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.

3,696 thoughts on “Sandbox Page”

  1. Feds are indicating higher for longer according to what I read today. Rates are projected to peak a half percent higher than previous projections with no significant rate cuts before 2024.

    Adjust your plans accordingly.

  2. Do your tax loss planning, you only have 2 weeks left.

    PLDGP
    That was my sale of 300 shares at 56.27.
    Thank You to the poster who mentioned it first.
    I gained $411 in 7 days.
    I had it in a NQ account. QOL stated it is not QDI for the 15% rate..
    So, why put on $321 as NQ Dividend on my Tax Return, when I could play with my Cap Gains account instead.
    With this sale, I can now plan to sell losing issues and escape taxation.

    1. Newman:

      You are aware that dividend income from PLDGP is “Section 199A” qualified and you get a 20% tax deduction on it – which is higher than the 15% QDI rate?

      1. As i understand it, it depends. Section 199A means that 20% of the income is untaxed, while 80% is taxed at the marginal rate…which could be higher.
        QDI means the entire dividend is taxed at a lower rate, which could be zero.

        1. RB,
          There’s also my strategy to keep income off the return so as not to affect taxability of too much Social Security benefits.
          The threshold has not been adjusted for inflation since Reagan.

      2. No, I did not know that.
        I didn’t do Due Diligence, because it was a small position.
        For my big positions, I do DD, only to have the value become DOO DOO
        Oh Lord, my brain is not what it used to be.

        “Ignorance is a disease , but it’s the only one you can get yelled at for having.”

        1. Well Newman, you rang the bell on a profitable trade. So I will disagree with your saying and counter “Ignorance is Bliss”. We should all be so fortunate! I bought about 1000 of these at around $54.70. Im holding for 2 reasons. I dont want to pay any more taxes this year, and it keeps a fair chunk of money impounded in a solid time out issue.

          1. Gridbird,
            Was it you who first mentioned PLDGP?
            So, Thank You, once again.
            I keep a Fidelity watchlist of “III Mentions” to research issues at a later time.
            I expect to repurchase PLDGP at a more impertinent time in the future.
            As for Ignorance:
            If Ignorance is bliss?
            Then why are so many people unhappy?
            Happy Holidays guys.

      3. I can’t think of any scenario where a 199A dividend has less of a tax liability than a qualified dividend. (for obvious reasons, the reason it is qualified is to compensate for double taxation, but REIT’s are not subject to income tax to begin with)

    2. The 199A rules do not apply to every taxpayer, but almost every REIT pays 199A dividends, so PLDGP is not really special in that regard.

  3. I hold an account at ‘TDAmeritrade’ and various articles state that the buy out by ‘Schwab ‘will be accomplished this year, on a staggered basis. Can anyone here with an account at ‘Schwab’ advise if they are satisfied and, if not, what are the drawbacks they have encountered. Appreciate the advice of the skilled investors here.
    ( I am very leery of this transfer ).

    1. Howard –

      My two biggest problems with Schwab:
      1) They say they don’t recognize many preferred stock symbols on the mobile app, so you cannot start a new position and buy NUMEROUS preferred stocks on the mobile app. My brother actually met a web developer for Schwab on a cruise just over a year ago and explained this problem, and still not a thing has been done.
      2) Schwab pays dividends usually very late in the day or even after hours!
      Whn my accounts were at USAA before Schwab took them over, I would even get dividends the night before they were due, but usuakky no later than morning when due. Schwab is always late to worse in paing dividends.

      1. Thank you, Fan59. Appreciate your input. Neither of these drawbacks will affect me because I only use a P.C. to invest
        online and I have a margin acct just in case I need cash on
        an immediate basis. Take care, Howard

      2. Schwab makes a huge amount on the “float” from client accounts. I suspect they hold on to dividends for a day so they can earn interest on them. Billions of dollars in dividends is a big temptation…

    2. I hold both IRA’s in both Schwab and TD Accounts. I am happy with my Schwab account because with fixed income like Treasurys you can purchase in small increments, but not at TD.

    3. I hold both IRA’s in both Schwab and TD Accounts. I am happy with my Schwab account because with fixed income like Treasurys you can purchase in small increments, but not at TD.

  4. As Richard Nixon asked on public television, “Sock it to me?!”
    Well here’s an example of the punch to the middle of the balance sheets of every ilk:
    From Canada, “Households made about $230-billion in debt payments during the third quarter, a record increase of 5.6 per cent from the second quarter, Statistics Canada said on Monday. In particular, the interest portion of debt payments jumped by 16.2 per cent, also a record.”
    I hear it, tick, tick, tick…is it the clock or? There’s a difference between hearing and listening.

  5. The FT has an article about tomorrow’s (12/14) SEC Meeting. One of the rules they are going to vote on is for brokerages to prove they used “best execution.” One proposal is that brokerages/internalizers (Citadel/Virtu) have an auction for literally every “market” order they receive. Instead of the internalizer being able to fill the order with less than a penny of price improvement, they would have to run a quick auction to find the best price from multiple sources. The claim is that this would dramatically reduce the number of orders filled by Payment of Order Flow vendors. If the SEC pushes it, it should be a fight to get it approved. Could be an issue that drives brokerages to start charging commissions again which would impact III’ers.

    Excerpts from the FT article:

    ******************************************************************************************

    Banks, trading firms and brokers are bracing for the biggest overhaul of US stock trading in almost two decades with the release on Wednesday of plans designed primarily to lower costs for small investors.

    The Securities and Exchange Commission is set to vote on four proposals aimed at pushing brokers and market-making firms to execute deals at the best price available — and prove this was done.

    Industry executives have described the reforms as the most sweeping since 2005, when a set of rules known as Regulation National Market System also addressed conditions for small investors by modernizing US equity markets.

