Sock Drawer Discussion

The intent of this area is to include items that all of us consider “sock drawer” holdings.

My definition of “sock drawer” is those issues I own that I consider extremely safe and don’t have to be watched to closely. Normally they would have more modest coupons, but you can sleep well at night (relative to safety)–you know the income stream is extremely safe, althought the share price may move around quite a bit.

Others may have their own definition–in fact I know they do–that is fine

For instance, I have held the Tricontinental 5.00% preferred (TY- or TY-P) issue for years and years. Tricontinental is a closed end fund managed by Columbia Threadneedle. TY was formed in 1929 and this small amount of preferred stock is the only leverage the fund uses–2.2% leverage. Because it is a CEF they must maintain a 200% asset coverage on the preferred stock–the last time I calculated the coverage it was over 4000%. This is a $50/share issue and last traded at $54.66. The issue is callable anytime at $55/share. Shares were issued in 1963.

346 thoughts on “Sock Drawer Discussion”

  1. Anybody know anything about the HOWMET AEROSPACE INC $3.75 Ticker is HWMpr
    It seems to have been a very old Alcoa issue.
    I got this from a 2007 Alcoa filing.

    “Alcoa’s Articles of Incorporation, as amended, authorize Alcoa to issue two classes of preferred stock:
    660,000 shares of $3.75 Cumulative Preferred Stock, par value $100.00 per share (“Class A Stock”);
    As of November 30, 2001, Alcoa had 557,649 shares of Class A Stock outstanding and no shares of Class B Stock outstanding. No additional shares of Class A Stock may be issued. Alcoa initiated an ongoing program to purchase and retire shares of Class A Stock in 1989.

    Since it is trading at 68, I am guessing Howmet isn’t actively trying to retire the shares.

    1. I am too have took a closer look at them when they were about $ 50, but they’re junk rated. Therefore, it does not fit to the sock drawer stuff, IMHO. So I bought some HWM 5.95 notes which was below the par then and which are the IG rated. Today these notes are trading at 111/113 (bid/ask) and are about 4.8% YTM.

      1. I wont go there either…They are the aerospace version of a hospitality preferred. If it was closer to 7% now, my attitude would be different. Its a small $55 million float, but company despite present adequately capitalized is a new spin off in a horrible sector now. The 5.5% ish just isnt there risk reward for me.
        Fitch believes the coronavirus pandemic will negatively impact 2020 and 2021 revenue, profitability and cash generation. However, Fitch expects the company will return toward metrics consistent with the rating by around 2022. The risk of supply chain disruption exists, and many of the company’s customers, including Boeing, are also experiencing difficulties. The magnitude of a potential impact is unknown and will largely depend on the return to service of Boeing’s 737MAX, the duration of the coronavirus’ disruption to the aviation industry, and whether HWM has any facility closures that persist for an extended period of time.

        1. Hi Gridbird, I know you have held SCE preferred in the past they called the SCE-E.What is the capital stack trust issue SCE-H verse the SCE-E?
          Thanks in advance B/L

          1. Hey Lou, I went digging on this several years ago as I was curious then also. If my memory serves the old legacy ones redeemed actually sat above the trust preferreds in priority. I would also suspect being these were very old they also had more specific protections afforded them than the “current generation” trust preferreds have.
            As I have been around in general these preferreds, trust preferreds, and subordinated debt more and watched from a distance of failed or stressed ones; I have come to the conclusion these types of protections, are of only mostly theoretical importance. Because when crap hits the fan, these things would all most likely go down as unrecoverable. It doesnt scare me as I know the realities. I just wince anytime I see SA writers call a preferred reco “safer”. That is a very relative term. They all will most likely get zero in a reorganization. Look where the CBL preferreds are at now.

            1. Morning Grid,
              With Edison calling almost 1/2 the outstanding SCE preferred doesn’t that make what is left a good bet? even if they issue new preferred or baby bonds at lower rates? Interesting comment you made on crap hitting the fan. This market seems frothy. We see examples every day now of how cazy its getting like that Quarte retail giving out preferred stock as a dividend.
              I bought the SCE-PL last week just to park some money but really don’t feel like buying much of anything right now

              1. Hey Charles. My comment on crap hitting the fan maybe wasnt clearly directed. I was just inferring that to mean if a company in general was financially stressed or heading to bankruptcy. In other words buying a subordinated note such as say NSS is really no safer than its lower preferred sister NS-A.
                In other words, I have a deeply receding hairline on my head. Just because I am standing next to Kojak doesnt make me all the sudden have a full head of hair. If one generally plays below senior unsecured of anything, the chances of any recovery is very slim.
                As far as SCE goes. I am relying on posted info from an earlier poster, but he said Edison was going to a 5% preferred stock cap structure from near 10%. Im suspecting the regulators were not allowing full recovery of preferred dividends in consumer rates. SCE was highly unusual in having 9%-10% cap structure of QDI preferred anyways. Most are 0% now and the rest maybe 1%-5% tops. So I suspect going forward owning SCE preferreds is more about your comfort in the company and future long term rates than any reissues or future redemptions. I am presently out but they are certainly still in my rotation list to own though.

                1. Grid,
                  You may have discussed what I’m about to ask b4 and I may have missed it.
                  As far as the oldies but goodies utilities, do you generally consider one about as good as the other. I pulled up a list of 13 with coupons 4 percent or less from QOL.
                  Some haven’t traded in awhile but several have. So for instance do you consider AILLP or UEPEM as good as say UEPEN. All are Ameren issues.
                  Same question on Connecticut P&L issues. Thanks for your knowledge, studiousness and enthusiasm of preferreds in general and especially utilities.
                  And along with what others have said, thanks for being generous on this board.

                  1. Razor, you are free to pick my brain for whatever, and it shouldnt take you long, ha. Short answer, yes those in reference including all the old 4% issues I have no problem owning. I say I own about 50 utility preferreds all the time, its just I only actually have money in 10-15 of them at any given time. I will rotate around for a few bucks if bid and ask and selling price allow to.
                    AILLP/UEPEM are different subsidiaries of Ameren with different credit ratings. Currently Ameren Ill is a smidge higher but 5 years ago it was a bit lower. No material difference. Ameren Mo (Union Electric) is a triple vertical aligned monopoly utility while Ameren Ill is just a Transmission and Distribution electric and gas monopoly utility. Union Electric has Callaway and if it blew up Fulton, Mo ya, I would say the preferreds are toast, ha. But since I watched it be built and could see the cooling towers from my house growing up, I am not too concerned.
                    I generally just go to where I see some movement. If I see an ask being lowered to a “reasonable price”, I will then lay a “reasonable bid” to snag. UEPEN played that way in low $87 range the other day. But some will just sit and then out of the blue have a quick 100-200 share dump and then its over. So in those cases you just set your bid and wait and hope. Make sure you see the past year and multi year pricing so you arent overpaying.
                    Ones well below their redemption price will have some pricing support even if rates trickle back up. They just wont drop to the level of a true ute market yield because the spread of price and redemption price would be too great and people would start buying it up.
                    I like the CLP issues too. You generally have to decide if you want to scrape up a few more basis points and pay above redemption price a bit, or go a bit lower and get some spread between purchase price and redemption price.
                    The safety of these types are off the charts with coverage ratios via profits of over a 100 times for entire series of each of the above. There several people on this forum (not me) that have personal wealth more than the yearly cost of each of the above subsidiary preferreds entire series.
                    That being said, I only own a portion of my stash in these. An entire stash dedicated to low 4% preferreds is just too much for me to stomach! 🙂

                    1. Thank you Grid. I love utilities although i am a buy and hold investor. Currently in my situation a QDI security in a taxable account will give me as good a net as I can get from anything else with quality if i can get a 4 percent yield. . E.G.. these o-b-g utilities @4 percent beat tax exempt bonds which i also like.
                      I’m getting killed with calls from build america bonds which turned out to be a good investment for me – average 7 percent coupons, IG and 10 year call protection. But the call dates have arrived with a vengence. I think some of these oldies will help me if i have some luck and can purchase them. You have been very helpful.

                    2. Razor, there are also a few issued noncallable also. I noticed Uncallable
                      WELPM has current bid of $139 and ask of $142. That is a small 3 millionish Baa1 par float that would net 4.2% or so if that interests you.

                    3. Good morning Grid,
                      A small eureka today I hope. I purchased some AILLP @ par this am and have orders in for several more issues. This will get me the 4 percent I need on this one. Thanks again for your help.

    2. In any case, HWM traded very weakly during the drawdown and took a long time to recover. Wall Street doesn’t like them too much, apparently.

    3. tim, don’t know how to make a general comment? this is a response to your reply to my post of 8/20 “don’t look a gift horse in the mouth”. on usb-h I did nothing but must “You” must have hit a nerve with several folks. usb-h traded that day at $23.48 and is now down to $21.92 off $1638 on my 1050 shares I’m not going “anywhere” cause I got plenty but If what you said was “right”: a buying opportunity was created for somebody? always open to any help from anyone

      1. Mike, it is rotation. When a stock goes up, and up, and up… you ask what is up with it going up? And the yield drops in the 3% + range. It is rotation. You can get better deals elsewhere. Stocks drop and rise as investors figure out the value of them. When the value becomes not aligned, a stock tends to move the other way. If you are a trader, then last month was a good time to sell. If you are a buy and hold kind of a guy, well, just hold onto it. If you are a buy and hold kind of guy, you could ask the same question on hundreds of stocks every month as they shoot up, fall out of value, and then move down. When they fall too far, too fast, they normalize and go the other way. This of course is independent of any news of the company causing the stock to move up/down.

        1. mr. conservative thanks for your thoughts I originally bought usb-h as a potential inflation hedge when rates started up several years ago added some in March, then the FED slammed on the breaks, which may now last awhile, but my average cost still leaves me a 15%+ upside potential and a yield over 4%, there fore “Sock Drawer”. learning from you folks everyday, thanks again

  2. As a fixed income investor I generally buy preferreds to hold to maturity much like I would a CD but at much better rates. I can accept the higher risk for much higher yields (particularly now when CDs are pitiful).

    Since I hold to maturity I try and buy below par and then just forget about it. This is clearly just a mental “win” as paying above par for a good yield on a solid issue can also be prudent. I’ve done this a few times but I still like buying below 25 and just holding until call and then doing it again.

    Lately, below par and investment grade (or close) have become difficult to find whereas May and June it was easy pickings.

    My July purchases have been ASB/D, PRE/I, SJIJ, AHL/E, AHL/D, EQA/A – all below par. Most have now climbed above. I’ll also admit to buying some of the WCC/A just for entertainment.

    I have a couple of CDs expiring in August – who knows what that will bring…

    This is a great site as I research individual issues. I really appreciate the knowledge of the “old hands” here. I wonder if there are others here in a similar boat as me taking a similar approach.

    1. Glad you are here Bill. I am awaiting more deals in the investment grade preferred arena–I may be waiting a long time I guess.

    2. Bill, I do the same thing, I’m basically too lazy to track the items, so I always try to buy <=$25.00 par.

      To your point, hard to really find those any more.

    3. Bill – with your style of investing there is no harm in letting the cash pile up while waiting for the next market swoon. There will always be another one.

      There are other things to do but they require daily attention to markets to work effectively.

  3. CNTHO from Connecticut Light and Power has a sell order out there for $53.25 for a yield of 4.96%.

      1. D, The life of an illiquid makes things always a bit deceitful. There was a 200 share one block purchase at that price, and then one other before close… 20 shares at $53.25. Current ask 53.25, current bid at close was $53. Reminds me of my recent INPAP adventure. Last September I saw it go off at $94. I said Im getting me a 100 at that price. Well I got $94.50, 8 months later finally. As it only had 10 block share trades during that time, ugh. That is the tightest sealed $40 million drum issue I have ever encountered. CNTHO is not even 1/5th the market value size and trades considerably more often than INPAP does.

        1. Very interesting, Grid, appreciate your insights into how these trade, or don’t. I managed to get a small piece of the CNTHP maybe a year and a half ago but sold when it went over 63, still have a bit of IPWLK from the same time. I look out for CNLPL and the like from time to time, INPAP seems like a very long range pursuit, maybe after I retire and have some more time to track. Always enjoy your insights and war stories.

          1. D, Someone informed me IP bought up a bunch in past couple years and under 10 million in par value. That would make more sense why it doesnt trade. I couldnt find actual numbers on this one in SEC filings which I usually can.
            LXP-C, I flipped out on a $5 rush up or so last year and havent been back. I only casually observe. I probably should being it fits my thesis…Find anything with decent yield and in predictable industrial reit segment and hang on. I own REXR-A and B. Bought A mostly under par recently then bought B to rotate out of A when their prices were the same. So I am overexposed here and need to rotate out of A sometime as B has the longer protection.
            LXP has 98% plus rent collection in May and higher in April, so that is the life blood of a reit and this is why my preference is Industrial reits, and it has good credit ratings. LXP is now 85% IR so they continue to jettison the office segment which was very smart.
            I wouldnt be afraid to own it, again.

