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.
I was looking for the new OXLCI at Fidelity- not trading openly so far, but if you enter the cusip into the Bond section it does come up with a third party seller @24.923 , but no ‘ASK’ price — however, below the Quantity box, it says 1 bond equals $1000 face value. I tried 1 and 25 but it would not preview- altho the prob (?) might be it says Day for time in force. Not sure if that keeps it from giving a preview.
Or is it just not available? You can see recent trades and depth- today Customers paid as high as 25.647 -twice for almost 3000 shs total –with low of $25.
Thought on being able to buy using the cusip tomorrow or not?
TIA
Sold my position in NCZ-A (Virtus CEF Preferred). Split it up into 3 and added to already acquired positions in:
REGCP (Regency)
REXR-B (Rexford)
CHSCM (CHS)
Pig – have you been involved w GJH?
Maine, negative on GJH.
Pig, I hold some of these also but at lower cost and I am also looking to add more but somewhat unwilling to buy at these prices. I’m over my FOMO but looking at how high the market has gone and getting vibes the economy is weakening makes me cautious. If we get a rate cut that bumps the market higher then these might be good for a short term trade. Personally I think of these as decent companies worth holding, course if the price is right I will sell. How do you view these purchases?
Charles,
Truth be told I wanted to get rid of NCZ-A. Its common scares me a bit, very low price. They have suspended the dividend before. Yr and a half hold and I sold it for less than I bought it, not much less but only gains were the distros. Felt like I ran as much as I could with that.
Regarding what I bought, yes, all 3 were purchased at lower prices. Just felt like 3 solid companies sitting at competitive yields still. I try to do my best not to be too worried about the rest. All 3 of those I’d be more than happy to add some more still with an interest rate scare or economic downturn; Whatever the reason would be if it were to drop. I think with interest rate cuts these could definitely pop some more.
Pig, back to what you have been doing. I thought at one point I needed to be completely invested to get the income we needed. Going over everything this past week I found out between interest and dividends we have twice the amount coming in that my wife is withdrawing on a annual basis.
That is when I quit worrying about the FOMO. Also there is still about 20% in money market funds. I do have a lot of GTC bids out but they are at prices I want to pay. Even if by some miracle they all hit there would still be around 15% liquidity. Of course, with the kind of returns we are getting there is risk and a good chance a capital loss could occur. But that’s only if I sell. So, as the hitchhiker said ” don’t panic”.
Now my focus is going to be to try to ladder out the income as it’s uneven month to month. This is going to be difficult as a majority of the income is concentrated because of quarterly payments. My next goal is to start rolling over holdings to better quality while still trying to maintain the income. We’ll see how successful that will be.
PP, I have REG’s pfds and REXR too.. might add in any swoon although it seems for now the swoons are done. Nice ‘ballast’ safer names. Bea
good comment.. regcp/pff pair has seen regcp underperform since issuance in august 2023 ..currently trading about 1 sigma rich
Under “Margin Accounts for Dummies” I learned today that I can ignore the message from Schwab that my buying power is zero and place all the orders I want without incurring any borrowing costs. If a trade executes and I sell a matching amount of MMF the same day, there will be no borrowing expense.
Knowing this, I can place lowball orders that I don’t expect to execute unless I get lucky. Someone pointed out that if a trade executes at end of day, it might be too late to place a MMF sell order. One day of margin interest should not be a problem weighed against a great fill.
Rocks
Settlement for purchases is next day.
If you have a purchase execute during the day (even at market close) you can place a sell order in your MMF after market close or next day before market close, and the MMF (which executes same day) will show in your account for settlement and you should owe no margin interest.
I do this constantly – even in IRAs.
rocks; until recently settled cash was required in Cash accounts in order to buy stocks. Now if you place an order to sell MMF in sufficient amount, settled cash is no longer required ; This change appears to me to have happened when settlement went from T+2 to T+ 1
Private and ted-
My margin and cash accounts are at Schwab. After speaking with a broker, I confirmed that a MMF order executes after hours and settles the following day. The trade date is the calendar date of execution.
If I buy stock on day 1, it will settle on day 2. If I sell MMF on day 2, it will settle on day 3, and I will pay one day of margin interest. I don’t get the idea, Private, that “show in your account for settlement” will be treated as settled funds. What am I missing?
Ted, I’m going to try what you described in my IRA. It seems counter to conservative brokerage policy to take it on faith that you won’t cancel the MMF sell before day-end.
Rocks,
I am at schwab bigly, and I was just describing what I do and the results I get.
I know that if I buy today, I can sell MMF after market closes today (or tomorrow before market close) and it works. IRAs, Roths, cash – all accounts. No trading violations, no margin charges.
If you were to cancel that MMF sale (or not enter it), Schway would hit you with margin (in a margin account) or a trading violation (in a non-margin account like an IRA) and would require you to have settled cash in the account (in advance) for future purchases. I think you can get that requirement lifted after 90 days or something (can’t recall – never had to do it).
Private, thanks. After your post I tried it and indeed it works. I sold SWVXX yesterday to cover a purchase that settled yesterday in a non-margin account. I did not get a warning nor a hand slap, whereas all along Schwab reps have conveyed that one needs to sell out of the MM on the prior day to settlement to cover purchase.
BTW, awhile back (three or so years?), there was an III discussion on ex-date and dividend. The bottom line was: a purchase on calendar day prior to ex-date qualifies for divvy; a purchase on ex-date (even during pre-market) does not , with due credit to an astute poster here that disappeared (Bob-in-DE)
Interesting and I wonder what is really going on here?
It doesn’t make sense that an MMF Sale settling a day after a Buy would provide the settled funds to cover the Buy. And Schwab sent an email a few days before T+1 went into effect explicitly stating you need to sell the MMF the same day (before 4pm) to cover a buy.
So I wouldn’t expect to be able to get away with this indefinitely.
In the case where something executes at end of day, could you short something to offset the borrowing–maybe BOXX, or does Schwab not recognize the short as an offset? Their margin rates are ridiculous
After having my traditional IRA moved from tdAmeritrade to Schwab, Schwab has marked my old AIC position as $0.00. Does anyone know if it is possible to move that position from my traditional IRA to a ROTH IRA at zero value?
it would be a taxable event
Yes, but if it went across at $0.00, the tax would be zero.
Hi Jay,
This was discussed several days ago on here, but it’s not super easy to do a search. If you scroll through older messages on Sandbox, or Reader Initiated Alerts, it shouldn’t be too far down the thread.
I guess I’ll have to wait till tax forms are sent out, but I just did the same conversion a few days ago and it came across as a $0.00 transaction and it is still showing $0 in my Roth account.
When you go to the “Move money” menu on schwab and do the appropriate clicks, it takes you to the Roth Conversion page and when you select the securities (AIC) you want to convert, it immediately shows the value of the conversion. Mine showed a $0 value conversion amount.
Hope this helps, and it is not tax advice. DYODD.
Mark,
Thank you. I tried the Search function here, but did not know you could manually call up older comments. I will go find the discussion.
Jay, also try
site:https://innovativeincomeinvestor.com/
in a browser. That’s a google function that can help
Is it showing that in TOS? They told me in multiple messages that “TOS never was meant to be a cost basis tool”…..
Messy
YHUNTER-
Well, they do have the other platform, try what has your basis.
Jay,
I did the IRA to Roth conversion with AIC at TDA. It worked perfectly on another position there last year. I always convert a small amount of cash (say $200) as well so when they send you the 1099R it will show $200 for the year and not $0.
