Sandbox Page

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

That link will get you to this page.

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

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

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

2,837 thoughts on “Sandbox Page”

  1. Someone wanted in LNC/D badly today. Got bid up to $30 for a while around 2:08. Decent volume too, including a 2k share print.

  2. Has anyone looked at the Wheeler (WHLRD) offer to exchange Series D Preferred Stock to Notes yet? I just received the offer in the mail today. It will be weekend reading for me.

  3. Does anybody know where I can find a study on the historical spread between yields of BBB Preferred and 90 day T Bills? Or where I can get weekly or monthly data for the last 50 years to do a study of my own?

      1. Potter, the easiest free source of interest rate data is the St. Louis “Fred” database. They have some series that go back 50+ years. Others go back 20 or 30 years. For preferred spreads, the closest to an industry standard is corporate Baa rates. I have not done it recently, but used to check all preferreds versus about 5 different interest rates. Corporate Baa’s had the best fit to the majority, but it was not 100%.

        This should get yet started.
        https://fred.stlouisfed.org/searchresults/?st=interest%20rate&isTst=1

        1. Thank you Tex. I got some pretty good data from the Federal Reserve and compared the 3 month and 30 year treasuries. Unfortunately the data only goes back to 1981 and excludes some interesting data before 1981 when the spread set a record for inversion. The graph of the spread and the two rates strongly suggest that the spread is the most inverse when the rates peak and then the spread climbs as rates fall. The range for the spread is minus 100 bp to about plus 500.

        2. Tex, the link Mark gave above had some interesting information about the S & P Dow Jones preferred stock indexes (9 of them ) that are going to be dropping Publicly traded Partnerships, Limited partnerships and MLP’s
          11 of them.
          How do you think this will affect the stock prices of these 11 ?
          I own one of the 11, DCP-B

          1. Charles, Its hard to tell if or when or how they do it. What is dumb is the idiots flagged NSS also, and it is a total debt instrument. I noticed about a week ago it dropped quickly into $24.80 area and I bought more. I will have to taper this one down eventually. Maybe it was dumped some then? Also you dont know if any tracking entities arrange private party sells to avoid dumping. Or how many funds even use these indices to begin with.
            That being said, I will watch for any appreciable sell off in CEQP-. It used to be
            one of my biggest holds, but I have had to steal some funds from it for other purchases, being this issue is relatively stable and very liquid. So I can get back in whenever.

            1. Hmmmmmmm – “tracking entities arranging private party sells” – Do they sell tupperware at these parties too???? ha…… I’m bored, putting off working out to purposely misinterpret the written word…… sorry ’bout that..

            2. Interesting thought Grid, CEQP wasn’t on the list, but doesn’t mean it might not be affected. The NSS pays at the end of the month, but this goes into affect Dec. 19th So maybe book any profit you have now ? then buy back after that date to still capture the divy ? I should probably take my own advice

              1. Charles, yes its on the list. Its the very first one. CEQP- is the Crestwood 9.25%. See it originally was a private 144a issue. S&P are numbnuts as it was assigned a ticker and private entities sold out on an IPO in 2018.
                https://www.spglobal.com/spdji/en/documents/indexnews/announcements/20221123-1458053/1458053_spuspreferredstockindexconsultationupdatedresults11-23-2022.pdf
                This notice was issued in November. Typically they sell before implementation date. I wont sell, I would just buy more temporarily and then sell into or after exD if a drop occurs.

    1. The oldest preferred I know of is symbol TY-P on yahoo. I’ve seen price data going back to 1963.
      Since the dividend is $2.50, you could find the current yield at various points in time, to maybe get idea what preferred yield were at that time.
      The yield on this issue seems to be below most other issues, not sure of its rating.

  4. I am generally only an observer here, but I thought that I would mention that I am really liking my Seeking Alpha subscription with Trapping Value and Preferred Stock Trader. The addition of Preferred Stock Trader has really added a lot of value and I really like his picks.

  5. Is there a good detailed sourced you use to learn about the accounting treatment of things? I’m looking at parap and trying to figure out If they called it today (just as an exercise they can’t), they got 1 billion at issue (minus fees) and would basically pay it back with $235 million worth of shares at the current $20/share ignoring the interest they’re paying. Does that difference show up for the company as profit ever or simply financing cashflow and ultimately increased common shares?

    1. The number of common shares of para increases on the conversion date. In this case, there are 10 million parap shares that should convert into 11,765,000 shares of para on 4/1/2024. Total para shares currently outstanding is 649 million. By adding the 11.765 million on any given day, the dilution is: 661.765m/649m = only 1.96%…..so earnings per share won’t even be diluted by 2% on the common stock of para. Correct me if I’m wrong. I hold a modest amount of 30 parap.

      1. Correct, I’m just trying to figure out how the 700 mil of basically profit from the deal would be accounted for.

        1. Hmmm. My best guess is that there is no gain recorded on conversion. The current liability of the dividends ceases on conversion, and common gets diluted. Can you imagine if para price shot up to $300 on the conversion date, para would then, on the same rationale, be entitled to claim a huge loss? I think not. I think there is no imbedded unamortized discount that would cause para to realize a gain if parap were converted at these levels. Hopefully someone more versed can affirm.

        2. dufus, what do you mean by “700 mil of … profit”? How are you calculating that?

          I’d agree with Fan59: the conversion does not involve cash flow:
          – from the stockholder’s perspective, they start with PARAP and after conversion they have PARA (at whatever the conversion ratio is).
          – from the company’s perspective, I am guessing that preferred equity is debited (retired) and common equity is credited.

          No cash involved and only entries on the balance sheet, not the income statement. Of course from the stockholder’s perspective, there’s a change in value, and an unrealized cap gain (or more likely, loss).

          That said, I’m no accountant; I’d like to hear from anyone who actually knows how conversions are accounted for.

