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.
Purchased some SCE-PJ today goes x-div 12 13 24 on 9-15-25 it floats. Or maybe it doesn’t and gets called just like the H did.
Thanks for the reminder that it soon floats, Charles.
6 months after that (3/15/2026), and SCE-K floats too.
K has a better floating spread. J has the better YTC, though. J still trading under par and K trading over par.
Mbg, yep the K has the better spread but the J was close to the same yield with the discount to par and I picked it up at 24.70 not quite the low of the day. Besides it was late in the day and it would have required a pita call to Fido and a 8 or 10 min wait on the phone for the K.
Nice trade, Charles.
Really? A phone call to trade the K but you bought the J no problemo. I wonder why.
I got the nanny message (size is greater than the max allowed) when I tried to place an order to buy 200 shares of NSA-B. 100 shares worked and I got that one filled. And my GTC order for 250 shares of FTAIM hit early on when the big seller came in. Before I could make an order to buy more, the seller was gone. Blew by my 25.41 price, but I’m happy with it.
mbg, I didn’t want to mess with the wack a mole trade and try 100 lot trades then 50 etc. I just went with 250 shares on the J
Earlier in the day I called in on the NSA-B to open an Active trader window but it was a low ball order.
One thing to share, I don’t mind a 5 to 6% yield on return with an investment grade preferred like a utility but on a reit I’d like to see more. Even with NSA seeming to be a solid co. I would prefer a yield closer to 7%
Not saying all reits are in danger but this sector of the market isn’t out of the woods yet and sometimes babies get thrown out with the bathwater.
A few nibbles:
NSA-B at 22.10, ex div 12/13
MER-K at 26.10, ex div 12/13
CHSCM 1t $25.10, ex div 12/17
BHFAN at 19.25, ex div 12/10
CHMI-B at $24.10
NYMTM at $25.02
SBL Holdings Instl 7% pref – paid $92 @ IBKR, they recently issued a 7.2% senior.. so it makes sense the pref trades so low.
ISIN: USU75065AA70 (Reg S)
https://www.fitchratings.com/entity/sbl-holdings-inc-96545828#ratings
I bot CHSCN AT 25.49 (25.10 stripped as it goes ex 12/17 .44) for cy of 7.05 ..tks for show
Yeah, CHSCN is arguably better when the discount is only 30 cents, have plenty of that one, as well.
tks for weighing the chscn/pff pair has gone from 2 sigma rich in october 2023 to 2 sigma cheap now.. chscn/chcsm pair has chscn trading 1 sigma cheap (3 yr horizon) ..was 3 sigma cheap in september and 3 sigma rich in june
I bot bhfan at 18.86 7.10 cy… bhfan/pff pair has gone from 2 sigma rich in october to 2 sigma cheap today (1yr horizon)..tks for show
Re CIM-A Fixed Rate , past the Oct 2021 Call Date ….. any holders with comments. Has the recent CIMN issue answered the question !!
Thanks
CIMN and CIMO have 2026 call dates and trade with a YTC 40-60 BP lower than CIM-A’s CY. The notes are higher in the capital stack, so this makes sense. I’d rather have the notes than the perpetual in a fairly high risk MReit.
Anyone here following the NSA preferred ? Just looking for a little input.
Hi Charles. All the signs point to “good enough” for the prefs. I also have a personal preference for debt backed by physical assets. From a technical perspective, others on this board have pointed out that NSA-B was granted to insiders and recently released onto the market, meaning it can be very illiquid and vulnerable to selling pressure, like today. It trades cheaper than A and have much better call protection.
From a fundamental view, I wouldn’t touch the common and self storage has some headwinds.. but I don’t see it dropping like office. They seem to be a mediocre operate, I’ve seen better/worse, but don’t know the space well, so don’t read into that comment.
market cap of equity is $5.5BN and prefs are only $340M, so plenty of equity cushion. 33% debt to equity, and 3.3x interest coverage.
https://ir.nsastorage.com/sec-filings/all-sec-filings/content/0001628280-24-044549/nsa-20240930.htm
https://d1io3yog0oux5.cloudfront.net/_d86c53684136e0cc1e3a31cf145fae18/nationalstorageaffiliates/db/334/7367/pdf/NSA_November+update+11.2024_FINAL.pdf
Interesting, I’d never noticed two preferreds with the same coupon on NSA.
It makes sense that if issued to insiders, it would be less liquid just as many A/b commons like Lennar (the commons all have the same economic value but generally MORE voting rights on the cheaper stock). I used to have an entire portfolio of long /short commons and there’s one that’s really expensive, and if you’re into arbs look at FCNCA and FCNCB. I only traded it when they got a lot of assets from one of the failed banks in 2023. Told someone to look at the arb and it turns out it’s been a major source of his income since then.
Anyway, I’m off topic. sorry
Maine, I checked FINRA and saw no long term debt. I read they are being creative with some of their properties like putting up solar panels and cell phone towers to collect income. Several in my area seem to be well maintained and in high traffic areas. Down the road, these locations could have possible multi use for the underlying property.
I feel like there are too many long term storage facilities competing for business so in a downturn there could be stress and storage wars for tenants (pun intended)
Well someone is willing to bid $23.85 on NSA-A. I’ll take my chances on the same coupon NSA-B under $22. Going Ex Friday.
nsa.pra/pff pair has nsa.pra trading near fair (3yr horizon)..built a base near 1.5 sigma cheap between october 2022 to november 2024..
TY- getting hammered today – down over 3% today. I have found this issue to be very rate sensitive. It’s a sock drawer holding but is still disconcerting to see such moves.
To this day I own a single share of TY- I use for tracking and I never did get a chance to buy it at a 6% yield after everything dropped last year. People really seem to like it at the 43 level. I think it is just an ill. Low volume with no real depth in the order book (but I did not check that, just a guess). So someone wanting out quickly of a few thousand shares causes exaggerated moves. They will be bought up and the preferred will slowly recover based on the direction of interest rates like you said.
Relative returns:
GDV prfd H is yielding 5.80. Ultra -high coverage ratio, decent management given the limited nature of the fund. At least I can be sure the managers won’t steal the assets without recourse.
