I will be adding a new link titled “Sandbox” in the right hand menu.
That link will get you to this page.
I had originally set up the “Reader Initiated Alert” page for ‘alerts’. I was thinking this, for instance, might be when a preferred stock is undergoing a temporary selloff and someone wants to let the population know about it quickly. Of course we all (including me) use the ‘alert’ page for general messaging.
I am requesting that we start using the Sandbox page for all general talk, and try to preserve the ‘alerts’ page for ‘alerts’.
I have had a screen up on one of my monitors all week where I see all comments – no matter where they are posted–it is a great page and I wish everyone had a page like that–believe me we all benefit from all the knowledge being shared. I don’t want to stifle any of the exchange of knowledge, but hope to get things a bit better organized by adding the Sandbox page.
I have a basic question about current preferred prices as it feels like the Fed funds rate cuts all the way down to neutral has already been priced in. I bought a 4.75% JPM-J in Nov 2019 when effective funds rate was 1.55%. JPM-J’s value today is down 4% with a measly 5% yield even through the EFFR is 5.33% (a whopping 3.78% rise from 2019). Why are preferred yields at least for IG banking so abjectly low? Is it that demand for preferreds is that much higher?
I think you’re kind of looking at the wrong comparison. Most preferreds are perpetual, versus Fed Funds which is an overnight rate.
Compare a 10-year Treasury yield of 3.64% versus a JPM slightly tax-advantaged preferred yield of 5.00% and maybe it makes more sense.
I’m not saying it’s justified but I get it.
I am just scribbling this to say there is slim pickings at the market right now. The only things I have been buying are Ameren and Eversource QDI preferred right around 6% yield. Anything yielding more is quickly in the junk territory for cum/QDI. I used to find the some REITs attractive but even those are losing their appeal at current prices. The high quality eREITs are well below 6% and higher quality mREITS have really appreciated price wise.
I am even having a hard time locating sell offs to get a discount now days. Bids are strong and anything with a great ask is gobbled up before you can blink twice. I have to wonder if I need to just stop looking and wait for “something to happen” in the market to cause a major sell off. Just accumulate some cash for now as it comes in.
What are others thinking in a generic sense?
Stuff is certainly moving fast. I blinked on a couple of CDs – nothing to write home about but about 0.25 above what is considered market rate today. The CDs were gone when I refreshed the page. I put in a placeholder bid on some paper about 1/3 way through the offering. Went back for a second look after lunch and it was all gone. Seeing signs of euphoria like banks you couldn’t give away jumping 10% on a recommendation. Went shopping today. With some stocks paying 3% to 4%, I am starting to think a MMF paying 4.25 to 4.50 is better than taking a principal loss on a one-day down draft.
JMO. DYODD.
Just logged in to my Roth brokerage account and see that FTAIP posted the 9/15/24 dividend to my account. FTAIP is now floating with a very juicy dividend until SOFR declines some due to the impending Federal Rate reduction announced tomorrow. Looked on FTAI website and nothing in investor news about a redemption. Wonder if we will get a quarter or so of the floating dividend before they redeem it as previously speculated upon. I bought FTAIP as a short term purchase knowing it has a high probability of redemption. If it is redeemed thinking HOVNP may be a likely candidate for the funds since mortgage rates dropping may warm up the house builders and get a nice capital bounce to my little stash of short term cash I play with.
IMHO FTAIP will not be called. The float is 3 Mo Libor + 6.886 percent. I speculate the bean counters are looking for the 3 mo Libor rate to decline. I think the same on CUBI-F and CIM-B. I agree with you on the HOVNP ( I have been adding to my position).
I think FTAIP will be called concurrent with FTAIO on 12/15/24, the call date of the later.
Those spreads are very wide for the current credit profile of FTAI (vastly improved from when all of their preferred were first issued). I have to believe they can call and issue a new security with much improved spread to SOFR or go fixed rate if they prefer.
Just my opinion.
I agree with you ; it’s the best buy in the series
yes there is call risk now on the next reset date ; 12/15 but even so at 25.25
stripped price 25.19 it’s not very far from par – i’m willing to take a chance on it ; trying to buy more at this price
comment from a trader this morning, and I’m sure it’s quite old:
“I used to have a great business model…….then my wife found out about her”
Trying a trading strategy:
“Buy on the expectation, sell on the news.”
Thinking two possibilities most likely tomorrow:
25 bps cut – market disappointment not 50
50 bps cut – sell on the news
Ranked all my holdings on 52 week high
Starting with highest, looked at 3MO RSI
Those over 80% (RSI Sell), put in GTC Sell @ at or above 52 week high
Ended up at 18 Sell orders.
So far, 11 Fills.
Tomorrow will tell whether that was Genius or Dunce.
Anyone have a mental model of how BDC’s will be affected by the decision? The usual theory is that they do better in an environment with higher interest rates as long as the economy is strong enough that aren’t many defaults. My naive guess is that this means they’ll drop on a 50 bps cut (combination of lower interest and increased perceived risk of recession) but might go up on a 25 bps cut. But obviously it depends on what’s already priced in. Any more refined theories?
@ Nathan – You could give the decision a week in advance and I still wouldn’t know what they’ll actually do… what’s priced in and animal spirits. With that said, I’d side with your thinking. Those animal spirits can whip around BDC share prices much more than changes in NII.
Interim report
12:30 market turning down
13 out of 15 GTC Sells filled @ 52 wk high >3 MO RSI
Sales = 6% of Portfolio Total fm Prfs to Cash
Plan to reinvest “when prices fall”
We’ll see if smart or dumb
Are your sells mostly preferreds?
Further clarification:
I did not “sell all of my best holdings”
a) As a Value investor, most of my best performers are a long way from their 52 week highs. ENB was the only one that made the cut.
b) I did not sell all (only 1 holding). Most of those at/near 52 week highs are my largest. Sales averaged 10-20% for most.
Trying to “buy when everyone is selling; sell when everyone is buying.”
fc: 11 pfds; 2 BB’s
did you sell the enb common or preferred? I’ve done the round trip on the common twice this year and can’t find a reason to not sell now and either switch to the preferred or use find something else.
jbosch
Both ENB and EBBGF are long time, large holdings.
Without divs, ENB up 19%, EBBGF 12%
Both near 52 wk highs.
ENB much more liquid and my largest holding.
So I sold 5% of my ENB.
I also am overweight Energy so that also was part of my thinking.
Still plan to buy 5% back if price drops “enough”.
I own ENB in a taxable account.
I see on Quantum that EBBGF is qualified and EBBNF is not.
Can you tell me if EBBGF or EBBNF is held in an IRA, is 15% withheld for foreign tax?
TIA,
Barb, I have EBBGF in an IRA and do not get foreign tax withheld
Barb and Pig,
I think it may depend on the broker. When I was at ETrade, I held EBGEF (another ENB pfd) in an IRA and they withheld the fgn tax.
Results of “My Interesting Trading Strategy”….
Fed cut 50 bps.
No “sales on the news” market move.
No substantive change in my Sells.
Bought back most at/somewhat below sale.
Lotta effort for little result.
Sigh.
I sold a few things. If this didn’t lift the market temproarily then a drop from here wouldn’t surprise me.
