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. Sallie Mae just declared this March’s SLMBP divi. This shows not only how quick Feds impact has been on rates, but also what impact it has on an issue with a low yielding adjustment. Last March the quarterly was .48 cents, this March its $1.61.
    NEWARK, Del., January 24, 2023–(BUSINESS WIRE)–Sallie Mae® (Nasdaq: SLM), formally SLM Corporation, today announced a 2023 first-quarter dividend on its Preferred Stock Series B of $1.6090725 per share. The company also announced a 2023 first-quarter dividend on its common stock of $0.11 per share.
    Both preferred stock and common stock dividends will be paid on March 15, 2023, to the respective stockholders of record at the close of business on March 3, 2023.

  2. Take a look at the chart for WFC-D. Closed yesterday @ 19.21, opened today @ 24.96. Many more like that.

    From the NYSE:

    January 24th, 2023 1:50 PM

    Market
    NYSE
    Service
    Trading

    On January 24, 2023, due to a system issue, the NYSE did not conduct opening auctions in a subset of its listed securities. This system issue resulted in continuous trading of those securities commencing at 9:30am without an opening auction print. As a result, a number of Core Trading Session trades occurred prior to the receipt of Limit Up Limit Down bands. These trades are eligible under NYSE Rule 7.10(c)(1)(B) to be reviewed as Clearly Erroneous.

    The Exchange has determined on its own motion that any trades in NYSE-listed symbols that did not conduct an opening auction and both 1) occurred after 9:30:00 but before the receipt of LULD bands (generally less than a second later) and 2) executed at a price further from the Reference Price, defined in NYSE Rule 7.10(d), than the Percentage Parameters, which are defined in Appendix A to the LULD Plan, will be declared null and void.

    For each impacted symbol, the attached spreadsheet identifies (a) the time the exchange received LULD bands and (b) the price range above which and/or below which executions will be busted.

    In addition, for those securities that did not conduct an opening auction and entered an LULD pause before 9:30:45, the Exchange is evaluating marking the trades as aberrant (i.e. Price Variation (Sale Condition H)) on the consolidated tape. This action will eliminate those executions from the calculation of the day’s High or Low price. The consolidated tape adjustments will be processed after the close.

    All NYSE exchange systems are currently operational.

  3. What money market fund is good to use at TDA for cash in waiting, since their sweep is useless?

    1. Choices may be limited at TDA but I use SWVXX which is the Schwab Value Advantage Money Fund Investor. Their is also a tax free version as well. Use your own DD.

        1. The Schwab MMFs are fee free, however you will have to decide for yourself if they are easy.

          They trade as mutual funds, so there is 1 day settlement. You have to enter your own buys and sells. If it is a non margin account, you have to sell the day before.

      1. I use SNOXX also- all Gov’t- as safe as possible at Schwab – and at TDA too. It has near 100% daily & weekly liquid assets – others can be quite low- that bothers me if everyone decides to sell.
        Others- ie: retail money market funds have this caveat (not in SNOXX):
        However, the fund may be subject to
        liquidity fees and/or redemption gates on fund redemptions if the
        fund’s liquidity falls below required minimums because of
        market conditions or other factors.”
        –Gate me not!

    2. It’s not quite a money market fund, but I like SGOV, which is an ETF that invests in Treasury Bills with 0-3 months on the clock.

    1. You need to call them. I got mine thru Schwab back on the 16th with no problem whatsoever.

      1. Thanks Chuck and Maverick.

        I may have have screwed up, buying on 12/29. The description from the prospectus, especially “whether or not a business day”, made me think the record date was 1/1/23 (Sunday), and the ex-date 12/30/22.

        Can anyone confirm I screwed up?

        “Interest on the debentures will be payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year, beginning on January 15, 2023, each of which dates we refer to as an interest payment date, to the record holders of the debentures at the close of business on the immediately preceding January 1, April 1, July 1 or October 1, as applicable, whether or not a business day.”

            1. There is no such thing as “to be safe”. You must buy before the ex date to be entitled for the dividend. The ex date takes into account settlement.

      1. a few thoughts about the article mentioned-

        1. He left out Alameda county (which includes Oakland, Fremont, and the rest of the east bay – LOTS of tech jobs there (I didn’t look at the EDD numbers for Alameda county). Not terrible, but shows a “San Francisco” bias – and SF is NOT the core of Silicon Valley.
        Lots of tech companies have been abandoning SF in recent years (some quickly, like Uber, most are going more slowly so that it isn’t so obvious. SF is a horribly business unfriendly place (we closed our offices there years ago.

        2. As he says, lots of the layoffs are of people who “work” remotely in Silicon valley/SF, so they aren’t counted in the EDD numbers, but they are now unemployed anyway. It won’t necessarily affect Silicon Valley or SF housing prices, etc. – but they are staff reductions that will be felt in those companies.
        Also, in pretty much every retrenchment by Silicon valley companies, the people who are hit hardest are remote workers. Easier to fire the person you don’t see every day. The second group who bears the brunt are the people in “satellite” offices – i.e. offices opened in other cities to attract talent/cut costs. Companies tend to retreat to their “mother ship” in tough times. I have already seen several valley companies closing offices in NYC, Austin, etc. None of those closures will show up in EDD numbers either.

        3. EDD numbers tend to lag pretty badly. There is a game to how and when to report layoffs. (Years ago, I used to manage that for a couple of big silicon valley employers, so I speak from experience). Companies will generally comply with the letter of the law, but they will do all they can to obfuscate what is really happening. Lots of factors enter into it – proximity, timing (how layoffs are grouped), etc.

        That said, I consult with a number of tech companies, and most of them are gearing up their recruiting efforts as the layoffs roll in (some of the companies who are laying people off are also gearing up recruiting – they just have to be careful how they do it). Finding good talent has been hard in silicon valley for a lot of years, and the high-quality people being let go won’t stay unemployed long. Lots of good “babies” being tossed with the bath water.

        1. Private,
          My nephew is one of the ones let go. Bought a house just in the last 6 months and was going to buy a new truck until the dealer upped the price after the deal was signed so lucky he walked. Should be ok with his background.

  4. Blackrock filed today its ownership for SJI is now over 16%. Not certain how that plays into the future.

    1. If its like everybody else, they get their cash and boot in their ass out the door. The regulators are voting Wednesday to approve it. Its on the docket 2-F. And soon my 2031 South Jersey bonds may at some point go into the dark abyss while sending me interest payments until maturity.
      F. Docket No. GM22040270 – In the Matter of the Merger of South Jersey Industries, Inc. and Boardwalk Merger Sub, Inc.
      The Board will consider a petition for a merger of South Jersey Industries, Inc., the parent company of Elizabethtown Gas Company and South Jersey Gas Company, with IIF US Holdings 2. IIF US Holdings 2 is a private equity investment fund, advised and managed by JP Morgan Chase Company.
      https://nj.gov/bpu/pdf/boardagendas/2023/20230125a.pdf

      1. GB…
        So JP Morgan becomes the owner. Any guess on what they would do with these? I was thinking of adding more on this CD-like item. Don’t like the idea of going dark, but the yield is awesome, and JP should be low risk?

        1. Rick, It’s not JP owning it. It’s a big money institution type owned fund that actually owns it. IIF also owns several other items like El Paso Electric. Their flow chart shows SJI by itself and there was a stated commitment to keep the SJI subsidiaries IG status. So this company should stay in decent financial standing. That being said I didn’t want the SJIJ baby bond and holding it knowing it doesn’t mature for 40 plus years. I took the 2031 debt a while back near a 9% YTM and will hold it until maturity.

          1. I believe the baby bond and the 31 notes are both junior subordinated and therefore pari-passu Am I wrong?

            1. Technically….With exception. The 2031 notes are not deferrable now unlike SJIJ which is.

          2. I just noticed SJIJ down a buck on 50,000 shares. Maybe this is the start of the big dump by the Funds before being delisted? I will be stink bidding at $10 as that is probably where it will end up on the Expert market based on prior action in KTBA. Lost my ass on that one but will now hold it till I die. Only 7 years to break-even! My kid will love me for it as it will pay all his life as well. Do I sound a bit snarky?

          3. Grid,
            Thanks for the reply…I fired-aimed in my question, so sorry to bug you. I found a pitch deck of the JP IIF (decent track record – not great, but decent 7%+ returns for the family offices/funds), and came to the same conclusion. IMO – This should be good/safe, but the probability of JP screwing up SJI is not zero. My MS guy says he could probably get trades, but it would be big spreads and little to no liquidity. Thus, the nice risk/reward % return.

            I think I’ll watch, and if we get a good swing lower, then get more.