To me, this seems as safe as a treasury on the relative risk curve. Unless the fund starts leveraging up in a crazy fashion (and I haven’t read the docs), the risk of the preferred defaulting seems almost impossible.
But, I never say never.
I don’t feel the risk is 145 bps over T. There is plenty of unsecured long term corporate debt trading at those levels.
Div are ordinary as far as I can tell. I sort of like that given the risk of qualified dividend status disappearing in a Congressional tax compromise.
In any case, I’d love to hear opinions on this. It seems like an investment where I would not ever worry. Pls advise if you have a better one. I’m in NV where a state income tax would require a constitutional amendment
Divs to the preferred have typically been LTCG and the remainder QDI. Here is last year’s tax treatment: https://gab-important-tax-docs.s3.us-east-2.amazonaws.com/GDVPrH-TAX-23.pdf
Preferred asset coverage is 646% as per latest report.
It is definitely one of my SWAN holdings.
I saw that, but then look at footnote a
My 1099 from Schwab for 2023 shows 27.6% of the distribution as Qualified with remainder classified as LTCG exactly as per the document I linked.
oops I mean GGN -pb. I looked at the wrong line.
now I hide my head in my shell
Hedge fund offerings through Interactive Brokers:
I received their email offering me exclusive access to hedge funds as an accredited investor.
I always look at these for their entertainment value b4 even listening to a pitch. I’m interested in anything that describes itself as long/short because that strategy is a bout as “played out” as a strategy can get, especially of trying to use the IB platform. As background I used some form of long/short to acquire most of my profits, so every once in a while something new comes up.
My first stop is to look at the principals. If the hedge fund office is located in someone’s home, that’s a pretty good tell they have not been successful…especially if the home is in a crime-ridden neighborhood.
I’m all for helping people get a start but I’m not about to send money to someone whose track record is a paper-trading account at IB.
Today I looked at WCW partners. No, NOT World Championship Wresting, unless they have moved company offices to a 2200 sq ft townhome in Dallas.
Am i Making a mistake drawing conclusions from the Zillow of this property? I can tell a lot of things from the stuff in the home;
https://www.zillow.com/homes/4035-Bowser-Ave-Dallas,-TX-75219_rb/55826154_zpid/?
I’m sure that once you make an investment they will have a nicer “office” space!
was hoping one of the pics would show his computer screen and I could zoom in to see what he’s trading.
I was hoping to see this:
https://www.facebook.com/AshishStockTalk/posts/never-saw-such-big-trading-setup-share-if-you-agreehttpstwittercomashishstocktal/1692160417585261/
Quiet LT, you’re giving away trade secrets!
One of the first things I did when I encountered a potential new client was I asked them to fill out a questionnaire listing their business address, shipping address, mailing address.
I then Googled the addresses to check out the client. Home address, was a warning person might be trying to buy direct so I would ask a couple questions and probably send them to the dealer they were already buying from. Address for delivery, Big warning danger Will Robinson ! if it was a freight forwarder. Something can be routed to Timbuktu Africa or over the border to MX.
Buyer beware if you’re looking for radiation shielding products and they list their business address as a cafe in Bend Or. or a coffee shop in La Jolla
If they were willing to buy more than a dealer usually buys , you would not deal direct? Even huge ADM caught onto the idea of an ecommerce site where I can buy a single 50 lb bag of a product. Hey, I like to cook and except for the fact my housekeeper was tasked with finding containers to store the powder I bought (plus it looks like flour…or cocaine) , being able to buy direct meant I wasn’t buying something one of their regular buyers had repackaged at a 1000% markup.
Nope LT, only exception is you can buy direct on line is West Coast and Lawrence brand buckshot. Two bags at a time last I knew. Anything else we send you to a distributor or set you up as a qualified business. The reason is distributor relationships, we can’t allow a distributor to find out we sold direct. We also like to point out to customers we don’t sell direct compared to the few competitors we have. Lead is kind of a niche market.
There are a few companies still like this, Stihl for example.
LT, I keep waiting for the Gridbird ETF or Hedgefund. Pretty easy to raise ~ $50 million, which is commonly quoted as the viability threshold for ETF’s. If Grid would do that, we could all retire and let him manage it for us. And do a better job. . . .
Related to this, I am seeing more “private” ETF’s plus the new 351 conversion funds. Interesting and legal way to lower capital gain taxes, similar to a 1031 property exchange.
I have an interest in a 351 ETF. Do you have a reference or link to a good one or good research / information on the funds that are out there currently ?
Appreciate any insights !
Mike, the guys at Alpha-Architect have been leading the 351 movement. They worked with a tax lawyer to get it set up. They did a podcast earlier this year with Meb Faber, that described how it works.
Google: Episode #522: “Wes Gray & Robert Elwood on How to Convert a Separately Managed Account (SMA) to an ETF”
Google: “The case for the tax-free conversion of SMAs into an ETF via Section 351” which is the Alpha Architect white paper.
Meb @ Cambria Funds is just starting an ETF for 351’s. Alpha Architect has done many, with low billion $’s IIRC. So I would contact either firm for more details. I consider both firms reputable.
BTW, when you put in weblinks, it is 50/50 that the spam filter will block the post, which is why I just give you the phrase to Google.
So
I’m in the Silicon Valley part of the SF Bay Area for a few months. I just bought a 6 foot noble fir Christmas tree with a disposable stand that set me back a Ben Franklin—100 bucks. When I first got married back in the sixties, it was $2 in West Germany. Wonder what trees cost in other parts of the country? I suspect a lot less.
Your price seems in-line for tree + stand. Google says average price for a 6 foot tree range from $70 to $100. An unscientific look at local prices in North Jersey:
A local supermarket has Christmas trees from Quebec
Fraser fir – up to 6 feet $64.99
Balsam fir – 5 to 6 feet – $55.99
The local cut-it-yourself Christmas tree farm, prices by species not by height, ranging from $45 to $95, $45 gets you a White or Scotch pine. $95 gets Concolor, Canaan or Fraser fir. Bargain hunters will love the 13-foot tall White Pine at the $45 price point.