35-
Good idea– just don’t expect that $200 to increase in value 😉
And- you get to pay tax on it 🙁
I checked with Schwab. ro do the same move from ira to Roth IRA, > even though shows 0 value in Ira, the did a test move of it to the Roth, when the did it showed value. so it would be taxable.
CaptRob,
What was the explanation as to why one account would show a different value to the same security?
The Rep at Schwab could not answer that question. Not unusual.
Jay, Schwab changed the value to 0 at my request. My advisor converted to a ROTH at 0 value. It is a taxable event at 0 value. I appreciate Schwab as I don’t think another brokerage firm would do this. You should be able to do the conversion online.
Asian markets finished slightly in the red. US futures markets were showing in the red overnight now slightly in the green before markets open.
Building activity is slowing with talk of inventory reductions and layoffs here past couple weeks but the consumer was out in force judging by the lines at Costco and the record air travel along with cruise lines saying best year since Covid along with talk at the community pool of people taking recent trips. Migration of travel trailers going down the freeway headed back to the Bay area was heavy showing people took advantage of the long 4 day holiday weekend.
SNV/PRE resets to 8.41 for 5yrs. PFF distribution 6.34 the snv/pre pair has gone from off the charts cheap in may 2023 (and double bottom) to 3yr high and 1 sigma rich today ..would not look for much more outperformance
I kept it i n my taxable account for the Qualified dividends. Sold above par in my taxfree account, close call I’ll use the money for the next such opportunity short term.
“SNV/PRE resets to 8.41 for 5yrs. ”
Is that your estimation or are you seeing this written somewhere?
Fidelity lists it as the current rate at 8.417%.
Prospectus says the rate is calculated on the reset date and it defines the reset date as every 5 years.
“A “reset date” means the First Call Date and each date falling on the fifth anniversary of the preceding reset date.”
SNV pfds are trading pretty weak considering
It is interesting where it’s trading as locked 5 years on rate and, as I read it, it can’t be redeemed until next reset date (5 years from now). From the prospectus:
“The Preferred Stock is perpetual and has no maturity date. We may redeem the Preferred Stock at our option, (i) in whole or in part, from time to time, on the First Call Date or any subsequent reset date, or (ii) in whole but not in part, at any time within 90 days following a regulatory capital treatment event (as defined herein), in each case at a redemption price equal to $25 per share, plus any declared and unpaid dividends, without accumulation of any undeclared dividends.”
Banking
Executive summary: Likely not pertinent to most III’ers, but if you are currently earning ~5% on ALL of your checking and savings account, delete this message. If not, read on.
If you have checking and/or savings accounts at one of the large banks like Bank of America, Chase, Wells Fargo, etc. you are probably earning about 0.01% on any balances in those accounts. You can easily earn ~ 5% on those balances if you move the money to a stock brokerage like Fidelity, Schwab, Etrade etc. I will highlight how to do it at Fidelity but if you use a different brokerage, you will have to check and see how it works there.
Fidelity
Open a “brokerage account” which has a ZERO $ minimum, NOT a checking account
Request “check writing” where they will mail your paper checks for free
Darn near never write a paper check, use electronic bill pay and have Fido send any checks you need, saving you hassles and a 73 cent First Class stamp
Get an ATM card where Fido will pay the ATM fees, with zero cost to you
Setup automatically recurring payments where required
Change the default “core account” holding to SPAXX (Aka Fidelity Government Money Market Fund) currently paying 4.97% on any unused funds. This is NOT FDIC insured but it only invests in US Government backed securities, so I do not lose sleep worrying if it will default.
Apply for a Fidelity Visa and have payments in full deducted from your new brokerage account. You get 2% cash back on all purchases
Electronically deposit checks into the account using your smart phone. Take a photo of front and back, hit enter and it is done. No more driving to banks to deposit a check.
Banks- uses for and reasons to have
Safe deposit box
Deposit cash, either paper and/or coins
Withdraw large amounts of cash for some reason
Get cashier’s checks
Get free Notary Services
Recommend keeping one bank account with the minimum required to NOT pay any monthly service fee
Schwab
Does all of the same things as Fidelity, but you have to MANUALLY move money into and out of a high interest money market fund. Otherwise, they pay diddly squat interest.
I have NO affiliation with any brokerage and/or bank. Not an influencer for Fidelity. No TikTok videos available yet, but thinking about it.
Another possible reason to have a bank account is for wire transfers, if the brokerage doesn’t provide that service.
R2S, thanks for your reminder about wire transfers. While we have done many house closings the last few years, I generally shy away from them. Every title company and experienced realtor I talk to has at least one horror story about a wire transfer gone wrong and zero recovery. We had one transfer that went wrong but thankfully were able to recover it.
Maybe title companies have learned better procedures and improved them to 100% from 99.9%. You just don’t want to be that 1 out of 1,000 that suffers a 100% loss. . .
I use SPAXX and FZDXX in fidelity. You are right about the low yields on bank accounts. No big deal just make the switch to MM.
Fidelity’s Core account for divs is not the same as SPAXX?? I guess the Core / FCash pays 2.72% apy
Is it possible to use SPAXX money to buy a stock, or do you have to sell some, then wait for a day or two for a ‘cash’ balance to show availblity?
thanks
SPAXX is one of the choices for your sweep account, there are others you can choose from, or at least there were back when I signed up long, long ago.
You never have to wait or manually move money in a Fidelity account. It is automatically added or subtracted from the sweep fund you chose.
Thanks- I called a rep- found how to change it- two higher paying mutual funds, for now SPAXX is highest at 4.97% .
They don’t make it obvious, that’s for sure. The rep did say it is available to use, with no wait- that’s important.
To add a bit more color, Fido has MM funds such as FZDXX yielding 5.15% that I guess you could call a semi-sweep accounts like SPAXX. From your practical point of view, Fido will automatically take funds out of FZDXX when you need them to fund a purchase after they exhausted fund you might have in SPAXX et al….. What they won’t do is let you automatically fund FZDXX with proceeds from a sale… So if you to leave SPAXX money low, you’ll still be covered for purchases beyond your SPAXX stash….. Sure beats Schwab’s non client friendly approach.
I use FZDXX in addition to my SPAXX sweep. According to their website, FZDXX has $100k minimum, so what happens if they sweep up from that account and it goes <100k?
Ask questions……. I do have over 6 figures in FZDXX in one account, but if I remember correctly, all you have to do is start with it and then the amount you have doesn’t matter… They may also be flexible on that 100k start amount depending on the type of account you have, but I”m not sure… Like I said, ask questions……..
The reason to keep the bank account is risk management. It’s why I have 2 brokerage firms and a banking account. Technical issues can occur. Just bought a Kia and they couldn’t do anything online for over a week due to a security breach. FDIC limits are another reason I spread things out. Got locked out of IBKR for a couple of days because my phone was stolen in Vegas and they couldn’t do 2 factor authentication. Wanted me to take a pic of me and my Driver’s License to email. I had trades on. At least I could hedge through Fidelity. I worked at a large fin institution and saw 3 6- sigma events in 2 months. That was really weird. The amount of hacking attempts is unreal. I don’t keep a ton of money in the checking. 2-day transfer to pay bills each month and a cushion for emergencies.
I agree with alexian. I see a checking account as having a higher fraud or hacking risk than my brokerage accounts, and I’m not sure I could convince the bank or brokerage that a well-done hack really wasn’t a withdrawal of mine. So I keep checking at a separate institution. I convinced my checking-account bank that they have to deny any overdrafts rather than pay them. It limits my potential losses to the smaller amount I keep in checking.
