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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.

1,945 thoughts on “Sandbox Page”

    1. I read somewhere that we are now adding $1.7 in debt for each $1 of GDP “growth” we are getting. If true, that sounds like the US has become a massive wealth destruction machine. Other places I have seen a ratio closer to $1.7/$1.6

      Add in inflation, unfunded mandates etc… and it is clear the present course is unsustainable.

      1. Scott—I agree that the present course is unsustainable. However, Congress (both GOP & Dems) have no interest in even addressing this situation. None whatsoever! Consequently, I think it eventually might take a black swan event to force the issue. The question is how far down the road will the “can be kicked” before we are forced to rectify an unsustainable course. We can’t grow the economy with an aging workforce and limited immigration. That’s basic Econ 101.

        The only other possibility, IMO, is for the U.S. to become like the Japanese economy and have low or no growth forever. Sort of a post-capitalist economy that tend to be on the socialist side regarding benefits–such as a national health care system. This will require raising taxes across the board—national sales tax, higher income taxes, higher state sales taxes, etc.

        Does anyone on the site see another solution. I’m all ears.

        1. To me it won’t be a black swan event at all. Just the good ol’ American Eagle flying directly into the sun. Kapow! When the Fed loses control of the long end it will be game over.

        2. Have you ever tried to reconcile published figures for the US deficit with increases in national debt (cash basis and not accrual)? The deficit is always lower than the increase in debt because Washington DC doesn’t want an honest account.

          My broker suggests that the analysis of credit spreads needs to begin to allow for the possibility of credit downgrades for US debt: maybe some corporate debt is more credit worthy than the US government?

          Washington won’t renounce its fiscal morbid obesity until an intervention forces the issue: a credit downgrade or strong evidence of US debt crowding out corporate investment. A significant contributor to this process may prove to be decreased interest in US debt by foreign investors? What is the alternative to US sovereign debt?

  1. I just found this website and really like the preferred stock table. It saves me a ton of time.

    I’m returning the favor by bringing to your attention a little gem you may not be aware of. I’m reposting something I posted on Reddit a month ago.

    I’ve been trading in stocks for several years and recently began doing research into various fixed income options. I found a little gem recently that I wanted to raise people’s awareness of. The fund is Barings Corporate Investors, ticker is MCI. I own shares but otherwise have no affiliation with the fund.

    [This is not financial advice, and I am not a financial professional.]

    I’m posting because I’m just amazed at the track record. Over several decades it has beaten the S&P while being half as volatile. It’s been on the NYSE for 50 years and it has only had a negative (NAV-based) return 2 of those years. [Throughout this post I’ll be using NAV-based total return to discuss the performance.]

    Its business model today is primarily issuing private loans to businesses (Bank Loans) with direct liens against the company’s assets. These loans generally have floating interest rates based on prevailing interest rates, so their profits have increased recently due to rising interest rates. It does exceptionally well during times of elevated interest rates, but even during the “free money” lunacy of the 2010s it still had an annualized return > 12%.

    Morningstar tracks over 27000 Mutual Funds, ETFs, and CEFs, and of those 27000 funds MCI’s performance is #1 in terms of long-term (10-year) Sharpe Ratio. (The Sharpe ratio is a measure balancing a funds overperformance to its volatility [i.e. reward versus risk]).

    It was first listed on the NYSE in 1973 and of the 50 calendar years from 1974 to 2023 it has only lost money twice:

    — In 1974 (Following collapse of the Bretton Woods global financial system) MCI lost 5.6%; the SPY lost 26.47% the same year.

    — In 2008 (year of Lehman brother’s collapse) MCI lost 10.34% while the SPY’ lost 37%.

    Over the 3 years from 2000-2002, when the stock market was handling the dot-com bust and then 9/11, MCI investors saw a (cumulative) gain of 19.1% while the SPY lost 37.6%.

    Across the 50 calendar years it has been on the NYSE, it’s beaten the SPY on average by about 1.6 percentage points annually: annualized compound growth of ~12.8% versus 11.2%. (The 12.8 is an approximation—prior to 1980 it is laborious to calculate total return each year. The earliest SEC filings I can get provide 25-year annualized data from June 1978 to June 2023.)

    [I’m comparing MCI to SPY because there is a pervasive belief that the stock market shows better growth than fixed-income, and MCI shows that is not necessarily the case.]

    If we exclude the 70s, which were not good for the S&P, and start from 1980 (A great year for the stock market) and go through 2023 (another great year for the stock market), MCI’s still outperforms the S&P by 1.25 percentage points: 13.17% vs. 11.83%.

    The fund had its inception in 1971, but it actually has roots going back far into history, back to the Louisiana purchase. (That is a fun story itself, which you can read about on Wikipedia [Barings Bank].

    1. Questions:
      1. Why would you pick MCI over MPV for a new purchase, given the difference in premium?
      2. When and how does Barings normally announce the new NAV? When are you expecting that announcement?