The local Home Depot store (website)
Balsam Fir – 5 to 6 feet – $41.98 – pick-up at store
Douglas Fir – 5 to 6 feet – $64.29 – free delivery*
Grand Fir – 5 to 6 feet – $89.97 – free delivery*
Noble Fir – 5 to 6 feet – $89.99 – free delivery*
Fraser Fir – 5 to 6 feet – $128.74 – free delivery
* listed as Oregon grown, quite a long haul
Trees stands start at $15 to $30 and up at HD
There are arbitrage opportunities in Fraser firs …
Long WY – plan ahead for Christmas 2030 – they sell seeds and seedlings
6-foot Noble Fir at local Boy Scout lot in Seattle is $95
In North East Pennsylvania for a large tree you will pay $225.00 for a 10′-0″ Fraiser Fir and that is with the Veteran’s discount.
https://goodtimechristmastrees.com/
Today Fido sent a reminder about the KIM-N tender- it says even if I don’t participate, my account might still be affected.
I guess they are referring to the possibility it might get to lower the amount in the future? Confusing offer.
TIM-
Looks like RCD, CRBD and METCZ can be added to the active BB list- since they are trading- ECCU not yet.
thx
If you’re referring to the new Ready Capital 9% senior note RCD, it has not begun trading. However there is an ETF on the Toronto exchange trading with that symbol and this is leading to some confusion.
It’s on Tim’s new issue list – with a price, but guess it’s the wrong one- over $30 should have been a clue 😉
The Ready Capital 9% senior note RCD should begin trading this week and that should self correct the III new issue list. Given the recent earnings decline I would expect RCD to trade below par, although how far below is anyone’s guess.
Remembering the significance of the day (Pearl Harbor 12/7/41) and thinking about all of the WW2 vets that were lost. Ran across an interesting ETF:
VETZ- The Academy Veteran Impact ETF is the first publicly traded ETF to primarily invest in loans to U.S. service members, military veterans, their survivors, and veteran-owned businesses. At least 80% of the underlying assets will consist of loans to veterans or their families
We do not own it in any account, but are going to buy some to support the cause. All of the WW2 vets we knew are gone, but manage accounts for some that lived through it (83+).
Has anyone here bought Canadian bonds or CD’s for their IRA accounts ? Were there any tax or paperwork issues ? I have noticed slightly better rates for their bonds and the same those of Deutsche and Barclays bank.
Investopedia has some info on risks- points out it depends on your brokerage, and that here might be some that are covered by FDIC (not sure how that works). The loonie has fallen against the dollar lately- currency fluctuations can ruin return.
I wouldn’t be surprised if you end-up having to get a fat % back on the 1040- more work, if possible.
good luck
Bill,
I haven’t crawled through this in a bunch of years, so I suggest you go check for yourself. But, IIRC, if you go read the US/Canada tax treaty, investments in Canadian securities by a US IRA are not subject to the 15% withholding tax that is applied to investments from taxable accounts. (Gridbird was much more knowledgeable about this than I ever was).
I have owned some Canadian issues in a Schwab account off and on for a long time. They require me to fill out a form every 5 years to take advantage of the treaty.
The challenge is whether the Canadian company, its payment agent, and the US brokerage all “line up” and make the “no withholding” work. I had several securities where everyone in the payment chain pointed at someone else as being “out of step” and I got hit with withholding tax every quarter. I dropped those issues (can’t recall names at the moment – I am away from my notes and it was a bunch of years ago).
From the discussion below and my experience today, it appears that I can draw the cash level of my Schwab IRA below zero with a purchase. It’s up to me to sell something (MMF) in the IRA to restore the cash by the next day.
Now, it’s not clear to me what advantages SGOV has over a MMF. And are there disadvantages to SGOV compared to a MMF?
SGOV should be state and local tax free right?
SGOV has a lower expense ratio than most comparable MMFs (e.g. SNSXX), so the yield can be higher.
Trades take place immediately instead of after the close, and you can trade it after hours.
Disadvantage is that the NAV isn’t fixed, and there’s at least a 1c spread on trades.
Also, I’m not sure if the current daily yield is published.
Can narrow that 1c spread to half a cent by doing a market order, At least on Schwab you can
Minor (?0 secuity point- if I recall correctly- MMFs are not going to put a halt or trade limits in, as was done years ago when there was a run on them, but not the case for these gov’t ETFs- they can use a freeze etc.
But- I might be wrong. Not too worried tho.
of course- this time I can’t correct immediately-grrr.
Should read: Minor (?) security point–
Noticed Luman’s Quest CTDD is up 89% since I bought it in April. Sorry I only bought a small amount. Still paying over 8%.
danzeb-
Who is Luman and what is his quest? Video game? ha ha
CTDD CY 9%. Congrats on the gutsy buy.
Luman? I know him – if he were around today he’d probably still know doodly squat! https://www.youtube.com/watch?v=33-8SHFwtyU&ab_channel=markowee
LOL…I always have a tune in my head, usually Beatles, but every once in a while it’s Red Hot.
Age is getting the best of me.
Luman’s Quest??? Yes, would be a good name for a video game.
My typing fingers are sometimes disconnected from my brain.
For those that don’t know I should have mentioned: Century Link merged with Qwest (not Quest) then Century Link changed name to Lumen (not Luman) Technologies. CTDD is 6.75% note issued by Qwest.
The Qwest Corporation that issued CTDD and CTBB is a separate corporation and a subsidiary of Lumen. QWest was not merged into LUMN parent. So CTDD and CTBB are farther down in the capital stack than you might think. Qwest describes itself in its 3Q24 10Q as a “wholly owned indirect subsidiary of Lumen Technologies.” QWest has separate financials on the parent’s page.
Lumen corporate started a debt restructuring maybe ~2023 that essentially first-mortgaged out its companies assets which effectively pushed down CTDD’s priority and deflated CTDD to 10-ish. As part of the deal, QWest is now guaranteeing the parent’s debt.
LUMN common got some tailwind from the AI boom and telco takeover activity. IMHO, it made good progress in its turnaround, recently completing a tender for near-maturity LUMN and L3 bonds giving it even more breathing space to turn around its operations. Nonetheless S&P Global dropped the dime in October and declared the restructuring a “selective default,,” saying the company was “a business in secular decline.” (As I see it, the growth is in the data center/fiber/Level 3 end of the business not the legacy telcos.)