Several years ago I looked at setting up a checking account at Fidelity, as suggested above. I read the fine print and found that not only could I not deny overdrafts, but Fidelity would automatically withdraw money from my brokerage account to pay them. Check your fine print, I don’t know if that is still the case. I certainly did not want to risk having my brokerage account wiped out by a fraud overdraft.
Hi Coaster, a very important detail that I should have been more specific on addresses one of your issues. You should have a separate “checking” account different from your “brokerage” account. The reason I mentioned opening a “brokerage” account to use as a checking account is that some brokerages do offer a checking account buy may not have access to the higher yielding money market funds. In that case, you have to specify it as a brokerage account when you open it, even though it is going to be used a a checking account only. Bottom line two accounts:
Checking account opened as a “brokerage” account
and
Brokerage account for your taxable investments
Agreeing with Coaster and STRONGLY do NOT recommend having only one account for both checking and taxable investments.
Hi Tex –
At the time I was looking at opening a checking account at Fidelity that would be separate from my existing brokerage account there. I’m not sure if it was strictly a checking account or a brokerage account that would be used for checking. The fine print on the checking account said that funds would be taken from my separate brokerage account to pay for checking overdrafts.
Hi Coaster, the situation where Fidelity takes funds from a different account to prevent overdrafts is an option they offer. It is not the default standard which applies. Here is their verbatim quote:
“If the cash in your Fidelity® Cash Management Account drops below your minimum target balance, Cash Manager moves available cash automatically from your designated funding accounts in the order you specify.”
And note this only applies when you open a “Fidelity Cash Management” account as opposed to opening a standard brokerage account like I suggested.
Also, we had a real world example in the last 6 months where Fidelity did NOT cover an overdraft. Here are the facts:
Account 1- non- margin, aka cash, brokerage account used for checking
Account 2- margin brokerage account used for stocks/bonds/llama futures, etc
Fidelity credit card automatic payment was drawn on the checking account overnight, but bounced.
Fidelity investment account could have covered the shortage, but no funds were drawn
If the default was Fidelity could take funds from another account without your prior approval, I would NOT recommend anybody open an account.
Once again, I am NOT affiliated, nor compensated by Fidelity, nor particularly liked by them.
Hi Tex, I’m glad to hear that Fidelity has changed their policies, and I still urge people to read all the fine print. I dug out my old paperwork, which was from 2012 and was also for a Cash Management Account, and the terms were actually more strict than I remembered.
Hello Tex, a local credit Union called Patelco was hacked. It may have been in the news. After review by a security consulting firm they have their core services back up, but auto bill pay and transfers are still locked down. I don’t bank with them but I use another local credit union. People that rely on bills being paid on time are experiencing additional pain because of this.
Lesson learned from these posts is don’t let the bank talk you into overdraft protection linked to another account. I think incurring a service charge for failure to cover a large withdrawal that is denied when some bad character goes over the daily limit or account balance is a small price to pay for having linked accounts drained also.
My worry that is not covered in these conversations is that too many private and government entities now want you to download apps for everything from paying a bridge toll or reporting a pothole to looking at the restaurant menu and ordering and paying for the meal.
I know nothing about cyber security but it would seem to me a bad actor can hack the software on a app and cause you to download malicious code embedded in the app.
I agree with Charles, I think the best checking account is one that will automatically deny all overdrafts. Also in agreement with him, I don’t do anything financial on my cell phone.
Yep, Just took a crappy software release to screw everything up. Been reading posts where people are locked out of Schwab and ETrade. Probably a good idea to occasionally download your brokerage statements. I was in the Rome airport last month, they lost power and you couldn’t even wash your damn hands. LOL. Haven’t those people heard of UPS?
Anyone have an opinion on EBBGF, and why it has performed so badly. Thanks
Explain “badly.” I own EBBGF and EBGEF. I don’t trade. If the prices drop, I see it as an opportunity to add.
On close inspection your comments on EBBGF are accurate, it is not trading erratically or badly, but am I missing something, a BBB- rating should not have a 7.9% return, but should be trading at a higher price.
Depending on where you buy it there may be a foreign transaction fee as high as $50. Not worth it for a smallish purchase.
Others here and myself own these because these are based off the 5yr US
treasury notes. The EBBGF has already reset in 2023 and locked in the interest for 4 more yrs This is what Quantumonline says
QUANTUMONLINE.COM SECURITY DESCRIPTION: Enbridge Inc. Cumulative Redeemable Preference Shares, Series 1, liquidation preference $25 per share, redeemable at the issuer’s option on 6/01/2018 and every June 1st in every fifth year thereafter at $25 per share plus accrued and unpaid dividends, and with no stated maturity.
Non-cumulative distributions of the Annual Fixed Dividend Rate will be paid quarterly on 3/1, 6/1, 9/1 & 12/1 to holders of record on the record date fixed by the board, not more than 60 days or less than 30 days prior to the payment date (NOTE: the ex-dividend date is one business day prior to the record date). The Annual Fixed Dividend Rate will be $1.00 until the first redemption date, then it will be equal to the sum of the Non-callable 5 Year United States Treasury bond on the applicable fixed rate calculation date plus 3.14%, resetting every 5 years thereafter on the applicable fixed rate calculation date. (see prospectus for more details).
On 6/01/2018 and every June 1st in every fifth year there after the holder will have the right to convert their Enbridge Inc. Cumulative Redeemable Preference Shares, Series 1 into Enbridge Inc. Cumulative Redeemable Floating Rate Preference Shares, Series 2 (see prospectus for more details).
We have plenty of time to see where rates are going to be in 3 yrs. then giving us a year to make a decision of what we want to do. I’m getting over 8% on my original cost and I don’t think I paid any $50.00 fee. But even if I did, spreading that out over 5yrs with a 8% return seems good to me.
Fidelity is one that hits you with the $50 fee on EBBGF as while ENB clears thru DTCC, they don’t clear the pfds so fee. I don’t think IB lets you buy F shares I have read. So it would be convert the currency and buy on the TSX.. Vanguard might be the $50 fee too. AND remember Vanguard now charges you 1% on all foreign/ADR divs collected for you. Dam fees sneaky everywhere anymore. No positions but I do trade $ENB and nothing wrong w 7.59% yield now on that common. Bea
Chase Brokerage doesn’t have fee (at least it didn’t when I bought it).
All comments regarding EBBGF were helpful, thanks to all that responded.
Raggs
Have had EBBGF for approx. 9 months and have a 21.4% gain (includes distro).
On multiple Schwab accounts, my wife and I have not received our quarterly payment on a recent new issue, ATHS, Athene 7.25% fixed rate subordinated debenture due and payable per the Quantum Online prospectus June 30, 2024 as the first payment for this issue that originated in book form on March 7, 2024. Has anyone received their quarterly payment from Athene for this 7.25 debenture issue? I did receive the quarterly payment on the Athene 7.75 % ATH-E preferred stock on July 1. 2024. Thanks in advance for any comments on this matter. Much appreciated. Hope that recipients of this quarterly payment check if they received their quarterly payment on ATHS.
I have not received it yet.
Whidbey Investor: Thank you for your feedback. FTM>
FYI: ATHS payment received by Schwab on july 1, 2024 and then evaluated and finally credited after phone call on July 3, 2024. Hope all holders of ATHS 500 million dollar offering check their receipt of the first payment on this issue that was offered in March 2024
My payment for ATHS landed in my account on 7/1.