      1. Hi David,
        Those are _very_ good questions!!!

        The truth is that at this moment I would also choose MPV, and in fact that is what I buy now with new money. Their portfolios are nearly identical. Undoubtedly, they had different histories; but my sense today is that they are effectively the same fund. I did not mention that in my post because I was trying to keep things simple and MCI is the fund with the very long track record.

        In terms of update to NAV, I’m expecting the annual report will be out March 8th or March 15th. We will likely have to wait until then for the newest NAV.

  2. This is just great. I ran a ytm in Excel and compared the result to FIDO’s calculator – exact match.

  3. Thank you all
    My sincerest thanks to all for your heartfelt support. III is a wonderful community so much greater than just an investment site… I’m so proud to be a part of you all

    1. Wishing you my condolences, My wife is moved by your expression of love for the one you lost.

    2. A dear friend just lost his wife last week, so definitely understand your loss. My condolences and best wishes to you. And it is great to see all the support extended to you here in the III community.

    3. 2WR,
      My condolences to you.
      And the choke in my throat is me thinking of it.
      I too lost a dear one recently and I miss her so.

      Be well

    1. The writers wouldn’t get their essay published on SA. 36 pages with constantly repeating the same lines, they should have had a group review and tightened up their writing. Wasn’t until page 6 & 7 did they get to the start of their analysis. I find it interesting they say they don’t have access to CBMS loan information from banks so they used CBMS from the equity markets and compared to the Great recession which historically going back to 1998 have had equal default rates to banks.
      Maybe this time it’s different? Been reading about the shadow banking Crisis in China. Could it be this time around Private Equity like Brookfield and Blackstone and others be in more trouble than the banks? I read that the Chinese Government has shut down several of them and is offering investors 80% to 40% back on the Yuan. These lenders were involved in the building boom that has collapsed there.

  4. Can someone share a good YTM formula with me?
    I think I’m pretty good with Excel but I keep striking out with its Yield and YTM financial formulas.
    I believe I’ve stumbled on a good opportunity but I want to get my numbers right before I share it with you all.

    1. Rate(# periods, pmt, (pv), fv)
      Provides interest rate per period
      pmt is qtrly coupon
      ensure pv is negative (outflow)

      Might look like this:

      …where “Coupon” below is D40. (Par Value is D41 etc).

      Yield to Maturity
      Coupon 4.20%
      Par Value $25.00
      Years to Maturity 38.947
      Freq of Coupon Payments 4
      Bond Price $15.34

      Intermediary Calculations
      Coupon per Period $0.26
      Number of Periods 155.79

      Yield to Maturity 7.1491%

      Be sure to let me know if you have any questions Westie and good for you for pushing the envelope.

      1. This might also help:

        Years to Maturity is Total Days/365

        D45, D46, D47 are formatted as blank
        D50, D51, D52 are formatted as blank

        Coupon per Period is D48, and

        D53 (Yield to Maturity) holds the RATE equation

        Again – just let me know if you get hung up on any of it.

    2. There are a couple different ways to skin that cat, but I just use the XIRR function in Excel. I also keep an ancient financial calculator around if I ever want to double check something if I think it looks weird. 🙂

    1. I am very, very sorry to hear that. What terrible news.

      Deepest condolences from my family to yours.

    2. I’m so very sorry for your loss. Sincere condolences to you and your family.
      With kindest regards.

    3. I am so sorry for your great loss and wish you and your family strength and understanding at this difficult time in your lives. Sending thoughts and prayers, A

    4. So very sorry to hear this. My condolences to you and your family. May loving memories bring you peace, comfort, and strength.

    5. My sincere thoughts and condolences, friend, we come like the rain and are gone like the wind, be weak, be strong and be well – love is forever and yours is as well.

  5. Enterprise Products Partners – EPD K-1 Delayed

    Received my 1099 from my brokerage yesterday so I thought I would check up on latest status of my one and only K-1 which is issued by EPD. Well, I can set my tax software aside for now as EPD pushed the K-1 release date back from February 29th to March 30th due to pending tax legislation which may affect their corporate taxes for 2023. I know that many on this site have investments of EPD, thought you would be interested.

    Here are the details in case you missed the release: https://ir.enterpriseproducts.com/news-releases/news-release-details/enterprise-provides-update-2023-k-1-availability

    1. I have a total of 3 MLPs left. Used to be 4 but MMP is gone. For however many years now I have given up even thinking about doing my taxes somewhat early. I cannot remember the last time I was done before March. On top of that even the brokerage accounts sometimes revise documents and output a newer one. Everything is becoming so ?complicated? now days that an April 15th deadline (Maine and Mass get to the 17th due to a holiday) seems optimistic. We are really due for a simplification of federal taxes so the delay in documentation is not such a big deal but that may touch on politics so I will shut up.

