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.
This Bloomberg headline caught my eye:
“US Credit Risk Rises as Tariffs, Job Cuts Stoke Recession Fears”
That’s the first time recently I remember seeing “credit risk” in a story title on BBG. I look at BBG headlines to get an idea what narratives are current.
I think credit problems are what separate ordinary stock market corrections from recessionary corrections.
Here’s the FRED ICE BofA US High Yield Index Option-Adjusted Spread.
https://fred.stlouisfed.org/series/BAMLH0A0HYM2
What credit spreads are considered bellwethers?
Pennymac Libor Case
We won the 1st round.
PennyMac Decision and Order
file:///C:/Users/Peter/Downloads/PennyMac%20Decision%20and%20Order.pdf
tks for update..cannot open link ..could you recap it
John,
that link is on your computer!
No it is NOT!..its NOT a link Its a copy of file address on his hard drive (i.e. C)
I do that sometimes too
If you copy and paste it into your subject bar it will open up
Call me stupid but what is a subject bar?
perhaps this is why I’m losingtrader?
I understand the case without looking and it looks like it’s based on Calif Law when there’s a federal pre-emption..but I would contend federal law is on your side.
In any case if this works, isn’t there a State Street preferred subject to this same situation?
Any others?
I had asked CPFB to review the matter with ..if I am recalling accurately, State Street, but my car manufacturer decided to fire CPFB’s employees!
John Horn.
The link you provided is a local file path on your computer, which means it points to a file stored on your device. This means that no one on the internet (including all of us) can access your computer, and therefore, we cannot access the file.
Why? Security. If it were possible for us to access your local files, anyone could connect to anyone else’s PC in the world and steal interesting or sensitive files—whether it’s passwords, financial spreadsheets, or any other personal data you can imagine.
To share the file with others, you need to provide the internet source from where you got the file. The file you have is called “PennyMac Decision and Order.pdf.” If you didn’t create the PDF yourself, then the source must be from somewhere else.
Hopefully, this explains why no one in the world can access the file on your computer. There might be one person who could, like your mom, but she would need to be physically at your computer. She would need access to your computer, a login to your user account, and permission to access your directory, which is unlikely (but possible) since the file is stored in your personal directory.
If the article is lengthy and spans several pages, consider using an AI chatbot or a custom large language model like Llama, GPT, or DeepSeek. You can prompt it to summarize the article into a single paragraph with five or fewer sentences, including a concise title or headline.
I dont have any dog in this hunt. I personally wouldnt invest in pennymac.
As a follow-up on PMT case – https://drive.google.com/file/d/1JSdPZSUaLJ9dcTsJ8-djKZ0pBEpFm_CI/view
Thanks 2wr. I was asked to render an opinion in this case–which I declined to do since I can’t afford to spend my time on items for which I have no dog in the fight. There are other cases being pondered relative to the LIBOR Act–no thank you I don’t want to render an opinion in these cases either–although the lawyers involved have been chasing me around. Just because one publishes a website doesn’t mean he knows anything more than the next guy.
I used llama 3.2. Summary:
It appears that the court transcript is primarily discussing the defendants’ motions to dismiss. Here’s a revised summary:
The Plaintiff had filed a lawsuit against PennyMac Mortgage Investment Trust and others, alleging some form of violation or claim against them.
The defendants have filed two motions: (1) a motion for judgment on the pleadings, and (2) a motion to dismiss under Rule 12(b)(6). They are requesting that the court grant their motion to dismiss, which would mean that the lawsuit should be dismissed without further consideration of the merits.
In response, the court has denied both motions. The transcript indicates that the court is denying these motions because they do not meet the required standard for dismissal under Rule 12(b)(6), and also notes that it cannot consider material beyond the pleadings when ruling on a motion to dismiss.
Overall, it seems that the defendants are trying to have their lawsuit dismissed, but the court has denied their request and they will need to respond to the complaint.
Thank you for finding and posting this. I bought some PMT-B a short while ago on the theory that this lawsuit (and the potential for a switch to a higher floating rate) didn’t seem to be priced in. This ruling makes me think that was a reasonable decision.
While it’s just a decision not to dismiss, and not anything final, the court hints very strongly that it thinks the plaintiffs have a good argument, and that this is exactly the outcome the LIBOR Act sought to prevent. I am not a lawyer and not a securities expert, but at this point a plain reading makes it sound like PennyMac is likely to lose.
It’s not clear what the remedy would be, though. It’s a California specific suit, so it’s possible that it would apply only to California residents. It also specifies the class as those “who own or owned” shares, so it’s possible those who buy now might not get the full benefit of a win. And PennyMac has made it clear that they will do whatever they can to avoid paying. Still, I think this is about as good a decision as holders can hope for at this point.
Anyone else took a look at your portfolio today? I usually don’t on bloodbath days, but I did today as I wanted to see where RITM-A is. Amazingly my portfolio is showing a modest amount of green overall on a day the S&P just hit 2.2% down! Makes me feel good I somehow managed to invest for some stability…… Let’s just hope investing in debt continues to hold up as that is mostly what we do for income investing except for the few common stocks held such as the utilities. Maybe I’m just lucky!!!!
I’ve also been surprised to see nice green on down days- today across all accounts am down ~$250 Pretty stable to rising the last couple weeks.
Gary, I agree but it’s early in the day and the accounts reports are delayed during the day. The end of day is more important. S & P down about 2% currently. Sit back and pass the popcorn.
Right on- down amt has doubled. Lately, at end of day, all indexes seem to recover some.
How important is foreign investment to US asset prices? And what would happen if foreign investment fell. I’ve listened to only the first few minutes of this podcast.
https://podcasts.apple.com/us/podcast/monetary-matters-with-jack-farley/id1769093906
Is it odd that US stock indexes are correcting while at the same time German and Chinese (priced in dollars) are rising?
I’m getting very uncomfortable with the new administration’s efforts to change so many things at the same time. It’s hard to estimate the effects of even one major change.
I am okay with changing lots of things at once. I am not okay with the constant shifting and reversals of announcements. As of this morning, the tariffs on Mexico & Canada, now slated for April, MAY be more than 25%. Which, of course, means they may not be.
There is no excuse for this constant shifting.
Steve, Now you see part of my reasoning to wonder about investing somewhere else. The new Prime minister was just installed in Canada and he is taking a tough stand.
Reading on line I get the impression a few Canadians are feeling upset at the way they are being treated and are looking for new sources for products like produce for example and said they wouldn’t return to buying from America.
The nonsense of Canada becoming a 51st state does seem to have upset many Canadians.
I have invested in other places specifically Canada. Currency fluctuations need to be taken into account. I did not do a good job with that.
Do we have anyone here on III that is good with currency hedging that could share some strategy to manage exchange rate fluctuation?