Thanks FC/mbg/phreborn/john and eric H for your input. Much appreciated!!!
follow,
I received my ATHS payments on July 1st. I hold it at Fido.
When you get it, it should be $0.57899306 per share.
This first payment accrued for more than the normal 3 months, so we got more than a full quarter’s rate.
https://www.nasdaq.com/market-activity/stocks/aths/dividend-history
Just got mine and it says:
07/03/2024 as of 06/30/2024
I hold ATHS in Schwab,and was paid what looks like 4 mo interest on 6/30.
Schwab credited my account today. “7/3 as of 6/30”, which is absurd
In my Schwab account, received ATH-E on 7/1 and ATHS on 7/3.
Ran across this new investment grade Junior subordinated debt. Entergy holding company. IG rated by both Moody’s (BAA3) and SP(BBB-). 5-year fixed rate at 7.125%. Cusip is 29364GAQ6. After 5 years resets at 5YR Tbill+2.67%. On long-dated maturity, I am growing a fondness for issues that reset from the 5 YR treasury.
Prospectus
https://d18rn0p25nwr6d.cloudfront.net/CIK-0000065984/88dfa6d2-79cd-4bdd-b596-77cd6dde483f.pdf
FWP
https://d18rn0p25nwr6d.cloudfront.net/CIK-0000065984/f70e8619-b5fb-4035-b4e3-1e22ac2897a3.pdf
Considering adding a silver
Have tried to buy this in a Vanguard account. Can never get an asking price on their website, only a bid to sell.
Talking to a Vanguard rep on the bond desk is like talking to a child. In the end, they just say I’m sorry, you can’t buy that from us. They can’t explain why, and can’t wait to get rid of you.
Dono, I never deal with the frontline jockeys. Their knowledge is minimal and all they can do is look at useless Bloomberg sometimes wrong info to try and quote me info I already know. Or already know is incorrect.
I always request a fixed income expert. With that being said Vanguard appears to be choking off call in purchases of institutional resets and floaters. The only reason I say this is because a couple weeks ago I added to my Nassau of New York baby bond. Rep told me, she cant sell it to me because they wont transact adjustable issues anymore. I had to explain to Hoss that your info is wrong and its not a floater, and to explain I had just bought a previous 1000 shares just 10 days previously.
I convinced her this was out of her capability and kick it up to a fixed income expert like they did before. After that occurred I was able to get my shares purchased.
Reminds me of my switch back to Fidelity this week- I wanted to be sure there was no drip on my preferreds and BBs. It took almost an hour for the fixed income guy to assure me that it could not be enabled even if I wanted to.
Is that normal for those issues –(anyone)? I have always had them off at Schlub, so wasn’t sure.
Entergy 7.125%. Cusip is 29364GAQ6 – they can defer dividends upto 10 years. Riskier than other utilities as they own Nuclear assets?
Also does not seem to be QDI
I have decided to pass on this Entergy issue also. I started buying from the bond desks primarily because NISOURCE (I love utility-type companies and understand the risks of lawsuits) and CITIBANK (I like TBTF banks) do NOT offer new preferred stock offerings.
I will stay with the $25 retail preferred stock for firms that do. They are much more liquid and easier to manage than dealing with a bond desk.
On these issues, I will only invest in 5 year reset rates.
Are these payment Qualified Dividends or Interest? Thanks for your postings and any reply.[This is in reference to Entergy Holding Co 5 yr fixed/reset}
Yesterday I wrote
“In theory, long yields respond to inflation and growth expectations and have a magical component called term premium. Have the first two suddenly changed? If not, the rise in long yields is a rise in term premia. If so, will we see a corresponding widening of risk spreads in the bond market, and is it a trend?”
Today, Michael Howell tweeted a chart supporting the notion that the jump in long yields was due to a jump in term premia.
https://x.com/crossbordercap/status/1808188016101331307
An excerpt from today’s Money Stuff by Matt Levine:
The coupon payments that investors are getting are relatively high compared with the bonds for sale. For the second half of 2024, total corporate coupon payments should equal about $220 billion, while net issuance is likely to be around $89 billion, according to Bank of America.
The imbalance between coupon payments to be reinvested and bonds expected to be sold could help keep valuations for corporate bonds relatively strong, said Travis King, head of US investment-grade corporates at Voya Investment Management.
“The cash inflow story is one of the most important technical factors in corporate bond demand now,” King said. “The concern is that investors will have more money coming into their pockets with less opportunity to reinvest it.”
MITN vs MITP 45 cent price difference for 10 cent difference in the first dividend then they are exactly the same. Good swap if you own the wrong one.
MITN vs MITP 45 cent price difference for 10 cent difference in the first dividend then they are exactly the same. Good swap if you own the wrong one.
ACR-C – interesting there has been no call notice for this issue….. It’s callable at any time on 30 days notice beginning 7/30. That means it will begin to float after 7/30. Using SOFR at today’s 3 month rate, it would begin to float at 5.32 + .26 + 5.927 or approximately 11.50%. Given it’s callable at any time after 7/30, a call could still happen but it looks like they are accepting the higher rate for at least a few days which you would think to be an indicator that they are going to leave these outstanding for at least a while…..
tks for heads up..I paid 24.45 for acr.prc ..assuming its called or trades near 25 ytc is near 37%.. good articles on S/A by Pacific Yield on ACR
Actually, with a 30 day call possible for 7/31, if you bot today, you’d most likely get $.008 in dividend on call date, and I think YTC near 30.%. I suppose in a way that’s near 37%. How did you calculate your YTC? I used https://quantwolf.com/calculators/bondyieldcalc.html with a zero coupon (for simplification), settlement today, and price 24.45. Still, near 30% or near 37%, wouldnt it be nice?
FWIW…. Google Sheets XIRR shows 32.83% based on $24.45 purchase and $25 redemption on 7/31 with fractional cent divy for 1 day. But most recent trade is at $24.60 that erodes the XIRR to 23%. But the real question is will they let this float for another quarter, then the yield, while still generous, dips to under 17%.
it appears as if 7/30 is first call date
From, and including, the date of issuance to, but excluding, July 30, 2024, we will pay cumulative distributions on the Series C Preferred Stock at an initial rate of 8.625% per annum based on the $25.00 liquidation preference, or $2.15625 per share. From, and including, July 30, 2024 and thereafter, we will pay cumulative distributions on the Series C Preferred Stock at a floating rate equal to three-month LIBOR (as defined herein) as calculated on each applicable date of determination (as defined herein) plus a spread of 5.927% per annum based on the $25.00 liquidation preference, provided that such floating rate shall not be less than the initial rate of 8.625% at any date of determination. Distributions on the Series C Preferred Stock will be paid quarterly in arrears on the 30th day of January, April, July and October of each year, beginning on July 30, 2014. The first distribution on the Series C Preferred Stock sold in this offering will be paid on July 30, 2014, will be for less than a full quarter and will reflect distributions accumulated from, and including, the date of original issuance through, but excluding, July 30, 2014.
and although I cant vouch for its accuracy this is the calculator I use
https://www.preferred-stock.com/calculator_ytc.php
it says 37.72%.. and although I am confident you will something else to dispute I am on to the next thing
The point is that it’s too late for C to be called on July 30 even though it is the first call date. It cannot be called now until July 1 because, “We may not redeem the Series C Preferred Stock prior to July 30, 2024, except as described below….. On and after July 30, 2024, UPON NO FEWER THAN 30 DAY’S NOTICE nor more than 60 days’ written notice, we may, at our option, redeem the Series C Preferred Stock, in whole or from time to time in part, by paying $25.00 per share, plus any accrued and unpaid distributions to, but excluding, the date of redemption.”