            1. Rick, no problem, glad to discuss. When you stated big spreads are you referring to the 2031 note? If so this one never seems to have any liquidity issues. There are always shares available and pretty tight for a bond. At least on TD. Yield has came down though past couple days I see. I bought close to 9% YTM and it now looks closer to 8.5% range. But if the bond goes dark, of course that is different!
              Regulated utilities are a different beast than say Blackstone levering up PSB. El Paso Electric was bought out by the fund and have maintained their IG status. The Fund itself is largely passive ownership. They will let the Board do its job. I doubt there is any more inherent risk than it being public. The risk is where its always at be it public or private and that is its holding company debt not the subsidiary regulated utility level. The holding company can always get into more mischief as it isnt constrained at that level like the regulated subsidiaries are. In this instance their 2 regulated utilities are their primary means of revenue and income as of now anyways.

              1. Grid,
                My trade/spread comment was if the issue would not be publicly traded (dark). Private trades may be possible, but who knows… We could test it – when it goes private, I’ll trade you my shares for $98 – I’d want you to make some extra juice when it matures! 🙂
                Thanks again!

                1. Ok, thanks, I understand your point. Yes, no question I agree with that.. I thought you were referencing being able to purchase now. My purchase was solely buying to hold until maturity. Wouldnt hold if selling was a need. I am not sure either way how trading will pan out on bond desk come closing time. For now the bond trading has had more leeway than ETD or preferreds from companies going private. Dont know how that plays out going forward and longer term. I liked buying in the 70s but not so much at the $98 level. Maybe in 2030 though. 🙂

    1. Agreed, have also been NSS for quite some time as well as the NS-A issue.
      Has been a nice steady prxed item, & with LIBOR doing it’s deed, should be a steady one for the qtrs ahead.

  5. Vanguard recently published a “Guide to Financial Wellness” which covers nearly every pertinent financial topic you will see from birth to death. Probably contains nothing new to III’ers, but might be pertinent to the younger generation. A concise, quick read and the price is right: free! Highly recommended.

    Link:
    https://corporate.vanguard.com/content/dam/corp/research/pdf/vanguards_guide_to_financial_wellness.pdf

    Disclaimer: no affiliation with Vanguard, not receiving any social media influencing fees from them. Not making a TikTok video about this.

    1. Now there’s something I’d like to see – Tex2 puttin’ his groove thang on busting a move to a financial wellness video on TikTok………

      1. 2WR, it’s a different world these days! Recent polls show that about 25% of American youth want to become “influencers.” These are the folks that make a living by posting TikToks, Youtubes, Instagrams, etc. And like everything else, the large success of a few convinces the masses it is the right path to follow. We personally know a few that are making a good living at it, but we know many more that are starving. We know a fellow that quit Goldman Sachs to become a full time influencer, so that tells you what is possible.

        And it has spread to investments which is why I sometimes go out of my way to make sure everybody around here knows I do not have a financial interest in what I post. There are a reasonable number of actionable things I do NOT post because we do have an interest in them.

        A group got together and posted video’s of their Ferrari’s and Lamborghini’s “earned” from their financial acumen. The SEC had a slight issue with them:

        The Securities and Exchange Commission today announced charges against eight individuals in a $100 million securities fraud scheme in which they used the social media platforms Twitter and Discord to manipulate exchange-traded stocks.

        According to the SEC, since at least January 2020, seven of the defendants promoted themselves as successful traders and cultivated hundreds of thousands of followers on Twitter and in stock trading chatrooms on Discord. These seven defendants allegedly purchased certain stocks and then encouraged their substantial social media following to buy those selected stocks by posting price targets or indicating they were buying, holding, or adding to their stock positions. However, as the complaint alleges, when share prices and/or trading volumes rose in the promoted securities, the individuals regularly sold their shares without ever having disclosed their plans to dump the securities while they were promoting them.

        “As our complaint states, the defendants used social media to amass a large following of novice investors and then took advantage of their followers by repeatedly feeding them a steady diet of misinformation, which resulted in fraudulent profits of approximately $100 million,” said Joseph Sansone, Chief of the SEC Enforcement Division’s Market Abuse Unit. “Today’s action exposes the true motivation of these alleged fraudsters and serves as another

        https://www.sec.gov/news/press-release/2022-221

        1. One of the influencers:

          Matlock founded Atlas trading with the help of his few friends. On 1st of May 2020, he started an account with $30,000, and in 7 months, the account blew up beyond $7 million in profits. People only see the success but do not acknowledge the past failures which lead the path towards success. It was pure knowledge and determination which got PJ in his current situation.

          There was a time when PJ thought of quitting his dream and going back to a normal stable life. He was constantly losing his hard-earned money and was exhausting his savings too. Everybody around him told him to quit but he could not ignore the fact that so many people were earning by trading. He did not give up. His wife and daughter were always on his mind and he knew he could not do anything reckless because that would harm them too indirectly.

        2. I hope you weren’t taking me serious, Tex… I was just making fun of today’s sociological impact of TikTok where now everybody and his brother feels the need be seen dancing a dance move that makes them look silly, and, like you point out, influencing others to do the same thus having the phenomenon feed on itself… Personally I blame Walker Hayes’ “Fancy Like.” LOL

          1. 2Wr, I knew you were not serious! Like you I find it interesting that many youth’s life plan for income is influencing. . . Doing real work for a living appears to be out of fashion. . .

            1. That makes what Tim has done here and what you frequent posters offer to us even more valuable. There is so much misinformation or self-interested information out there, that this forum is a true bonanza of information for those of us who are less experienced. Thank you

  6. The iBond section doesn’t get a lot of posts, but I just posted with a question about their payments in ’22 and so far this yr.
    thanks to anyone who can answer my Q.

  7. I still have 30 shares of SLMNP and am thinking on putting them or a portion back to the company. Funny how I got stuck with this issue. The days leading up to non-reporters going dark I kept checking SLMNP and everytime it was fine. The day before going dark I had my finger on the sell button @ $1,020 but decided not to since it didn’t look like it was going dark and I liked the 6% yield from a solid company. Fast forward to today and 5.8% on cost is not as great as then plus LYB’s operating results are somewhat in a tailspin most likely due to the downturn and war in Europe. The put offer is $848.27.
    I’m leaning towards parting with half of my shares just because 30 shares is on the high side of concentrated risk for me. For any here that did put their SLMNP shares was there any problems you had?

    1. I have not put my shares back to the company but someone here did say they did but I do not recall who. I think. So you might get a response on that.

      Otherwise my 27 shares, so we own a similar amount, will sit in my account forever. LYB might have some headwinds but their ability to pay is very good. Do I wish I sold above 1000? Perhaps. Hindsight is 20/20 and all. I just ignore the past and sit comfortably not really worrying about them. 5.8% or whatever it is is quite decent for a long term hold. What truly sucks is not being able to buy anymore at the current price.

    2. GRjoel – I would be interested in buying your 15 shares of SLMNP. I will enter an $850 bid for the 15 shares. Assuming you can enter a LIMIT order to sell 15 shares at $850 there’s a good chance we we will pair off. Please let me know. And, most importantly, don’t use a market sell order as there is no telling what would happen.

      1. After further thought I’ll keep all my SLMNP shares for now because of the continuing price floor of $848. I also think that my 5.84% yield on cost will look pretty good in the near future.

              1. EarlyBird
                How are you able to something on the expert market? Which broker are you using?

    3. I’m stuck with it too. Most of the recommendations on III have been good but this one was a loser because of the misguided expert market. I can’t see selling at this low price unless you have something better to buy with the money, I’m not expecting a default so the floor isn’t going anywhere.

    4. GRjoel. I bought a hundred shares during covid in the $900 range, and haven’t looked back, and goes into my sock drawer. If you dont need the money now, why sell? Then you have to think where to put it with the fast rise in bonds and preferreds. The company is in good standing, they are a large cap, and their corp bonds are rated Baa2. Their book #’s look fine, and the dividends keep coming in. I wont sell mine any time soon. I also like the fact that they are helping the environment with the plastic recycling in Europe. They need to start one here in US.

    5. Why would anyone sell SLMNP here?? The only reason I can see is a desperate need for cash. As I see it: At this price around 848 we have a security that pays a secure qualified dividend of 7% with no downside risk, and liquidity through the put option. So one should exhaust all cash equivalents prior to selling SLMNP…that is as long as cash equivalents pay less than 7%.

      1. I’d have to go back to my notes… but i did get a letter from my broker and I received an offer I believe for $850 in the past year. My reply was a big nope. If the company was financially distressed, it would be a different story. I appreciate their efforts though. my 1,000 shares will sit there.

  8. I was out all day yesterday. Does anyone have any insight on why both Oaktree Capital preferreds were down on volume (OAK-PA,B)? I don’t see any news or SEC filing. Would appreciate any insight. Thanks. –NCSI

    1. They announced a 1:3 reverse split for the common shares. No negative news–speculation I read is that they want to make the stock more available to institutional investors that might have rules prohibiting them from acquiring stocks with single-digit prices. Seems to be a knee jerk market reaction–might be a good time to add to a position. I added some OCSL common yesterday as it dropped for the same reason.