  6. KRP is coming up on it’s dividend announcement. Oil futures have been climbing now approaching 80 a barrel. But people have to remember the dividend is based off the last quarter.
    I think Azure and Bea and a few others have bought it in the past 30 days in the middle 14’s
    I may or may not sell after the x-div date. This qtr. Is shaping up to be pretty good for the next payment 3 months from now.

  7. Am I the only one who is now having problems finding investment grade preferred that pay > 6.5% with a yield to worst that matches? I follow most every conversation here so yes I added to CTA-B but when screening I am not sure I want to add things like ATH-x or a bank like BOH. I am seeing quite a few options at 6-6.15% but nothing stands out as a superior choice for a preferred that is QDI with cumulative being a nice kicker. Any ideas someone wants to toss out that they got their fill and can share in case it is illiquid? I am sensing patience might be in order right now unless you are very happy with a solid 6%.

      1. Eladio,

        I was looking at all the ills today but as you mentioned 6.1-6.3% was about the best I could get buying at the ask. I was hoping for a bit more.

        1. FC, The illiquids are tight and compact and everyone is just squatting right on that yield area. If you are wanting IG and no banks, you could sniff around on the BEPI and BIPI which are plus 7% and way under par. I have considered them myself, but I just am in no mood to buy anything I dont want. The yield spread between quality IG perpetual preferreds and throw your money in the CD/TBIll and chill coffee can is almost non existent to 100 bps. The “The TBill and Chill” yield is just begging people to hideout of there if they dont want any risk.
          Im pretty much set up monthly out to 5 years with half my stash. And every month when something matures and I dont see anything I want, I just roll up in a safe instrument and wait for next month. I will look to flip things, but in my comfort zone I would be flipping 4 quarters for a $1 bill right now. Until something breaks lose.
          Sooo the point is. Take your Tbill and chill, or serve up another helping of 6.2% spinach and clean your plate before you are allowed to leave the dinner table!
          PS…What the hell happened to TDS today?

            1. I cant believe all the SA crazies thinking those TDS preferreds are going to be taken out at par if they sell US Cellular. The more likely happening is cash payouts and preferreds left outstanding with a smaller weaker company.

                1. Non cash impairments apparently, Maine. They actually raised the common divi a penny today.

          1. Grid, I decided to peek. Almost a 25% drop in one day. Good thing it’s Friday and a 3 day weekend for a cooling off period. If it had been earlier in the week I could see it open the next day even lower.

          2. Grid, QOL shows BEPI and BIPI are debt securities, it further shows income from these securities (interest) is qualified. Does this make sense?
            I also assume that Canada withholds tax from BEPI distributions. Correct??

            1. MFZ, yes some kind of quirky provision makes it QDI. These should be viewed as preferreds in terms of relative safety though. I cant say with certainty whether you avoid the withholding or have to claim it come tax time.

    1. how about the baby bond ZIONO ; BBB rated ; floater 9+ % yield
      might get called but ;its trading near the stripped price?

      1. Ted, I suggest you look in Fido bond search and see what Zion bonds are selling for. They are up from several months ago but compared to other banks bonds they have a pretty high yield. That to me tells me the market ( investors) think of them as a higher risk investment. I decided to sell my ZIONL and reinvest it elsewhere.
        But to each their own risk tolerance

    2. Just loaded up on Brighthouse Financial (Insurance). Went with the 4.625% callable on 12/25/26. Picked them up for 16.13 for a yield of 7.17%. Rated BBB-. Credit to Tim and mSquare for the alert.

    3. fc, For preferreds, have found much better adds occur if you’re willing to wait it out, then buy heavily when market panics and “knows” rates are headed one way or the other. Loaded up/averaged down relentlessly in March 2020, May 2022, 2nd 1/2 of 2022, March 2023 and went 2x on holdings in October 2023.

      Haven’t bought in months now and finding little solace in borderline issues solely to add something with yield and will not average up price of holdings nor compromise on overall A-rating of current holdings.

      There’s always another event. Best wishes.

      1. Alpha, Not the greatest yield for the trade but I did add some of the CTA-PB I also sold the last of my EFSCP for what was equal to the next dividend. I did buy a little BMY other than that I just am sitting watching.

    1. Westie – This is really helpful, thanks for posting! I have 4 BDC’s in my income portfolio and it’s nice to see how they stack rank against their peers.

  8. Qurate and QVC are disliked by the market. QRTEP is paying 19% and QVCC 12.45%. They make regular payments. Although the BB and Pref are down significantly the 4.85% $1000 bond went up 24% in less than a year.
    It will interesting to hear what they have to say at there next conference call Feb 28.

  9. A decent amount of bond interest and dividends hit the account. More due March. April doesn’t look so good. Any suggestions here on what would be a good purchase to fill the gap?

        1. irish,I got a full allotment of a Nuveen closed end fund NXP no leverage good credit solid fund been around for years

  10. Has anyone received their NMFCZ distribution?

    (And does anyone know what the ex date was?)