I sold the ASB BB and BWB preferreds. No more banking issues for now. I don’t like the risk reward profile. Sometimes I think the concept of a commercial bank seems so dated now. There are many ways to spend your $$$ than before with non bank entities who do a better job. I have a small amount of the TFIN pfd last Q I looked at was decent. Even stupid SIPCL silvergate death blow was at 15.
It’s like Steve Martin in Penny’s from Heaven?
> I’m sure it’s quite old
At least twenty years, yep. The old sitcom Arrested Development made the pun back in the Bush admin:
https://www.youtube.com/watch?v=V9v3sAck-QQ
NSA-B up on quantum online FYI
I sent them a note and the responded since it was originally a private placement they didn’t catch it listing
Z, thank you.
did this price at par?
thanx, long NSA-A and I added to CIO-A, New buy NSA-B all in the RothIRA. mmkt rates dropping fast. DYODD Bea
Bea-
CIO weekly chart hinting at the possibility of a recovery from a crushing selloff. It would need to double to regain pre-Covid levels.
https://www.tradingview.com/x/6VE8dlxw/
CIO-A weekly chart. CY 8.6%.
https://www.tradingview.com/x/AnYlRHnQ/
I’d need to feel that CIO was on the way to better days before buying CIO-A. I know nothing about the company. Just shooting my mouth off.
3 yr cd 4.75 apy
https://www.sdccu.com/rates/consumer-deposit-rates/
little help-gbdc-gain-arcc-sar what is the better buy thanks for any reply
Not an answer to your question but since you mention GAIN – https://www.gladstoneinvestment.com/newsroom/press-releases/detail/396/gladstone-investment-corporation-exits-its-investment-in
I have their 7.05% Make Whole Note matures 6/5/28, Cusip 38173MAD4.
Frugal1
I recently purchased GBDC, but I did not do a comparison to the others you’re considering. I read ADS Analytics and Scott Kennedy over on SA who have some great articles on BDCs, among other things. Good luck with your research james.
First time my comment ever got rejected by SA because I wasn’t a paid subscriber. Their readers loss, not mine.
Martin, this is similar to tripadvisor now. where they deleted my ratings because the hotel asked them to.
I don’t bother reading TA anymore
Martin, have you been clicking to close any pop-up boxes? try to go around them like refresh or go to the main page. I seem to be getting a lot more pop-ups lately asking for $4.95
Charles:
So many on this website with their income portfolios valued at all-time highs, lots of interest and dividend income rolling in, etc – who still remain too “thrifty” to spend $200+ on an annual SA subscription and instead use this comment forum to complain about that site. It’s hilarious.
CFs – pure and simple.
Yes that’s true Doc, I donate to this site and Wiki and I need to up my donations. I grew up in the LA area where with a cheap antenna you received every other channel and some UHF for free. We haven’t had cable in 20yrs after it went over 60.00 a month. I refused to tip more than 15% for service unless it was outstanding and it bothers my wife until recently I surprised her by tipping 20%.
Old habits die hard. I was mowing lawns, climbing freeway fences to collect pop bottles and I got a 20 yr old family car to go to college after I graduated high school. My wife’s grandfather lost his farm in Wisconsin in the depression and my grandfather strip mined his to earn money. Being thrifty was ingrained in both our families growing up.
Papa Doc
It is not thrift that keeps me from paying SA, it is disappointment. If they put out a solid product, I would consider paying, but they don’t so I won’t.
they do too much to drive revenue/”protect” selected “contributors” (like deleting and blocking comments, etc.) and not enough to police the terrible ones.
Once upon a time, I read some contributors there frequently, but the pay wall nonsense has just gotten to be too big a headache and the quality of the contributors has fallen too much. There are still a few good ones, but they are lost in the chum, so I find ways to read them and ignore the rest.
From Lyn Alden’s latest newsletter:
“I view China as the #1 variable to watch regarding global macro cycles, even more-so than the U.S. Federal Reserve. Whether the Fed cuts 25 basis points or 50 basis points is somewhat meaningful, but how long China’s leaders consider the cost/benefit analysis of remaining in a malaise of deleveraging versus performing a pivot and stimulating out of it, is likely more important.”
Rocks, I found the article but it’s blocked behind the subscriber paywall. I did read her latest article on comparing SLB and COST. Think there are factors that may influence the future trajectory of those two stocks opposite of what she predicts. We hit a recession SLB will continue down and if COST does a stock split, I could see the price continue in an upward trajectory. SLB has lost almost 10% in the month since she wrote her article.
The valuation of COST has become ridiculous, priced like it was growing 30% per year forever when it’s a grocery store growing at 9%. Stock splits change nothing in the valuation of course.
I can’t see her article on China either. I would be interested in looking at it, but not enough to buy in.
From the quote you posted, she seems to not have a grasp of the economic situation in China.
The government isn’t “choosing” to stay in a malaise, they have a big list of terrible problems
-a massive debt crisis (staggering amount of debt held at the local/provincial level that is not reported, generally),
-a huge real estate crisis (the bubble has burst, but the gov. is masking it),
-exports are not growing (one way they traditionally got out of problems)
-their unemployment rate is big and growing (especially among younger people),
-their population is shrinking (which underlies some of the other issues, because the gov. lied about that for years and based their economic plans on a growing population)
– the list goes on and on.
At the same time, they can’t fall back to “stimulating out of it” because their standard way of stimulating has been through construction projects, and they (a) don’t have anyone to buy what would be built, and (b) they don’t have the debt capacity to just keep building (see the debt crisis, above). They have also relied on export growth, but they are running into tariffs because other economies are waking up to the fact that the cheap imports from China are hurting their domestic economies.
The Chinese are trying to find solutions, but they are not easy to find.
Private, my pet peeve that Chinese companies like Temu and Shein are taking advantage of shipping direct to the US and the cost of shipping doesn’t seem to be realistic as to what they are paying. I already know a lot is cheap junk because if the price is too good to be true there is a reason.
Debt the world over is scary period.
I remember when they offered bonds to pay for building a commuter rail service from LA to Las Vegas by a private not a government entity I was interested at the time. I thought this project was already built and done until I started reading lately due to hold-ups they still don’t have a train to run on the tracks! The project is so over budget it will cost more than buying a plane ticket and flying there.
I remember as a young adult hearing how retiree’s savings were wiped out by the default of that nuclear power plant project up in Washington state that was referred to as Whoops ( WPPSS ) at the time https://time.com/archive/6700863/whoops-a-2-billion-blunder-washington-public-power-supply-system/.
Didn’t bother me of course at the time except I remember thinking I hope nothing like that ever happens to me.
TNTowanda will love the one sentence in the article saying that even Moody’s got sued for giving the bonds high ratings.
List of munis here:
https://www.brinkeradvisor.com/p/us-treasury-and-cd-rates-update-bdc
Only a month has passed since I wrote the post below. I’ve added update comments. So far, all assets have trended per the scenario.
————–
Here’s a scenario (not a prediction) for markets that assumes no surprises, such as noticeably rising unemployment or a credit event.