I’ve got a friend who does a lot of international investing and his best strategy is not to hedge. He’s got a lot of stocks in HKG, where the exchange rate is banded between 7.75 and 7.85 for decades, but in other markets he’s always talking about PPP , Purchasing power parity
Charles, Canada is and will be in a rough spot unless they can immediately make moves to ensure access to their own energy cheaply. They have been reluctant lately to take advantage of their own good fortune of having the geology and infrastructure to support it but by and large have been governed by the climate gods to make it hard to grow, thus dependancy on another country for so much of their prosperity. If the US were to permanently impose tariffs then access to that cheap energy essential to growth. Trump hates Trudeau. He will hate the new guy more is my prediction. So as a result, I’m going to make a wager that US-Canada relations rough at least next 4 yrs, unless at some point the Canadians capitulate. Yes, not their nature to do so, but they are vulnerable to aggressive US action.
I do not agree at all with your analogy of Germany. The German tough times are due to self inflicted wounds of which they have been warned about multiple times over the last couple decades. Much of Europe also afflicted by the same insane energy policies that forced them to abdicate to their Russian masters to ensure they don’t freeze to death. As we can see this play out now under multiple fronts; war, energy, and geopolitics. Recent moves by France (military build up and a more aggressive push for nuclear power) indicate their leader understood when Trump told him the old model won’t be happening from now on. The US, by contrast, is much more capable of a more self reliant economic model if that is in fact what ends up happening. My thought is there is simply not enough time for this to all play out and running out the clock might be an effective strategy for combatants in an ongoing trade war. Have no idea, of course, what comes after Trump. Are these countries going to rely on a US election to change their paradigm?
Pig, I agree with a lot of what you say. When I was living in Pennsylvania I noticed during the winter produce was very expensive and the selection wasn’t as good as I was used to here in Calif. During the winter out here a lot of what we get is cheap and from Mexico. I’m sure Mexico would be happy to ship produce to Canada for more money. I would say 3 days at the most from Mexico by ship to Vancouver. Right now we are getting cheap grapes from Chile.
I don’t know let’s just see how this will play out.
Mark Carney the new Liberal Party leader is also the former Vice Chairman of Brookfield Asset Management among other things.
Well Citadel you know where the government retirement funds are going.
More to the point and far more concerning: 12 months from now when the present dislocations and those to come have had a chance to ferment and all the illegals have been chucked out, what group comes next.
People who spell “Steven ” with “Stephen”
hahahaha
I live a few miles from Canadian border. Cross frequently for arts, food and views. Check a few of their newspapers for restaurant deals, tix for plays and duty free booze. etc.
Currency fx is very favorable for us.
U.S. press is not reporting they are really really really PO’d. I have tix for a play. debating about not going. today ontario put 25% “tariff” on elec they sell to 3 states. took american booze out of their gov’t stores, (largest non u.s. volume market). Goods in stores are labeled “made in canada”
The states most affected by Canadian electricity tariffs are NY and MN…Michigan not so much due to regional sharing. My guess is the situation will be resolved after Canada holds elections but not before.
The talk about Canada being the 51st state and their prime minister being referred to as Governor is creating a hardening of positions. It makes it hard to predict because emotions are getting in the way
TRUMP: HAVE INSTRUCTED SECRETARY OF COMMERCE TO ADD ADDITIONAL 25% TARIFF, TO 50%, ON ALL STEEL AND ALUMINUM COMING INTO THE UNITED STATES FROM CANADA.
TRUMP: WILL SUBSTANTIALLY INCREASE TARIFFS ON CARS COMING INTO U.S. ON APRIL 2ND IF OTHER TARIFFS NOT DROPPED BY CANADA.
TRUMP: THIS WILL GO INTO EFFECT TOMORROW MORNING.
TRUMP: WILL SHORTLY BE DECLARING A NATIONAL EMERGENCY ON ELECTRICITY.
The punishment will continue until morale improves!
This excerpt from yesterday’s Daily Spark https://www.apolloacademy.com/the-daily-spark/ by Torsten Slok in which he discusses the ideas tied to a Mar-a Lago Accord:
“1) The changes that are required to existing US manufacturing production, including eliminating Canada and Mexico from all auto supply chains, will take many years. Can the US achieve the long-term gain without too much short-term pain?
2) Globalization has for decades put downward pressure on US inflation. Will a more segmented global economy with a much bigger manufacturing sector in the US put too much upward pressure on US inflation, given the higher wage costs in the US than in many other countries?
3) With tariffs being implemented, the rest of the world may over time begin to decrease its reliance on US markets and also increase their own defense spending. Under such a scenario, what are the incentives for the rest of the world to sign a Mar-a-Lago Accord?”
Over my head to make a comment on, except I’d guess that any path aimed at bringing all auto production to the US means more expensive cars.
Rocks, He stole my thoughts!
On today’s litter box I replied to Westie that these moves with tariff’s to leverage our trading partners was probably going to make them re-think their dependence on trade with the U.S.
A by product of this would also be less dependence on the American dollar.
Unfortunately, This is going to work out exactly like in Germany. They tried to keep a higher standard of living and continue to manufacture and sell to other countries. But as with anything cheaper wins out. They lost the battle and to be competitive and still be able to sell products They first moved production to lower cost European countries like Spain then finally out sourcing to China.
Even if production for a lot of products is moved back to the US, the market to sell to will be smaller than the world market and cost will not be competitive.
All of the Sunday comments are well focused on the fast paced chgs of economics & country ties we are living thru. They are great reads.
Quick, & recent, overview of the Dollar ( DXY ) . . .
December 31, 2024 = $108.15
Janurary 13,2025 = $109.99
February 14, = $107.00
Feb 28, = $107.38
March 07, = $103.82
I’m looking for relatively safe 7.5 to 8.0%
PMT issues may apply;
Relatively safe 7.5% to 8%
Isn’t that an oxymoron?
No, it is really not…. I will throw a couple out there….
ARGD
BEPI
FGBIP
You’re welcome….
FGBI’s last quarterly report from Feb 16th time frame.. they are going in the wrong direction while other banks have stabilized or improved. Not saying it won’t pay but things have gotten worse, not better over the last 12 months.
I am not shy about buying bank preferred but even I need to see improvement over the last 6-12 months…. So I did not purchase any.
SGOV – 75%
XDTE – 25%
Income, est – about 10.1%
Performance, dividends reinvested, 4/24 to 2/25 – Up 7.4%
Max draw down – 0.6%
SPY/TLT 60/40
Income, est – about 2.4%
Performance, dividends reinvested, 4/24 to 2/25 – Up 9.4%
Max draw down – 5%
JMO. DYODD.
Bear-
XDTE is down >14% in 3 mo- not exactly ‘relatively’ safe.
I received my FICO today from one of the banks where I do business.
Only mentioning this because it’s funny: 849/850.
The reason it wasn’t higher, according to the report, is that I don’t have any installment debt.
I do recall seeing 850 once in my life when I was using 0% financing on a car loan.
Perhaps funnier is that Progressive refused to provide a home insurance quote due to my Transunion report. The letter I received by mail from progressive indicated I had 35 credit lines and said “OPTIMAL: 1”
Does Progressive wants customers who can’t get written by others?
As an aside, I went with PURE. They only have 1650 policies written in Nevada, but the terms of the policy and their claims settlement procedures are far and away the best in the industry for high value homes.
