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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.

1,493 thoughts on “Sandbox Page”

  1. Monday Mar 18 CME FF Futures for Jly / Sep / Dec contracts ….
    at Monday open …. above contracts indicate below FF Rates …
    July = 5.18%
    Sept = 4.995%
    Dec = 4.70%

  2. Exit strategies question: I don’t have one, and I think I should. For instance, now holding FCNCO with 17% LT gains, paying right at 6% on current value. I had told myself 15% was enough, yet here I sit on hands. Is there any wisdom someone might share? or is there an old post on such? thanks.

    1. How about this phrase……?
      “Bulls make money, bears make money, pigs get slaughtered.”

      1. Depending on your age and investment goals. Also is being 17% up that greedy? You have a drop in value and lose some of that 17% are you still getting paid to hold? Lastly, This is a bank preferred and non cumulative. Can you find a similar yield in a cumulative preferred that has the added safety of the common also paying a divided so that the company would have to cut the common to zero before they quit paying the preferred.

        https://time.com/personal-finance/article/bear-vs-bull-market/

        1. This may seem like advice, sound like advice, but follow your own path and do your own research.

          1. Thanks. Yes. I have no problems making the plans. It is sticking to them that I have issues with. I liked the Time article. And the cumlative Idea was a good one thanks. Off to study more. All input is greatly appreciated. I have learned a lot at this site. Thanks to all.

    2. If you don’t have a plan and don’t have any strong feeling other than unease, sell half. I’ve rarely regretted doing that.

    3. Sell half the position. My solution for nervousness. Some profit locked, some upside retained. A variation on the old advice, If a stock is keeping you awake at night – “Sell down to a sleeping point.” (Do consider your after-tax net and reinvestment opportunities first.)

      1. Good advice, Bear. I spent hours trying to find a safe 7% preferred that also had upside. Found several close but not quite. Close only counts in horseshoes and bacci ball. Ended up putting in a GTC and caught it. Figure where you’re going to put the money if you sell a half position even if it’s a govt. MM fund

    4. If I can find another issue with a better static yield and/or a higher potential capital gain, I book profits. I believe in “You can’t go wrong taking profits”. In the final analysis, you should do what you’re comfortable with.

    5. Doug-
      There’s always the option of selling 1/2,1/3, etc, to take some profits, and use the rest as a long or short term core, whether trading or not.

    6. doug: I can’t help ya, I bought PBI-B at 15.40 and still holding, but the dividend helps ease the anxiety. I do like the idea of maybe selling half though.just need to sneak up on the mouse and click it I guess.

  3. There should be a rule that all current predictions must be prefaced by these words:
    “Given the context of massive deficit spending combined with high federal debt, I predict…”
    Deficit spending is the 10-ton elephant in the room, and that fact seemingly escaped all those predicting recessions over the last two years.

  4. Grid bluntly states, “Nobody can predict anything.” That’s not really true. People make correct predictions all the time. The problem is you don’t find out who’s right or wrong until after the fact, so predictions in real time aren’t of much use. Or are they?

    I like to use predictions to set my range of expectations. A prediction that is non-consensus can be an eye opener. Liquidity guru Michael Howell correctly called the stock market bottom in fall 2022 based on his liquidity measurements. In the recent interview linked below, he clearly explains his current reasoning.

    I’m bringing all this up because Howell surprised me by predicting the 10-year treasury yield rising to 5.25% this year. Huh? I don’t have to believe him or not believe him to at least take a few minutes to imagine how my investment plans would be affected if he’s on to something that’s not on my radar.

    https://www.youtube.com/watch?v=zPXiuOmICy0&t=3593s

    1. I guess I should have been more precise and not so blunt. How about nobody can consistently and accurately predict interest rate movements enough to consistently rely on at all. That certainly doesnt mean one cant have successful strategy though…. But even the “Bond King” has a bunch of unforced rate call errors himself. But I guess you only have to be right once in your life to milk a living off it. Elaine Garzarelli proved that….

      1. Wikipedia
        Garzarelli’s fund, Smith Barney Shearson Sector Analysis, was established just before the crash. Thanks to all the free publicity she got from being interviewed as a prognosticator, investors soon poured $700 million into this fund. In 1988, Garzarelli’s fund was the worst-performing fund among growth stock funds. From 1988 to 1990, Garzarelli’s fund underperformed the S&P 500 average by about 43 percent. Even the few investors who were in her fund before the crash in 1987 (when Garzarelli’s fund outperformed the S&P 500 by about 26 percent) still lost. What she saved her investors by avoiding the crash she lost back (and then some) in the years that followed.

      2. Actually, Grid, I’m just having a little fun because I too generally believe nobody can predict anything. This was my ultimate reaction to the endless stream of silly predictions in the wake of Covid.

        My attention has been focused on interest rates since mid-2022 when, as a total novice, I started buying fixed income. By the end of that year, I knew how to find the good stuff. My only regret was being low on cash when good stuff was at 7%.

        As to the crux of the matter, predicting the direction of rates, I know I can’t do it, and the best people I follow don’t claim to be able to do it either. There’s a lot more humility in the pundit world these days after all of the failed recession calls, which makes Howell’s 5.25% 10yy call all the more interesting.

    2. rocks
      The line in the responses that I liked the best…..

      “This concept that there is a wall of money on the sidelines, just waiting to come into the market.”
      “It’s a fallacy.”
      “When money comes off the sidelines to buy a stock, the Buyer pays money, gets the stock. The Seller gives up the stock, gets money.”
      “There is no change in the money supply.”

      Duhhh…….

    3. rocks2stocks: This baseball quote pretty much applies to all the financial “seers” as well.

      Baseball is like this. Have one good year and you can fool them for five more, because for five more years they expect you to have another good one.
      Frankie Frisch quote.

    4. I don’t think it’s an official Yogi Berra quote, but it should be : “predictions are difficult, especially about the future”.

  5. My best friend writes options for a living.
    Writing options is a risky business.
    He started with a brokerage firm, then went off on his own in 2004..
    He made his fortune in the 2008 meltdown.
    “People were willing to pay any premium. I feasted on the panic. Others went bankrupt.”

    He reminds me often “You don’t get hurt by the things you fear might happen. It’s the ones that you don’t expect that can kill you.”

    I’ve always been a cautious sailor.
    At the first sign of a change in the weather I start preparing for the worst.
    While others are partying and enjoying their cocktails, I’m battening down the ports and hatches, checking the rigging, securing the lifelines. Sometimes, when nothing happens, I end up looking pretty stupid in my foul weather gear in the bright sunlight.

    I’m uncomfortable with the current economic/political/geopolitical weather conditions. I don’t know exactly why, but I have the overall feeling that we have been burning our collective furniture for some time to remain warm and that we are running out of furniture. There may be nothing to sit on when the music stops.

    I have a large lump of maturities in my T-Bills and CD’s coming in May and June. Think I’ll leave them all in SPAXX and SGOV and resist my normal urge to pursue opportunities.

    Just have this feeling ………

    “You don’t get hurt by the things you expect. You can get killed by the things you don’t expect.”