Treasuries up
(9/14/24:
– ZT 2-year note futures +0.99%
– ZN 10-year note futures +1.58%
– ZB 30-year bond futures +2.19%)
Yields down (30-year yield < 4%)
(9/14/24:
– 2-year yield -36bp to 3.58%
– 10-year yield -19bp to 3.66%
– 30-year yield -18bp to 3.98%, under 4%)
Dollar down (DXY < 100)
(9/14/24:
– from 102.60 to 101.11, low 100.51)
Gold up
(9/14/24:
– GC gold futures from 2507.8 to 2610.7, +4.1% to new all-time high)
Crude down (new low)
(9/14/24:
– CL crude futures from 78.35 to 68.65, -12.4%
– the low of 65.27 was a new low for the selloff from the Sep 2023 high of 95.03
– the low since the Mar 2022 high of 130.50 was 63.64 in May 2023)
Stock indexes up (SPX new all-time high)
(9/14/24:
– SPX from 5434.44 to 5626.01, +3.5%, no new all-time high)
What are the odds that any of these possible trends, much less all of them, will sustain for several months or even into 2025? I'd like to see if the scenario gets traction before thinking probabilities.
What would be the consequences for preferreds and bonds in this scenario? Reduced risk of high-yield financial preferreds and bonds going south. Generally stable to improving preferred prices. Lower coupons for new issue CDs and bonds. Existing bonds trade higher. Increased likelihood of calls to vulnerable bonds.
r2s well thought out what you expressed. I looked this morning and Fido MM down to 4.9% and so is my T Rowe ultra short term Treasury fund at 4.9%
I started over a month ago and rearranged the deck chairs with a few sells but did not re-invest as many of the funds so up to 22% cash equivalents. One I wished I kept and another sell I cancelled just in time and hopefully I don’t regret that.
I’m on the side of the net that I think there is more room for prices to run up as people discover when their 30 day and 1 yr CD’s mature and rates offered are a lot less than they can get on a preferred ETF which of course is buying the same preferred we hold and driving up the prices and lowing the yield.
Vicious cycle.
We could see new all time highs going into the end of the year, but then what? Too many people crowd to one side of the boat it either capsizes or a market event causes them all to rush to the other side.
Wish I knew. Right now I’m happy to get an almost 7% return with about 18% unrealized capitol gains over the last 3 yrs and still some powder to invest if opportunities pop up. If I lose 10 or 15% of those capital gains I hope the income still stays the same.
A few people here have discussed the fall in yields on safe CD’s and of course they are looking where to re-invest the money to keep the income stream.
Looking ahead, I’m with that group of people who mentioned on here that they worry when things are going to pot and now that things are going good they still worry.
So R2S glad you’re asking what comes next and I am hoping I have it sorted out correctly.
BTY, After working my way up from 20 years in the warehouse learning about the business and then 25 yrs in sales I learned what teamwork means and not to take advantage of people. We have a great group of people on this site.
We’re getting notices we are eligible for a class action settlement form Oracle sharing inforrmation. We know nothing about dealings with Oracle. Is this worth applying for? Or is it like ten bucks after lawyers fees and split the pot a million ways?
115 million settlement. About 30 million to the lawyers for their fees and expenses. Leaves 85 million for potential claims. It sounds like most people were likely effected in some way. So if 8.5 million out of the 330 million in the US submit valid claims you’re talking $10 per person.
The too long, didn’t read. – Yes. I would expect it to be another $5-25 type of settlement.
Do you mean $5-$25 or 5-25 years? Been there done that and if you’re lucky you’ll get 5 of each. I got the notice too. didn’t bother…. this one’s a great example why lawyers do this.. $30 mil for the lawyer, $5 for you……
I meant a one time payment between $5 and $25 depending on the number of applicants. The lawyers are always the ones that make the money, but without a class action suit often there would never be a suit in the first place. In some cases, the suits are necessary to keep a company honest, in other cases they are just stupid lawsuits with a lawyer just out for money. If I recall correctly, several years ago there was a lawsuit against the company that sold the review books and classes for the bar exam. The settlement was a coupon for a discount for another overpriced class or set of books. A settlement that was completely worthless to anyone other than the lawyers that got money.
There was a battery lawsuit a few years ago. It took several years for any money to ever make its way out. I’m sure a lot of people moved before any checks were ever sent out.
Do you buy lottery tickets? This one may be for you. As I see it, Oracle puts up 115 million, the lawyers take 28 million. The rest is divided up among anyone who did on line shopping since August 2018. The theoretical average recovery payment will be infinitesimally small.
On the other hand, the actual payment will be divided equally regardless of number or amount of purchases, but only among those who apply for it. Most people ignore class actions or are not aware of them. So the actual payoff will be higher than the theoretical. If only 4 people apply, you go home with 22 million. For an investment of 10 minutes of time.
Its better than buying a cheap near-expiration, out of the money option on a double levered Vol fund on a can’t happen event that no one thinks will occur like US Government debt default. Its better because there is no option premium and a non-zero risk of recovery.
I would Google around for a news story or two. By the way, while not wanting to chip in to your 22 million, it appears that anyone reading this is likely eligible to apply. Realistically though I’d say your guess of 10 bucks is right. JMO. DYODD.
Why lower rates when it’s already priced in? Real rates have already come down for new and reset instruments. The very short end will have no effect especially before the usual Holiday Orgy of Consumerism, Debt and Travel except to pare a bit off of money market and T-bill payments to the wealthy. What good will lowering rates do before the election?
Just askin’… I don’t see it. Already made all my moves months ago anyway.
IRX, the 13-week t-bill index, ended at a new low of 47.63, indicating the market expects two rate cuts. My guess: 50bps now or 25+25.
Although there is a narrative calling for rising inflation, I’d say low-priced crude and gasoline plus China likely exporting deflation will subdue inflation for now. Crude futures are in the mid-60s for the next 1.5 years.
https://www.cmegroup.com/markets/energy/crude-oil/light-sweet-crude.quotes.html
3 Month SOFR. If one were to peruse the 3 month SOFR rates one would learn they can go very low, very fast. I’m going to cull out my preferred stocks that are tied to this with a low fixed rate (SOFR + Fixed rate). If that fixed rate is not up to snuff, I’m selling them. Here is an excellent showing of how you can lose return on debt investments in a declining interest environment. AGNCM: Three-Month CME Term SOFR plus 0.26161% plus 4.332% per annum. If SOFR goes to 1% the total return drops to 5.592%.
Jack-
If SOFR goes to 1%, there’s a recession on and a 5.6% yield might look pretty good. What about the current yield? Too many variables for me to guess at any of this. A 4+% kicker on a floater is pretty good.
From 2020 to 2022 it was essentially zero.
This post is NOT about politics (in the sense that is disallowed here). If I recall correctly, after the presidential election in 2016, when Trump surprisingly beat Clinton, preferreds were immediately down considerably, and I never understood why. Thinking ahead, are there any legit reasons why, if candidate X or Y wins this November, that we might expect some sort of similar undesired drop?
Dave,
I’ll take the first stab.
Opinions are like belly buttons. We all have them…..
The Republican candidate has openly spoken about dropping the value of the dollar, increasing tariffs and having the President manage the Federal Reserve. (Details are in Project 2025). I would think this will spike interest rates.
FWIW, the election forecaster I like best is Rachel Bitecofer. and her projections suggest there will not will not be a sweep of the White House, Senate and House by one party and that we’ll have some gridlock. If that’s the case, I think we’ll be having more of the same economic discussions next year.