    1. Hi David, NMFCZ are New Mountain Finance Corp 8.250% Notes Due 11/15/2028 and as notes are not declared like a preferred. I have these notes in my Vanguard account and always get paid the day after into my account. This is the first time NMFCZ has paid so sometimes there will be a slight delay. You will get “paid” quarterly on 2/15, 5/15, 8/15 & 11/15 until at least call date of 11/15/25.
      Hope that helps, A

      1. How did this get a Baa3? Their current debt load appears to be 70% more than their entire market cap and they don’t even have $100M cash on the books.

    1. Sometimes I wish I had the time to actually review the data used in the article which I do not have a subscription for. So I can only see the chart and first paragraph. For example the chart shows a percentage of CLOs that are delinquent 30 days or longer. Without knowing how much was borrowed in that approx 9% of loans matters versus the whole portfolio of CLO. For all I know it is 50 million out of 500 million.

      Like Mr Elino the CFO says this last report in the transcript.

      “Additionally, we did see a slight net increase in delinquencies in the third quarter of approximately $28 million. We experienced $98 million of new delinquent loans and resolved a $70 million delinquent loan from last quarter through a successful restructuring.”

      So as you can see they are dealing with the issue. Resolving a 70 million loan appears to be a big deal? So how much in loans are outstanding to determine how big an issue this is? So now I would have to dig deeper and deeper…

        1. Thank you for the link. I feel like I have heard of that website but fail every single time to use it.

          Based on the article there is obvious strain for Arbor and the people who borrowed money that now floats. One thing I did not follow properly in the article were these two sentences.

          “Most borrowers who were late on January payments eventually paid, an Arbor spokesman said, and he said 5.8% of Arbor’s securitized debt payments are still not current on January payments. ”

          “The spokesman said the share of Arbor loans that were delinquent on January payments and delinquent for 30 days or longer was 4.6% as of Feb. 13. ”

          Did the author speak to the “spokesman” on different days? Are we talking about different things? How does 5.8% of securitized debt not current in Jan turn into loans totaling 4.6% that are delinquent on Jan and delinquent 30 days or longer? I would have thought the second statement would be higher percentage wise.

          So things are improving then in a matter of a few short paragraphs? Just slightly confusing at first glance. One can still see the stress though compared to a year ago.

          1. There are two discrete data points, loans that are late making payment in January (~25% of securitized debt) and loans that are 30 days late or more (~9% of debt). Of the first group, most eventually paid but there is still 5.8% outstanding.

            This indicates that the delinquency rate for securitzed debt is increasing rapidly if the 5.8% of newly delinquent debt gets added to the 9% of securitized debt already outstanding…especially when compared to the 30+ days of delinquent debt for January 2023 which was reported to be 0.4%.

            The rest of the article outlines some of the reasons this might be happening, but the outlook for Arbor does not look sunny.

            1. Citadel, restructuring doesn’t sound good either. That is kinda kicking the can down the road. Riley for example and I think I remember 15 years ago other companies like Apollo, and was it Ellington doing the same with used car dealerships back when. Failure rate was high on restructured loans.

            2. CW:

              ABR up nearly 6% today, as the market likes its EPS report (with a 34% short interest we are likely seeing a squeeze today).

              Remarkably, at $13.90/share I have it trading at a 4% premium to tangible book value now, while a few of the other quality commercial mortgage REITs (BXMT, KREF) trade at 20%+ discounts. Paying a premium to book value in this market today for any commercial mortgage REIT seems foolhardy to say the least.

              For a $12+B loan portfolio, they don’t appear to be taking many CECLs. Only $17M in the 4th quarter? They did see a 75% rise in non-performing loans to $263M since 9/30/23.

              “During the fourth quarter of 2023, the Company recorded a $17.3 million provision for loan losses associated with CECL, which was net of $4.8 million of loan loss recoveries.

              At December 31, 2023, the Company’s total allowance for loan losses was $195.7 million. The Company had sixteen non-performing loans with a carrying value of $262.7 million, before related loan loss reserves of $27.1 million, compared to twelve loans with a carrying value of $150.5 million, before loan loss reserves of $12.6 million at September 30, 2023.”

              I saw that the REIT analyst at Hedgeye put a SHORT on ABR yesterday….whoops. But he had done real well with his short on MPW.

              I don’t own any of the ABR preferreds but they all look “money-good” to me.

  11. Myrmikan Research

    Ships are my arrows, the sea my bow, the world my target.

    Nations do not exist in isolation. Peoples have always roamed the globe in search of different opportunities. Nations principally trade to expand their consumption possibilities. In a world where we produce to consume, receiving goods and services is better in material terms than sending them elsewhere.

    1. By war a nation may take what they want or need. If renewable like fruit on a tree they cultivate the tree, if it’s finite they consume and take All that is there and without worry over the destruction or misery that is caused.

  12. Question on ZIONL a floater ; big current yield of 9.4% on high quality issue
    can be called since float 9/15/23 ; question is ;will it be called on next div date ;end of Feb; its trading with accrued dividend of 50 cents; does anyone have any insight about the near call possibility?

