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.
Was doing some research on (CIM) Chimera Investment Corp. 8.00% Series B Fixed/Float Cumul Redeem Preferred Stock; I have owned this security since it IPO’d 2/2017 and I thought they would call the preferred as it is to reset 3/30/2024 @ 3 month SOFR (currently 5.316% plus 5.791% or a whopping 11.107% (!). On the last earnings call I came across this Q&A
Eric Hagen: Right. No, that does make sense. How are we also thinking about the fixed to floating rate preferred? I mean, it looks like that’s going to reset with this year. Do you think there’s situations or conditions where you might look to call those or redeem them as they turn into their floating leg?
Phillip Kardis (CEO & Director): Yeah, I think we evaluate all those options. And I think as we mentioned right now, we think that with cuts coming in the future, at the end of the year and through next year, that — while the — we expect the floating rate to reset higher, we see that coming down over time and probably looking to deploy capital and buying new assets rather than at this point retiring that. But that’s a case-by-case, and fact-based analysis that we’re constantly looking at. So things could change and we could come to a view that it would make some more sense to actually start repurchasing it. But that’s part of the mix of how we think about deploying capital in new investments versus reducing that expense.
Eric Hagen: Yeah. Thank you guys for the comments. Appreciate it.
Anyone else here holding this preferred and have some salient thoughts or insight?
Some recent writers on SA keep mentioning the discount to book value as a reason to buy the common stock. Who knows if the stated book value is an accurate reflection of the actual book value. If the ftf issue is not redeemed, I suspect it might be because the company either doesn’t have the liquidity to do so, or wants to piggy bank its funds in case things get worse. To me, it’s a risky purchase right now, but everyone has his/her own risk levels.
Randy, thank you for your reply. This preferred B from Chimera is $300 million to redeem and the company stated it bought $1.4 Billion in mortgage loans so this preferred would be of interest; “In total, for 2023, we purchased $1.4 billion of mortgage loans. 50% of the loans were seasoned reperforming loans, 33% with DSR investor loans and the remainder were business purpose loans. We securitized $841 million of the re-performing loans and $475 million. The DSCR we called six existing deals and issued four new deals totaling 1.2 billion, enabling us to recapture 133 million, and we raised approximately $74 million from ATM issuance and have begun deploying the capital into high coupon non-agency securities, which we purchased at a discount, generating low to mid 10s unlevered returns and committed to purchase approximately $150 million of business purpose loans with mid-teen levered returns.
AB—-you obviously are quite familiar with the company. Are you going to retain your position, add to it or sell it? I would be interested in knowing. I still own several mortgage reits preferred which are under water. None, I think, are in trouble but I don’t enjoy having the unrealized cap loss showing in my account year after year 😟
Hi Randy, thank you for your inquire. I have no plans to sell my Chimera preferred at this time. I watch their corporate news and the annual/quarterly reports just to make sure they are operating in my best “interests” and my income stream they are providing is relatively safe.
Wishing you peace, A
A call would be a gain from here, I would consider it a good reason to own it. But I’m not expecting a call any time soon. I own CIM-C not CIM-B, doesn’t float as soon but when it does then it floats at a higher net rate and more upside to par.
Hi Azure,
I know CIM and have been in out and out over the years daing back to their IPO during the great financial crisis. I just have a feeling that these mREIT preferred fixed/float issues are going to get called in a big wave. I also doing think CIM is going to move first. AGNC or NLY might move first… a hunch. I also suspect that they have the interest rate risk swapped out.
I have the NLY F and G issues, and for my part plan to hold them right up to the point when (if?) the Fed cuts. Then I plan to move to something fixed.
It sounds like the CIM CEO is telegraping the he does not plan to call this issue. When you think about it his logic makes a lot of sense.
Question on CIM.D/B coupon reset on 3/30/24. Are there further resets beyond 3/30/24 or does the reset coupon remain until called?
TIA
If not called, those issues will float with 3 month SOFR.
TY…but 3m sofr changes almost daily…question is once coupon is reset, does it change daily/weekly/monthly/quarterly/annually or remain at reset level defined on 3/30/24 until called….? Quantum suggests an annual reset but not clear…
“Stock will accumulate and be payable at a percentage of the $25.00 liquidation preference equal to an annual floating rate of three-month LIBOR plus a spread of 5.379% per annum”
” ‘Dividend Determination Date’ means the London Business Day (as defined below) immediately preceding the first date of the applicable Dividend Period.”
Page S-19 of the Prospectus
So this changes every quarter, which matches well with the 3 month SOFR rate.
I’ve been thinking about my cash position which is sitting in Schwab’s money fund earning 5.2%. 3yr CD is 4.65% @ Schwab.
I decided to buy OCCIN instead. 5.25% monthly pay from CEF OCCI trading at 22.95 and due 12/31/26. 5.7% current yield which will be taxed at marginal rate (same as cash) and YTM of 8.5% or 2.8% will be LT cap gain. OCCI is CLO debt and equity and 2.8x asset coverage. Fancy cash++
Thoughts?
FYI
According to the SEC, T+2 will change to T+1 effective May 28, 2024. Canadian markets will implement the change one day earlier.
This will of course impact individuals who sell money market holdings to settle equity purchases.
I own some FOSLL 7% Sr NOtes 11/30/2026 since the issue price. Does anyone have exposure to this name…I know the company has had some struggles, but they look bankrupt-prone.
Does holding debt instruments from an MLP cause the same UTBI concerns as the equity instruments in an IRA ?
Nyet
Thank you.
Greg,
FWIW, a lot of (most?) MLP preferreds don’t have real UBTI concerns.
I own/have owned several MLP preferreds over the years, mostly in IRAs.
If you look in the tax discussion in the prospectus for a preferred, it will say something like “it is expected that the distributions will be treated as guaranteed payments for use of capital”, and if you can get a look at a k-1 for the issue, it will show income in box 4b (UBTI is in 20V, IIRC).
That said, IIRC, if the company gets in deep financial trouble and doesn’t have enough earnings to pay the preferreds, I believe some of the payment may be UBTI (I have never seen it, but I remember reading that).
SYF-PRB why is taking so long? I’m not seeing it and I can’t buy the temp symbol at IBKR
It’s trading in a number of brokers I use under symbol SYFPL. I picked up a small position this morning at 25.20.
Schwab is charging a $6.95 commission on SYFPL.
Picked up some of that Main Street Cap Corp 6.95% 01/01/2029 today (cusip 56035LAH7), dated date 12 jan 2024. Then noticed that the first coupon is 01 sep 2024. That’s unusual in my experience: with a semi-annual payer like this, I’m used to seeing the first coupon 6 months from the dated date. Anyone else find this odd?
When they do pay on 01 sep, I expect they’ll pay interest from 12 jan to 31 aug (7.5 months), not the usual 6 months. Is that what others would expect as well?
I have seen this in occasion and yes, I too would expect the first payment to include time from 1/12/24 to 8/31/24. That said – I have gotten into the habit of verifying payments of all of my bond and preferred payers. So far out of hundreds, I have only had one issue and it was a late payment that was resolved. You can check with IR and Main Street to confirm though.
Thanks Proto. Yep, (don’t) trust but verify 😉 …
Bur, you can find the answer in the bond prospectus…
Date interest starts accruing
January 12, 2024
Interest payment dates
Every March 1 and September 1, commencing September 1, 2024. If an interest payment date is a non-business day, the applicable interest payment will be made on the next business day, and no additional interest will accrue as a result of such delayed payment.
In case you ever need it….
https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/0001396440/000139644024000033/ck0001396440-20240111.htm
Grid, thanks for the pointer. How did you find that prospectus?
I still haven’t figured out how to use EDGAR effectively. I made my way to https://www.sec.gov/edgar/browse/?CIK=1396440&owner=exclude, found the latest Prospectus doc posted was on 11 jan, yep sure enough it’s for this bond. But it’s not final (no coupon, no dates).
The doc you linked to clearly is a later version, but I see no Prospectus published to EDGAR later than 11 jan.
What am I missing?
Bur, you were on same link as I. My link above was from 1-11. They had a preliminary 1-10. Was you looking at the 1-10 prelim one accidentally?
Ha! If it were a snake it woulda bit me. Yes, when I looked again just now, there it was, same document, updated one day later on 11 jan. Thanks!
what was the YTM on your purchase if I may ask ?
Mike, I calculated 6.943% using xirr in excel (inputs were all-in price of $100.544, accrued interest, the large first payment on 01 sep and normal payments thereafter).