    1. Westie, thanks for sharing your musings. Always appreciate your posts and glad you joined us. Your thoughts express how I explained the market to my wife. When the music stops are you going to be able to find a deck chair to sit in. Hopefully we are not on the Titanic when the music stops.

    2. Westie most of my funds backing my GTC bids are in PRTXX getting a current 4.93% yield. The TRSTX is yielding 5.70% even being ultra short term, not sure it’s worth the .8% difference.

    3. Took profits at 52 week highs today
      Full foul weather gear while the sun is shining……

      Kept ADM, CC, PFE and KRP

  6. Thoughts on tax considerations for the GLPpA call at par
    there are choices to be made before the ex date ; to hold ,accept the interest income and a capital gain or loss, depending on your cost basis being higher or lower than 25
    Or ; sell the position BEFORE the ex date; avoiding the taxable interest ,
    and accept accrued interest as a Capital Gain( or a reduction of a capital loss) ; in my case ; with a cost basis of
    24.98 and a holding period of more than 1 year , I plan on the sell ;

    1. Bought in Nov for $24.97. Should have sold Jan 30 at 26.92. Wasn’t paying attention and settled this week at $25.40 for accrued div. Hmmm. Don’t think it makes much difference.

      1. It looks like the issue fell about 4% right after the call. That kind of thing can really start to impact the performance of a portfolio if it happens enough.

        Imagine the annualized returns for those who purchased above $26 over the last month or so.

        The dangers of holding issues that are significanlty over par. Yield to call calculations matter.

        1. Dick ; this issue has been discussed here many times , from back to October 2023 when GlPpA traded below par; those students of “preferred” sniffed a Call coming based on several factors ; the Quality of the parent , the size of the issue ($69 million) meaning that funds were available to effect a full Call ,
          and wide differential in yield over GLPpB and the MLP Units.

      1. Private, Westie, I have been having a feeling of unease with the economy. We have been having slow months in sales. Jan. was ok, we didn’t meet the sales goal but then Feb was bad and now March is shaping up to be not as bad as Feb. but still looking like it may come in at about 80% of goal. Next week will tell. Finally getting applicants for our job opening in sales, but 2 ghosted the interview and one actually e-mailed to say he took another job. One applicant did interview and looked promising. He comes from car sales and spent 1-1/2 yrs doing that but I suspect he wouldn’t be looking if car sales were doing good. Back to my comment about 2007 at another job. The phone calls have slowed down. We had a will call a couple days ago and it was the assistant br. manager of the customer who picked up. I asked him how it was going at his branch and he said a similar thing we had been saying, that with the rain things had slowed but hoping it will pickup now that the rain has let up. Said they are still having supply issues, but not as bad as 3 or 4 yrs ago. Next time I see our Fedex driver I will ask him what he is seeing at the businesses he stops at.

    1. Westie, interesting article. All I can say is people shouldn’t blame anyone but themselves regarding debt although sometimes circumstances are out of our control. Credit is like an addiction. This country and its people have borrowed so much, I don’t see how people and businesses can think lower rates are going to save them, they will just borrow more. I saw another article recently that said people and businesses are using bankruptcy and it’s becoming more common and less stigma to do so as a way out.
      A slow down is going to make things a lot worse.

      1. Just as an aside on consumer debt – I have been noticing two disturbing trends:

        1. credit everywhere for everything. You can’t buy anything online without being offered to pay for it in multiple installments (No Fee! No Interest! – all free today! ). Easy way to lure people in. https://www.youtube.com/watch?v=zUnhfvGdmmw
        But if they are late on a payment, they get hit with fees, interest, etc.. Insane, but it is an easy “gateway drug” to get young people used to borrowing for everything and carrying lots of debt.

        2. Instant paychecks. Companies are getting employers to let employees draw payroll earnings earlier/faster. Instead of getting paid every few weeks for work performed during the pay period, employees can draw wages faster – in some cases, the same day they work a shift. In some states, the payment companies are also trying to get approved to make “advances” against future wages (so, even more debt through their employer). No longer will people have to live from paycheck to paycheck, they will be able to live from shift to shift. Heaven help them if they ever miss a shift…

        Truly, the consumer debt industry is getting out of control.

        I really think that most of the consumer debt problem is a matter of practical education. I taught my kids about debt, and they have all avoided it (a couple have mortgages, but that is is).

        I talked about personal debt with some of the kids (20s and 30s) we had over around the holidays (we do big parties for folks we mentor/have mentored, my children and their friends, current and former employees, etc. – “fire up the smokers and they will come”) It was surprising to me how many well educated people live with significant consumer debt and don’t seem to see that as a choice they made.

        I grew up with parents who had grown up poor during the depression and grandparents who were adults during the depression, so I had debt avoidance beaten into me from an early age, and I tried to pass it on to my kids.
        Not sure who will teach kids today.

        1. I am not surprised to hear that about the well educated people living with a lot of debt. I remember around 2010 in part of the midwest, Lexus SUVs seemed to be the thing for college and recently graduated college females to be driving. Even just being a secretary they’d try and find a way to be driving a Lexus SUV.

          Today some of the attorneys I work with drive expensive cars, live in more home than they can afford, have significant debt, and barely contribute to retirement plans. Then they complain they need more money. You would think after years of education they would know how to manage their money better, but many don’t. Recently, I attempted a relationship with someone and she criticized me for driving an older Lexus because it didn’t have all the high tech things a newer car would have like gps, bluetooth, and satellite radio. Apparently, I was supposed to spend 40k+ on a new car despite maybe driving just enough to need 1 conventional oil change a year. Some people just have no problem voluntarily living paycheck to paycheck with all their monthly income going to various monthly bills. Seems ridiculous to me.

  7. Fed Funds Futures @ CME … Friday Mar 15 open ## ….
    July Contract = 5.22% F F Rate
    Sep Contract = 4.97% F F Rate
    Dec Contract = 4.67% F F Rate
    CME page posts this contract @ Open / Close / Intraday
    Just FWIW what the money trades indicate.

  8. There have been reports of retail chains shrinking their store footprint. Lately, Dollar Tree. Before that the big drugstore chains. This seems to be a topic of discussion over at The Other Website where Realty Income O has an ardent following. Pages 17 through 21+ of the attached list the tenants in Realty Income O’s large portfolio by name and business type.

    Much too much to read, but what struck me was not the tenant concentration in dollar stores and drug stores but the 50% jump in interest payments from 4Q22 TO 4Q23. With about 12% of O’s debt maturing in 2024, at a 4.46% peg, in a world where regional bank and other lender’s real estate portfolios are under scrutiny, I would imagine that O’s C-suite is hoping for the Fed cavalry to ride to the rescue, sooner rather than later. Likewise, commenters on TOWS are expecting a Really Big Dividend Increase later this year after the rate cuts. Recent increase was small, up from 0.2565 to 0.257.

    SUPPLEMENTAL OPERATING & FINANCIAL DATA Q4-2023
    https://www.realtyincome.com/sites/realty-income/files/realty-income/quartly-and-annual/realty-income-q4-2023-supplemental-information.pdf

    Disclosure: Not a member of the cult yet, although the preferred mentioned here looks interesting. JMO. DYODD.