Having a dad who has been in insurance for 70 years, policy terms are super important. They have a “home systems” coverage that is pennies compared to a homeowners warranty company and isn’t limited in $ value….the HO warranty companies would likely pay about 20% of the value of my refrigerator or AC unit
At my advanced/lengthy credit history and a mortgage (no other debt), my scores vary between 850 and a few pointa lower– changing every month, depending on whether I charge a few hundred or a couple thousand on one of my few cards– all of which is paid off before their end of month report- crazy & almost meaningless.
My friend Jonathan Clements is the owner and editor of Humble Dollar; he sadly is dying of cancer and sat down for an interview. I wish I had gotten the opportunity to interview him on my old investment radio show and believe many can learn from his story: https://humbledollar.com/2025/03/asking-the-editor/?utm_source=mailpoet&utm_medium=email&utm_source_platform=mailpoet&utm_campaign=another-ses-test_7
Be well my friends, Azure
Curious why Citi has not called C-N floater– Qonline has it over 10% and $30.17 Seems risky to be buying it- almost 9.5 yrs past call, but they don’t seem interested in doing so.
Gary,
I recently investigated this. The reason is pretty interesting. This should get you started…. all oddities seem to trace back to Gridbird…
https://innovativeincomeinvestor.com/esports-entertainment-suspends-preferred-dividend/#comment-105491
Does anyone not see the illogic in the Citi disclosure about why C-N isn’t called?
I’d think the market would be capable of understanding the $700 million hit to earnings on extinguishment of the debt. In any case it would be a one or two day affect on the price of the stock as people read the cause.
Or, is this an example of Citi understanding the inefficiency of markets?
LT,
I thought the same… I wondered why they did not do some partial calls year by year? The differential between the preferred price and the par value scared me away.
voner
Citi pref N
Put your thinking cap on.
Cost of capital.
Citi is grandfathered on this issue which it got through purchasing the original issuer and was allowed by the regulatory approval at that time to count it as regulatory capital.
Unless/until the regulation changes, there is no cheaper cost of regulatory capital to Citi than this issue.
Thanks to all- makes sense, in a way.
Prob won’t see a ‘low’ price again. 3/19/20 was the time to grab it.
About 1 year ago, I began to pay more attention to the institutional preferred and baby bond marketplace. Why? The large money center banks. Over the last year, I have purchased STT-I (State Street 6.7%), C-CC (Citibank 7.125%), JPM-OO(JP Morgan 6.5%) and now BK-J (Bank of NY 6.3%). Do not bother to look up the stock symbols (STT-I, C-CC, JPM-OO or BK-J).
None of these institutional issues trade via stock symbol. They trade by CUSIP. These are preferred stocks and like almost all preferreds they are perpetual. However, they are all also 5-year fixed rate reset off the 5-year treasury rate. I prefer not to take a lot of interest rate risk. I have no idea why the major banks seem to be abandoning the retail preferred marketplace. Anybody have any thoughts why this is happening?
In terms of the baby bond market, my strategy was to own 20 different investment grade utility companies each at about 1% of my net worth. That is because utility companies can generally defer interest payments for 10 years. My risk mitigation to that happening. I consider companies like Eversource, National Grid, Ameren, and Entergy to be 1 company and my total holding, I am still self-limiting to 1%.
Again, in the institutional market I am finding companies that are not issuing retail baby bonds. Like most baby bonds, they have long durations, so again I only buy fixed rate off the 5-year T-Bill. This allowed me to add American Electric Power, Replace NISource, whose retail issue was called, and add Nevada Power (a Berkshire Hathaway Energy company).
Again, I am not sure why these companies are avoiding the retail baby bond space.
Steve, I don’t think anything has changed since the dawn of man trading with fellow man. The tides just ebb and flow. The big banks in the New York money centers catered to the wealthy, then you had the everyday banks for the working man. The Dime banks grew because they realized pennies and dimes add up to dollars just took longer. The big banks grew but they went after larger depositors. I just don’t think the mega banks want to deal with collecting money $25.00 at a time anymore.
As I understand it, The banks do not sell their preferreds shares. They hire underwriters to sell them.
Steve,
I agree the $25 wrapper is only relevant to broaden the base of debt holders.
It seems these issues always have a yield lower than the $1000 issues, but may be more liquid.
I believe this was just one reason for Corts, with a secondary reason being it allowed registered reps and bd’s another bite at the apple by creating a new security .
tax preference seems like a reasonable answer.
The preferreds are part of the banks regulatory capital whether retail or instititional. Both are qualified dividends. I do not know of any tax preferences here.
In general, are the size of the issues you’ve been looking at large? The consensus would be that the retail baby bond market is limited in size as opposed to what can be issued in the institutional market… Also, frequently there is a price differential between the two, most frequently favoring issuance in the institutional market from the issuer’s point of view..
2whiteroses. I think you hit the nail on the head. These issues have been fairly large.
Thanks
Steve—I did the same thing. I own State Street 6.7%, Citicorp 7.625%, Citicorp 7% and Cobank 6.45%. The Citicorp 7% is a 10 year T reset and the others are 5 year. In finra, I can see the current trading history of all issues so I’m not trading blind when I call the Schwab bond desk. I have, at last what I consider, large investments in all of them at yields that range from 6.46% to 7.61%.
I lost COBANK January 2nd 2025 when it was called. The new issue had a minimum of 250K, which is too large a single position for me. I also monitor FINRA when I call the Schwab bond desk. I have found that the pricing from Schwab is generally a tad more than I expect. However, it is almost always below some trades taking place on FINRA. So, to me it’s okay. But I sure would prefer just being able to issue a bid and see if I could get the pricing that I really would like. This is the one thing about all of these issues. They are not as easily tradeable as retail issues. Right now, my institutional fixed rate resets are 17% of my net worth. I am not sure if I will add more to this block of money because they are less liguld than retail preferreds. But, I am very happy with my blended return on these issues.
Steve-
You mentioned institutional baby bonds. I think you meant to say bonds, being that they are $1000 issues, generally of the subordinated variety. Here are some junior resets and floaters that I watch or own:
CRBG 21871XAP4 6.875% first reset 12/15/27
ET 29273VAX8 8.0% first reset 11/15/29
ET 29273VBC3 7.125% first reset 10/1/29
EPD 29379VBM4 7.55% floating
EPD 29379VBN2 5.25% floats 11/16/27
ALL 020002BB6 7.5% floating
PPL 69352PAC7 7.2% floating
NRUC 637432MT9 7.5% floating
TRP 89352HBG3 7.0% first reset 6/1/30
There must be many more like these with some great yields. Please share. Juniors have more risk than seniors to go along with the better yields. The credit risk of the issuer might be more important.
r2s—I have a large position in the NRUC issue (currently floating with a 7.45% coupon). 3month sofr + 26bp + 291bp. Changes and pays every 3 months. A3/BBB Currently trading at $100.5. I definitely agree that the credit of the issuer is most important.
Two other issues I own are by Enstar Finance. 5.75% and 5.5% coupons that will reset off the 5 year T—the former this year and the latter in ’27. I assume the 5.75% will be called in September, but who knows with the 5.5%? It floats to the 5 year T plus 4% Both are BBB-
NRUC floating ?
please check this ; it’s a Note
ted-
Some junior $1000 notes float or reset. The same is true of junior baby bonds.
