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Sandbox Page

I will be adding a new link titled “Sandbox” in the right hand menu.

That link will get you to this page.

I had originally set up the “Reader Initiated Alert” page for ‘alerts’. I was thinking this, for instance, might be when a preferred stock is undergoing a temporary selloff and someone wants to let the population know about it quickly. Of course we all (including me) use the ‘alert’ page for general messaging.

I am requesting that we start using the Sandbox page for all general talk, and try to preserve the ‘alerts’ page for ‘alerts’.

I have had a screen up on one of my monitors all week where I see all comments – no matter where they are posted–it is a great page and I wish everyone had a page like that–believe me we all benefit from all the knowledge being shared. I don’t want to stifle any of the exchange of knowledge, but hope to get things a bit better organized by adding the Sandbox page.

1,613 thoughts on “Sandbox Page”

  1. More 1099 issues.
    GLMPF – Golar LNG Partners LP, 8.75% Series A Cumulative Redeemable Preferred Units. Quantum Online says QDI is YES but my 1099 says Nonqualified dividend. The New Fortress Energy website shows no information on this issue. Any idea how I can find the official call on whether this issue is designated QDI or not?

    1. Maybe talk to the company IR or a tax professional, but generally the preferred of an LP will NOT issue qualified dividends.

      1. Correct as a general proposition. Generally – LPs do not generate QDI
        Incorrect, as to GMLPF in specific. When originally issued in ~2017. GMLPF distributions were QDI. Current status – I don’t know.
        Agree with suggestion – contact IR. This is possibly a complex issue.

        There are a lot of possibilities:
        – A simple mistake. Congratulations on your good luck.
        – A change in tax status of the LP entity, after the NFE deal, in which case you are out of luck.
        – A change in QDI status because the security is no longer tradeable, in which case you are out of luck
        – A change in QDI status because an earnings test was not met.
        – Something else. To paraphrase the local drive-by home repair guy with the ladder on the pick-up truck, “NFE/GMLPF? You have quite a situation there.”

        You might want to re-read the original prospectus carefully, especially around pages S-59-60
        Election to be Treated as a Corporation
        U.S. Federal Income Taxation of U.S. Holders
        Distributions

        I found this language concerning –
        Dividends… generally will be treated as “qualified dividend income,” … provided that: (i) our Series A Preferred Units are readily tradable on an established securities market in the United States…”

        https://www.sec.gov/Archives/edgar/data/1415916/000104746917006534/a2233590z424b5.htm#dk46101_material_u.s._federal_income_tax_considerations

        JMO. DYODD.

        1. Great response. I hold the GMLP preferred and can confirm that when the security went to the expert market (and therefore were no longer tradable on an established market) we lost our QDI status and the dividends are now treated as Ordinary Income.

          Another bummer on this whole debacle.

                1. We are discussing QD vs NQ, not ROC.

                  The PDF you linked states:

                  “Distributions we pay to U.S. unitholders will be treated as a qualified dividend for U.S.
                  federal income tax purposes to the extent the distributions come from earnings and
                  profits (“E&P”) and as a nondividend distribution or a return of capital (“ROC”) to the
                  extent the distributions exceed E&P.”

                  Note the word “qualified”.

                  1. I give the edge to Justin here.

                    I’m not convinced that a press release calling a distribution QDI, without anything else, overrules the language in the IPO prospectus or the federal income tax code. The Hoegh prospectus has a proviso similar to GMLPF’s making tradeability a QDI prerequisite (S-57.) This language echoes the tax rules (Publication 550, Investment Income and Expenses).

                    I have “no dog in the fight” and I can’t speculate on why Hoegh designated the divvies as QDI, possibilities range from the timing of the delisting (apparently 2023, so HMLPF was arguably a 2023 listed security), to thinking that issuing reports makes the preferred more tradeable, a “cut and paste” error, or something else.

                    I’d appreciate anybody getting a definitive answer on Hoegh coming back. The wave of drive-by go-dark overnight price crashes at hands of the hedge funds soured me on preferreds as retirement-safe investments. The consolation was that the income would still be there. Having qualified income converted into ordinary income on gone-dark foreign issues was not a risk that I worried about until I read the GMLPF post here.

    2. I wonder if New Fortress has even published the paperwork for how the 2023 dividends will be on GMLPF?

      Seems I do not get an updated 1099 until April with the correct information for GMLPF.

      Not sure if it is New Fortress that is slow or my brokerage firm that is slow with this information.

  2. Wash Sale. Downloaded 1099-B data from Morgan Stanley E*Trade today into TurboTax and was surprised to see $750 in wash sale set to zero across 4 preferred stocks I sold in Aug. 2023. Reading about WS on their website, it states “when your broker determines that a wash sale occurred in your account, they are required to 1) calculate the loss amount of the trade and carry it forward into the cost basis of the replacement securities that you bought.”
    When I look at the replacement securities in my account, they do have a WS beside their ticker but the basis and cost per share shows exactly what I paid for them in August and thus not reduced to by the wash sale amount. Anyone know how this is supposed to play out as I really don’t want the wash sale money to just disappear.
    Thanks.

    1. Leonard, if you are using tax software, you enter the original sales price and your original cost basis. If the software detects that you have a loss, it will have you check a box that the sale is a wash sale and you will enter the positive amount of the wash sale. It will then subtract the wash sale from the transaction and reduce the loss by the wash sale amount.

      If you are using tax form 8949 you enter a “W” in column f for adjustment type and in column g you will enter the wash sale amount as a positive number. In column h you take the original loss and add the wash sale amount which reduces your net loss.
      Example, sold $1,000, paid $1,100, WS $75, leaves a net loss of -$25.

      My broker also takes the wash sale amount and shows it as an increase in my basis of the stock that was newly purchased and caused the wash sale. If your broker doesn’t do that you will have to manually keep track of your increased basis.