    1. Private, I think everyone on this site has noticed more offerings coming to market and at lower rates than the past 6 months. Also the maturity on a few are out to the 2060’s if we don’t get a Fed rates cut May or June look out.

  9. If the major stock indexes are starting a correction while at the same time the yield curve moves higher, what will the effect be on the price of preferreds? PFFA seems to follow every stock market correction and bottomed several times starting in fall 2022.

    I’m so new to this that I haven’t been through a downturn. Many of you have experienced multiple drawdowns and have strategies ready to deploy. I’d greatly appreciate hearing about them.

    Lately, I’ve been feeling like it’s too easy. Red flags?

    1. Nobody can predict anything. Personally I have been focusing more on protecting my flanks than capital gains this year. As far as PFFA and your question. You kind of answered it yourself. Thus why some people are not inclined to preferreds unless easy cap gains are laying there. The skeptic would suggest preferreds represent the worst of both worlds. They act like equities when they crater, and act like bonds when they do. There are a few ways to sidestep the brunt, but being in major preferred funds wouldnt be one of them.
      Besides the specter of rising interest rates on the long end (and that is conjecture as nobody knows) we do know one definable negative. Credit spreads are historically speaking relatively tight which levitate preferred stock prices. If credit spreads widen fixed perpetuals will feel the heat from that. And that is totally separate from any interest rate movements and or general stock market volatility.

    2. rocks,

      My 1 cent, worth maybe a half-penny, many would have other versions:

      1) Re-read the first line in Grid’s response.
      2) Buy only BBB+ or higher and only invest an appropriate portion of total holdings and individual issues.
      3) Wait patiently for capitulations. It could take years.
      4) When the market is convinced it knows the future (it doesn’t) is doomed and yields reflect your target – BUY.
      5) Turn off the news and do not look at your account balances.
      6) If the price falls, BUY more – all the way to the nadir. (see #2 above – you cannot pursue this strategy with marginal or junk issues)
      7) If price suddenly pops back, SELL last bought tranche (only) back to the market.
      8) Continue with #6 through the nadir.
      9) Collect divvies happily ever after.
      10) Develop non-preferred alternative investment strategies so that you’re not trapped with unusable cap gains if the opportunity arises.
      11) If prices climb again, start SELLING maybe 5% blocks when cap gains start eclipsing multi-year divvies.
      12) Never forget #1, #5 and #10.

      If you understand the math of this it’s easy. Good luck.

      1. Alpha, my only small quibble is I am personally not as strict on BBB+. My Union Electric preferreds for example are BBB-, and I have as much confidence in them paying than any thing else (unless Callaway blew up of course) no matter how much higher the credit rating is. The bonds of BBB- are still of higher quality themselves in the A/BBB+ range so that is still high quality… I feel like I lean strong credit quality as all but three are IG preferreds. But none of mine are BBB+. But all but 2 are IG still. And one NSS is going to be redeemed if merger passes regulatory muster.
        More importantly though, I like your #10. And I have already been drinking the Kool-aide there!

        1. Yes I agree Grid. Overall holding an A-, though have two below BBB+. One is your referenced Union Electric via UEPEO and you know the other which is unrated. When driving to the price nadirs during capitulations, like to have a broad front including the highly liquid PSAs, ETs, Gabellis, NRUCs etc.

          1. Yes, Alpha, they are certainly the ones to buy in market upheaval opportunities no doubt……No question… The 2013 Taper Tantrum, December
            2018 credit spread blow out, and March Covid 2020 routs proved that. Those types you referenced were the ones to pluck, as the illiquids didnt really even blink during those periods of time.

      2. Thanks Alpha, I’ve lurked here for years and have followed your posts and basically have come to imitate your strategy with a few flips and divi captures thrown in for fun. This has been successful for me and very stress free, but it does require patience. With MMF at 5.3 it’s a great time to capture cap gains. I’ve sold quite a bit in the last week or two. Also, I think it was you who turned me on to Wolfstreet. I have learned a tremendous amount on that site about how the Fed and banks work, as well as a much different perspective usually than MSM presents. I do appreciate you sharing your thoughts (and Grid, and many others too for sure)

        1. Hi Pete, Happy to learn of your positive experience.

          We all owe a recurring thank you to Tim for creating and maintaining III – and for all our brother and sisters collaborating to make the collective sum of us greater than each of us individually.

          Best wishes for your continued success.

    3. @R2S and others

      You should eventually learn to trust your instincts rather than fight them. Sometimes feelings can get irrational, so better to take the advice of others more seasoned or research why/why not you felt a certain way to see if it pans out.

      My experience with “downturns” is that when the wind changes, the preferreds are often lumped in with the common when it comes to the initial knee jerk panic selling. When things settle a bit, you will see preferreds being bought by bargain hunters like myself.

      My biggest worries are interest rates and credit quality. As many have said very hard to predict rates. However, credit quality is something that never goes out of style in fixed income. An investor can have much more influence on credit quality through selection.

      I can tell you that a good rule of thumb is a 1% increase/decrease in rates is approximately a 10% move in prices.

      What say you?

    4. Rocks,

      If you’re a buy and hold type then you’re going to feel the pain in a large market correction. The best that you can do is position yourself with quality holdings, DCA at lower prices if you have the cash, and ride it out. If you don’t want all of the pain then you need to reduce your holdings or add some negative delta via shorting. I prefer the latter.

      Shorting preferred stocks has been viable in every correction in the past 15+ years: The 2008-2009 GFC, China GDP fears, implementation of steel tariffs, inverted yield curve fears in 2018, 2020 Covid drop, and 2022 interest rate increases. None of this is predictive. It’s being reactive to price change.

      The one time that I hit it big was during the early stages of the 2008 GFC. There were several tip off signs and maybe I just got lucky. In late 2007 I recognized that the market was going into the crapper. I sold a large chunk of my preferred holdings at a loss and for the next 18 months or so, I was net short, swapping on the short side while many $25 preferreds dropped $10 to $15 to $20 (see Royal Bank of Scotland preferreds under $5). I was short a large chunk of three Lehman preferreds when they went under. And then when the market reversed in March of 2009, I transitioned to net long for the recovery. Even a blind squirrel can sometimes find a large acorn :->)

      1. Theo,

        So interesting.
        1) Tip off signs. There were writers in 2006 who made the right call for the right reason. It was annoying to read that nobody anticipated the fall. There were warning signs. In Jan 2000 Bob Brinker said get out, so I did. These writers based their observations on readily available information. It’s hard to separate the signal from the noise, but someone always does.
        2) Sell, even at a loss. How I wish I’d had the guts to do that on occasion. There are ways to prepare in advance. If this were a crypto site, it might be stated as sell your s–tcoins.
        3) Short. What? When? Better have a list ready because you don’t want to chase. Tough business. I’m always surprised to read when a good trader on X decides to short a big cap mo-mo winner. Sheesh! Find something weak to short.

        1. Biggest advice. Setup your lifestyle to consume 50% of your money per month. Buy assets with the other 50% every month. This scarcity will cause you to build skills within your industry and eventually start your own company.