  6. Does anyone hold PW-A? There was supposed a dividend declared around mid November. I have not seen anything about this dividend payment yet. The common seems to be bottoming and is rated a hold by Thestreet and CFRA. Does anyone know of liquidity issues?

      1. Thank you Irish, that is about right for payment date. But how did you find about that?
        They were expected to declare dividend around 11/12, which is 3 month after declaring last dividend but they did not delare it until now (per TD). This is what confused me.

    1. Odd- S.A. says it does not pay a div- but obviously one was reported for their 3d qtr. It won’t come up on Yahoo, but does on e-trade (for Aug).
      quantum online shows pay date of 12/15

  7. Anybody have an opinion on DDT? It’s currently trading at $25.56 = 7.38%?
    I guess I’m asking about the safety of the dividend. I owned it for a long time and it frequently trades in the $26-$27 range. Thanks.

    1. What are the s&p and Moody’s rating of DDT? Quantumonline ratings look much less than on the spreadsheet of preferreds here. Wondering which is accurate.

      1. Mark—the Moody’s rating (Ba1) is the same but the S&P rating is significantly different (BBB- and B-). I don’t know which is correct.

    2. With the common stock of Dillard’s, symbol DDS, at$360 and a p/e of 7.19, I feel more comfortable holding my mere 50 DDS than I do with Investment Grade preferreds whose coupon and common stock price are substantially lower.

      1. Fan59,

        I am not sure what you said makes sense. Did you just compare the common DDS with the preferred DDT? DDS yield is next to nothing and one should not compare that to a preferred’s coupon. Also the share price of DDT is based on many factors but will generally always be approx 25 dollars depending on factors related to interest rates of other things.

        Perhaps you made a typo or I need another cup of coffee because my reading comprehension failed me.

  8. Blackstone – Given there’s been III talk about BX, maybe this is of interest:

    Blackstone Just Limited Withdrawals From Its Huge Retail Real Estate Fund
    Blackstone BX –5.97% is limiting withdrawals from its huge retail real estate investment trust after a sharp rise in redemption requests from investors.

    In a letter posted on the Blackstone Real Estate Income Trust website, Blackstone (Ticker: BX) said that redemption requests already have exceeded the 5% quarterly limit for the REIT, which had $69 billion of net assets at the end of October. The REIT is known as BREIT.

    The news that Blackstone is limiting redemptions, or gating, the REIT has sharply depressed Blackstone shares Thursday. The stock is down 6.9% to $85.15 at 11:22 a.m. Thursday

    https://www.barrons.com/articles/blackstone-reit-51669913002?siteid=yhoof2

      1. Gary:

        We all know the old investing adage: “Liquidity is never there when you need it most.”

        But BX closing the gate at 5% of NAV/quarter is pretty typical for these private real estate funds. The $70 Billion BREIT is invested in property assets (like the MGM Grand and Mandalay Bay in Vegas which they sold today), and it takes time to sell those. All of the student housing assets purchased when they acquired American Campus were also put in BREIT.

        The bigger issue is that the marks BX reported on their real estate holdings in their private funds when they issued EPS on 10/20/22 seemed insanely high.

        When they were first reported I immediately thought of that entertaining Sopranos episode with the corrupt home appraiser.

    1. One can imagine Blackstone hitting the 5% redemption limit for Q1 2023 by close of business on January 3

    1. Yes, and a bond search on Fidelity put Credit Swisse bonds at the top of the list I ran a couple weeks ago. Don’t believe everything you read. Check several sources, what I like about III everyone here shares.
      3 months ago I think it was Blackstone I was reading about that had closed one of their REIT funds to new investors and started a new one because investors were pouring in new money. I thought at the time as they were going around buying up companies, I was wondering how the investments were going to pay enough to pay dividends to the investors. Now we know

  9. GYB: Old Goldman Sachs floater that has been called. There is a class action settlement based on banks screwing with Libor. The numbers look pretty good. Anyone else participating in this? Your thoughts would be appreciated.

    1. How would anyone choose to participate in this issue called 3 years ago???? Is this about a suit for those who owned the security at the time it was called? No one other than owners at the time can choose to participate, can they? Is there a link to the class action?

  10. Automatic withdrawals. Just in case there are a few III’ers that do not know about these features. Many, if not all brokerages allow you to set up automatic cash withdrawals on say monthly, quarterly, etc. basis. We have this setup on several accounts so that X dollars are transferred on the 1st of each month to a local bank. Super easy to setup to any bank in the Federal Reserve System. Once you have the account setup, you can transfer money both ways with a few clicks in a few seconds if you want to do more than the automatic transfer.

    Brokerages will calculate the Minimum Required Distribution (MRD) on IRA’s and you can also set them up to be automatically distributed. We set them up to transfer the full amount on December 1st every year, so if there is a problem we have a full month to get it fixed. You can pick any date you want and/or spread it out over the whole year. Whatever works best for you.

    Both of these automatic transfers save time, effort and minimize the chance for an error. Like “I forget to transfer the money over and it caused a bounced check.” In some cases, there is NO local bank and the brokerage account is the only checking account. But some people still prefer to keep their local bank. Have not figured out how to have a safe deposit box at a national brokerage yet. . .

    (This was prompted by comments where III’ers talked to humans at banks. Kind of a foreign concept in some places

  11. Received a memo from IBKR that there is a tender offer for BAC-Q.

    > Option 2 – Tender shares for cash: 17.30 USD + Accrued Interest per 25.00 Liquidation Preference Amount tendered and accepted

    > Minimum Tender Requirement: 25.00 Liquidation Preference amount and in multiples of 25.00 thereafter

    Would appreciate a translation. What does “Liquidation Preference amount” refer to? The price of $17.30 (plus accrued)? And why would I go for this when BAC-Q closed at $17.85?

    TIA

    1. Banks trying to get these on the cheap to raise money – they are selling their holding in mortgage backed securities as the risk of people not paying when home value goes down.
      I got notice of tender offer for my BAC/S/P shares also
      The default option is to do nothing – So I believe I keep them and just collect the income until called – someone correct me if I’m wrong
      I have them at or over 5.5% and way under par
      With such a low coupon rate I can’t imagine these being called for a long time.