Even Warren Buffett’s legendary optimism is fading.
https://www.schiffsovereign.com/trends/even-warren-buffetts-legendary-optimism-is-fading-150201/
Throughout the centuries there were men who took first steps down new roads armed with nothing but their own vision. Their goals differed, but they all had this in common: that the step was first, the road new, the vision unborrowed, and the response they received – hatred. The great creators – the thinkers, the artists, the scientists, the inventors – stood alone against the men of their time. Every great new thought was opposed. Every great new invention was denounced. The first motor was considered foolish. The airplane was considered impossible. The power loom was considered vicious. Anesthesia was considered sinful. But the men of unborrowed vision went ahead. They fought, they suffered and they paid. But they won!
This IS the life of Warren Buffett and I am Azure
Thank you Azure for the great read and an excellent excerpt.
Sharing a related sentiment:
According to Darwin’s Origin of Species, it is not the most intellectual of the species that survives; it is not the strongest that survives; but the species that survives is the one that is able best to adapt and adjust to the changing environment in which it finds itself.
Azure, I did not interpret Buffett’s letter as pessimistic. He simply stated that due to Berkshire’s size it will be difficult to achieve huge gains. I have never heard Buffett say anything but the USA is a great place to invest.
NVIDIA is this decades golden child. Where else could I purchase such a company in 2016??? Today a BILLION dollars from a legacy of Berkshire stock was given.
Sometimes I think as folks age they become closed to the new opportunities. I think the USA is the only place I would truly place my legacy. I wouldn’t confuse increasing a large valuation into a multiple larger one, with lack of opportunity.
What we in TN did find humorous is the “rascals” aka as Haslam. 🙂
TN, I truly thank you for your reply and thoughts. In the early 1990’s I graduated law school and one of my best friends was the lead counsel for a billionaire named Victor Posner (DWG, Arby’s, RC Cola, National Propane, Sharon Steel etc etc etc). Victor lived on the ocean in Miami and had just bought the Firestone mansion on Golden Beach and I was invited over to tour the property. I figured it was a good way to see if I could get Mr Posner to invest with my young investment management company and maybe meet some other wealthy people that were his friends and business associates. When I got to the house Victor was sitting inside on the old patio furniture that the Firestone’s had left watching some financial show and Mr Posner at some point said, “ ask me anything you want and don’t hold back”. The only thing I could think of was to ask what stocks or assets he would recommend I should buy for myself for the future(I was supposed to be the expert). Without hesitation he said Berkshire Hathaway and Florida Power and Light (now NextEra Energy). I bought both stocks the next day and have owned BRK-A ever since. I have been to over 15+ annual meetings in Omaha (not my favorite city) and stopped going to them about 5 years ago; I’ve even gotten to ask Buffett/Munger some questions over the years. IMHO this years update/love letter had a bit of a negative bend at times. Buffett talks about too much utility regulation, high valuations and why they are holding so much cash at this time. Buffett will ALWAYS be USA 🇺🇸 thankful and grateful for the opportunities this country brings. We also have to remember Buffett just lost his best friend/partner Munger and may be thinking/writing about his own demise. I do not have the same enthusiasm for the business future in the US; I recently became a citizen of 2 other countries with much better prospects for safety:taxes:business. I live the United States, but sadly am not happy with what has become of our freedom and the attack on our constitution I have fought so hard to practice and defend. I primarily live in the US because my son is in his 3rd year of Dental School here and I’m happy I get to spend time with him. Lastly, when my son was born the first stock I bought him was BRK-B and that’s his largest holding in his trust account by far. Thank you for your time and reading my thoughts. I want to wish you and your family well, Azure
AB, We (and many friends and associates before and after) relocated our residence and businesses across the country over two years ago for some of the same reasons you have outlined.
The near-completed folder for an additional citizenship in 1 other country is on my desktop now, also for some of the same reasons you have outlined.
Our investments have been modified, particularly in these last few years, to adapt to the changing landscape. It is a smaller and smaller footprint. Only today I wrote a friend and referenced this very issue.
Best to you.
Curiosity compels me to ask which two countries those are, because it is hard to see really bright prospects anywhere and I have a daughter just graduating college. I suspect it is hard for you too, thus your choosing more than one bolthole.
It is no longer just a given that the best choice is the US, not so much because others have improved their countries, but because we have become more like the pack. So I have counseled her to have a fallback plan.
I hold citizenships and permanent residencies that I have accumulated over the years, but I don’t really view any place as “better” than the US. As a tax dodge – maybe. As a place to have a quieter life – maybe. But as a “bolthole” – probably not.
I suspect that if things got bad enough in the US that I wouldn’t live here, things would not be brighter anywhere else (i.e. degradation of the US would drag down the other countries where I would actually want to live).
I have been fortunate to have lived in countries in Europe, the Middle East, Latin America, and Asia/Pacific. I love to go back to many of those places, and I could live in some, but I wouldn’t give up the US.
Besides, I have a bunch of kids and a bigger (and growing) passel of grandkids I couldn’t get my wife to leave (I think she would leave me before she left them), plus I have my clan and community who need my support. Just couldn’t walk away from all that.
I recognize that my “pro-US” views are biased by my heritage, service experience, etc. but that is who I am.
Azure, which two countries have you received citizenship?
ChrisW, thank you for your inquire. I’d prefer to not say at this time and place…
Azureblue—I wasn’t aware that one could shop for & hold other citizenships without denouncing the US one. Did you have to give it up?
I too have my doubts that the US will be on the right track going forward. – thanks
Hi Gary, I have not given up my US Citizenship and am in the process of getting passports for both countries. In Vance v. Terrazas, the Court decided that having another citizenship while you are a U.S. citizen doesn’t imply you’re giving up your U.S. citizenship. As far as U.S. law goes, you’re American first, even if it’s your second citizenship. Other countries may demand that you give up your American citizenship, but the U.S. has no say in that.
Hope that helps ✌🏻
Regardless of what you do, the U.S. taxman will likely pursue you to the ends of the earth. For a long while.
Camroc – US citizens are taxed until they are no longer citizens. It is a long, complicated process to expatriate, and the taxman will hit you pretty hard on your way out the door.
Camroc, you may find this post of interest about “taxes” and our illusion of fairness https://www.schiffsovereign.com/trends/even-the-fdic-doesnt-want-to-pay-its-tax-bill-150216/
Taxation is theft, purely and simply even though it is theft on a grand and colossal scale which no acknowledged criminals could hope to match. It is a compulsory seizure of the property of the State’s inhabitants, or subjects. Surfs, just pure surfs to the deep state.
Finally, you think you “own” your home because you either paid cash or have paid off your mortgage. Stop paying the property taxes and you will find out who truly owns your home… I am Azure
Cmon AZblue… all the profit is yours when you sell your home, and you get $500K of capital gain free of tax — where else can you get a tax break like that?
And you get the privilege of paying property tax every year. Hardly free money if you make a profit on the property.
You guys don’t like paying taxes? How do you feel about schools? Streets? National defense? Police? Jails? Public health?
For many the “profit” from selling a house is mostly or all price change caused by inflation depending on when in the volatility cycle you bought and sold.
Azureblue-
Thanks for the info.
here is an example from St. Kitts/Nevis… https://immigrantinvest.com/blog/st-kitts-citizenship-benefits-en/ There are similar programs in other Caribbean countries… I have no comparative experience but am just aware of these type plans in the Carib.. https://immigrantinvest.com/blog/st-kitts-citizenship-benefits-en/
2WR – Good example. A lot of countries have ways to gain citizenship or permanent residence by investing (basically, buying your way in). For example, Portugal was popular in recent years (but I think they changed their rules recently to be less popular?). Canada has a program but recently changed their rules too.
Even the US has a program (generally called “EB-5”) where someone can get a green card for themselves (and some dependents) if they invest around $1M in the US (less in some areas). Its a government program, so the rules are overly complicated (and subject to a lot of fraud – or at least they used to be). Waiting list is really long. We used to have a practice helping non-US clients with EB-5 investments, but we exited it years ago. We had clients who applied when their children were in primary school, only to have the kids “age out” years later while the family was on the waiting list. Quite messy.
Some folks from “first world” countries buy their way into other countries for various reasons (often, tax related). However, the vast majority of applicants (in most countries we looked at for clients) are from places like China. For example, the list of EB-5 applicants from China dwarfs the lists of applicants from all other countries combined (last I looked – well before the pandemic), and Chinese were getting around 80% of the US EB-5 visas issued back them. Canada also had a huge backlog of Chinese applicants – not sure what it looks like now that their rules changed.
Most countries also have ways to get residence (which can sometimes lead to citizenship) based on other things – time as a resident is pretty common. Some will grant it for service to the country, etc. Every country makes its own rules (and some don’t publish them).