Ted the NRUC doesn’t float or reset. If you are talking about the Co-op’s $1000.00 bonds you will have to post a Cusip so we can look it up.
r2s—do you know the float terms of the PPL issue? Thanks.
Whidbey Islander,
69352PAC7 – PPL – floats off the 3 month plus 2.66%
https://www.sec.gov/Archives/edgar/data/922224/000089322007000779/e31666fwfwp.htm
Good info, thanks. Do any of these pay qualified dividends?
The bonds won’t pay qualified as they are interest but many of the institutional preferreds may be qualified and worth checking out.
Here is an older list that somebody posted on this site within the last year of utility issues that float. A starting point for others to investigate if they are interested. With the CUSIP number, this should be enough to start researching any company that you are interested in.
Southern California Edison Co 842400FU2 9.767 9.74 SOFR
National Rural Utilities Cooperative Corp 637432MT9 8.489 8.49 SOFR
PPL Capital Funding Inc 69352PAC7 8.236 8.25 SOFR
Edison International 281020AZ0 8.225 8.03 UST5
NextEra Energy Capital Holdings Inc 302570AW6 7.631 7.97 3ML
Edison International 281020AX5 8.125 7.87 UST5
WEC Energy Group Inc 976657AH9 7.681 7.84 SOFR
Sempra 816851BS7 7.5243 7.54 ??
National Rural Utilities Cooperative Finance Corp 637432PB5 7.125 6.9 UST5
Emera Inc 290876AD3 6.75 6.8 3ML
NextEra Energy Capital Holdings Inc 65339KCW8 6.7 6.71 ??
National Rural Utilities Cooperative Finance Corp 63743HFQ0 6.2179 6.17 SOFR
Georgia Power Co 373334KU4 6.0992 6.07 SOFR
National Rural Utilities Cooperative Finance Corp 63743HFL1 6.0482 6.03 SOFR
NextEra Energy Capital Holdings Inc 65339KCR9 6.0397 6 SOFR
CenterPoint Energy Inc 15189TAZ0 5.9996 6 SOFR
NextEra Energy Capital Holdings Inc 65339KBK5 5.65 5.87 3ML
Laclede Gas Co 84859DAB3 5.8534 5.84 SOFR
Dominion Energy Inc 25746UBY4 5.75 5.75 3ML
National Rural Utilities Cooperative Corp 63743HFA5 5.6851 5.68 SOFR
Mississippi Power Co 605417CC6 5.6563 5.66 SOFR
Edison International 281020AS6 5.375 5.57 UST5
Consumers Energy Co 210518DG8 5.4085 5.41 SOFR
Algonquin Power & Utilities Corp 015857AH8 4.75 5.4 Reset
Florida Power & Light Co 341081GC5 5.3029 5.39 SOFR
National Rural Utilities Cooperative Finance Corp 637432NK7 5.25 5.37 3ML
Florida Power & Light Co 341081GJ0 5.2205 5.27 SOFR
Edison International 281020AT4 5 5.27 Reset
CMS Energy Corp 125896BU3 4.75 5.23 ??
NextEra Energy Capital Holdings Inc 65339KAV2 4.8 5.21 3ML
Florida Power & Light Co 341081GS0 4.998 5.03 SOFR
Sempra 816851BK4 4.875 4.98 ??
Duke Energy Corp 26441CBG9 4.875 4.91 UST5
Dominion Energy Inc 25746UDD8 4.65 4.76 UST5
Dominion Energy Inc 25746UDM8 4.35 4.66 UST5
CMS Energy Corp 125896BV1 3.75 4.56 ??
Sempra 816851BM0 4.125 4.47 UST5
American Electric Power Co Inc 025537AU5 3.875 4.29 Reset
Southern Co/The 842587DF1 4 4.17 ??
NextEra Energy Capital Holdings Inc 65339KCB4 3.8 4.16 ??
Southern Co/The 842587DJ3 3.75 4.06 ??
Duke Energy Corp 26441CBP9 3.25 3.66 Reset
I prefer senior debt for $1000 issues, although I own some preferred and juniors. To me, senior debt from credit-worthy issuers is what distinguishes bonds from preferreds and junior BBs. However, the temptation has been the ability to lock in a great coupon for several years.
Hey Steve,
Not sure on the retail preferreds not being issued as much but maybe it’s cyclical demand. There seems to be a small return of accredited investor convertible bonds.
I have the Citi 7.125 issue, would you be up for sharing the CUSIPs of any of the others that are trading a reasonable yield still?
I have lots of utility preferreds as well spread out over some of the same companies and like that as part of the strategy as we journey into the unknown. It was bittersweet to give up the PacifiCorp shares to the tender offer but too good of a deal.
Thanks for the posts.
Here is what I own.
172967PK1 CITIGROUP INC. 7.125% Reset 5Yr+2.693%
025537AU5 AMERICAN ELECTR 3.875% Yield to 1st call 6.2% Reset 5Yr+2.675%
65473PAR6 NISOURCE INC. 6.95% Reset 5Yr+2.451%
89352HBG3 TRANSCANADA PIPELINE 7% Reset 5YR+2.614%
48128AAJ2 JPMORGAN CHASE 6.5% Reset 5YR+2.152%
641423CH9 NEVADA POWER CO 6.25% Reset 5YR+1.936%
857477CH4 STATE STREET CORP 6.7% Reset 5YR+2.613%
064058AN0 THE BANK OF NY 6.3% Reset 5YR+2.291%
If you do not mind the lower coupon payments until AEP resets 2 years from now in early 2027, I believe the current pricing will still get you a 6.2% yield to 1st call. AEP is not in the $25 retail preferred market. Pacificorp was a Berkshire Hathaway Energy company as is Nevada Power.
I can confirm that Schwab marked State Street and Citibank as qualified dividends. JPM and Bank of NY are new issues that have not yet paid dividends but I expect them to be qualified dividends (DYODD).
NiSource and AEP are bond interest (not qualified dividends). I expect the new issues of Nevada Power and Trans Canada Pipeline to also be bond interest (not qualified DYODD).
SteveA, Great list, thanks for posting all that info. Looks like some good stuff in there.
Great list. Did anyone able to buy this online? Seems like no bond inventory for trade other than calling the bond trader specialist. Last year I’m only able to buy citigroup 7.125 but took a while.
No, I had to call the bond desk for every trade. Schwab had none of them but put out ask requests and called me when they got a response. Took several hours on average. For Bank of NY Mellon this took 3 days. The Schwab ask request is good for only 1 day, so I had to call back every single day.
Thanks. Do you have to pay a fee to the bond desk even if there is not trade executed including GTC trade? I never used bond desk since the fees are relatively high and I don’t buy large number of bonds.
Steve, You don’t mind my asking Did Schwab have a minimum?
No minimums other than the issue minimums themselves. For example, I saw the new NRUC issue in the secondary market. I tried to buy it. It had a 250,000 minimum and they enforced it. I saw some posters say that Fidelity required a 50,000 minimum to do an ask request. That has not been an issue with Schwab – no minimums
Thanks Steve, I have been told the 50k minimum. I think they are very busy over at Fidelity.
Charles, can confirm on no minimums for Schwab.
Not commenting for Steve but for RP and CM and my previous orders a Schwab:
-if a customer is unable to process order via the site, they will not charge the phone fee but there is another smallish fee that they pass along. These are all in increments of 1,000 as far as I know.