I got tired of the drama and left the party this week. JMO. DYODD.
Lumen Technologies Inc. Downgraded To ‘SD’ (Selective Default) On Distressed Exchange
https://disclosure.spglobal.com/ratings/en/regulatory/article/-/view/type/HTML/id/3260860
BearNJ, thanks for the additional info on Lumen and Qwest.
Schwab reversed the single principal+dividend transaction for the SCE-H call and replaced it with two transactions.
I love how schwab back-dates all these transactions a week or so.
I’ll take credit for that 🙂 Ha.
Except for the fact they classified it as a “cash dividend”…… Hopefully the get it correct on the 1099. Ugh!
I’m trying to wrap my head around SGOV and would appreciate feedback on my comments.
I realized today that SGOV’s sawtooth chart pattern is what a MMF would look like if you added on each day’s accrued dividend throughout the month and plotted it, always starting at $1. If you sell a MMF midmonth, you will still receive the dividend for any days that you held it plus all of your principal.
Now I see that SGOV does the same thing. For each day you hold it, the price increases by a day’s worth of monthly dividend, allowing you to use SGOV as a cash alternative that, like a MMF, pays you to hold it for any arbitrary number of days.
If you own a MMF in a cash account and place a sell order, you may have to wait a day for access to the funds. That shouldn’t be a problem with SGOV and becomes an advantage of using SGOV.
Unlike a MMF, SGOV doesn’t fix the principal amount. On every ex-dividend date, the price drops by the dividend amount to a price that varies from time to time and possibly even trends. How does that work?
And that brings up the question of risk? Excluding credit risk, what are the risks with holding SGOV ?
rocks
Your analysis about the daily price changes is accurate. Same applies to other ultra-shorts such as JAAA and CHSI.
Not sure about your question – “excluding credit risk…”
My answer is – two “risks”
1) Liquidity – minimal/none
2) SGOV is the shortest term you can get. If rates are rising, you get the benefit right away. Falling – same. So your risk is that you are riding the daily interest rate. An alternative is to lock in a given rate for a longer maturity and bet that decision was correct.
By excluding credit risk, you also avoided what I believe is the greatest risk in today’s market: risk spread.
Risk spread is the premium received for taking credit risk beyond “riskless” gov’t maturities of the same duration.
Historical risk spread has varied between 2% all the way up to 10% in market panics.
Today’s short term risk spread averages around 1%.
Matches VIX being at its lowest level in four months.
Today’s markets are very comfortable with taking credit risk.
This retired banker sees that as an unreasonable assumption given the large number of major risk variables in today’s environment.
If/when the market returns to “normal” risk spreads, the prices of risk assets will decline proportionately to their degree of perceived risk.
SGOV, investing in short gov’ts, will not be impacted by such a risk spread adjustment.
rocks-
Correct– I would add that the time to add / start is at the ex date (obviously).
I also do a little arb among those I hold- SGOV, JAAA ( AA CLOs), CLIP, and USFR. Some have ex dates other than the 1st of the month, so you have to watch. Lately tho, they are too close to bother, although, JAAA is the standout- even increased this month. At Fido & Schwab you can sell and use the money immediately for a purchase.
“At Fido & Schwab you can sell and use the money immediately for a purchase”.
This is why I no longer use Schwab money market funds. In my IRA account, you cannot place an order and sell the money market the same day. With CLIP and SGOV you can.
SteveA-
So I thought, but today as a test I bought enough SGOV to push the cash level negative in my Schwab IRA cash account. I’m surprised as I thought that wasn’t allowed. I think Schwab changed its policy. I remember months ago having to beg a Fixed Income trader to allow me to make a bond purchase with the promise that I would sell some MMF. Doing the same thing more recently, the trader was like no problem.
My MMF sell order is in today to cover the SGOV purchase. You have to wonder what would happen if the negative cash position in the IRA wasn’t fixed within T+1.
Hey Rocks
if you go negative and don’t fix it within the T-1, schwab will give you a “trading violation” and will be required to have cleared cash in the account to place future orders.
Steve,
you can do that at schwab. I do it almost every day and have for many years. in fact, now that we have next day settlement I can buy something today and sell the MMF today or tomorrow. I can also sell today and buy MMF today with the proceeds.
You just have to fill out a form to enable it (I think its called some kind of “margin”, but i may be wrong). If they tell you there is no such thing, just keep pushing (maybe talk to a manager). I was lucky to have a local branch guy helping me set up my accounts who signed me up for lots of these “hidden” functions.
Not sure why they don’t just enable it – other than it gets people to sell MMF and hold cash in their accounts (which Schwab invests for itself).
I think this is a little garbled.
The margin feature for IRAs is called Limited Margin. You can request it online. It can’t be enabled by default because the regulators don’t allow that. It’s not available for some accounts such as inherited IRAs.
Now that everything has T+1 settlement, you must sell the MMF on the same day you make the buy. If you don’t sell it until the next day, you will have a trading violation (but in my experience, nothing bad will happen, at least the first few times).
Private, thanks for all your comments.
re: “now that we have next day settlement I can buy something today and sell the MMF today or tomorrow. I can also sell today and buy MMF today with the proceeds.”
My experience so far: in non-margin accounts all works as smooth as you state. In my margin account, I incurred margin interest when I bought and sold the MMF the next day. I did not know until the end of month when the margin interest was posted.
Gary I think I know the answer but can you confirm if you can place GTC orders with having the funds in SGOV?
Oh- you must be referring to your comment below– no I haven’t tried buying GTC with orders Fido would normally reject.
Well, it will probably do no good, but I wrote the editors of both the WSJ and Barron’s asking them to do an article on the cluster that is Fidelity’s new Market Access nonsense. I doubt anything will come of this, but you don’t know if you don’t try.
Rocky, I wonder if it’s worth fighting the Man. I tried to place a GTC order on a preferred I had held and sold in the past some 500 shares. Today I tried placing an order for 250 shares with only 252 showing as having traded and it wouldn’t let me. I like loading low ball orders in ahead of time waiting for a market panic.
I also want to change some bids on a low volume preferred that I already know they will not let me unless I call in and cancel the existing order and get a open trade window.