Project 2025 is not anyone’s platform. You know this and are just campaigning.
You need to stop.
Scott, he can’t
Anyone else nibbling on ESGRP at sub $19.50? I can live with a) holding it as an illiquid and clip the ~9%, or b) flipping it if this seller abates.
Still lots of ETF’s need to sell, but some mind games can be played by the brokers, so it’s not guaranteed it will keep falling as it approaches its delisting date.
https://disclosure.spglobal.com/ratings/en/regulatory/article/-/view/type/HTML/id/3222846
Not nibbling, just watching. Maybe if it drops further before the next ex-div date I’ll buy a starter position. I just don’t want to buy it at $19.50 and then see a big drop to $14-15 if one of the ETFs sells their entire position in a day.
With that said, the almost 9% yield is quite tempting.
I would really like to buy this issue. However Sixth Street is a partnership, so won’t the preferred lose it’s qualified status? Not to mention the risks and paperwork involved with a partnership. Plus, IRA’s and partnerships have tax problems.
ESGRP is Fixed 7% turning to Float at 3M Libor + 4.015% on Sept 2028, while ESGRO is Fixed 7%, imho better value since I do not expect 3M Libor (or equivalent) to be > 3% for long.
While it’s very possible SOFR stays below 3%, that is certainly not my , nor the markets, base case.
https://www.chathamfinancial.com/technology/us-forward-curves?utm_source=google&utm_medium=cpc&utm_campaign=forward_curves&gad_source=1&gbraid=0AAAAAB-GcZpaStuNS3K2sAYwZQSV-WtXh&gclid=EAIaIQobChMI496F0tHAiAMVGE5HAR32BARpEAAYASAAEgI9KfD_BwE
Thanks for the data. They show SOFR in Sep 2028 at 3.1%, so even if we take the forecast at face value, it will amount to a 7.11% interest rate for ESGRP, i.e. only a pickup of 0.11% vs the ESGRO.
Anyway, my base scenario is that with the sovereigns (and many corporates) drowning in debt, the central banks will apply interest rate repression again, similar to the one we had between 2015 and 2022, with short rates firmly below 2%.
costasco, I have no crystal ball so I cannot say what rates will be in 4 or 5 yrs. History doesn’t repeat itself but it comes close a lot of times. I am no economics historian although I do love to read about and see history when I travel. but look back over the last 150 years, There has been inflationary and deflationary times. We live with 8 billion people on this 3rd rock from the sun competing for resources. Low interest rates short term or even long term like 2010 to 2012 can cause inflation and make things worth less, just look at the cost of a home compared to 20 years ago. The chicken or the egg. Is money worth less or is the house worth more so it takes more money to buy the house? Some might call it stagflation but it would be nice to see rates hold long term between 3 to 6 percent depending on if the loans are short or long term. Some might look back in that future and say that was the best time ever for living.
Maine,
I hesitate on ESGRP. The Karfunkle family, the board of directors, and private equity causes a “DANGER WILL ROBINSON” reaction. The board approved the take under at a lower price than the common. From memory I believe the preferreds will lose qualified tax status
I have had better returns with HY bonds (due to a strong economy) but also because management I invest with are aligned with shareholders.
Have no idea if these will continue to pay. Wouldn’t surprise me to see these moved to a subsidiary, etc.
But this is what makes a market fun! Genuinely hope this works out well for you.
Hi TNT,
Your comments are appreciated.
My knowledge on Enstar is very limited, hence I am eager to better understand the fundamental (not liquidity) risks.
My investment is based on two simple notions:
1) The Standard and Poors analysis indicating they don’t expect meaningful deterioration in the credit after this merger.
2) The solid reputation of sixth street. My understanding is that sixth street will use enstar as a vehicle for their credit investments, similar to athene w apollo.
Will the Karfunkles be involved with Enstar after the sale? Any other factors I should be evaluating? I am comfortable losing the qualified div and the liquidity, assuming this stays a relatively safe credit at 9%.
I am waiting for the announcement of it going dark. Once that is declared it will drop.. that is when I will take a 1/2 position and let it run.. should be 9% plus…
Maine, I did a deep dive on this when announced. Let me go back and review. I’ll post later.
PS The S&P analysis is not anything I rely upon. In a meeting once with a leader of a large investment firm he stated: “most analyst are home in their pajamas eating cereal during our earnings call” He advised me to understand which analyst are competent and which are consuming cereal. So, I have a list of analyst I think credible.
Here is the latest presentation for TSLX, sixth streets public BDC. While the BDC and the Enstar unit are completely different, Enstar and TSLX will hold similar investments. It also provides info on the overall firm, including AUM, strategies, team and investment philosophy.
FWIW, TSLX has traded at a 20% premium, on average.
https://sixthstreetspecialtylending.gcs-web.com/static-files/9d7c091f-ef93-4af2-abd3-6a13d71b54e8
I agree with folks saying it will likely fall further… but I peg that at 65% odds, so I have started to accumulate. I love 9% yield for higher quality issue with liquidity risk. I already a boatload of the SJI issues. Plus, I will be eyeing a Roth conversion w the shares, something I’ve heard other members do, but have not done myself yet.
Maine it works but I read somewhere you can’t do it if you have started withdrawals. If someone has a different take on this and wants to share I would be interested.
Is SCE-H being called? I haven’t seen any news. I just added to my position at 25.03 on the ex date (9/13)It’s currently floating at over 8% and callable. also, it starts accruing interest quickly as it pays on 9/15
I would guess if you look out 2 years at what rates are expected to be then add the margin, this would be allowed to float, but that’s a guess.
I do need some floating stuff in my portfolio but I don’t like giving the issuer a free put without any compensation and it doesn’t seem like there’s much comp for that put.
Just my 2c
Pete-
SCE-H is due for a floating rate adjustment. I’m interested to see if the price goes below par next week.
Thanks LT and RTS for your replies. I may have jumped the gun on adding to my position per your comments. Float is definitely low and price could drop with adjustment.
R2S with the discussion on here about what will happen to prices on floaters if SOFR goes down this would make one a good one to watch to see what happens.
25 or 50 rate cut? The betting is now up to nearly 50-50, 47%-53%. Consensus was for a 25 cut only a few days ago.
Geesh, I say leave it where it is. Rates are just in the “normal” range, whatever that means. I’m so tired of the Fed and how the markets react to all the talking Fed-heads, it’s really nauseating.
With the above rant said, I can see where the market will be disappointed with a 25 basis cut, and freaked out if they cut 50 basis points. So it’s a lose-lose proposition in my very humble and probably out-of-touch opinion.
FTAIP vs. FTAIO pricing looks completely out of line to me. FTAIO closed at 25.70, while FTAIP closed at 25.21. Both float at a 6.886% spread, but FTAIP floats starting 9/15/24, while FTAIO floats starting 12/15/24. Ex-div dates are the same. Am I missing something?