      1. Steve,
        Thanks for the very helpful reply. I messaged Etrade and asked if they take the wash sale amount and put it as an increase in my basis of the stock that was newly purchased and caused the wash sale, but as I mentioned in my post, the basis so far is exactly what I paid for the stock with no apparent increase, but the ticker does have a WS beside it so maybe that will come into play sometime.
        I hope I don’t have to manually keep track of my increased basis.

  3. Picked up a full holding of SPNT PB today at 25.05 if it goes lower will add another tranche to lower cost.

  4. In case anyone cares, Terra baby bond TPTA now yields over 31% until maturity in June of 2026. Or you could consider TFSA (same company) which matures 90 days earlier with a yield to maturity of 9.5%.

  5. Wanna have fun? Like living dangerously? Value over Growth?
    Try the “catch a falling knife” strategy

    I bought the following Commons immediately after pratfalls:
    ADM PFE CTA CC
    All solid companies paying divs 4-6% with accounting stumbles causing major market drops
    So far, so good – all green 3-6%. Think all four as Sock Drawer.

    NYCB and RILY didn’t temp

      1. I bought BMY around 48 so far so good. I think when rates drop and we have that recession everyone is thinking about these will be good growth stocks to hold.
        I also hold WHR but am a little underwater on it. IIRC even in the GFC WHR didn’t cut it’s divided.

    1. Westie, I can’t remember if it was you or private who was holding ADM to flip because it seems to trade in a certain range that you can buy lower and sell higher. As a suggestion, I have been watching CAG not as extreme a drop or hiccup as ADM in stock price but instead of being involved directly in commodities it’s a little higher up in the food chain. (pun intended) They are consolidating and have gotten out of a partnership in India and are promising to reduce debt.If inflation goes down, I can see them doing good. JMTC

  6. Way off topic story (no investment content – I am just sitting in a waiting room being bored (again):

    I had an interesting experience today with an electrical co-op.

    Co-ops are wonderful in that they bring electricity (and in some cases, phone and internet) to rural areas. Having spent my early life living REALLY rural, the electric co-ops are near and dear to me (I still remember life before we got electricity).

    I am a member of several co-ops (for properties I own), and my parents were members in several co-ops scattered across the western US. Every time you move to a new area and get electricity from a co-op, you are automatically a “member”. You pay money in each year (which they use as working capital), and after about 30 years, they pay it back to you (often with some “earnings”). Strange thing is that if you move away, you don’t get your money back for the 30 years. Not even at a discount – so you start getting checks for small amounts years after you leave. Same thing if you die – your estate will get checks for small amounts for many years after you die.

    Anyway, my parents passed away many years ago, but today I got a check for a few dollars for one of my parent’s accounts for money they paid in in 1995. Luckily, the postmaster in their last tiny community was a close friend of my dad, so he keeps my address on a post-it on the wall of the post-office (which is in the back of the general store – seriously, an old fashioned general store with no other store within 50 miles) and he forwards me mail that comes for my parents.

    I called the co-op to get the check re-issued in my name. I offered to send them scans of my papers showing that I am responsible to wind up my parents affairs and electronic copies of my parents’ death certificates. Gal at the co-op insisted I needed to send certified copies of the death certificates (which cost $50 each) and a court certified appointment (which doesn’t even exist in the state where my parents passed away). We went round and round for about 10 minutes. I just kept saying it made no sense for me to pay over $100 (plus get a certificate that doesn’t exist) to get the $400 left in my parent’s account (which will pay out in small amounts over the next 15 years).

    Finally, it occurred to me to politely ask to talk to her boss. He knew my parents well (his mother lived across the road from my parents, and my mom “looked in” on her every day). He apologized for the gal in the office. Said she is a from the “city” (its a town of 3,000 people) and had just graduated from college, so she is not used to how things work in the country.

    I told him I wasn’t upset with her (she was very polite), I just needed to get it resolved. So, he called her into his office, put us on speaker, and we agreed that the electronic scans I had would be fine and that they would issue the new check to me in the next couple of days. I told them I would bring them some rhubarb pies when I am passing through at the end of the month (my mom was famous for them, and I can do a fair copy). Whole thing handled in one phone call.

    When you live in the city and have to deal with faceless bureaucracies, you forget how simple life can be in rural America.

    1. Private, my town is part of a group of towns that owns the power from Shasta dam. I went to many city meetings years ago and found out they use their profits from their electric utility for other things in the city budget. Then we have the county. They were facing a budget shortfall with the employee retirement fund. They started their own utility and told the public they could supply power cheaper than PG&E and it would be green power. They wouldn’t let PG&E bid on any of the contracts even though PG&E produces some of it’s power with hydro from dams. Home owners were automatically switched over to the county service, you had to opt out if you wanted to stay with PG&E.
      The kicker is, all the transmission lines and sub stations are still owned by PG&E that supply power to the city and county utility.

  7. Has anyone parked $ in the Global X 1-3 mo treasury etf CLIP? Fee is only .07% and a sec 30 day of 5.28%. Schwab’s SGOV is less & has fee of .34% I prefer the safety of sgov’s fixed nav over the variability clip ( minimal for now) Opinion? Also- does anyone know if CDs are available on the Schwab mobile app? Not finding them. Thanks

    1. Here is short 4-minute, no-nonsense YouTube video with a walk-thru of T-bill alternative ETFs. (SHV, BIL, GBIL, CLTL, SGOV) The video is a year old so it doesn’t cover newer funds like BOXX. (I clicked over from the BOXX video. )
      https://www.youtube.com/watch?v=2V0dtUqHWXQ

      Things I look at: fee waiver period for a new fund, tax status (hopefully state tax exempt), marginability and a 1-year chart to see if the NAV erodes over time.