    “Potentially these could be the most significant changes to the regulation of equity market structure since regulation NMS,” said Paul Mahoney, law professor at the University of Virginia.

    https://www.ft.com/content/66bb47cb-ab02-4764-90da-6cbc05c53672

    1. MarketWatch has a similar article. Increasing retail commissions that I can see while restricting fractional payments that I can’t see is is not my idea of investor protection. I remember the good old days of paying $125 to buy a handful of shares plus the “Odd Lot Commission.”

      IMHO, another great idea from the SEC, like “protecting” preferred investors from supposedly “inadequate” information by forcing them to sell at a discount in the shadowy Expert Market but not allowing them to buy at any price. Not quite the “efficient market” I keep reading about.

      Disclosure: that was a rant.

  6. BWNB v BWSN For some unknown reason, I owned 100 shares of BSWN. I sold on the opening at 24.40….. Can anyone explain how BWSN Babcock & Wilcox Enterprises, Inc. 8.125% Senior Notes Due 2/28/2026 be worth 9.37% YTM and BWNB, Babcock & Wilcox Enterprises, Inc., 6.50% Senior Notes Due 12/31/2026 be worth 12.55% YTM? That’s what I did – bot 100 BWNB back at 20.60. BWNB I think goes x-div tomorrow, but the only possible justification I can figure would be thinking about them on a current yield only point of view and that probably doesn’t make any sense either if you used proceeds for proceeds to buy 118 BWNB.

    1. 2wr
      Maybe the approx $3.26 lower price for BWNB? I get 11.52 & 9.37 for 20.94 & 24.20, but close.
      NB can be called at anytime- but not a factor.

      1. My numbers were based on BWNB @ 20.60 and BWSN @ 24.40 I believe stripped prices for both..

  7. Question to the group on DCP – and their preferreds….
    Looks like they will get bought out by PSX, and with my reading of the prospectus, the preferreds seem protected. Their cash to div ration is awesome. So what is the risk here (besides a meteor or something)?

    1. Rick,
      It’s not a change of control that they could be called because PSX was already part owner of DCP. DCP-B starts floating in June I think and they may want to call it. PSX gets a good borrowing cost based on their credit so why not replace it? then again, DCP is making enough money to take part of the cash flow to pay it off. Either way you get a couple more dividends before its called.
      At least that’s the way I am playing it

  8. FWIW- BASK BANK :
    The annual percentage yield you are earning on your Bask Interest Savings Account has been increased from 3.85% to 4.03% APY*.

  9. Just bought some more CEQP-P at ~$8.8. Broken preferred. Got super lucky on this one in 2020 with a sizeable position in the $5. Ego stroke here. Still, I like adding to this in nibbles <$9, and in chunks <$7.5 (if that ever happens again). The one I chickened out on in 2020 was DCP preferreds – still mad at missing those.

    Bought some more of the Lincoln 1000 bond last week at ~$150.

    1. CEQP-P has a weird redemption price of $9.218573 per share and it issues the dreaded K-1, so keep that in mind when buying it.

      1. I bought 1000 shares today at $8.90. Purchased in my IRA so I don’t have to worry about the K1. Super bargain here.

  10. Just saw where the US Government paid, over the last two months, $103 Billion in interest on the debt- a year over year increase of 87%.

    1. Mark:

      From a recent issue of one of the investment newsletters I subscribe to:

      “As I’ve described in recent newsletters, U.S. government spending is running out of control. The National Debt is now up to $31.25 trillion, having just surpassed the $31 trillion threshold in the first week of October. In just the past month, that debt has jumped by over $325 billion and by $660 billion over the past three months. Due to higher interest rates, the interest bill alone on the National Debt next year will likely be north of $1 trillion.”

      The growth rate of U.S. Government receipts is declining sharply as the economy slows and capital gains receipts (from the once-strong stock market) recede. Once the recession hits in full force next year (U.S. GDP is still growing slightly), safety net outlays and other entitlements will soar. It’s an ugly economic picture…”

      1. I find the news disheartening, as my two grandkids will have to pay for this generation’s profligate ways. Thanks for the post.

      2. Rob quoted a newsletter writer: “It’s an ugly economic picture”

        Rob, the $31 trillion is like pocket change lost in the couch. The REAL number is north of $200 TRILLION. The extra $170 trillion is what we have promised Social Security and Medicare beneficiaries going forward. Take those unfunded liabilities and net present value them and you get the $170 trillion. I would be more concerned about those instead of making interest payments on the $31 trillion. Everybody gets to decide on their own how and when this will get reconciled. I suggest that it WILL get reconciled some time, maybe not in our lifetimes, so maybe we can just ignore it and hope magic money beans solves it somehow.

        Laurence Kotlikoff of Boston University has been talking about this for literally decades. He co-authored a book about it:

        https://www.amazon.com/Coming-Generational-Storm-Americas-Economic/dp/0262112868/

      3. Maybe a place to start is to pierce through the Washington BS and begin to define the federal deficit as the change in the federal debt. Let’s go back to good old fashioned book keeping. Yes we could adjust for unfunded liabilities but this simplistic measure is bad enough. I expect the federal debt to increase at least $2 T from 1/1/2023 to 1/1/2024. Disagree?

  11. NEWT – Just for you 2WR – perhaps you can pepper Barry with questions

    Will Provide Update on the Financial Illustration of the Bank Holding Company and the Bank on a Go-Forward Basis Subsequent to the Acquisition of the National Bank of New York City

    BOCA RATON, Fla., Dec. 12, 2022 (GLOBE NEWSWIRE) — Newtek Business Services Corp., (Nasdaq: NEWT), an internally managed business development company (“BDC”), today announced that Barry Sloane, Chief Executive Officer, will hold a conference call on Wednesday, December 14, 2022 at 8:30 am ET, to provide an update on the pending acquisition of National Bank of New York City (“NBNYC”) and to discuss the Company’s financial illustration as a bank holding company.

    The corresponding presentation titled ‘Update on Pending Acquisition of National Bank of New York City’ dated December 12, 2022, will be available in the ‘Events & Presentations’ section of the Investor Relations portion of Newtek’s website at http://investor.newtekbusinessservices.com/events-and-presentations, after market close on Tuesday, December 13, 2022 at 4:00 pm ET.