FTAIP floats at 3m LIBOR + 6.886% and is callable starting Monday, Sep 16. Here is the notice requirement:
“If we elect to redeem any Series A Preferred Shares, we will provide notice to the holders of record of the Series A Preferred Shares to be redeemed, not less than 30 days and not more than 60 days before the date fixed for redemption thereof (provided, however, that if the Series A Preferred Shares are held in book-entry form through a Securities Depositary, we may give this notice in any manner permitted by such Securities Depositary). Any notice given as provided in this paragraph will be conclusively presumed to have been duly given, whether or not the holder receives such notice, and any defect in such notice or in the provision of such notice to any holder of Series A Preferred Shares designated for redemption will not affect the redemption of any other Series A Preferred Shares.”
If notice hasn’t been given, it could happen at any time, and perhaps that’s the reason FTAIP is closer to par. FTAIO has one more dividend before the call/float date.
Retired Sailor,
Actually, FTAIO has a different spread than FTAIP.
1. FTAIP = 6.886%
2. FTAIO = 6.447%.
“When, as, and if declared by our board of directors, we will pay, out of amounts legally available for such purpose, cumulative cash distributions on the shares based on the stated liquidation preference of $25.00 per share at a rate equal to (i) for each distribution period from and including the date of original issue to, but excluding, December 15, 2024 (the “Fixed Rate Period”), 8.00% per annum and (ii) for each distribution period beginning December 15, 2024 (the “Floating Rate Period”), Three-Month LIBOR plus a spread of 644.7 basis points per annum. ”
As R2S pointed out, FTAIO has a minimum 3 more months before it becomes callable. Those 3 added months (v FTAIP) of accruing dividends makes a big difference in their YTCs. I think FTAIPs greater call risk makes it be currently more “pinned to par”.
Retired Sailor,
Given those differences (floating spread and floating/call dates), I actually agree with you that FTAIO is mispriced. According to my calculations:
FTAIO –> at 25.70, YTC = -3.13%
FTAIP –> at 25.21, YTC = +0.79%
Assumes FTAIP gets redeemed in 30 days.
By the way, when a preferred is to be called at $25 plus a PARTIAL dividend accrued, how do we know when the last date is that we can buy it and get that accrued amount too, not just the $25 redemption price? Can we buy it as late as the day before it’s called? Is there some record date for the accrued amount? If so, is that record date included in the press release? I looked at the announcements for a few recent calls (O-, CSR-C, and RF-B), but their final divs were all full divs whose pay date was the call date. In those cases, I knew the div was going only to those who bought the day before the final div’s ex-date.
I agree ;and just picked up 100 sh FTAIP at 25.22 ; I love this series
long time holder of FTAIM of course only in an IRA
Income from oil/gas royalty trusts (RT) has been a recent topic. Several III’ers have commented on Kimbell Royalty Partners (KRP) including excellent personal experience from Azure. I decided to take a look at all of the RT’s that I could locate. The guru on these was Kurt Wolff that ran McDep.com but he retired a few years ago. He used to build models using all of the reserve reports each posted. My analysis is what a third grader would do compared to his. I looked at price return and total return only without regard to anything else, like management, where their resources are, are they adding new resources, depletion rates, cost structure, etc.
BLACK BOX warning one: Unlike preferreds/babys that payout fixed amounts, many RT’s payout based on variable revenues from selling oil/gas. I have NOT included “current yield” because it might be very misleading.
BLACK BOX warning two: Many of these RT’s eliminated or greatly reduced payouts in the 2020 timeframe when oil futures literally went to ~ NEGATIVE $40. So, NONE of these should be considered as stable income sources. Highly variable would be a fair characterization.
BLACK BOX warning three: Some of these are literally penny stocks and we, rational III’ers would NOT consider them as anything other than an ultra-high risk lottery pick, even if the return numbers I show look great.
BLACK BOX warning four: None of this analysis considers the income tax implications, which can be messy.
The time period I chose was from 12/31/19 through today 9/12/24, which I think is reasonable because it has the period where oil was very depressed. And nat gas has been and continues to be very depressed. Before making any investment decisions, you MUST look at longer time frames and you will see that some of these returns are dead something bounces. (Can’t use the official Wall Street word anymore.)
I have included returns for three mega cap oil/gas companies: British Petroleum, Chevron and Exxon. In addition, I have included the large energy ETF: XLE plus the SP500: SPY for comparison.
The data is presented in a CSV format:
Ticker, 9/12/24 close, IRR based on price only, IRR based on total return, company name
I think it is valuable to compare the two IRR’s to get a feel for how much of a contribution dividends made. For example, Kimbell had a price IRR of -2.1% but a total return IRR of 8.9%, so dividends were the deal.
The sort is from highest total return IRR to lowest:
HGTXU, 0.5, 25.8%, 35.1%, Hugoton Royalty Trust, uninvestable penny stock
PBT, 11.24, 25.5%, 32.3%, Permian Basin Royalty Trust
MARPS, 3.85, 16.5%, 26.5%, Marine Petroleum Trust
MVO, 9.12, 8.3%, 24.6%, MV Oil Trust
DMLP, 29.41, 9.1%, 21.9%, Dorchester Minerals, L.P.
SBR, 60.55, 9%, 19.6%, Sabine Royalty Trust
SJT, 3.36, 6.1%, 18.2%, San Juan Basin Royalty Trust
ECTM, 0.45, -9.5%, 17.7%, ECA Marcellus Trust I, uninvestable penny stock
XOM, 111.23, 10.4%, 16.1%, Exxon Mobil Corporation
SPY, 559.09, 12.5%, 14.1%, SPDR S&P 500
VOC, 4.73, 0.5%, 13.3%, VOC Energy Trust Units of Benef
XLE, 85.11, 7.7%, 12.5%, SPDR Select Sector Fund – Energy
CRT, 9.19, 1.1%, 11%, Cross Timbers Royalty Trust
KRP, 15.41, -2.1%, 8.9%, Kimbell Royalty Partners
CVX, 139.21, 3.1%, 7.9%, Chevron Corporation
NRT, 5.13, -3%, 7.5%, North European Oil Royality Tru
PVL, 1.58, -3.3%, 6%, Permianville Royalty Trust Trust, uninvestable penny stock
MTR, 5.99, -2.5%, 4.3%, Mesa Royalty Trust
PRT, 4, -6.1%, 2.2%, PermRock Royalty Trust Trust
BP, 31.58, -3.7%, 1.6%, BP p.l.c.
BPT, 1.53, -27.4%, -21.1%, BP Prudhoe Bay Royalty Trust
Editorial comments: in hindsight KRP was a middle of the pack performer with its 8.9% IRR. DMLP had a 21.9% IRR and IIRC is one of the RT’s that is actively managed and adds new properties. SBR is right behind with a 19.6% IRR.
Based on mostly dumb luck, we have held SBR in many accounts for a decade+ time. We drip it in every account. We do NOT own any of the other listed issues and/or have any open long/short orders on them in any account. We have a Bacon number of one with DMLP management, but do not own it in any account.
Our personal belief is that oil demand is not going away anytime soon and prices will rise over the long term. Best guess is that prices will fall in the short term if/when the world really goes into a recession. It is the long-term belief that has us continuing to hold SBR. Obviously, there are many folks trying to eliminate fossil fuels ASAP so it is a Wrestlemania in the meantime.