    2. Theo, “liquidation preference” is the correct term for what many people refer to as “par” for preferreds: it’s the price at which the issuer has committed to liquidating each share when they redeem (liquidate) the issue.

      1. Also, note that liquidation preference is not necessarily $25. Other liquidation preferences I’ve seen in the preferred universe are $10, $50, $100.

      2. Theo – Also, what the specific quote is telling you is that the amount of accrued interest [sic] that someone who tenders will receive in addition to the $17.30 tender amount is based on the accrual rate of 4.25% calculated based on the $25 liquidation preference amount… Why they call it “interest” when this is a preferred that pays dividends, not interest, I don’t know, but the math would be $25 x 0.0425 = 1.0625, then 1.0625 divided by 360 days = $0.00295 to arrive at the daily amount of interest [sic] accruing… Multiply that by the number of days from the last interest [sic] payment date to the tender date, adjust for any 31 day month (instead of the 12 months of 30 days each the formula assumes) in between and you have the amount of interest [sic] someone will receive plus the tender amount of 17.30 USD. I hope this clears things up a bit instead of making it murkier to you.

        1. 2whiteroses, I understand accrued interest (sic). What threw me is the phrase “liquidation preference amount”. In 20 years of owning and trading preferreds, I never came across that so I figured that I’d check here. Thanks for the explanation. What also threw me was that their offer was less than current price so I wondered if I was missing something.

          1. Theo, now that you know the term, you’ll see it’s used in virtually every preferred prospectus. Take a look for example at the prospectuses for preferred issues from PSA, AGNC, ALL, GOOD, LAND, GS, JPM, and WFC (just to name the few I opened in a five-minute search).

  12. Just a 💭 thought: I look at the municipal bond market at least every other trading day. I pull up different perimeters at Vanguard/Fidelity/Merrill Edge (grades, insurance, duration, risk, maturity, coupons) and the last 10 trading days have found very little to buy in tax free land that I would consider as a good value. I am still trying to fill in my 25 year bond ladder 🪜 and believe buy prices are not in my (or your) favor right now. I also follow the new municipal bond issuance (it could be the time of year), but there are very few municipalities/states etc that are looking for money right now. Thoughts?

    1. Azure, I am seeing the exact same thing that you are. As you know nearly all IG muni’s are priced via a spread to UST’s. The dealers have them setup to track UST 10’s for example automatically in their OMS. The UST 10 has dropped from 4.33 to 3.7 since 10/21, it has dragged down all of the muni ask yields. All bets are off in the non-IG, often times unrated world, but you probably do not want to go there, with one exception. Some percent of the time ~ 20%? when an issue is escrowed to maturity, the ratings get pulled. In theory this is the absolute safest muni you can buy. Some brokerages, cough Fidelity cough, will NOT let you buy them. Dealers seem to still price them like they are IG rated.

      The largest area of unrateds, excepting ETMs, are for nursing homes. A real minefield and many have defaulted, so it is caveat emptor.

      Muni bond trivia answer: when an insured bond is ETM’ed, the insurance policy is no longer in effect. I am not aware of any instance where an issuer has clawed back their ETM deposit, so losing insurance coverage has not been an issue to date.

      1. I bought some long duration bonds earlier in previous month and amazed at how hard they have came down in yield. I bought a 2039 A2 bond in early October at nearly 6.7% YTM and last trade it was peddled for 5.77%. If it was an ETD, Im sure I would have flipped it by now, ha. Several other long duration IG’s I also bought then but they haven’t traded in weeks. I might have been the last trade on one of them.

      2. Tex, thank you so much for your reply. The ETM; I have never seen one that was not deposited in US Treasuries awaiting maturity. I think a clawback would be an automatic SEC inquire and not worth the trouble as they would lose. Another thing I have noticed the last 3 to 5 months is the enormous amount of Texas bonds that are in the market. Most of them are very specific “numbered” areas and an investor no longer gets a “Houston” electric area revenue or GO bond. These bond are numbered for a carved out numbered area and I just stay away from those as even with the insurance are not for my investment portfolio. Municipal bonds to me will always be to “stay” rich and not to “get” rich, so I will 99% of the time buy the safest bond. I did invest in some State of Illinois bonds (I believe they had insurance), but I had to hold my nose to just keep those in my ladder. Be well, A

  13. FWIW: Bask Bank money mkt incr- again.
    The annual percentage yield you are earning on your Bask Interest Savings Account has been increased from 3.60% to 3.85% APY*.

    1. Merchants Bank of Indiana (which issues preferreds that many of us including me own) has a money market account that has been at 3.82% since November 3.

      1. Along those same lines, CIT Bank, now a division of 1st Citizens Bank, is offering 3.60% “Savings Connect.” 1st Citizens baby bond preferreds rated slightly higher than Merchants FWIW… Ba1 vs Ba3

    2. I had money at CIT for years and never had reason to contact them. last month there was a problem and when I called, the wait time was 80 minutes. I sent them a secure message and it took 6 days for them to reply. I took my money out.

      How is the service, aka responsiveness, at Bask Bank?

      1. I had a similar issue with CIT years ago. I also took my money out.

        I have a small account (used to be larger) at Barclays. Many transactions with absolutely no problems there. Money moves out like lightning and money deposited there is credited promptly.

        I don’t have an account (yet) with Merchants Bank. But I called them today to verify there were no fees (there aren’t with six max transactions per month) and that money market was FDIC insured. It is. No hold time. No “press 1 or2” garbage. A real person answered and was able to answer all my questions. I was impressed. I was told they service all 50 states, but every account had to be approved.

        1. I also have an account at Barclays. Once or twice a month I fund my local checking account with a transfer and as you said, it’s prompt and errorless.

          I’ll call Merchants Bank tomorrow. I hope that they offer a trust account because many do not.