    To attend the conference call or webcast, participants should register online at http://investor.newtekbusinessservices.com/events-and-presentations. To receive a dial-in number, participants are requested to register at a minimum of 15 minutes before the start of the call. A replay of the call with the corresponding presentation will be available on Newtek’s website shortly following the live presentation and will be available for a period of 90 days.

    https://investor.newtekbusinessservices.com/news-releases/news-release-details/newtek-business-services-corp-hold-investor-conference-call

    1. MAV,
      I am starting to believe they are somehow not going to call the baby bonds. Pretty good drop in NEWTZ today.

      1. 35Sline – yeah, NEWTZ is certainly trading that way

        Wonder if Barry figured out a way to screw the preferred shareholders. The call on the 15th should hopefully provide clarification

        1. Hey Guys,
          According to the press release that Maverick posted yesterday, they are suppose to post a presentation after the market closes today.

          1. The presentation is out but I do not see anything specific to the outstanding baby bonds. It does say they will be a bank holding company that has elected financial holding company status.

            1. And it also mention “customary closing conditions: process has begun.” Hopefully they will clarify WHAT closing conditions specifically have begun and whether or not redeeming the notes is one of them because it sure seems to include refinancing the notes as one of the conditions necessary to be completed before closing..

              1. Yeah – the presentation is light on any details

                What exactly do they mean when they say

                “Newtek is progressing towards the operational and financial and shareholder repositioning to prepare for the transformation from a BDC to FHC”

                Hopefully the call tomorrow clarifies things

            2. It’s a little hard to take seriously anything from their IR, but slides 2-3 seem to indicate they will be raising debt and equity to fund the acquisition and presumably refi the existing notes

              “All financial targets and other information is subject to change based upon, among other things, volatile financial conditions, potential capital raises and other assumptions in connection with the pending acquisition of NBNYC”

              “FINANCING:Debt, Equity and Cash on Hand”

        2. But when you think about it, were that truly the case, would NEWTL be worth 24.90 on its own? I would think that would be worth less too….. I will definitely be on the conference call…. I’ve also let IR know I plan to attend and hope as this is a public shareholder update meeting that the topic ought be covered. They know I’ve raised the question before when given the chance in prior public CCs.

          1. That is a good point. NEWTL trading differently than NEWTZ . I agree, it would be worth less too on it’s own with no call

      1. Zack”s rates ATLC #2 Buy, Strong Value currently. Wish I had spare cash, I would nibble on a little ATLCP.

    1. ATLC has retired $89M of shares in 3 qtrs -but, 1 million was in 1st qtr with high prices.
      Report numbers seem to be pretty good, but what do I know…

  12. The agency bond for federal farm credit bank 2037 at 6.45 ytw seems great but I’m new to the actual bond market. Am I missing something?

    1. It’s continuously callable starting 01/23/2023 with no make whole call provision. I own it but I am not expecting for it to survive a call beyond a year or so unless we get higher long term interest rates. Until then it’s a nice yield with little risk other than reinvestment risk.

    2. Unless you purchased it “when issued” the YTC is significantly less. Buying it at today’s price would only produce a YTC (1st call 1/23/23) of about 5.9%. I also agree with other comments that they will probably be called early but I consider them a good safe place to place some cash at good rates short or long term if not called early .

      I don’t know if it is nation wide, but here in Michigan bond interest from FFCB and FHLB bonds are not taxable. Other agency bonds are taxable.

  13. AGRIP is appealing. Coupon is 6.875 until 1/1/24, whence it starts to float a 3mo libor + 4.225. Moody’s Baa1, S&P BBB+. I scooped up 30 shares below par at $99.95 easy. Likely will be called, seems like a safe 6.875% until probable call……..

    1. Fan59,
      I concur with your outlook.
      From AGRIP Q3-2022 report. page 10
      https://www.agribank.com/wp-content/uploads/2022/11/AgriBankOnly_Q3_2022_FINAL.pdf

      As advantageous opportunities arise, AgriBank has been terminating certain LIBOR-indexed swaps. These terminations are intended to opportunistically lower AgriBank’s exposure to LIBOR instruments due to the LIBOR discontinuance.
      Our exposure to loans indexed to LIBOR does not include wholesale loans, as they are not directly indexed to LIBOR.
      However, the wholesale pricing terms are generally matched to the District Associations’ retail portfolios, which contain loans indexed to LIBOR. As such, the wholesale loans have historically been partially funded by LIBOR-indexed bonds. LIBOR-indexed bonds were also used to
      fund a portion of our administered variable loans to District Associations and, in turn, their customers.
      As we have shifted our funding, with no remaining LIBOR-indexed bonds as of the year-ended 2021, certain District Associations may see their basis risk increase. With limited exceptions in accordance to FCA guidance, District Associations have ceased issuing new loans indexed to LIBOR, somewhat mitigating this basis risk.

    2. Funny, Fidelity let me purchase some last Friday, but called to inform me that it is 144A and will be liquidated from my account tomorrow. Anyone else run into this at Fidelity?

      1. Chris, I ran into same problem with Vanguard on a CoBank 144a years ago. They called and said they were going to sell it. I said no your going to give me what I paid for it and reverse the trade fee too (they had them way back then), so they complied. I would at least fight for that, but maybe they caught it and cancelled it before it settled. I had mine a week or so before they called me.
        Technically they are correct so its hard to fight back on this purchase.

        1. Thanks Grid, They did make me whole and cancelled everything, no gains/losses or fees. Just surprised it went through in first place and curious to how Fan59 is able to own it.

        2. Grid, I bought AGRIP through TD about a week ago and I see that it is still there in the holdings. What do you think is the downside of keeping it? Would it create any tax or regularity complications down the road if TD keeps it in the account?
          Your thinking and insight is greatly appreciated.