Tex, I truly appreciate your analysis as I think you did excellent work. I am traveling and can I only be short in my reply. I found a massive piece of land that I’m under contract with and am hoping to be back at my office sometime late next week G-d willing. You fail to include which have had tax free distributions. KRP and their distributors are mainly tax free and their beta the last 7 years has been quite low as a bonus. For those of us in the highest tax bracket the quarterly income qualifies as “mana from heaven”. Great job my friend and know many here appreciate your work and dedication ⭐️⭐️⭐️⭐️⭐️
Hi AB,
You’ve peaked my curiosity, and I obviously have to do some more research, but how are the distributions considered tax free? I see in your other post that they do not issue a K-1.
But a summary of their prior year distributions stated that a large percentage was considered a non-dividend distribution (ROC? – am I correct with this terminology?), but the remainder is to be considered dividends.
From their form 8937… ” Kimbell has reasonably determined that sixty eight percent(68%) of the distribution paid on March 16, 2023 should constitute as a non-dividend distribution and thirty two percent(32%) of the distribution should be treated as dividends.” The percentages vary by quarter, but there always seems to be a component of “non-dividend distribution” and “dividends” for each payout.
And not asking for tax advice, but also asking for tax advice……. Would it be best to hold these in a taxable account, or retirement account?
Don’t royalty trusts all have implied liquidation dates associated with them??? Almost by definition they should not be considered as perpetuals, right????? I’m going by memory here as I doubt I’ve looked at a royalty trust in 20 years…….
2WR, all royalty trusts are depleting assets in that eventually the world will run out of fossil fuel. That said, there are three factors where that is not 100% accurate:
1) Kurt used to show several RT’s where the official, independent report showed the in ground resources were essentially flat over many years, i.e. barely depleting as a percentage of gross available.
2) Fracking changed the game for ones that were formed pre-fracking. For a given unit area, the extractable assets went way up.
3) Some like Kimball and Dorchester keep adding more acreage, i.e. they are actively managed, as opposed to one which just had a bunch of land put into the trust and DO deplete.
it is a case by case basis, so you do have to read the annual independent reserve report. Even if you get convinced the trust will deplete below economic viability, you have to forecast future oil prices to estimate the total dollars out. I have not run the numbers recently, but IIRC all of our SBR’s have returned >>100% and will have reasonable returns if they went to zero tomorrow. Can’t make that promise going forward.
Lot’s of Texan’s want higher oil prices which are the major endowment assets of the university system.
Thanks, Tex – I’m sure my memory of royalty trusts stem from pre-fracking days but also include trusts not tied to oil or gas as the underlying asset. I remember a Canadian one (name escapes me) based on nickel mining for example and I believe mining from a specific Cdn nickel mine. If I’m not confusing trusts that one quite prevalently mentioned a target date where the trust expected to liquidate due to depletion….. I guess the bottom line remains true, even if not AS true, that no DD on a specific royalty trust would be complete without having at least a theoretical handle on how long the trust expects to be in business..Is that a fair statement still? Aren’t there royalty trusts out there now that do believe their trust has a near definable life remaining???? NO question I could be entirely wrong..
2WR, we need Kurt to come out of retirement to answer the lifetime of royalty trusts question! He would know the answer for each one. I recall some cases where they had language along the lines of: “When the revenues minus expenses fall below XYZ $’s/quarter, the remaining assets will be sold and the trust ended. . . ” This is a case where fracking might extend the life of the trust.
At the other extreme implying a semi infinite lifetime here is what Dorchester (DMLP) says in their 10K:
***********************************************
Termination and Dissolution
We will continue as a limited partnership until terminated under the Partnership Agreement. We will dissolve upon:
● the approval by the holders of Common Units representing a unit majority;
● the sale of all or substantially all of our assets and properties;
● the entry of a decree of judicial dissolution of us; or
● the withdrawal or removal of our general partner or any other event that results in its ceasing to be the general partner other than by reason of a transfer of its general partner interest in accordance with the Partnership Agreement or withdrawal or removal following approval and admission of a successor.
***********************************************
Dorchester has properties in 28 states and continues to actively acquire more acreages, so it appears they are not planning on winding down any time soon.
Bottom line is what you suggested, you MUST do DD to understand how each trust plans to cease to exist. Decades ago, we held Santa Fe Energy Trust (SFF), where they sold 100% of the assets and paid out a going out of business dividend. It was still a viably producing trust as opposed to depleting below costs.
No Bea, KRP was set up to allow additional acreage to be added, so is DMLP.
90% of these I have traded. SJT and BPT are owned and operated by a private company. One point several of these do have termination dates.
Tex left off the Texas Pacific land trust. Too rich for me to own. Some of these are in bad locations and pump almost as much water as oil and gas.
I could go on, but I will repeat what Tex said, these are not a widow’s annuity
umm why did you say NO BEA charles???? this was a discussion by Tex and by Azure mostly on the various roycos for o/ng??? yes I know KRP grows by adding acreage, if prices plunge and co’s start shutting wells dist go kaput..
I learned o/ng royalty from LizaHuang who was the expert and commented for years on them on yahoo from 2003-7 or so when she decided to stop posting because of people who questioned her expertise which was extensive, her basis in most was zero.. things like Cross Timbers CRT, which is still paying and fluctuates and I could go on.
this and your other comment when I posted my allocations about ‘my shorthand being hard to read’ was not appreciated at all and I am sick of you, stop it. commenting on an investment post I make is one thing but your snide remarks and obsession with me LIKE YOU WERE STARTING A BEA ETF to track my trades!! I mean really!!
I have tried to be nice to you , you bring nothing to the table at all, nothing here, nothing. All that lead trading got into your brain maybe.
Grid is the smart one that’s for sure. Like Pig Pile i vote for a mute button.. I am sure people will mute me. Meow
mea culpa Bea, I was in a hurry yesterday rushing to take my wife out. I meant to say 2WR.
Bea, you could interpret it as Charles’ admiration — it’s called negging:
https://dictionary.cambridge.org/us/dictionary/english/negging
Ah Af thanks for the link. I wasn’t trying to be negative.
I know Bea to be a very knowledgeable person and I was just having trouble understanding the short hand commentary. I should have kept quiet. A lot of people on here do short hand and use acronyms. Hard for new people to follow.
I didn’t mean to upset her.
My CHS-M which go xd Monday came off ‘loan’ some shortie/arb’er I guess who had borrowed and was shorting it didn’t want to pay the dividend too on top of the high margin rate. My gold stocks soaring today especially my largest position.
Borrow transactions last 2 days for 4-5 years using spx index options (european settlement)
Borrow for 4 years at 3.52-3.6
Borrow for 5 years at 3.67-3.70
seems appealing
“Interest” is reported as 60/40 capital loss so you need to be able to offset that with gains
LT, I have never borrowed using spx index options (ES). Might you explain the interest reporting? What/how is interest reported as a capital loss? Also, where does one find the borrow rates? TIA
Best thing I heard today: Bloomberg TV interviewed the CEO of Cantor Fitzgerald about 9/11. Recall they lost 658 employees that worked in the Twin Towers. It was about ~70% of their total worldwide workforce. The CEO’s brother was one of the deceased. All employees of the company donated their salary today to a support fund for charities, which is noble. What I thought was even better was the the company hires every single dependent of the deceased employees. It sounded like internships as opposed to lifetime jobs. He said something like: “we want to help get these kids started on a good path.” Pretty incredible for the firm to bounce back from the disaster of 911. Odds of the company surviving had to be low back then. . .