      I don’t use Schwab, but I have been finding that individual banks offer CD rates better than the brokered CD aggregators if you enjoy going on a treasure hunt. Special promotions, odd terms (11 month vs 1-year, 16-month vs 1.5 year) are good places to look. There is of course fine print to read like early withdrawal penalties, etc.

      JMO. DYODD.

      1. Bear- thanks for ur input. I am very heavily in Sgov, which is going below 5%, and have used snoxx and bil. Need to get back into CDs, and maybe treasuries/ t-bills. Did buy a good amt of Clip today.

      2. Just an FYI, some treasury funds have very little state tax-exempt income.
        PIMCO is almost 90% REPO Income in their money market.

        AMAXX | 89.836119 | PIMCO Government Money Market Fund Class A |
        | AMGXX | 89.836119 | PIMCO Government Money Market Fund Class C |
        | PGOXX | 89.836119 | PIMCO Government Money Market Fund Administrative |
        | PGFXX | 89.836119 | PIMCO Government Money Market Fund Class M |
        | PGOXX | 89.836119 | PIMCO Government Money Market Fund Administrative |
        | PGFXX | 89.836119 | PIMCO Government Money Market Fund Class M |
        | AMGXX | 89.836119 | PIMCO Government Money Market Fund Class C |
        | PGYXX | 89.836119 | PIMCO Government Money Market Fund Institutional C |
        | PGFXX | 89.836119 | PIMCO Government Money Market Fund Class M |
        | PGYXX | 89.836119 | PIMCO Government Money Market Fund Institutional C |
        | AMAXX | 89.836119 | PIMCO Government Money Market Fund Class A |
        | PGFXX | 89.836119 | PIMCO Government Money Market Fund Class M |
        | PGPXX | 89.836119 | PIMCO Government Money Market Fund I-2 |
        | PGPXX | 89.836119 | PIMCO Government Money Market Fund I-2 |
        | DGEXX | 77.423596 | MS U.S. GOVERNMENT MONEY MARKET TRUST S |
        | DWGXX | 77.423596 | MS U.S. GOVERNMENT MONEY MARKET TRUST R |
        | DWGXX | 77.423596 | MS U.S. GOVERNMENT MONEY MARKET TRUST R |
        | DGEXX | 77.423596 | MS U.S. GOVERNMENT MONEY MARKET TRUST S |
        | NOGXX | 76.480000 | NF US GOVT MONEY MARKET |
        | NOGXX | 76.480000 | NF US GOVT MONEY MARKET |

        1. Same with Schwab’s.
          | SNOXX | 88.775427 | SCHWAB TREASURY OBLIGATIONS MONEY FUND – INVESTOR |
          | SCOXX | 88.775427 | SCHWAB TREASURY OBLIGATIONS MONEY FUND – ULTRA SHA |

          1. Why would you buy SNOXX in a taxable account, when SNSXX has the same yield and is 99.6% UST?

          1. You just mentioned SNOXX above, and Bear asked about the state tax exemption, which for SNOXX is basically non-existent because the fund is just a big repo counterparty (probably with the Fed) and doesn’t own any un-hypothecated treasuries, leading to a surprise for some at tax time when they find out that the so called Treasury fund that would be exempt from state income tax is anything but exempt.

    2. SGOV is not a Schwab product, it’s the “iShares 0-3 Month Treasury Bond ETF” run by BlackRock Fund Advisors.

      I guess Schwab’s similar product would be SCHO, but it seems to have a lower yield.

    3. Hey Gary,
      I’ve been quite pleased with TFLO, the ishares floating rate short term bond ETF. Current SEC yield is 5.39. Expense ratio is 0.17.

  8. I’ve been slowly building a position in KIM-N. It is currently yielding around 6.5%. It is optionally redeemable (at Kimco’s option) if the common stock price of KIM hits $21.77 (13% higher than current levels).

    I was wondering if anyone else here has thoughts on this one.

    1. Dick:

      “It is optionally redeemable (at Kimco’s option) if the common stock price of KIM hits $21.77 (13% higher than current levels).”

      That is incorrect. KIM can’t force conversion unless its common stock trades at 130% of the $21.77 conversion price for 20 of any 30 consecutive trading days (which would be $28.30).

      At $28.30, KIM+N would be trading for $65/share.

      KIM+N is my largest holding in the property REIT shopping center sector, and it remains way undervalued compared to the 5.5% current yields of 5.125% KIM+L and 5.25% KIM+M.

      1. Thanks for the correction! I must be losing a step in my old age…it’s probably time for me to run for political office haha

        So the conversion price would be around 47% higher than current levels…so basically if you buy KIM-N now, you’ll get around 6.4% and if KIM’s common goes up 47%, you might get the common ($65 of common for each share of KIM-N which is trading around $56.50), right?

    1. Z that coupon 6.375% isnt competitive in the BDC Note space;
      I like BDC debt , and have a number of issues
      here are some yields ; CGBDL 8.92 , SAJ 7.97 , WHFCL 7.88

    2. z:

      gotta cusip for this issue?

      (called goldman ir. transferred me to a no answered phone)

  9. finra use question—I want to be able to find NEW ISSUES of corporate and agency and quasi-agency securities. Is that possible on finra or some other website? I just can’t figure it out on finra, but I suspect it’s possible. Thanks.

  10. Can anyone give me a reason MFAN is trading at 25.00, while RWTN is trading at 25.30 and MITN is trading at 25.20 . I know RWTN and MITN are paying a little higher interest, BUT Seems a balance sheet should come in to play. I am a buyer of MFAN here

    1. ED, you answered your own question. A little higher risk comes with a little higher rate. One difference I see is that MFAN term issue pays the same net divvy as MFA-B perpetual so I consider it the better buy unless you play for the upside. Meanwhile MITN pays a good amount less then MITT-A and MITT-B so I consider the perpetuals to be a better deal.