    1. Wow……. Yes, I own a couple and remember doing a lot of research on practically all of them many years ago but I don’t even remember having seen this one at all. Don’t remember any Allstate based STRATS…… Maybe at the time the maturity was too long for me… It’s not anymore, so I’ll look into it…Thanks for the tip… On a surface glance @ QOL, three-month Treasury Bill rate plus 0.80% doesn’t sound all that tasty.

      1. Its a considerably better present yield than GJP has. Basically its 6.5% straight up yield now (not YTM which isnt worth my time to compute) And great present relative value being its A rated debt and the underlying bond backing the issue is a 5.95% par yield trading at a 10% premium at $110. I went in for a smaller position today.

        1. YTM adds a little over 1.30% compounded though backloaded since retail investors don’t give it much cred until closer to redemption date. Hasn’t the drop in rates lately reduced the float yield to around 6%?

          1. It’s attached to 3 month Till plus spread. Low end is still rising. Since it is a week from monthly exD it’s around 6.5% off purchase price yield with my math anyways. If 3 month Till craters it’s toast yield wise.

  9. From Yahoo today, interview with Charlie Munger late last year,
    he acknowledged that Berkshire Hathaway is sitting on billions of dollars in cash. The reason isn’t that Buffett and Munger think they can wait for stocks to get even cheaper — the wager known as “timing the market.”

    Instead, Munger said bluntly that Berkshire isn’t buying anything “because there’s nothing we can stand buying.”

    1. Charles, Berkshire should be buying more electrical and water utilities. These are the last monopolies in the US that are publicly traded and the cash on cash returns are guaranteed, safer and higher then most other businesses. Look at just the free cash flow for most of the utilities, and you and I are a captive audience ⚡️ Full Disclosure: I own Berkshire A and B and have no plans to ever sell these equities
      Wishing you profitable investing, Azure

  10. OTRK and OTRKP

    OTRK is up 110% today and OTRKP up 55%. I don’t see any news…. Is this meme mania? I only follow this as a reminder of how lucky to get out of OTRKP after originally being sucked in by their originally escrowed payments for something like 6 quarters.

    1. OTRK announced new data that shows a reduction in depression and anxiety symptoms for Ontrak Health’s Wholehealth+ program members.

      ..Guess that’s enough to move the stock.

  11. today’s mystery big mover: ABR-E, trading as high as 21.37, up over 10 %, and higher than both ABR-F and ABR-D…which is absurd.

  12. HTLFP and MS-E should be kicking down dividends today. If you have Schwab like I do you should see them in your account by Friday or so 🙂

      1. Thanks Gary.
        They were posted in my account about 5 pm PST. Maybe this is a good sign ? I had some late posting issues with them last year they couldn’t explain, but so far this year everything has been on time.

  13. Are we ready for another four day trading week? the last couple shortened holiday trading weeks had quiet trading days the Friday before the 3 day weekend and the Monday after. Half the people took the week before the holiday off and the other half took the week during the holiday off.
    I expect the four days next week to have a lot of trading volume since people finished with time off for a while. Lot of banks scheduled to report earnings Tues. Expectations are for good reports. Actually next week will be full of banks and finance companies reporting.

  14. (Per RetiredBroker’s request, I have added the margin that is added to the index for each issue. Otherwise the data is the same as the previous post.)

    There has been a lot of interest in all of the fixed-float, reset and/or variable issues. I decided to take a look at all of the issues that are either already trading with variable rates or will be so shortly. I defined shortly at ones that have a “change” date before 4/1/23. I used the latest payment that was either paid or has been declared. It should be reasonably accurate except for the ones that will be changing for the first time.

    Format is:

    Ticker, Preferred or Baby/Term, Type, Index, Margin, Coupon yield, Current Yield, Change date

    Index: 3ML= 3 month libor, UST5YR= US treasury 5 year, UST3M= US treasury 3 month

    Change date: Old= is any time before 10/15/22

    Sorted by current yield:

    NSS, Baby, FixFloat, 3ML, 6.73%, 11.05%, 11.12%, Old
    VIASP, Pref, FixFloat, 3ML, 6.58%, 10.66%, 11.06%, Old
    NS-A, Pref, FixFloat, 3ML, 6.77%, 10.25%, 10.42%, Old
    NS-B, Pref, FixFloat, 3ML, 5.64%, 9.13%, 10.42%, Old
    NS-C, Pref, FixFloat, 3ML, 6.88%, 9%, 9.17%, 12/15/22
    AGNCN, Pref, FixFloat, 3ML, 5.11%, 9.19%, 9.15%, 10/15/22
    SLMBP, Pref, Variable, 3ML, 1.7%, 5.24%, 8.77%, Old
    NLY-F, Pref, FixFloat, 3ML, 4.99%, 8.67%, 8.72%, Old
    CUBI-E, Pref, FixFloat, 3ML, 5.14%, 8.53%, 8.41%, Old
    GLOP-B, Pref, FixFloat, 3ML, 5.84%, 8.2%, 8.24%, 3/15/23
    CUBI-F, Pref, FixFloat, 3ML, 4.76%, 8.14%, 8.05%, Old
    VLYPO, Pref, FixFloat, 3ML, 3.58%, 7.33%, 7.26%, Old
    EBBNF, Pref, Reset, UST5YR, 3.15%, 5.86%, 7.14%, Old
    BML-J, Pref, Variable, 3ML, 0.75%, 5.61%, 6.94%, Old
    BML-G, Pref, Variable, 3ML, 0.75%, 5.49%, 6.91%, Old
    BML-H, Pref, Variable, 3ML, 0.65%, 5.51%, 6.88%, Old
    NLY-G, Pref, FixFloat, 3ML, 4.17%, 6.5%, 6.8%, 3/31/23
    USB-A, Pref, Variable, 3ML, 1.02%, 5.21%, 6.55%, Old
    BML-L, Pref, Variable, 3ML, 0.5%, 5.29%, 6.48%, Old
    BAC-E, Pref, Variable, 3ML, 0.35%, 5.07%, 6.31%, Old
    GJS, Baby, Variable, UST3M, 0.9%, 5.28%, 6.3%, Old
    GJT, Baby, Variable, UST3M, 0.8%, 5.19%, 6.17%, Old
    ZIONO, Pref, FixFloat, 3ML, 4.24%, 6.3%, 6.16%, 3/15/23
    MS-A, Pref, Variable, 3ML, 0.7%, 4.88%, 6.14%, Old
    USB-H, Pref, Variable, 3ML, 0.6%, 4.78%, 6.08%, Old
    GJP, Baby, Variable, UST3M, 1.15%, 5.35%, 5.5%, Old
    ZIONP, Pref, Variable, 3ML, 0.52%, 4.04%, 5.39%, Old
    GJO, Baby, Variable, 3ML, 0.5%, 5.11%, 5.36%, Old
    TFC-I, Pref, Variable, 3ML, 0.53%, 4.04%, 5.27%, Old
    GS-D, Pref, Variable, 3ML, 0.67%, 4.09%, 5.21%, Old
    ALL-B, Baby, FixFloat, 3ML, 3.17%, 5.12%, 5.14%, 1/15/23
    GJR, Baby, Variable, UST3M, 0.7%, 4.93%, 5.14%, Old
    GS-C, Pref, Variable, 3ML, 0.75%, 4.09%, 4.98%, Old
    GS-A, Pref, Variable, 3ML, 0.75%, 3.83%, 4.9%, Old
    MET-A, Pref, Variable, 3ML, 1%, 4.34%, 4.86%, Old
    PYT, Baby, Variable, 3ML, 0.85%, 3.07%, 3.65%, Old

    1. If my math is correct, NLY-G has a current yield of 9.39% based on what the floating dividend would be. It sees as though it should trade higher. I can only assume that it doesn’t due to the risk of rates going down and the resulting reduction in income/value from these shares. I own NLY-G and two AGNC issues that are not on this list. I paid right around par value for all of them. In hindsight, I should have studied up on this situation more. I do not have a good feeling about how this is going to end for me,

      1. My unsolicited advice is to buy names you understand well, especially with MREITs which can be volatile, and your fear can run wild.

        Knowing the underlying portfolio, their financing, key terms, and quality of management are necessary. Otherwise, it is easy to be prone to fear and selling at the worst possible time. And don’t rely on others for advice, esp SeekingAlpha yield pigs.

      2. NLY-I is better,. Floating rate offset of 4.98% compared to NLY-G’s 4.18%. G might pay an extra 75 cents or so until they both float. Now why on Earth would you pay an extra dollar for less than a dollar return and a vastly inferior floating rate?

        1. Martin G. : Maybe some folks figure with NLY-G floating starting 3/30/23 they will be getting a yield of around 9% pretty soon if not called. NLY-I doesn’t float until until 6/30/24, a full 15 months later, assuming it is not called. Some people think the FED will pivot in late 23 or early 24 and if that happens rates could come down to where companies could float new issues for much lower rates again (we have all been through that before), this could happen right about the time NLY-I is set to float. So, it’s just a matter of do you want 9% now or 9.8% in the future ? I guess it is a crap shoot on these F/F issues, so grab the money now if you can, may not last.