There’s also another mistake you’ve made coming up with 37% but you’ve made it clear you don’t care.
good comment regarding the call date..not so good regarding “my mistake” regarding the ytc of 37.72 which is based on the calculator I attached to the 7/30 call date which as you pointed out is not possible.. so why you definitely deserve credit for attention to detail I think my analysis captures the essence of the investment opportunity…
I know you’ve gone on to something else and you apparently don’t mind posting wrong yields for readers to read, but if you want to know why it’s wrong in this case, here’s why…. Using your calculator, I think you put in Call Date: 7/30/24. For Coupon Rate you put in 8.625%. For Call Price you put in $25 and for Latest Price, you put in 24.45. Doing that right now, your calculator comes up with 37.72% YTC. The trouble is that your calculator, like every calculator, is too dumb to realize that someone buying C today is not entitled to 8.625%. So you have to manually adjust the calculator to make it calculate what’s happening in the real world. The calculator assumes that if you put in 8.625% as Coupon, part of your return will come from the dividend you receive from that 8.625% coupon…. But buying today means you get no part of an 8.625% coupon dividend, so your yield has to be less… You entitled to ZERO and, therefore , to estimate a proper YTC you have to put in 0% for coupon instead of 8.625%. Then your calculated yield becomes closer to being accurate – I say closer because what https://www.preferred-stock.com/calculator_ytc.php comes up with differs from what https://quantwolf.com/calculators/bondyieldcalc.html putting in the same data… I have no explanation for that.
I’m not writing to be personally critical of you. I’m writing to help make sure inaccurate yields are not touted due to misunderstanding of details in special circumstances that are beyond a calculator’s built in assumptions.
regarding this statement
You entitled to ZERO and, therefore , to estimate a proper YTC you have to put in 0% for coupon instead of 8.625%
Huh? if I understand you correctly you are saying that the current coupon is 0..no offense I’ll stick with my number
8.625% per annum. From, and including, July 30, 2024 and thereafter, cumulative distributions on the Series C Preferred Stock at a floating rate equal to three-month LIBOR as calculated on each applicable date of determination plus a spread of 5.927% per annum based on the 5.00 liquidation preference, provided that such floating rate shall not be less than the initial rate of 8.625% at any date of determination.
The nuance that you continue to not take into account is the concept of X-DIVIDEND DATE and holders of record. P. S-12 of the prospectus says, “We will pay distributions TO HOLDERS OF RECORD AS THEY APPEAR IN OUR STOCK RECORDS AT THE CLOSE OF BUSINESS ON THE APPLICABLE RECORD DATE, which will be the first day of the calendar month in which the applicable distribution falls, or such other date as designated by our Board of Directors for the payment of distributions that is not more than 90 days nor less than 10 days prior to the distribution payment date.” ACR’s press release dated June 6 (https://www.acresreit.com/2024-06-06-ACRES-Commercial-Realty-Corp-Declares-Quarterly-Cash-Dividends-for-its-Preferred-Stock), says, “The Company will pay a cash dividend on its 8.625% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock in the amount of $0.5390625 per share. The dividend will be paid on July 30, 2024, to holders of record on July 1, 2024.” So if you bot ACR-C on July 2 and it was called on July 30, somebody else would be entitled to the $0.53906 dividend, NOT YOU. Therefore, all you would get is the appreciation between 24.45 and 25… You would get the YTC equivalent of a ZERO COUPON bond for the time period you owned it. Like I said, the calculator doesn’t know that, so it is up to the person using the calculator to take into account the special circumstances when you buy on or immediately after the date of record…
You’ve more than once shown you do not take X-div date (or Date of Record date) into account when it’s relevant…. Take a moment out and give the light bulb a chance to turn on. It’s important and impactful for the sake of accurate calculation of YTC or YTM, particularly on very short maturities or call dates, to know what you’re entitled to and what you’re not due to it….
BTW, here’s a quick article at Investopedia that might help – https://www.investopedia.com/articles/02/110802.asp
Hey 2WR,
I realize I am responding to a week old post (I have been out of contact most of the last few weeks), but I wanted to ask what is probably a
silly question you might be able to answer (given the discussion of ex-div dates).
One of my guys asked me how “after-hours” and “pre-market” trades figure into ex-div dates, and I had to say that I don’t actually know.
If we assume an issue has an ex-div date of 7/2, I know that if I buy it anytime up to marked close on 7/1, I get the divi.
I seem to remember that if I buy it pre-market on 7/2, I don’t get the divi. Not 100% certain, but it is what I recall.
However, I have no recollection of what happens if I buy after-hours on 7/1. It’s still a purchase before ex-div date, but being after “market close” I suspect it is too late, but I don’t know.
Private – My answer most likely carries as much weight as your own because quite honestly, I don’t know for sure either….. A quick google search leads to old articles such as https://seekingalpha.com/article/765801-how-ex-dividend-dates-work from 2012 which says what I would think is correct – that a purchase at ANY TIME on the day before x-div, including after hours entitles you to the dividend….. That seems logical, as is the other statement that says buying ANY TIME on x-div date, including premarket, excludes you from owning the dividend….. I’m sure it’s officially spelled out somewhere, but I don’t know where nor did I look very hard to find it.
@Private
Regarding the dividends:
– buying after-market counts as the same day;
– buying pre-market on the next day is still the next day.
mjtroll
Right there with you at 24.44 for 230shs (for a long time)– hoping they don’t call.
Thanks. I had some change laying around. Picked up a wee bit and took a small flyer with it.
While you guys are having fun with numbers, I’m thinking about not buying ACR-C, a preferred from a CRE REIT.
R2S I’m sure a few mortgage REIT’s are going to be doing okay. I think Bear and August know their way around them. I have been tempted, but I don’t know them that well to take the risk.
All I know is roofing distribution is slowing down. I suspect tract housing with large subdivisions are only building as they are sold. This is the time when loan applications fall out of escrow. I am hearing customers saying inventory reduction, stocking at one location and other branches pulling out of there. Couple customers cutting staff and others short staffed. This slow down trickles down to everyone from the supplier to the builder and the loan companies.
:Hey Charles and Rocks I would suggest that Maine is a go to on mREITs.
PCF – High Income Securities Fund – A 1 for 1 Rights Offering with an unusual twist – hard to guestimate the math of what this Offering in of itself will do to the NAV, Twist is an after offering tender for a high percentage of the shares just issued with percentage dependent upon whether or not shareholders voting for adoption of proposal or not..
https://highincomesecuritiesfund.com/wp-content/uploads/sites/37/2024/06/High-Income-Securities-Fund-Announces-Terms-of-Rights-Offering.pdf
TNX (10-year t-note yield index) closed at 4.238% on June 25. Today 4.489%. +25bps. The stock indexes appear to be oblivious to the sharp rise in long yields.
Agency yields are sensitive to long yields. This new issue agency bond showed up today at Schwab.
3130B1W29 6.625% 7/10/54, call 10/10/24
Schwab’s list of new issue retail notes rated BBB- or better has only one entry today, a Toronto-Dominion 5.5% note. I expect the list to refill after the holiday. If long yields hold up, the new offerings should be much better than the last batch.
In theory, long yields respond to inflation and growth expectations and have a magical component called risk premium. Have the first two suddenly changed? If not, the rise in long yields is a rise in risk premia. If so, will we see a corresponding widening of risk spreads in the bond market, and is it a trend?