    1. They have another more expensive issue, “O” is Three Month Term SOFR plus 0.26161% plus 4.24%. Currently a healthy 9.73% yield.

      “L” is 3.89% over SOFR. Difference is “L” is subordinated note with a stated maturity date in 2028.

      So no information to go on, but with banks now on the edge with current economy and that these other more expensive issues remain outstanding, my bet would be on the line that it’s not called. A new issue can be expensive and not sure what rate they’d have to pay in today’s market with a BB+ rating.

      1. …banks always have the option of suspending the dividend for some period
        of time. I own a some Synovous fixed to floating issues which are pretty much in the same category. I’m curious why they don’t call some of these

      2. Guy; thanks for your thoughtful input; I’m on the ZIONO as well ; both are now trading close to 25 on a stripped price; (within 10 cents); this looks to me to be a win-no lose situation ; its about a wash if they call them;
        having just sold all BANCpF for a large profit, I have been reinvesting in ZIONL ;

  13. Does anyone have an opinion on the CLO market? Specifically as it related to the holdings in JAAA and JBBB?

    1. Rocky Mountain,

      I’m happily invested in two baby bonds (EICA and EICB) from a closed end fund (CEF) that focuses in on the similar space as JBBB. The bonds have medium duration and when the price dips have a YTM of ~8%.

      I like having a focus on the debt vs the equity and I like the CEF coverage requirements.

    2. RMH,
      I own both those funds. Have an equal weighting in both but some people I’ve read have mentioned the JBBB fund, although lower in quality holdings, provides a worthwhile bump in yield. It would be pretty rare for BBB rated CLO entity to melt down. Having said that, I’d be lying if I said I understood it all.

    3. Thanks for the comments, Greg and PP. I hate investing in things that are pretty nebulous and hard to research. I plan to monitor JAAA/JBBB very closely for any issues.

    4. RMH,
      I hold JAAA, JBBB and CLOZ. These are very safe from a credit perspective. I have read that there has never been a default in an AAA CLO. Also, BBB is like .02 percent default rate. I think most of the loans are floating so the dividends will drop with rates. There are a few good articles on SA regarding these funds. They appear to be the safest higher yield instruments around, about equal to investment grade bonds with better rates. Time will tell. Good luck!

  14. Anybody else out there who hold LNC-D getting an itchy trigger finger? I bought a few hundred shares back in May 2023 a little below par and it is currently $28.25!!! . If I sold my capital gain is like over six times the quarterly divy! I don’t usually flip things much like some folks here, but this is just a little tempting. Only issue LNC-D is still returning right at 8% at this elevated price and that means I have to find another place to put the coins returning 8%.

    1. dj – I am an unrepentant flipper. For most issues, my rule of thumb is that if something runs up to the point that the market will pay me more than a year’s worth of divis for my shares, it can have them.

      Esp. true with something that has run up $4 in less than a year (and dropped $4 the six months before that) – but I don’t own LNC-D and you (a) shouldn’t take advice from me (its not even worth the price you are paying for it), and (b) you should do what best matches your strategy.

      1. Private:
        Those are pretty good rules to follow, especially the one years worth of dividends. I am still holding my PBI-B shares, up a little over $3.00 a share from my buy price, almost 2 years of dividends and I am in the “deer in the headlights” mode.

      1. Yikes, even thinking of the YTC at $30 is scary. 2027 will be here soon.

        A fellow unrepentant flipper

        1. Maine/fc/dj/Private,
          Ran the numbers through the YTM calculator. Running ~5.441% YTM if called on time. I have it too, bought during the 2023 banking crisis. Kinda feeling like that YTM isn’t good enough right now for BBB-. Not knowing, of course, whether or not it would be called on time.

          Thinking about selling after a very nice cap gain.

              1. Yup, the YTC is tough for these names trading over par with a couple years left.

                For instance, the YTC is horrible for CSWCZ when it approaches $26, which it often does.

                I don’t blame those that are buy and hold, I just rather squeeze out a few percentage points each year by trading around.

                1. If there is something lined up to buy then yes am in agreement. Not typically a trader myself, but, I will move around the chess board pieces every so often. Sold LNC-D and purchased SR-A (thanks Tim for alerting us!!). Got an upgrade in quality and with YTM over 7% with SR-A. Took a little bit of a coupon hit there but I think a decent move all things considered. If 10yr heads to 5% then I guess it all goes down some.

                  1. Pig; i’m in at 25.08 and i’m still with it; went ex today; the current yield is hard to beat elswhere at the moment,

    1. He wants a higher yield but didn’t say the company was at risk. So I’d have no problem holding for 7.5%. He compares it to lower yield issues priced so low they have a higher YTM. That seems to be a frequent occurence nothing unusual here. The higher YTM may be the better long term hold but investors tend to underrate that factor when it’s several years out.

      1. Z thanks for posting. I always like reading PST but I don’t always want to be flipping my holdings although I try to spread the risk out. I like reading the comments section in the articles. Just like Martin’s here.