    2. Ed I took a position in MFAN at 25.10 ; its a relatively new issue (Jan 15) ;it takes Joe Sixpack time to find these things and bid them up imho
      I’m looking at RWTN , why did they need to isssue a preferred with such a high coupon 9.25%

      1. Redwood perpetual RWT-A paying over 10%. So the lower yield on term RWTN is not enough for me to choose it over A.

    1. mr,
      How would you compare MTBA to AGNC? Is AGNC holding “noxious” MBS? Are you using MTBA as a higher-yielding MMF substitute?

      1. Rocks2stocks,
        I really can’t compare them… apples and oranges in a way. The REIT has leverage and a duration bet. MTBA is just buying newly issue MBS. The key is that these are issued at current rates, meaning if overall rates drop, you get a prepayment boost relative to the older ones. I see that as a plus vs. the old ones, plus if rates go against you and move higher, they probably don’t get dinged as hard as the ultra low coupon ones. And… you hit the nail on the head… I kinda see it as fancy cash+. Meaning, yielding more than cash, and if rates do fall I’ll pick up a bump in price.

        1. I thought some more about MTBA and even bought some. It’s a bond fund. I wouldn’t buy TLT for income because the yield sucks. TLT is really only good for cap gains and that means predicting long yields. Get it wrong and it’s dead money. Even if you get a nice gain with TLT, chances are the yield has fallen at the same time.

          In the case of MTBA, the yield, if reasonably stable, is worth the risk as a cash alternative. OTOH, cap gains might come with a drop in yield. Even so, the yield would likely continue to beat a MMF. Trade offs.

          The risk for which there is very little data is a dividend cut.

      2. I would only add that AGNC invests in Agency MBS only – so they do not take any credit risk. Because of this, they tend to use lots of leverage. With AGNC the leverage is all short term in nature. AGNC will use more leverage than mREITS that have non agency MBS in their portfolio. With AGNC this can be as high as 7 to 1 in terms of leverage – an example I don’t know their current leverage ratio.

        Agency MBS has no credit risk as it is implicitly backed by the Government, so the mortgage backed securities in AGNC’s portfolio will not default.

        Non Agency MBS has credit risk and is not backed by the Government, and some of the morgages in the mortgage backed securities will default.

        MTBA invests only in Agency MBS, but does not use leverage. Generally MTBA yields less than AGNC and is much less volatile than AGNC for these reasons.

        When interest rates go up AGNC will get pounded. When interest rates go down, AGNC will do well. MTBA will have the same up/down cycle but the moves will be less severe.

        So one could use AGNC to speculate on moves in the 10 year if that is the goal. This is becasue AGNC book value will increase rather dramatically (due to the effect of leverage) when the 10 year drops.

  11. Some interesting price action this past week. The gold standard highest quality/yielding issue preferreds i.e. JPM-C (6% coupon) and PSA-H(5.6% coupon) etc. are now trading pretty close to par and PSA even dipped below briefly this afternoon.

    When people realize no cuts until fall at the earliest or even past then, we might get another entry point soon here for some better yields as prices in fixed dip further.

      1. Isn’t JPM-C only callable on a dividend payment date after March 1, 2024? (Ref.: Page S-4 of Prospectus Supplement)

        If it’s called on the date of the June payment, looks like yield to call will be under 5%, FWIW.

        1. At the option of our board of directors or any duly authorized committee of our board of directors, we may redeem, out of assets legally available therefor, the Preferred Stock on any dividend payment date on or after March 1, 2024, in whole, or from time to time in part, at a redemption price equal to $10,000 per share (equivalent to $25 per depositary share), plus any declared and unpaid dividends on the shares of Preferred Stock called for redemption up to the redemption date. Subject to irrevocably setting aside or depositing funds necessary for redemption, dividends will cease to accrue on such shares on the redemption date, without accumulation of undeclared dividends.

  12. I went back to the tax free window and bought:
    Rhode Island Housing & Mortgage Finance Corporation (high state income taxes here and few new issue bonds compared to most other states) coupon 4.45% due 10/1/2044 @ $99.865 with a YTS/YTC/YTM/YTW @ 4.46% happily tax free yield rated stable AA1/AA+ CUSIP 76221SBK6 Sinker starting 4/1.2042 and as with all tax free housing bonds there is a continues extraordinary call at anytime at par $100, Convexity 2.351 and Duration 13.366. I urge each of you to do your OWN deep due diligence as this tax free bonds is great for my tax free bond ladder, for my income trust and may not be appropriate for you or at your own personal risk level. 💎 Azure

  13. Synchrony Financial reportedly just priced $500M of 8.25% fixed rate reset non-cumulative series B preferred that floats in May of 2029 at the 5 year treasury with a spread of 4.044%. Rated B+ by S& P. Temporarily on OTC as SYFPL but will be listed on the NYSE as SYF-B.

    1. Second time NYCB and A and U where down one day and up a day or two later. Happens when news gets reaction. Nice for day traders.
      Stock up 17% today.

  14. Tim,
    Question on the Athene debt offering, why didn’t they offer a new preferred given that the market is accepting such preferreds with a lower coupon, example 6.5% for ATH-D vs the 7.25% for the newly issued debt. I was planning on adding to my ATH-D but now I’m reluctant to do that. Preferreds are junior to the debt in the credit stack and should command a higher coupon not lower. Why should someone buy the preferred when debt is available at a higher rate? What am I missing here?

    1. AJ—one can’t ever know the ins and outs of issuing one versus the others. While the new baby bond may look high for coupon it does afford them to defer the interest payments for years and years. I have noted over the years that from an investor perspective preferreds many times move more favorable than baby bonds–don’t know the answer to why that is the case either.

      1. Tim,
        If they don’t pay the interest, presumably dividends on the preferred are prohibited, so I would think the yield on the debt should be lower than on the preferred. Am I missing something?