It’s a PITA
Yes, Charles, I’m fighting for whatever it’s worth. It would be quite embarrassing for Fidelity if we could get an article in either the WSJ or Barron’s, so maybe they would actually resolve this problem. At the end of the day, they are either going to fix this issue or I’m going to move my accounts. Hope you and your family have a wonderful holiday season!
It would be so nice if everyone adopted the XXX-X convention (used by Tim and QOL) when writing about a particular preferred.
Not to beat a dead horse, but I just noticed something else weird about the SCE-H redemption. I held them in a taxable account. Fidelity shows the transactions separately – the redemption and the payout. Schwab shows it as a single transaction.
My cost basis at Fidelity was $25.22, so I show a capital loss which is what I was going for to offset some earlier gains this year.
My cost basis at Schwab was $25.20, but since they credited the redemption and interest in one transaction ($25.42), I show a short term capital gain – definitely NOT what I was going for.
My question is which broker is correct? Or, are they both correct and it is up to each firm to determine how they handle redemptions and final payouts? This seems like something that should be standardized, and not willy nilly left to the brokers to make their own rules.
If Schwab is incorrect, is this something they will fix at the end of the year, or will I have to call in and do some harassing?
At fidelity and vanguard mine are shown as separate transactions
Schwab normally separates the final return of principal and the final interest. What happened with SCE-H is that Schwab initially posted only the principal payment on 11/29. That was followed on 12/3 by a reversal of the original posting and a new posting of the combined principal and interest. Very strange.
I just got off the phone with Schwab fixed income specialist and he said that it should show up correctly on the 1099, and if not to call back and they will re-issue the 1099. He agreed that it should be separate transactions.
Now all that is left is to make sure Fidelity classifies this correctly as a qualified dividend. In prior payments they show it as interest. Final payout classifies it as a dividend……
They are not both correct. Interest needs to be separated from principal.
If they report it improperly, it’s up to you to correct it.
It took me 7 months to get Fidelity to even post a price on a few index options which are marked-to-market at year end. The failure to post the one with a big loss led to Fidelity showing I had a $145,000 gain instead of a $2300 loss on the overall position.My CPA would have adjusted, but what price to use when they don’t trade every day? t has to be marked to market at 12/31. Fidelity finally decided to use the midpoint of bid/ask
I paid 19.95 for pmt/prc 6.75 which is 8.47 current yield.. the pmt.prc/pff pair has gone from 2 sigma rich last month to 2 sigma cheap today (1yr horizon)..On absolute price basis the 200dma has not been breached since 12/23 ..it comes in at 19.86 …good article by Jeremy LaKosh on S/A titled
“PennyMac Mortgage Investment Trust: Series C Preferred Shares offer 8.2 dividend yield
Fully agree, mjtroll! Bought 300 PMT-C for my IRA today at %19.93, decent value! Fan59
tks for weighing in ..any others you have your eye on?
mjtroll –
Minor potatoes, but if you play it right, you can sell CIMN 9% at same price or less than the cost of CIMO 9.25%, so I sold all my CIMN today and swapped it for CIMO – a true inefficiency that should not exist. Similarly, I sold all my PMT-A and PMT-B on an upnote today, and bought the PMT-C on a serious down note today. The C is not only bottomed as you state, but a decently higher yield than the A and B, and much better room for future capital appreciation. Fan59
My kind of swap. though for CIM I’m mostly in CIM-B now for the higher yield. PMT-A/B yielding less than C because of the chance they lose the lawsuit. Maybe long odds but any odds at all changes the value.
Hi martin. Always good to see mREIT talk on the board, usually I have to goto X for that. Just wondering how you are calculating yield for the PMT issue.?
I am showing PMT/C as the highest current yield at 8.5%, according to IBKR.. too lazy to calc it myself. Plus, PMT/C has more upside if rates drop.
It looks like PMT will be out with a new baby bond soon. PMTU pays only 8.5% compared to 9%+ for the other recent issues, plus it often trades the most expensive.
I bounce around like a hot potatoe w/ mreit prefs, my fav currently being CHMI-B. It’s one of the rare live floaters trading below par, currently at $24. It pays CME Term SOFR + 0.26161% + 5.631%, ex div in a few weeks on 12/31. It’s portfolio is also rather safe and liquid with 100% agency and MSR. The rub is that the common market cap has been shrinking, not good when a primary thesis of mREIT investing is enough “common cushion” to meet the margin calls if we have a drastic increase in mortgage spreads. My bet is that the cushion is still enough, but then again, I don’t have all my chips bet, so to speak.. we are talking a highly levered portfolio after all, and risk happens.. although the market seems to forget this. Lastly, trust regarding management is paramount, and they don’t seem like the worst crooks on the block. they actually just internalized and didn’t take an addtl fee, just decided to give themselves fat salaries, sigh. Another risk is that they are taken over by a poor credit widget, what I call “Terra risk,” what almost happened to WMC before MITT bailed them out.
Good comments Maine. I bot few shares mid week on GTC @ 23.90. Also listened to the Tera (TPTA,TFSI) earnings call week or so back and came away very uninspired. I noticed CHMI home base is here in Monmouth Cty NJ and plan on a pop in visit some time. Any questions/suggestions you have to help me look good? (maybe pair back gaudy common divy?) ;^)
PMT-C a touch under 8.5% at current price. The rate is listed I just make minor adjustment in my head for accumulated dividend, but there isn’t any today. Term issues typically pay less than perpetuals unless the perp has a low price, probably because the possible upside is factored in to the price.
I don’t own CHMI-B except sometimes trying for dividend capture. Analysts don’t like it, I’m a numbers guy not a business guy so I consider other peoples analysis.
I like REITs with multiple issues there’s more opportunity to trade between them on price movement. RITM CIM MITT MFA ABR my largest total holdings. I do the same for some other sectors too but the price divergences are smaller.
Martin, You said the T word and I’m glad you did. Nothing wrong with trading between preferred within a group like PMT or within similar preferred like you and Maine do. I even buy and sell a little myself.
I think there is a larger group of readers on this site that do this than the group who are more of a buy and hold group.
I just wanted to mention this for the group of readers who are new to this site and perhaps silently following along.
Maine, I hope no one beats me up for saying this because this is the sandbox forum.