    2. Isn’t USB-H 3.5% over 3-month LIBOR? I must be wrong about that, bc it would be trading at over 10% at a sub $20 handle….thanks for all you do around here!

      1. No Graustus. The 3.5% is the minimum floor par yield. Presently it pays .6% plus Libor.

    3. Tex the 2nd,
      Thanks for the list, it makes it very easy to compare issues. I got a question though, one is issue I own that is a FF is ZIONL, yet it never gets on the lists ? I wonder if being a BB and having a maturity date (2028) puts it into a different category ?

      1. Hi Bill, for this list I only included issues that were either already floating or were going to float/change before 4/1/23. ZIONL’s float date is 9/15/23 so it missed the cutoff by 5 1/2 months. The 4/1/23 cutoff was arbitrary, but the reasoning was that the further out you go, the less certainty about interest rates. Many are calling for the fed to be cutting short term rates before the end of this year, hence 3 month libor, 3 month SOFR, 3 month US Treasury, etc. MIGHT be going down by then. That is not my highest probability forecast, but it is not ~zero percent chance either.

  15. There has been a lot of interest in all of the fixed-float, reset and/or variable issues. I decided to take a look at all of the issues that are either already trading with variable rates or will be so shortly. I defined shortly at ones that have a “change” date before 4/1/23. I used the latest payment that was either paid or has been declared. It should be reasonably accurate except for the ones that will be changing for the first time.

    Format is:

    Ticker, Preferred or Baby/Term, Type, Index, Coupon yield, Current Yield, Change date

    Index: 3ML= 3 month libor, UST5YR= US treasury 5 year, UST3M= US treasury 3 month

    Change date: Old= is any time before 10/15/22

    Sorted by current yield:

    NSS, Baby, FixFloat, 3ML, 11.05%, 11.12%, Old
    VIASP, Pref, FixFloat, 3ML, 10.66%, 11.06%, Old
    NS-B, Pref, FixFloat, 3ML, 9.13%, 10.42%, Old
    NS-A, Pref, FixFloat, 3ML, 10.25%, 10.42%, Old
    NS-C, Pref, FixFloat, 3ML, 9%, 9.17%, 12/15/22
    AGNCN, Pref, FixFloat, 3ML, 9.19%, 9.15%, 10/15/22
    SLMBP, Pref, Variable, 3ML, 5.24%, 8.77%, Old
    NLY-F, Pref, FixFloat, 3ML, 8.67%, 8.72%, Old
    CUBI-E, Pref, FixFloat, 3ML, 8.53%, 8.41%, Old
    GLOP-B, Pref, FixFloat, 3ML, 8.2%, 8.24%, 3/15/23
    CUBI-F, Pref, FixFloat, 3ML, 8.14%, 8.05%, Old
    VLYPO, Pref, FixFloat, 3ML, 7.33%, 7.26%, Old
    EBBNF, Pref, Reset, UST5YR, 5.86%, 7.14%, Old
    BML-J, Pref, Variable, 3ML, 5.61%, 6.94%, Old
    BML-G, Pref, Variable, 3ML, 5.49%, 6.91%, Old
    BML-H, Pref, Variable, 3ML, 5.51%, 6.88%, Old
    NLY-G, Pref, FixFloat, 3ML, 6.5%, 6.8%, 3/31/23
    USB-A, Pref, Variable, 3ML, 5.21%, 6.55%, Old
    BML-L, Pref, Variable, 3ML, 5.29%, 6.48%, Old
    BAC-E, Pref, Variable, 3ML, 5.07%, 6.31%, Old
    GJS, Baby, Variable, UST3M, 5.28%, 6.3%, Old
    GJT, Baby, Variable, UST3M, 5.19%, 6.17%, Old
    ZIONO, Pref, FixFloat, 3ML, 6.3%, 6.16%, 3/15/23
    MS-A, Pref, Variable, 3ML, 4.88%, 6.14%, Old
    USB-H, Pref, Variable, 3ML, 4.78%, 6.08%, Old
    GJP, Baby, Variable, UST3M, 5.35%, 5.5%, Old
    ZIONP, Pref, Variable, 3ML, 4.04%, 5.39%, Old
    GJO, Baby, Variable, 3ML, 5.11%, 5.36%, Old
    TFC-I, Pref, Variable, 3ML, 4.04%, 5.27%, Old
    GS-D, Pref, Variable, 3ML, 4.09%, 5.21%, Old
    ALL-B, Baby, FixFloat, 3ML, 5.12%, 5.14%, 1/15/23
    GJR, Baby, Variable, UST3M, 4.93%, 5.14%, Old
    GS-C, Pref, Variable, 3ML, 4.09%, 4.98%, Old
    GS-A, Pref, Variable, 3ML, 3.83%, 4.9%, Old
    MET-A, Pref, Variable, 3ML, 4.34%, 4.86%, Old
    PYT, Baby, Variable, 3ML, 3.07%, 3.65%, Old

    1. Tex, thanks for this post. (And the one following regarding selling now…thought provoking) … It would be helpful if you could post the full index data. i.e. 3ML plus 4.5% or UST3M plus 1% or whatever is applicable.

    2. Tex the 2nd,

      RE: FTF issues using Libor rates.

      ALL-B for example, is a 500 million dollar issue, that’s a 20 million share float.
      Every 1% higher than their initial coupon of 5.10 will cost them $1,250,000.00 MORE per quarter.
      We are almost 3% higher thanks to Libor, so that’s over $3.5 million more for the first quarter!
      Q2-23 will also hurt them by millions.
      I think they will call it ASAP.
      That will leave us scrambling for alternatives.

      Opportunity cost definition:
      The loss of potential gain from other alternatives when one alternative is chosen.

      1. Newman, I am under no illusion it may not be long in the world. But actually that is precisely why I am investing in it. This money has been essentially put in HY short term timeout with ALL-B.

        1. Gridbird,

          Per the prospectus, How many days advance notice do they have, to call it?
          Have we banked 1 months worth at Libor rate yet?

        2. Exactly, Grid…. I think the same way, although I’m quite certain I’ll still be holding these well after you’ve bailed… In fact, it’s because of the high likelihood of call that I got into ALL-B and/or similar type situations in the first place. Without that possibility, I may not have played at all. What makes these interesting is if you enter into them thinking of them as short term income generating vehicles anticipating the call, then the longer they remain outstanding beyond your expectations, then usually, with high expectations, the better your investment turns out to be… I kind of like owning something where if I’m wrong, I most likely do better than I originally expected. The CUBI preferreds so far have been great examples of this for me..

      2. Looking at ALL-B (and just trying to look at all sides of Allstate’s position) I think Allstate could be thinking of two things: what would it cost to float a new issue NOW, and what will Libor be in a year or so. I think it would cost pretty darn near 6% to float a new issue now…plus underwriting costs. And the market seems to think that Libor will be around 2 to 2.5% in a year or so. If those two things are true, Allstate may decide it is best pay up on ALL-B for the next year rather than pay 6% for the next five years.

        So with ALL-B one bears the risk of call, plus the risk I have outlined above.

        I am generally leery of issues trading around par or above with low premium floaters.

        1. Yes it depends on your concerns. But one thing is reasonably certain, market has and will continue near term to anchor these type of issues near par. Personally I am not worried about SOFR next year while it is still rising. For my needs I dont see bearing the risk of a call as a risk. As I am totally agnostic to a call being the purpose I bought it for. But, I also dont mind babysitting against future yield expectations and also am not owning for a long duration play. So it always matters the purpose and goal of the purchase.

          1. I agree that these need watching especially the ones with low reset rates if LIBOR was to drop. But I think we should get enough warning and with people playing the dividend flipping game you should be able to off load and re-position into another holding that is fixed rate. For me, I hold 3 on Tex’s list. I hold others not on the list because they are beyond the April cut off he chose. There are others I hold that the re-set is high enough they are worth keeping if in the future world of preferred stocks the average dividend is 5% to 6% These I expect to stay close to par or higher as people chase yield in a lower interest rate environment.
            A few like HTLFP the reset is so high I need to babysit as the issuer will most certainly call. CHSCP was a current example given here of a preferred selling at a premium that can be called

        2. RB
          3ML ceases 6/30/23, so quotes on 3ML will not be available after that date.
          The final fallback in the absence of current quotes for 3ML is described on page S-18 of the prospectus for ALL-B:
          “However, if fewer than three banks selected by the Calculation Agent to provide quotations are quoting as described above, three-month LIBOR for that floating-rate interest period will be the same as three-month LIBOR as determined for the previous floating-rate interest period or, in the case of the interest period beginning on January 15, 2023, 0.31%. ”
          The first dividend period for ALL-B after the cessation of 3ML will be the dividend period beginning 7/15/2023. The “three-month LIBOR as determined for the previous floating-rate interest period” will be the 3ML as of 4/13/2023. This would then become the 3Ml for the dividend period beginning 7/15/2023. As I interpret the prospectus, this would then, in effect, also become the 3ML for ALL-B as long as it remains outstanding.
          Thoughts?