PFF and JNK gapped down today. No predictions, just watching and accumulating cash.
I meant to say term premium, not risk premium.
ENB Common… and various ENB Preferreds ….. may have missed some recent poster comments.
Any favorites on the numerous preferreds …..
Any serious Canadian taxation issues to U.S. holders by the brokerages ?
Really seems to be a rock solid utility. Thanks ….. Jim
My experience would advise sorting out the tax withholding before you buy. I got into a situation with a retirement account where I could not recover the 20% income tax withholding (ouch).
EMB has 3 preferred in the series; EBBGF has the highest current yield now at 7.93% ; there is a 15% Canadian source Tax ; but that can be recovered on form 1040 ; under Foreign tax credits; I have been told these issues held in an IRA don’t get charged the Foreign Tax ; I personally have no experience with this; but you might query your broker about that.
Jim
I currently have positions in the common and one of the preferreds, and have had positions in all three of the US dollar denominated preferred shares in the past.
The preferreds are very nice income instruments as their rates reset every five years. Enbridge has a very nice web page on their preferreds.
https://www.enbridge.com/investment-center/stock-and-dividend-information/preferred-hybrid-shares
Currently I’m looking to add to the common shares.
Here is a very good podcast on CLO’s by Michael Gayad, interviewing Shiloh Bates, who runs CLO funds for Flatrock Global. The more I learn about CLO’s the more I am nibbling on them. Can be found on https://leadlagreport.substack.com. You don’t have to subscribe to watch.
Good luck.
Thank you for sharing this, very helpfull
Thank you for sharing this, very helpful
Fryman,
Thanks for sharing the link. I just watched most of the video and found it very reassuring (as I have positions in the CLO debt; e.g. EICA, EICB and EICC).
I ordered Shiloh’s Bates book titled, CLO Investing: With an Emphasis on CLO Equity & BB Notes on Amazon where it got great reviews.
Also note at end of the talk Shiloh Bates mentions you can go to the company’s website he works for and learn more flatrockglobal.com
I looked up Flatrock and came across this
https://seekingalpha.com/article/4694894-the-resurgence-of-the-clo-marketplace
The video may be reassuring but the fact that it’s worth questioning is not.
Fryman – I have shared this post before and not to be repetitive, but I have found the video at this link to be useful.
https://www.youtube.com/watch?v=OxivWs5vPTM
It is from the CEO at Eagle Point.
Thanks for re-posting August saves having to look for it again. Been studying CLO companies today and still don’t think I am ready to step outside the preferred or BB but I didn’t know these are long term obligations like 8 to 10yrs in length. 2 to 2-1/2% is considered a normal default rate on CLO’s and during the GFC they went as high as 8%
As always any company stepping in after a disruption to the market is going to do better starting fresh compared to a company trying to recover from a down market. Recovery rate on loans written off are higher than 70% so buying non performing loans is high risk. Great Ajax in the purchase of mortgage non performance loans comes to mind. Comment I ran across today on a few BDC’s? having a SBA license gives them an advantage having a form of government backing.
Listening to the interview after a full day I find myself nodding off, but Thomas Majewski has had experience starting with the 2002 dot com collapse, the aftermath of the GFC and was it the 2014 / 2015 energy and oil blowout. He’s been through all that.
Hey Charles – I would not invest in the common either. I just think that there are fees and charges applied to the common that grind down the advantages of CLO equity to the investor over time.
Also – I am not sure the BB are much of an advantage over the Terms Prefs. Eagle Point actually has a term pref and a baby bond maturing at the same day in Jan 2029. I think the BB had a .4% lower yield to maturity when last I checked. That just does not sounds like it’s that much safer.
I like the term prefs in CLO equity CEFs and prefer them to HY bonds/funds/etfs for the reasons given in the Flat Rock video. I also like them better than prefs in regional banks. But hey that’s just my perference and everybody is different.
T Rowe Price also has a nice floating rate bank loan fund which I keep with the prefs. FWIW.
HI Charles –
the type of assets used in the various CxO structures makes a VERY big difference. Ajax is dealing in mortgages. Eagle Point/Flat Rock/Oxford Lane etc are dealing with leveraged bank loans. These are 2 completely different things and can not be compared.
With a mortage when it defaults the owner can simply send back the keys and life goes on.
With a bank loan when it defaults the company goes bankrupt.
Underwirting standards are also better for bank loans than they are for mortgages.
Lastly – mortgages are not diversified. bank loans span multiple sectors of the economy.
These are big differences.
The Eagle Point video and Flat Rock videos both make these points.
As always August I value your input. Seems like flat rock has created several funds since the GFC with multiple CEF dealing in CLO’s to spread the risk out even more. They look interesting.
Yes, I chose a poor example comparing a mortgage service company. Long weekend and days over a 100 are my excuse.
Charles,
Saw you mentioning CLO’s in another post this morning, but thought I’d mention, if not already on your radar, JAAA and JBBB. Two Janus ETFs holding CLO’s. I have them both and happy so far with what they have done. I guess a nice downturn would test that happiness but I’ve vowed to just hold on and keep adding if that were to happen.
Thanks Pig. I have been reading trying to re-arrange the deck chairs like you. What I have researched so far is these funds and the ones that you mentioned bty, have pretty much been created after the 2020 Covid crisis. Therefore they haven’t been tested in a real market crash. Now there has been several long standing CEF’s that went through the GFC and recovered but some I think had to do reverse stock splits or maybe I am thinking of BDC’s. As mentioned by Shiloh Bates CIO of Flat Rock some of these had a 30% upside “IF” you had bought at the low point of the GFC again call it market timing, chance, or picking an entry point your happy with.
Because of risk of capital this makes the preferred and BB’s more enticing. The question is where are we at in the cycle? It’s been covered or mentioned that these companies are fighting over clients or borrowers because of high rates there is less interest in borrowing. Because of this it’s been speculated they have been lowering their loan standards and taking on more risk. If these companies are bank like and filling a niche in the Market that banks got out of due to risks it has to make you wonder. So cut to the chase maybe it is better to go with a fund that is holding a basket of these companies.
Hey no problem charles I get it!
The three funds that Flatrock offers appear to be two CLO funds and one fund that invests in loans (not CLO debt or equity from what I can tell) made to midmarket (smaller) firms. This latter fund would be more like a BDC in terms of the loans that it makes, but not in terms of its structure. There is a 15% incentive fee on the equity fund, and it looks liek the midmarket fund is an interval fund.
These aren’t 1940 Act protected funds from what I can see. ECC and OXLC are. Plus ECC and OXLC have term preferred stock. I would probably stick with the ECC and OXLC term prefs and the T Rowe Price floating rate bank loan fund.
2024 Year to date update
Price only except where noted
MLP’s 15.49%
SP500 (SPY) 14.50%
JBPP- total return 4.85% aka Justin Bank Preferred Portfolio
SGOV- short term UST ETF total return 2.65%
BDC’s 1.54%
All preferreds 1.30%
PFF preferred ETF 1.15% Heavily bank weighted
Baby bonds/terms 0.40%
Canary preferreds -0.10% Low coupon yield, high quality
Muni bond funds -0.55%
Equity REITS -5.16%
MREITS -6.74%
An OK year to date for our preferreds/babys with the median preferred being up 1.3%, which if you through in maybe 3% of dividends gets you to a 4.3% today return. If you beat that number, you should be very pleased. If that continues through the end of the year to get a ~ 8.6% total return, should be a lot of happy III’ers. Trailed the Nvidia led SP500 by a tiny bit with its 14.5% return. Contrast all of those returns to being in CD’s or Tbills which would have given about a 2.65% total return.