:Personal Rant:
One of my peeves is that while some countries grant visas/residence to foreign students who complete advanced education, the US is too stupid to do that. We attract foreign students, teach them advanced skills (engineering, for example), then require them to leave the US as soon as they graduate – yet we have a shortage of skilled technical people (go look at the job opening for semiconductor engineers!). Just crazy to me.
:end rant
Sorry for the long post. I am once again sitting in a waiting room, so I am inflicting my boredom on you.
Many countries around the world will provide you a status (permanent resident) upon purchasing property or opening and funding a back account.
Columbia used to be $150,000 residential property with 3 month physical stay. The funding amount has recently been increased.
If anyone hasn’t read it, here’s the link to the Buffett shareholder letter.
https://www.berkshirehathaway.com/letters/2023ltr.pdf
The way the Schiff author describes it is WAY off from how I read it and it sounds like he has an axe to grind.
Thanks for posting O.
Nice read and first time for me. I have my own impressions, But BH’s risks of doing business are more and more related to regulation and the poor education that leads to misconceptions by the public about how our modern world is run and supported by basic infrastructure.
Have you ever taken the market value of Berkshire and subtracted the value of the securities portfolio? Then divide that remainder by the free cash flow of the operating businesses. The last time I did that, the multiple was low. If you split the company into operations and investments, the sum would be 30-50% higher? That’s the penalty that conglomerates pay for a confusing business image.
Did I miss a discussion in this forum about NGL-B?
https://feeds.issuerdirect.com/news-release.html?newsid=5247760337754758
I’m not sure why this is referred to as a 12.806% issue. Is this fixed at that level due to NGL’s interpretation of the LIBOR rules, or is that just the most recent period’s accrual rate? Note that half of the accrued payments from the missed period went ex-div on 2/15 and are supposed to be paid tomorrow – $4.44 per share. The other half might be coming soon. If so, this might be an opportunity. I just bought 1/4 of a “normal position” of this.
DYODD and beware: K-1 issuer, with UBTI concerns if you hold too much of it in a single IRA account.
9% isssue. NGL-B suspended dividends in early 2021 but caught up with a $4.44 dividend on 2/15 (it is cumulative). At current $28.50, it will pay about 7.9%, assuming it continues to pay dividends. It is callable at any time so one is taking chances with such a high price.
Tom, the $4.44 only pays half of the missed distributions. If NGL were to call the issue, they would need to pay $25 plus the other $4.44 plus any accruals since the end of 2023. From the previously cited source,
“NGL Energy Partners LP (NYSE: NGL or the “Partnership”) announced today that the Board of Directors of its general partner declared a distribution of 50% of the arrearages earned and outstanding through December 31, 2023 to be paid to the holders of the Partnership’s 12.806% Class B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class B Preferred Units”) …”
Answering my own question with more research…
From the NGL 10-Q filed 2/8/2024, page 24 as marked on the page:
“Class B Preferred Units
As of December 31, 2023, there were 12,585,642 of our Class B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class B Preferred Units”) outstanding.
The current distribution rate for the Class B Preferred Units is a floating rate of the three-month LIBOR interest rate (5.59% for the quarter ended December 31, 2023) plus a spread of 7.213%. Effective July 3, 2023, the reference to LIBOR in the formulation for the distribution rate in these securities was replaced with three-month CME Term SOFR, as calculated and published by CME Group Benchmark Administration, Ltd., plus a tenor spread adjustment of 0.26161%, in accordance with the Adjustable Interest Rate (LIBOR) Act (“LIBOR Act”), and the rules implementing the LIBOR Act. For the quarter ended December 31, 2023, we did not declare or pay distributions to the holders of the Class B Preferred Units, thus the quarterly distribution for December 31, 2023 is $0.8004 and the cumulative distribution since suspension for each Class B Preferred Unit is $7.8051, not including interest. In addition, the amount of cumulative but unpaid distributions shall continue to accumulate at the then applicable rate until all unpaid distributions have been paid in full. The total amount earned as of December 31, 2023 is approximately $111.9 million.”
(That 10-Q is available at https://investors.nglenergypartners.com/sec-filings , about the third item down.)
So, not only is this floating at SOFR3 + 0.26161% + 7.213%, but interest is accumulating on the distributions that are still in arrears.
Checking the math, the $111.9 million divided by the 12,585,642 units outstanding gives $8.89 per unit, so the dividend that gets paid tomorrow at $4.44 per unit checks out as half the accumulated deficit as of 12/31/2023.
Thanks for the research and correcting me. Did not do the math on deferred dividends. Is NGL good for the rest?
It’s hard to say. In the quarter from 10/1/23 to 12/31/23, net income for NGL was $45.767M. $35.428M was paid to preferred unitholders, leaving $10.244M gain attributable to common unitholders. That explains why income was only 8 cents per common unit for the quarter. See page 13 of the 10-Q cited above.
I bought my position at $28.46 yesterday and sold it at $29.20 at market open today, well above my limit price. Then I bought half of it back at $28.50. I feel better with the smaller stake.
Tom,
To me, it sounds like they think they’ll be able to pay off the remaining divs in arrears as early as this April (the beginning of their fiscal Q1). Note the below comment by Brad Cooper, CFO – once they’ve generated their typical level of free cash flow in their fiscal Q4 (Jan 1st thru March 31, 2024), they’ll be in position to pay the remainder.
From their Feb 8 conference call (reporting on fiscal Q3):
1. Brad Cooper, CFO:
The remaining asset sales should close by 331. With free cash flow, asset sales and the release of working capital in the Liquids segment, we will make the remaining 50% payment in the very near future. We will be thoughtful on the timing of this payment as we assess what the fiscal 2025 cash flow and capital budget could be as we kick off the budget process in late February.
2. Mike Krimbill, President and CEO:
Looking forward, we are focused on following: payment of the remaining preferred distribution of arrearages as soon as possible, then reinstatement of the Class B, C and D distribution as soon as possible. Third, continued deleveraging through debt reduction and increased EBITDA, balanced with addressing the Class D preferred.
3. Brad Cooper, CFO:
We wouldn’t have committed to making a first payment, if we didn’t see line of sight to having the second payment being made. We do want to see the release of working capital come our way in the third quarter, the free cash flow, we typically generate come our way in the fiscal fourth quarter and then be in a position to make that payment. But the growth projects that Mike spoke to does not impede our ability to address those arrearages.
its time for me to unload KMPB @22 ; had a nice run from 17.43 entry price in October ; going ex on the 29th ;
going to sell JXNpA but I have a little time before the ex of 3/11
also made partial sale TCBIO @20.20 ; regional bank ; ex 2/29
Nice job on KMPB. Had similar entry price, but I got antsy and sold with $2 capital gain
I did just read on SA about the ATH prefs by Retired Investor, and I am buying some as I find the rates and safety now a point and some over CD’s and good duration even if getting called (but some note likely). I do like the pressure the insurers have for paying pref’s. I still feel fine with my AFFT, dark or not. As some of the better, early CD’s I had are maturing, they go to ATH for now.
Tizod—it makes me a little nervous to buy preferred issues of private companies. I can’t remember the exact examples, but I do remember some similar preferred issues getting screwed (stranded) by private equity takeovers of the parent company. Does anyone on this site have any knowledge of precise examples or any thoughts on the matter? Thanks.
This can happen whether it is a private company or not.
When JP Morgan Chase took over First Republic Bank, the former indicated it had no intention of honoring the preference shares.
The prospectus will generally indicate what rights the shareholder has if there is a change of controlling interest.
There have been several examples usually taking advantage of some loophole. The one most discussed here the preferreds were spun off into a holding company which made it a separate legal entity even though the funds were used for the acquired business. Need to know all the legal ramifications which 95% of investors don’t.
If you are implying that Chase acquired First Republic as a corporate entity in an arms-length merger and then dishonored First Rep’s preferred stock, I think that is incorrect way of looking at the transaction. First Republic failed and the assets and deposits were taken over by Chase.
First Republic Bank seized, sold in fire sale to JPMorgan
https://apnews.com/article/first-republic-bank-silicon-valley-fdic-5ab48702b7136d42f73ac13e0a20955d
“Regulators seized troubled First Republic Bank early Monday, making it the second-largest bank failure in U.S. history, and promptly sold all of its deposits and most of its assets to JPMorgan Chase…” ….
“The bank’s shareholders are likely to be wiped out as part of the deal.”
JMO. DYODD.
Much like what happened to Signature Bank of NY when state and FDIC took over.
However, not sure why SBNYL is still being quoted between $2.50 and $5.00. I was certain these were wiped out. I called M-E about these and they said no way to sell. Was hoping to remove from portfolio in Dec ’23 for write-off.