          1. This brings up the general question of “busting” a trade. They can be busted for a variety of reasons and theoretically be done for as long as you hold the security. If the brokerage messed up and let you buy something they should not have, the trade can be busted one of two ways:

            1) Have the counter party, agree to the bust and if they do NOT

            2) Have you broker buy the position from you and keep it in their inventory. Then will then mark it for sale and eat any loss.

            There are a several other ways that trades can get busted. A few years ago FINRA went after many brokerages for selling less than the required minimum number of muni bonds. The most common minimum is $5k face, but some are $25k, $100k, etc. We held one that was below the minimum and had matured but paid out in full. FINRA made the brokerage offered to bust the original buy trade. We had never complained about it. And FINRA was proud of what a fine job they had done.

            One issue I see every once in a while is where a corporate bond is not registered in the buying state. You can buy it if you live in ABC, but not XYZ. And some brokerages frequently get this wrong and let you buy it when technically they should not. This might be cause a 144A type bust some day. . . .

            1. Thanks Tex for the detaild information. I leaning towards selling it if I can recover my cost, or even with minor loss.

              1. MFZ, Sorry I didnt see this. I was traveling most of day trying to get to St. John USVI and only quickly played on internet off and on. Some fat lady should refund me half my ticket price since she oozed into it, but I digress….Tex would know the granular more than me. But bottom line its really up to brokerage. Unless Schwab gets more anal at full integration, TD is going to let you keep it. The only real concern is if buys and sells get totally chocked off at retail trading level and you cant get out. But 144a is not experts market and trades fairly. But we arent supposed to be inside that investing playground without permission.
                I have already about a month ago started moving the boat from floaters to fixed again. So I am not personally looking here. But if the SOB ever dropped into low $90s I will buy AGRIP in my TD 144a or not.

      2. Challenge them on the 144A designation and say to reach out to their data vendor. There are a handful of securities that have this setting incorrectly because of one data vendor.

  14. FHN is about to be purchased by the Canadian bank TD. FHN-C has a 6.6% coupon that is currently trading at $25.20. It is F2F until 5/26 and then changes to 3 month libor plus 492 basis points. QOL has it rated at Ba2 and BB-. Does anyone have any opinion as to where it might be rated once the takeover is completed? Practically speaking and not officially changed. I’m not sure if TD has debt issues that might be used to get a handle on the FHN-C issue. Thanks for any feedback.

    1. Randy – See Fitch’s take – https://www.fitchratings.com/research/banks/fitch-maintains-first-horizon-corporation-rating-watch-positive-on-pending-sale-to-td-18-10-2022

      Rating Action Commentary
      Fitch Maintains First Horizon Corporation’s Rating Watch Positive on Pending Sale to TD

      Tue 18 Oct, 2022 – 9:59 AM ET

      Fitch Ratings – New York – 18 Oct 2022: Fitch Ratings has maintained the Rating Watch Positive (RWP) on First Horizon Corporation’s (FHN) and First Horizon Bank’s (FHB) ‘BBB’ Long-Term (LT) Issuer Default Ratings (IDRs) and ‘F2’ Short-Term (ST) IDR.

      Fitch placed FHN’s and FHB’s ratings on RWP in March 2022 following the announced sale to The Toronto-Dominion Bank (TD; AA- /Stable). For additional information on the transaction, see “Fitch Ratings: Acquisition of First Horizon Corp Neutral for Toronto-Dominion Bank’s Ratings” (March 1, 2022) at http://www.fitchratings.com. Fitch expects to resolve FHN’s and FHB’s Rating Watches upon successful completion of the transaction with TD, anticipated to take place in early 2023, subject to regulatory approvals and closing conditions.
      Key Rating Drivers

      RWP Maintained on Pending Sale: On Oct. 17, 2022, Fitch maintained the RWP on FHN and its bank subsidiary FHB which was first initiated following the announced sale to TD. Fitch believes the purchase by TD will likely result in a stronger business and financial profile for FHN than it currently possesses on a standalone basis.

      Upon successful completion of the sale to TD, FHN and FHB will be merged with and into TD Bank US Holding Company and TD Bank, National Association, respectively. Therefore, the RWP indicates that FHN’s and FHB’s ratings will be upgraded in line with the entities they are merging into. See “Fitch Affirms (The) Toronto-Dominion Bank at ‘AA-‘; Outlook Stable” (July 11, 2022) at http://www.fitchratings.com for details on TD’s ratings.

  15. Off topic for preferreds/baby, but very much on topic for income seeking investors. I have commented several times about the Puerto Rico PROMESA which is essentially the same as Chapter 9 bankruptcy for municipalities. Recall the PR was NOT legally allowed to default on their general obligation bonds, so they got Congress to change the law so they could go BK. The PROMESA law that Congress wrote setup a control board to straighten out the mess. It was modeled after a similar board saved New York City from BK in the 1970s. It worked in NYC’s case and prevented BK. It has been an unmitigated disaster in PR’s case. They have NOT made any substantial changes in how PR is run/budgeted. Two substantial things they have accomplished is to shortchange bondholders and pay lawyers/consultants ~ $1 BILLION. Not to mention that this provides an existence theorem to mainland municipalities, that they should be able to declare BK and shortchange bondholders.

    BOTTOM LINE IMO is that Puerto Rico will default again after this round is closed. Might take 10 or 20 years, but as long as Wall Street will float more bond offerings, the music keeps playing and they keep dancing. And investors will gobble up all of the bond offerings, because their memory of events lasts 5 minutes or 5 miles, whichever comes first.

    Today, the former Lt. Governor & Secretary of State of Puerto Rico, wrote an editorial along these same lines. Verbatim

    Unfortunately, very few current incumbents from both major political parties appear to be learning the “lessons of PROMESA” and if significant steps are not taken in Puerto Rico’s constitutional and statutory framework, once PROMESA is out of the picture, Puerto Rico may very well fall into budgetary and government practices that will plunge it into bankruptcy before the decade is over.

    https://www.theweeklyjournal.com/opinion/preparing-for-post-promesa/article_45e0da28-7667-11ed-8856-13095e64ce37.html

  16. DOGS OF DOW ~ YIELDS AS OF 12/6/22

    Verizon…7.11
    Dow…5.48
    Intel…5.38
    3M…4.82
    Walgreens…4.74
    IBM…4.49
    Chevron…3.53
    Cisco…3.19
    JPM…3.04
    GS…3.03

  17. Pardon the interruption, but can anyone tell me why the CUBI preferreds are highlighted in yellow on the Master List? Thanks.