It really is a wonderful story…. Cantor under Lutnick’s leadership has been doing this every year since 2002 and as an event it has grown larger and receives more publicity annually The dedication of everyone involved is extraordinary… Although I had retired from Wall St 5 years prior to 9/11 I lost friends in the event including one from CF. I also remember having interviewed with another, smaller firm by the name of Sandler O’Neil who also suffered a high percentage of employee losses in the event. They were on the 104th floor of the South Tower while CF was on 3 floors in the hundreds in the North Tower. According to Wiki Sandler lost 68 of 171 employees. Tom O’Neill had offered me a position so my options were between working for Sandler downtown or for Chemical Bank in midtown. As I remember, choosing Sandler would have added nearly 10 minutes to my already ridiculously long commute (2 hrs 20 minutes one way) just to get from the lobby of WTC to the 104th floor, so I chose to go to midtown instead…. Funny how such a trivial reason for finally choosing an employer could have changed my life so dramatically… Who knows? Maybe I would have loved working at Sandler so much I would have chosen to keep working.. Certainly NOT loving working for Chemical in my final year before retiring did contribute greatly to the decision to chuck it all in and head to the Caribbean instead of continuing in the rat race..
I am glad you were not in the WTC, 2WR! wow. Everybody wanted you.. and we have you!! yay!! I watched the History Channel 102 minutes that changed the world piece again, hadn’t watched in years. Cried. I know most of those interviewed either died that day or since from the dust/cancers. Too bad Howard Lutnick wasn’t one of them.
LXP-C has been on a tear lately from $45 to almost $52…My basis of $44 causing me to think about taking some off the table?
Same here…..only what would I replace it with? CY still ~ 6.3%, which seems decent these days.
Good coverage of pfd divi’s and not much chance of redemption.
So who is buying preferred PLDGP at $65.50 today?
This is a $50 straight 8.54% preferred that will almost certainly be called on 11/13/26 at $50/share by PLD. 1.28M shares outstanding. This is the largest publicly traded REIT and would never pay this rate any longer.
Looking at a negative YTC of 5% at today’s price? Maybe a decent indicator of how overheated preferred and bond pricing is right now.
PLDGP has rarely ever made sense. No different then CHSCL a lot of the time. I have no idea who is buying it. ETFs that are tied to an index?
amen… I am always perplexed when securities having significant negative ytc’s are recommended in this blog
Then you must really hate C-N among others what with all the information generated here about it being justifiably far above par…… This darn blog and all the ignoramuses on here!
I have owned C-N for years and it briefly crossed 30 today which made me think about when to even consider selling – 32, 34? I checked for other outstanding C prefs to try to get an idea of appropriate yield and it was comical the length of the list of ones that have been called.
If you ignore the floating element (which you obviously can’t) and use WFC yields of 5.5-6%, you get an implied fair value of $50, which seems absurd.
Am I missing something obvious here? The floating element in a declining interest rate environment will reduce the value by a little bit but it seems the market is pricing in a significant call risk despite management repeatedly saying it would not be called due to its accounting/capital treatment
Troll, Nobody here has recommended PLDGP, they wouldn’t…they are too smart to recommend that. Nor has there been any recommendations to buy negative YTC securities. You are making that up.
Troll. Seek and ye shall understand.
If you can recall any security where someone blindly recommended a security significantly over par, there are lots of smart people that can explain why one would do that.
My guess is that the security is a busted convertible or it is a non-callable. If it is one of those, I think we have gone through several of those over the years with many (not just a single thread) discussions on several. One example is WFC-L where we have gone through the prospectus with a fine tooth comb and also some have reached out to the IR for the company for any clarifications and shared them. So if you just joined in the last few months, you might not have enjoyed the many years of several discussions of some that are over par. I personally bought a lot of WFC-L when it was a hot topic last year as it approached par. I paid over par, but purchase yield was over 7%. I bought a lot and it went into the sock drawer. In the zirp days, this thing was approaching $1,600 per share, and hence it was a no brainer with the thought that rates have to come down.
Just let us know what security was mentioned and we can help explain it.
We are here to help
Bought a nice muni today: 51771fau0
Las Vegas convention and visitors bureau AA- (upgrade in 2023)
96.289, 4.23 YTM 4% coupon issue price 98.601 so a small cap gain at maturity
callable in 2029 matured is 2049, mandatory sinker starts early 2040’s
If you live in Nevada its probably ok, but if you don’t I think it would be a terrible long term investment.
?? Taxed in other states is the reason you don’t like it?
A few weeks ago there was a nice summary of the reasons for investing in Kimbell Royalty Partners (KRP). (The summary may have been written by Azure Blue.) Did anyone keep a copy of that? It was excellent, to my recall, and I have looked and looked for it on this website. It would be great to have it for future reference.
Jay
Jay, you do realize KRP pays a variable dividend based off the sales of oil and gas at the well head? Last quarter’s payment was .42 cents
Average the price of oil last month and how it has been doing this month so far using the price of oil futures which is not the same as what the producers get at the well head but it gives you a rough comparison. Now with oil breaking 70.00 a barrel and If Oct. pricing stays the same then the Nov. dividend which is based off the income from the prior 3 months is going to be lower than this last .42 cents.
To give you a rough example, If the next dividend comes in around .32 to .35 then to get a yield around 10% like the stock is showing now the stock would drop to around $13.00
The stock is trying to hold support at $15.00 a share. If it breaks that price and oil prices stay where they are at or go lower I am not sure where the next support level would be. $14.50, $14.00
Ab probably bought in 2019 when the share price was under $10.00
So the question becomes are you looking at KRP as a trade or long term hold with a variable payout?
This is an excellent analysis by Charles M, I would also mention hedging as something to consider when investing in energy producers. (Prices, coverage, expiration dates are what I look at) Annual hedges are rolling over soon for some companies. IMHO, the 2025 resets may be at lower price levels, meaning potentially lower distributions for some companies.
KRP has a cross chart on hedging, commodity pricing O/NG and expected distributions in their investor presentation. JMO. DYODD
Bear, thanks for the input. I forgot about the hedging. That would be important if the company is expecting prices to stay low or going lower. I just went off the last 2 quarters and winged it. I looked at WTI and how KRP wants to keep the same volume and estimated how much less it would be from. .54 cents and gave a 5 cents leeway for the last payment and did the same for the next which is really too early to tell. Not as indepth an analysis as it could of been. But that’s what you get for free
Kimbell has a “going concern” opinion. Debt exceeds fair value of assets .
That’s definitely not normal for a royalty trust.
I had a billionaire oil investor friend in Midland look at this . Super smart. made it all from $1000 when we were freshmen in college.
He looked at the 10-k, said don’t bother.
After AB posted, I looked at it. The father/son certainly treat themselves well. Too many good management teams in the world to accept Kimbell.
I believe the going concern applied to Kimball Tiger Acquisition Corp, which was a SPAC type entity that failed to find a business.
As explained in the 2/21/24 10-K page 14:
As of the close of business on May 9, 2023, the public shares [of Kimball Tiger Acquisition (TGR)] were deemed cancelled and represented only the right to receive the redemption amount. Following such redemption, TGR (along with Kimbell Tiger Acquisition Sponsor, LLC (“TGR Sponsor”) was dissolved in accordance with the terms of its organizational documents….