— I understand that SBNYL is trading in the dreaded Expert Market, so it arguably has value even though it can’t be readily bought or sold by most civilians living in the real world. Some commenters here trade in the Expert Market and may have suggestions to offer.
You might want to take ME’s “no way to sell” comment to a higher level. IMHO, a good broker (discount or full service) should be more pro-active. Do your homework first.
— I don’t give tax advice and it may be an aggressive stance, but a TY-2023 loss may not be entirely out of the question, especially given ME’s “no way to sell” position. You might want to spend some time going through the official IRS publications to learn what constitutes a loss and what is the appropriate tax year to report it. I have not thought about this for a long time.
JMO. DYODD.
For all of us Yield Hunters out there, here is a great educational piece on risk. Good weekend read.
https://www.urbankaoboy.com/p/re-investing-private-credit-and-the?utm_campaign=email-half-post&r=79ypg&utm_source=substack&utm_medium=email
Excellent piece.
ChrisW, Thanks for sharing. I read slowly and will certainly do so again. If my takeaway is correct, the equity portion of CLOs are not as risky as I thought. I very much liked the duration “secret sauce”. Much to think about
Any thoughts on the management changes at ZION announced Friday after hours? Quite a few management changes.
Not quite a red flag, but maybe a yellow one?
It all seems a little abrupt.
One of my favorite “waste of time” YouTube shows is 747 Gear.
The originator, Kelsey, is a 747 pilot whose videos analyze common non-fatal mistakes pilots made captured on video.
What makes this show so attractive is that Kelsey often shrugs his shoulders and says “I’ve made that mistake myself” and goes on to give the specifics of that blunder..
He generally ends saying “Pilots are humans too. We make mistakes. The trick is to catch them before they hurt you and make sure they don’t happen in the future.”
In that vein, following is my “Investors are humans too. We make mistakes.” sharing.
I’ve long been proud of my KTH and KTN IG structured holdings.
KTH 8% coupon $28.95 = FIDO 7.1%
KTN 8% $26.61 = FIDO 7.7%
Terrific yields for IG securities.
I wondered why their valuations changed so little when interest rates rose and fell. but, hey, those are great yields.
Fast forward to three weeks ago.
I became interest in YTM for another “opportunity” I stumbled across. Colleagues on this site helped me out with some valuable references which I followed up on. That “opportunity” did not pan out but I began analyzing YTM for all my securities with a fixed maturity.
Guess what?
H YTM 4.09%
N YTM 5.5%
Yikes!
Fortunately for me, my gains on sale of N offset my losses on H.
An interesting conclusion is that Mr Market is comprised not only of experienced investors (like most of you) but also includes newbies like me who don’t know enough to look beyond the published yield and overbid.
Don’t be one of those who make that mistake.
That YTM for KTH looks off.
Are you using $27.10 as the principal repayment amount when the issue matures?
Also, are you considering the accrued interest?
I’m coming up with a YTM around 6% at $28.95 using $27.10 and stripping out the accrued interest.
Yes, just eyeballing you have to strip off about 65 cents. Plus who would $28.95? The person that did showed no patience. Its been pretty gettable around $28.60 without trying too hard. But I have had my methods to get it cheaper whenever I needed some.
Dick
Point well taken
Key thing is to look at the YTM, not the yield
Maybe I’ll get them right after a while
Am I doing something wrong? I can’t get this to come up on Schwab.
The KTH symbol on the Schwab app is goofy but it works on the website. Sometimes I can’t get certain preferred symbols to load on the Schwab app. I’ll usually just enter the trades on the website in those cases.
There are others like KTH. DTW doesn’t work on the app either. Preferreds are treated like red headed step children and these trading platforms give them next to no consideration.
Once you have say KTH in your Schwab account you can buy and sell them via the app. Just hit the 3 dots to right of the security and then you will have a buy or sell option to use with the app.
Thanks, I figured it out. Still learning the Schwab platform and all it’s little nuisances……
Don’t know how much of a difference it will make but NYCB likes the name Flagstar and is doing name changes. Stock price has been dropping.
“New York Community Bancorp Inc. has dropped the 10 brand names on its branches — including Roslyn Savings Bank, Queens County Savings Bank and New York Community Bank — in favor of the name of a Michigan-based lender that it purchased in December 2022: Flagstar Bank”
JPM ~ Dimond sells 150M in JPM stock
A big nothin’ donut, it was announced back in October he’d be selling a million shares. He only sold 821,800 shares. So either he’s OK with the cash he’s now set aside (for whatever his need is/was) or there’s another 178,000 shares he’ll stilll unload. At a historic high share prices, congrats to him.
https://apnews.com/article/jpmorgan-dimon-bank-stock-8bf2366793488eed0c0b5327a7ad19a3
CMSD is trading above CMSC, which shouldn’t happen. They’re essentially identical with six week offset in ex-div and payment dates. CMSC is next to pay. Full disclosure: I have an enormous holding in CMSC, by the standards of my tiny portfolio.
Not sure what the gap was you were seeing, but based on today’s close they are trading within a penny of each other.
CMSC has 18 cents more accrued interest, so they shouldn’t be trading at the same price.
I just added to my tax free municipal bond ladder:
Iowa Finance Authority Single Family Mtg Rev 4.5% due 7/1/44 to settle 3/12/24 @ $100.46 rated stable AAA/AAA guaranteed by multiple governmental agencies YTM/YTC/YTS all about 4.46% Sinker starts 1/1/40 Duration 7.539 Convexity .676 ALL housing bonds like this one can be called at anytime at par.
This tax free municipal bond fits one of my trusts portfolios and may or may not be suitable for your needs and portfolio. I urge each of you to do the research on all investments before committing your assets.
I am Azure
Sorry, I didn’t include the CUSIP 4624677W5 🙃
Many investors dreamed of seeing CD rates of 5.0% or greater. It has changed behavior from being forced into riskier assets aiming for higher “yields.” Sometimes it worked out and other times not so much. We have a number of preferreds/babys that either went belly up and/or suffered 90% loss of principal. The rush into CD/US Treasuries is called “T Bill and Chill” by some in the profession. Even around here on III, I see a lot of chillin goin on!
5% CD’s work well in tax deferred accounts, but not as much in taxable accounts. Since they pay out interest, it gets taxed at both the Federal and State levels. Not attractive for those in high Federal tax bracket and even more so those in high tax states, like California, New York, Minnesota etc. What the world needs is a way to get CD like returns without being immediately taxable.
Voila! There is a solution: BOXX: 1-3 Month Box ETF from Alpha Architects. Long story short, instead of paying out interest, it essentially adds it to the NAV on a daily basis. Instead of fixed $1 NAV money market fund that pays out 5% annually, BOXX will increase the NAV hence share price by 5% annually. Pull up a one year chart to see for yourself. This allows you to convert what would be highly taxed interest payments into capital gains, be they short term or long term. Seems to make a lot of sense for taxable accounts where the funds are not needed for a while. The added bonus of commission free trades is a key part of the benefits.
The ETF has been trading a little over one year and just passed $1 BILLION in assets and was written up by Bloomberg yesterday. Excerpt:
*******************************************************
A Marine Corps veteran with a finance Ph.D. has come up with a new way to avoid taxes.
Any American holding US government securities has to pay income taxes on the interest they generate. For the richest investors, the Internal Revenue Service’s cut is 37%.
But a year-old investment fund offers returns that closely track short-term Treasuries, with starkly lower tax bills. The fund, Alpha Architect 1-3 Month Box ETF, uses a complex options strategy and a longstanding tax loophole that favors exchange-traded funds.
“We spent seven years figuring out how to do this,” said Wesley Gray, the ex-Marine and chief executive officer of Alpha Architect. “My job is just to deliver all the value I possibly can to my shareholders, within the law.”
The fund, known by its ticker BOXX, surpassed $1 billion in assets this month. It is one of a number of efforts to use the ETF loophole in creative new ways, said Jeffrey Colon, a tax professor at Fordham University’s School of Law in New York. He called BOXX “the poster child for tax arbitrage.”
*******************************************************
I have no ties to Alpha Architect, but hold them in high regard. I have no reservations holding BOXX in any account. But as always I might be 100% wrong, so you MUST do your own due diligence before investing a single cent.
Link to Bloomberg story:
https://www.bloomberg.com/news/articles/2024-02-22/this-exchange-traded-fund-mimics-t-bill-returns-without-tax-bills
Link to BOXX website:
https://etfsite.alphaarchitect.com/boxx
As long as the loophole is open it will work. I would look for something to be done about this, unfortunately,
NTT, the “loophole” is like kind exchanges which is the same thing that nearly all equity ETF’s use. That is how they get around declaring most capital gains and causing a taxable event for the investor. If Washington tries to get rid of that, you are going to hear a lot of screaming from ALL of the ETF vendors. Can’t say it will not happen, but if it does it will effect BOXX and a blue zillion other ETF’s at the same time.