          Thanks for the feedback.

        2. I called Merchants twice and was shunted to a voice mail where I left my name and phone number twice. No reply yet.

          I tried opening an account at Bask Bank but their server went into an endless processing of my uploaded documents (photo ID and picture) so I don’t know if that went through or not. Gotta call them on Monday. Hopefully, some day the technology will catch up to the idea :->)

      2. When calling I get a live person to answer in just a minute or so. Way better than any other bank I do bizness with.

  14. Good morning –

    Is anyone looking at the SBR senior secured notes offering?

    I believe its over 11%

    Thoughts are appreciated.

      1. Sabre Corporation (“Sabre”) (Nasdaq: SABR) today announced that its wholly-owned subsidiary Sabre GLBL Inc. (“Sabre GLBL”) upsized and priced an offering of $555,000,000 aggregate principal amount of 11.250% senior secured notes due 2027 (the “Secured Notes”), an upsize of $20,000,000 over the amount previously announced. The sale of the Secured Notes is expected to close on December 6, 2022, subject to customary closing conditions.

        The Secured Notes will pay interest semi-annually in arrears, at a rate of 11.250% per year, and will mature on December 15, 2027. The Secured Notes will be guaranteed by Sabre Holdings Corporation and each subsidiary that borrows under or guarantees Sabre GLBL’s senior secured credit facility. The Secured Notes and the note guarantees will be secured, subject to permitted liens, by a first-priority security interest in substantially all present and hereafter acquired property and assets of Sabre GLBL and the guarantors (other than certain excluded assets).

        1. They don’t look like something available to mere mortals.
          “The Secured Notes and the related note guarantees have been offered in a private offering to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”) and to non-U.S. persons outside the United States in accordance with Regulation S under the Securities Act. The Secured Notes and the related note guarantees have not been, and will not be, registered under the Securities Act or any state securities laws. The Secured Notes and the related note guarantees may not be offered or sold in the United States or to, or for the benefit of, U.S. persons absent registration under, or an applicable exemption from, the registration requirements of the Securities Act and applicable state securities laws.”

    1. I am really surprised SABR got 11%. I cringe when looking at their income and cash flow. I think I would rather play blackjack with my money. I wonder if their heating for their facilities is fueled by throwing greenbacks into it.

  15. After today’s ex-dividend Swapped UZD, UZE, UZF into USM bond cusip 911684AD0 . Yield 7.63% Maturity 2033 much shorter and i maybe alive then . YTM 8.35%

  16. There are 4 new Federal Home Loan Bank bonds showing up as being offered today at Fidelity
    FHLB 5.50% 12/22/25 3130ATZS9
    FHLB 5.85% 12/20/29 3130ATC4
    FHLB 6.11% 12/21/32 3130ATZD2
    FHLB 6.38% 12/21/37 3130ATZE0

    The last 3 all have 6 month call then continuously. The 5.50% has a 3 month call but then quarterly instead of continously…. Caution on all – Accrued doesn’t even begin until their respective December dates so at least 3 weeks out.

    1. 2whiteroses – thanks for the info. I’m not familiar with FHLB. Are their bonds backed by the federal government and have they ever defaulted on any loans like back in ‘08. Thanks for your response.

      1. TimH – Oddly the answer to your question is not cut and dried, but I suppose it never has been… So the best way to answer is to quote one or the other of the 2 major rating agencies… Both Moody’s and Standard&Poors give the FHLB system equivalent ratings to Treasuries, AAA/AA+. However, to quote Standard&Poor’s, “Our ratings on the FHLB System’s senior debt indicate our view of the almost certain likelihood that the system would receive extraordinary support from the U.S. government if needed. We base this view on the system’s integral link with the government and critical roles in promoting homeownership and providing funding to U.S. banks. Our ratings on the system’s debt are at the same level as the U.S. sovereign ratings, even though the U.S. government does not explicitly guarantee the FHLB System’s debt.” The language at Moody’s is essentially the same but a bit more obtuse….

        Regarding ever defaulting, I’ll leave that to better historians among us than I to answer because I can’t say with enough certainty to be deemed a reliable source on that…..

        1. 2whiteroses – appreciate your informative answer and anyone else who adds their thoughts. ATB

  17. CUBI-E and F – It’s kind of interesting how these are trading today at the opening after going x-div…. F actually traded at sub par 24.83 and is offered at 25.03 and yet the next coupon payment on 3/15 is bound to be even higher than this 12/15 of $0.509. Seems an odd occurrence for such a high F/F ratio preferred going forward… E too, but F seems cheaper relatively

    1. As an example, the 12/15 coupon payment on CUBI-F for 12/15 is 8.144%… If CUBI-F were to reset today, the 3/15/23 coupon would be 9.495% if I figured correctly… Yet being offered at 25.03…

      1. i did a little switching this morning. selling the e and buying more f.
        assuming they might take out the E next chance they get.
        but who knows!!
        i thought at least 1 would be gone by now LOL

    2. Somewhere people or the AI is simply looking at spread of the floating rate and ignoring the overall yield. Or maybe figuring both of these have a long road until called. Short term, with “E” trading at $25.37 there’s already a 37 cent hit if this is called in the next quarter, two or three. With “F” just under par now, it’s straight coupon rate. With dividend per share only 2.4 cents/qtr more favorable for “E” going to take many quarters to breakeven with “F”. And I feel “E” will be taken out before or in conjunction with “F” due to the floating rate difference.

      I loaded up on “F” in late November, if called next quarter that’s 13% XIRR, if not then a generous floating rate over 3ML. One downside is, since this isn’t cumulative, they could just not pay a future dividend.