            1. Grid, very interesting, hadn’t looked at Rexford before but it seems like it could be a good fit putting together my collection a few years out from taking social security. Added Lexington to my watch list too. I think Tim is right, that we’re headed for a break point and buying opportunity one of these days and I’m working to make the most of it when it comes. Thanks very much, I appreciate the conversation.

              1. D, Interestingly, Lexington and Rexford have very similiar credit ratings, though the methods reached are very different in terms of actual numbers. For example Fitch has Rexford downgraded because they have never accessed public market for debt. So art and science definitely collide on credit ratings.
                If one finds present interest rates to stay this low finding issues with uncallable features would benefit in the long run. The Lexington issue has that feature. The credit spreads on preferreds are very high now, especially with financials. This on the surface creates an opportunity now for many…..If they pay and remain viable. Im only dabbling at best in financials myself though.

  4. Any holders the Partners Insurance preferreds here? I bought some of the I issuance today below par which seemed like a safe bet as an investment grade.

    Do they have a history of calling them?

    1. Bill. i have a small position of 400 shares, i picked up in March in low 20’s. I picked up for the same reason, and investment grade. Exor bought them out about 4 years ago, so it is a little fun looking at financials. Exor recently has been trying to sell them which hasn’t shaken up the investments. They did take a few hits with insurance regarding cancellations with Covid. I don’t see any skeletons in their closet as of yet… They have some bonds over par in the 2.+ % range.

      They did have a history of calling the preferreds. They do have 1 that can be called, but they have not done so. I own the PRE-I.

      1. Lucky, This may not appeal to you, but I stealth bought 84 more shares at market close of EP-C at $44.85 today. That nets out 6.44% YTM of $50 in 2028. I havent been flipping this one, just keep buying on dips, and am slightly overweighted now. This was rated Baa3/BB+ after the Mid March rout. If one looks at the KMI bonds they are very strong now. They even raised common divi last quarter a nominal amount. KMI is the premier nat gas carrier in US. Plus when many preferreds got routed 50% and more before rising, EP-C dropped less than half of that.
        Everything has its risks, but these are points I like about it. Solid subordinated debt rating, defined intermediate maturity, solid yield no worse than plus 6% and higher if they ever redeem earlier, not a nebulous company such as a BDC where you dont really know what it owns. EP-C and KTH (bought a lot lower) plug a needed hole of defined intermediate length little and no call risk income issues. I do have a smaller amount of Rily bonds also, which hits that target area also, but I dont trust it. The biggest knock to EP-C is it must really be bought in tax free account or your exposed to phantom income tax ala AATRL (and KTH).

        1. You sure about the phantom income? EP-C and KTH have similar terms, they would only produce phantom income if they deferred an interest payment at some time during their history. (like Hillman just did, for the 2nd time)
          PECO was priced below par at issuance, so it had market discount at issuance. (Page S-19), which is how they got an 8.0% coupon on a 7.38% underlying bond.

          1. Justin, maybe I am wrong. It seems every one of these trust convertibles I am aware of such as AATRL and NYCB-U have that onerous feature. You have more expertise in understanding these than I do. I have only owned these various issues in tax free accounts so I have no experience.
            I thought the conversion factor in the trust contributed somehow to the tax set up via through an original discounted coupon. The Hillman issue is not a convertible. But as mentioned I could be wrong. If you deep dived I would trust your opinion over mine on this.

              1. Lou, Without question it is. The question is can you stomach the 4.5% ish yield. It is a very old Dow preferred issued 70-80 years ago or so. But it was issued as a then huge $170 million or so float so it stays rather liquid and thus open to more liquid price swings despite its age.
                Corteva was broke off from Dow/Dupont when it split up last year and left it highly capitalized with senior unsecured A3 debt rating. It has a tremendous amount of intellectual capital and pipeline research. Is number one or two in sales in many of the various seed sectors also. A great way to sector diversify. I own some of it myself. You are not going to get rich off it though, ha.
                Last winter I was playing around with it flipping on $108 to $112 swings. Then got lost in shuffle and kind of forgot about it and recently reentered in $99 area. At this price will just hold, as it is one with a redemption price well above its trading price ($120). It wont go anywhere as they have had two opportunities to redeem on merging and spin off and passed on the chance to redeem either of both of the preferreds.

                1. I noticed that CTA-B spent a good amount of time trading around $110-115 over the past 12 months. This one doesn’t seem to have recovered close to its previously highs like so many other preferreds have. Is there any reason for this other than it being somewhat obscure? It would appear that there’s perhaps an opportunity to buy now at around $102 and sell around $115 when this one catches up to the rest of the preferred market.

              2. Hi Gridbird,how is CTA-B eligible for the 15% tax rate?and hopefully Vanguard picks that up.Thanks in advance, happy 4th B/L

                  1. The pricing is very erratic on this one. I bought it in 3 separate transaction the last 2 days, 99.1, 98.75, and 98.6. Just set a limit price and let it swing.

                    By the way, it goes ex-d next week so it might be a little more volatile.

                    1. In perspective, if it was a $25 stock it would be like .05-.10 price fluctuation. It also doesn’t trade much, and you can have itchy investors wanting out or in and will pay a few more pennies to do that. You also have an upcoming $1 + dividend and usually for any stock that means a little more buyers and exitors. This is not one for day trading, but long term holding or could be monthly or quarterly trading. But with the low volume… once you are out or in… you might have to wait a bit to get back in/out, and then factoring in missed/gain dividends while you are waiting. With a 4% yield it is probably pinching pennies in the long run, which makes this more of a long term holding.

                      In the end, the company makes billions, and this 8ish million dollar annual payment for this preferred is peanuts, and will probably be around for awhile. This makes it a more of a sock drawer holding in my opinion.

                1. Lou, I forgot to answer one of your questions as I was answering on phone after bogeying the 3rd hole on the course. CTA-B is capital stock. As mentioned before I said this was an old Dow preferred (Im pretty sure it was, but Dow and Dupont both had Ag Science divisions) and CTA-B in its original ticker form was first callable way back in 1937. So its been around.
                  Anyways these preferreds were assigned to the Ag division so Corteva got them in spin off last year. It will be QDI because its capital stock. All C Corp capital stock are QDI 15% tax treatment just like a common stock dividend and must be declared by BOD. Like any C Corp QDI preferred, the company must generate profits that equal the payments or risk it being considered return of capital, tax wise. As Mr. Lucky already said, the payments of these preferreds are just a speck on their earnings….So in other words, sweat its stock price movement, not its ability to pay the dividend. 👍

                  1. Gridbird,appreciate all your help your the best,looks like our Missouri weather is heating up for the weekend enjoy.
                    All the best B/L

                    1. Lou, Always take your sweat towel with you, as summer heat and humidity are here to stay a while. Dont like it, but if we had San Diego weather here we would have San Diego house prices too, and I wouldnt be able to afford to live here anyways, ha.

                  2. Just for fun I looked up the origins of the word ‘bogey’ and how it got associated with golf. The word has Scottish origins from “bogle”, meaning ghost or phantom. The jump over to golf occurred in the early 1890s, when golf clubs devised a standardized stroke total for each hole that was the maximum a good player should take to sink the ball in the cup. This maximum score was assigned to a phantom golfer named Colonel Bogey and golfers would strive to “beat Bogey” or “beat the Colonel”. Nowadays, scoring one over the maximum strokes assigned to a hole is simply called a bogey, with double-bogey and triple-bogey (terms I’m most familiar with) used to indicate the number of additional strokes after that.

          2. Justin, I think you are correct. The only OID I see referenced in prospectus is the deferral you mentioned. So it may be just fine.

        2. Nice. Grid. I bought KTH near $30 so a pretty good deal. But EP-C is another story. I bought last year in the $49 range, so I am down a good chunk on that one (even with 3 dividend payments). I am just letting it sit there.

          I am about 95% invested. I just dont want to miss out on div and interest payments as that is 2 x my current salary. I wish I flipped more sock drawer items during March. :-). Those have some hefty gains that I will just sit on. ASRVP – $24ish, PPX – $16ish, SOJA – $23ish, LANDP – $25, DLR-C – $21ish, KKR-A – $21ish, QTS-A – $25ish, AXO- $22ish… for commons, i bought walgreens, AT&T, US Bank, Vodafone

          1. Lucky, I churn things frequently so I really have few real cost basis, lol.
            EP-C is a prime example..Earlier in year I was buying $48-$49 and flipping $51-$52 ranges. But in March it made me money by losing money. I think I just got back in it at $48ish, but market crashed.. It, however, didnt drop in tandem with issues like SJIJ, PPX, and SR-A that dropped like a rock. So I dumped a goodly portion at a nice loss in $43-$44 range bought others that dropped significantly more…A most odd way to generate profits, but I was fully invested and it was unique times so I did it. Worked out very nicely getting me in black quick, but cant say I wasnt nervous cause I was. But, anyhow, I rebuilt my EP-C position after those 30%-40% drop off preferreds recovered and I sold.

      2. I had bought a few shares of PRE-I at 23.75 and then bought again when it went below 25. I like the insurance preferreds amongst the financial sector. As they are quasi-regulated and in my opinion will really have to screw up badly to not pay preferred dividends.

        What do you guys think of GBLIZ and GBLIL? Now it has become a US corporation (shifted from Bermuda).

      1. Nope it was just on my watch list and seemed a good opportunity. I bought 3000 shares at 24.98. I see it went back above par later in the day.

        To Mr. Lucky’s point I looked in the news but saw nothing exciting on the parent that would scare me off.

        I am a buy and hold investor so it will go in the drawer and I’ll see if they call it next April.

      2. msq, quick question before heading off to work. Which broker is good for low commissions and ability to buy bonds through and how do you find the correct symbol? I tried on TDA a couple times to find the cusip 505588BAO with no luck. I don’t want to call them and pay for help in buying. I know its been discussed her on the site before, but not easy to look this up again.

        1. Charles – Are you sure you have the cusip right??? There is cusip 505588BA0 [#0 on the end, not letter O] and that brings up Laclede Gas 7.90 9/15/30 at Fidelity, but search even at FINRA doesn’t bring up any results for 505588BAO.

          1. 2WR….You are such a tease! Laclede Gas (Spire) 7.9% A rated bond? I was selling everything and just owning it. I was really shocked when I checked it was long ago redeemed. 🙁

            1. Grid – Hey I didn’t say it was current or anything only that the cusip exists if you change the O to 0. lol Didn’t even looked to see if it was a bond that’s still around, only that it was legit Cusip – I was too busy patting myself on the back for finding a possible answer to Charles’ conundrum.

              1. Ha, I was just teasing. I knew before I looked it was long gone. But I still had to make sure. 🙂

        2. Charles M, in my experience Etrade has the best tools to search for bonds and also some actual ability to buy them, but it will depend on exactly what you are looking for. TD, Fidelity, Schwab – they might show you a bond exists but you may never see them offered.

          1. Having tried TDA and ETrade and recently having talked to Schwab, for my purposes Fidelity has the best bond platform. They charge a flat fee of $1/bond with a maximum amount which I think is $250. They show you depth of field on each individual bond, sort of like Level II for bonds, and, unlike any of the other platforms, they allow you to set a bid or an asked just like you’d set a limit price on a stock…. You can set your levels either inside or outside of the given best bid and asked, provided that it’s not farther than 2.50% away from the quote. The thing I don’t like is they do not allow you to set a minimum amount you’re willing to act on.. For example if you want to buy 25k of bonds but would be happy if yo ugot hit with 5k only, you can’t do that unless you put in 5 bids at 5k each instead of one bid for 25k.

            A couple of weeks ago, a very loyal Schwab bond platform guy gave me a phone number for a senior bond guy at Schwab to discuss what I wanted to have in bond desk capabilities. Oddly enough, and honestly enough, when describing what I liked about Fidelity he admitted that he felt Fidelity had an edge on them right now…. BTW, I also know that TDA does not show you the actual best bid and asked quotes out there in the market… When you compare platforms it’s quite obvious they’re showing marked up offerings vs what’s truly out there at the moment… I think they still operate as principal though, thus explaining that…. They sell with the marked up price included… That rules them out completely imho.

            1. 2ww Thank you for your response, hope you enjoy the holiday. I knew folks on here keep accounts at several brokers because of discussions that no one broker seems to be the best at everything. I think people have called Fidelity the Nanny broker, but that doesn’t seem apply to buying and selling bonds with them?
              There was a reason for my picking that cusip #, Recently both on here and on Yahoo it was mentioned Spire did a tender offer for their bonds. There was a link to another page that showed after the offer expired not all the bonds were tendered to Spire. I guess some people like the dividends better 🙂
              I just picked that cusip trying to find any of Spires bonds still out there.
              One thought, after a bond is called, even if not all of them are turned in do they no longer list them as active and drop them off Finra ? even if say final call date is 2030 or 2050 ?