Related to this tax wise is a BIG PUSH to get rid of 401K/403B’s. Washington does not like all of that income escaping taxes TODAY. Smart money is betting 401K’s will be gone in under a decade.
I like the last line here…
“We’re one of a million products and ideas and innovations that, for lack of a better term, leverage the ETF tax technology to get a better outcome,” he said. “It’s more of a democratization of tax dodges.”
I like the concept. The only thing about this type of ETF is that it has never been stress-tested. Not saying they’re doing anything wrong or risky, but as with many other ETFs/ETNs, sometimes “things happen”.
People buy CDs, whether they are tax advantaged or not (and they are not in a taxable account) for a reason.
Rocky Mountain –
Stress tested? The NAV of an ETF can swing if traders get spooked but it’s unlikely that BOXX will move much because quantitatively, the underlying Box option strategy is riskless.
Thanks to a poster on this site I was made aware of Boxx. I ran it by a respected advisor and invested. It makes me happy knowing I will have little 1099 interest to pay while yielding money market CD or Treasury rates. Thank you to the poster! And hats off to those that also followed up on the post.
Is the “complex options strategy” a box spread of some sort? It would make sense given the name.
Scott,
That’s exactly what it is, thus the clever ticker BOXX
I wish I could recall the poster that alerted us all to BOXX. Not yet one year in but will have LT Capital Gains instead of ordinary interest income. I have watched this and the yield is same. I even ran this by my Schwab person and he/she thought it clever. Bloomberg is a year late publicizing; perhaps it should read III!
TNTowanda, I believe we owe thanks to Tex the 2nd for initially pointing us to BOXX.
Nice find, and thanks for sharing, Tex.
If so, thank you! For some reason, I don’t think so though. I recall the poster mentioned he was listening to the radio and heard about this. He/she was going to invest a small amount to begin with. I found a YouTube video on Boxx and studied it while asking others. Regardless, I/we owe great thanks . The cash inflow since Bloomberg has been tremendous. I reside in TN so don’t even pay state income tax but it saves me $$$$.
TNTowanda – you have a really good memory! I archive III comments using a (somewhat flaky) RSS feed using Outlook. Here’s the first reference to BOXX I could find:
_____
Feed: Comments for Innovative Income Investor
Posted on: Wednesday, July 19, 2023 5:10 AM
Author: mrinprophet
Subject: Comment on Sandbox Page by mrinprophet
Alpha Architect 1-3 month Box Spread
I was listening to the Market Huddle podcast and they had on Alpha Architects founder and they talked about their relatively new ETF BOXX.
https://etfsite.alphaarchitect.com/boxx/
I’ve heard of Box spreads before but never really paid much attention. Think synthetic cash using options (https://www.investopedia.com/terms/b/boxspread.asp). There are new ETFs popping up all the time, and I ignore 99% of them.
What caught my attention, and why I mention this here, is that this is effectively tax efficient cash. It doesn’t pay a dividend and you can look to turn these into long-term gains instead of income. You obviously need to hold it for the appropriate length, but I think there is some merit here, situationally. I’m taking a small position.
_____
Here’s the (broken) link to the comment – I believe it’s broken ‘cos stuff periodically gets deleted around here:
https://innovativeincomeinvestor.com/sandbox-page/comment-page-11/#comment-111688
Wow! Thank you for finding this. And to mrinprophet THANK YOU! Your post helped me and others. My entire family puts cash into BOXX.
I’ve never dealt in options so I don’t understand fully what this fund does. I’d like to know how it is related to treasury yields, and if treasury yields fall, does that mean boxx yield also falls? I don’t see any direct correlation to treasuries in what they describe.
Was I right or wrong?
I saw NIpB (NiSource Pfd Series B) trading at 24.91-24.92, so I bought it at 24.92 on a whim.
My thinking is that NIpB starts to float on 3/15 at a really nice yield, or will be called. Most likely called.
So, it’s like a lottery ticket, except you get your money back if you don’t win. Either the issue is called (most likely), in which case I get a minimal capital gain of 8 cents, or it moves to a really nice floating rate (I get it, highly unlikely).
Did I miss something?
Dono, what you missed was they already announced a redemption notice for March 15th.
Well, don’t forget the 8 cents. 😉
Funny how times change, Camroc. Remember a couple years ago that 8 cents would be a nice call snag. Now with 5% money markets, it doesnt carry the same heft as it used to.
You could buy $1,000,000 worth at 24.92 and make a cool $3,210.27 in less than a month.
Not including the interest payment.
And its not going to include it either since it went exD yesterday. No accrued dividend is coming. That train already left the station.
Dang. Well the $3,200 is still not a terrible return.
I dont see it much more than money market rates. 8 cents yesterday would be 22 days. 22 days of a 30 day month is .7333% of a month. Take 8 cents times 1.2667 gets you a prorated monthly 10.13 cents. Times that by 12 and thats $1.22. Divide that into 24.92 and that is a 4.89% yield. So taking liberties to avoid YTM calculator aside I wouldnt trust for this, its still only around 5% give or take which is basically MM returns. The market will have a pretty tight math on this until redemption.
Grid,
Just saying, I always love to see a thread where someone does the research and the work. Well done.
O. That is in honor of our dear online friend 2WR, who always sharpens the pencil long enough to hit out the 3rd place decimal if needed! Hope he is doing well and hope to see him posting soon again.
Don’t know how I missed that – thank you.
Question—is interest paid on Canadian stocks/bonds held in US retirement accounts (by US citizens) subject to a 15% withholding tax? I’ve read that the US-Canadian tax treaty agreement is making some changes. Thanks.
I can’t speak to legalities, and don’t own many Canadian issues, but can tell you what Fido does in my accounts: They withhold 15% of dividends in my taxable account (which I can recover via 1040), but do NOT withhold in my IRA and Roth. Hope that helps.
CR, just a reminder to make sure that you keep the foreign tax under $300 per year if single or $600 if married filing joint and securities are held in a taxable account. If you go over those limits you have to file Form 1116 and you will likely lose the deduction. I did a test on my taxes with an amount slightly over $600 and my credit returned zero. You still could claim it as an itemized deduction but that is much less than what is withheld.
Do you remember when Romney released his tax returns? I tried to find them but I could not. He had millions of dollars in foreign tax credits. I use Form 1116 every year and have not lost any of the foreign tax credits. I think the key is is not to have your foreign source income exceed a % (I do not what that is) of your total income.
Shareholder287, if Form 1116 is filled out and you are under the $300/$600 limits you will get the total credit applied against your tax due. If you use the Foreign Tax as an itemized deduction on Schedule A, you are able to list the entire amount. The credit is the preferable way to go since it is a dollar for dollar credit against your taxes, while the itemized deductions reduce your taxable income. You will have a reduction (Did Romney receive 100% of his Credit?) of the tax credit if you go over the $300/$600 limits.
Hi Steve N,
My foreign tax credits comfortably exceed $600. I use Form 1116. I have been able to recover all my foreign tax credits. They do carryover if you are not able to take them (which has happened a couple of times in the last 25+ years).
I think Romney was able to take all his foreign tax credits in that year but, that was a few years ago! Best, 287.
ASFAIK, Interest and dividends on Canadian securities is exempt from Canadian withholding if securities held in an IRA (traditional or Roth). However 401k accounts are Not Exempt.
Most brokers make you sign a form to exempt you from the canadian withholding tax (schwab made me sign).
The real problem is that the “not withholding against an IRA” requires the Canadian company, the Canadian paying agent (can’t remember real title), and the US broker to all get on the same page.
I kept getting hit with withholding for some Canadian issues in an IRA at schwab about 10+ years ago.
-schwab swore up and down it wasn’t them – they were just reporting what they received – so I should talk to the canadian paying agent.
-I also talked to the issuer, and they said they were reporting correctly to the paying agent (whom issuer selects), so it was the paying agent.
-Paying agent was no help.
After a couple of quarters, I ended up giving up on those issues in my IRAs.
So, maybe things have gotten better, or maybe the issuers you have will do better. Good luck to you.
it depends on the security and broker. Interest is treated differently than dividends and dividends SHOULD not be, and some brokers do it right, but some do it wrong.
And occasionally, there are dividends paid that are NOT exempt by treaty. (last one was Thomson Reuters in July, IIRC), but those are very rare.
Hi All,
Assume that most know about Textainer’s special meeting tomorrow 2-22 to approve their sale. This one worked out well for me. Here is a link to the company website with details!
https://investor.textainer.com/news-releases/news-release-details/textainer-announces-date-special-meeting-and-publication-its
Amen Roadkill.