          Nobody has made any money long term shorting. People operating within this quadrant need to be medicated. Quickly realize. If you are absolutely correct you would not have enough time to perform a victory lap while the world descends into guns and ammo mode.

          My biggest secret. If I have no idea what to buy. Every month automatically it buys the total market. Keep reading Buyandhold from seekingalpha comments to keep disciplined when everyone else around me is crying, or selling everything off.

        2. Rock to stocks, ( by the way, you a geologist?) Theo is right on one thing. Forget the analysts. Certain parts of the economy get warning signals. I remember reading an article about a lady in los Angeles who went by certain signs in her business that told her a top had formed and it was time to batten down the hatches
          For me it was June 2007 the phones quit ringing. I was in lumber and flooring sales for the largest distributor West of the Mississippi. After that month I saw things getting worse. Having contractors saying the bank had called their home equity loans they had been using to finance their business. I put both my 401k and my wife’s in bond funds. Yes it was scary when the bond market froze up but we were in our early 50’s a long ways from retirement. In 1-1/2 yrs our accounts were about the same or slightly up while others we worked with who had been in growth funds had lost almost 50% in their 401k
          Course they eventually recovered what they lost.

        3. There were several tip off signs for me in 2007.

          1) Someone I tracked was selling heavily margined short puts for income. In the late summer, I noticed that second tier financial stocks were being assigned to him. Their common theme? Sub prime involvement.

          2) I owned two variable annuities that were up nicely. One started slowly transitioning to fixed income in the early fall. In November, the second one began transitioning as well. My conclusion was that they must know something because they move cautiously and slowly.

          3) I had a mental stop loss to move the entire variable to the cash account if I got down 10%. That happened in early December.

          In late December, I also sold off six figures of preferred stock and booked a $15k loss. That’s a lot of dividends and then some! Fortunately, I had gains to offset. In January, I began shorting and I recovered that $15k loss in 6 weeks as the market tank picked up speed.

          I have a preferred short list available at all times. It changes if shares become unborrowable or if borrow rates exceed 12%. I’ll only short higher borrow rate issues if the market is volatile and it’s intraday positions. It’s a transition process. Short a little as the market falls. Increase the short/long ratio as it drops more. If it drops enough, carry more short than long. FWIW, in 2008 and 2009, I paid over $7k in borrow fees each year. It was merely the inconsequential cost of doing business.

          Pairs trading is mechanical. There’s no need to know a thing about fundamentals. Price dictates everything. When the market was hyper volatile in 2008-2009, there were numerous price dislocations and profitable swaps were easy to find, sometimes in minutes to hours. In non volatile times, it’s all about income, hoping to bump the annual yield up 2x-3x.

          1. Thehornsby, I lived 2007/2008/2009 as I managed 10’s of billions of dollars of derivatives and my team and I were make a MILLION DOLLARS A DAY, facilitating CDS (credit default swaps), that we split with my firm 60/40. This is a decent write up of what happened, but the author misses many of the salient details that were very behind the curtain https://www.investopedia.com/articles/economics/09/subprime-market-2008.asp#:~:text=The%20stock%20market%20and%20housing%20market%20crashes%20of,and%20a%20higher%20risk%20of%20defaulting%20on%20loans.
            Lastly, no executive of these firms that destroy many many lives went to jail (as usual) and the Fed (again just too complicated to write about here) bailed out many of the firms because of “other” world government/being in the pocket of the politicians and their influences. Look at AIG; just why were they saved and Bear Stearns/Lehman/Countrywide Credit went Chapter 7 and JPMorgan Chase, Goldman Sachs, Morgan Stanley, and Bank of America were bailed out?!? China 🇨🇳 look in the hazy mirror. Think what could have delineated who got the thumbs up or thumbs down (life or death) during that crisis. Lastly, since history ALWAYS repeats itself because we never learn financially (it’s different this time, right?) http://www.usdebtclock.org and Buffett has been warning about severe leverage and derivatives for many years. Just whom gets saved this time…
            Today, certain people file for bankruptcy, businesses and individuals, and it no longer has the stigma it once had. Now it’s almost considered wise, a way to regroup and come back again. Capitalism without bankruptcy is like Christianity without hell.
            I am Azure

            1. Azureblue, I’m not sure what the point is of your making a million dollars a day during the 2008 GFC. Be that as it may, I’m just a retail guy who for the first 30 years of my investing life never owned more than 500 shares of a large cap stock unless it was below $20. Then, maybe I owned as much as 800 shares. LOL. I’m just a little guy who got it dead right back then.

              My only claim to fame is doubling a six figure account in 2008, withdrawing the gains and doubling it again in 2009. So, effectively a triple. Other than that, I’m small potatoes,. I am occasionally also facilitating CDs (small “s” as in certificate of deposit).

              Thanks for the link. I’m aware (on my retail level) of what transpired during the GFC, having read a few books about it.

              1. I’d be glad to clarify; there was no flex, just saying the commissions and pricing on CDS’ (and all derivatives at that time) were beyond insane. This is because they were not regulated in anyway and we were just making up numbers as we went. Price swings to protect these billions at each firm would have wild gyrations moment to moment and “normal” prices were on a negotiated market by many that didn’t understand what ultimately was happening or needed to happen. Much was and still is being kept from the general public because they wanted the markets to not melt down and stay relatively calm. Further, ALL sides were desperate these assets would not drowned and take away their livelihood. All this could have been avoided with some common sense and the regulator agencies to regulate the insanity. Sadly, we seem to have learned nothing as the derivative market is infinitely larger than when I was apart of the madness and we will all get to repeat the meltdown sometime into the future…

            2. Azure – I lived the 08-9 crisis, mostly living in China (managing things across Asia/pacific (China, HK, Thailand, Taiwan, Singapore, Malaysia…).
              Truly frightening.

              We had officials we worked with regularly in China just disappear or be executed (literally – one guy I had lunch with on Tuesday was executed Wed.). Also had some execs at some state owned enterprises disappear. Unfortunately, we are seeing disappearances picking up again with the current crisis.

              1. Not trying to be sick humor private, but what’s happening in China doesn’t make it in the news. On the other hand we hear a lot about Russian CEO’s jumping out of windows.
                Are we going to have a worldwide economic pandemic?

                1. Charles,
                  The most dangerous occupation in the world is to be a billionaire in China. Death rate is breathtakingly high.

              2. Pragmatically, the parallels of 1940 expansionist autocracies Germany, Japan, Italy with 2024 expansionist autocracies Russia, China, Iran/North Korea is of concern. And speaking of “signs”: Executing dissidents, disappearing CEOs, invading neighbors, threats to invade neighbors, nuclear sabre-rattling by two nuclear powers, increasing attacks on world trade routes, increasing cyber attacks, China accumulating gold for 16 straight months, calls by four autocracies for a new world order.

                The potential geopolitical implications notwithstanding, it appears there are a plethora of lower-tier market “events” that could be triggered as these imbalances wind up or down.

                Anyone else catch themselves starting to sub-consciously check the headlines last thing at night and first thing in the am to be sure nothing calamitous is underway?

  10. Many of you probably saw the headline yesterday that Goldman Sachs has green lit investment back into US commercial real estate saying the bottom is now in. I have been avoiding the real estate space in general quite frankly.