              1. Charles – Well good, I’m glad your mystery cusip number problem got solved and that what you were looking for was that exact Laclede Gas issue. Implementing that one change to the cusip # at the end, can you now find it at TDA? I couldn’t.

                Interesting thought on Fidelity being considered the nanny broker but that not carrying over to their bond platform I never thought about it that way but I guess that’s true…. There’s not much that they nanny over on straight bonds, but probably by design, they do make it just a tad more difficult in their nanny type philosophy for someone to research and/or buy or sell non-investment grade issues. The bottom line, however, is you can and you can buy/sell with more flexibility than at any other broker I’ve tried…. What I think you can’t do at all, though, is research a bond to act on that does not carry any rating whatsoever.. I don’t think they support that ability and if you come across a f/f type true bond (meaning a 1k bond not a baby) I bet you can’t buy that either without calling in if at all.

                On your question about call, you’re a bit confusing… If a bond is called in entirety today, then what are you talking about when you’re asking about a final call date of say, 2030 or 2050? If it’s called it’s called (thanks, Yogi!), so from the issuers point of view, if it’s called no one holding it beyond that call date will be entitled to further interest payments no matter how long they continue to hold..

                1. Fidelity is very open about their “nanny policy” on buying individual bonds. Internally they call it “putting bumpers” in place. They do it a little on corporates and a lot on munis. For example, they will not let you buy any Puerto Rico muni bonds, even the ones that are money good, insured rated A2/AA. Fidelity lives in fear of an investor buying something that goes South then coming back and saying “you should have told me NOT to buy XYZ.” They are willing to let investors take standard, broad based market risk, but are more likely to restrict investors from buying anything far out on the risk spectrum. BTW, Schwab also has a nanny policy but it is less restrictive than Fidelity.

                  Interactive Brokers by design has no bumpers on corporates and/or munis. However, due to quirks in their data feeds, there is some percent of bonds that are not tradeable on their platform. And their platform lets you but in way out of the market prices, either on purpose or by accident. Say a bond is offered at 105 and you mean to offer 100, but accidentally enter 110. You just bought all of the bonds @ 105 and more than likely cannot bust the trade. In this case having bumpers would have saved you. Stated differently without bumpers your odds of doing a fat finger trade go way up. And don’t ask why I know this. . .

                  1. Good point on munis at Fidelity, Tex. I hadn’t really considered munis in what I wrote, which is ironic since my background was as an institutional muni bond trader……….that was way back in the pre-internet, pre online broker days. Also pre price reporting, wild wild west days…

                  2. Interactive Brokers does not allow you to buy variable rate bonds at all. You can look them up in the Trader Workstation and see offers, but that’s as far as you can get!

                    1. Karma, IB does let you buy some variable rate bonds, but not all of them. My worst performing coporate is a variable that I bought the last time short term rates were zero. I had the mistaken thought that once rates rose from the ashes, they would stay up. . . 100% wrong on my part, which means that the variable rate has collapsed. Kind of like the risk we have on fixed to float preferreds if rates stay low when they convert to float.

                2. For those interested in Fidelity’s bond platform capabilities, it just occurred to me that I have a transcript of a webinar they did back in March that is very thorough in explaining everything one can do via way of research and execution on their platform. The webinar was an hour long so this is not a quick read and the transcript is without screenshots or pictures, but it’s worthwhile to understand what Fidelity does…. If you already have a Fidelity account, it becomes just that more easy to follow along with them as to what they’re saying. The pdf file is 6.8mb and if anyone’s interested, you can PM me thru SA and I can send it to you…….

        3. Charles M
          I own no bonds, but when I did in a TDA account, you call the bond reps, not the phone # for the stocks. There is no cost for the reps to work with you on bond trades. Maybe everything has changed. If so, sorry.

    2. I am a long-term holder of the “H” series, added greatly to my position during the December, 2018 dip. The issue was created to incent preferred stockholders to vote in favor of the acquisition mentioned above. The company has a good credit rating and can replace this funding at a lower cost. It is callable next April and I do expect it to be called at that time. Won’t be able to replace the dividends at the same level, with a similar credit unless I consider a good quality Canadian reset, but who knows where rates will be next April.

  5. AILLL is one of the Ameren preferreds resulting from the company’s acquisition of Central Illinois Public Service, I think about 10 years ago. Periodically, some of the legacy CIPSCO preferreds have been discussed as “sock drawer.” When I read the very dated AILLL offering, it says the the issue is “redeemable at par ($25) at the company’s option at any time…” but goes on to say it is “not subject to mandatory redemption.” I’m confused. If it indeed is not subject to redemption it would seem to be “sock drawer.” If it is subject to redemption, it can be called at any time (and it’s trading at a 16% premium to par). Gridbird, I think you’ve discussed the Ameren issues in the past, as have other preferred aficionados. Can I impose on you and your brethren to educate me? Redeemable or not? Sock drawer? Thanks for you guidance.

    1. No inconsistencies there. It’s redeemable at the company’s option, but they have no obligation to do so. The company just don’t seem inclined to bother.

      I know that grid does a little happy dance every time Ameren declares a dividend, as he should. It’s a large call exposure that the folks are willing to take for an outsized yield.

      1. I began selling mine today at 28.99/share. $4 over par, even for these guys is just leaving too much of my junk hanging out in the breeze. Nothing wrong with ringing this register. Tried to sell it multiple times above 29/share but nobody bit at that level in over a month – although some sold in that area and even higher if I recall correctly.

        1. A4I, Me personally I agree with your decision. The yield has been driven down so far its not worth the risk/reward for a few basis points and 15% or whatever so above redemption price. I have done this with a few issues myself not chasing the few extra bps, and have started off in a different direction now.

    2. AILLL is callable at any time at $25. That said, it has been outstanding like this for quite a while.

      You pays your money, you takes your chances

      I own it but would probably not buy at the current price

    3. Oldman, yes they are correct… I am presently not in AILLL, but my arse is sticking out far enough in AILNP to more than compensate the call risk. In fact its even higher, lol. I have been in these for many years on a thesis of many reasons…Wont go into them all but will mention a few.. One these are presented as one series to PSC. So collectively due to the majority of dollar amounts residing in the 4%- 4.25% collectively they average well below 5% when rate filing comes. Still cheap…Secondly the holding company owns a considerable amount of these.. In fact they own about 70% of all the floats (the shares outstanding are just scraps of the original issues except AILLL which is still intact.). They have voting rights and thus they control the preferred votes if it was ever a reason it was needed. Pretty standard for older issues.

      1. Thanks to all for the education and, of course, to Tim for creating the vehicle to educate and inform.

        1. Oldman, a little more history for you if you like. Ameren Illinois is made up of 3 acquistions, CIPSCO, Illinois Power, and CILCO. All these acquistions occured in past 20 years or so. All of the CILCO preferreds were called when acquisition was completed around 2010. I dont know the reasons. All of the other preferreds were left outstanding and eventually renamed to Ameren Illinois. They were actually $50 par preferreds that were reconstituted into $100 issues with the 2010 folding in of all companies into one subsidiary. AILLL was left at $25 because it actually is a $1000 preferred stock with depository shares of $25 representing part of the $1000 preferred.
          The vast majority of these preferreds are Illinois Power which was owned by Dynegy. Dynegy before selling it to Ameren, offered tenders of all the preferreds to get voting majority for approval. Then after Ameren bought it, Dynegy handed over the tendered shares to Ameren. They have not been redeemed. Ameren in SEC filings from 2003 ish closing stipulated they would continue to buy in open market and offer tenders up to acquistion period.
          So these were never redeemed or retired, the hold co has them and thus represents the majority voting block in addition to owning all the common stock. Why they never redeemed these I have no idea, but they clearly went out of their way not to. And they cant redeem the outstanding preferreds unless they are willing to redeem theirs in the process also.

    4. Could not resist the spike up and sold 20% of my AILLL at $29.75.
      A bittersweet event, as I had held those for a long time.
      But am confident I can get them back at a lower price.

        1. Grid, as you yourself have said, it’s difficult to see AILLL selling for such an elevated premium and not doing anything.

          And look at CNLPL & CNTHP. they are selling at nosebleed levels. I own CNTHP from 2015, and still holding on, but sure as heck tempted to unload.

          Many illiquid Ute preferreds are on fire today – wonder why?

          1. I dunno Inspy. My frequent past push into them was squeezing out better yield and risking modest call exposure. Now many of these are really yielding no more and also having potential for a huge call loss smack. Of course I am one to criticize holding 300 plus shares of one that is 25% above par, past call myself. But other than that my indulgence in the way above par past call issues is pretty muted.

            1. I look at it a bot differently Grid. I have a couple of these illiquids bought at very nice prices – so while I am sitting on a call risk loss with them, I also didn’t buy them for potential capital gains.. I bought them for the yield they pay me and the fact they don’t move much when the market goes to hell.

              So while I have debated playing the flip game with them, I have been reluctant to do so, especially in the low rate interest environment we are in. I just don’t have the time or patience like you do with the very illiquids to do flip like that. Now that does not mean I won’t at some point – shoot every person has their price and if someone wants to get really silly and buy my shares at ridiculous prices, I will let them. But I guess I don’t look at the unrealized capital gains I currently have as something to count on. I am more about focusing on that long term income stream with these. May not be the best idea for everyone, but it works for me.

              1. Maverick, There certainly is no right or wrong. And of course its all about what one wants…And also which issue and how far above call price. This is only my opinion so it certainly is no definitive answer. But lets say CNLPL sitting at $62 over $10 past call price with a 5.23% yield. There are many ute issues around that yield without the capital risk of a call.
                When I was buying these I was getting 6.2% or so a few bucks over redemption instead of buying 5.5% types. But that scenario is gone now. Now one is getting same yield on these and risking call losses. The risk/reward seems tilted the other way. I personally mark to market so I dont over expose myself to call outside of a few. Who knows…. But I tilted off away from these to get other ones like KTH (too high now, but uncallable so I keep), gulp, and lower yielders like CTA-B and INPAP without call loss risk. Also I have over recent times acquired quite a bit of the Fortis Series F which is around 5.2% but under par, and low IG (but Canadian priced). I love that utility.
                But again, I am not without sin, I own over 300 shares of AILNP. Talk about call loss risk!

                1. Grid

                  Oh yeah. I hear you there. I certainly wouldn’t be putting new money in some of these issues trading far over par because as you said, you can buy other UTE issues that yield the same without the call risk.

                  I guess if they get a bit more crazy in pricing I may change my tune. Because people have different objectives, I agree no one size fits all answer. It’s a matter for me of figuring out the realistic spot I think I could buy them back at and figuring out if its worth it from the risk and time aspect. Thanks

  6. USB-O fell to even if called, 5.15% until then. Could be a holding place for some money just sitting on the sidelines doing nothing. But I’ll probably end up flipping it a few times.

    1. Not sure about flipping, but if I were buying for the sock drawer I would rather buy the A or H issues. Lower yield, but I have protection from rising rates with the floating coupon.

  7. Is Alliant Energy getting ready to call IPLDP? Alliant is issuing senior debt offering of $400 million to pay off current senior debt that matures on September 1. That leaves $200 million for “general corporate purposes” which equals the value of the IPLDP preferred shares which have been callable since June 2018. IPLDP is dipping today as it just passed it ex-div date.

    1. Steve, Based on what you wrote, very little chance on your scenario. It would be highly unusual to move subsidiary capital to holding company debt.

  8. Today I traded in my UMH-D at a slight gain and bought PPX @ 25.25 for the sock drawer. Slightly lower yield but hopefully its a set it and forget it purchase. Any other PPX fans out there? I will likely add more below $25.25.

    1. I have both PPX and the common, PPL. PPX is past 1st call, so don’t go too much above par. Yes, I am a fan

      1. Tim and Bill, I have a full allotment of PPX myself. I have traded it often for flips, if it presents itself but always get back in. Not many near 6% ute debt issues around like this. It is a solid core hold for one so inclined.