I originally bought some in the $24.x range, and bought more as it dropped into the $18s. Only wish I had bought more $18s…..
For TGH-B, now that the deal is approved, it will be redeemed at $25 (or so they say) and it goes ex-div next week for $0.39, so its current price of $25.09 is still undervalued (right?)
The acquiring company has 120 days from closing to redeem the shares.
“Each issued and outstanding cumulative redeemable perpetual preference share of Textainer (each, a “Company Preference Share” and comprised of 7.000% Series A Cumulative Redeemable Perpetual Preference Shares, and the depositary shares representing a 1/000th interest in each such share, and 6.250% Series B Cumulative Redeemable Perpetual Preference Shares, and the depositary shares representing a 1/000th interest in each such share), will automatically convert into a corresponding preference share of the Surviving Company and will be entitled to the same dividend and all other preferences and privileges, voting rights, relative, participating, optional and other special rights as set forth in their respective certificate of designations in effect as of immediately prior to the Effective Time (as defined below). Within 120 days following the Closing (as defined below), each such issued and outstanding preference share of the Surviving Company will be redeemed by the Surviving Company, and each holder thereof will receive an amount in cash equal to the amount to which such holder is entitled pursuant to the applicable certificate of designations. Consequently, the depositary shares issued in respect of the Company Preference Shares (the “Series A Depositary Shares” and the “Series B Depositary Shares,” respectively) will represent a 1/1000th interest in a corresponding preference share of the Surviving Company. The redemption of preference shares of the Surviving Company will result in the corresponding redemption of the Series A Depositary Shares and the Series B Depositary Shares.”
Source: https://www.sec.gov/Archives/edgar/data/1413159/000119312524009283/d510957dex991.htm first page, third full paragraph.
Thanks, sailor.
so, it should pay the regular 39 cent divi (ex 2/29), and be redeemed within four months (so likely get next divi too, ex in May), if held until then.
My thought is that if you could buy today, collect the divi and sell 3/1 for 25, you would net about $.30. Not bad for holding for a week (better than MM account).
It should rise about two cents a week after 3/1 if it rises with the divi accrual. Not terrible.
Of course, sometimes the market action doesn’t match the math, so not risk free, but I bought a few hundred today (instead of moving money into MM) and may buy more overnight.
KRP Announced a Q4 2023 cash distribution of $0.43 per common unit, reflecting a payout ratio of 75% of cash available for distribution; implies a 11.2% annualized yield based on the February 20, 2024 closing price of $15.38 per common unit; Kimbell intends to utilize the remaining 25% of its cash available for distribution to repay a portion of the outstanding borrowings under Kimbell’s revolving credit facility.
I may or may not continue to hold KRP through the next qtr. depends on current and future oil prices. But may, as pricing has held above 70.00 per barrel. Questions about demand and production worldwide need to be watched. DYODD
Charles
Thanks for your KRP leadership
KRP, ENB, ET, EPD, AM
I believe North American fossil fuel has favorable future based on my 2024 political expectation (“drill baby, drill”) and deteriorating worldwide geopolitical situation.
Just my personal view.
As always, everyone to DYODD
Charles, Kimbell Royalty Partners https://www.sec.gov//Archives/edgar/data/1657788/000110465924025796/tm246436d1_ex99-1.htm
had another incredible quarter, exceeded my expectations and I greatly admire managements ability. Some highlights: 93% of the current distribution is tax free (return of capital), they have 16%+ of all the land based oil/gas producing rigs in the United States, are 1099 verses most Royalty Partners K1’s, currently have 17 million acres they control, record Q4 2023 consolidated Adjusted EBITDA of $69.0 million, an increase of 23.7% from Q3 2023, continue to grow their business through acquisition and rig count, 75% of earnings go for the distribution and the other 25% to paying down their debt. Please, I urge each of you to not listen to ANYTHING I post and do your own deep due diligence as you are the one that are responsible for your portfolio, future and the risks.
Courage is not the absence of fear, but rather the judgment that something else is more important than fear. Your current safe boundaries were once unknown frontiers.
I woke up this morning to a shock – my account went down $25k overnight! I shortly realized they finally delisted my 1000 shares of AIC. I liked it better when it was showing the last trading value of $24.33.
@jh
Me too at FIDO
sold Rilyz today; took a $925 hit ; reasoning; imho risk of deferred div payment has increased beyond my considerable tolerance ; RILY has $125 M bond issue due in April ;
I am mindful of CCLDP having a similar trading pattern before the Ax fell;
they even had the dividend declared for the next quarter ; Nov; but it was pulled; as does RILYZ now ; I was uninformed before : Oh they declared the dividend so they have to pay it; I got time to think about this !wrong
FWIW, RILYZ is a note, not preferred. So it pays interest, not a dividend. Therefore not declared or unpaid dividend. If interest payment isn’t paid they are in default.
Also, “M” has already been partially called (roughly 80%) for February, it will leave a small portion ($25 million) for April redemption.
FL–You are mostly right. All of the Rilys are senior notes, except for RILYL and RILYP, which are preferreds.
But it’s RILYO that’s partially called for February, with the remainder being paid in May.
RILYM is next up, due 2/28/25.
Hey James! Just wanted to clarify something from Ted’s post – seems like there was a mix-up between “M” and “O” for the timing and I failed to recall that. But the main idea remains intact, the majority of the next issue due has already been called, which is reassuring.
Regarding the market concerns, “Z” seems to be the last hurdle currently for Riley in terms of maturity. While the 5.25% coupon benefits Riley, the current price has taken a hit due to higher rates. It might be worth keeping an eye on as it approaches maturity and the YTM increases.
Interestingly, “O” had a healthy YTM just a few months back (XIRR of 20%), but now it’s almost at its maturity price. Things are definitely shifting, so staying vigilant is key.
There is also some kind of investor class action lawsuit brewing, but that seems directed toward common RILY shareholders. Not sure how that’s gonna play out if/when the company clears the SEC investigation into the Franchise Group CEO Brian Kahn. B. Riley
There is also some kind of investor class action lawsuit brewing, but that seems directed toward common RILY shareholders. Not sure how that’s gonna play out if/when the company clears the SEC investigation into the Franchise Group CEO Brian Kahn.
The RILY class action lawsuit is for shareholders who purchased common stock between May 10, 2023 to Nov 09, 2023. It’s being filed by a law firm that some consider to be ambulance chasers and/or in cahoots with short sellers.
If someone liked RILYZ at $16 a couple months ago, they are really going to like it now at ~$11.25 premarket this morning.
@GB – those that took a bite then are feeling a little indigestion currently. The hefty dividend on the common is due to be declared soon. If this is or isn’t declared, or reduced, may be an indicator of what’s happening under the hood of Riley.
Grid:
Saw this comment over on SA this morning from one of Rida’s lieutenant’s:
“I own all of the RILY Baby Bonds and just added RILYN this morning. Rida is recommending to members to add to the baby bonds if your allocation rules permit.”
So HDO has ridden these baby bonds all the way down. Not surprising. Has to be especially painful for his lemmings….whoops, I mean subscribers.
Caveat Emptor to anyone buying them now. I remember when he recommended the WPG bonds a few months before the company went belly-up. But perhaps RILY will soon issue a solid EPS report and we are near the bottom?
FWIW – Someone is working to manipulate the RILY stock as they are borrowing shares big time and paying 25% interest rate on shares lent.
> Someone is working to manipulate the RILY stock as they are borrowing shares big time and paying 25% interest rate on shares lent.
This is a funny framing; as if anyone who thinks that the shares are overvalued is inherently a fraud.
Show me where I said anything about fraud…. I mentioned it was a heavily shorted stock and borrowers paying a hefty premium. It’s the #3 stock as “most shorted” according to MarketWatch. 62% of float shorted. With this amount of shorting, someone is trying to work some magic with the stock, doesn’t mean or implied it’s fraud. But with the jump today, those folks are probably feeling a little less optomisitc about their short position.
Hi FL GUY,
There have been a few recent supposed “squeezes” in RILY. Thursday was the most recent example.
On Thursday RILY announced some press indicating that they (supposedly) did some kind of “internal review” and managed to clear themselves of any wrong doing. Where have we heard that before… Anyway this is interesting as on the Wednesday there were rumors of a letter being sent to the RILY Audit Committee Chair. If the letter that I saw was actually sent (I think it was) then I am not surprised that the press came out of RILY on the Thursday.
I have no opinion (or interest) in any of the allogations concerning FRG I just think this is part of the general short seller noise that is out there. My interst is only in the very expensive price of their options.