      1. Let’s assume both E and F set their 3/15/23 coupons today (it will actually be set on 12/13 I believe). CUBI-E would be 9.90% and F would be 9.52%. As bob said, who knows what CUBI’s going to do but since both are only callable on dividend payment dates, let’s assume these are called on 3/15/23. At 25.35, CUBI-E would be 4.98% YTC. At 25.02, CUBI-F would be 9.92% YTC.
        CUBI-E current yield is 9.76% and CUBI-F’s is 9.51% if I haven’t screwed up along the way…. So if choosing between the two, the choice would be dependent upon your own opinion if you think it’s likely they’d call E while leaving F outstanding on any given call date… IMHO, particularly when thinking about the absolute levels of both today, what CUBI does for one, they’ll do for both, so I’ll choose F, the one with the lowest absolute dollar price not the E, the one with the best current yield…. That being said, I still own both but more F’s than E’s

        1. Maybe my math is wrong, won’t be the first time. But if it’s right, I show the difference is much larger. With 3/15/23 call I get CUBI-E with 3.64% XIRR and CUBI-F with 8.08% XIRR. 61.44 cents/sh and 59.08 cents/sh respectively (4.69% 3ML rate).

          CUBI-E is hammered with short term duration as it has 35 cents/share trade above par.

          If they both stick around until 3/15/24 (and no change in the 3ML rate) I get CUBI-E with 8.60% XIRR and CUBI-F with 9.36% XIRR. Just no reason to buy E vs F currently.

  18. Good morning,

    Does anyone follow TDS, or US Cellular as they have notes and preferred linked to them. TDS common dividend inching closer to 8% but am more interested in the notes and preferred of the above.

    UZD GJH TDS-V and TDS-U

    Any and all thoughts are appreciated
    Thank you

    1. Last week I opened a small position in the “V” preferred. Over 9% yield and a dividend coming up in December.

      1. I have traded UZD in the last 6mo; in the June Swoon it dropped to 19.50 and I bot a little; then it quickly recovered to 24 and I sold, feeling the FED was not done and put it back on the hot list. I see it is sub $18 again and may have to take a look. The last quarterly report threw all these out of bed w the common as it was below expectations– but U.S.Cellular has valuable cell towers backing the value there, as pointed out to me by Kaptain Lou who I chat with on SA. Anyway so much to choose from these days, it is hard to keep up with all the swings! Bea

        1. Interesting, does anyone have any idea why tds-v is both cumulative and qualified while usd is not? tia any thoughts. sc

          1. Assuming you mean UZD rather than ‘usd’, it is because UZD is a bond therefore pays interest and interest is never qualified.

    2. Have owned TDS-V for quite a while. Traded out some in $22s and added back in $17s in October.

      Am concerned about the common TDS down 40% in the past month after earnings Nov 3rd, but so far holding the preferred.

      1. After today’s ex-dividend Swapped UZD, UZE, UZF into USM bond cusip 911684AD0 . Yield 7.63% Maturity 2033 much shorter and i maybe a life then . YTM 8.35%

          1. By description, it IS the bond behind GJH 6.70% due 12/15/33. Closed offered at 8.412% according to Fidelity… So GJH is a little bit cheaper than the underlying bond right now……..

  19. For those following my SI-A trade from last week, I have taken profits between 14.75 and 14.90 this morning. Up nearly 20%, I was waiting for a down day and got that today.

  20. New research from Rob Arnott @ Research Affiliates verbatim

    History Lessons: How “Transitory” Is Inflation?

    Key points

    The US Federal Reserve Bank’s expectations for the speed of reverting to 2% inflation levels remains dangerously optimistic.

    An inflation jump to 4% is often temporary, but when inflation crosses 8%, it proceeds to higher levels over 70% of the time.

    If inflation is cresting, inflation levels of 4 or 6% revert by half in about a year. If inflation is accelerating, 6% inflation reverts to 3% in a median of about seven years, threatening an extended period of high inflation.

    Reverting to 3% inflation, which we view as the upper bound for benign sustained inflation, is easy from 4%, hard from 6%, and very hard from 8% or more. Above 8%, reverting to 3% usually takes 6 to 20 years, with a median of over 10 years.
    **************************************************************************
    If Arnott is correct, the implication is that preferreds will NOT be rebounding to 2021 levels for 6 to 20 years. And very few that were issued in that time will be called on their first call date.

    https://www.researchaffiliates.com/publications/articles/965-history-lessons

    1. Tex… And yet the 1 month Treasury is inverted with any that are 5 years and up. How does that reconcile?

      1. Lucky, easy to reconcile. You can have a recession simultaneously with high inflation, aka stagflation. A different way to think about it: how will the Fed raising short term interest rates lower inflation? The Fed can’t produce more oil/gas, food, cars etc. Their only plan is to create “demand destruction.” The Arnott paper diplomatically says the Fed totally messed up the inflation analysis before it got out of control and is totally messing up by thinking it will come back down quickly.

        If Arnott is right that inflation will take much longer to get back down to say 2.0%, what are the implications for preferreds/babys/terms? Separate from Arnott I have been thinking about it, but am not ready to publish anything yet.

        1. Historical averages might not be a reliable guide, too much weird stuff going on.
          Implication would be you might not be able to sell for a good price but holding at 7-10% net dividend isn’t bad. Unless the economy gets so bad they start defaulting. Floaters would remain underpriced as an eventual rate drop has already been priced in. Shorter term preferreds under par could be a good play while riding out the storm.
          or just take your 5+% CD’s and Treasuries.

          1. Martin G

            Yes indeed, for us in or near retirement just holding IG preferred’s and bonds with decent dividends mixed with a few 5% CD’s is all many of us need.

        2. Tex…The part of the seeming disparity that is difficult to reconcile for me is the disconnect between longer rates and higher inflation which implies a near zero to negative real interest rates going forward, as defined by nominal interest rates minus the inflation rate. Negative real rates make sense in a time of QE, but in a time of QT, or balance sheet runoff, or no manipulation, it makes less sense to me. Foreign buying interest, since our rates are still high compared to other developed economies, might help explain it, but somehow it just “don’t seem right.” Maybe I am just tired of it. lol.