        1. Hi Gridbird,what are your thoughts on percentage of a portfolio to hold of cumulative preferred utility shares for long term income?
          Thanks in advance B/L

          1. Big Lou, There is “by the book” and there is “Crazy Gridbird”. Traditional money strategies recommend no more than 10%-20% of a portfolio in preferreds. But that is generic. All of my money has been in preferreds since 2013, and I have never been below 10% returns and am creeping to up 8% this year already.
            But…That is being done by trading also, and of course a near perpetual tailwind of downside in interest rates.
            It really depends on what you want and the yield you are needing. Because utility preferreds are 5% range at best and other sectors pay more. And what is worse, outside of the 1940s issued ute preferreds which were yields of sub 4%, this is worst time ever to be buying them in terms of yield. There are many good ways to skin a yield cat besides utes. But admittedly Im probably 80% ute preferreds now. I dont want the worry of what banks are hiding on their balance sheets or leveraged issues blowing up like many have recently. Only 3 utes have went bankrupt since Great Depression. Pacific Gas and Electric (twice), Public Service New Hampshire, and El Paso Electric. The latter two were disastrous nuke building projects. And PCG is well, PCG, but the preferreds are in line to be paid in full yet a second time. You dont get that from normal business, typically just a pat on the back and thanks for playing.
            There are other more diverse ways to play also through various funds of preferreds, there is even a utility type preferred fund also if memory serves.
            Im sure they a very reasonable ways to get income also. But I have no interest in them. I prefer buying my food and eating my own cooking.
            So long story short, Lou, I dont have a good answer for you personally. About 75% of preferred universe in monetary value issued are financials/banks. One thing is damn sure for me is I wouldnt have a preferred portfolio that “mirrored the market” in terms of being 75% in financials and banks.

            1. Thanks Gridbird,when you say all total portfolio in preferreds?i do own lots of old illiquids most from my hometown ute Ameren also the old Connecticut power and Alabama power.More recent SR-A,IPLDP and ETI.I see your point on the banks they got hit hard in March.Thanks for your help B/L

              1. Lou, Ameren your local provider too? Same here… I could have all my money in them and not lose any sleep.. Price point matters as bid ask spread is always an issue with these, but I got AILIH, AILNP, UEPEP, and UELMO now. If any of them move around, I will scalp and buy a different one.
                Bought a little CNTHO today to join my recent CNLPL and CNTHP repurchases. First time I have got the CNL trio band all back together since 2015, lol.
                See this is why they are safe… I am using CLP as the example, but Ameren is in the process already with PSC….CLP said govt told them to accept non payments for next 24 months…Then next sentence CLP said they already were doing it as they were working with state PSC to set up accrual account, and then get it all back next regulatory rate filing.. They gonna get theirs… But CLP did also say very few people were not paying anyways.
                When things went to hell in 2008-09 banks were getting clobbered and preferreds were down 75% or more and many needed bailouts. Utes needed nothing and prices bottom out down a third instead of 3/4 before recovering quicker. Just like the flash crash in March. Price doesnt always indicate stress of company but how am I supposed to know? I cant read a bank balance sheet and it doesnt mean anything anyways as the devil is in the minutia that is unknowable for peons. Utes were clearly just buy/sell imbalances.
                But remember safety in payment doesnt always equate to safety in price. You have to be careful on entry points especially the illiquids as they tend to trade counter to liquid issues. Take my UELMO purchase though its a very low yielder it was buyable near its 5 year low today. During the March route it actually went up on a few minimal trades. So these will trade oddly due to the extreme illiquidity and small old floats.

                1. Grid,

                  I, too, was able to pick up 100 CNTHO at $52.08 this morning. Wish I had put in for more, it went as low as $52.00.

                    1. Looks like someone is testing the waters of some Illiquid Ute Preferreds today. 1 share trades at a high price in AILLN, AILLM, AILLI.

                      Alabama Power ALPVN traded $47.70 higher with 1 share as well.

                      Wonder what is the intent behind all these trades?

                    2. Inspy, It is possible they are testing to see if there are any hidden shares that could be intercepted lower and see if there is a trading price limit wall somewhere below ask.
                      What is shown is not always what price can be had. For example me today, as I start to prune a few of my PCG shares… On way home from course I noticed my standing ask of $23.61 for 200 for PCG-D was unmolested and standing bid was $23.40…I changed my order to sell at market and guess what..They sold at $23.735.. Over 12 cents higher than my all day ask was at…They are thieves and they have to be taught a lesson every now and then and this is how I do it.

                    3. Grid – Re what you did today with PCG-D shares, meaning changing your limit order SELL to a market order SELL and then ending up getting your trade executed HIGHER than your original, sat there unmolested all day limit order – out of curiosity what percentage of the times have you done this and had it work against you instead of in your favor??? I’ve got to assume you’ve got a second sense about you as to when you think this will work before you do it, right???

                    4. 2WR, I actually do it quite often and it works in this manner quite often. As basically I only play in illiquids which these generally are. It also works the opposite way too. Getting no where with a bid, and then change and fire off a market order buy. Last week I did it with EP-C and bought a dime cheaper than my stranded bid was sitting at.
                      I always make sure the standing bid or ask provides a necessary floor (or ceiling) to handle my transaction though. Also, volume has had to gone dead for a few hours also.

                2. For someone in my age group and life circumstances, Gridbird has been a Godsend. I now have ~40% of my holdings in illiquid IG preferreds he has discussed and have also harvested mid-5 figures of cap gains from them without even really trying, certainly not to the extent that Grid does. My call risk is now zilch. Any calls will bring me even more cap gains.

                  I’ve never felt so comfortable with what I hold. My only major changes in this Covid black swan era have been to sell down my IG bank preferreds–SBNCM, BAC-L, WFC-L, CBKLP, etc., so that they now make up only ~7% of my holdings. Another 30+% are in the very best MLPs–mostly EPD & MMP–which have never cut their tax-deferred distributions. Huzzah! Those I’ve had for over a decade & will die with them. The rest of my stuff is a gaggle of old treasuries at rates that I will never see again. How fortunate.

                  If you are a player, fine. Do that. I am not. I just want to get paid and sleep well, knowing I have the finances to handle the contingencies I see before me. In short, I believe I am set, come what may.

                  I say all this not to brag, but as an homage to Gridbird. I can’t believe the knowledge and wisdom he dispenses daily. For free. Just tosses it off to anybody who has a question. I bow to the light within him and hope that those who can benefit will listen and absorb what he says.


                  1. Well Camroc, it works because mostly its an extension of what you already did. Invest in quality and trust and believe in what you own. And like you, if things appear to be changing, its better to get out early than late. You have gotten a bit too good though. Too many times I will tell you about something available or something I just missed and you will say…Ya, I know, I already bought some. 😀

                    1. I’ve said it before Grid, you’re a gem. For those who may not have considered it, sharing info about illiquid securities can make it harder to execute strategies. Gridbird has always helped others just because that’s who he is.

                  2. camroc, Thank you for sharing that thoughtful note. I too would like to recognize Gridbird, as a mentor and now a friend. For countless hours of selfless giving, for teaching, guiding and providing enough intel for those willing to do the homework to be successful in the preferred arena – how could any of us repay him.

                    When I bumped into Gridbird on SA in January of 2018 I knew just a little less than zero about preferreds. It was an article regarding SO and I’d written a comment and he responded talking about something called preferred shares maybe being a better option. Well, I remembered the term from grad school but the definition was long-ago lost. As is so easy to do with Gridbird, we struck a chord and the rest is history.

                    Two and half years and 1000s of hours of study later, running a good-sized book with all the bells and whistles, Wall Street worthy spreadsheets, data feeds, owning rock-solid preferreds I may never sell, navigating crashing markets with ease and knowing what the CEOs had for dinner…whenever self aggrandizement or a bit of swagger challenges the better sense of modesty, it is quickly extinguished remembering that fundamentally, the entire project was built on the coaching and tolerance of someone else.

                    The opportunity to give back on Tim’s site has been satisfying in it’s own right as well, but then again, it’s nothing more than paying it forward with a guiding light not quite as bright as the one provided to myself.

                    Grid, I know you’ll find some humorous way to deflect the gratitude, though from Camroc, myself and I know many others, take a bow.

                    We’d of course be remiss not to also thank Tim. Inexorably patient and pragmatic, so many of us, knowing it or not, are deeply in debt to him. Thank you again Tim. Thank you.

                    1. Camroc and Alpha8 well said. Thank you to everyone contributing here especially Grid and Tim. ATB

                  3. Camroc,well said couldn`t agree more Gridbird has helped me a lot along with this site.
                    Thanks B/L

  9. I have been looking at SRC-A as a sock drawer holding.

    It has a C rating on III. I’m not exactly sure what this is and if its even relevant.

    Any experts on this or SRC-A as a sock drawer in general thanks.

    1. Hi Bill W, Just an opinion and not an expert on anything, though I would not classify an issue rated Ba1/BB+ (Below Investment Grade aka Junk) as a sock drawer holding.

  10. Some of my young adult children have modest savings, but the 1.4% bank savings account rates are rather bare-bones. They’d be new to the market, looking for safety(!), stability, simplicity, not shooting for highest yields, probably buy-and-hold, with no mess, no fuss, and no smell. To them, 4.5% – 5% is a huge jump from current savings rates.

    If I were to recommend some uber-sock-drawer options for them, would I misleading them by suggesting any of these?
    PSA-* (several good options near par, such PSA-J or -K)
    GGT-E or -G
    maybe USB-O or -P
    or possibly SR-A or IPLDP?

    1. Dave, I am reading (maybe incorrectly) they are wanting savings income. The options presented are misappropriating objectives and investments. If they are wanting to just save and thus preserve capital for say a house in a couple years, this has never been the way to do it. This is a miss match of combining short term goals to perpetual investing instruments.

      1. Good comments, thank you. For most of them, “saving for a house in a couple of years” isn’t on the radar. It’s probably more long-term (4 to 10+ yrs), so that they’re not falling behind inflation (or barely keeping up with inflation). It is money I expect they’ll have for a good period of time. They’re probably too cautious for commons, especially in this volatile time. Just trying to find something that would be considered quite reasonably safe but is in the 4-5% range… thank you!

        1. Dave, the ones you mentioned are definitely considered in the safe range of preferreds, in terms of ability to pay dividend. Of course you would need to explain to them the value of these issues could go up or down a lot based on several factors despite income stream. And of course proper price entry point matters and bid spread fleecing varies with the above issues also.
          Also there are income funds out there to provide instant diversification for smaller investors, they may provide an option.

  11. I bought some WELPM today for $123. It is non-callable from WEC and yields 6% at that price. It looks like there are still shares available for those that are interested.

    1. @ Tex
      I got excited when I read your post.

      But you should check your math on the 6% yield at $123.
      I’ll pass.

        1. The ask for WELPM is $126 today. That’s a yield of 4.76% for those looking to add to their sock drawer.

          1. Tex,

            For 4.76%, I would rather buy something like USB-A. Same yield, both qualified. WELPM rated Baa1, USB-A rated A3. The big kicker…WELPM yield is set, while USB-A is trading at the “floor” rate with potential to rise if interest rates rise.

  12. Folks, what are you thinks about a HWM-P (former Arconic/Alcoa) as a sock drawer candidate? It’s fell about 1/3 of his pre-covid price and now offer nice 5,9% divi.

    1. Yuriy, Stock symbol I found was ARNC-P Which now looks like the security is going to be liability of Howmet and symbol may be changing to HWM- see some interest in the stock but not a lot of shares selling and low to high bid ask.
      There are articles about how it was doing a reverse split into 2 companies. It merged with Alcoa in 2016 now they are splitting the company back up into 2 companies again. The rolling mills will be ARNC and Howmet will be the Alum specialty products for aviation and aerospace. Alum is a commodity, same as the lead I work with.
      Anything with aviation you need to do a deep dive, who their competitors are, who they do business with ( think Boeing and G.E )
      I don’t follow so know nothing. If You like it do like several others here have said. Put in a low ball bid ( 68.00 ? ) see if you get it once trading picks up when the split companies have time to adjust and investors know more.

      1. Tried to look into this ARNC- issue just for fun….. It seems to be a tiny issue totaling $55 mil. so it’s certainly not going to be a burden, however, it also seems as though quantum has it wrong as far as ratings…. Based on the CUSIP listed this issue is NOT rated by Moodys at all, however Moodys did downgrade the preferreds that they do rate from B1 to B2. I think both Moodys and S&P have them on negative watch. Interestingly Fitch actually upgraded Howmet from BB- to BB on 4/1 It seems tough to figure out exactly where this preferred ends up corporate wise in the split, but I suppose the guaranty remains no matter what. I suppose everyone might have a different definition of a sock drawer eligible security, but a perpetual preferred below investment grade would at best end up in a special drawer of socks in need of darning. Still a tiny little preferred issue originally issued in 1947 does seem to have some survivability to it, doesn’t it.

        1. Thank you 2whiteroses for the more in depth look. Does it have cumulative dividends ?
          Done with my posts for now. Being a plant nut I am going to run over to Davis to pickup a Avocado tree from another member of the Rare Fruit Growers.
          Enjoy your day.