    2. The tax impact of the qualified dividend income vs. interest payments is also part of the picture.

  15. This is old news for a few investors here. More news on commercial real estate and pension funds. What is in your wallet? (pension fund)
    https://fortune.com/2024/02/27/commercial-real-estate-new-york-city-1-dollar-exit-office-buildings/
    Canadian pension fund heavy into real estate.
    https://archive.is/Q3DPc
    Danish government pension fund lost billions on American bank stocks and a German real estate company.
    The fund has been without a permanent CEO for a year. The lady they finally hired with a banking background in Nov. quit after a month.
    This may show up in insurance company funds next.

  16. I know that Enbridge Cumulative Redeemable Preference Shares, Series 5 (TSX: ENB.PF.V) trades in the US as EBGEF.

    And I know that Enbridge details their preferred issues at https://www.enbridge.com/investment-center/stock-and-dividend-information/preferred-hybrid-shares. On that page, Enbridge specifies that Series 5 pays in USD (although that page is sadly out of date wrt the new reset rate for the series)(thanks to 2wr for posting the link to the press release specifying that).

    ETRADE is reporting a dividend for EBGEF that’s less than 6.683%. I suspect it’s because of Morgan Stanley’s infuriating policy of not explicitly reporting withheld foreign tax (they only publish the net dividend), so I have go argue with the know-nothings and figure it out. I’m sure the first thing they’ll do is claim that EBGEF is not Series 5.

    Can anyone remind me where Enbridge states that Series 5 trades as EBGEF?

    1. @Bur Davis

      Here’s an excerpt from a FIDO notice regarding EBGEF. Here’s the CUSIP: 29250N667

      With respect to any Series 5 Shares that remain outstanding after March 1, 2024, holders thereof will be entitled to receive quarterly fixed cumulative preferential cash dividends, as and when declared by the Board of Directors of Enbridge. The new annual dividend rate applicable to the Series 5 Shares for the five-year period commencing on March 1, 2024 to, but excluding, March 1, 2029 will be 6.683 percent, being equal to the five-year United States Treasury bond yield of 3.863 percent determined as of today plus 2.82 percent in accordance with the terms of the Series 5 Shares.

      1. The N series also reset and was payable March 1. Etrade/MS has always been slow to post but I am expecting it to show up tonight, hopefully at the current yield.

        1. Etrade posted the March 1 dividend tonight. The reset rate was applied, and despite being math challenged, I believe I am getting 9.545% on my cost basis. Sweet. Now to check the math, wish me luck.

    2. Thanks, Gumfighter.

      Bur,
      In Fido’s notice to Gumfighter, they used the cusip # to identify EBGEF as Series 5. ETRADE may also be able to use the CUSIP to see that Series 5 is EBGEF.

      Enbridge’s site has this page. It shows EBGEF’s CUSIP #29250N667:
      https://www.enbridge.com/~/media/Enb/Documents/Investor-Relations/DividendandShare/ENB_Securities_Prefs_Summary.pdf?rev=96dec5edae57409eafae4dcc4ea4bdaa&hash=845D9686A87D4CBFA473CFA82E61A490

      By the way, QOL also matches up EBGEF with its CUSIP and “Series 5” designation.

  17. For what it is worth – anyone considering bottom-fishing with the two NYCB income securities (that are getting crushed again today), there was an editorial this morning on a prominent financial website insinuating that NYCB management (and perhaps investors) should have seen this disaster coming:

    “NYCB Woes Offer Lessons Beyond Real Estate
    More equity and seasoned management are the best defenses against losses, no matter what form they take.

    March 4, 2024 at 3:00 AM PST

    When banks get into trouble, it often comes as a shock. Then the problems seem obvious in hindsight — if only managers and supervisors had been paying attention. The recent turmoil at New York Community Bancorp Inc. is a case in point.

    Since a sudden writedown of two commercial real estate loans in January, NYCB has suffered a quarterly loss, 71% dividend cut, two-thirds decline in its stock price and credit downgrade, along with shareholder lawsuits, management upheaval and the disclosure of “material weakness” found in an internal loan review.

    Two lessons stand out from this debacle.

    One involves capital. Because NYCB was (until recently) small enough to avoid stringent capital requirements, it became highly leveraged. Setting aside balance sheet intangibles like goodwill, a 7% loss on its assets would be enough to wipe out its equity.

    NYCB’s Highly Leveraged Balance Sheet
    Excluding intangibles like goodwill, less than 7% of the bank’s assets have been backed by equity over the last five quarters

    Source: NYCB quarterly filings

    That strategy, which enabled NYCB to reward shareholders with hefty dividends, might have seemed reasonable five years ago. The bank had a solid position in a niche that seemed steady: making loans to rent-stabilized buildings in New York as well as other commercial properties. But the time to prepare for a storm is before it arrives.

    The storm came in two waves. In 2019, New York state curbed landlords’ ability to raise rents in rent-stabilized buildings, reducing their value by as much as 50%. Then the pandemic sent workers home, sapping demand for office space. Commercial real estate prices plunged.

    At this point, NYCB and its supervisors should’ve recognized the challenge posed to its business model and cut its dividend to preserve capital. Instead, the company diversified its business — first acquiring Michigan’s Flagstar Bancorp Inc. for $2.54 billion, then buying $38 billion in assets from Signature Bank last year after it failed and was taken over by the Federal Deposit Insurance Corp.

    A second lesson involves managing growth. Flagstar was a lot for NYCB to swallow; assets ballooned by 43% to $90 billion and the bank gained a national mortgage platform. Yet, less than four months later, regulators let the company buy the Signature portfolio. The deals catapulted NYCB’s assets to more than $100 billion, subjecting it to capital and liquidity requirements and annual stress tests.