          1. Foreign central banks buy our debt, we buy their debt. No true price discovery.
            Round and round we go. It’s a worldwide Ponzi.

    2. Great article. I worry about the potential forecasting error for statistics based on small populations. It’s all we have but I bet the statistical error factor is high.

      It seems clear to this “grasshopper” that the fixed preferreds would suffer and not approach call prices but what about the F/F’s? Many are trading in the 23-26 range and could get called in rates increase or the inversion extends for long.

      I am focusing on the quality low rate, low spread F/F’s that currently trade at big discounts. Shouldn’t they do well if Arnot is close to right?

  21. Tex recently posted this link: https://opensocialsecurity.com. I’d never heard of the site and the lazy part of me probably didn’t want to bother, though saved to check it out which I did today.

    Enter a small amount of info and the model generates a basic table of projected annual SS income. Nothing shocking here. *However*, for a “wow”, click on the color-graph to view maximizing claiming strategies based on you/your spouse variable claiming dates. Look for the single light-green square.

    We’ve always been in the max-deferral mindset, so was more than surprised when for our own situation, model indicates to maximize PV of future SS benefits; my GF (wife) should claim “immediately” and I defer to 70, with a declining PV if she delays. Didn’t see that coming.

    The model also quantifies the PV of those future distributions for a thousand start-date combos for easy comparisons. If you haven’t already, recommend checking out the link provided by Tex.

    Thank you Tex!

    1. Years ago, my wife and I had an in person meet with a live SS rep who suggested my wife collect half of mine and let hers continue to grow to age 70 when she would switch to hers. That was a strategy we didn’t even know existed. (not sure that route is still available). Bottom line is SS is way more complicated than we realized if you’re trying to maximize return and 2 people are involved.

    2. I used the site too thanx Tex. I always thought I’d collect at FRA but the calculation for max benefit suggested waiting another year. I have 1/2 longevity in my family– dad’s side not great/ mom (89) her side pretty good. I don’t need the income but I believe as Martin pointed out there is advantage if you can earn on investing the SS pmts by collecting early. It is complicated but really important. All the good things we help each other out with here!

      1. Bea… Both my wife and I have taken SS already, so I just gave the link a quick once over, and although the value of investing unspent SS payments is mentioned, the rate of return is unknowable, thus the “ideal ages” concept is muddled. As the ages are amortized for life expectancy, and a “breakeven” age for larger payments taken later to catch up to lower payments accruing for longer is approx. 78.5 years, reinvesting payments would make the effective breakeven age later than 78.5 it seems, but by how much? Another factor not covered is the size and frequency of any COLAS that may occur over time. Another unknowable, this factor makes an accurate prediction mathematical model even more difficult to formulate

    3. alpha, OUTSTANDING suggestion for the Social Security analytics site. After putting all my relevant info in, They recommended my spouse to take SS at 62 and 1 month and me to wait until I’m 70 and 0 months. Then for my spouse to file at 69 and 6 months to file for spousal benefit. I am much younger right now and will not take SS for many many years, but this was extremely interesting and valueable and I truly thank you so much 🥇 I urge everyone to project their SS information into this valuable site.

  22. Negative on Silvergate common (SI) and preferred (SI-A). Marc Cohodes recently did two interviews discussing his history of short selling. In case you have not heard of him, his research has literally sent several executives to jail for fraud. One of his recent short selling targets, MiMedx has its CEO and President convicted of fraud and residing in prison. Earlier this year, he started claiming FTX and Sam Bankman-Fried were fraudulent. He did on interview on October 11th where he discussed his reasoning for his FTX views. This was BEFORE FTX went bankrupt. I had not heard this interview until recently. When I listened to it, after his FTX views, he brought up Silvergate. He is very negative on SI and claims they have inadequate KYC/AML (Know your client/Anti money laundering) procedures in place. As with most short selling stories, there is a lot of controversy and push back. Cohodes does not bat 1,000 but he has some notable home runs. Just think about the semi-infinite positive views on FTX/SBF and how Cohodes had the testicular strength to take the over side.

    Some will come to a different conclusion, but Cohodes comments cement my view that both SI and SI-A are uninvestable. I have no association with Cohodes but did meet him one time. Quite the character. We are also NOT short SI and/or SI-A in any account.

    Link to October 11th interview. BLACK BOX WARNING, lots of profanity is used.

    https://app.hedgeye.com/insights/122943-marc-cohodes-ftx-is-dirty-rotten-to-the-core-hedgeye-investing-s?with_category=17-insights

    Link to November 21st interview, after FTX went BK. Also contains lots of profanity.

    https://mebfaber.com/2022/11/25/marc-cohodes/

  23. 2WR,
    This is the form needed to file a reconsideration.
    Available online as a PDF.
    SSA-44 (12-2021)
    “Medicare Income-Related monthly adjustment amount- Life-Changing Event”
    1. Marriage 2. Divorce 3. spouses death 4. work stoppage
    5. work reduction 6. loss of income related properties
    7. Loss of Pension income and finally 8. Employer settlement payment

    The form SSA-44 is a simple form to fill out
    Step one I picked Loss of pension income and the date of withdrawal gets entered. Nothing else made better sense.
    Step 2 fill in numbers for the year after the mistake year
    Step 3 no seems logical
    Step 4 is Documentation
    Attach the explanation of the mistake with proof of funds being transferred in and out.
    Show proof of the date you deposited the money and then the correspondence letters that came afterwards.
    Explain that the taxable amount on form 1099R should have been zero
    Sign step 5 and mail it to the local Social Security office.
    This is done AFTER you are notified of a premium penalty.
    I guess you can pre-empt that, not sure though.
    I hope I didn’t confuse you.
    Good luck
    I can provide my email address if needed for private exchanges.
    There are you tube videos how to appeal IRMMA
    Here’s one
    https://youtu.be/H4mZjshRxu4

    1. Many thanks for following through, Newman…. I really appreciate it.. I’m going to take some more time to really dig into what happened and make sure that my conclusion was accurate before proceeding with IRS interaction, but at least now I have the info on the right avenue to follow thanks to you…… Most importantly, comment wise, is to express my awe for this site, where, overall, as some others have recently pointed out, we act as a community willing to help others out without judging… This has been a topic just barely related to innovative investing yet the responses received, the ability to post and the camaraderie experienced here is what makes III and the people on here such a great resource.