I consider this group more of the sophisticated investors willing to take on a little more risk for a little higher return on investments but watching closely for cracks in the foundation.
Short term, I am reading that M rates are going down.
https://www.businessinsider.com/todays-mortgage-rates-friday-6-2024-12
How does this affects Mreits I don’t when they are borrowing at high rates and loaning back out at lower rates? except for leveraging and selling the loans? The one good thing is lower rates support higher home prices which supports the building industry and the loan re-fi business and home equity loan business.
Looks like only 28% of the 1.85M shares outstanding of KIM-N have been tendered at $62 by the original 12/4/24 deadline date.
The folks at KIM had no choice but to extend the offer another week (and eliminate the minimum 67% requirement) – likely due to embarrassment. I tendered zero, but did reduce my position a bit when it nearly hit $63.
Kimco Realty® Announces
Waiver of Condition for the Receipt of the Requisite Preferred Shareholder
Consents and
Extension of Cash Tender Offer to Purchase All of Its Outstanding
Depositary Shares Representing 1/1,000
of a Share of 7.25% Class N Cumulative Convertible Perpetual
Preferred Stock and Consent Solicitation
https://s1.q4cdn.com/944058265/files/12-05-24-KIM-Preferred-N-Tender-Offer-Update.pdf
I wonder what will happen price wise with this one after next week and most folks hanging-on to shares.
Will it go back to trading as normal – $54-62+ ?
I just realized that at my age I’m past my call date.
Just think of yourself as a perpetual.
If you jump in the pool, hopefully you’ll be a floater.
But then he’d have to change his name to “Bob” 🙂
Beyond redemption
r2s, what’s your spread? And how come I don’t see you on QOL?
Expert market
WELL DONE, SIR! HA!
On Nov 19th I emailed FINRA OTC Symbol Management to ask them to remove OCESP. They replied back asking me for additional documentation and I told them I do not have any. I checked fidelity, schwab, and ally which I have certain types of accounts with for docs but came up empty. I just know it was called on 10/17/2023 and they should be able to look it up. Not sure why they managed to remove OCESO but not P which I mentioned to them.
The ticker is still listed on the OTC and I thought it would be interesting to share this with the forum to see if this ticker eventually disappears. Not sure why I bothered but I did after asking otcmarkets.com why it was still there and they told me they do not control it. Pointed me to FINRA.
I’d repeat back their lazy reply to them, but restate it in a way that it seems like a legit question. Also, send them some statutory language , very lengthy, totally unrelated , so they waste time reading it.
You might also mention Roman Polanski, Tex Watson and the Cielo Drive house , as well as the Sept 1, 1939 Nazi invasion of Poland as if these
are somehow related.
We’d all like a good laugh if they respond.
METCZ at 24 would have about the same CY as METCL. Does that matter?
I wonder why Tim gave METCL a D grade for safety?
rocks2stocks…. I have wondered about that as I have owned METCL since it was issued. I only bought a half position after spending a lot of time looking at Ramaco Resources. I was leary of investing in a coal company as it is a declining industry in the US plus they are a small company. Ramaco does not produce any thermal coal, but produces Metallurgical Coal used in steel making. It is a niche market. I finally bought some and after owning it a while increased my position to a full one. METCL has been a very solid performer for years and paid me a very nice dividend. If you look at their financials they are pretty solid and appear to be a well managed company. They are also trying to develop a property they own in Wyoming that they think has potential rare earth elements. Time will tell if that amounts to anything. One potential problem ahead of them is the large amount of met coal (60% of their production from numbers I found!) they export to many different countries in the EU and Asia. They could get slammed if the tariff “wars” get rolling. Maybe the D rating for safety relates to them being in the coal business? It is definitely not in favor for longevity now. I am still mulling over whether to buy any METCZ. METCL can be called anytime now per the prospectus and matures in July 2026 for sure.
I highly doubt METCL will be called before maturity. They just issued 8.37% debt and I suspect they have much more important uses for funds than to save .6%. I agree METCL has been a great performer just like TECTP and FITBI.
Dj West Coast cities that have ports the cities have been fighting to ban the railroads from shipping the coal through their cities to the ports. Saying the trains spread coal dust that causes respiratory problems. Kind of boxing in coal companies from doing business.
Ramaco’s common stock was up 10% yesterday and down 6% today. IMHO, its main attraction for risk-oriented investors is the potential rare earth project. Otherwise it is just a small company selling an out-of-favor commodity subject to economic ups and downs and possible tariff retaliation in a trade war.
Cons- no shortage of bankrupted coal land in Wyoming. A competitor already claims a much bigger rare earth discovery. ( with Mark Twain-like mining hype – “exceeded our wildest dreams” “jackpot” etc ) You do have to extract the stuff. The end product is only a tiny fraction of the “billions of tons” of ore announced in every “discovery” press release. (Mark Twain 101.)
Pros – The landscape has changed in the last two days. Ramaco published a report from Fluor saying that the project was viable. China banned exports of rare earth minerals to the US. National security can give these projects a push from dreams to reality.
IMHO, Ramaco’s new bonds are speculative but a decent gamble. Long. JMO. DYODD.
METCL has more than a 3% premium vs a ‘discount’ on price now– a factor.
METCL matures in 18 months at $25. I sold at 26.23 since I knew it would be dropping in price. If it gets to $25 or lower before maturing I’ll probably buy more. METCZ doesn’t mature until November 30, 2029 so some would prefer it at $25 or under.
The world and the markets must be in a very safe place: VIX is down 18 of the last 21 trading days. LOL. Happy Holidays.
VIX may be down, but not sure about the world being a safe place after reading abut the UnitedHealthCare CEO murder. Sounds like an assassination hit from s spy movie. Pretty incredible on a busy Manhattan sidewalk. What in the world is going on?