    Management apparently wasn’t up to the challenge. NYCB’s chief risk officer and chief audit executive departed. On Feb. 7 — after the earnings warning, stock plunge and credit downgrade — the bank suddenly named Alessandro DiNello, Flagstar’s former chief executive, as executive chairman. By month’s end, the bank had also named DiNello its CEO, replaced the board’s lead independent director, taken a goodwill writedown, and disclosed that “ineffective oversight, risk assessment and monitoring activities” had hampered its internal loan review.

    Instead of attempting to resolve such problems as they arise, both banks and regulators need to do better at looking ahead.

    Apartment and Office Portfolios Show Cracks
    NYCB disclosed that 8.3% of its multifamily loans and 38% of its office loans have an elevated risk of default

    Source: NYCB fourth-quarter 2023 investor presentation

    Note: Data as of Dec. 31, 2023.

    All banks, even those serving niche markets, should fund themselves with enough capital — 10% to 15% of tangible assets would be a start — so they don’t have to scramble when losses inevitably occur. In its Feb. 7 presentation, NYCB disclosed it had $4.4 billion in “criticized” loans (which the bank sees as having an elevated risk of default), equal to about 60% of tangible capital.

    Supervisors, meanwhile, need to assess whether a bank’s management is really prepared for growth before greenlighting a major acquisition. Moody’s Investors Service cited the “high governance risks” caused by the executive turnover when it downgraded NYCB to junk on Feb. 6. If these risks had been recognized earlier, regulators would’ve been unlikely to sign off on the Signature deal.

    If these lessons are heeded, some good may yet come from NYCB’s chaos. The solution should be obvious — and not just in hindsight.”

    1. I thought someone posted here a month back that they knew management at NYCB and was going to talk with them. An update would be appreciated with all the bad news.

    2. I mostly trade them except for some closed-end preferreds I have which are in an entirely different category from the rest. But there are lots of times I own none. I’m interested in capital gains as much as I am the income. Maybe more. So I generally only buy stuff well below par.

      When SVB et al. went down and took everything with it there were some opportunities in the preferreds of much better banks. I basically keep an eye on what’s getting killed and search for preferred opportunities. If possible I hold them for a year to get the long-term gains treatment and reassess. I’m not afraid of short holding periods. I was almost day-trading them during the GFC. I had several one and two day holding periods. That was nuts.

      I had some NYCB.A. I did a pretty good job buying it but was late to sell. I got out with a very small profit of 3.X%. Basically beer money. When they announced their “material weakness in internal controls” that did it for me. It’s a bank. That’s like their entire job. Every day I ask myself if I should sell my other two.

    3. More NYCB chaos info today from CNBC. This moshpit is too crazy for me to personally dance in. But I like watching it though.
      Late Friday, Moody’s Investors Service cut the deposit rating of NYCB’s main banking subsidiary by four notches, to Ba3 from Baa2, putting it three levels below investment grade. That followed a two-notch cut from Moody’s in early February.

      The downgrade could trigger contractual obligations from business clients of NYCB who require the bank to maintain an investment grade deposit rating, according to analysts who track the company. Consumer deposits at FDIC-insured banks are covered up to $250,000.
      The Moody’s ratings cuts could affect funds in at least two areas: a “Banking as a Service” business with $7.8 billion in deposits as of a May regulatory filing, and a mortgage escrow unit with between $6 billion and $8 billion in deposits.

      “There is potential risk to servicing deposits in the event of a downgrade,” Citigroup analyst Keith Horowitz said in a Feb. 4 research note.

      NYCB executives told Horowitz that the deposit rating, which Moody’s had pegged at A3 at the time, would have to fall four notches before being at risk. It has fallen six notches since that note was published.

    4. I am down to clown on this one. As for the article..

      “a 7% loss on its assets would be enough to wipe out its equity.”

      So basically they would have to lose 8 billion. “At December 31, 2023, the Company had $113.9 billion of assets, $85.8 billion of loans, deposits of $81.4 billion, and total stockholders’ equity of $8.4 billion.”

      113.9 x .07 = 7.973 billion. Ok.. That is true or close enough.

      “NYCB disclosed that 8.3% of its multifamily loans and 38% of its office loans have an elevated risk of default”

      83 billion total loans. 44% multifamily (36.5 bil). 12% CRE (10 bil).
      8.3% of 36.5 bil = 3 billion.
      38% of 10 bil = 3.8 billion.
      Total 6.8 billion.

      So I guess those loans could be a total loss and equity goes down to 1.6 billion. Now how likely is it that every single loan with elevated risk goes to zero?
      —-

      “less than 7% of the bank’s assets have been backed by equity over the last five quarters”

      Yes.. they are a larger bank now. 7% won’t cut it. We are talking about capital requirements right? So it has to go up. That is exactly what they are working on. I mean the article is stating known facts but somehow they come off as a crisis. Is the reporting actually being realistic or sensationalist? I am still trying to digest the ratings downgrades but if NYCB can fully insure or collateralize them it might scoot by. 90% of the balances of the top 20 deposit relationships already are.
      —-

      The current CEO, Dinello, is the type of person you want at the helm. A person capable of turning around a mid sized bank will now take on the challenge of turning around a larger bank.

      The whole held to maturity security nonsense on this bank’s balance sheet is zero. Everything is available for sale. BTFP could be paid off, the loan reset by borrowing again, and could use that for another year even if BTFP expires March 11th right? If possible use the fed window to save a few bucks on cost of borrowing if the collateral can be used at the m-t-m value to get what they need loan wise.

      I am surprised they kept any common dividend above a penny but the cut will help their cap position. Run down some of the loan portfolio, slow down some lending growth unless the most optimal situation, and maybe even sell a choice asset or two if it made sense. They must have a team examining their liquidity profile every day at this stage. In the recent 10K we already know they are analyzing their “internal controls”. Hell, everything is being analyzed at this stage.