          1. Charles M – I’d only be going by what quantum says were I to confirm it’s cumulative…. They say they are… I say I only did this for fun and didn’t happen to see a definitive answer anywhere nor did I find a prospectus…. I wonder if you searched EDGAR if they go back to 1947? Grid, you probably know that answer……lol

            1. 2WR, Usually you can track down the meat of the prospectus of these old issues through supplemental links (usually there are many so you gotta poke and hope and then keep poking) on their annual filings in SEC. Being I have no personal interest in a cyclical industry low yield preferred, I am not going to dig this one out. 🙂

        2. Many of these very old issues arent held up in price by their credit rating but by their illiquidity. Hence the reason I love illiquids as they generally hold up in times of turmoil. But I try to buy illiquids in quality commiserate with price and credit, not just illiquidity.
          Look at KSU-. An old NONcumulative rail preferred. About BB+ quality if last 2018 credit rating of BBB senior unsecured is still correct. KSU- is 4%, $25 “par” non callable old issue that last trade at $28.02. Who would assign any value to that? There are gillions of preferreds with that quality that pay better than its 3.57% perpetual yield. Yet it always trades above relative value because of its illiquidity. International Paper also has one that trades like this also. I would be a player of IP preferred around $80 but that isnt happening despite that is really what its worth at best on a relative basis.

        3. “Fitch Upgrades Howmet (formerly Arconic Inc.) to ‘BBB-‘ On Spin-off Completion; Outlook Stable”
          They are IG by the Fitch, isn’t it?
          I just seek something from the Aerospace-Industrial sector for my pref’s portfolio asset allocation and there are only two companies which have prefs issues – GE who have a lot of non-exchange traded $1000 prefs and the this one.
          I don’t like GE mainly cause of their high debt level and chronically loss-making. And they are certainly not quite an Aerospace company…

          1. Yurly – Fitch rates senior unsecured BBB- You’ll see at the bottom of the article they rate the preferred BB up from BB-.

            1. Yep it was my mistake – I read the commentary inattentively and was also confused by the fact that I own some of their senior debentures which are IG according to Morningstar bond center.
              Thank you guys for a heads up.
              P.S. Btw now I see what their senior debt is trading with the 6+% yield so it make no sense to buy prefs.

    2. Yuriy, this from the S&P Global bond report on Alcoa:

      Research Update: Howmet Aerospace Inc.
      Outlook Revised To Negative On Weaker Credit Metrics Due To Coronavirus; Ratings Affirmed April 16, 2020

      Rating Action Overview- The coronavirus is having a significant impact on global air travel that will likely lead to lower commercial aircraft production and aftermarket demand, which will likely result in Howme tAerospace Inc.’s earnings and cash flow in 2020 being weaker than we had previously expected.- Therefore, we are revising our outlook on the company to negative from stable and affirming all of our ratings, including our ‘BBB-‘ issuer credit rating on the company.- The negative outlook reflects the likely weaker credit metrics due to lower earnings and cashflow as a result of the coronavirus outbreak.

  13. I bought 100 shares of AILLI today at $102.50 for a yield of 5.03%. Redemption price is $102. Looking at, I’m seeing that this has only traded 12 times since 1/1/2019 so it doesn’t trade much but I’m not sure why that is. It looks like AILLI has 50,000 shares outstanding while some of the other Ameren Illinois issues have similar shares outstanding but seem to trade much more frequently.

    I primarily sold some past call bank preferreds to free up the cash to buy it. Given the current climate, it felt safer to be in a cumulative utility rather than a non-cumulative bank.

    1. Tex, Congrats you beat me by 5 seconds….They were still there when I entered matching ask bid and by the time I hit the buy button I saw the 100 shares trade and assumed they were mine….They werent….I pulled the bid immediately as I knew it was a waste of time from there.

        1. I was lucky enough to get a measly 20…slow process but patiently building a nice size position in this issue.

  14. Tim,
    Thanks for your post on the mReits on Wednesday. Helpful in these chaotic times. Good luck with your SDS trade. I do the same with VIXY, crazy volatility.
    I currently own AATRL based on previous sock drawer comments. Like everything it has traded down significantly but given that AMG is a solid Investment Grade company it seems very over sold. I re-read the prospectus today to better understand the rules for deferring payments and it seems very unlikely AMG would do that unless their business was in severe trouble. Any reason not to be buying here under $30 ?

  15. Tim,
    GDL-C is puttable until March 26.
    Now trading below $50.
    Isn’t this like free money (assuming GDL does not go bk in 7 days), so we should buy millions of shares < $50?

    I think my question is: how is it possible it trades below $50, and are you buying lots of it?

  16. For those looking to add, the ask on APRDM from Alabama Power is currently $106 x 300. The yield is 4.64% at that price. This is BBB+ rated by S&P. It was issued in 1961 so the call risk is probably fairly low. The redemption price is $103.23.

    Also, the ask on IPWLK is $104 which yields 5.43%.

    1. Now is a good time to add to sock drawer issues. I sold some holdings at a loss, and looking to put the proceeds into IPWLK.

      If we are facing several years of low interest rate environment like Japan, these Utility illiquids are a safe way to go.

        1. IPLDP just above 23 today. PPWLM at 130 if you can get it at that price.

          SR-A 23.51. Bargains galore?!

          1. Having a little trouble understanding why SR-A has become such a darling of so many on the board, here. It’s a split IG perpetual preferred from a company that while it may be strong, still has most of its eggs in one basket – that being nat gas. Nat gas pricing has been obliterated the past few years as most know. There’s little diversity in services that I see with this company, however, I note that I do own a small slice of this issue. Not questioning why anyone is buying it, just find it interesting that it’s being named in so many posts.

            I thought that sock drawer issues were more favorably viewed if they were very illiquid, dual IG, term dated, etc. Perhaps some of my fellow posters have multi-layered chests of drawers?

            1. I think it may be that it’s a darling of the venerable Gridbird. It’s not in my sock drawer, much less my lockbox, but I did sell some WELPM (out of my lockbox) and bought more IPLDP and SR-A, something I may regret later, but it improved my portfolio yield a bunch. I think both will continue to pay, but unlike my WELPM, they are not uncallable and will likely be gone someday. After me, I hope.

              P.S. EPD printed a 12 today due to oil’s continued malaise and more funds deleveraging. I bought a bit more of that, too. Couldn’t help myself. In for a penny…


              1. Cam,
                You’ve got ____ of steel to still be buying EPD down here. I first got in about 6 yrs ago and have added and sold some along the way, but always maintained a core position. Reality tells me though, that I will not live long enough to see this thing ever turn to the green in my portfolios. Same with XOM common shares or KMI. While they weren’t necessarily bought for cap appreciation, they also weren’t bought to continue bleeding all down my leg. But such is the chance that we take when we roll the dice. GLTA.

                1. Nah, my cojones are pretty much like everybody else’s. I’m just topping off as a calculated risk that EPD will pay longer than I can live. Randa & Teague continue to buy in the open market, recently over 200K units between 15 and 19.

                  I have no expectation of ever getting even, but I don’t have heirs to worry about. So I just enjoy the income now. Whatever’s left when I leave the party will mostly go to charity. They can deal with any fallout.

                  Most of my buying now, as I said, is in IG ute preferreds. If things get bad enough so that their lights go out, well… I suspect dividend income will not be high on the list of things to worry about.

                  I can’t believe I ate all that freeze-dried food I had stashed away a couple years ago. The mac & cheese actually wasn’t that bad. lol


            2. A4I, Let me take a stab for my reasons…Remember this is almost entirely a regulated nat gas utility. Very tiny minor operations outside of this. It is not an MLP or piper, it provides nat gas heating to residential and industrial customer. For many people like me in my area its the YING to Yang of Ameren. Ameren provides my A/C and lighting and Spire heats my house and water heater. Main operations are in Alabama and MO which are positive regulatory environments for utilities.
              Earnings are projected to increase 4-7% ongoing and they just increased common dividend 5% last quarter. EBIDTA up 5% from last year…Have an almost billion dollar credit facility. The origins of the company date back to 1840s. Im just very familiar with it being my local ute and headquarters are here locally.
              Now on illiquids….This is my opinion only…But, dont confuse illiquidity with stability. Illiquids wont trade in tandem with liquids because they dont have the general sell pressure…But trust me the selling will come in time…The yield differential is getting just way too much..Look at the price charts of old illiquid utes. Most are around 4% and pretty close to par price. That is not sustainable over a period of time when issues with same quality are yielding near 6% and more..They will drop in time. Look at their 20 year price charts. It isnt like they just stay around par because they are illiquid. Go back ten years ago on old $100 low yield issues and you can see many of these issues trading in $60-70 range. And it will take a return to that to generate a 6% yield.. Its really just a matter of math, credit quality and time…
              IPLDP is higher quality for example credit wise than many of these, but it has dropped way more than illiquids now. Has it suddenly become less safer? No, it just has the liquidity and people are selling liquidity. I have rotated a bit too early into more liquids from illiquids…Ouch…But eventually the worm will turn one way or the other in time, because the discrepancy is too much. Either the liquids will climb back, or the illiquids will fall back more in line yield wise with their sector and same quality peers.

              1. Grid
                Thanks the very clear explination. Are we to assume that the SRAs of the world could find themselves selling for under 25 for a longer period time giving their other qualities? If we buy low and they continue to pay this may be acceptable for part of a portfolio but the buyer certainly has to understand this when they get into it. Thanks again your insights. SC

                1. SC, These can go under par and stay under par for years. If credit spreads widen (or panic and forced selling doesnt ever stop, ha) these could go lower. As one can see if takes a lot of painful price movement just to raise an issue 25 basis points in yield, let alone 200-300 bps.
                  And the fact many were issued with this generational low yields at par it could find many trapped. Take my favorite example UEPEN 3.5% issue from 1940s…It basically has been under par for 70 consecutive years! In 2008-09 crisis, many high quality 6% “par issues” with no credit stress languished in the 15-17 range for quite a period of time. The market owes us nothing price wise.
                  Seller interest, volatility, credit quality, credit spread between government bonds and corporate debt will all factor into the pricing. Its just at various times different ones mentioned above will effect them more at different times.
                  As far as say using SR-A as the example, I definitely enjoyed it more buying at IPO and flipping for $2 and flipping 4-5 other times for $1-$2 at a time more than my most recent foray…Buying at $26, $25, and 24, and $23. In fact I enjoyed the former a lot more, ha!
                  But for me if it sits at $22 forever, I can accept that too (as if I would have a choice) as I reinvest all proceeds and it would just increase my yield longer term. If I am going to stay invested, job one for me is to own issues that I can sleep and snore knowing the divi check is coming! Its not in me to buy PEI-B at $3 and try for a big score (which very well could happen, who knows). But every day I would worry about the divi suspension notice coming.
                  In these times liquidity and cash is king. Look at Boeing. In just a few days time it has went to completely drawing down revolver and requesting Federal loans for cash..They are in crisis mode despite a still BBB- bond rating (that just got lowered). Credit ratings cant keep up with day to day events.
                  This is why hospitality reits have been excoriated, nobody knows if they have cash to get through the crisis.

                  1. Well said, Grid. I think what has complicated the game here has been the ‘newer’ tendency of some to get into ‘flipping’ the securities on the fixed income side – or what used to be known as fixed income, in my mind. Isn’t this what jacked up the common side of things so much – meaning speculators, or these damned machine trading algo’s and bot bots driving the car like they stole it? Seems like a lot of this type of activity has now migrated over to the fixed side because it’s typically been deemed ‘safer’ to play in that sandbox. The only thing that is fixed right now is that the recent ‘up’ days are not as high as they used to be and the ‘down’ days are getting worse than they used to be. Lower highs and lower lows. Until this plays out and stabilizes, the playbook is useless. And we’re still far from the max pain point, IMO.

                    1. Fixed investments is no longer fixed investments. It is being traded like common stocks and other gambling methods.

                    2. A4I, At the end of the day as you know, these really are just an income stream play mostly at the lower end of the capital structure with some residual annuity sell off value. That value is down now.
                      I am in preferreds for the income stream only. It was only several years later I learned I could stay in same credit quality and exploit trading movements to squeeze some cap gains out with the income. A good run of 5 yrs doing that. Im assuming now its back to the original purpose. But if I see increase value by losing money to sell, and buy something else, that I will too.
                      I have no special mental brain power to determine if many of these go bankrupt or even mine down to $5. I have posted many times through the past year how these $25 preferreds have cratered to $5, and eventually go belly up or continue paying. As my dad said several years ago.” I dont care if the damn thing goes to $1 as long as I am getting my 6%”. Some people may not feel that way, ha. Since I am dumb, the only way I can play is with companies that have good balance sheets, have cash (or little present need for it) or access via revolvers and such, and a fairly strong stream of earnings.

              2. Hey Grid, OR anyone in the forum, is there anything in the prospectus For KTBA that one should be worried about? Can one buy this and throw it in the sock drawer and forget about it. Thanks in advance, ATB.