    But I noticed just the other day that O (a dividend aristocrat) just confirmed and slightly raised their monthly dividend. I realize as pointed out on this site that O has a 6% cumulative perpetual fixed preferred currently yielding 6.09% But the trading price on that has rallied nearly 25% since the bond yield panic from past fall.

    Where I’m going with this is I’m actually considering opening a position in the common stock of O since it’s only rallied 13% from the 1 year low vs. say a JPM common stock that has rallied nearly 60% from the 1 year low.

    Also I know a few people have asked in recent weeks but anyone with any updated thoughts on the two Terra (Income Fund [TFSA] or Property Trust [TPTA]) in terms of how money good either of these are with redemptions now in only 2 years sporting some nice double digit yields; in light of Goldman’s bottom call here, please share.

    1. My 2 largest real estate holdings in my stock account (as opposed to my separate fixed income account) are O and RNP which is a fund holding a bunch of REITs and REIT preferreds. I don’t trade them. They just sit there and add to my income stream.

      1. Jerseyvinny – Thanks. I’ll take a close look at RNP. A couple folks have mentioned that one to me in previous discussions.

        I also wanted to add, this is not just a “call” from Goldman. The Goldman Sachs Asset Management group is actually putting money in harms way here and investing dollars into US commercial real estate.

    2. Theta, Terra Income is externally managed. If you go to Quantumonline and look it gives the email for investor relations. I Googled the company. Here is their website. https://www.mavikcapital.com/
      Outside their SEC filings you don’t have much to go on. The website is just storefront that doesn’t give me a warm fuzzy feeling. DYODD

    3. theta
      Contrarian view……
      CRE is a $2.3 trillion time bomb.
      Everyone involved (owners, lenders, regulators) are working together to kick the can down the road, hoping for………. something, anything.
      By all means, as in “The Big Short”, now is the time that big money can be made by wading in where angels fear to tread.
      But, as shown in the movie, the time between the investment and the ultimate return can be a long one, full of further steep drops and doubts.
      For those with a deep wallet and strong stomach, it is an opportunity.
      Everyone else, probably not.

      As an aside, I am CFO for a company. We purchased our HQ building in 2019 and financed the purchase with a 4.25% mortgage. We lease out 70% of the space.
      100% leased -nice profit of $250,000/yr since.

      The mortgage renews next year.
      We are projecting a 7% mortgage rate which will add $300,000 (25%) to the annual cost.
      Underwater.
      We can handle it as long as there is not a business downturn causing vacancies.

      We are in better shape than 90% of CRE.
      Who/when will the piper for that 90% demand to be paid?

      1. Charles M – Thanks for your comments.
        Westie 18 – Appreciate you going into all that detail and sharing this with the community. You know it’s funny you mentioned something as I was talking about this awhile back over drinks…..

        But imagine you had the incredible foresight to see the 08/09 debacle coming and bought swaps say a bit early. Then never seeing your positions marked higher as everything is falling apart. And then realizing, the counter party you bought said swaps from might fall into the abyss and could lose all your money thus having to sell too early and leaving a ton of money on the table.

        I still think the best way to have played all that was with put options. Especially if you were early you could of went way out of the money with 6 month duration or even LEAPs. When those two Bear Stearn hedge funds completely evaporated think it was in the summer time, the stock really shrug it off was still trading $120s. I even remember looking at $100 and $90 puts and they were so cheap. When a stock goes from $100 to 0, you’re talking returns of 50X or much higher depending on the strike and how much time you had on the contracts.

        There was one trader I distinctly remember even after Lehman tanked into the upper $30s, he bought out of the money puts two or three days before the stock completely collapsed. He made so much money; he never disclosed but said something to the effect from that single trade, he can now send both of his kids to Harvard for undergrad and medical school but it won’t cost him a penny.

      2. I think we haven’t even seen the beginning of the bottom for commercial real estate, at least in the bay area. Just my observation based on anecdotal experience.

        We had someone ask us to evaluate a deal they had been offered for some office space in SF earlier this year (kinda funny – we really aren’t a RE operation, but we do live in the bay area and can do math). They wanted their local employees to go from a total work-from-home to a hybrid work schedule with some days in an office. The offer they had was just silly (someone trying to offload a lease at way above market rate).

        We did some looking for them – crazy how much space is available in the bay area (compared to 2019), esp. in “older” (pre-2000) buildings, and how cheaply it can be had.

        Had to have quite a discussion about why downtown SF would be a terrible idea (taxes, commute, parking, crime, expense,…). The”home office” in Asia loved the idea of having an SF address. I got them to let me talk to some of their employees – none of whom live in SF. NOBODY wanted to commute into SF (or, “calcutta by the bay”, as I call it).

        They ended up in south San Jose at ~10% the price of the space in SF they had initially been offered, and the employees are VERY happy with the reverse commute for the days they have to be in the office.

        So, I am staying out of real estate for now. I may miss some opportunities, but I don’t want to buy something that is still falling.

        1. Just take a look at NXDT, a supposedly diversified REIT. Managed by the Nexpoint group, who are “experts” in real estate and alternative assets. It’s been a disaster for the shareholders, common and preferred.

          A prime example of what they are dealing with the City Place Tower they own in Dallas. Awesome property, except that they are doing renovations/conversions to parts of the tower and can’t get the borrowings refinanced. Even if they do it will be at a not-so-friendly rate.

          Thankfully I sold the common, but still am a bagholder in the preferred.

          I’m sure there are very smart investors out there who can take advantage of opportunities, but my perception is that light at the end of the tunnel may still be the oncoming train.

          1. Rocky Mountain:
            NXDT released their 10K today. As long as they continue to pay 80% of their $23M annually in common dividends in more shares of NXDT, the common price will continue to languish. My guess is they will eventually need to do the dreaded reverse stock split.

            The $84M NXDT+A 5.5% preferred actually seems to be very well protected and covered. It only costs NXDT $4.6M/year, as this preferred was issued when NXDT was still a closed end fund. For 2023 I calculated about $10M in free cash flow to pay the $4.6M in preferred dividends.

            As of 12/31/23 NXDT reports only $200M of debt on $1.1B of assets (which of course must be discounted due to NXDT’s complicated holdings and structure).

            As for Cityplace Tower, as far as I know Intercontinental Hotel is going to open a 5-star hotel on the first 8 floors at end of this year or early 2025, and Neiman Marcus is moving its corporate headquarters into the office portion. Floors 34-41 are being converted to 98 Class A multifamily units. Are you hearing something different and hence your comment that they can’t get the borrowings refinanced? Or are you just shooting from the hip?

            The trophy asset Cityplace comprises about 12% of the company’s NAV.

            1. Directly from the 10K you referenced:

              Cityplace Debt
              On May 8, 2023, we received lender consent to defer the maturity of the Cityplace debt to September 8, 2023. Also on May 8, 2023, the parties to the loan agreement agreed to convert the index upon which the interest rate is based to one month SOFR effective as of the first interest period beginning on or after May 8, 2023. On September 8, 2023, the lender agreed to defer the maturity of the Cityplace debt by six months to March 8, 2024. The purpose of the deferral was to allow for continued discussions around refinancing the debt. Management recognizes that finding an alternative source of funding is necessary to repay the debt by the maturity date. Management believes that there is sufficient time before the maturity date and that the Company has sufficient access to capital to ensure the Company is able to meet its obligations as they become due.