  24. SJIJ – Thoughts on the fate of SJIJ considering what transpired with the PS Business Parks preferred?

  25. LTSL up $3.25 today on volume of only 400. Since only an “expert” can buy this issue I wonder what somebody knows or did they make a bad mistake.

    Also haven’t seen it discussed at all but the recent announced dividend for NLY-f was the first one to float – 8.8% on market price, slightly less on par.

    Also glad to see some discussion here on agency bonds. I have purchased these for years and try to get them right after issue. Recently got some FHLB at 6% and FFCB at 6.45 and 6.98%. As is typical these may be called on an early call date but I’ll take the higher safe interest for relatively short periods. The interest is also not subject to state tax.

    1. Ken, the announcement of the new dividend amount for NLY-F came out at 4:15 p.m. on 11/9/2022, per businesswire: https://www.businesswire.com/news/home/20221109005895/en/
      NLY-F closed at $24.20 on 11/9 and opened at $24.52 on 11/10, a 1.3% jump.
      Sister issue NLY-G closed at $22.32 on 11/9 and opened at $22.57, a 1.1% jump. NLY-G starts floating on 3/31/2023.
      Sister issue NLY-I closed at $21.87 on 11/9 and opened at $22.46 on 11/10, a 2.7% jump. NLY-I starts floating on 6/30/2024.
      Parent issue NLY closed at $19.12 on 11/9 and opened at $19.69 on 11/10, a 3.0% jump.
      Exchange-Traded Fund PFF closed at $30.31 on 11/9 and opened at $30.81 on 11/10, a 1.6% jump.
      The S&P 500 closed at 3748.57 on 11/9 and opened at 3859.89 on 11/10, a 3.0% jump.
      Like they say in the textbooks, “the implications are left as an exercise for the reader.”

    2. I got that 6.98% bond at issue through Fidelity. I’ve got an order to pick up the 6% step-up GS new issue which closes on Monday. Can’t be called till May 2024 with a maturity in 2029. Both of these may well get called early if rates back down and that’s ok. You take what the market gives you.

      1. Richard or others
        is there a cusp number yet for the new gs bond at 6 percent and the other
        you mentioned at 6.98 percent? tia your replies. sc

        1. At Fidelity you can place an order for this new issue until 11:30 am ET. The CUSIP is 38150AQB4

      2. Richard or others
        is there a cusp number yet for the new gs bond at 6 percent and the other
        you mentioned at 6.98 percent? tia your replies. sc

        1. s…I don’t think this is the bond referenced earlier, but I see a recently issued GS 6.125% with one year of call protection, cusip 38150AQ99. Priced at 100.000

        2. CUSIP 38150AQB4 for the 6% GS bond. The IPO closes at 11:30am Monday at Fidelity.

          CUSIP 3133ENY95 for the 6.98% Federal Farm Credit Bank issue.

          Be aware that lower rates could get these called long before their expiration dates. The GS issue’s first available call is May 2024.

    3. Got 20k of the 6.9% when they came out. Can’t beat that imo and new issues are yielding a lot lower now. Likely called in April, but I will take it.

  26. FINRA bond site does not list current price of cusip 3133ENU40, Farm Federal Credit Bank Bond, issued 10/20/22. Can anyone help me with a price quote and how to obtain information myself without going through my broker? Thanks in advance.

    1. The Nov. issue has a higher interest rate. Check the Cusip that I posted below.
      Just bought some on Schwab.
      FFCB

      1. Thank you BB as I am out and about today. I’m going to wait a bit and see if the merger talks drag it down more

      2. Is the intention to hold until maturity? Once SJI goes private, there is no secondary trading unless I’m mistaken.

        1. Rich, that has to be the prudent intent. It may trade but one has to assume the worst. That is why the 2031 bond has more allure being the fact it has a defined 8 ish year maturity. Plus this subordinate debt issue cannot be deferred unlike SJIJ. This 2031 bond is the remnant leftover from SJIU equity unit issue. Once it repriced to the 5.03% bond it shed the deferral clause too.

          1. Thanks Gridbird – how could these bonds conceivably trade? They are still SEC registered so I imagine it’s possible. Interested in knowing how one could sell if need be.

            1. See, the new SEC guidelines were to eventually be used on bond market but were delayed. I don’t know what if anything has came out of this. So my plan if I ever buy is just to assume the worst. As they will definitely cease filing after merger is complete.

              1. Assuming status quo, how could one sell the bond after the merger? Trying to think of an example where a company’s SEC registered bonds remained outstanding after going private and throwing the CUSIP into a Schwab or Fidelity to see whether it is possible to trade them.

                1. You may not be able to sell it. As Grid says “assume the worst” translates for me to have the ability to hold until the 2031 maturity. Unless you can handle that particular scenario you would be best to avoid the security.

                2. Rich, please look no further then Phoenix; use to trade under symbol PFX. Company was taken over privately years ago, ceased to trade on the NYSE and now the bond is trading with the controlling market makers on a wide spread.
                  Full Disclosure: I am very long these Phoenix Company Inc., 7.45% Quarterly Interest Bonds QUIBS due 1/15/2032 and I know of a few other that are long the bond that post here. PLEASEEEEE do your own deep due diligence and NEVER listen to some person behind a computer that may or may not have your best “interest” in mind 🤔 I am Azure

                  1. Azure, I thought of these too. But, there is a portal for access to the financials for shareholders. And here is the problem I worry about…Not everything has phased in yet…..From article this summer…
                    https://www.bloomberg.com/professional/blog/sec-rule-15c2-11-industry-impact-and-unanswered-questions/
                    Blater notes that bonds issued by a U.S. publicly listed company will, by default, have the necessary and up-to-date information because of SEC requirements for listed equities. Bonds issued by private companies and some from emerging markets may be more vulnerable, and the rule changes could affect their liquidity.
                    Privately placed 144A securities will not be affected by the amended rule until January 2023, when the multiyear rollout moves into its next phase, but they risk becoming completely illiquid if they’re no longer able to be quoted.