As for the father/son “treating themselves well” – yes they do. Lets face it, when you have control, it is too hard to keep your hands out of the cookie jar.
You are correct. That’s what I get for 10 minute review.
My friend’s analysis was more thorough. He always reads the reserve reports and the balance sheet. Told me don’t bother. Given he has a petroleum engineering degree and has been buying working interests for many decades I always follow his opinion on energy. Yes, it’s sloppy to slavishly follow another person’s opinion.
losingtrader no skin in the game. Just watching. There are better companies out there.
No worries LT. I own a sizable chunk (for me) of KRP and was really confused by the going concern comment as I feared I overlooked something when reviewing the 10-K!
I have owned this for a while and my current basis is such that selling would be a nice payday for the government (most KRP divs are tax deferred) so I am sort of stuck with it until I decide to pay up. It does what I want but haven’t been thrilled with some of the management actions (e.g. the preferred sale last year) as it seems they are too focused on growth (to help enrich the management (?) – cynical me).
Charles-
Concerns about the dividend is the reason I didn’t buy KRP today, despite the nice price drop and my feeling that crude and oil stocks might have found support today. Metals, including beaten up lithium stocks, bounced.
Was today, 9/11, some kind of inflection day? The stock indexes were steeply down early after the CPI report, and then at 8am ET reversed sharply to end green. My only guess is that the CPI report locked in a rate cut for 9/18.
R2S I keep an eye on it and unlike Ab I don’t have a low cost basis in this so I have traded it the last couple years. Locking in hedges is good for times of low oil prices and it certainly “feels” like we are headed down that road but still the price remains above 15. My instinct tells me to be patient.
I’m over the border now in Ca trying to get a feel for their stocks.
The rate cut is baked in and people will start talking about when the next one is going to happen. Both Sn & Sb are up in cost. They are conflict metals and in times of world unrest demand goes up. One makes Pb harder and one makes it softer. Any shooters on this site who have been complaining about cost haven’t seen nothing yet. I think Sb is up 300% in the last few months
Jay, thank you for your inquire. I have been traveling (trying to add to my land holdings) and this is the first chance I have gotten to respond about Kimbell Royalty Partners (KRP). I certainly am NOT an insider and most of my information you can find for yourself. I own a good sized position and add in family trusts that I am controlling with my free cash flow every time KRP dips (like this week). I have had extensive conversations with management, many in person and others I have gone to see areas of their holdings as I was invited to see many of their areas of corporate operating wells. I encourage you and anyone here to do your OWN deep due diligence and do NOT listen to those that know little to nothing. There are 4 active analyst’s that follow KRP and all 4 have a buy or strong buy. In early August the Truist analyst reiterated his buy on KRP. First, KRP’s reserves have quadrupled since 2017(!), they are 100% domestic production (do you really want to invest in countries that are hostile to the US), there is NO K1 for this royalty company, I believe my risk and their corporate risk is very low, they have one of the best reserve production ratios in the energy industry at 16.3%, 17 million gross acres of land holdings in 28 states, NO California or BLM land holdings, corporate policy is a 75% payout ratio (the last distribution was 100% tax free), almost 130K gross wells, 50K wells in the Permian Basin, KRP has about 17% of all domestic rigs (!) operating and pumping out KRP oil/gas, 16% hedged for the next 2 years, 16+ years of drilling inventory remaining, 11% insider ownership, completed 4 major acquisitions since 2019, only a 14% decline rate (excellent in their industry) etc etc etc Lastly, someone commented about the father and son that run Kimbell; that’s Robert and R. Davis Ravnaas. Read their bios (which are amazing) and look at their track record with Kimbell, it’s fantastic IMHO. Kimbell has an excellent web site with all their presentations and information that might be of interest to you https://kimbellrp.com/
Smile, I am Azure
Azure, thanks for the excellent color on this issue.
Thank you, Azure Blue. That was exactly what I was looking for. Jay
Moody’s affirms ratings of
1. ATH preferreds (Baa3) and ATHS (Baa2).
2. MET-A (Baa3) *
* I assume Baa3, not Baa2.
The report for MET has 2 ratings for MET non-cumulative pfds: Baa2 and Baa3. QOL shows Baa3 as of early 2023.
https://www.moodys.com/research/null-Moodys-Ratings-affirms-Athenes-ratings-Baa1-senior-unsecured-debt-stable-Rating-Action–PR_1000010156?cid=GAR9PTU7VKT2671&emailToken=eyJ0eXAiOiJKV1QiLCJhbGciOiJIUzI1NiJ9.eyJVc2VySWQiOiJkYzVkYjczMC01NTBiLTQ3ZjctYjhjZi05NzY2ZjAxZmU0MzMiLCJEb2NJZCI6IlBSXzEwMDAwMTAxNTYiLCJjcmVhdGlvbkRhdGUiOiIyMDI0LTA5LTEwVDEzOjQzOjA5LjM0NzM0Mi0wNDowMCIsImV4cCI6MTcyNjI0OTM4OSwiVXNlck5hbWUiOiJjcGFtaWtlbWJhQHlhaG9vLmNvbSIsIlVzZXJUeXBlIjoiMiJ9.4HFp-ONjBPAOulCClAzmTH4OcMmrFaOOPJJJOq-AzyM#0572b961dceedc105347b4ba6f05cd6f
https://www.moodys.com/research/null-Moodys-Ratings-affirms-MetLife-ratings-senior-unsecured-debt-A3-stable-Rating-Action–PR_1000009728?cid=GAR9PTU7VKT2671&emailToken=eyJ0eXAiOiJKV1QiLCJhbGciOiJIUzI1NiJ9.eyJVc2VySWQiOiJkYzVkYjczMC01NTBiLTQ3ZjctYjhjZi05NzY2ZjAxZmU0MzMiLCJEb2NJZCI6IlBSXzEwMDAwMDk3MjgiLCJjcmVhdGlvbkRhdGUiOiIyMDI0LTA5LTEwVDE0OjA0OjAwLjQ4MjMxMDEtMDQ6MDAiLCJleHAiOjE3MjYyNTA2NDAsIlVzZXJOYW1lIjoiY3BhbWlrZW1iYUB5YWhvby5jb20iLCJVc2VyVHlwZSI6IjIifQ.rwMuK5_OefJJQZ23fZJxocEU_nP3Dz7KdTaRMxo4p1c#0572b961dceedc105347b4ba6f05cd6f
Thanks mbg!!
Apologies… big-time off topic….. any recent postings on Grid ??
Realize his added value to your regular posters. Thanks ….
Thanks for the reminder on that Met perpetual floater. I’ve been sitting on that forever. Got in between $20-$22. Even now here trading at par, still getting a near 7% yield. For a graded preferred this high, has a decent spread protection of 100 bps + another 26 on top. Still though probably means time to sell soon.
Other than junk tier than have massive spread adjustment bumps, investment grade floaters can be tricky timing wise. You want to buy them when no one wants them and sell them now as we come off peak interest rate cycle highs.
Ally Bank stock down ~18% today from higher-than-expected delinquencies on car loans.