          1. I’ve read that too, nhc….Given the prevailing opinions regarding direction of interest rates in general in response to the expected recession officially showing up around then, doesn’t this language seem to support an idea that ALL will most likely end up incentivized to call these this year if this circumstance prevails? How happy ought they be to be locked into fixed rate 8%?

            1. I betting it does get redeemed at some point too. But another issue is does the new regulations allow cover to replace the “fall back” provisions? I haven’t really came across a definitive answer. I’m sure companies would hope it to though. Of course the new regs were designed more with concern with all the corporate loan obligations than with preferreds and ETDs though.

              1. I haven’t seen a definitive answer to that either. According to ARRC, replacement will apply only to those cases where a fallback for LIBOR is not “hardwired” in the relevant instrument Might be some good billables for the attorneys on this one.

                1. Nh, I bet they wouldnt pass on an opportunity to try to collect some coin here. Provided the Camp Lejuene money stream is weakening by then, ha.

              2. I am not sure a regulation can override a prospectus that is silent on the topic, since the prospectus has to contemplate using a different rate when 3MLIBOR is unavailable, and as has been pointed out, this security has a fallback position, just one that ALL may not be very happy with. There are quite a few offering documents that say exactly this, and allow the rate to be swapped to a new industry standard, and some were issued many years ago even before LIBOR was announced it was being phased out and large bond holders with a cost less than par might just sue them to force them to redeem it and move on to the next issue if they propose going to a different rate when the prospectus doesn’t contemplate that.

                1. To me Justin, that just increases odds of many issues just being redeemed especially if company has the means or ability to do so and avoid problems.
                  For some of these ones like ALL-B they could be faced with a permanent high add on. As its likely to be peaking this summer. Many prospectus have this same wording to it.

            2. Why are people so concerned about calls on issues they bought below par? That’s a positive short term outcome, then just buy something else with the money and profits. I’m much more concerned about the possibility of falling prices leading to a loss.

              1. I think the issue is more expansive than ALL-B. Im in the I dont care camp on it, but many people want to buy issues and not deal with calls and want to hold an issue longer term. Plus there is doubt and concern with the future on these types of issues that can cause angst. And then you have another subset of issues like SLMBP. Its way under par and a live floater and there is likely no chance of it ever being redeemed at par. So these types one must be a better caretaker of. Issues like say NSS that concern is irrelevant due to the higher adjustment and the fact it has been proven to be a par hugger even in a zero rate environment.

          2. nhcoast.
            My thought is that Allstate may call the issue as soon as the board meets the second day of Feb.
            The Allstate Corporation (NYSE: ALL) will conduct a conference call and webcast at 9 a.m. Eastern on Thursday, Feb. 2, 2023, to discuss fourth quarter 2022 earnings.

            1. I’m guessing that a call soon is likely too. I am going to speculate (based on nothing) that we get one quarter of float. Anyone care to take the under?

          3. Whoa…

            Just read the comment by nhcoast.
            So Allstate may be locked into whatever rate is set in April? I had assumed ALL would be paying the prevailing (ie adjusted every quarter) rate. If the rate is locked, then ALL will almost certainly call ALL-B.
            It all depends on how “cessation of 3ML” is interpreted. I guess one could argue that replacement by SOFR (plus some adjustment) is not cessation. That’s above my pay grade. Someone needs to contact Allstate for clarification.

              1. ALL-PB closed at exactly par on heavy volume.
                Sure looks like an imminent call to me.

  16. Sell in January and go away? Why not? Year to date, 2023 median returns:

    Canaries, IG rated, low coupon yield preferreds:_____ +8.29%
    Median preferred:____________________________________+5.13%
    Baby bond/term:_____________________________________+2.19%
    PFF, largest preferred ETF___________________________+4.94%

    So you sell ALL of your preferreds and put the proceeds into a 4.0% money market account or into a 4.5% US treasury. Your 2023 total return will be locked in @ 9.0%+. How many III’ers would be happy to have that guaranteed return? And you can spend the rest of the year doing constructive things like watching Tik-Tok videos and learning to make REAL money from other social media influencers, I hear there are some great ones out there. . .

    1. Tex, it would be tempting to sell and lock in profits that we have seen lately. I looked at this myself. If I was flipping and thought I could buy back at a lower price this is a good option. But on the other hand a lot of the preferred I bought are still not back to par or prices they were at before the feds started raising rates.
      We all agree higher rates will not last for the long term.
      The last time I experienced this kind of market I sold and locked in profits and I regretted selling. But I didn’t have a choice. Not enough savings to both keep my stocks and buy my first house in 83 couldn’t hold both.
      This time I will hold and ride out the ups and downs in the market for 2023
      I have cash and the opportunity to buy more at a lower cost or if my preferred stocks continue to recover value I will not regret selling.

      1. Charles, I’m with you. Building quality income. If rates go higher, buy more and keep averaging down, if they go lower – you’ll be glad you bought and held what you had.

        One exception with ya, “We all agree higher rates will not last for the long term.” I have no idea where rates are going.

        1. I have no idea either Alpha. I just paid off a 30 adjustable mortgage last March. Started around 8% and finished at 3-1/2% The mortgage service companies kept selling the loan, I lost track how many times it was sold.

          1. Congrats on the payoff Charles. Nice just knowing it’s paid off!

            On debt, here’s a funny one for you: When rates turned hard back in Nov, our credit union was lagging the up-tick and still (very last day) had a 1.something% car loan rate. Didn’t need the loot but what the heck, could not resist and set up a separate bucket for this – yanked $50K and within ten days dropped it into a higher IG 6% bond, turning our SUV into a revenue center. hahaha.

  17. MDV.PA

    Any thoughts on these. Doesn’t look like something I would put a fortune into, but looks worthy of a small portion of the protfolio.

    1. I looked also. Tiny cap reit and it has something like 4 different classes of common stock? That is done for a reason, and typically not to benefit of shareholder. Management costs I read were like 18% or revenue, and they really cant access debt anymore without breaches it appears. I would kind of lump it into the type of NXDT-A ilk. Just depends on what you want or risk level to determine if its a suitable buy or not.

      1. It looks like they are down to just Class C shares as of 9/30/2022 so that may be a good thing. They are up to their ears in debt for sure.

        1. It does appear much is fixed near term, which helps near term. I did put it on my list, but it doesnt appear to be any worse or better than any preferred of same yield ilk. These small reits need to have the buildings examined better for a long term hold. As one or two “property mistakes” can be more stressful to a small outfit.

    2. Lots of debt. I haven’t looked closely at everything. I can come close to that yield at larger well known REITs I know more about, and more trading opportunities.

    3. NewTT,

      Just me, but if I wouldn’t put a fortune into it, I probably wouldn’t put a $1 into it. Not that I’d put a a single fortune in any one bucket anyway, but why let excess risk of even a small hold potentially offset the yields of the good stuff.

    1. Has anyone checked the change of control concerns for the preferreds?
      Wondering what the probability is of redeeming vs maintaining or going dark. I will look this weekend.

      1. Where would the the change of control provisions be found–in the 10k or the filing for the listing of the preferred? In the 10k I found:
        Dividends to the Series A Preferences Shares will be payable on a non-cumulative basis only when, as and if declared by our Board or a duly authorized committee thereof, quarterly in arrears on the 15th of March, June, September, and December of each year, commencing on September 15, 2020, at a rate equal to 7.00% of the liquidation preference per annum (equivalent to $1,750 per Series A Preference Share and $1.75 per depositary share per annum) up to but excluding September 15, 2025. Beginning on September 15, 2025, any such dividends will be payable on a non-cumulative basis, only when, as and if declared by our Board or a duly authorized committee thereof, during each reset period, at a rate per annum equal to the Five-Year U.S. Treasury Rate as of the most recent reset dividend determination date (as described in the Company’s prospectus supplement dated July 7, 2020) plus 6.712% of the liquidation preference per annum.

        1. I read through the prospectus quickly and found nothing mentioning what would happen under a change in control, but I could have missed it.
          Coincidentally , I sold out of this yesterday. Taking this run up to get out of most of these smaller non IG issuers that may leave the preferreds hanging. I could be missing out on some yield and gains but it’s getting pretty tiresome having to keep my head on a swivel for these occurrences. I know nothing is safe with the PSB debacle, but at least I can sleep a little easier at night removing what I feel is vulnerable.

          1. My interest is in the note, ARGD…. The place to look for appropriate language is in the prospectus, not the 10k. Regarding ARGD, there seems to be language in the prospectus that pertains to Argo Group US, the issuing body for ARGD but maybe not ARGO-A in merger etc., but I’m not quite sure I can get through the legalese.. I’m referring to p 43 of https://www.sec.gov/Archives/edgar/data/1091748/000119312512398425/d410461d424b2.htm#toc412953_16, “Certain Covenants of Argo US” Anyone want to take a stab at being an interpreter?