                1. Tim,
                  It’s about as bulletproof as you’re going to find – so long as T stays solvent. I own it and am not worried. Just look at how it’s held up compared to so many others in the ETD and PFD space. I take comfort in that. Nevertheless, you’re still 100% at risk of losing it all.

    2. ALPVN from AL Power now has an ask of $103.45 x 200 which yields 4.45%. Redemption is $104.20.

      WELPP from Wisconsin Electric (WEC) is available for $90.50 which yields 3.98%. Redemption is $101.

  17. The test of the sock drawer is upon us..

    No greater day than today for a test..

    MINT and NEAR down 2% at the moment

      1. They are invested in short term bonds, not necessarily completely investment grade… I am disappointed by move also but notice these are trading at a slight discount (depending on when you invest). A lot of the Gold ETFs were at slight premiums for the better part of the month.

        But really the sock drawer test involves those that are illiquid, credit quality preferreds or baby bonds and how they do in days like today.

        1. Crazy for NEAR, which is basically an IG money market fund, to be 2% below NAV this morning. It was down more than BKLN lol. Was a little worried one of their top 10 holdings had blown up.

          I’m already way overexposed to NEAR, but had to at least consider using margin to go all-in. Probably should have.

    1. IPWLK hasn’t changed today. Actually if I accepted the current bid it would be up for the day. It’s a good one.

    2. 0.2% for Mint and near. .maybe selling pressure from those raising cash gave it a brief dip.

      gold and treasury funds are the only thing up for me. JPMJs 4.75% still treading above par.

  18. I put a sell order out for 25 shares of IPWLO that I hold it my retirement account for $95/share. I’m looking to raise some additional cash to buy common stocks. I figure someone should want it based on it yielding 4.42% and being 92.2% of redemption price of $103. Are there any tips for getting grey market/odd lot trades to trigger?

    1. Tex there are no established market makers for grey issues. Its like separate stores instead of one big tent. In make its entirely possible you could see a sell below your standing ask price. Plus sub 100 share orders of this ilk could possibly get overlooked/ignored.

    2. You can’t even get a b/a quote. Totally blindfolded. I’ve been bidding 90 for a round lot off & on for several days with nary a bite.

      Like Grid says, you’re totally in the dark on this one.

  19. First time clicking on the sock drawer tab.
    I see my TY-R limit sell at 54.66 will be forever memorialized on this board.
    It was my first preferred buy. Someone mentioned it on SA a few years back, and after that I pretty much switched from commons to the emotionless prfds.

  20. I picked up some CNLHP today for around $50.20 which gets a yield of 4.48%. Redemption price is $50.50 and S&P rated BBB+. A lot of shares moved. With the direction of interest rates are headed and considering CNLHP was issued in 1963, I have no idea why someone was selling so much.

  21. Here’s a couple maybe worth checking out:

    UEPEP at $102.30 for a yield of 4.46%. Redemption price is $102.47.

    SOCGM is $31.95 for a yield of 4.69% and it is non-callable.

    1. Tex, in your post, I think you meant SOCGP instead of SOCGM?

      UEPEP is a consideration so long as one is content with the low 4.46% yield – but offsetting this with high safety and sustainability. I have a small position bought at $102.10, but will add should the price fall below $102.

  22. Gridbird, Is IPLDP worth picking up at $25.35? In the off chance they do not call it for a few quarters. Loss of a few cents otherwise.

    1. Hster, I bought a couple hundred more a few minutes ago. Your getting over 350 bps premium to 10 year. Not many of those available in uteville with no call loss possibility. Doesnt mean it cant go lower, but there will be no credit issue here when this all settles down.

      1. Thanks for the heads up Gridbird. Bot only 100 for fun before I wrote you just in case you came back affirmative. I’ll get serious tomorrow. Or maybe put in a limit order for tomorrow morning. The ex-dividend date is in a few days.

        1. Hster, we are prisoners to market reactions, but in a 1.5% environment it would pop back eventually. Its been through the taper tantrum right after it was issued and drove it down to $21, but was back to $25 in 6 months. It sold off in $22 range in Dec 2018 credit spread rout but recovered quickly. I bought then and should have bought more, but whatever. Anyways just showing that high quality can have volatility also. Rates were higher then though also…. Tomorrow who knows….

          1. Gridbird, I picked up a few hundred more this morning for a starter pack but will wait to see what happens ex-dividend. We’ll see if there is a mini-taper tantrum this summer but if there is a selloff, it won’t be the Dec 2018 style dumping where interest rates were being raised. I think the fed has been chastened but more importantly this crazy indebted economy cannot support higher rates and the U.S. is in yearly trillion+ in deficit. But I still have half in cash reserves so I could hold out for decades if need be and collecting more than 5% is a treat!

            p.s. Gridbird- are you by chance from the power industry and that’s why you are gridbird or are you into spreadsheets. My hubs and I were trying to figure out origins of your name.

            1. Hster, You gave me a great laugh! There is no great Oz behind this curtain. I dont even know how to make a spreadsheet. I use the free plug and play Yahoo finance spreadsheet to monitor all my stuff in one area. My long time GF works for local ute, but the origins of my nickname is not that either…Gridbird is the alter nickname for the Big Red St. Louis Football Cardinals that Arizona stole from us. Media called them Gridbirds (Gridiron) to differentiate between baseball Cardinals.
              I always keep a big portion of my preferreds in Utes. Because when push comes to shove and they get in trouble they will line someones pocket to stay solvent via legislatures or public service commission, and let rate paying customer prisoners foot the bill. I bought 400 more IPLDP today at 25.37. I have way too much of this, but right now Im staying in a ship I feel comfortable drowning in, ha. I will peel off some at some point. I have to be done now, but if it dropped to 25.25 before end of day, I will buy more somehow someway. It goes exD tomm.

            2. Hster–Grid doesn’t even know how to use a computer–but he is an wizard on his smart phone 🙂

              1. Tim, I know how to turn on my ipad basically. My smart phone is barely smart since it cost $50. 🙂

                1. I still have a dumb phone. And I use a desktop computer with Windows 7. But not with a dial-up connection.

  23. Related to our conversations on illiquid/sock drawer preferreds (AILLL, SOCGM), I count 99 issues that are traded on the Pink Sheets and are still paying dividends. Note that most preferreds have the NYSE as their primary exchange so they tend to have fewer extreme price excursions. I can publish the list if anyone is interested. I don’t think Tim includes this field in his database.

    1. Tex 2, Have you ever used the official OTC Markets website? They have a screening tool that shows all their trading preferreds which are the pink sheets in various levels. Including the crossover Canadian issued preferreds. Its a great little tool.

  24. What is the sentiment on SLMNP at current prices of $!,040+. I was able to pick up a very few just before the last Ex Date reasonably (I thought.) and would like a few more possibly. What is a decent purchase price now?

    1. WendyW, There may be duration risk, but even closer to $1,100 appears SLMNP would still be priced well inside the current market. Keep in mind there is about $6.50 of accrued dividends as we approach the next ex-date circa 04.13.

  25. Didn’t someone sell AILLL (callable anytime for 25) for 28.50 just last week?

    Well, it hit 29.50 today. That buy took real bravery. Still, I didn’t sell any of mine.

    So. Who’s the fool? I will only admit that I do live on a hill. 🙂


    1. Camroc, I was the seller of 200 AILLL at $28.50 last week.
      I tried to buy back, but got only 50 shares at $27.69 today.

      I seriously doubt the $29.50 price can be sustained, am fully expecting it to drop back below $28 shortly. My bid remains at $27.69.

      1. Bob, I wish I was a seller at this price, but Im already sold out. I strictly buy in low $27 range and flip for 50 cents. I wont risk holding long term. Of course years ago it was buy at $26 and flip at $27…Ah, the good old days!
        I have called a no call on AILLL for 7 years running and been right all along. I have given a bunch of reasons and Camroc should have them all memorized as to why. That is why he dont sell! But, I dont trust any issue with a premium such as this, so I dont hold.
        I had to force the broker to buy them for me in 2013 because he was worried about the call and paying a dollar premium past call. I had to tell him to shut up and buy.

        1. Well, maybe not memorized, Grid, but certainly well documented so that I can easily refer to your reasoning if my palms ever start getting sweaty. lol

          And if rates do go negative for a while and if AILLL does start bouncing over 30 consistently, then maybe I’ll peel some off. Otherwise, I’m prepared to eat any call that comes down the pike.


          1. Camroc, As you know, the divi for April has already been declared. The do nothing dummy board from subsidiary Ameren Ill has already did their one function and approved it. They slapped each other on the back and said, see ya in 3 months! 🤣

  26. Is AGNCP appropriate for sock drawer holdings?
    It’s selling under par now $24.94 and I’m wondering if I should fill out the drawer as I only have a 6 pack.
    (Members on SA have told me it’s a pretty safe thing to hold.)

    1. AGNC (P or other) ….

      Sock drawer, no. It’s like a teenager that needs close supervision. But I sure do own it.

    2. Hster – I certainly agree with Bob on AGNC so if you’re thinking sock drawer-ish on the name, a read of what I wrote on 2/12 on AGNCO vs AGNCP in Reader Initiated Alerts might help you get over the hump on the name if not the issue. Throw in an expectation of greater price stability, which for me is important for sock drawer status, along with Bob’s teenager supervision requirement and AGNCO might be a better vehicle for the drawer but only your open sock drawer, not the closed one – you know the one you might seek to reorganize on a dull rainy day or to avoid taking a trip to the in-laws..

      1. Hster, Bob, 2wr, I also would not call AGNC preferreds sock drawer issues but you can certainly keep some on a shelf in the closet as they’re among the safest mREIT preferreds (along with NLY). Important to remember they’re primarily dealing with agency (FNMA, FHLMC) paper for which the underwriting criteria is about as tight as it has ever been. I could care less about the margins that kick in 4 or 5 years from now and may never manifest. Summarizing:

        Assuming rates are sideways…and assuming $25 value at call date. Neither will be true or exact, though they provide a basis for meaningful comparison. Using call dates as mileposts…

        At AGNCM call date of 4/15/2024: AGNCM cash to term is $6.20. AGNCN is $6.11. After over four years of hold: AGNCM wins.

        At AGNCO call date of 10/15/2024: AGNCM cash to term is $6.96. AGNCN is $6.98. AGNCO is $6.78. AGNCM and AGNCN tie for the win, AGNCO is dead last. We are now 4.75 years out from today.

        At AGNCP call date of 4/15/2025: AGNCM cash to term is $7.72. AGNCN is $7.86. AGNCO is $7.64. AGNCP is $8.14. AGNCP wins. AGNCN is 2nd, AGNCM is 3rd and AGNCO is dead last. We are now over five years from today.

        However, based on the current AGNCP pricing, AGNCP “wins” all current and interim (5 years) categories by a country mile. That will begin to change as AGNCP cruises to the $25.50+/share range, which is a near certainty to occur assuming the other issues are constant.

        1. Dear alpha8, Thanks for that thorough breakdown. I want to hold as long as possible so long term and even short term- I think AGNCP definitely has room to run. All that RQI rights offering new money has to buy something.

          I should have bought NLY-I when it came to market but I didn’t know much about MREIT preferreds having been forced from preferred CEFs to individual issues. I personally think there’s a large pool of new dumb money like me that want in on preferreds. None of my peers know anything remotely about preferreds. Surprisingly preferreds have not reached mainstream for something that pays so well.

          1. Hster, Yeh, I think we all have a coulda, woulda, shoulda drawer. Just watch your allocations. We don’t want to be knee deep in anything if the current starts pulling the wrong direction.

      2. Thanks 2WR for pointing out your golden nuggets of analysis.
        Sometime next year at the first whiff of the fed raising rates, I’m sure we will have to reevaluate all our fixed income although we’ll all be scrambling right after elections. Until then, I’ll keep a side eye on them.

        Bob- Teenagers can grow up to be reliable adults. I guess I’m so happy at the prospect of collecting 6+% that I don’t mind holding it forever.

  27. I just got my 1099-DIV from Schwab and it appears as though they’re reporting IPWLO as non-qualified. I also own several other illiquid utility preferreds (my larger positions are APRDM, IPWLK, UEPEP, CNTHO, WELPM, PPWLO) and I won’t be receiving my first dividends on those until next year. I’m afraid that Schwab is going to report as non-qualified for every illiquid preferred. My tax rate is fairly high so the qualified vs. non-qualified treatment matters quite a bit. Does anyone else hold any of these through another broker and how are they getting reported? I may try to transfer these out of Schwab. Thanks in advance!

      1. Thanks but I’m not sure about the holding period being the issue. I bought the IPWLO shares on 9/10/2019 and I believe it’s a 90 day holding period for preferreds. Also, I thought brokers normally disclaim that they only report if the company is qualified and it’s up to you to reclassify if you don’t meet the holding requirement.