        1. Martin, I had time to read the article and ran it through Quantum and after comparing OCCI market cap to ECC market cap of almost 5x I feel better with the preferred of ECC just my personal preference.

      2. For long holds, CY at time of purchase outweighs any bonus cap gain (or loss) years later when inflation has eaten up the value. For short holds, say 2 years or less, YTM becomes more interesting.

    1. Negative and positive reports. A quote from NYC.GOV: Last week, the triennial New York City Housing & Vacancy Survey (HVS) for 2023 was released, detailing the tightest housing market in the city in over 50 years. The rental vacancy rate fell to a multi-decade low of 1.4%, down dramatically from 4.5% in (pandemic) 2021 and 3.63% in (pre-pandemic) 2017.
      Also prices remain up 2.3% year-over-year.

  15. Is this new or old info concerning CTVA?

    For Immediate Release:
    Thursday, February 8, 2024

    Nazneen Ahmed (919) 716-0060

    (RALEIGH) Attorney General Josh Stein today applauded the North Carolina Business Court for a decision that will help the North Carolina Department of Justice in its ongoing fight to protect North Carolinians’ access to clean water. The ruling states that if the court finds “old” DuPont liable for PFAS contamination in North Carolina, then in addition to Chemours, its other new offshoot companies, New DuPont and Corteva, are also on the hook for damages.

    “Companies cannot engage in corporate shell games to avoid liability for the messes they make,” said Attorney General Josh Stein. “I’m pleased that this ruling provides that Chemours, DuPont, and its related companies cannot avoid responsibility by engaging in corporate restructuring schemes. Our fight for clean drinking water continues.”

    The North Carolina Business Court determined that if old DuPont is found liable for contaminating North Carolina’s natural resources with “forever” PFAS chemicals, then New DuPont and Corteva can also be held financially responsible for the damage.

    Attorney General Stein sued DuPont, Chemours, and other related companies in October 2020 to hold them accountable for how their manufacture, use, and disposal of PFAS have polluted North Carolina’s drinking water and other natural resources.

    1. Corteva faces a lot of headwinds.

      (Reuters) – Syngenta and Corteva (CTVA.N) must face a lawsuit from the U.S. Federal Trade Commission and a bipartisan group of states accusing the pesticide manufacturers of unlawful efforts to curb competition from generic rivals, a federal judge has ruled.

      In addition to the FTC lawsuit, Corteva is also making hundreds of millions in payouts to resolve all PFAS-related drinking water claims by public water systems that serve the vast majority of the United States population.

    1. I saw this story the other day and thought it said as much about FedEx (moving their operation from 259,000 square feet to something closer to 80,000 square feet) as it did the state of commercial real estate valuations. The other interesting aspect is that there was 13 bidders which means the bottom fishing has begun. Nice property in a good area…kudos to the buyer.

      1. The article stated new road systems affected value also. But the bottom line I was only really thinking about was whoever owned the note and or property on this building their ass whipped.

      2. CW:

        “as it did the state of commercial real estate valuations”

        Do you mean the state of the office market? This was a very large office/flex space property that was leased to a single tenant (Fed Ex). Single tenant triple-net leased office properties are the likely the single worst property type one can have exposure to right now.

        Check out the stock price of REIT ONL to get an indication. Realty Income wisely spun off that single tenant office portfolio in late 2021 and it has done nothing but barked since.

        Last I checked most industrial, shopping center (grocery-anchored, power centers, regional malls), hotels, data center, self storage, etc. real estate is doing just fine.

        1. Lol…I was just making a general observation and certainly don’t have a dog in this CRE fight (yet). If you’re comfortable holding malls, shopping centers, hotels, etc. right now…have at it.

          1. CW hotels nope, my son was a maintenance engineer for a couple. Lots of deferred maintenance going on there. Malls, again nope. Open shopping ctrs. Couple preferred. Industrial I sold my LXP preferred over 47.00 see it now.
            Holding REXR preferred. article in Benzinga Southern Cal industrial reit owns and manages 371 properties with 45 million s/f Disposed of one property for 11.3 million and bought 2 for a combined cost 69.5 million funded with cash, forward equity settlements and Starker 1031 exchange. I would say that’s pretty good not using any borrowing.

            1. Read up on the SITC strategic changes. Their stock price indicates a ~8.5 cap yet they are able to sell properties at a 6.5/7 cap.

              Common sense. Wish others would do it.

                1. Hey Charles. It’s very good for the common. Cap rate is similar to yield. They are saying the public markets assigns a 8.5% yield based on the implied stock price, yet they can sell the assets directly in the private market for a much better price, a lower yield.

                  This was a good read on the situation, albeit a bit dated.
                  Although we don’t know the full extent of their plans (only hints) it’s refreshing to see management take action to monetize value.