The Schwab site does allow you to look up most CUSIPs and you can see what stuff has been trading for recently sometimes (time and sales) because a lot of these issues they have to call a broker and get a price so you can see if their current broker is being ridiculous or not.
Fidelity has a similar policy if I remember correctly.
You’re a legend. TY for sharing. I have to say that I liked having Buffett pay a premium for my dividend shares because he doesn’t like to pay them. Good note on AEP, was looking at them earlier but not this issue.
Just to give one back (only institutional that hasn’t been called) I have:
Citi 7.200% Series BB Fix to 5/15/29|5yr treas+2.905% 172967PJ4
There does seem to be a little extra kicker for the issues that aren’t on the retail market.
I’ll be digging through these.
I’ve been lucky to buy Citi 7.2 and Citi 7.15 bonds last year. I guess people are holding these bonds when interest rate is trending downwards. I’ve to regularly checked these illiquid bonds every day. Bought these two online via InteractiveBrokers but almost zero availability online when I last checked a few weeks ago.
The Aug ES (SPX futures) rally to all-time high was 19%. It retraced 50% at today’s low for an exact 8% correction. Round numbers mean traders were waiting to buy. The close was just above the 200-day moving average. Nicely scripted. SPX has a history of correcting to even percents.
I don’t know what will happen next. If the low gets taken out quickly, more downside to come is likely (market frowny face). For a new all-time high, I’d guess some uncertainties need to be cleared up, including the growth rate for big growth stocks. Next month’s payroll report will be more important than today’s. CPI Wednesday, FOMC a week later.
CCLD and it’s preferreds of this were mentioned yesterday.
Today, there was a 3 million share sell imbalance at the close in CCLD, driving it into the 1.60’s
One day after the $25 preferred CCLDP gets converted to CCLD worth about $14.7, the CCLD drops another 21% so worth about $12.59.
Puerto Rico independence? No idea if this is under consideration. Years ago and it could have changed some muni bond fuds and/or CEF’s had tax free bonds from Puerto Rico.
I have no muni bond funds. I have no idea of impact on this market if any.
https://www.dailymail.co.uk/news/article-14474405/trump-terminates-funding-columbia-anti-israel-protests.html
sorry wrong link
https://www.dailymail.co.uk/news/article-14470559/Trump-pressured-make-Puerto-Rico-independent-save-America-eye-watering-617-billion.html
Jumped into F-D (Ford Baby Bond). 6.89% for this BBB- issue seems a little mispriced.
III has it as BB+ (S&P), not BBB- I have had some shares however since 2022.
yazzer, ok yes see that. Quantum says Ba1/BBB-, Schwab has it at BBB-
QOL has both right
I like it and have been adding myself. Automakers been getting headwinds with tariffs so good opp to pick some up on the cheap.
Another interesting interview with Michael Howell.
https://www.youtube.com/watch?v=NJC5cLGVX8E
Amongst the ongoing carnage these two are interesting:
FTAI, which bounced hard after the review, is falling again.
BHF, which rocketed up after putting itself on the market, has given back most of the pop.
Waiting for the ESGR buyout to close. Price has fallen a little, but this deal should close the 1st half of this year. Hoping in the next 3 months. No mention of the preferred being called at that time.
Charles, didn’t someone post a section of the merger supllement saying these would be delisted?
I seem to remember that is correct Lt. I sold mine and missed the last dividend.
I switched over and bought the common around 328.00 so I have 10.00 locked in ( I hope) if it wasn’t so expensive I would have been doing $2.00 flips the last couple months. Gets close to 331.00 up to 333.00 and repeat.
Charles,
Although most mergers eventually get done, having been involved in M&A trading for many years , using massive leverage, I want to caution anyone against trading these deals without knowing exactly where they are in the process, the level of antitrust risk, the approvals required…etc.
I remember when the GE/ HON deal broke, just how many people lost their entire net worth betting on the deal winning EU approval. The owner of the trading firm where I was doing business at the time had posited that “Jack Welch isn’t going to retire until this gets done,” an incredibly stupid statement. I told him Jack Welch doesn’t control the EU competition commission. The deal broke and the arb spread went from $1 to $20.50 in a matter of seconds.
When a deal breaks, the spread often widens beyond where it was b4 the deal because leveraged players are forced to exit immediately.
Waiting for a deal to break on antitrust grounds is actually a great time to enter at the original merger ratio for a short term trade.
My history with deals is 144 months trading them (12 years), 5 losing months, 139 winning months. The 5 losing months were big.
Lt, sage advice. Thank You. Maybe I should just take 1/2 the profit and be happy.
For those who might want to play in this area, NOT for big returns but for another way to look at MM fund alternatives, there’s MERFX and GABCX but even they stumble every now and then when taking on the associated risks you mention. I think both concentrate on announced deals only and don’t speculate on potential deals in the pipeline….. I’ve owned each in the past but do not own either now.
2wr
Thoughtful comment.
When I read the many analyses regarding competing YTM/TYTC and MM yield alternatives. I keep defaulting back to fourth grade math:
$100,000 @ 5% = $5,000/yr = $416.67/mo = $13.89/day
$100,000 @ 5.5% = $5,500/yr = $458.33/mo = $15.28/day
$1.38/day for 50 bps improved yield on $100K investment
I greatly respect the sophistication and knowledge of my peers on this site, but I find myself asking:
Is improvement in yield the most important issue today, or is it preservation of capital?
Right now, safety is my goal, not $1.38/day
Westie, Seems like we are all waiting for the other shoe to drop.
What I have been seeing for suggestions from other readers has either been something for a short term trade or moving into a defensive position hiding out in a 6% return
The safety of the 6% return is only 2 points over say SGOV. But a lot of these “safe” stocks have a redemption 25 to 40 years out. A lot can happen in that time. Also I know the S &P and Moody’s rating of investment grade means a lot but I still take them with a grain of salt.
The ball game that we were in the middle to late innings of a stock market expansion has ended I think and we started a new game and may now be in the early innings of a market contraction.
I have always been orientated to investing in the domestic market. For one thing I feel more comfortable and familiar with our economy.
Contrary to the current thinking that the world economy should revolve around America I think the world opinion has changed, possibly permanently.
In the past I tried investing outside the country mainly Australia and New Zealand.
Does anyone here have suggestions? Not for short term trades, but holding for income and possible growth ?
What is the sale of ESGR related to? Sixth St, et al, is buying it. Not related to BHF, even tho they tried to be bought – right?
Does this make BHFAP and BHFAO sporting over 7.7% yield at current prices more attractive or less?
Besides me, I do recall many on this board owning this and some of us sold some or all our shares with the premise that a buy out would increase the chance that these preferreds get de-listed
I hold the BHFAM having bought it around 14.60
You need to go with BHFAL, current yield 7.40% and then you don’t have to worry about something sinister happening to a perpetual preferred. This is the sole baby bond / debenture listing they have; matures 2058.
good comment..bhfal/vclt pair has performed very similar to the preferreds..it has gone from 2 sigma rich in december to about 1.5 sigma cheap now (3yr horizon).. it has been below current level 4 times in last 3 years
good comment.. bhfap/vclt pair has gone from 2 sigma rich in november to near 1.5 sigma cheap now (3yr horizon).. this is not the first this pair has visited this level but presumably for different reasons
Bank and private equity stocks down again. Does this suggest credit stress on the horizon?