      1. There 20 others that are not highlighted- but are on the fixed-to-float & floating list. Not sure why the CUBIs are special.

  18. NEWTZ – Block trade today on 277k shares at 24.60. That’s 12.5X the daily average volume… I have to believe it’s the company buying these in the market at a discount in advance of having to call them most likely in January in order to close the bank purchase to convert from BDC to BHC….. But could there be other implications???? If NEWT has been buying blocks, would they be able to vote the shares they’ve purchased to modify the protections afforded shareholders under the 1940 Act? I’ll have to re-read the prospectus.

    1. I doubt it’s NEWT buying their own debt. Among other reasons, I don’t think they have the spare cash sitting around to do this when they also need to pay $20mm at closing for the bank.

      I presume they are still required to honor the 30 day notice to redeem the notes. One might think they should be raising the financing now before the Christmas lull, if they are on track to close in January. But hard to understand what’s really going on with the closing

      1. 730 – They can’t spend the $20 mil on the bank purchase until they take care of the notes and they can’t take care of the notes by calling without giving 30 day’s notice… So if they plan to close in January, we will either see a call announced some time this month or we will see what other monkey business NEWT may have up its sleeve… I hate to sound so cynical, but their unwillingness to put forward their plans as to how they will address this precondition to redeem the notes prior to closing the bank deal is really aggravating.

        1. NEWT could waive the closing condition in the SPA, and I’m not sure there is any other reason they would need to refinance the notes to close the bank deal. So maybe they could kick the can down the road a little farther?

          Of course, they would still need to refinance the notes to achieve Barry’s dream of becoming a BHC and not being subject to the BDC/RIC requirements.

          1. There is that wrinkle technically, strange as it sounds….. It does seem to read as though the purchase agreement does set out these preconditions and then goes on to say oh by the way, we don’t have to abide by them. But as you say, even if they did that, the BDC language protecting note holders on asset leverage ratios as set by the 1940 Act would remain in place, preventing NEWT from acting like a BHC as long as that language remains… So theoretically even if they waived the precondition, that should still mean they have to get out from under the BDC language by either calling or defeasing… Maybe that would afford them the ability to close the deal prior calling the notes, but still, their motivation for getting them gone remains… closing in January and calling NEWTZ in Feb instead of Jan would save them a coupla bucks theoretically due to the par call kicking in Feb 1.

            I just hope there’s no underhanded attempt to screw the noteholders by finding a way to leave them outstanding when the intention to have them redeemed seems to be so clearly spelled out….. At least both L and Z are relatively short maturities. I’d feel dirtied if they did that, but not terribly concerned about them credit wise.

            1. Hi 2WR,
              This might give you some answers. Hope it helps.

              “Following the closing of the Acquisition, the Company intends to operate as a bank holding company, and will be subject to regulation and supervision as a bank holding company. Such regulation will include the requirement that we maintain certain levels of regulatory capital, increased liquidity, and meet certain other financial conditions. Additionally, while we intend to effect the withdrawal of our election to be regulated as a BDC in connection with our proposed conversion to a bank holding company, certain of our existing debt facilities would continue to require us to comply with certain financial covenants applicable only to BDCs. As a result, although we would not be a BDC, if we are not able to successfully remove these provisions or otherwise retire or refinance this debt, we would continue to be required to meet a coverage ratio of total assets to total borrowings and other senior securities, which include all of our borrowings and any preferred shares that we may issue in the future, of at least 150%. Because we may be required to adhere to such BDC requirements, our operating results as a bank holding company may be negatively impacted.”

              1. MarkS,
                It sure sounds like they are looking for a way out of retiring or refinancing the debt. Is there any way for them to remove the provisions?

                1. Hi 36spline,

                  The documents provide a way to change the language. Moreover, BDCs have taken advantage of recently rule changes allowing for increased leverage ratios. For that to have been accomplished, I suspect that the BDCs would have had to get their banks to agree to language modifications. There is a path to accomplish that- whether they are successful is another matter.

                  1. Mark – the rule change is irrelevant because even at the reduced coverage ratio, what’ BDC’s are allowed under the 1940 Act doesn’t come close to what their goal would be as a BHC…..

                    Regarding the documents, in order to change the BDC language, that would take a majority vote of ALL note holders affected, not that of any one individual series… That, coupled with what you say that they seemingly are looking for a way out of retiring or redeeming the notes, is why I was suspecting they might be the ones buying the blocks that have traded…. What if the company itself owns more than 50% of the affected notes? Could they then vote to screw the other holders out of the protective covenant?

                    Also, thanks for what you quoted – where did you find that?? Link?

                    It just rubs me the wrong way that they might be attempting a way around the language in the SPA such as this from Section 7.02 – Conditions to the Obligation of Purchaser. The obligation of Purchaser to consummate the Share Sale is also subject to the fulfillment, OR WRITTEN WAIVER BY PURCHASER, before the Closing of each of the following conditions.
                    (j) Financing Matters. (i) Purchaser shall have completed a refinancing of its outstanding notes, including the elimination of any provision relating to Purchaser’s election to be treated as a business development company under Investment Company Act of 1940 as amended….” Can that simple highlighted caveat actually make every frickin’ word in the agreement totally toothless????? The ability to waive seemingly gives the fox permission to raid the hen house…. Gosh I hope I’m wrong…..

                    1. “Holder” is a term of art. You have a beneficial interest. I don’t believe that you have a voting interest. I would guess that that power is held by the trustee, who is the actual “holder.” But my comments, however, are based on a rather rudimentary reading of the documents. Meaning: I skimmed it. Hope this helps.