During the Thursday “squeeze” the common stock initially spiked (about 30% higher in early trading) and then sold off to the lows of the day. I personally took it as an opportunity to sell (more) April Calls.
The good news was that RILY did issue press stating that they would release earnings on 2/29. NOTE – they have a 10K filing deadline on 2/29. This is good news as the called RILYO May 2024 notes are supposed to return par plus 1 month interest on this date. My sense is that they would not have an earnings release on 2/29 if these called notes were not money good. The remaining (uncalled) RILYO has since gone to a small premium.
I actually have a good slug of the called RILYO as I invested proceeds from selling straddles into these notes back in December. Have since covered the put leg of the straddles and have layered on short call/long put postions in RILY.
If you look at recent trading in RILY public portfolio companies there may be forced liquidation (IMO) currently going on at RILY. Particularly looking at APLD and SNCR coupled with reported/rumored sales of Sylvan Learning Centers and also parts of their loan portfolio,
While earnings are scheudled for 2/29 what is interesting is their audited 10K. Last year they pre-announced in December, reported earnings on form 8K on Feb 22, NTed the 10K on 3/1 and restated with a 10K on March 16th. IMO a repeat of this is possible (likely?).
Anybody managing retirement capital would do best to steer clear of this name IMO.
For my part I expect to de-risk short call options legs going into the call, and aggressivly sell call options into any kind of “squeeze” after the call.
They are the kings of getting into these money sucking quagmires. I would trust a blind monkey throwing darts over these financial experts. One of the team, PennYlessY, has got caught admitting he has less money now than he did in 2019. And he isnt even retired yet. How is that even possible? Let me take a guess. Maybe being a high yield huckster, and not really being able to differentiate between a balance sheet and a balance beam.
These things may be eventually great money makers, who knows… But people thought Z was at $20, and $15 also and here we are. There may be some manipulation going on who knows. But any decent and respected company would not have a 2028 5.25% bond selling at under $11 in this relatively stable market environment. So it has not and will not be a play for me.
Hopefully for him, Rida pays well.
One should expect a sizable trading bounce at some point on these issues unless we hear in the short term RILY is going to zero.
Buy and hold forever, scary… Momentum and technicals just as valid or moreso in the trading here as any fundamentals if you believe anyone hawking the fundies at this point.
Ya, I dont like this at all, but Im weak and had to treat it as a sports bet, as a quick trade after this came out this morning. As your mention of a bounce should come from this. I did, however, prefer my 14th bet in a row win last night taking Sabres at $200 with plus odds to win in regulation which they did 3-2.
https://brileyfin.com/news
I bought 500 shares of Z at 12. Like to ride a quick bounce and leave!
Grid, glty and I thought my quick flip choice is taking a risk. I’m playing with gas, please don’t strike a match until I leave the room.
Charles, I am not proud of myself as this isnt an investment. Its a bored morning small bet. My hope was their internal investigation would at least drag the price back to what it was earlier in the month which was over $13. But if it goes to $11 first, I take my $500 welt on my rear and move on.
Charles, Grid
Oh, you guys
I see Z is at 12.21 11.66 low 12.45 high
All I can think of is the Garden of Eden
The snake…..
“Here, Eve, take a bite of this apple. It is soooo sweet”
“What do you have to lose?”
GOT to resist.
Reminds me of my Navy experience.
Moored in San Juan, Puerto Rico.
Friends said “Come with us to the Casino.”
“Nah, waste of money”
“Limit yourself to $75 – if you lose that, then leave.”
I won $465.
Lost $750 coming back the next three days
Info on the partial call for RILYO. As noted, the early redemption was a requirement of this credit facility.
https://www.prnewswire.com/news-releases/b-riley-financial-announces-partial-redemption-of-6-75-senior-notes-due-2024–302047541.html
thanks for all the comments to my post on Rilyz ; and all the RILYs; my error in
not noting these are mostly Notes , and any interest suspension would result
in default ; I note common theme in the responses is picking on some reason they won’t default rather than countering with investment pros to my con.
In any event selling yesterday at 11.84 turned out to be fortuitous;
RILYZ now trades 10.43. I feel comfortable watching the RILY show play out
from the sidelines.
Be very very very careful with this name if you are managing retirement (and not speculative) capital. Just a suggestion.
10 Year World Bond Yields; where do you see value??
Country S&P Yield▴ Rate Bund T-Note Bank Rate
Japan A+ 0.721% -0.10% -166.1 bp -355.5 bp 82.1 bp
Switzerland AAA 0.841% 1.75% -154.1 bp -343.5 bp -90.9 bp
Taiwan AA+ 1.210% 1.88% -117.2 bp -306.6 bp -67.0 bp
Vietnam BB+ 2.327% 4.50% -5.5 bp -194.9 bp -217.3 bp
Germany AAA 2.382% 4.50% 0.0 bp -189.4 bp -211.8 bp
China A+ 2.438% 3.45% 5.6 bp -183.8 bp -101.2 bp
Sweden AAA 2.514% 4.00% 13.2 bp -176.2 bp -148.6 bp
Denmark AAA 2.523% 3.60% 14.1 bp -175.3 bp -107.7 bp
Thailand BBB+ 2.566% 2.50% 18.4 bp -171.0 bp 6.6 bp
Netherlands AAA 2.649% 4.50% 26.7 bp -162.7 bp -185.1 bp
Ireland AA 2.787% 4.50% 40.5 bp -148.9 bp -171.3 bp
Finland AA+ 2.848% 4.50% 46.6 bp -142.8 bp -165.2 bp
France AA 2.860% 4.50% 47.8 bp -141.6 bp -164.0 bp
Austria AA+ 2.895% 4.50% 51.3 bp -138.1 bp -160.5 bp
Belgium AA 2.960% 4.50% 57.8 bp -131.6 bp -154.0 bp
Slovenia AA- 3.031% 4.50% 64.9 bp -124.5 bp -146.9 bp
Portugal BBB+ 3.045% 4.50% 66.3 bp -123.1 bp -145.5 bp
Singapore AAA 3.087% 3.78% 70.5 bp -118.9 bp -69.3 bp
Croatia BBB+ 3.244% 4.50% 86.2 bp -103.2 bp -125.6 bp
Spain A 3.288% 4.50% 90.6 bp -98.8 bp -121.2 bp
Cyprus BBB 3.319% 4.50% 93.7 bp -95.7 bp -118.1 bp
Greece BBB- 3.330% 4.50% 94.8 bp -94.6 bp -117.0 bp
Jordan (*) B+ 3.365% 7.50% 98.3 bp -91.1 bp -413.5 bp
South Korea AA 3.489% 3.50% 110.7 bp -78.7 bp -1.1 bp
Slovakia A+ 3.500% 4.50% 111.8 bp -77.6 bp -100.0 bp
Malta A- 3.529% 4.50% 114.7 bp -74.7 bp -97.1 bp
Canada AAA 3.591% 5.00% 120.9 bp -68.5 bp -140.9 bp
Czech Republic AA- 3.682% 6.25% 130.0 bp -59.4 bp -256.8 bp
Lithuania A+ 3.770% 4.50% 138.8 bp -50.6 bp -73.0 bp
Hong Kong AA+ 3.790% 5.75% 140.8 bp -48.6 bp -196.0 bp
Norway AAA 3.809% 4.50% 142.7 bp -46.7 bp -69.1 bp
Italy BBB 3.864% 4.50% 148.2 bp -41.2 bp -63.6 bp
Morocco BB+ 3.877% 3.00% 149.5 bp -39.9 bp 87.7 bp
Malaysia A- 3.894% 3.00% 151.2 bp -38.2 bp 89.4 bp
United Kingdom AA 4.087% 5.25% 170.5 bp -18.9 bp -116.3 bp
Australia AAA 4.182% 4.35% 180.0 bp -9.4 bp -16.8 bp
Israel AA- 4.200% 4.50% 181.8 bp -7.6 bp -30.0 bp
United States AA+ 4.276% 5.50% 189.4 bp 0.0 bp -122.4 bp
Bulgaria BBB 4.297% 3.79% 191.5 bp 2.1 bp 50.7 bp
Qatar (*) AA 4.820% 6.25% 243.8 bp 54.4 bp -143.0 bp
Mauritius BBB- 4.893% 4.50% 251.1 bp 61.7 bp 39.3 bp
New Zealand AA+ 4.918% 5.50% 253.6 bp 64.2 bp -58.2 bp
Poland A- 5.489% 5.75% 310.7 bp 121.3 bp -26.1 bp
Chile A 5.530% 7.25% 314.8 bp 125.4 bp -172.0 bp
Serbia BB+ 6.090% 6.50% 370.8 bp 181.4 bp -41.0 bp
Hungary BBB- 6.400% 10.00% 401.8 bp 212.4 bp -360.0 bp
Philippines BBB+ 6.418% 6.50% 403.6 bp 214.2 bp -8.2 bp
Iceland A+ 6.434% 9.25% 405.2 bp 215.8 bp -281.6 bp
Romania BBB- 6.515% 7.00% 413.3 bp 223.9 bp -48.5 bp
Perù BBB 6.701% 6.25% 431.9 bp 242.5 bp 45.1 bp
Indonesia BBB 6.701% 6.00% 431.9 bp 242.5 bp 70.1 bp
Botswana (*) BBB+ 6.979% 2.40% 459.7 bp 270.3 bp 457.9 bp
India BBB- 7.063% 6.50% 468.1 bp 278.7 bp 56.3 bp