                    1. BTW, Phoenix is now a whopping 11.22% current yield and about 14.3% YTM in about 9 years. At some point I’d be surprised if Nassau Reinsurance Group Holdings doesn’t start buying back the $268MMish debt in the open market on the elcheapo. Be Well, A

                  2. Azure – Super helpful and thanks for the real world example. Per TRACE, the trading volume looks decent and the quantity traded is clearly retail, yet Fidelity doesn’t offer it. How can one go about finding the market makers and do you know if it’s possible to buy/sell these types of issues through E-Trade or Schwab?

                    1. Hi Rich and thank you for your question. I have to call Vanguard and/or Merrill Edge to get them to go through their in-house corporate bond specialist/market makers to get an offering. I know that Vanguard has made it almost impossible to invest in ANYTHING they deem risky or not trading on the “correct” market, but I have not called them to see if I can buy more. I have a substantial position in the Phoenix 7.45% QUIBS and look forward to each quarter getting paid. My plan is to definitely hold until maturity or I meet my own maturity. Hope that helped ⭐️

                    2. Azure – There was no reply link showing so I wasn’t able to respond directly to your last post. This really helps. My fixed income experience with Merrill Edge has been lackluster. For example, they don’t allow clients to buy non investment rated bonds. I was under the impression customers do not have access to the Merrill institutional bond desk to try and source bonds, even if some larger markup is involved. I’ve asked several reps before and it was all a dead end. How are you able to do so?

                    3. Hi Rich—aren’t you getting a reply link on your posts? I will look at it. What browser are you using?

                    4. Rich, there was also no reply link for me from your last reply post. I know I have signed a few “hold harmless” letters with ME, their bond desk is very sub-par and they always are about 0.60/0.75 priced higher then Vanguard. I will call sometimes and they will quote me a lowered price. Unfortunately, I have an extraordinary amount of money with them as they have 1 of my 2 main trust accounts that has been accumulating principle and dividend income for many decades. I usually buy my already trading preferreds, exchange traded bonds, equities etc from them as there is no commission, but stay away from their bond desk unless it is something Vanguard will not buy me. I also have some Phoenix Company Inc., 7.45% Quarterly Interest Bonds QUIBS due 1/15/2032 in this trust account. My plan into 2023 is to establish a Fidelity account and probably transfer this account. When I transferred my parents estate account away from ME, I got a call from their President of North American Operations and they credited my account $10,000 to rescind my ACAT. That was about 3 years ago and I really want to move it in 2023.
                      Be Well, Azure

                    5. Azure–have you had the reply link issue in the past? I am going to look at things tonight and see if I can see an issue.

                    6. Azure – I wish I was in a position to sign their hold harmless letters. The whole letter is ridiculous in my opinion. If someone wants to trade junk bonds – let them! Fidelity has no issues with this, regardless of assets. But how is it that you’re able to reach out even indirectly to their institutional desk as an Edge client? Is there a Merrill Edge number staffed by reps who know how to do this? For example, assume I want to but a fixed/floater bank debt that is rated investment grade (so presumably no hold harmless letter is needed). Fidelity doesn’t let me. I agree BAML is sub-par but if it’s possible, I’d consider trading through them and paying the markup. Thanks again.

                    7. Tim – No need to look very far as at least for me using FF and Windows 10 it’s happening right now in this thread… I have noticed it before and from best I see when it happens it happens when someone is attempting to Reply to a Reply to an original message… You have to go up to the original message to hit Reply but then your response does end up where it ought to be as a response to the response..

  27. Short term money. Twenty eight US Treasury issues maturing in 23-24 that have YTM’s >=4.7%. Just bought one maturing March 2023 @ 4.45% YTM, matures before April estimated tax payment. Plus commission free at some brokerages.

      1. Bur, I do NOT buy these at TreasuryDirect (TD). I buy these at different brokerages. Several reasons:

        1) You should have many more choices from a brokerage than from TD. For example, maybe you find the best yield to maturity on a 10 year US treasury note that was issued 9 3/4 years ago. So it matures in 3 months. Same for 6 month, 1 year, 2 year, etc paper. Gives you more chances to get a little higher yield.

        2) TD works fine for one person/family, but not practical for say 10 or 100 folks. You do not want to make everyone have both a brokerage account and a TD account. Related to that is the simplicity of tracking one account versus two.

        3) If you have to sell a UST for any reason, you cannot do that at TD. You have to transfer it out to a brokerage, then sell it.

        4) You can buy commission free at some brokerages,

        5) You can sometimes get a microscopically better price/higher yield. You are only allowed to do non-competitive bids at TD, i.e. you accept whatever price/yield the auction settles on. On some brokerages you can do a “bid-back” which lets you set a buy price below the current ask price. Maybe you get filled or maybe not, but you can try it.

        I have ZERO problem with anyone using Treasury Direct, we just choose not to. Obviously a lot of III’ers jumped on Ibonds which have to be purchased at TD which is fine.

    1. If I could buy it at par, I would jump all over it. I am just an extreme tightwad.
      Thanks
      Mark

    2. Jim,
      I hold a few similar to these. Look great but are callable. I took a look back and they were calling 2% – 3% bonds earlier this year. If rates back off a little not much hope of getting more than a year or maybe 2 or 3. If rates go/stay higher these will be better. However, that said there is no downside – 6-7 % for a year or 2 is great. I am trying to find some non – callable to help build a longer term bond ladder. Good luck !

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