            In any event, if both Arch Capital and Enstar are interested in buying out ARGO, I suppose we would root for Arch as they’re the higher rated entity with the rating agencies

            1. https://www.sec.gov/Archives/edgar/data/1091748/000119312520188490/d112454d424b5.htm
              I got to page 30 and my eyes glazed over.
              Under certain limited circumstances, the terms of the Series A Preference Shares may change without your consent or approval.

              Under the terms of the Series A Preference Shares, at any time following certain tax events or at any time following certain capital disqualification events, we may, without the consent of any holders of the Series A Preference Shares, vary the terms of the Series A Preference Shares such that they remain securities, or exchange the Series A Preference Shares for new securities, which (i) in the case of a tax event, would eliminate the substantial probability that we or any successor company would be required to pay any additional amounts on the next dividend payment with respect to the Series A Preference Shares as a result of a change in tax law or (ii) in the case of a capital disqualification event, would cause the Series A Preference Shares to become securities that qualify as at least Tier 2 capital, where capital is subdivided into tiers, or its equivalent under then-applicable Capital Adequacy Regulations (as defined herein) imposed upon us by the Applicable Supervisor, including the Enhanced Capital Requirement (as defined herein), for purposes of determining the solvency margin, capital adequacy ratios or any other comparable ratios, regulatory capital resource or level of Argo Group International Holdings, Ltd. or any subsidiary thereof. However, our exercise of this right is subject to certain conditions, including that the terms considered in the aggregate cannot be less favorable to holders of the Series A Preference Shares than the terms of the Series A Preference Shares prior to being varied or exchanged, and certain terms cannot be varied in any event. See “Description of the Series A Preference Shares—Substitution or Variation” in this prospectus supplement.

  18. I am struggling to verify or understand a tax question. I am hopeful smart contributors (James) and others might clarify. I understand a bond purchased at discount will result in ordinary tax treatment when matured (the discount amount is ordinary income). My question is the treatment of the discount when matured in a tax deferred account: 401K, IRA, ROTH? If in a ROTH it would seem the bond discount is never taxed. Is this correct? TIA to all!

    1. In retirement account no tax implications whatsoever.
      In taxable account, if the premium discount is resultant from a bond that matures less than 12 months, it’s effectively ordinary income tax rate.
      However if bond matures > 12 months, any premium discount that is “gained” at par redemption is subject to 15% LT cap gains tax.

      This is why one of my strategies last year was buying the biggest discounted bonds in 60-70 cents on dollar range with 1-2% coupon issuance. My effective yield will be dramatically bumped by the 15% applicable tax rate vs. say buying a bond at 5% under par with a higher coupon and having all that income subject to ordinary income tax rate.

      1. Suggest you run that non-Roth example by your CPA or call one if you don’t currently work with one. Or google “taxation of bond market discount” and you will be in for a surprise !

    2. TNTowanda: I’ll add to what Theta said. The Roth account must have been open for at least five years and you must be over age 59 1/2 before you can withdraw money without possible penalty/taxes. Even if you’re over age 59 1/2, you can withdraw contributions you made to the Roth, but the five-year rule says you’ll pay taxes on any earnings you made. But if you’re over 59 1/2 and have had the Roth for at least five years, then no taxes are due upon withdrawal. In a regular IRA, you will only be taxed on the amount of money you withdraw, once you are over age 59 1/2. Hope this helps.

      1. James, Thank you this is very helpful. I appreciate all your comments. If the ROTH has been open over 5 years but one annually converts sums from IRA into the same ROTH, how does the 5 year clock work? Is it 5 years from ROTH opening date for all securities held in the ROTH?

        1. You may want to go spend some time reading what the IRS says https://www.irs.gov/publications/p590b#en_US_2021_publink100089543

          I think what you are looking for is a “qualified distribution”

          The pub above says:
          “A qualified distribution is any payment or distribution from your Roth IRA that meets the following requirements.

          1 It is made after the 5-year period beginning with the first tax year for which a contribution was made to a Roth IRA set up for your benefit.
          2 The payment or distribution is:
          A Made on or after the date you reach age 59½,
          B Made because you are disabled (defined earlier),
          C Made to a beneficiary or to your estate after your death, or
          D One that meets the requirements listed under First home under exceptions in chapter 1 (up to a $10,000 lifetime limit).”

          That said, you should consider doing some heavier research than asking on an internet chat or go talk to a tax professional. There are other rules that come into play (IIRC) because, as always, the IRS can’t have anything be simple or straightforward…

        2. TNTowanda:

          The 5-year rule on Roth conversions requires you to wait five years before withdrawing any converted balances — contributions or earnings — regardless of your age. If you take money out before the five years is up, you’ll have to pay a 10% penalty when you file your tax return.

          The clock starts ticking on the first day of the year you do the conversion, no matter what date the conversion actually happened. For example, you could execute the conversion on Dec. 15, 2020, and the five years would be up on Jan. 1, 2025.

          But always double check anything you read here or anywhere! 🙂

  19. Long New York Times story on Neel Kashkari, President of the Minneapolis Fed. Interesting background to end up with that position. One quote stood out to me:

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

    I commented that the financial markets didn’t seem to believe that the Fed would stay the course. The central bank, in its latest forecast, had projected that the Fed Funds Rate would increase to at least 5 percent and that there would be no rate cuts this year. But the markets were pricing in cuts starting in its second half. “I’ve spent enough time around Wall Street to know that they are culturally, institutionally, optimistic,” Kashkari replied. I said it seemed almost as if the markets were playing chicken with the Fed. Kashkari laughed. “They are going to lose the game of chicken, I can tell you that,” he said.

    Link to article:

    https://www.nytimes.com/2023/01/10/magazine/inflation-federal-reserve.html

        1. Well darn, J – How’d you do that? I tried as an experiment with using archive.ph and couldn’t git ‘er done…

          1. No special magic, 2WR. The good ol’ “Copy => Paste” game…
            I have no idea why archive.ph didn’t work for you.
            You could try:
            – cleaning/deleting the cache from your browser;
            – using VPN to change your IP address to some other country;

  20. Two of the largest winners 2023 year to date are NGL Energy Partners -B and -C.

    NGL-B was up 19% today/ 53.7% YTD, closed @ 14.2
    NGL-C was up 15% today/46.5% YTD, closed @ 13.8

    Cumulative dividends were suspended after the 1/15/21 payment, so 2 1/4 years of dividends built up. Only announcement I see is that that NGL upped their 2023 EBITDA guidance. No mention of reinstating dividends. Two guesses for the YTD increases:

    1) Added to the buy list from some investment advisor

    2) Investor perception that dividends will be reinstated

    We do NOT follow NGL, nor have any positions in common/preferreds in any account and have no open orders. The price increases do standout though. . .

    1. and caveat emptor. those NGL preferreds produce K-1’s.
      But this was filed with the SEC on the 13th, so I guess getting a new CFO means that the company is going to survive?

      On January 3, 2023, NGL Energy Partners LP (the “Partnership” or “NGL”) announced the appointment of Brad Cooper to serve as the Executive Vice President and Chief Financial Officer of NGL Energy Holdings LLC (the “General Partner”), the general partner of the Partnership, effective January 13, 2023

  21. EP-C – El Paso Energy Capital Trust I, 4 3/4% Trust Convertible Preferred Securities due 3/31/28

    At $45.10 last, isn’t this cheap relatively speaking for a 5 year split IG rated preferred? 45.10 = 7.07% YTM . It’s fully guaranteed by Kinder Morgan but is rated a step below @ Baa3/BB+ as a preferred issue. If you look at the big boy bond market for Kinder Morgan debt, you see 35 issues and they all seem to fall in line regarding relative yields along the maturities offered… The most comparable issue to EP-C is KMI 4.30% due 3/1/28 (CUSIP 49456BAP6) last offered at 4.739%. That makes EP-C 233 basis points cheaper than the parent KMI’s unsecured debt. Granted, some spread is justified, but this seems way too much. BTW, consider this a busted preferred as far as it being convertible… KMI would have to be over 28.30 to be in the money and $22.58 is as high as they’ve been in the past 5 years. Also on the plus side, Moodys, which as KMI as stable, says, “The ratings could be upgraded if Moody’s adjusted proportionately consolidated debt to EBITDA approaches 4x and the company’s dividend policy enables the funding of capital expenditures, both maintenance and growth, largely with internally generated cash flow.” On Dec 7, KMI said, “The company also guided for $7.7B of adjusted EBITDA, up from $7.5B from the 2022 forecast, with expectations to end 2023 with a net debt-to-adjusted EBITDA ratio of 4x, well below its long-term target of 4.5x.” https://seekingalpha.com/news/3915124-kinder-morgan-guides-2023-eps-below-consensus-flat-vs-2022. That’s not to say Moody’s is close to a rating upgrade, just pointing out KMI is seemingly on the low end of the debt to EBITDA ratios but the numbers may not be directly comparable because KMI is quoting NET debt-to-adjusted EBITDA. Anyone have an opinion on this one? I own a good amount already but am considering adding