      So.. I was waiting for a >10% yield on A but I did not add anything yet. I feel with all the news coming out, panic feel in the air, I want PACWP pricing. I want sub 11 to add. I have owned U for what feels like a long time. Totally underwater. I bought some A recently and slightly underwater. I will double up on A if I see true blood in the streets. 7-11 per share of A sounds about right for the risk to add.

      PACWP got saved by a merger. In this case of NYCB the mergers have already happened and Dinello just needs to skate on thin ice for a few months to get to solid land. This could be a real winner here.

    1. Maine: Help me understand the message. I own a few REIT preferreds and have looked into buying more, but I’m new to all of this. Until a few months ago, my fixed income investments were almost exclusively Vanguard bond funds. This community has helped me explore a different approach, for which I’m grateful. What is it about REIT preferreds that suggests they’ve been structured in a particularly manipulative or dishonest way?

      Nimzo

        1. Nimzo,
          Too many items to list. Some people say Preferreds are for suckers as they don’t have the protection as bonds, nor the upside of commons.
          I love individual preferred stocks but they aren’t for most as there are many land mines out there.
          Forget about individual name risk, there is structure risk… basically Preferreds have a lot less protection in periods of stress, namely covenant and capital stack.

          Good “cedar Preferreds” to look at a situation where common and bond investors won, but preferred holders lost. Or there can be situations like Rait financial, where there they spin off the good company, but the Preferreds stay with the weak remaining , and eventually goes bust.

          And of course, there is the non-cumulative feature. Grid and 2WhiteRoses are very knowledgeable about this topic.. basically, it pays to read the prospectus and understand the terms.

          PFFA isn’t the worst pref ETF.
          Or find a relatively cheap active fixed income etf or fund. Active pats over time with fixed income.

          1. So… Warren Buffet buys pref. stock.

            Am I Warren Buffet? No.
            But this fact shows that pref stock has it’s place.

            I also keep REIT pref shares in my portfolio and have never had a problem with them. I like to buy them below par however, and never them above par.

          2. Maine Just so it’s clear to Nimzo, so he can research a little on here or other sites your talking about Cedar Fair?
            On PFFA it’s a big preferred ETF so one or two failed holdings doesn’t affect it overall. We discussed it on here how it has been caught holding a preferred way above par and when the preferred gets called all that capitol appreciation is lost. As a holder of individual preferred you would hopefully be able to rotate out and keep the difference between the 25.00 call amount say if you were holding it at 27.00

            1. Charles,

              I’m pretty sure he’s talking about Cedar Reality Trust, which entered into a merger which paid off the common but left the preferreds stranded at a much weaker credit, Wheeler.

              In six months the preferred crashed from a $25 par down to seven bucks.

              1. Thanks O , I didn’t get involved as you might have guessed. But I figured for Nimzo I would try coming up with the full name of the company. Not very good , so I didn’t win the prize.
                At least he can research over on SA and see no one has been following WHLR since the merger in 2022 and .19 share price of the common.
                Mentioned as a buy by the HDO crowd

          3. Maine:

            You conveniently mention the disastrous Cedar preferred saga (as if all REIT preferreds could fall into this very unique trap and “land mine”) and fail to mention all of the property REIT preferreds that were either called for redemption at $25 during the 15-year period of lower interest rates since the GFC (fairly recent ones include AMH+E, STAG+C, PLYM+A, etc.), or had proper change-of-control clauses and were redeemed at $25 during buyouts (like SPG-TCO, STAR-SAFE, etc.)

            I have been investing in property REIT preferreds for many years now and they have allowed me to retire comfortably and live off a portfolio income stream.

            And then you post this crap:

            “And of course, there is the non-cumulative feature”

            Sorry…get your facts straight. Every property REIT preferred (and mortgage REIT preferred) is cumulative.

            I know you are smarter than to post nonsense like this? Maybe save these types of obviously misinformed comments for mostly useless sites like X/Twitter?

            1. Don’t let your misinterpretation of Maine’s comments of preferred stocks in general get in the way of your assumptions, kiddo. 🧐

            2. Kid Twist, Jeesh!!

              I’m just saying to be careful out there with prefs for those that are new to it.

              Sorry, I wasn’t thinking the non-cumulative doesn’t apply to REIT prefs.

              I do stand by notion; that most individual investors shouldn’t be buying single name prefs, or bonds, or even stocks for that matter, basically a boglehead view. But this doesn’t mean that many can’t do it successfully. Prefs are even more inefficient but also full of land mines that can be mid-understood and tend to appear during periods of stress.

              1. The Bogleheads approach is attractive to me. But by the time I learned about it, I had already assembled a portfolio of several dozen mostly dividend-paying individual stocks that I am not eager to dismantle, together with bond index funds that I have been happy to replace in part with preferred stocks and baby bonds. Facing retirement at the end of this year, the income they generate is welcome. Certainly these securities present risks. But I understand the gist of the discussion here to be that REIT preferreds aren’t necessarily more risky than other preferred stocks. I own RITM-A and RITM-D, and I have my eye on UMH-D., which just reported favorable earnings.

                1. I like RITM but funny you brought it up as they will likely spin out the asset management division, meaning the prefs will have less equity cushion.

                  I still think they will be in very good shape, just something to monitor. You don’t get paid 1.5x HY spreads for nothing!

      1. One thing I love about prfds/BBs is being able to look at long-term charts to see how price behaved in times of market stress. And you can do the same for the parent companies.

  18. CHEMOURS Moody’s:
    The review for downgrade follows the company’s disclosure on February 29 that the company’s senior managers, including CEO, CFO and principal accounting officer are placed on administrative leave amid an internal review of the company’s practices for managing working capital, including the related impact on metrics within the Company’s incentive plans, certain non-GAAP metrics filed with SEC or otherwise publicly released. Chemours’ Board of Directors is also evaluating potential material weaknesses in the company’s internal control over financial reporting as of December 31, 2023. As a result, the company has delayed its full-year 2023 earnings release. The company has appointed Denise Dignam as the Interim CEO and Matt Abbott as the Interim CFO.