                    2. Thanks, Mark.. Not to be crude but when you get right down to it, this appears to have the potential of being a giant circle jerk where the present noteholders end up in the hands of attorneys and the willingness of management to do the right thing… You would think that NEWT, once it becomes a BHC will become a frequent new issuer of debt as they leverage up from the limitations they now have as a BDC, That should put them in a position of not wishing to screw their current lenders (i.e. noteholders) while seeking new lenders by not following thru on noteholder covenants in the SPA by using a technicality on what seems to be such straight forward language requiring redemption to get out from under the BDC protections. But I guess we’ll find out.

                      The Proxy statement, sans the conditions of the “Transaction” which was approved by voters, was a vote to shed NEWT of its BDC status….. It would be unclear, barring the impact of the Transaction,” meaning the bank purchase, whether or not having this vote could give the company the right to just strip the noteholders of the protections they signed on for under the 1940 Act when they bot the notes… That, however, becomes academic because the voted for proxy says, “Following the closing of the Transaction, the Company intends to operate as a bank holding company.” Or in other words, the impact of the Yes vote doesn’t take effect until after the Transaction closes. So now, therefore noteholders’ protection comes down to what’s in the Stock Purchase Agreement. And the Stock Purchase Agreement has that one little phrase that MIGHT allow NEWT to walk away from anything written in it because they can waive any of the conditions to closing apparently for no reason at all if they think they can get away with it without consequences…. Hence, the jerk….

                    3. BTW, did you notice that the 277k block of NEWTZ retraded as a block +15¢? That to me smacks of the company being the ultimate buyer..

                    4. Not really sure what you are so worked up about

                      The closing condition in the SPA was for the benefit of NEWT (not the noteholders) and they are free waive the condition if they want to.

                      But Barry has ants in his pants to become a BHC and has staked his reputation and taken a big hit in the stock price because he thinks that is the best course for the company in the long run. He can’t do that until the notes are redeemed. He is not going to reverse course just to save a few million dollars a year on interest expense.

                    5. I still think the most likely outcome is they refinance their liabilities simultaneously with the closing of the bank deal. They need $20mm of cash to pay the seller and it would make sense to deal with that and refinancing the notes all at once. But if they are gonna close in January, I would think they would need to go to market soon. Nobody will be in the office the last couple week of the year.

                    6. I suppose what’s really gotten me worked up stems from Barry’s unwillingness to go public with his plans on how they will address the notes… It’s tough not to read something into that stonewalling.

                    7. Saw that, AB, but if you trust in the stated Use of Proceeds these funds are intended for specific use not related to the transition.

                    8. 2WR, after NEWT raised over $300MM and got the Fed to approve them moving to a BHC, are you really that concerned they cannot raise the funds to call both NEWTL and NEWTZ?

                    9. AB – I’ve never expressed any concern regarding their ability to raise the funds necessary to call the two notes… If that were at issue in their eyes, they would never have wanted to become a BHC in the first place. My concern is about their resolve to do so despite what seems to be pretty clear cut language implying the necessity.

    1. Max, FWIW I like the new issue ATHLV.
      I also like MBINO, an issue that floats at 3 month Libor plus 4.569% in late 2024. You get a current yield of 7% and a dividend ex next week. If reset were today, the coupon would be 9.392 and the preferred would yield 10.9% at the current price of 21.5.
      For a live floater consider USB-A. High investment grade that floats at 3 month libor plus 1.02. If reset today, coupon would be 5.78 which imputes a yield of 7.27% at the current price of 794. Goes ex at the end of this month.
      Hopefully my math is correct.

    1. “consensual hallucination.” I love it… A term to remember………

      “kathoomphed” too… gotta love that one too..

  19. I picked up more CHSCL today. The CHS series of preferreds look cheap and they go xdiv on the 15th.

  20. QRTEP – Hurry, only a limited supply remains but if you call in right now, you can own 1 share of QRTEP for $36.95, our lowest price ever…. But don’t wait! You must call now………Supplies will not last………

    1. 2WR: I love your humor. Unfortunately I have 100 shares. Fortunately my basis is only (?) $65, and at least the dividend is temporarily (?) safe.

    2. I always thought Lori Greiner could not let this go BK. Not sure if that is true, but it seems she’d put some weight behind it, and maybe make it “work”. So I have some and some common. Lost more than I should on it, and I wonder if it can make it. I think it can but can mgmt turn the boat? I’m waiting only because they have cash flow. But i think I’m playing a fools game.

  21. LANDO – Can anyone explain how LANDO, Gladstone Land Corp., 6.00% Series B Cumulative Redeemable Preferred Stock continues to defy gravity and still trade at a premium price above $25??????? Makes no sense to me why this shouldn’t be trading at 7.50% current yield or better which would mean below $20. What’s the secret sauce keeping this one up?

    1. New, NO NO NO! Relax! That happened over a DECADE ago! Its no big deal. Its been delisted longer than you have owned them. My point was even big companies delist and they can be safe. Delisted in and of itself is nothing. In fact PLDGP dropped back to $54.75 on a sell and I bought 100 more today. PLDGP is delisted but is Baa1 and will always trade because its Prologis and they file. And with 13% debt to capital and A rated bonds, that is a pretty safe ~ 6.25% YTC. And they will very likely call it first chance they get 11/26.

      1. Ok, I thought this was a recent development. Whew. But still, the price of UEPEN is far below what I paid, but I take comfort that I will likely always get paid a dividend.

        1. Irish, a 100% no. They are wrong, it can be redeemed then at company’s discretion but it is a perpetual. But it will be. Prologis has bought half the float up over the years, including overpaying for them I have seen. They issued this at companies infancy back in 1996. So its DOA 11/26 as Prologis does not use preferred stock for capitalization (note the delistment long ago). But if some miracle they dont you are “stuck” with an 8.54% BBB+ preferred from an A bond rated number one Industrial Reit in the world with a debt to capital ratio of only 13%. Last trade was $54.85 and goes exD of $1.06, so you are getting it at $53.80 if those shares are still there. It only has about $50 million float left and is largely institutionalized. There have been a couple recent shots to buy this at a fair price and here is one. But its best served purpose is for plugging a short duration hole in your income as it wont be around most likely come 2027.
          Charles, I dont care what any numbers say, this is the ultimate sleep at night preferred in terms of safety. $54.75 before exD is a solid price. If this thing was uncallable until 2037 at $54.75, I wouldnt be nervous only owning just this and focus on my sportsbetting ha.