              1. Rocky Mountain:

                This was also posted in the same 10K for NXDT:

                “Cityplace Debt Extension
                On March 8, 2024, the lender agreed to defer the maturity of the Cityplace debt by twelve months to March 8, 2025. The terms of this extension require a 0.25% extension fee, with the loan continuing to amortize during the extension period, as well as a waiver to purchase an interest rate cap.”

                This is an incredible trophy asset. Have you seen it? It isn’t the type of office and hospitality property that is having some of the “ticking time bomb” problems that many of the perma-bears on this site are warning about.

                Some history:

                PROPERTY HISTORY:
                Cityplace Tower (the “Property”) is a class-A trophy office building, originally
                constructed in 1988 for approximately $300 million, which at the time was the most expensive office building ever constructed in Dallas, Texas. The Property is situated along the East side of Interstate 75 and N. Haskell Ave., adjacent to the Uptown, Dallas sub-market and less than 1-mile from downtown Dallas.

                The Property is 42 stories, contains 1.35 million square feet of office space and common areas. The Property was built as the headquarters for Southland Corporation (now 7-Eleven) and
                was originally planned to be Cityplace East of what would be “twin towers” on opposite sides of Interstate 75 and connected by a skybridge.
                Construction of the second tower (Cityplace West) was eventually canceled due to the Savings and Loan
                crisis and resulting real estate crash in Dallas, Texas.

                The Property is also the only office building in the DFW metroplex with direct access to the DART Light Rail and services the Red, Orange and Blue lines. The 10-story deep rail station is accessed via the concourse level of Cityplace or via entrance on the West side of Interstate-75. The DART Light Rail had the 5th highest ridership of light rail systems in the United States, with more than 17.6 million annual rides, an average of 48,200 rides per weekday.

                Anyway, I didn’t start getting into NXDT+A until it was below $15/share, so it has worked out OK for me so far. I consider this preferred “money good”….for now!

    4. Theta,

      I’m a fan of equity REITs and have been adding to my holdings as they dip. While I fear that I’m early and the bottom is not in, I do try to be very selective and use multiple small limit orders.

      Current holdings include ARE, CDP, EQC, FRE, GTY and PLYM.
      Also have a position in a few preferreds CIO-A, SRG-A and RLJ-A

      In a marketplace, there are lots of opinions.

      1. If you like REITS, how come no NLY? Do you think it is worse than the many you hold ?

        eg. NLY-G which has been callable since Mar 2023 has now become floating and pays almost 10%, while trading near the par at $25

        Do you fear credit event that would cause NLY to pause/suspend dividends?

        1. They get no respect. Always high yields. While I consider them asbesdoes glove issue, their strength has been surprisingly strong! For their pfds

          1. Greg Gilbert – Thanks. I’ll look into those, especially the preferreds

            mSquare – I wish I had bought NLY 20 years ago and left on DRIP. I think other than the chaotic 2022 when their stock price really sank to the bottom and they had to have a 1:4 R/S, it’s held up really well considering the incredible large distributions.

            If you Prefer – I concur on the NLY preferreds. I have two of their issues presently.

        2. I hold NLYprG as well as AGNCN in my fixed income account. Bought before they floated and very happy with them. Didn’t see this generous ~10% float coming when I bought. ‘Sometimes even a blind squirrel finds a nut’

    5. I hold TPTA. I have reviewed Terra’s 10q report each quarter and think they are well diversified and managed. Their balance sheet also looks ok to me….as of September of last year, they had $270m of positive equity.

      The new CEO has also promised better transparency in the coming quarters to let investors know how their loans are performing. DYODD, but I am happy to hold at these levels and collect the interest payments.

      https://www.secinfo.com/d1J33r.En.htm#_ifcdf302597bc4d5f9eb01353a9d279fc_16

    6. Theta, Goldman’s “The bottom in in for commercial real estate” is 110% total b**l s**t IMO. Sounds like some newly minted Ivy League MBA put that report out. For those of us that have been at this a few decades or longer, these things take YEARS to play out. We have not seen nearly enough CRE loans where they “mail in the keys” to date. Note that most CRE loans do NOT immediately go to foreclosure. They go to a “special servicer” that attempts to find the best solution to the problem. Check back in probably 2026 to see if the bottom is in. . .

      1. Tex2:

        Well, Blackstone’s Jon Gray seems to disagree with you…but of course they are looking for deep value out there:

        “As investors, sometimes, one of the risks is that you miss it by being overly cautious and I think now is probably a good time before rates come down,” Gray said.

        Blackstone Says Time to Buy Real Estate as Prices at Bottom

        Competition to buy discounted assets hasn’t been great: Gray

        Asset manager’s president sees a wave of buying opportunity

        March 14, 2024 at 5:15 AM PDT
        Updated on March 14, 2024 at 5:33 AM PDT

        Real estate prices have bottomed and there’s a great opportunity to move fast and buy assets at beaten-down prices, according to Blackstone Inc. President Jon Gray.

        “The perception is so negative and yet the value decline has occurred, so when you get into this bottoming period that’s when you want to move,” Gray told Bloomberg Television’s Francine Lacqua in an interview in Rome, where he is attending the Bank of America Global Investor Summit conference.

        Competition to buy discounted assets hasn’t been great so far, he said, adding that there will be a strong need for new capital as financial institutions begin realizing losses from loans that were made when borrowing costs were much lower. While Gray sees a wave of buying opportunities as some banks and even insurance funds may have to sell at discounts, the scale won’t be as bad as it was during the financial crisis, he said.

        There will be tons of headlines of market transactions that were made in a different world that have run aground now,” Gray said. “But on the ground we’re seeing the cost of capital start to come down, spreads are starting to tighten and new construction is coming down dramatically.”

        Blackstone has already been stepping in to finance multibillion dollar real estate deals, and there may be more that emerge similar to the $17 billion portfolio sale of Signature Bank debt, Gray said. In November, the world’s biggest alternative asset manager bid for the portfolio of commercial-property loans from the Federal Deposit Insurance Corp.’s sale of Signature Bank debt. The collapsed lender was seized by regulators in March last year.

        “As investors, sometimes, one of the risks is that you miss it by being overly cautious and I think now is probably a good time before rates come down,” Gray said.

        Blackstone has grown into a powerhouse that touches all aspects of the economy, lending to businesses and financing infrastructure projects. Its assets hit $1 trillion in July 2023, making it the world’s largest publicly traded alternative asset manager.

        Its shares surged 83% last year, including reinvested dividends, beating its biggest peers as well as the S&P 500, which returned about 25%. Blackstone became a member of the stock gauge in 2023. Blackstone’s shares have gained 8.3% this year.

        The firm’s $60 billion real estate trust for wealth individuals, the Blackstone Real Estate Income Trust, allowed investors to draw cash in full in February. It marked the first time in a month that the fund fulfilled all redemption requests since November 2022. The milestone is a sign that investor pressure for cash back has eased.