With HFRO-PRA at a yearly low, I picked some up at an average of $17.41, for a yield of 7.72%. On page 16 of their latest Annual Report, they state asset coverage ratio at 4,290% excluding preferreds, well above the 300% required, and 623% including the preferreds, also well obove the 200% required, hence the rationale for the A1 rating from Moody’s. The all time low for HFRO-PRA was in October of 2023 at $16.62, and soon after, during the whole month of December 2023, ranged from $17.97 to $19.61 during the month, closing December 2023 at $18.47, nearly $2 higher than its October 2023 all time low, just 2 months later. I don’t care for the common, but the Annual Report does show extremely diverse holdings as far as assets and asset coverage goes. As far as the exchange offer involving issuance of another $100 million in preferred B shares: Current A shares $135m plus max potential tender offer $100m B shares would bring the total to $235 million. The last year end 12/31/2023 ratio including preferreds was: $1,032,580,080/$165,690,000 = 632% asset coverage at year end 2023, including preferreds. While no other major borrowings were announced, and consideration given that the other aggregate debts may have changed some, still, if you add the new $100,000,000 preferred B issuance to the year end denominator, you get $1,032,580,080/$265,690,000, and you get 389% coverage, still well above the 200% ratio required for “including preferreds” I think the selloff in the prefereds stems from uncertainty of the effect of the new issuance upon the coverage ratio, so I hope this sheds light. Again I realize some other debts may have increased, but I don’t think the SEC would review and allow an uncomfortably tight ratio creation from overissuance of new preferreds. In a nutshell, the asset coverage ratio goes from 632% to 389%ish, and the current selloff is unwarranted on A! paper.
Wasn’t this the one Azure Blue said was a dangerous investment?
lt –
Are you referencing HFRO-PRA regarding Azure Blue? If so, I don’t see any posts from Azure Blue regarding HFRO-PRA from any time period, and I think Moody’s has a better handle on the ability of HFRO-PRA to pay dividends based on asset coverage ratios than any poster on this board. Can you reference the post where you think Azure Blue appears to be stating that HFRO-PRA is a “dangerous investment”?
LT, Fan59, others:
Here’s that AB “negative sentiment” post regarding Highland / HFRO from last August:
https://innovativeincomeinvestor.com/still-the-reigning-safety-closed-end-fund-preferred-ba-a-long-ways/comment-page-1/#comment-126446
_____
No position in anything even remotely related to the topic under discussion, but I do have a master’s degree in ratholing. 😉
ESW I like a Challenge, but no interest in this horse. Hat’s off to you.
ESW3, you are too funny, I had to google “ratholing!”
Yup… we often win by not losing (err not getting ripped off) when it comes to investing. It’s the wild west out there, for better or worse. Glad we have you to share your insights.
You might want to study the lawsuit history of Jim Dondero, Highland Capital Management, etc. Lawsuits going on for many years. Some pretty ugly stuff with black smoke billowing up. Can’t say there is a fire there, but can’t say there is not. And it ain’t an oil-well fire despite all of this occurring in Texas.
Google this to see one summary: “Dondero v. Highland Capital Management, L.P., No. 22-10889”
Excerpt:
Defendant-Appellant James Dondero managed Plaintiff-Appellee
Highland Capital Management (“Highland”), an investment fund with sev-
eral subsidiaries. Highland had a practice of lending its subsidiaries—and
Dondero personally—money to meet investment demands. Dondero was ef-
fectively on both sides of these promissory notes, acting on behalf of High-
land and the relevant subsidiaries. The potential for litigation arising from
that arrangement lay dormant until Dondero was removed from Highland
during the company’s bankruptcy proceedings. Highland, then managed by
a court-appointed board, attempted to make good on the promissory notes
executed in its favor by the subsidiaries and Dondero (hereafter referred to
as “Appellants”)
Tex –
You are referencing a 2019 Bankrupcy case for Highland, and the text of the case you reference includes …”.”Highland’s organizational structure encompasses up to 2,000 other
investment entities (“related entities”). Although most are neither in
bankruptcy nor subsidiaries of Highland””,….. I truly get your concerns about Dondero, and I care not for the common. Mind you, HFRO-PRA was issued AFTER these bankrupcy proceedings and Moody’s was well aware of the bankrupcy and the drama involved when they wre retained to evaluate the paying ability of the newly issued preferreds, that is my point: The asset coverage ratio is there for all to see, I do appreciate your input, and Ill cautiously hold and see how it goes. Thanks!
Fan59, many investors place a lot of credence in a company’s management. When the investor sees red flags in management, they will NOT invest in that company, be it common, preferreds, debt, etc. Investors just have a lack of trust that management will do the right thing for stockholders, bond holders, customers, etc. An excellent example is the Portnoy family, of RMR, in REITS. They consistently show up on the worst REIT managers list and many investors will not own any part of their capital structure.
Dondero has a lot more than just this bankruptcy case going for him. This BK case was NOT a one-off. And even if it was a one-off, it was not like a “mere flesh wound” in Monty Python parlance. Some commercial real estate folks will NOT do business with him period. None of this means that HFRO-A will turn out poorly, just that there is some management risk beyond the numbers.
Excerpt from 2012: “James Dondero, Highland Capital’s Giraffe-Eating Hedge Fund Manager, is in a Helluva Legal Fight”
Original post: To catch you up in case you haven’t been paying attention, James Dondero, who owns the 72nd most expensive house in Dallas, eats giraffe jerky, and once stood next to George W. Bush, is the co-founder of Highland Capital Management, a $20 billion hedge fund and private equity firm headquartered here.
The firm has been sued by various investors, including the Houston Municipal Employees Pension System and Jay-Z. But since its portfolio tanked in 2007 during the financial crisis, Dondero has managed to steer it back to ridiculous profitability.
The same can’t be said for his personal life. Dondero is in the midst of a messy divorce that made headlines in March when Dondero claimed he couldn’t pay spousal support because he is insolvent, despite his $36 million annual income.
During the trial, Patrick Daugherty, Highland’s former private equity chief, testified that Dondero had told him he was purposely minimizing his assets to avoid giving money to his wife. Days later, Highland sued Daugherty for breach of contract, calling him a “megalomaniac” who was “unmanageable, erratic and insubordinate” who went on abusive tirades and dehumanized employees.