          1. Grid,
            I did as you suggested and looked at the price chart and saw it doesn’t really go much lower than this in its history so I decided to put in a bid at where I wanted to own it. Really just parking the money for a few years.
            Yes, I have a lot of bids out just sitting there and people say the money isn’t working for me but even sitting in a sweep MM account its making more than it did 9 months ago

            1. Grid, I just looked at their bonds and this is one of the A rated companies who can go to market and get the best rates on their debt issuance.
              No doubt at all they will take this out when the time comes.
              This is one of the growth companies to watch when the economy recovers, but who knows when that will be. As Tim said, the common stocks are starting to now sell off.

              1. Charles it has always been hard to get, but I remember a few years ago hoping to snag at $65 because I could hold and flip shortly later closer to $70.
                The descent towards par being its 2026 call date has helped the price start to sag. Yes is credit is strong and its balance sheet is a “fortress” as they say.

    2. Re SLMNP
      Yes, it is expert market. But at this price you have the potential of an upside and no downside as you can always put the shares back to the parent at around the current price. Think of it as a 7% qualified dividend money market.

      1. RB,

        Unfortunately, I paid way above the minimum price. Unlikely that it will ever reach what I paid. Life goes on.

    1. I doubt it. Preferred buybacks are done for vastly different reasons than common buybacks generally are and the excise tax would tend to cause companies to NOT redeem their preferreds.
      If you look at the buyback totals, preferred shares are barely above a rounding error compared to common shares.

    1. 2whiteroses….seem to remember when Ike had the highways built, going for a Sunday drive was a regular form of entertainment. “See the USA in a Chevrolet.” Now the kids want a robot driver. It was sci-fi back then, but I remember some predictions that were mentioned in grade school, of a system of sensors in the road and the cars, where you couldn’t crash into anyone or run off the road. Here we are 65 years later. Might as well watch a screen of some kind while you listen to music since you have a robo-chauffeur.

      1. Amazing, isn’t it? I can just imagine a Gen X’er sitting in the front seat of his driverless Third Space less than an arm’s length away wanting to be able to have Alexa push button # 4 on the dashboard radio/audio system…

        1. 2whiteroses…Might as well put a VR sim on the car’s glass so you can drive anywhere in the world if you get bored with other visual stimulation.

      2. It was a regular form of entertainment, for everybody BUT the driver and no millenials want to draw the short straw….
        once they have self driving cars, then there is no reason to go out and see the countryside

        Kinda off topic, but Silvergate Bank’s CEO just put out a statement saying they have nothing to hide but makes it sound like they have everything to hide, and the stock tanked as a result

  22. I posted about the redemption of BAC-Q a few days ago. I still don’t understand it. Here’s what IBKR messaged me:

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

    Quantum has nothing about this. Here’s a link to an article about this:

    https://www.prnewswire.com/news-releases/bank-of-america-announces-redemption-of-3-004-fixedfloating-rate-senior-notes-due-december-2023–301695050.html

    “The redemption price for the Notes will be equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest to, but excluding, the redemption date of December 20, 2022. Interest on the Notes will cease to accrue on the redemption date.”

    Can anyone tell me what “100% of the principal amount of the Notes” amounts to? Is it $17.30 ? Can they redeem this issue for less than $25 which Quantum indicates is the call price?

    I’d be grateful to anyone who can provide insight.

    1. The article you posted is most definitely not about bac-q.

      BAC-Q is a tender, not a redemption. It is an option available to you, if you don’t do anything you keep your bac-q, if you want immediate liquidity you can tender. That is all.

      The terms are for every share you tender (ie 25 bucks in liq pref.) you get 17.30 and interest.

      1. I suppose what led me astray was that the title of the Yahoo link was:

        BAC-PQ BAC-PS
        PR Newswire • 3 hours ago
        Bank of America Announces Redemption of 3.004% Fixed/Floating Rate Senior Notes Due December 2023

        Thanks for your reply.

        1. Theo – You are right though that quantum does not have info on its site about the BAC-Q tender…. As a suggestion, when you see events like this that quantum has not picked up on as of yet, they encourage you to email them to alert them… They are good at not only then posting the info, but, like Tim, thanking you for letting them know….

  23. Spec/Flip Play?:
    AQNU converts to Common ANQ in 6-24. The Convert has followed the Common down to smash levels almost halved from $50. Looks like the final capitulation has occured with the last div payment of almost $1.00 = a 14+% yield until 6-24, six more divys. Worst case you end up with a decent util common which pays a div right now and may nudge up IF interest rate nudge down?? They are in a consolidation period of mergers and right now it looks messy.
    DYODD.

    1. Joel:

      Sadly, AQNU was recommended by Rida and his crew back on 4/1/22 near $50. Good grief.

      https://seekingalpha.com/article/4498938-watch-me-turn-4-percent-yield-into-8-percent-algonquin-power

      Saying AQN is a “decent” utility might be a stretch at this point. Way too much floating rate (and overall) leverage, they paid too high of a price for a Kentucky utility that is closing 1Q 23, and the common dividend is clearly unsustainable. They are taking on even more floating rate debt when that KY acquisition closes and have not used hedges. Maybe that is why the CFO departed in August?

      Most of their growth was funded via equity issuance and with the common down nearly 50% YTD (in a year where utilities have dramatically outperformed), those days are over for now.

      Trapping Value over on SA (he is fantastic) did 3 separate articles in 2022 warning of AQN’s heavy debt load.

      The good news is that insider buys in AQN have recently spiked big-time.