        “As the real estate market bottoms, as rates start to come down and the Fed at some point starts to cut, as well as the lack of new supply — that should be more constructive for commercial real estate and we think that will be a positive for BREIT,” Gray said.

        The environment for fundraising is getting better compared to about six months ago, though it’s a bit slower on the institutional side, he said. Investors are more enthused about private credit, or secondaries, and insurance clients are increasingly realizing the benefits, he added.

        1. Kid I think they are bottom fishing and I think it’s too early yet. But then it’s the investors money they have raised and they have proven they can turn in the keys and walk away. Once bitten, twice shy. Hopefully the banks let them use the investors money and don’t fall for that trick of we loan them more money to roll this dead turkey over only to find its good money after bad.
          https://seekingalpha.com/news/4080154-breaking-down-banks-exposure-to-troubled-commercial-property-market

  11. I just noticed that ATHS is showing up on Fido. No bid and ask and cannot trade, but it must be getting close. I am going to grab some early if the price is right. Good luck.

  12. There was an excellent discussion on Agency Mortgage Reits the other day, comparing the leveraged (as in AGN..) and unleveraged (???).
    Azure?
    Looking to buy the best unleveraged.

    Can’t find it.
    Can someone help?

    1. Side note: Non agency MREIT BRMK was not leveraged when they came public. Recommended then by BT. Eventually rolled up into RC because of bad loans.

  13. I reflected last night how much this site means to me.

    It’s sense of community, education, and actual investing opportunities…..

    Invaluable.

    And it’s free.

    But it’s not free to Tim whose leadership and knowledge makes it possible.

    Tim bears the costs – in time and money – of providing his service without comment.

    So I decided to donate a self-defined tithe of the money this site has made for me in appreciation .

    Consider doing the same.

    1. Westie, my time for tithing is end of the year, the last couple years. I agree with you that this site has been invaluable for me since Feb / March of 2020

      1. Tim
        You are so thorough
        Can you find that article on Agency Mortgage REITs (5-15 days ago) that compared the leveraged to the leading non-leveraged?

  14. tpgxl price here makes no sense to me

    like 5.3 YTC?

    yeah maybe it doesnt get called in 5 years, but that means rates are higher which would mean this would not be a great yield on cost (about 6.5% here) vs alternatives then I would imagine

    if rates are lower this will be called… good luck if you are buying at 26.8! not for me…

      1. Dick, I think a lot of us bought lower, but the way the market is if you sell to lock in the capital gains what are you going to replace it with’for the income? Some higher risk preferred recommended by the HDO crowd? I’m conflicted about what to do. Right now I am sitting tight collecting the dividends and hoping for another opportunity to buy at good prices if we have a pull back.

        1. The yield to first call on ALL-J comes out to around 5% at the last trade price of $27.08. I can come up with a nice list of preferreds that offer better yields as well as more potential for capital appreciation. (CTA-B is one but there are many others…I think the YTM for KTH is even around 6%).

          If you continue to hold ALL-J, sure you’ll still get the income. You’ll also get a loss of share price as it approaches the call date or gets called. That’s why it’s important to keep an eye on issues that go significantly over par to make sure the math still makes sense. (Taxes are relevant if these were purchased in a taxable account. )

          I’m not sure what you mean with the HDO comment. I doubt my holdings and HDO recommendations match up too often if ever.

          1. Dick, it was just a comment compared to your recommendations they are way out farther on the risk taking.
            Here is the issue I am looking at Dick, at the price I paid I am getting 7.3% return on a relatively safe preferred with an income of $115.00 every 3 months. Real world example. I sell and net $6812.50 great I have a capital gain but not the upcoming dividend. I pick any of the other ALL preferred outstanding the best I could come up with is say 300 shares of ALL PI and I come with approx $90.00
            That is if my bid hits in the next week or so. The way I look at it is I lost 25.00 of income. Yes I am set up for more Capital gains if rates go lower in the next year. But it’s the income not the growth right now. The bird in the hand compared to the 2 in the bushes
            I do see your point, but I want the 115.00 from a safe investment using the $6812.50

            1. I don’t follow any of this.

              The yield to first call on ALL-J at $27.08 is around 5.0%. That’s “real world” math.

              Best of luck dude

              1. According to Quantumon line I have 4yrs to first call. I’ll keep collecting the 7.3% dividend and if the Fed drops rates I expect some clueless investor will pay me more between now and then.

        2. Charles, I’m in the same boat. I bought more last year when prices were much lower and all of my holdings have appreciated nicely. However, I can’t find anything worth switching too. And it’s killing me to but new positions and DCA up at higher prices. I search and I search but I end up just holding pat. (sigh)

          1. Theo same here. I just lucked out on the one I bought today. I looked at a group of preferred all around 6.7 to 6.8 and calculated what I would have to bid for any of them to get. Have like 6 open bids

  15. I see Rida of HDO who posts daily on SA touted Realty Income to his followers ;was aglow over the 5.80 yield on this “King of the Reits” ; but he never mentioned the Op 6% Preferred (inherited from the SRC buyout) which yields
    6.15% at 24.53; have 800 sh with a 24.36 cost ; this is a sock drawer holding imho and should be trading at 25.86 to yield what the common does ;

    1. I do like it as a sock drawer issue ……

      Not sure how long it will stay outstanding but may be a good pick up with any money from our NI-B redemption

  16. Here is an article on MSN today that was from Business Insider. Some may have already read this. As an investor, I invest for the money and try not to think about how it was made. But this is about what PE funds do and what is behind the MPW disaster that happened that everyone on SA was invested in and talked about. Makes me wonder what other landmines are out there in Private equity land and their business dealings.
    https://www.msn.com/en-us/money/companies/why-america-s-hospitals-are-on-life-support/ar-BB1jGgY3?ocid=hpmsn&cvid=1315c84db5c6469c9de3ab6bc45fd6b7&ei=104

    1. Charles, Especially with the newer SEC reporting rules, I’ve seen weaker pfds as targets for PE.

      PE strategy: 1) buy the target company 2) stop financial reporting 3) buy de-listed pfds back from the market at 50 cents on the dollar. 4) re-sell company.

      OK – a wildly simplied version, but I think it’s reasonable to assume this conversation has occurred many times by PE operatives.

      Even when ES last year had that speedbump press release about not reporting – I bailed from all CNL and NSA pfds. Sure they later clarified, though I’m not hanging around for any further clarifications or surprises.

      Seeing new SEC financial reporting rules + PE as a new risk. They have no obligation to be our friends – unless we are on their side of the equation in which case we would expect them to maximize our gains.

  17. OT – I really appreciate this site, the dialog and participants. I have learned so much and am still learning. Recently, I have started carefully to pickup some municipal issues with hope of it becoming a meaningful part of my overall income portfolio. Aside from the occasional mention of a muni issue here, can anyone suggest other sources of info and dialog relevant to muni’s? TIA

    1. I read the Raymond James muni weekly. I use muni cefs, a target date cef, and home state individual bonds. it was fun to buy the low coupon heavily discounted long duration bonds in October. I read about the projects (e.g. hospitals, uni stadiums, shopping courts) and municipalities themselves since I’m interested in my largely rural state despite living in the metropolis. QDI preferred is often better for me than muni but I’m agnostic and don’t mind a little duration. the market is glacial, seasonal, the spread to treasury are weird, and the ratings (or bank rated) and insurance make the whole market peculiar, but fun. I’m at about 50% fixed income and about half of that is muni.