Bloomberg radio this evening interviewing a Calpers ( State of Calif. retirement fund) This person is retiring himself. He feels the market is topped out. Feels market is not going anywhere and maybe there is a rate cut for July. But as we get closer to election time market volatility will increase with the uncertainty of who will win the election.
The Market that went up 15% is more and more concentrated in fewer and fewer stocks. Umm, I mean stock. No top in sight and no end to the euphoria.
Ritholtz on Bloomberg mid-June: A highly respected “data driven, evidence based and unemotional” pundit claims that based on 235 years of data, the AI boom could continue for 50 years. A day or so later , on a Ritholtz podcast, the head of US equity at Bank of America says, “I hate to say its different this time, but its different this time.” Yahoo finance headline June 19: sure its a bubble, but it won’t end in a crash.
Favorite old timey quote: “Stock prices have reached what looks like a permanently high plateau,” – Fisher, 1929
Cautionary note from history, from a 1950 radio show based on Alexandre Dumas, The Black Tulip
“How does the wind blow in Holland?”
“It blows cold for us now, but we must endure it for a time”
— 1673, after the tulip mania
JMO. DYODD.
To me, this feels like a replay of Cisco mania at the turn of this century.
Greg-
At the “turn of the century” I was part of a short-selling group specializing in the mountain of worthless dot-com stocks with high prices. Duck pond (with patience). I don’t see that now. In 2022 the bottom fell out from under many overpriced, speculative tech stocks (see ARKK). Are there many such left? I don’t think this will be a rerun where the Naz loses 80+%.
Thanks Tex the 2nd!
SGOV the Blackrock Tbill ETF had its expense waiver ending 6/30 and was to go to 0.13%; BIL the SPDR product was at .13-.14 so I was wondering what Blackrock would do on here a while ago as I have a lot in SGOV now and use it as a semi sweep a/c as FIDO gives me access to funds if I move to the sweep account.
Anyway they settled on .09% instead of .13%, giving it a slight edge over BIL in that realm. Pennies!! happy. https://www.ishares.com/us/literature/summary-prospectus/sp-ishares-0-3-month-treasury-bond-etf-2-28.pdf
unrelated, well kind of as I move slowly into more pfds, I got back into CTO-A the 6.375% pfd of CTO. I had it in the 2023 swoon at 18.04 basis, sold those at 21.75 to redeploy, back in at 20.20; someone sold a chunk last week depressing it, end of month/quarter rebalancing? who knows. Of course CTO added to this pfd earlier this year at about $20 to the company. They are successfully continuing the transition from a C corp to a small REIT, ok holding. Earnings come out 7/25 for 2nd q. DYODD. Bea
George Lucas needs to buy this CD….
https://www.raymondjames.com/pdfs/structuredproducts/2024_06_61776C3P0.pdf
Thanks, it’s been years since I’ve seen one of these. Some thoughts
— Implied embedded CD interest rate is ~4.7%, which is above the 5-year Treasury ~4.37%. As I read it, these is no accrued interest payable at maturity since the return is based solely on the SnP index performance.
— There may be an annual tax hit under OID rules. As I read it, if SnP remains at par, payout at maturity is 10000 flat. Downside: you may have paid tax on phantom income. along the way. OID is complicated, DYODD.
— New car pricing. The 10000 price you paid includes dealer prep (fees). Once you drive it off the lot, it is worth 9566. May impact resale value. Not clear to me whether payout is on net or gross. There are costs and risks associated with hedging.
— It appears that the payout will be taxable at higher ordinary rates not lower cap gain rates even though the return is calculated on an equity product.
— Buy/flip? Selling just before maturity in an attempt to convert ordinary income into long term capital gains might not work (“… any gain recognized by U.S. taxable investors on the sale or exchange, or at maturity, of the CDs generally will be treated as ordinary income.”)
My friends, now that the SEC has been defanged, I am able to offer to you the first BearNJ Equity Linked Security BELs. BELS offer you the comfort and security of United States Treasury bills along with participation in the upside of the market. The interest income is state tax exempt. The product is marginable The equity portion is taxed at lower cap gain rates. Indeed, if the market should drop BELS provides losses to set off against your income. In the event that the market goes to zero after a world ending market crash, the BELS product is designed to preserve 90% of your capital.
BELS are better than Brand MS. BELS pay interest. There is no cap on the upside of the equity portion.
I back tested BELS over 5 years with dividends reinvested. I can report that BELs outperformed CDs, delivering ~11,800 for each 10000 invested. BELS are 90% SGOV and 10% SPY, Five year returns –
BELS – 11,483
SGOV – 10.784
SPY – 18,411
TBTF Bank CDs – pretty bad.
All investments involve risk, particularly when they go down BELS are a part of the Alarm Bells ETF suite, so named because anything we offer here should set off Alarm Bells in the mind of any rational investor. JMO. DYODD.
it was a joke…
The CUSIP ends in C3P0… the name of the Star Wars character….
As others have noted, On Monday AQNB should start to float. Nice jump for a BB+ SP-rated utility issue. “Coupon is fixed at 6.2% until 7/1/2024 at which point it floats at 3-month Libor plus a spread of 4.01% until 7/1/2029″”. It should be 9% plus. They should have to do a 30-day notice, but the call of AQNA was a little messy. They were able to call it about 10 days into the floating period because they called in the entire issue. Many were counting on the call being limited to a payment date. It closed today at $25.18 on 31,500 shares. However, after hours (unusual for a preferred) traded 6,100 shares. Last trade at 4:53pm EST. Jumped to $26.
On a different note, a little surprised on RJF/PRB. Thought it would be called but it was an unusual offering from TriState Capital Holdings who initially offered the issue. 5 call year which is 7/1/2024. But it stays fixed for 7 years. I would have guessed Raymond James wanted out of the preferred stock offering. I guess they figured it wasn’t bad at 6.375% for awhile longer. Trading flat. BAA3 issue.
How long will AQNB remain floating? Do your own due diligence (DDOYD) and come up with your hypothesis. Seems to me, they will be getting a chunk of cash in the 4th quarter of 2024 or the 1st quarter of 2025. Frankly, I am as little surprised they did try to get a one or two year note knowing they have a cash infusion coming. So, I may be miles off in thinking this has any bearing on AQNB being called.
https://investors.algonquinpower.com/news-market-information/news/news-details/2024/Algonquin-Power–Utilities-Corp.-Announces-Its-Support-for-Energy-Capital-Partners-Proposed-Acquisition-of-Atlantica/default.aspx
Apologies for vagueness in advance in this post, but round about the time of AQNA’s possible upcoming call, I had some very good conversations with IR where she convinced me how the exact language I was quoting to her as to why they had to call on payment dates only was actually the language allowing them to call at any time as long as they called the series in its entirety. At that same time, the lady pointed me to language somewhere in one of their documents that outlined that their corporate strategy at the time was to NOT plan to call AQNB at its first possible date….If I remember correctly they targeted a date 5 years out from first call, maybe longer… The vagueness is that I cannot provide a link, but wherever it was, it was language that also said at the time that they’d be calling A at the first available date…. Go figure
Lots have changed at AQN since then and it was not a cast in stone kind of statement, but remembering that, I was not surprised that B remains outstanding…. And with the internal snafu that caused the slight delay on calling A, I doubt the same slight delay will happen on B.