Bahrain (*) B+ 7.478% 6.25% 509.6 bp 320.2 bp 122.8 bp
Ukraine (*) CCC 8.158% 15.00% 577.6 bp 388.2 bp -684.2 bp
Colombia BB+ 9.593% 12.75% 721.1 bp 531.7 bp -315.7 bp
Mexico BBB 9.656% 11.25% 727.4 bp 538.0 bp -159.4 bp
South Africa BB- 10.110% 8.25% 772.8 bp 583.4 bp 186.0 bp
Namibia 10.683% 7.75% 830.1 bp 640.7 bp 293.3 bp
Brazil BB 10.764% 11.25% 838.2 bp 648.8 bp -48.6 bp
Bangladesh BB- 12.255% 6.50% 987.3 bp 797.9 bp 575.5 bp
Russia NR 12.690% 16.00% 1030.8 bp 841.4 bp -331.0 bp
Sri Lanka SD 13.382% 9.00% 1100.0 bp 910.6 bp 438.2 bp
Pakistan CCC+ 14.728% 22.00% 1234.6 bp 1045.2 bp -727.2 bp
Nigeria B- 15.604% 18.75% 1322.2 bp 1132.8 bp -314.6 bp
Uganda B- 16.051% 9.50% 1366.9 bp 1177.5 bp 655.1 bp
Kenya B 17.453% 13.00% 1507.1 bp 1317.7 bp 445.3 bp
Turkey B 24.975% 45.00% 2259.3 bp 2069.9 bp -2002.5 bp
Zambia SD 25.180% 12.50% 2279.8 bp 2090.4 bp 1268.0 bp
Egypt B- 29.087% 21.25% 2670.5 bp 2481.1 bp 783.7 bp
Safe? Not sure on the exchange rate but Australia and New Zealand ? Higher risk, Indonesia and India ?
Namibia looks interesting. I haven’t done any serious research, but Total and Shell have discovered enormous oil and gas fields just off of their coast. As the finds are commercialized, it should bode well for Namibia’s coffers.
@azb
Canada – Financial Services, Natural Resources, and Manufacturing
Mexico – Natural Resources, and Manufacturing
Dark Horses:
Iceland – hopefully the volcano doesn’t destroy it
Uruguay – not on list
I’d stick with the Americas or specifically Canada and Mexico.
This was just for fun, and I am not an expert on sovereigns.
What say you?
NWGG, thank you for your reply. I too like Iceland as they have an excellent economy and if their 10 year bonds trade near 7.5%, I will be in. I can’t buy Mexican bonds (I watch Pemex closely and have owned many of their bonds in the past) because I find the corruption and lawlessness there to run deeply into every aspect of their economy. I am looking to buy all things India 🇮🇳 as they are the largest demo on the planet and growth in their economy seems like a quality bet into the future.
Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants – but debt is the money of slaves
Have a great weekend, A
Tim
U OK?
We all care for you.
Westie—I’m good–just busier than a 1 armed paper hanger–wish my business would go away (I know some folks love more ‘business’—me I am fine with just a little).
Until Mr Market enforces some kind of discipline on sovereign nations with their
Super high Debt to GDP ratios, they will just kick the can down the road and solve it. The US collects a ludicrously low amount of tax as a percent of GDP and could easily shoulder a higher tax collection by removing some of the distortions like the exemption on tax exempt debt.
But the bubble in the Chinese real property market is WAY worse in terms of economic damage that is going to be caused and could lead to the fall of the CCP, as the populace doesn’t get to vent their anger at the ballot box.
We could almost certainly shoulder a decrease in spending.
I think tough decisions on both the inflow and outflow sides need to be made.
I agree, but I have trouble recalling a ‘tough decision’ being made, other than pushing the issue further out(say beyond election day).
Doug, I agree also the solution to our debt problems lie with changes on both revenue and expenditures, but no politician has ever been successful getting elected on a platform that calls for higher taxes! The typical voter will tell you our taxes are way too high…… In reality taxes are at historical lows!
This is reaching into that political hot potato nonsense that we try to avoid here.
Thanks Rocky_Mountain_Hiker
Ready for something different?
With all the comments on CD and Treasury issues, the recent tone of III seems decidedly conservative. If you are less risk averse the following may be of interest.
TELL (Tellurian Inc) is in the early stages of building a LNG export terminal. TELL’s Driftwood LNG project is fully permitted by the EPA. The DOE has licensed Driftwood to export LNG for more than 25 years. TELL has spent several millions on construction but has not yet reached FID (Final Investment Decision).
TELL is attempting to turn the corner, declare FID and build/operate the Driftwood LNG project. In the last two months several factors make this more probable.
1) Early December 2023, the Chairman was replaced by the company co-founder.
2) Late December 2023, Lazard hired as financial advisor.
3) Late January 2024, Biden pauses approvals for pending and future applications to export LNG from new projects.
4) Early February 2024, TELL explored sale of upstream assets and business.
5) Last week, TELL received a FERC extension for Driftwood LNG completion till 2029.
These factors prompted my purchase of several thousand TELL shares at a price below $0.50 a share. In the past two weeks the shares have appreciated over 80 percent. TELL has stated they anticipate reaching FID in the next few weeks. TELL shares could be valued at 3 to 4 dollars when, or if, FID is declared.
There is a distinct possibility that the 2023 third quarter “Going Concern” warning could signal the collapse of TELL but I believe there is a reasonable case for Driftwood’s success.
TELL has a 8.25% senior note, symbol TELZ, due 2028. It pays 13.93% as of Friday’s close. I believe TELL is better positioned to benefit from a FID than TELZ.
Last year an III reader posted a brief comment on the public listing of MNR (Mach Natural Resources LP). Whoever it was, thank you. I purchased several hundred shares in the low 17’s. Last Friday MNR announced a cash distribution of $0.95 for the fourth quarter. MNR closed at $17.27 the day prior to the announcement. The annualized cash distribution amounts to over 20 percent. Of course one quarter is no guarantee of future earnings.
As always, DYODD. Regards from Thailand.
Bob
The original guy behind tell was originally a key executive at LNG. In that capacity he paid himself and his brother massive bonuses when the company was licensed to produce lng.This guy is far from shareholder friendly. I strongly advise you to look closely at what goes on in TELL as the same thing may well happen.sc
Anyone know where Allstate announces the current rate for ALL-B, now that it’s floating? I’ve poked around google and https://www.allstateinvestors.com/ and can’t find any mention of it.
https://www.preferredstockchannel.com/symbol/all.prb/ says it’s now 8.69% but based on the interest I received in January I infer a rate of 9.02% (not complaining). Anyway, I’d rather read it from the company itself.
search for “libor-linked”
https://www.allstateinvestors.com/static-files/22d8ce91-6b1a-45fa-92ac-784599569b68
The key to skiing in uneven terrain is to be over your skis.
The idea behind the thought is, when you don’t know what is before you, you need to be prepared for anything.
To do that, you have your weight centered.
We are investing in very uncertain terrain.
Political: Deeply divided Congress has two working days to pass 10 budget bills
Geopolitical: the Houthis are wielding increasingly sophisticated weapons supplied by Iran to close the Red Sea to traffic
The Fed: no change, decrease, maybe (gasp) increase
Are you over your skis?
I spent the long weekend going through my portfolio.
As I’ve mentioned before, I’m:
5% Cash (earning 5%)
40% T-Bills/CD’s (5.3%)
40% IG (cheating to include ENB, AQNB, and CHS ) (7.4%)
15% Below IG (8.2%)
That allocation fits my personal risk/reward appetite.
If the market goes up, down, or stays the same, I’m good.
When I first came onto this site, I was impressecd and intrigued how often Tim said “I’m planning to do nothing today.”
That’s me.
I feel over my skiis.
We’ll see if that holds.
Westie I have learned a lot from your contributions here thank you.