                  1. And for the prefs, I’m not touching it.

                    My guess is that management redeems it, but I haven’t been able to confirm. There is a risk of it being stranded.. but again don’t think SITE does that.

            2. Charles, Nice job with the LXP-C sale.

              I am a holder and comfortable holding it for the long term, knowing it will trades with rates and volatility associated with being illiquid.

              7.1% call protected for a parent BBB rating is a-ok in my book.

              The common is also cheap but it may stay cheap for a long long time.

              1. Maine, I hate to admit it when I have said I am not a big believer in following charts with everything else going on in the market, yet this is a simple case of following the chart. As long as the market isn’t volatile which to be honest, it has been an almost steady upward trajectory the last 3 months I saw that LXP-C rises into the ex dividend date then falls afterwards.
                So this is a simple case of me picking a date 30 to 45 days out trying to collect an equal amount to the dividend which in this case I was only able to get about 2/3rd I would be glad to take advantage of something like the Oct. drop but on the other hand, I take the risk if I bought before a drop like that I would be looking at no available seats when the music stopped. The rest of the time I can use the money elsewhere.
                As for a long term hold, the preferred has been in a steady decline for over the last 2-1/2 yrs due to the rise in interest rates. I also have a hard time feeling comfortable with a $45.00 preferred when the common is less than $10.00

                1. Fair points.

                  LXP is neither Prologis nor REXR, but they still hold a mediocre portfolio instl industrial, which is pretty good collateral.

                  And a relatively conservative balance sheet and plenty of equity cushion. 96m pref backed by $2.7bn equity.

                  I like it here, don’t love it. Call it a medium size position, based on a low conviction view that CPI will abate as the true rent shoes up in the data.

      1. Looks like the seller from Friday is getting more aggressive – still offered near lows of day

        1. Well for me, its “in for a penny in for a pound”. I did a PennYlessY double down trade. At least Im not doing it in MPW or mall reit preferreds.

          1. CTA-B
            Mr Falling knife here….
            I’m in at $68
            Other two knives – NYCBU and ADM holding up

            Call me crazy but all three have solid franchises currently unloved by Mr. Market

            1. Westie, I wouldnt say CTA-B is unloved as much as the illiquid has had a volume dump that has temporarily swamped the market. 100k volume and a bunch Friday was just too much too soon for market to absorb in such a short period of time for an old illiquid issue.

              1. Grid, 100K dump not uncommon in this one. By my estimation this has happened 23 times in last 20 yrs,

                1. Pig, good data, thanks.

                  Def a weird issue. 1,672,594 shares outstanding yet avg volume is only 3k, per fidelity. When it rains, it pours.

                  PFF isn’t the seller. As of last Friday, they hold about 10% of the float at 161,528 shares, up slightly from January 30th.

                  Anyone able to track down a list of holders? The list on fidelity is not complete.

                  1. Maine, actually that is pretty typical. See daily ave preferred volume is usually determined not only by shares outstanding but also how old it is. The longer a preferred stays outstanding the more “institutionalized” the shares become which in turn lowers the ave daily volume. Although its over $160 million in original issuance size which is actually rather large for a ~75 year old issue, it wont have the typical ave trading volume a newer issuance with same float size would have.

                    1. Grid, that makes sense. They “buried” somewhere!

                      BTW, this NYSE link is good for looking at recent historical volume. Last Friday it traded 47k shares. We have to go back to Jan 17, 2023 to find another 10K+ day. Interestingly, the price spike that day to a high of 102.


                  2. All I know is I’m overweight in it now. I’m now hoping they call this at any time in the future!

            2. Just in case anyone is curious, though we refer to this as Corteva, technically its a preferred stock of EIDP (formerly known as EI du Pont de Nemours and Company) in which Corteva owns 100% of its common stock. Over 10% of the float has been dumped in past 2 days. That isnt pocket change so it wasn’t just one Joe 6 pack dumping his shares past couple days, ha.

              1. Grid, I have been used to funds rebalancing at end of quarter and then I think we have seen large dumps when options expire. This seems different. I am not a conspiracy person but I feel sometimes that news about a company is known ahead of release by some on Wall St and they trade on their inside information.

                1. Charles if this was some inside info the common stock would be rocked. In fact its up over 2% today and 20% past month. And its sister A issue continues to basically sleep walk. This doesnt feel different at all to me. It feels exactly what an institutional dump does. And all things considered considering the massive volume dump (over 10% just today alone now and rising) the price has held up actually too good for my liking. Before the seller flooded market it was actually up nicely the first few thousand shares traded.

                  1. That’s a pretty large holding by one entity. If they had wanted to get the best price you would have thought they would have sold a little bit at a time instead of depressing the price by dumping like this

                  2. Grid:

                    I agree. I find it very difficult to believe that a holder of CTA+B would have unique inside and bearish information regarding CTVA common and the underlying business of Corteva, but the holders of CTA+A and CTVA would not.

                    This looks like a garden-variety institutional dump. I sold all my CTA+A shares to buy CTA+B at an average cost below $68. Seemed like a no brainer.