        1. Depends on the broker.
          some calculate holding period, some don’t.
          But the fact that it is illiquid pink sheet is irrelevant for US issuers.
          (it does matter for non-US, as it is not considered an established trading market), so you get some quirks with pink sheet shares from countries like Bermuda, that are considered not qualified.
          What also depends on the broker is the sophistication of their security master and/or whether they subscribe to a service that identifies qualified/non-qualified dividends

    1. Tex, my Schwab 1099 conveys qualified dividends for all my sock drawer pfds but for two: SLMNP (OTC Pink No Information) and IPWLG (OTC Grey Market).
      Your IPWLO is OTC Grey Market. All others you listed should be fine at Schwab (if I am not mistaken).

      1. Aarod – thank you! So based on your 1099, Schwab seems to make the distinction on the OTC status? So 1) Pink No Information and 2) Grey are going to be non-qualified?

        It would be nice to have an idea of the expected tax treatment prior to purchasing.

        1. Ugh… same here. For those that have been here before, as it relates to SLMNP, do we have to contact Schwab to get them to amend it? If it’s non QDI, then I’ll pass and sell the position. Or, is it something that we just have to have the accountant correct at tax time? Thank you.

          1. “Ugh” is right. TDA got qdi right on every one of my illiquids. Every. One. Of. Them.

            I hope Schwab doesn’t eff everything up when they take over. Sigh. Just when you think you’re all set…


        2. Tex, it appears that way but I am not sure. Per Bob’s and Nomad’s posts conveying forthcoming Vanguard ban on purchases of four lowest OTC tiers. I had just checked my sock drawer pfds using the screener in Thus, the thought that could be the reason. I also hold SLMNP in Fido but my 1099 has not yet been issued.

          1. Aarod – I was just curious if you received your FIDO 1099 yet and what the SLMNP treatment was. Thanks!

            1. Hi Tex, yes, Fido reported SLMNP as QDI. My apologies as I failed to post here. Thanks for reminder and BR

              1. Thank you! Did you own any other illiquid preferreds or Canadians through Fido? If so, how were they handled on your 1099?

    2. I have also had this issue with Schwab. Allegedly, it gets straightened out in the year end 1099. Have you also noticed that they often have preferred dividends taken back then reissued – usually a few dollars different. Their clearing house kinda sucks.

      1. I’m in the middle of my busy season at work. Here is the contact for a manager at Schwab’s client advocacy team in case anyone would like to reach out and try to get clarification on how they are determining QDI status on illiquids. It would be great if you could report back on what you learn:

        I may be reached Monday-Friday at 1-800-468-3774, extension 48768, between the hours of 11:30 AM and 8:00 PM Eastern or; via email me at


        Dawnn Lone
        Resolution Manager | Client Advocacy Team
        1-800-468-3774 / Fax 1-800-977-0122
        211 Main St
        Mail Stop: PHXPEAK
        San Francisco, CA 94105

    3. Sorry, Tex. I was flipping through various screens (tasks) when I responded – and had forgotten that you stated that this was in your 1099 – rather than the transactions page – where I so often find those revisions. I own IPWLK, and in my 2019 1099 it is reported as QDI. As you know, there probably is a revision or two coming in the next couple of weeks. It may well be spontaneously resolved there.

  28. For anyone looking to add to their sock drawer, the ask prices for AL Power preferreds have come down a little. APRDO is 103.50 for 4.48% yield and ALPVN is 103.99 for 4.42%. The redemption prices are 103.14 for APRDO and 104.20 for ALPVN.

    1. Thanks for the heads-up, Tex. I decided to buy the 100 APRDO shares offered, at $103.50.
      This will join my sock drawer community as a neighbor of APRDM.

        1. Tex and inspbudget, I am looking at the many preferreds issued by Alabama Power and will probably buy one to replace KYN-F. I already have some ALP-Q and wondered if you know why ALP-Q was issued as a $25 preferred with all the rest being $100 preferreds. Thanks

          1. Alan,

            Sorry, I have no clue why ALP-Q is $25 par vs the others.

            But our Jedi Master of Illiquid Utes, Gridbird, should be able to uncover the mystery whose answer you seek, as he wanders the dusty vaults & catacombs where ancient IPO prospectuses go to languish & die.

            Pay homage to All-powerful GridBird, and he will perhaps bless you with his unmatched wisdom !!

            1. Inspy, It really is an irrelevant non issue. 50-60 years ago preferreds were issued as $100 issuances. Now the common retail issue price is $25 for retailers. I highly suspect 50 years ago, institutions largely purchased these not retail investors. It has no material effect on anything.

              1. Totally right, it’s all about the calendar.

                Way back when, preferred were for the well-heeled individuals or institutional buyers. A $100 preferred issued in the 40s or 50s is like a $1000 issue today and very few individual investors could play in that league. Were hard to get your hands on.

                1. Thanks Gridbird and Bob. That makes sense. The $100 preferreds from Alabama Power I was looking at were issued in the 50s and 60s.

    2. I wonder if Schwab will show these as non-qualified. They showed ALP-Q as non-qualified on my 1099. 🙁

      1. Alan, I just checked my brokerage accounts. All were correctly done QDI, including the Canadian resets. You need to find the guy in charge of correctly implementing proper tax procedures and put a paddle to his arse. And tell him you are coming back in a week reshape that rear again if it isnt done by then!

        1. Gridbird – do you mind disclosing what OTC issues you had last year and with which broker? I think that could help the rest of us poor Schwab folks figure out how to restructure things.

          1. Tex, Which specific ones are you in question over? I trade a bunch of them. And to be honest I just looked at 1099 Consolidated form on TD and Ally. And all my dividends were qualified. Which matches of course prospectus. To be honest I dont think they program the holding period, because I get QDI whether I held long enough or not. And Ally, well they even gave me QDI credit with some baby bonds.
            If you give me names I will let you know if I held them last year. Vanguard hasnt given me 1099 consolidated yet. But they are the least of my concerns because I have had Vanguard for years and they always give me QDI status even if the holding period wasnt met. They all get the short term cap gain and wash rules correct though.

            1. Hell, if Ally is giving QDI treatment to baby bonds that’s where I’m headed!

              Not really. I have to believe they will find that mistake at some point and issue a corrected 1099.

        2. Thanks Gridbird. Schwab also showed SLMNP and EBBNF as non-qualified. I’ll call them the first of the week.

          1. Alan, Just remember these numbnuts arent the IRS. They dont get to set the rules and laws. You can manually override any of their pontifications as you have the tax law on your side.

        1. Thanks Tex. I’ll call on Tuesday when they reopen and will use this email if I don’t get any satisfactory results.

  29. On maximum of position sizing, what do investors here think is a good upper bound for sock drawer candidates? 5%?

    In this environment where assets have inflated, I am always wishing I had bought double, at least I could take half off the table. Eat my cake and have it too…

    1. Some items listed here are over 5% but not by much. When you approach 6% there’s probably too much risk to be considered sock drawer.
      Answer is always changing, ask next year and you’ll get a different number. Floating sock drawer.

      1. Thanks Martin, Maybe I should ask an alternative question. What in your sock drawer if any would you feel comfortable holding more than 6%.

        1. Are you asking about interest rate or % of portfolio? We might not be talking about the same thing.

    2. Hster – you get rich by holding concentrated positions (think Bill Gates and Microsoft) but you retain wealth by diversification. Think like a bank and categorize your risks and decide how much risk you are prepared to take by category. If you own 100 different preferred issues but they are all US banks you have a very undiversified position. Not good for capital preservation.

      For a single issuer (not just issue) 5% would be the highest I would ever consider. Surely one can find at least 20 sock drawer quality issues to include in a portfolio. And please don’t rule out CEFs. Lots of diversification and access to assets and asset classes you can’t buy as an individual. Just wait for better entry points. Almost everything in the CEF fixed income world is richly priced. Both the underlying asset prices and discounts/premiums are near extremes.

      1. Good point, diversification is about avoiding losses not maximizing gains.
        Also, it’s relative. If you have a million dollars spread it around. If you have $40,000 to invest you don’t need 20 different things.

      2. Thanks Bob- all excellent points esp. about banks and about issuers.
        I actually started in CEFs(JPS/RNP) and was forced to look at single issues as no good CEF deals were available. The last CEF mini-sale for me was end of last year when HPF/HPS tanked and then leaked slowly after distribution cuts.

        It’s hard to build up a sock drawer when you’re late to the party but I’m waiting and watching and learning from everybody on this board. Thanks again.

    3. Hster, I would think 2%-5% on any single issue is top end for prudent investing purposes. I presently have 10% of mine in IPLDP which may or may not last long term. But Im a pensioner and dont come close to spending my monthly check, plus its a COLA. I doubt I ever spend a penny out of my stash, so I feel I have more liberty to do whatever the spirit moves me on without any worries about it impacting my lifestyle.

      1. Dear Gridbird, I’d keep 10% in IPLDP if I could get it at a good price! My biggest is 5% in JPM-J(yes… sighs…) as I only started a few months ago but 7% would have been ok. But not having the pressure of relying on the distributions or needing to liquidate any time soon makes all the difference. I follow your comments very carefully! Thanks for the continued wisdom.

  30. The appearance of this sockdrawer section has actually forced me to consider what ARE my untouchables…and my socks often are, especially after golf. Anyway, with huge thanks to Tim, Grid, Camroc and all who contribute so regularly, the current residents are, in order of position size:

    NCZ-A (wish i’d loaded up when they were 22.90!)
    SLMNP (sockdraw allstar surely)
    EPR-G (Only REIT in there)
    WRB-B (I will survive)
    IPWLK (Never been to Indy..but love their power)
    AILLL (future hall of famer)
    PPX (needs no introduction)
    AATRL (an oldie, but a goodie..recently added)
    ECF-A ( ..or how I learned to stop worrying and love CEF preferreds)
    F-B ( built tough enough not to touch)
    DUK-L (last years gift)
    AHL-D ( 7 yr itch..not callable till 2027)
    AFC (Logic defying, call defying….)

    To be honest, I’m pretty conservative buy and hold, so there are prob more issues that qualify for me, particularly financials/banks. But thanks again for all suggestions. Tim, you do amazing work. And I have 1 unhappy financial advisor I left about 18 months ago..

    1. I just sold NCZ-A not two minutes before reading this. Took the profit and redeployed the money closer to par value. Sold WRB-B a couple days ago, don’t want the call risk.

      I bought some AATRL and SLMNP because of posts here. Two forum favorites.

      Toward the bottom of your list are tradable stocks but I don’t like them for sock drawer.

    2. Adrian,

      I have several of the names on your list. ECF-A, NCZ-A, SLMNP, AILLL AATRL & IPWLK.

      For QDI financial preferreds, my favorite sock drawer residents are WFC-L and BAC-L. They have gone up significantly from when I first bought, but being noncallable busted convertibles, they are worth consideration IF you are willing to accept the current yield as being what you’re getting for as long as you hold them.

      Another company for your consideration: Connecticut Light & Power. They have preferred issues CNTHO, CNTHP, CNLPL, CNPWM. Although they are all callable ( and have been so for years ), Grid believes there is very low likelihood of call. I own CNPWM & CNTHP. Recently sold CNLPL and now looking to buy back.

      Good to see another like-minded income investor here. Look forward to your input on the rationale you employ in choosing which issues to buy & hold.

    3. Adrian–thanks for the compliment–the folks here make it all worthwhile. Your sock drawer looks kind of like mine–in particular your CEF preferreds–I love them–not for their coupons necessarily, but I know the safety and back in 2008-2010 Gabelli proved to us what happens when the shix hits the fan.

      Here is a poorly titled article (they did the titles then) on Seeking Alpha from 2011–I recount the fall of a Gabelli CEF in later 2008 and 2009 and how they reacted. Good history for folks.

    4. Great list, thank you! About the PPX, what are you think is there a big risk this issue to been called in short time?
      Always looking at it but always afraid to buy )))

      1. Yuriy, a good thing to remember is most of these are ultra safe in terms of payment and future ones down the road. But for most a proper entry point is very important also. If you overpay you may not be happy. And on some you could get a double whammy…Overpayment and call notice slapped on you.
        Take AILLL, Its current yield is still way above current ute preferreds. So it represents relative yield value. But that $3 premium to par is just too much risk for me.
        And I am the Godfather of AILLL in investing forums and am saying this. But I just wont risk owning it at $28. But I will trade in and out of it when I can if I get right entry points. And some have held so long they are willing to risk as it has been good to them, so I get that….And it may never be called. Just my opinion being one who owns them, but many are not real good value risk reward be it a call or just purchased too high. But this is an opinion based on people who value capital protection more than security of payment. Many people may feel they are in it for income, but change their minds if one later finds they overpaid by 20%. Something to ponder.