  22. ALL-B Comment from another board from an experienced investor in Preferreds ” I don’t think it’s that likely ALL-B is called given the 3.16% spread and that it’s not a qualified div. But it’s certainly possible given they could refi it into a fixed coupon that’s a lot lower (but would be locked into that rate for 5 years). At 24.84 there’s a little upside if they call it and you’ll earn a nice, safe coupon with low price volatility if they don’t call it. It’s one of my bigger positions but not top 10. ” I understand that if Allstate doesn’t want to spend cash or sell fallen securities to redeem this issue , they will have to issue 7-8% fixed or something with reset option like Lincoln or Athene for 5 or so years. They may just tough it out and wait until SOFR drops

    1. Allstate does refinance and call issues, but historically slow drags a bit unlike PSA. Personally its one of my biggest issues for present moment because of what I expect it to do near term. I agree that its certainly possible it will get called, but no certainty. Im with Martin for my needs I really dont care if it gets redeemed or not.
      But that call threat thought process is a bit two dimensional in thinking. This issue is a debt and a liability. QDI preferreds are capital and an asset. Allstate is a balance sheet powerhouse with a strong reputation and can move up and down the cap stack for whatever reason they want which would adjust the potential new issue yield issuance.
      Allstate fixed preferreds are presently trading sub 6% yield and 2043 senior unsecured is right at 5%. They are not a staggered wounded warrior like Lincoln nor a market in general suspicious issue like Athene and other insurers of that ilk. Still this fairly low adjustment could cause a call slow walk and at $500 million its not a staggering size issue that moves Allstates needle either way.

        1. No, it floats quarterly off Libor plus the spread. So invariably come this summer it will have been redeemed, transferred to the SOFR replacement or permanently fixed at last posted Libor before it shuts down.

          1. Any odds in general you think we see issues getting redeemed because of the SOFR switch?

            As you can tell I am neutral at best medium term about where LIBOR/SOFR is heading given yields now have been steadily shrinking and peak presently being around 6 month mark and CPI continually declining.

            At this point only preferreds I would add are trading under par and with at least >4.75% + LIBOR/future SOFR.
            NLY-F is a good example of this. Current yield is around 10% but that can quickly decline in a couple years. This QT cycle will be very short lived; a blink of a second compared to the QE cycle.

            1. Theta, Im nuetral also. If Fed “pivots” worst case things can change quickly and they can do emergency cuts too. You tend to get a lag effect protection a quarter, but market can sniff this stuff out and price of issues could drop hard before anything begins.
              The SOFR conversion provision was put in place for loans and such that had no provisions. Most preferreds state basically as last resort “use last reported”.
              Does SOFR provide cover to replace that provision? I cant say with absolute certainty it does. My basic assumptions are there is no immediate pivot. QT has barely started, and have no clue how committed they will be. Many issues I own including my CDs, term dated, and bonds need no supervision, but my floaters are under need of babysitting.

              1. I concur 100%. I have some floaters that I have price alerts on that are on my mind.

                Just out of pure dumb luck timing wise late last year I was able to snag several corps that are noncalls with medium duration that were way under par because of low coupon issuance but with OK step ups and yields that I am presently not seeing anything near that neighborhood. Have to sit on my hands now.

                It’s hard to get overly excited about buying a new preferred position when see it has rallied anywhere from 10-25% from only a couple months ago. I realize this is not an efficient way to look at it and many merely see an income stream and an acceptable yield but timing, cost basis, and position sizing are such challenging elements for me to reconcile with, especially since everyone on here knew this day was coming when yields would be back with a vengeance.

                1. theta, So with you on this. Missing the daily buying from the falling prices. Sure the accounts are up wildly now, though not as happy as when we were getting those incredible buys day after day after day. Mostly waiting again with a morsel here and there.

                  1. I agree Alpha/Theta, it is tough buying. With ~ $3/share gains from buying last year, I am now rotating 20% into cash and pivoting from the cheap IG bought in the $15/$16 area, but not abandoning the idea completely. With over 6 figure gains in a week it is probably prudent to trim those holdings. Those Dec buys were pretty good. It was a set of long steps down, and an elevator ride up. I am thinking of shifting 20% from the cheap IG into different ideas. Started buying MS-P, CUBI-F, ALL-B, and looking at illiquids, etc.

                    1. alpha – Right. Have no choice to wait especially when I see news such as Tex just posting with respect to Fed not pausing until 5% or potentially higher, street playing chicken etc.

                      If anything we may be on the wrong side of this right now with respect to yields. I think current yields are not only pricing pause in for mid/late 2023 but possibly trims end 2023/early 2024. How else can you explain a 10 year yield on a solid investment grade (not junky in disguise i.e. BDC, small oil play etc.) barely in the 5% range.

                      Mr. Conservative – Nice pickups. As usual that window of opportunity was fast and furious. Timing is everything. We may end up getting another pullback at some point if market continues to underestimate resolve of Fed. The next meeting, in particular Q&A is going to be very interesting and possibly insightful.

                2. I frequently swap positions. I have a number of profitable positions acquired just before the recent run-up and I’m struggling to find anything worth swapping into. It’s a lot easier in a down move because panic selling and illiquidity makes some issues drop faster. Not so on the way up. I feel like the Maytag Repairman with nothing to do…

            2. Good question as to the odds. This is a case where the language in the prospectus written years ago never contemplated that LIBOR would disappear and there would be a need to switch to a different rate, so you get differing treatment on an individual security level.
              (and the opposite could have been true, where it could have been fixed to a now-dead LIBOR that was at a low point in the history of interest rates)
              But I don’t think I have yet seen any announcement of a redemption on a floating rate instrument because LIBOR is no longer published. (But there are definitely securities that will do just that, we are just to early to know which)

  23. Re: ALL-B
    Please note language below from the offering prospectus.
    Question: If 3-mo LIBOR has been replaced by SOFR before April 15, July 15, or October 15, 2023, i.e. the quarterly interest reset dates, based on the language in the prospectus will the then rate be permanently fixed at the quarterly rate for the PRECEDING PERIOD (since LIBOR no longer exists), i.e 3-month LIBOR + 3.165% spread, or will SOFR be substituted for LIBOR with the rate floating based on SOFR? It is my understanding that SOFR will replace LIBOR on or before June 30,2023???

    Would be grateful for your opinion on this. Thanks!

    ” If fewer than two quotations are provided, three-month LIBOR with respect to that floating-rate interest period will be the arithmetic mean (rounded upward if necessary to the nearest whole multiple of 0.00001%) of the rates quoted by three major banks in New York City selected by the Calculation Agent after consultation with us, at approximately 11:00 a.m., New York City time, on the first day of that floating-rate interest period for loans in U.S. dollars to leading European banks for a three-month period commencing on the first day of that floating-rate interest period and in a principal amount of not less than $1,000,000. However, if fewer than three banks selected by the Calculation Agent to provide quotations are quoting as described above, three-month LIBOR for that floating-rate interest period will be the same as three-month LIBOR as determined for the previous floating-rate interest period or, in the case of the interest period beginning on January 15, 2023, 0.31%. The establishment of three-month LIBOR for each floating-rate interest period by the Calculation Agent will (in the absence of manifest error) be final and binding. “

    1. That is my reading of it, and I don’t think it gives them any wriggle room to switch to a new rate, without disclosing that fact in a prospectus supplement.
      But the redemption provisions are really loose, no notice, no payment date, just that they can’t do a partial call while leaving less than $25 million outstanding.

      in whole at any time or in part from time to time on or after January 15, 2023 at a redemption price equal to their principal amount plus accrued and unpaid interest to, but excluding, the date of redemption; provided that if the Debentures are not redeemed in whole, at least $25 million aggregate principal amount of the Debentures, excluding any Debentures held by us or any of our affiliates, must remain outstanding after giving effect to such redemption

      1. Justin, redemption notice is there you just have to read further down on S21.
        Notice of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each holder of Debentures to be redeemed at its registered address…

    2. Hi Dave,
      The Libor is put together each period by calculating the average of the banks participating by providing data. I read the above differently than you do. It seems to me that they will create their own informal Libor by independently surveying at least three major banks. If they can’t get three banks to informally provide the information- they will use the last quote available. However, that doesn’t preclude them from attempting to collect the data for the next period. I don’t read it as becoming permanently fixed. However, I could be wrong.

  24. Re Citigroup Capital X111 TruPS ( C+N ) active Floater ….
    Pays Qtrly late Jan / Apr / Jly / Oct
    Normal Jan. Divi Declared Date has been Nov / Dec
    Anyone seen a reset divi declared yet ? Thanks

  25. Sorry for the dumb question but…started new account in Etrade, like it, but cant figure out how to export positions in excel format. Can get pdf (alot of good that does) but can’t seem to figure out .xls or .csv file. Support didnt help and my account guy didnt know (wow thats crazy as I assume he has an account here!!!). No issues with my main TD account, easy-peezy to do it. Help!!