In the early 2023 quarterly earning presentations, they had 2029 to call this issue. But in the last several presentations they eliminated any dates. These quarterly reports references were before a strategic review to see if they should divest some assets and reduce debt. So, I am not overly surprised they have not called it either. But with 1 billion in cash coming 4th qtr 2024 or 1st qtr 2025, they will have cash on hand to do it. Fairly recent development announced 5-28-2024.
You’re pointing out the details of what’s changed and what was said in previous quarters. Thanks for filling in what I didn’t….. All I was finding right now was this footnote from https://www.sec.gov/Archives/edgar/data/1174169/000117416923000053/a2023q3-exhibit992xmda.htm – p 41 “The Company’s subordinated unsecured notes have a maturity in 2079 and 2082, respectively. However, the Company currently anticipates repaying such notes in advance of maturity upon exercise of the Company’s redemption rights in accordance with the terms of the applicable indenture.”
Roth IRA Conversion question. I asked Schwab to value AIC at zero and they kindly did so. I recall some kind person posted that it is best to do the conversion after year end as the year end value would be zero. Is this correct?
My understanding the value of the conversion is the last price of the day.
I apologize for asking for information already posted. I lack skill set to search successfully on this site.
Wanda, no one here can give out legal advice, but I do know if it is going to be called and they have announced that date and the broker valued it at zero because it can’t be traded then I would do it before it is called.
@TNTowanda:
I’ve been able to locate two III comments, both from @Private, on the Roth conversion topic you’re asking about:
_____
Thu 8/24/2023 9:45 AM
I think that the thing that enabled moving WTREP from an IRA into a Roth at zero was that it was priced at zero for an extended period (multiple quarters, including across the end of the tax year – IIRC), so that both the transaction (on the move date) and the 1099-R at the end of the year both showed zero.
If anyone is able to move something from an IRA into a Roth at zero based on a few days of the security showing zero – and the 1099-R at the end of the year reflects zero, I would love to hear about your experience.
heaven knows I would love to do that kind of Roth conversion again.
https://innovativeincomeinvestor.com/reader-initiated-alerts/comment-page-7/#comment-97471 (link doesn’t work)
+++++
Thu 5/23/2024 2:32 PM
My point was that I don’t think you can do the roth conversion at zero with something that has only shown at zero for a short period.
I did one that was at zero for a long time (across tax years) and it worked.
I tried another one that was reported at zero for a few months and it didn’t work (came into the Roth at a “last trade” value). It was OK for me because I needed to do Roth conversions anyway, but I was disappointed I didn’t get it across at zero.
https://innovativeincomeinvestor.com/sandbox-page/comment-page-17/#comment-118356 (link doesn’t work)
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I was able to locate these comments by searching through the RSS feed I maintain for III using Microsoft’s Outlook email program. It’s an adequate way of archiving III posts, but it’s not foolproof since for some reason Outlook will only read in the last 30 RSS items – so I miss postings if I don’t keep Outlook open 24×7.
Another way of archiving III posts is to periodically do .PDF printouts of the same RSS feeds using the Feedbro extension for Chrome. I have it set to capture the last 2,000 postings, so if I print it out (save it to disk) every month or so I can capture most of the postings here.
Good luck.
ESW3, Wow and Thanks! This was exactly the post I recalled. I have PDF and saved. I texted my advisor and he will move one share only to determine how Schwab handles the value. He said he would work with the back office if the ROTH doesn’t go through at zero.
Reading the IRS rules, it seems clear the value is the last trade of the day the conversion is made.
TNT,
I looked at AIC this morning on Schwab and it showed up in my general list of securities with a $0.00 value. Now it is in a separate section called “fixed income” with, I believe, the CUSIP. I went through the steps to do a Roth Conversion and it is showing a value of $25.565, which is the value it showed for the past week or so. Before that, it was bouncing daily in the high 22’s to mid 23’s.
I wonder if I tried to convert when it was still in the general securities list, if I would have gotten the $0 value….. I also wonder if the brokerages, or the IRS has discovered and closed this loophole. I guess time will tell.
IRX, the 13-week t-bill yield, has been going sideways for a year. Previous flat periods, shorter and longer, were followed by big moves. I looked at the chart on ToS.
liquidated kmpb at 22.05 as kmp/hyg pair went 2 sigma cheap in july 2023 to near 2 sigma rich in april and seems to be rolling over.. on absolute basis close below 21.84 would confirm..good article on S/A by “preferred stock trader”
in addition to buying WBA yesterday , I have been doing some “bottom fishing” with and old friend of mine ; PCH
rhis is a timberland/ real estate REIT ; a peer of WY; and i’m buying sequentially around 39; which is the long support level ; things look to improve for their business and i’de say 47 looks like a good exit point ;
i have 200 sh now . and it looks like it’s starting to base out ; i’m planning on buying up to 1000 shs ; at the right price ;
think this will be a big winner (as it has in the past) before the year is out ;
is this a stock blog now?
It’s interesting that Fidelity has 5 yr CDs at 5.35 & 5.30%- same as 6mo & 1 yr rates.
Reminder- Mkts close at 2p EST on Wed 7/3
LBRDP/PFF pair has gone from over 2 sigma rich in mid june to now near fair value (1yr horizon).. not sure why it dropped it nearly 4% today
ex-date is 7/1. So buyers today should get the div I would think.
You do, this looks like a pre divi dump. I bought 400 in $22.76. If one is interested in the particulars this is a pretty good article summarizing what I had to root around for a few hours digging up several years ago when it went from a 5% issuance to a 7% issuance.
https://seekingalpha.com/article/4667353-8-4-percent-yield-from-charter-buy-liberty-broadband-preferred-stock?source=content_type%3Areact%7Csection%3Asummary%7Csection_asset%3Aall_analysis%7Cfirst_level_url%3Asymbol%7Cbutton%3ATitle%7Clock_status%3ANo%7Cline%3A1
Im not a cartwheel honk of this as I think the credit rating is actually lower than some feel it is. But I have always been comfortable owning it off and on over the years once it went to 7%.
Not a “cartwheel honk,” Grid??? Who is???
Some have speculated they think is a higher quality issue backed by all the Charter stock. But for me, bottom line is Fitch has Charter senior SECURED at BBB-. So start your own slotting game and that would make the preferred B1. Its not quite that simple I get it, otherwise I would never own/trade it. But still its hard to give it much of a rating when it’s mostly backed by common equity of a BB ish senior unsecured credit entity.
Grid, why do you think this would dump pre-divi this time? It hasn’t shown that behavior before, and I can’t help put notice the 138.9k volume on the last day of the month is awfully close to the huge up date LBRDP had on 5/30 on 128k volume. I honestly don’t know why either of these happened, but between the volume and the last days of the sequential months, it seems like there might be something more going on here.
NCSI, This is just a guess. It certainly isnt a bunch of mom and pops collectively dumping at same time. Some big owner(s) wanted out. It could even be a preferred index reshuffling. But by getting out now they avoid the tax off the dividend payment. I have seen this before. In the good old days of flipping this stuff happened all the time. Buy the dip, sell the rip. Both Charter and Liberty were up today. Liberty was up ~2.5% today.
fc-
Yes, but why are sellers giving it up?? And, the common is up about 2%.
Also- the $800mm private offering won’t be used to make an offer for it.
Peeeculiar.
mj – looks someone dumped some shares; I trade LBRDF , and i’de be interested again around 22.25
good comment… the stripped price is near 22.43 now
sold a boatload of TVC today. Very nice short term gain for this one, TVE might be next