      1. Rob, I replied to your comment inside the SA article you linked, I am sure both will get removed.

        1. Way to stick it to them! One thing one must be aware of with equity unit buys, is really when its all said and done, its almost just the same buying the common as they trade in total sympathy. All of them do. They really shouldnt even be labeled as preferreds as they will trade totally off the common stock movement due to the mandatory conversion factors established at IPO.

    2. I am currently watching AQN and hoping for a dividend cut at which point I will consider both aqn and aqnu for longer term

  24. Its amazing how fast US trade between countries have started to shift already from various issues…
    ….U.S. manufacturing orders in China are down 40% in what a logistics manager described to CNBC as an unrelenting demand collapse.
    Asia-based shipping firm HLS recently told clients it is a “very bad time for the shipping industry.”
    …China to U.S. container volume was down 21% between August and November…. Chinese factories are shutting down two weeks earlier than usual ahead of Chinese New Year.

    The global trading map is being rapidly redrawn, with EU-U.S. trade and investment in U.S. rising sharply as economic ties between the West and China are subjected to critical scrutiny. This year, the U.S. has imported more goods from Europe than China – a big shift from the 2010s, according to Project 44.
    “For their part, Europe’s manufacturers battling sky-high energy prices and inflation are increasingly exporting to and investing in the U.S.,” Brazil said.

    1. IMHO, there may be some impacts on shipping container leasing company profits from decreased trade. Not so much in the leases, which are stable and long term, but in the resales of used containers, which has been a profitable sideline for the container companies. There have been a few veiled references to this risk in some of the recent reports. Just my opinion.

      1. The AQNU converts to AQN and goes away so not much point in buying. except for the dividend and that goes away in 2024 According to Quantumonline if AQN is under 15.00 at time of conversion in 2024 you get 3.33 shares of AQN for every one of AQNU.
        The 2 preferred are F to F and clear out to 2079 and 2078 plenty of time for them to get their act together

  25. Bill Bernstein has a great article entitled: “Playing Inflation Russian Roulette in Retirement.” If you are not familiar with Bill, he was a practicing MD Neurologist and gave that up to pursue investments. His IQ is off the charts IMO. He wrote two seminal books on investing (Four Pillars of Investing) and has several others that are not investment related. He is not trying to sell anybody anything so he is unbiased in that regard. A few verbatim snippets:

    ************************************************************************************
    The second question had an equally painful answer to many investors in 2021, the most obvious way to protect against inflation seemed to be the purchase of Treasury Inflation-Protected Securities (TIPS). After all, a TIPS provides a nearly perfectly safe way of paying for inflation-adjusted living expenses, but only when held to maturity.

    The rub is that the road to that desired result is often bumpy, and, more importantly, the price paid for that inflation guarantee at maturity can vary widely. What folks who bought TIPS last year and early this year, hypnotized by that inflation protection and seemingly riskless promise of secure future consumption, ignored was that the price paid would be dear indeed if and when the Fed responded to inflation by raising rates. For example, the 30-year TIPS auctioned this February at a 0.125% coupon went for 97.96; as of this writing, that same protection of real consumption in 2052 can be purchased for an inflation-adjusted price of 69.23 (which calculates to a real yield of 1.63%). Ouch. Another way of putting it is that good things often come to those who wait; the losses in long nominal Treasury securities have been similar.

    . . .

    The most obvious losers were the folks who in 2021 reached for yield by extending maturities, or who decided it was a good time to defease their future consumption with TIPS. This is best illustrated at the short end of the nominal Treasury curve: In mid-2021, the three-month yield stood at 0.16%, while the five-year note offered all of 0.29%. In other words, one got 13 bp more yield by extending out 4.75 years.

    At the risk of being overly harsh, that wasn’t a yield curve, it was an IQ test.

    . . .

    It would be nice if one could purchase inflation-adjusted annuities, but those products have gone the way of disco, and I suspect that proposing their revival would not be a career enhancing move for any insurance company executive who suggests it. The best that one can do in this regard is to “purchase” the inflation-adjusted annuity offered by spending down one’s retirement assets to defer Social Security until age 70.

    Link to HIGHLY RECOMMEND full article:

    https://www.advisorperspectives.com/articles/2022/11/29/playing-inflation-russian-roulette-in-retirement?

    I have no affiliation with Bill.

    1. Tex2, Nice article! That is exactly what we are all wrestling with whether we know it or not. This quantified article helps me confirm my approach:
      I recently posted a realization that the excess principal at maturity (if bot at 96 and matures at 100 then add the 4.16% into the side fund for compounding (100-96=4/96=4.16) to compounding side fund) of a bond can be ‘automatically’ processed into his idea of the ‘side-fund.’
      – This is easy IF you ONLY use the income as it pays
      – Roll the ENTIRE principal when it pays into …
      – ANOTHER discounted bond (lower buy price than par). This will be your compounding additions…not a ‘true side-fund’.
      – Income can increase incrementally also.
      “Lessons are learned from experience, not reading and theory…” Buddhist Tenant

  26. Funny how a light bulb goes on when you are just drifting along. Here’s a simple thought that hit me. Look at this case study:
    CUSTOMERS BANCORP INC
    Coupon Rate 4.500%
    Maturity Date 09/25/2024
    CUSIP 23204GAD2
    Last Trade Price $96.00
    Last Trade Yield 6.875%
    My goal might be to have income (coupon only) and also compounding (addition to prin at maturity). If I am okay with getting 4.5% to spend, say $450/year on a $10,000 investment, in this case I also get a 4% addition to principal when it matures and the objective is to then rollover all the principal accumulation, which should at least, help with an inflation hedge. and add a bit to income.
    Eventually, it makes sense to use some of the prin like an annuity melt-down.
    I know that that is how my mind was already working, but this makes it an auto-pilot, numbskull, mechanical operation. I had never seen it that way.
    This is what I was feeling about the zero-interest coupon killer and the needed normalization of rates where it was just spending principal anyway.

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