But the Atlanta Fed GDPNow did bounce.
HYG is unch while TLT is up.
A little widening in credit spreads.
My guess is there’s a lot further to go. It seems Bessent wants the 10 year yield lower at any cost.
Lt markets don’t like uncertainty. Down like 8% off the Dec. high.
JPM was so over valued a week or two ago I was considering selling calls. To me valuations are just going back to a norm in a lot of cases.
Fitch Ratings says subprime auto loans 60-days past due stand at 6.6%, a 31-year high. About a third of loans are subprime. Overall, The Fed says 3% of all auto loans are 90-days delinquent, a 15 year high. The high past due rates are said to be an indication of consumers running out of savings, high inflation and high car costs. Last December, TransUnion predicted 2025 card delinquencies at ~2.7 in line with previous years. I haven’t looked at mortgages. Nobody is moving because they can’t get cheap loans.
As far as I can tell locally any weakness is at the lower income level. Middle income and up folks complain a lot but that hasn’t impacted spending. The upscale mall is as crowded as ever. I do see a lot of credit cards used for everything. Self checkout is now “credit card only” at Target and the chain supermarket. The local indy grocer which caters to seniors is still happy to take cash at a register operated by a real person.
PE will do well, unloading its products on the public. Read a report today that there is a new Apollo-branded Private Credit ETF. JMO. DYODD.
Bear, Thanks…. great recap of all recent data points.
Still amazed at the COSTCO checkouts… personnel able to crank out a $700 customer cart in 40 seconds ! Still remember when this was a $400. stock …..
GAM-B goes ex-dividend tomorrow. A1 rated issue. Trading at or near par. 0.37 cent dividend. Since I do not think it will drop to 24.65 tomorrow, I purchased it today.
I added to my position. Volume higher than typical. Could we be possibly be missing something? I have found nothing (yet).
in case you or others are not aware.
The company has an ongoing buyback program on these preferred shares. 2nd article date in Year 2024 dated 12-04-2024.
https://generalamericaninvestors.com/news
Picked up some GAM-B today at 24.68 First tranche last year was 24.49 Let’s see how low we can go.
It just went ex-dividend and this is about the cheapest it has been in a while so I picked up some more to flip.
Well Scott it’s dead money until the next dividend so a lot can happen between now and then. I would be willing to buy more if it goes lower.
Me too. I already have a more than full position.
But, I’d be more than happy to acquire this at 6%+ versus getting 7 on something close to or at a junk rating.
I’m sure someone has figured out the odds of a default on the lower rated preferreds –I think I read a piece on this here (frankly I might have posted it ; my memory isn’t great).
For me the lower yield has “peace of mind” attached too it. It’s something easy to figure out the risk.
Insiders buying GAM-B the last couple of days.
https://finviz.com/quote.ashx?t=GAM&p=d and scroll down.
With the company having the option to buy back these preferred shares at under $25 per share, it seems like a very safe investment. As of 5/21/2023, it was A1 rated as per Quantum online investment. So the credit rating has been reiterated since the 2008 issuance. The current yield is 6.03%.
I am not seeing where there is any buyback option for the company, or a put right for the shareholder. Where are you seeing that?
Dated 12-04-2024. “authorization for the repurchase of up to 1,601,553 outstanding shares of 5.95% Cumulative Preferred Stock, Series B when the shares are trading at a market price below the liquidation preference of $25 per share.”
https://generalamericaninvestors.com/documents/reports/Press-Release-12-4-2024-re-Action-taken-by-BOD.pdf
SteveA,
“With the company having the option to buy back these preferred shares at under $25 per share”
Isn’t buyback at $25 not under $25?
No they would buyback on the open market when the price is below $25 per share and then retire those shares. Saves money instead of calling the shares back at $25 per share. Then they would save more money by not having to pay the quarterly dividend on those retired shares.
Thanks SteveA, hadn’t seen that under $25 buyback option for GAM-B. Now checking I see the $1+ price drop in Dec 2024 when the board announced that under 25 buyback. An unexpected game changer. Didn’t see that in the original IPO prospectus.
I just posted on this …thought it was in Sandbox but I guess in alerts,
I bought another big chunk.
UMBFP a little bit
BCV-a also
Not much to miss unless they issue another preferred and lower the coverage
HBAN LOB, NEWT and RC: Some Lenders Benefit From SBA’s Troubled Loan Program
https://www.barrons.com/articles/lenders-sba-loans-defaults-df8112da
pay to read
https://archive.ph/BuMXb
Changes that helped lenders hurt the U.S. Small Business Administration’s flagship lending program and many of its borrowers.
Early defaults on loans backed by the SBA are on the rise. The defaults will haunt borrowers the rest of their credit lives. But the SBA loan program has been great business for a handful of lenders, thanks to the government’s guarantees and the Biden administration’s decision to eliminate the fees it charged for the government’s backing.
A Senate hearing last week studied how the SBA’s flagship loan program, known as 7(a), turned cash flow negative last year, after the agency dropped its fees and loosened its lending rules.
Leading the SBA’s lending are three banks: the Columbus, Ohio-based superregional bank Huntington Bancshares; the Wilmington, N.C.-based Live Oak Bancshares; and the Boca Raton-based NewtekOne. Then there’s Ready Capital, a money-losing New York real estate lender whose only profits come from high-rate loans made with the SBA’s backing.
Delinquencies in the $116 billion SBA program have jumped to 2.5% from 1% in the last two years, according to a December SBA risk analysis seen by Barron’s. Annual default rates have doubled to 3.2%, while loans defaulting in just their first 18 months have nearly tripled to almost 1.5%.
“This has harmed taxpayers and the small businesses saddled with debt they can’t manage,” Sen. Joni Ernst (R-Iowa) told the Wednesday hearing, “while the irresponsible lenders get paid no matter what.”
A Barron’s data analysis of the last five years worth of SBA records found a cross-section of business dreams that crumbled less than 18 months after their SBA loan approvals: truckers; beauty salons; a Flint, Mich., smoothie bar; a New Jersey carpenter; an Albany, Ore., hobby shop.
Since the 1950s, the SBA 7(a) program has guaranteed 50% to 90% of a lender’s small business loan, in exchange for fees designed to make the program self-funding.
Interest rates began rising as the Federal Reserve fought inflation in 2022 and 2023. To sustain small business lending, the SBA eliminated its bank guarantee fees for most loans under $1 million, while loosening its lending rules.
Small businesses that entered the program found the variable rates on their SBA-backed loans climbing above 10%. The rate squeeze hasn’t abated much since.
“That is a lot of money for a small businessperson. What may have penciled at 6%, often doesn’t at 10%”, says Ben Sabraw, managing director at Phoenix-based SMS Financial, which invests in distressed loans.
Even as the bad loans bought from banks by the SBA, under the guarantee, doubled in the agency’s last two years—to $1.6 billion—lenders thrived.