                    CTA+B has a 40 basis point higher yield, is bigger and far more liquid, and has a buyout price of $120/share (only $102/share for CTA+A).

                    Let’s see if the seller “reloads” tomorrow!

                    1. Yes, all in all it is a very controlled dump, nothing nefarious about the company. We are getting excited over a crumb like percentage drop considering how many shares have been sold past 2 days. Its largely more a relative value play than any material “steal”. But these are the types I am more personally interested in anyways. Any time the volume temporarily dries up, the prices starts heading back up. Look where we are at now… Its now only down 50 cents today from a 10% plus volume dump. There still could be some more controlled dump waves, as nobody knows who is selling or how much left there is to dump. But clearly there cant be a lot left just on volume traded alone.

                  3. Grid – indeed an institutional dump

                    I just quickly scanned the Time and Sales data and found 6 large block trades totaling 80,186 shares

                    That is slightly over half the volume today so far. I suspect they likely exhausted the pool of very large buyers and as such have dumped the rest in the market in much smaller trades

            1. Old bastard finally died thank God, and lets get that cash now! We got cars and vacations to buy, ha.

    1. I have no idea who originally mentioned to swap A for B but thank you whomever it was. I had approx 40 shares of A just sitting around that never became a full position, sold, and then bought B for a good price earlier today. Not as nice as my older cost basis of 65 but I will take the small bump in dividends none the less. Was also nice to sell A for a small gain as well.

  16. GPMT-A
    I could use some help analyzing the change of control provisions. There is a share cap of 4+. What does that mean?

    1. Leonard:

      The share cap means that on a change of control that takes GMPT private, you would need to get $25/4 or $6.25 per share for the common shares of GMPT to ensure you would get the full “par” amount of $25/share for your GMPT+A preferred stock.

      Of course, if a publicly traded mortgage REIT just offers to buy GMPT, your shares in GMPT+A would convert to the preferred shares in the acquiring REIT.

      On a different note, just finished up selling my MGR at a sub 6% yield. Many of our dearly beloved preferred and baby bond holdings are trading near full prices again. I’m trying to sell the rest of my 4.375% Bank of Hawaii preferred (BOH+A) near a 6% yield. Perhaps only the ETFs would be dumb enough to pay these prices?

      The $14+ Billion preferred ETF PFF has been getting inflows every week this year – about $200M total so far in 2024. As well all know they are not price sensitive when it comes time to buy.

      Up, up, and away!

  17. Hi all, would greatly appreciate any thoughts on purchasing Tennessee Valley Authority (TVA) debt.

    Thesis: They appear to be exempt from State and Federal taxes so could be a good addition to my taxable accounts, and the duration and current price make them something that could pay >5% once the short term treasury market cools off.

    Looking at this issue:

    Anyone hear have experience or thoughts on these bonds? Always appreciate the insight on this site!

    1. dear SD Surfer:

      these agency bonds are stable and i’ve owned some of them off and on. note that TVA bonds are subject to federal taxes. if considering TVA bonds, you may wish to look at these three from fidelity on the secondary market that are currently close to 5% yield-to-worst:

      CUSIP 880591EJ7
      Maturity: 09/15/2060
      Coupon: 4.625
      AAA AA+
      Price: BID: 92.560 1,000(10)
      Price: ASK: 94.476 994(5)

      CUSIP: 880591ES7
      Coupon: 4.250
      AAA AA+
      Price: BID: 86.082 1,000(10)
      Price: ASK: 87.638 2,449(5)

      CUSIP 880591EY4
      Maturity: 09/15/2052
      Interest: 4.250
      AAA AA+
      Price: BID: 87.495 1,000(10)
      Price: ASK: 89.356 1,000(50)

      san diego: world’s best weather!

      best, avi

      1. avi – FWIW, your second example I believe is the same one the Surfer brought up and based on how Fido’s showing TVA bonds in a search, all three of these have the same offered side yield of 4.95% so not much to differentiate between these three except for maturities. Currently Fido’s only showing 25 TVA bonds but normally they show in the range of 42 or so……Best yield shown on a YTM/YTW excluding on due in only 6 months is TVA 0.00% due 9/15/39 CUSIP 88059FBS9 with yield = 5.002%. I would suspect when market opens on Monday, their list of TVA bonds in the market place will expand….. I also assume that Surfer would not be interested in the much shorter maturity TVE and TVC baby bonds that are also outstanding because of their maturities.

        1. As expected, Fido’s now showing 72 separate TVA bonds this morning, including a raft of zero coupon issues….. Best yield available is in the 5.33% range but that’s for zero coupon issues in the 35 to 40 year maturity range.

      2. thank you, very much appreciated. Will check all of these out, and appreciate the correction on Fed Taxes…..one of the issues with youtube tutorials is sometimes they aren’t 100% correct lol.

        Again, appreciate you comments, weather is fantastic and the surf is on again after the big storms 🙂

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