    1. tizod – on your portfolio page, in the upper right corner of the screen, below the log off button, there are three links – “help” “print icon” and “download icon”. Click on the download icon (down facing arrow) and your portfolio will download in csv which you can save as excel if you like. Pretty sure that’s what you are trying to accomplish.

  26. Silvergate Bank (SI) is paging Jimmy Stewart! We have been discussing SI and it’s preferred SI-A for several months. Recall that a major calling card of SI is their crypto lending business called the “SEN Network.” After FTX went bankrupt, many concerns were raised about SI’s relationship both to them and other crypto related customers. An III poster stated that a) SI commercial customers would NOT abandon ship and b) their underlying collateral crypto coins were still money good. My take at the time was that SI was susceptible to a bank run, ala “It’s a Wonderful Life,” even if the underlying assets were strong.

    SI has experienced a massive bank run with $4.7 Billion out of $12 Billion in crypto related deposited withdrawn in Q4. SI also had to sell $5.2 Billion of assets and lost a staggering $718 million on the sale. Speaks to the reality of mark to market accounting on balance sheets. They laid off 40% of staff. All of this was known last week.

    What is new is that we learned today that SI DID access the Federal Home Loan Bank for a $4.3 Billion. I had posted before that SI potentially had two sources of short term funds: the FHLB and the Fed’s discount window. The FHLB and Fed had both issued statements that they would NOT lend using crypto assets as collateral. So it is not clear to me what assets SI used to get the FHLB loan. Also not clear when they got the loan, before or after they sold the $5.2 billion of assets.

    Bottom line: IMO, Silvergate does NOT survive this bank run, the corresponding lawsuits, not to mention the short seller’s coming after them. Pure guess is that the bank is taken over by a larger, TBTF bank. There is always the chance they will be allowed to literally go BK, and the FDIC makes depositors whole.

    Which brings up SI-A, closed @ $11.55 ? The range of outcomes seems binary to me. Either worth zero or ~ par ($25 discounted to current interest rate environments.) If SI gets taken over by a TBTF bank, maybe they leave SI-A outstanding and continue to pay dividends. At the other extreme, if they go BK, SI-A would south quickly. How lucky are you feelin?

    Link to FHLB loan info:

    https://www.americanbanker.com/news/silvergate-bank-loaded-up-on-4-3-billion-in-fhlb-advances

    1. FHLB short term advances is not new information. It was disclosed on 1/5/23.

      https://ir.silvergate.com/news/news-details/2023/Silvergate-Announces-Select-Preliminary-Fourth-Quarter-2022-Financial-Metrics-and-Provides-Business-Update/default.aspx

      “At December 31, 2022, the Company held $5.6 billion of total debt securities at fair value, all of which are U.S. government or agency-backed and available for sale, and which include unrealized losses of approximately $0.3 billion. The Company anticipates selling a portion of these securities in early 2023 to reduce wholesale borrowings, which will result in the recognition of a fourth quarter impairment charge related to the unrealized loss on those securities expected to be sold.”

      So that is what they might have used as collateral. Probably better to borrow money as a cushion at a certain rate instead of selling more debt securities at a greater loss when looking at a time period which allows deposits to hit some equilibrium.

      1. FC, here is the quote from SI’s 1/5 news release:

        “Silvergate utilized wholesale funding to satisfy outflows. ”

        They did not mention FHLB and/or Fed, which why at least to me, it was news that the loan was from the FHLB. You are better than me if you read that statement and immediately knew it was the FHLB.

        I don’t know about FHLB’s policy, but last I heard the Fed does not disclose who receives discount window loans, specifically because of the stigma associated with the perception that the bank must be in serious trouble.

        1. in the release i see this down further.

          “Wholesale Funding

          At December 31, 2022, the Company held $2.4 billion of short-term brokered certificates of deposit.
          At December 31, 2022, the Company held $4.3 billion of short-term Federal Home Loan Bank advances.”

  27. My tax question–DO I take into account deductions under “Adjustments to Income” on 1040 Sch. 1 in computing whether I can contribute to my Roth IRA for 2022. I am 67, draw Social Security, no W-2 income but I have $5000 net of Sch. C income. I will pay SE tax on roughly that amount. Total AGI is 5-figures. As an “Adjustment to Income” I can deduct insurance premiums (Medicare, Dental & Long Term Care) on Part II of Sch. 1 along with 1/2 of SE tax. This amount will equal the $5000. Am I allowed to make any Roth IRA contribution for 2022. I don’t want to have to withdraw money or pay the IRS penalties for an improper contribution. I have not found this addressed in any IRS publication. Thanks for your help.

    1. I’ll take a stab at this. You can make a Roth contribution as long as your deductions don’t cancel out all of the $5K in earned income (your AGI doesn’t figure into this). In other words, if there’s anything left after deductions, you can contribute that exact amount to a Roth, and then your earned income would likely show as zero. Tax software should be able to walk you through this and tell you what, if anything, you can contribute. If your deductions exceed your earned income, you’ll show a loss for your business. As far as I know, this is all part of your Schedule C.

    2. David P.

      IMPORTANT!
      You must make adjustments to your net earnings from self-employment to arrive at the amount of “plan compensation” to use to determine the plan contribution/deduction for yourself.

      The IRA deduction is not the net $5,000 that you earned on a Sch C but from the number on the Sch SE, 92.35% of the 5k is allowed= 4617
      I’m not at the office and can’t properly check it out.
      The tax software should handle it properly.

      https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that-you-can-make-for-2022

  28. ALL-B – Doesn’t this lock in its next floating rate coupon for April on this Friday? 2 days away and 3 mo LIBOR @ 4.81, if today was Friday then this would lock in at 7.975% for the 4/15 payment… I’d love to hear the bear case for why this is trading at $24.85…Baa1/BBB.. Yes I’m onboard too… I suppose insurers like Allstate could be in for a beating in California from the storms, but still, that can’t be the reason for this being this cheap, can it?

    1. I bought some. 8% seems to good to be true. The bear case, other than unlikely financial trouble, is if future rates ever fall back under 1 or 2% this could be a dog with that low floating rate.

    2. I thought by now ALL-B would be priced at a bit below par plus accured interest regardless of whether its called. If not called I don’t think the price will shoot up to be yield equivalent with the other issues because of fear of a call in the near future. I have a good-sized position in the low 24’s, but just added more @ 24.85.

      1. That’s the fascinating thing about all these F/F issues…. Because of the call risk, nobody should expect dramatic upside price adjustment from these levels due to the lockin of a new rate, however, we’re sort of in an unprecedented time for F/F issues in the sense of them being in an era where rates have shot up so dramatically in such a short period of time, that there’s not much history as to what to expect if interest rates were to reverse and head lower….. Theoretically in that environment the upcoming rate to be paid should always exceed the going rate for fixed perpetuals, so you’d think that as long as rates don’t go down as rapidly as they went up you’ll always be getting high income than the fixed perpetual but you’re going to be giving up price appreciation in exchange.

        1. 2whiteroses…. Would that relationship you spoke of hold up if the yield curve returns to a more normal positive slope?

          1. That’s a good question, lucky. I suppose if/when we return to a more normal yield curve environment, what we’d have to expect would be a narrowing of the spread between what payment you could expect from the F/F vs the fixed rate of the same issuer. Taking ALL-B as an example and considering where we are right now, I would estimate that there’s in the neighborhood of a 200 basis point advantage in favor of the F/F issue right now relative to a long term fixed Allstate issue using ALL-G as a starter example. That’s a whole lot of advantage to absorb a normalized yield curve, isn’t it? All in all, I guess this could be more of an argument for focusing on only F/F issues with high spreads to their targets such as 3 mo LIBOR. But of course, Mr Market always goes to extremes, so this theoretical illustration I’m sure will vary from reality when the time comes…It’s the risk we take with F/F

        2. Who needs more than a little upside when you’re getting 8% short term rate on a solid issue. A Call would be a positive outcome would be glad I bought it. Of course a large gain on something else would be nice if you want to roll the dice but I don’t see that as a reason not to buy this too.

    3. I bot some ALL-B at 24.85 also. Probably call it, why would they continue to pay 8%. Home/Auto premiums are going up a good amount so I suspect good cash flow for them. Maybe? we get April, July pmts out of them. Regardless better than 3.89% on SPAXX current ROTH cash ac yeild which is now filling up w my recent trims.
      I had a slug of HPP-PC at $13 and collected a div, sold 40% at 15.25 and a 1/3 of my UZD bot at 16.80, probably keep the rest in my ‘riskier’ bucket; nice to put something’ safer’ w some of that money. Bea

    4. Also added to my ALL-B from 10/21- now at 24.55 cost ~8.13% –using your figures- rounded to 7.98%
      One to watch.

    5. I checked the prospectus and it says
      ” the Debentures will bear interest at an annual rate equal to three-month LIBOR plus 3.165%, payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year, beginning on April 15, 2023.”

      Which is it: 3.165% or 4.81% added to Libor?

      Thanks
      Steve

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