With a government guarantee that costs nothing for many loans, the 7(a) program can be great for the lenders, says Eric Bowles, a retired banker who once ran SBA lending for BofA in Georgia. “They are lending money at prime plus 2 or 3%, and the guaranteed 75% of it is effectively a government security.”
That guaranteed portion can be sold at a premium to investors in the secondary market.
The biggest SBA lender, Huntington Bancshares, made nearly $10 billion in 7(a) loans over the past five years. SBA data through December 2024 shows that Huntington’s loans perform as well as the average bank in the program, with some 0.35% of the guaranteed amounts charged off.
Almost matching Huntington’s 7(a) volume is Live Oak Bancshares. It grew SBA-backed lending from $1.8 billion in 2022 to $2.8 billion in 2024. Live Oak’s default rates have been lower than other SBA lenders, but the bank told investors that they began rising near the end of the fourth quarter.
An uptick in defaults doesn’t perturb everybody associated with small business lending. The SBA’s mission, after all, is to spark economic growth and job creation.
“To grow the economy, we must have more businesses applying for and then getting SBA loans,” says Dan Rogers, who worked at the SBA before joining the small business lending team at the First Bank of the Lake. “With that, Americans and U.S. politicians and the bank lenders all must be tolerant of some defaults.”
The SBA’s last public report under the Biden administration highlights the 777,000 jobs it says were preserved by its loan programs. Nowhere does it discuss the 7(a) program’s fall into negative cash flow.
A substantial share of 7(a) loans are made by credit unions and nonbank financials firms. Credit unions had the lowest rate of 7(a) charge-offs of any class of lender in the last five years, with just 0.18% of the amount the SBA guaranteed.
Nonbank financial firms—now some the program’s biggest lenders—had the highest charge-offs. These non-depositary institutions averaged 0.49% of their guaranteed amounts charged off since 2019.
NewtekOne made SBA-guaranteed loans for two decades as a business-development company. In 2023, it bought a small bank and does its SBA lending under the bank’s license. NewTek originated $6.3 billion in 7(a) loans over the past five years.
Selling the government-guaranteed portion of loans has been a key strategy for Newtek. The “gain on sale” profit from these securitizations is seven times Newtek’s interest income.
But many investors think that “gain on sale” profits aren’t a durable business strategy, and NewTek’s stock has sunk from $35 in 2021, to a recent $13.
NewTek didn’t answer Barron’s queries about its business. But the company has tried to reassure investors that it can reap gains on sale in all financial weather. “People don’t like gain on sale, I can understand that,” said chief executive Barry Sloane on a November 2024 call. “If gain on sale is an anomaly, because rates move up and down and spreads change, yeah. But this is our business.”
When Newtek reported December quarter results last week, it compared the credit quality of its loan portfolio to Live Oak’s. In 2024, the Newtek bank’s net charge offs were almost 1.3% of its average loans; Live Oak’s were under 0.5%.
Newtek’s change to a bank left Ready Capital as the SBA program’s largest non-depositary lender, with $3 billion in loans over five years. Organized as a real estate investment trust, ReadyCap still makes 60% of its loans for real estate. As Barron’s has reported, ReadyCap’s real estate borrowers have been struggling and the REIT has repeatedly cut its dividend. The stock fell 30% this week with the report of a big December quarter loss and another dividend cut.
That has made SBA loans crucial for Ready Capital. In 2024, the REIT’s real estate lending had negative net interest income, after counting loan losses. But the company nearly doubled its SBA dollar lending, originating over $1 billion in loans. That generated the company’s only interest income, as well as gains on selling the government-guaranteed portions of the SBA loans into the secondary market.
The interest rate that Ready Capital charged its small business borrowers was higher than most banks, averaging more than 11% in the five years of SBA data. By comparison, Huntington charged just above 8%, while Live Oak averaged 7.5%.
SBA data show that agency charge-offs on ReadyCap’s loans have been lower than for other nonbank lenders. “We have lower overall defaults and lower early defaults than our large lender competitors,” said a person close to ReadyCap.
The complexion of Ready Capital’s SBA lending changed last year, however. From the SBA’s September 2023 fiscal year to its September 2024 year, agency data show that ReadyCap ramped its 7(a) loan volume by more than 250%, while cutting its average loan size nearly in half. Those loans will have to season before its clear whether ReadyCap’s credit quality has changed, too.
Problems in last year’s SBA-backed loans won’t start appearing until this year. That is because struggling business owners often throw in the towel at year-end, says distressed loan investor Sabraw. He expects a new wave of 7(a) charge offs soon.
“7a loans can behave like consumer loans,” says Sabraw. “When they start to default, you may never get another payment.”
Last week’s Senate hearing signaled that the SBA loan program’s negative cash flow will lead the agency’s new administrators to end the practice of guaranteeing bank loans without a fee. Rising defaults may also spur the agency to return to sober lending rules.
If that happens, the growth of government-guaranteed lending profits may slow for lenders like Ready Capital
As an additional tip regarding Barrons, many times, such as this time, if the article is paywalled, they let people read it if you google the headline and access the results directly thru a browser. That’s what I did originally, but it apparently only allows it once per headline as I too couldn’t access a second time… Then went to yet another browser and started over…
@2wr After the first article, clear the cookies and the “history” of your browser, and you can read the next article without a problem.
2wr-
Thanks- interesting read.
3 MONTH TERM SOFR: There’s been quite the flee to safety when observing how far down USTreas yields have come down, hasn’t there….. It’s kind of interesting to note just how stable 3 month term SOFR has been, though. In general, it’s moved from 4.32 range now down only to 4.295%. Theoretically, for those seeking stable income, this is another argument in favor of F/F rate issues in this environment…. You give up price appreciation potential, but you continue with more stable income generation…it also seems to be a potentially way to gracefully navigate thru any widening of credit spreads provided you don’t end up with any credit clinkers…. You do have to keep an eye on YTC though and/or call risk
Fine post on the F/F Peg Rate topic….. have been using several issues for some time.
Two of Very Fine Qualty … below $25 …. BML-G & BML-H
ylds in the 6,00% – 6.10% area
2WR…. Yes, I also watch 3M SOFR closely as I have a number of FF equities tied to SOFR. It has been stable, but if the Fed cuts interest rates again in the next few months SOFR will drop, mirroring the Fed Funds rate drop. Alot of the FF I hold is around 10% right now. A 1% total cut by the Fed this year will drop them to about 9. Still a pretty darn good rate. Will be interesting to see how it all unfolds this year. I am well stocked on popcorn to watch!
Bought 25k ALTM at 5.84 on the close. It will settle at 5.85, the deal price. The return depends on how long it takes Fidelity to reorganize it. I figure 10 days would still make the return 6%, any less and it goes up dramatically. Reorg should be by Monday but I’ve no idea what Fidelity will do.
I’m taking a shot in the dark, and I can recall one deal where this would have been a truly disastrous strategy: 2003 Berkshire bought Clayton Homes
After the deal had been closed and the stock stopped trading ajudge delayed payment for the shares:
https://www.deseret.com/2003/8/9/19740475/court-orders-delay-in-sale-of-mobile-home-maker/
lt,
is there a typo in your post? Using 146K dollars to make 250 bucks in 10 days? Wouldn’t just buying SGOV and holding it for 10 days work out better?