Great points and well taken, Tex. On the other hand, I’m sure I can show you a long list of lawsuits against many, if not most highly rated parents of preferreds. I worked for Prudential and Merrill , and you would not believe the amount of lawsuits and allegations and actual documented misconduct that went on and was publicized, not to mention Merrill being fully bailed out by BAC. As an insider, at times I was very jaded and had waning faith at times in these companies, yet they are seen as blue chip and safe as far as the preferreds and baby bonds go. As far as your reasoning goes, if we have a disputedly convicted felon with many lawsuits against him as incoming President of the US, and many people truly have zero faith in the US Government and won’t do business with them, and there are many more lawsuits against the US Government than against anyone else, then we should not invest in US Treasuries? Just having fun, Tex, I think the Preferred of HFRO should be OK.
My guess from studying the chart, HFRO-A is headed to 15 where the CY would be 9%.
Here are some $25 stocks from my spreadsheet with CY above 7% that are trading at par or under: OAK-B, CODI-B and -C, PRIF-D, RITM-D, HOVNP, OCCIM, ARGD, OXLCN, SNCRL, ABR-D and -F, MITT-B, SCCC.
Thanks for the heads up! Bought some of this today. A-rated with an 8% current yield and huge upside to par. Seems to be worth the risk/reward. Portfolio looks to be performing well and improving year over year.
I bot abr-f at 21.52 approximately 7.25 current yield assuming pull to par (25) as 10/26 call date approaches (I used 24.75) ytc is over 15% ..having said that it has had a terrific run up since august
Fan-
Check the beautiful stats at cefconnect, and look at the top holdings- big concentration- mostly in their own stuff.
All noted, and thanks. I’m in only 300 shares of the preferred at cost of $17.41 = $5223 total. I am not arguing about the quality of the underlying CEF, HFRO. Nearly every common CEF has a very poor 5 year performance record. Take NCV for example: down 34% in 5 years and continually bleeding. Yet, NCV-PA trades for $22.13 and yields a paltry 6.36%, so this is supposed to be a safer bet in the eyes of Mr. Market? I’m sure I could find other examples of dog CEFs with overvalued preferreds. I fully realize HFRO is a dog’s dog, but am comfortable taking a small position in the preferred at this level and would NOT suggest anyone overdo any nibbling on it. I do feel they have ample coverage ratio, is all I’m saying.
good comment …with one BIG exception ..the market values the assets at 55% discount to their stated value so you can halve your coverage ratios
I received this from Fido:
Your bond or CD is about to mature. Once it does, you’ll automatically receive cash in your account.
CUSIP: 78590A307
Description: SACHEM CAP CORP NT 24 6.87500% 12/30/2024 PFD
Rate: 0.000%
Maturity Date:
Quantity: xxx
Redemption Price: 10.00
Redemption Principal: $x,xxx
While this (SACC) is maturing, it’s not 0% and it’s definitely not $10 redemption price. SMH
Interesting factoid…..
I keep 1 share of PFF as a tracking reference.
Purchased Sept, 2023.
Gain since then: 6.86%
About as much as if it had been invested in MMF.
CNN is reporting that the new admin may privatize Fannie Mac and Freddie Mac. Who knows? But it occurs, i would think those govt agency bonds would have their credit ratings downgraded. Anh other impacts to their bonds that othets forsee?
SteveA,
The trade was to buy the preferreds of fannie and freddie months ago. They are up 1000 pct since then.
I pulled one of them up and it’s $10 out of $25,
That’s already quite a resurrection considering where these traded after the govt imposed conservatorship: in the range of 1 cent to 25 cents.
I was arbitraging the yields differences of the preferreds when govt took over.
I had a huge, very lucky day then because all the differentials collapsed with the common and preferreds.
Ackman had or has huge positions in both the common and preferreds, if memory serves. ew years back he sued the govt over the conservatorship and got jack squat. I think that went to the US Court of Claims. Yes, here:
Fannie Mae (“FNMA” or “Fannie”) (FNMA, Financial) and Freddie Mac (“FMCC or “Freddie”) (FMCC, Financial)
Fannie Mae and Freddie Mac remain valuable perpetual options on the companies’ exit from conservatorship. Adverse court rulings have effectively ended shareholder litigation. The Supreme Court denied certiorari in their Court of Federal Claims litigation (the “Takings Cases”) on January 9th, 2023, which follows the June 2021 Supreme Court ruling in the Collins litigation that found the Third Amendment to the PSPAs to be authorized under the HERA statute. On March 1, 2023, Pershing Square dropped its remaining claims in the Takings Cases as we did not see a viable path forward.
We continue to believe that the economic and political rationale for Fannie and Freddie’s independence remains intact. Both entities continue to build capital through retained earnings which has increased their combined capital to $97 billion approaching a fortress-level of capital. We believe that it is simply a matter of when, not if, that Fannie and Freddie will be released from conservatorship.
From Bill Ackman (Trades, Portfolio)’s Pershing Square 2022 annual letter
Thanks. Good information.
What I was thinking about was GSE agency bonds that are typically highly rated. Seems to me that if the GSE are privatized that their bonds may no longer be A-rated. I would feel safer with FHLB or FFCB government bonds. Perhaps this will result in more preferreds being issued.
My bet is privatized GSE bonds would be AAA, not the AA+ of the US govt. The rating would go up, but perhaps the yield would too. I saw Mark Zandi of Moody’s say home lending rates would go up. Ofc Zandi is known for being wrong most of the time when it comes to predictions. So am I. But, I’m also known for advising people they are getting from me the exact value they paid for my opinions/
As a GSE FNM and FRE had implicit backing. Their senior debt did go to a 9% yield right b4 conservatorship.. I don’t see any difference with FHLB. One of the FHLB’s got in trouble a few years back and was merged with a more stable region’s FHLB. https://seattlebusinessmag.com/financial-services/and-then-there-were-eleven/
I’m on a tangent again. I guess I now know what to buy during the next great financial crisis. Hint: (its not the “asset” that is a limited supply of nothingness )
FHLB’S are criticized for low capital levels. In that vein ,I recall Fannie’s CFO quitting in disgust during the 80’s and saying fannie had razor thin capital margins. I worked for an S&L back then and he was right but it took 25 years for the failure.
I bot SPMA 8 11/30/2029 at 24.83…this term preferred is on the “Laundry List”..Sound Point Meridian Capital is a CLO equity manager whose management is the same as Sound Point Capital management a multibillion dollar fixed income manager specializing in credit … this term preferred shows up as a liability on balance due to its fixed maturity date
https://www.soundpointcap.com/