t figure out why. Anyone have an idea? The cheap one is TPTA, and it is up 7% today.
They have a relationship but they have not merged and are totally separate securities. The company that issued TFSA has a much better balance sheet than TPTA. TPTA just announced loan modifications due to problems with covenant violations.
Pretty sure TFSA (Terra BDC) is now a subsidiary of Terra Property Trust (TPTA) after a merger in 2022. Both bonds are listed as liabilities in the Terra Property Trust 10-K. From everything I can tell, same parent company is responsible to pay both of these bonds off at maturity. If Terra Property Trust goes under, I am not sure the gives TFSA any protection.