Or maybe I need to reread your post and figure out what I am misunderstanding here.
Hoping it settles tomorrow or Friday, actually. If not, then early next week.
There is a reason the 32 million share sell imbalance could get done at 1 cent below the deal price
OK. SGOV comparison was not very good once I thought about it especially as rates have gone down on 0-3 month ETFs… but at least more predictable.
Can SGOV go up 17 cents in 10 calendar days? you can buy only 1455 shares of SGOV with 146k….. This kind of kissing your sister like but 1455 SGOV x 17 cents = $247. I think lt wins if his timing is right, but truly a yawn, even for me……
Brokers will be paid Friday. When they pay me is the question.
This is the kind of thing I would have done 1 million or more shares as a starting point when I traded with OPM. It becomes more interesting when it’s $10,000 minus borrowing costs , which was ST treasury rate + .25. However, I was paying a commission on every share then, so I would have needed a few cents , likely would have been following it for more than a day, and my back office would be settling it on the payment date, not some unknown future date like Schwab . There are advantages and disadvantages of trading with massive leverage, so I normally would use it in a situation where a deal has closed but the stock keeps trading through the end of the day.
Yeah, the things we could do with OPM…… I was quite consistently successful with that too and kept telling myself why not do the same thing once retired? Nope… couldn’t do it…. couldn’t trust me with MePersonMoney so went way too far overboard in the other direction focusing far too much on these kinds of trades……
2wr, the odd thing is for a decade or more the trading offers got better, but in the past 10 years the offers have gotten worse…much worse. I think the only way to go is on one’s own through a clearing firm but using professional software, with a choice of stock loan entities.
Stock lending has become a massive profit center and in many cases is being manipulated IMHO (and I’m not that humble)
2wr, yea. Like I said it was not a great comparison at all. With SGOV you would have to wait many more days then 10. I guess I was thinking it was “close” but it was not.
My mind was more going to the effort to find the deal, make a penny, etc.. or I just plop it into SGOV and go check a few coin star machines to make up the difference when grocery shopping. (I am joking.. not meant to be a put down).
It is an awful lot of money at stake to make 250 bucks. Not that you could lose it all.. but get tied up just as LT stated in his first post. Not really sure that strategy is my cup of tea. I cannot imagine the circumstances happen terribly often to make it a daily biz day task to find one.
i only first noticed it in the final 10 minutes of trading when there were 32 million shares to sell. Quick review of the filing.
given the time spent analyzing vs return gives me a negative roi
Bloomberg headline:
“Brookfield Explores Using Insurance Arm to Adopt Berkshire Model
CEO Flatt said the insurance business may ultimately own the rest of its operations.”
ANG is owned by BN, right?
Remember when it was posited that Eddie Lampert would turn Sears Holdings into another Berkshire ? I recall Cramer pushing that idea , but I’m not sure who else. I wonder if you need more than a lot of float to make $$$
Torsten Slok (Apollo‘s chief economist) on his blog, “The Daily Spark”, today says this (among other observations) about current economic affairs:
…”The employment report on Friday will be stale. The key indicator to watch over the coming weeks is jobless claims, which come out every Thursday at 8:30 am ET”….
I feel guilty, kind of like my 4yr old grandson coloring outside the lines. Not sure where to post.
Sold
half my position in CUBI-F @ 25.40
Bought
GBNXF @ 14,50
IBRX @ 2.79 2nd or third tranche
KRP @ 14.15 Decided to join the rest of the III’s in this leaky boat
Hey CM,
Is GBNXP a MLP?
Yield Hunter, it’s a Canadian pipeline company. The Canadian rail CN invests its retirement fund in this company. They own assets in both Canada and the US. They just bought an export terminal in Texas and renewed a contract with an existing customer. Investment Doctor says payout is about 65% of cash flow. They just rolled over debt due in 2026 at 5.8% and replaced it with a 4.45% note due 2031 so they are being proactive which I like.
You just need to hold it in a retirement account to avoid the 15% Canadian tax withholding. I don’t have a problem holding in my wife’s IRA at Fidelity. Being oil infrastructure I don’t have to worry too much about oil prices except the drop in oil prices scared people and allowed me to buy more.
Hat’s off to Bea, I learned about it from her.
SO….the only people this back and forth on tariffs helps is algo traders whose systems read news and trade on it. It’s utter manipulation, and I’d be willing to bet some people in gov’t are minting money (which will be worthless when we have to buy their crypto) on this.
The rest of us, we can complain and then maybe spend the money to have our own system.
Many years ago Dow Jones was selling something like the above for $10,000 per month. I haven’t a clue what the state of the art is right now.
When do preferreds take deep dives? I’m looking at a chart of PFF going back to Mar 2007 overlaid with IRX, the 3-month t-bill index. As you might expect, PFF generally trades inversely to rates except for the two recessions. During the 2007-2009 GFC, PFF fell side-by-side with IRX. The same thing occurred in 2020, although the dive was brief. JNK follows the same path as PFF.
What’s going on? The answer could lie in credit spreads. The recessions were credit events, times when risky high-yield assets took a bath, including preferreds.
Recently, with stocks down and bonds up, markets look more risk-off than risk-on. And yet, I don’t see the red flags of rising credit risk waving. Preferreds are mostly ignoring the tumult. Then again, it’s the riptide you don’t notice that drags you into deep water.
BlackRock CEO quoted as saying “everything is fine” and “We’ll find ways to navigate…” — through the Panama Canal? — Former Chinese-owned canal ports among today’s latest BLK acquisitions. CKHU up today. — Surprised China sold its other ports to BLK too – JMO. DYODD
Anyone with E-trade get their call and accrued pmts (0.31?) for SBBA Scorpio tankers?
They zeroed it yesterday, showing the symbol. So far today, it is totally gone & no money showing.
Ditto
Schwab processed the call and credited me with 0.30625 per share.
PFFA at 21.87 is below yesterday’s 22.02 NAV. How will this resolve?
PFFA NAV yesterday 21.90, so price found NAV.
Anyone finding babies to save from the bathwater yet? I do not understand how/why UMBFP is trading where it is… Last price = 25.14 and IMHO, these will be called on 7/15/25. At 25.14, YTC = over 8% and UMBFP, based on the rating for UMBF is split investment grade…. If it’s NOT called it will reset for the next 5 years at 5 yr Treas + 6.675.
2wr
At 2 pmts to 7/15/25, I get 3.48% YTC — can’t get that 8%. Guess I’m missing something?
Two payments = 0.875 (that is: 25*0.07/2)
Your net at 25.14 is: 0.875 – 0.14 = 0.735
Settles on 5 March 2025, so to 15 Jul 2025 have 132 days
So (0.735 / 25.14)* (365/132) = 0.0808427 (8.08%)
I dismissed annualized since the return possible is related to the call date, not the rest of year.
But, I guess it feels good. If called, you can”t get to 8%.
Do you dismiss annualized yield when you’re reading the yield on a money market fund? It’s the same calculation when they’re telling you a money market’s earning 4%…. No matter how you slice it, if you’re just parking funds you’d have in a money market anyway you’re going to get 2x what you would in the mm