    1. Chemours – now there is a board I am glad I am not on.

      Does make me wonder about Dupont and Corteva. All came from the same company, same corporate culture.

      We have been hired to do several internal investigations of corporate wrongdoing over the years. I think spun off companies tend to have more management issues than “sold” companies (just my feeling – I have no data to back it up).

      When companies are acquired, the buyer tends to go through the acquired operation more carefully to make sure things are run properly. Spin outs often seem to just keep doing whatever the old company did – but the new management doesn’t always know why or how the old parent managed things, and sometimes unknowingly wander into nasty places.

      I will have to buy some popcorn and watch this one play out.

  19. Apologies if this has already been discussed in detail. I saw chatter on some other boards about the Via Renewables preferred stock. There is an imminent cash buyout in the works from NuRetailCo. I did find this tidbit in marketscreener with respect to the preferred stock after the merger completes. There still is a double digit yield on these: VIASP.

    …….Via Renewables expects that its Series A Preferred Stock, currently traded under the symbol VIASP, will continue to trade on NASDAQ following the transaction……..

    Merger is expected to close next quarter.

    1. Not an expert here, but from the press it looks like NewRetailCo is just a temporary legal entity. These kind of things are created for all acquisitions. Once the acquisition happens the name will be Via Renewables. The common equity will all be taken private and the pref shares will remain publicly traded.

      Personally – I would be nervous holding a preferred stock in a private company and would look for other options, but to each his own. I know others on here are comfortable with this structure.

  20. I have trouble navigating the finra website. Can anyone give me the link for new corporate bond and new long term semi-government agency offerings? Thanks.

    1. Randy, I was at work when I saw this. I’m no expert, but this is a start. I bookmarked this as my start.
      https://www.finra.org/finra-data/fixed-income/corp-and-agency
      I haven’t tried entering in all of the detailed parameters, I just type in the first 3 or 4 letters of the company if that doesn’t work I try another combo.
      Down in the right of the screen is the reset and search buttons
      If you have the Cusip, Like the State Street one. What I do is scroll down on that page to the list of bonds already showing.
      I click on any one of them, it takes you to the second page that has the info for that bond. On that second page at the top is a search bar you can check the user agreement and enter the Cusip
      It will automatically take you to that bond info. Once you see how that bond is listed by the spelling of that bond you can go back to the first page and enter how State Street is spelled hit search and it will bring up all the listed State Street bonds.
      I apologize if this is cumbersome, I learned it this way. Maybe someone else has a easier way.

      1. Charles—-thanks. I live in Menlo Park half of the year and I sort of remember you live in the San Jose area.

        1. LoL Private is down in that area. I am up in wine country. Sonoma county. My brother and sister are down there in Saratoga. I get down there couple times a year.

  21. FWIW noticed my shares of RILYO were partially called yesterday for appx 80% of what I held.

    1. History? I feel people are conflating the recent bank run failures with a bank trying to turn things around and becoming better as each day passes. The 2023 10K will be late by a max of 15 days. The grace period. The new CEO and his team are basically cleaning house aggressively and may as well get all the bad news out ASAP. I may add to the preferred if we see a down market day and people really hammer this bank on top of it. I would want to see below 15 to add more -A. >10% yield before it floats.

      But with all this said.. it is sized as a speculative buy. I am not looking to own 1500 shares of this bank’s preferred.

    2. Yeah, $3.72 now -22%+. Oddly enough while also down hard, the A preferred is not hitting new lows and bounced pretty good off the opening low. Still a dollar above my cost. Exit stage left >>>>>>>>>>>>

      1. I had started buying the U again on the very day the news hit.
        Luckily, I had made quite a bit when the U fell to 18.10 a few weeks back.
        The sub debt never went below 75% so , trading at less than 40% of par briefly the U was an easy buy at that points. Dumped above 31.
        Best/ luckiest preferred stock arb in a long time

  22. RIV common dividend CY 13.0%. From RIV Feb 2024 19-A:
    “On February 29, 2024, the RiverNorth Opportunities Fund, Inc. (the “Fund”) paid a distribution of $0.1289 per share to shareholders of record at the close of business on February 15, 2024. In accordance with generally accepted accounting principles (“GAAP”), the Fund estimates that 92.16% of the distribution is attributable to return of capital and the remaining portion is attributable to net investment income. ”

    I take it that RIV is selling assets to fund the very large common dividend. Is it reasonable for a fund mostly invested in fixed income to pay out so much?

    1. Thanks for posting RtS
      What does that mean for the preferred I wonder? Are they supposed to keep a 200% ratio?

    2. I don’t personally understand how this fund works, but if you look at the NAV chart on cefconnect.com, it certainly does not appear to be destructive ROC.

      And no, a 13% yield is not outlandish for this type of fund. It’s less than PDI pays.

      https://www.cefconnect.com/fund/RIV

      1. David,

        I also don’t understand how RIV works but hoped someone else did. I noticed here https://www.cefconnect.com/fund/RIV on the Pricing Information tab that RIV has been trading at a sharp discount to NAV since the end of 2022, more so than at any time in its history. It would be interesting to see how that compares to similar funds.

  23. Looks like ZIONO and ZIONL not called this time around ;ex 2/29 ;
    so we are in for at least one more quarter of outsized returns from these 2
    investment grade credits;
    I spoke of these here several weeks ago ; my thoughts then ; win- no loose
    situation ; as my stripped price almost covered it.

      1. from the ZIONL prospectus:
        We will notify the holder, in writing, of the redemption not less than 30 days nor more than 60 days before the redemption date.

        1. and remember, individuals are not the holders. DTC is, so sometimes they get notified well before we find out about it.

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