        1. I’ve been using mqy, mmd, oia, myd and bbn for taxable and bmn for target date. occasionally a few others and just trade out when applicable if they diverge from each other. I’ll probably pile into bmn and hope they leverage up when short term rates cool off.

    2. — Joe Mysak covers muni bonds on Bloomberg Radio. Bloomberg has financial podcasts available for free on line on Spotify, Apple (you don’t need Apple device to access) and lately on YouTube. Odd Lots, Masters in Business (Barry Ritholtz), Big Take, etc. You may find some coverage there.

      Bloomberg podcast home page on YouTube
      https://www.youtube.com/bloombergpodcasts

      Joe Mysak author page
      https://www.bloomberg.com/authors/ACaLXayjcZk/joseph-mysak-jr

      — There’s a lot on YouTube, wheat and chaff, pundits and pumpers, but some educational too.

      Series 7 Exam: Municipal Bonds tutorial
      (Informative and not as intimidating as the title sounds.)
      https://www.youtube.com/watch?v=pslIzz7becc

      — Start the day every day by first looking at interest rates and yield curves. Not news, not politics, not sports, not weather, not movies. Interest rates. First. Always.

      — Use AI as a finding tool. Often way wrong but often yields more useful results than Google.

      JMO. DYODD.

  18. Anyone here use ETrade and also have partial redemption of RILYO? Asking as I had 389 shares redeemed, paid 5 cents for interest on the redemption. Um, that doesn’t cover one share interest for 29 days. I had shares at FIDO too, it posted correctly. I placed a call to ETrade and obviously stumped the guy who answered my call as I’m awaiting a call back as he needed to investigate more, and have been waiting for a couple of hours now.

    1. hey FL,

      I had some of these RILYO notes called in a Schwab account. It all worked out in terms of the principal and the 1 month of interest. Sounds like you should have received about $50 in round numbers if memory serves.

      1. August – I calculated $54 and change, so 5 cents paid isn’t even a rounding error. I was supposed to be called back but haven’t yet heard back from ETrade. Since MS bought them the service has gone to crap, had to wait over 30 minutes yesterday just to speak to someone. They disabled the chat and messaging. Not so great customer service.

        1. Just had a call with ETrade (I had to call them back, but luckily found a direct line to the Corporate Actions team with a short hold time). Sadly, it seems like their customer service standards have slipped. Despite their acknowledgment that they made an error, according to their “back office team” they’ said I won’t receive my interest payment until May. Um, nope…. I informed them that Riley announced both principal and interest were covered up to the redemption date, and other platforms like Fido and Schwab have paid. It might not be a large sum, but I shouldn’t have to chase down my interest payment I’ve requested they double-check their data and get back to me. It’s frustrating, but let’s see where this goes.

          1. Hey everyone, just dropping in with an update on my ETRADE situation! Three days have passed and we’re still waiting for resolution. ETRADE has acknowledged that this isn’t just affecting me—it’s a system-wide issue. They’ve reversed the redeemed shares and taken back their nickel in interest, so my shares are back, but now there’s a negative cash balance. They assured me they won’t be charging margin fees on affected accounts. Still no clear timeline for a fix.

            1. ETrade finally got this resolved. Took back my shares and corrected the interest payment. I should have had to call and the dispute their initial resolution, but finally got it right in the end.

  19. Anyone here who has had experience with Western Digital, WDC? invested in it or worked for it or a similar company? I have a reason for asking from an investment prospective. Thanks in advance

    1. Hi Charles,
      I have invested in the common (since sold at a minor loww) and know people who work there.

      1. Thanks August. I was thinking with so many people here that someone would have interest. I was wondering how they are doing as I was thinking about investing in them.

        1. Should of been more detailed August. Just wanted to know if they are middle or miner league player in the hard drive business and not struggling. Seem to be doing good

          1. Hey Charles – This is a story of two companies to some degree hard drLaives and solid state storage devices. The latter came from an acquisiton. I first got involved with the common when Elliott Management took a position. I frequently mirror Elliott Management and ValueAct Capital when I look at long term investments in common stock. I sold out because I felt there were better opportunities out there.

            Last I looked at Western Digital notes there were below investment grade as I recall, and I only gave them a cursory review.

            Elliott was looking for them to spin off the solid state business.

            This FT article gives a decent overview of the state of play as of October and involves the spin off of their solid state business.

            https://www.ft.com/content/88c73be0-be62-44b4-bed6-ee0a4458ddd5

            If you want a benchmark to compare them against it would probably be Seagate.

      2. I know a lot of people at WDC and have done business with them (and with/for some of their acquired companies) for decades.

        They are kind of a hodge podge.

        -The original WDC was kind of the bottom feeder of the disk drive world.
        -They acquired most of Hitachi’s disk drive business about 2012 (all dates are just from my memory – so may be off a bit), which had been small and struggling until it acquired IBM’s disk drive business about 2003
        -WDC acquired Sandisk about 2016, which got it heavily into the memory business (and created a vertical supply for SSDs).

        I hear rumors WDC is considering spinning out the disk drive business, but nothing announced that I have seen.

        The HDD industry is down to just a few key players (Seagate #1, WDC #2, Toshiba #3, last I looked), and growth is not looking great, so a spin out may make sense.

        1. Thanks Private, sounds like HP and a lot of the older tech companies. Just limping along. If you’re a long time employee you’re hoping to make it to retirement. Management trying to find a niche in the market and trying to compete with the high flyerers.
          My dad was on the research team at Control Data developing one of the first platter hard drives, was one of their R & D machinests. Then went to NCR . He wished he had stayed with aerospace and defense companies.

          1. Thanks Charles.
            For some reason, I didn’t see August’s post with the FT link before I posted. It sounds more complete than the rumors I am hearing – but I am hearing rumors currently.

            A lot of old line companies are trying to ditch businesses that are not high growth. We have been involved in a bunch of those transactions over the years.

            Lots of Chinese companies were happy to buy those businesses, but it has become much harder because of restrictions in both the US and China.

            1. Folks – one thing to consider here is the nature of the investment.

              If WDC does spin out either the hard drive or solid state business this will materially change the balance sheet and the cash flows supporting the liabilities: any bonds that might be under consideration.

              Personally, my approach is always to sell both the parent and the spinco in these situations if I own the common. I would also avoid purchasing fixed income securities in the parent before any kind of spin unless I have done very specific analysis.

              I just think downgrade risk is very real particularly when Elliott Associates is involved… Note from the FT article above – EA has a convertible issue so the incentive will be to do whatever is necessary to boost the stock, convert and exit ASAP. Fixed income investors are likely to be left holding the bag.

              1. Thanks everyone, I was looking at the buyout by the Japanese co. I would think Elliott would be very interested in that happening. Yes, I was looking at the bonds to replace the Callon oil that is getting called on me.

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