        1. Grid, yeah this sock (ailll) is on my drawer too ))) bought it approx. 1 year ago below $27. But there were another times when no one expected that the Fed will go to cutting rates and there was no such steong fear about redemptions.
          Now I think to buy more Ala.Pr.U but it bothers me that I’m already too deep in Canadian resets. Also there was a good opportunity at DUKH but my bid was too greedy so I missed it… and other utes mostly are too expensive now, above the $26 is a level which is unacceptable to me. So the PPX at today’s level (25.70-25.80) generally looks fine to me, will think whether to take this risk or not.

          1. Yuriy, PPX has been a frequent hold of mine since it went past call. Im presently out. In past shortly after exD it would drift down into 25.30s to low 40s and I would load up and sell around $26 usually pre exD. But it really never drifted down much after exD this time. I love buying past call above par issues, but I try to stay sensitive to redemption and risk/reward. I have never got stung with holding the call bag, and hope to continue the streak.

        2. Well, I simply could not stand it, seeing a bid for 200 shares of AILLL at $28.50. So I sold 200 shares to the bidder.

          Wanted to sell more at that price, but now the bid has fallen to $27.90.

          If it falls to the $27.50 level before next XD ( April 10 ) I will buy back for sure.

    5. Although a common stock, Regions Financial Corp (RF), is in my sock drawer–4.0% dividend. But, given an opportunity to collect 2 years of dividends, I sold RF today. History indicates that I will have a chance to buy it back within the next several months and stuff it back into my sock drawer.

  31. question about CTPPO. quantum has it callable at $110 and fido says it’s not callable. i tried tracking down the prospectus for it but couldn’t find it. looks like EAS got bought by iberdrola in 2008.

    1. Woody–I had it callable at 110, BUT this shows otherwise. From 10K filing in 2005–there were just 5,713 shares outstanding which includes 533 shares owned by CMP Group.

      6% Noncallable (2)





      1. thanks tim. that’s kind of the info that i found. just wasn’t sure which
        one was correct. thanks for the great website.

        1. Thanks Woody. That filing specifically said ‘noncallable’ so I assume that is a fact.

          1. You will have to go deep into an annual SEC filing (I think I had to go back a few years, also) to find share count. I could be wrong, but I remember a number closer to 2000 shares. And the preferred would take over the majority board if not paid (which it never has not been). This is a very old preferred. When I was flipping modest amounts of it years ago, I dug pretty hard into the history of it. Its too hard to mess with to get shares much anymore. I would like to be definitive for you but this was a hard one to dig up if memory serves so I am not doing it again.

            1. Grid–I knew you might be familiar with the issue–the 5xxx share count is from a 2005 so not certain if they may have bought some in. When I feel energetic I might deep further.

              1. Tim, Im usually pretty sure on these things as I researched them all. But here I put the warning bells out as I am suffering from a 75 year old brain trapped in a 55 year old body. So my memory could be incorrect without verifying. But people “chasing these types” need to be aware of a few things. Even if some are snagged it is a Pyrrhic victory if paying too much. As these have high bid spreads. To put it in perspective…In past TWO YEARS CTPPO has traded 30 different times…Total amount of shares traded from those transactions? 213 shares give or take one or two shares. 17 of those 30 transactions would have netted you a one share purchase. Only one of those transactions would have netted you more than 23 shares, and it wasnt even 50. So one has to keep that in mind. I bagged a 100 shares a few times but both were years ago.

  32. TIm;

    I appreciate the tip on the AATRL! Just purchased a small position myself at the same price of $48.10. I would not have known about this one without your assistance.

    Thank you.
    Mike Havel!

    1. Great–I do have to correct my research on this as is in not redeemable at $50–they can end the trust and call in the shares if they do, but there is no mention of the $50 in the prospectus (although that is kind of assumed–but they word it more like–they can liquidate the trust and distribute the proceeds, without a $50 mention).

  33. I bought a small position for the sock drawer of the Affiliated Manager 5.15% convertible Trust Preferred (AATRL) this morning for 48.10. This issue is callable now at $50 (it is a $50 issue). It is in the drawer now and won’t see the light of day for years I hope.

    1. Do you mind showing me where in the prospectus is says it can be called at $50? The only info I could find is:

      AMG may elect to redeem the junior subordinated convertible debentures prior to maturity, without payment of premium, for 100% of the principal amount plus accrued and unpaid interest and other amounts to the date of redemption:

      • in whole at any time or in part from time to time on or after October 15, 2012 if the closing price of AMG common stock for 20 trading days in a period of 30 consecutive trading days ending on the trading day prior to the mailing of the redemption notice exceeds 130% of the then prevailing conversion price of the trust preferred securities; or

      • in whole, but not in part, at any time following certain specified events relating to a change in the investment company or tax laws that adversely affects the status of the trust, the trust preferred securities or the junior subordinated convertible debentures.

      1. As I understand it, this is a broken convert. No chance of a call since the call price is so far away. It does mature in 2037.

        1. Thats right RetiredBroker. I like ‘date certain’ issues if the date isn’t too far out–like some that at 2102 etc.

      2. Hi Landlord–Redemption of Trust Preferred Securities

        The trust will redeem all of the outstanding trust preferred securities when the junior subordinated convertible debentures are paid at maturity on October 15, 2037. In addition, if AMG redeems any junior subordinated convertible debentures before their maturity, the trust will use the cash it receives on the redemption of the junior subordinated convertible debentures to redeem, on a pro rata basis, trust preferred securities and (unless there is a debenture event of default) common securities having an aggregate liquidation amount equal to the aggregate principal amount of the junior subordinated convertible debentures redeemed.

        1. Tim – but the junior subordinated convertible debentures have the same terms as the trust preferred and I don’t remember seeing any callability other than at the stated maturity… The trust does have the ability to liquidate the trust and then distribute the debentures to the shareholders, but I’m not quite certain how that could negatively impact AATRL holders because you’ve bot the trust relying solely on the quality of the debenture in the first place.. AATRL shareholder should be indifferent to owning the preferred or the underlying debenture and might in fact ever prefer to own it outright, wouldn’t he?

          1. 2WR–I am going to have to do some deeper digging–you and Landlord could be correct–which wouldn’t change my opinion, but would be nice to know for certain.

            1. Tim – As I remember the only true callability factor on AATRL had to do with circumstances having to do with trading level of the common where they could force a call if shares were trading above convert price for x number of days… AS this is a broken issue from that point of view, I’m viewing it as non callable… would love your set of eyes taking another look as well…

              1. Yeah. AATRL would have to trade at/above $260/share for 20 consecutive days in a 30 day period. At $80/share now, it has a long way to go from a few years ago where it was at $200/share.

                As long as AMG can pay its interest on the junior subordinated convertible debentures, this will be fine. A quick look at the books and I come up with 8 x interest coverage.

        2. Thanks, Tim. So it sounds like it matures at $50 but we’re protected from a redemption until the maturity date unless one of the events triggers (like a tax law change). So, even if this went to $55, you would calculate the desirability of AATRL based on YTM with a 2037 maturity date. You don’t need to worry about YTC.

          It was unclear to me if this was a broken convertible like RLJ-A/WFC-L/BAC-L but it sounds like it mainly is with the exception that it’s not perpetual and will eventually mature at par in 2037.

          I think the uncallable feature and long maturity date make it a reasonable hedge to floating preferreds or Canadian resets.

          1. Falls Church–yes with a current yield in the 5.4% area and a pretty good credit rating I’m not sure you can do much better–right now. 2whiteroses and Landlord Investor opined they didn’t think it was redeemable early–my first glance said it was, but they may well be correct–I am going to dig a bit deeper.

            1. Oops, auto-filled my handle from another website. That was Landlord Investor writing, not Falls Church (or rather, we’re one and the same)! Thanks, Tim for looking into this. Would definitely appreciate your opinion on callability.

            2. I fully agree with you, Tim. This is the best on the board right now at 5.4% and 4.5 – 5% under Par.

    2. Tim, did you trade this through fido ? i use fido and they don’t allow
      trading with that ticker. Thanks

  34. Along the lines of the Gabelli callables noted below, what do folks think of the WFC callables, O, N and P series? 30+ bps more yield than WFC-Z, 20+ bps over WFC-L and very unlikely to be called unless rates go lower without spreads rising.

    1. Surely better than WFC-Z with lower yield. I’m never afraid of calls at stripped par, just buy something else if called.
      Wells Fargo has had some problems and scandals lately, spooking some investors.Is that the reason for the price drops? As long as they are too big to fail it’s probably no big deal.

      1. Well, it’s not quite at stripped par. Around 20 cents above that level. When there’s call risk, you always have to ask yourself whether 20 cents is worth the risk to earn an extra 2 cents per quarter over WFC-Z. However, it really seems like a call is 99% unlikely unless we start seeing banks issue preferreds below 4.5%. The thing is, even if the 10 year went down another 25-50 bps, it’s not necessary that preferred yields will follow suite. If spreads increase, then yields could remain the same or even go up.

        Hard to imagine that WFC would be able to issue preferreds below 4.5% if the yield curve is deeply inverted.

        To make a call even less likely, I think WFC-N is your best buy. The P series is a buffer as it has a 5 bps higher coupon and would be called first. Double calls are extremely rare. You could go one level safer on call risk and go with the O series. Then WFC would need to make a simultaneous call of three series of preferreds for you to get hit with a call. Probably never happened in the long history of preferreds.

  35. RILYZ @ 25.20 for 5% YTC in 4 months. Too risky to be considered sock drawer?

    GAB-G, GAB-H, GGN-B. Solid 5%. Price is vulnerable to rising interest rates.

    1. Martin G–I know you trade so your risk tolerance is much different from mine, but none of the B Riley issues would go in my sock drawer–but I do have some of the Gabelli’s there–but now in smaller quantities as I had to let a couple go on outragerously high prices.

    2. I own RILYZ with expectation of call in mind given they called RILYN with same 7.50% coupon on 12/30/19. However, I agree with Tim it’s a little too dicey to be a sock drawer candidate. Also, I’m beginning to rethink the call possibility. When you look at where every series of RILY preferreds is trading you begin to wonder about whether the level RILY could actually refinance or issue another series of notes would be good enough to be economical… Even the RILYP perp preferred’s level doesn’t give them much incentive to refinance RILYZ. So given RILYZ’s stated 2027 maturity, I’m beginning to think there’s a good possibility that RILY might enjoy the relatively longer maturity of RILYZ more than they’d relish retiring the coupon. With that in mind, I’m beginning to think they will more likely leave RILYZ outstanding at first call OR they may combine a refinancing of both RILYZ and RILYH at that 5/31/20 time but be more incentivized to call RILYH than RILYZ for purposes of extending their debt maturity structure… Were it not for RILYH being outstanding with same initial call date, I would bet RILYZ lasts beyond the first call… On the plus side, though RILYZ already offers the best YTM of any of the series but RILYH offers a much better YTC for the same 5/31/2020 call date than RILYZ.

      1. Yes, they called RILYL with the same coupon but not until over a year after it became callable and less than 12 months before its maturity date. It’s just not prudent to get too close to a maturity date before rolling a bond if you’re a high yield issuer. So, the question is if the driving factor in the RILYL redemption was the ability to refi at a 100 bps lower rate or the approaching maturity. If it is the latter, it could be years before Z is called.

        I prefer G as we get a chance to see what happens with Z first. As long as Z is outstanding, there’s a buffer against a call of G (plus G is not callable until the end of the year).

        The RILY bonds are safer than they appear due to their high coupons. It’s kind of like being in a higher tranche in a CLO. The lower coupon RILY bonds/preferreds would have to go seriously below par before RILYG/Z would have a fair market value of below par.

        1. Landlord – You’ll pay up 30 basis points on RILYG vs RILYZ on a YTM basis? You and I are sort of agreeing on why Z may stay outstanding longer than the first call, yet you’ll pay up for G… I don’t get it…. and for me, I’m looking for the shorter actual or implies maturities as the ay to play RILY notes – it’s a take it one maturity at a time kind of strategy for me on a credit like this… a relatively conservative approach to some relatively high yield situations. That’s why I’m rethinking Z and wanting to be more balanced between Z and H.

          1. 2WR, I think it depends on the spread between Z and G. At 15 cents, I think I prefer G. G won’t get called for several months at least after Z gets called. Sure, G may drop some initially on the news of a Z call. But my guess it goes right back to where it was a few months later, after people forget about the Z call. That’s when you have a chance to exit G.

            Also, while you give up 30 bps on YTC with G vs. Z, your total return on Z is higher than owning G, getting called on the call date, and reinvesting proceeds in a money market fund until G is called at the end of the year. Who knows, maybe by December the preferreds market has gone down (unthinkable, I know) and RILY’s other bonds are trading with 6.75% yields and it no longer makes sense to call a 7.25% bond early.

            1. LI – But that’s what I’m saying now – that based on current prices of RILY issues today, it doesn’t make much economic sense to call Z now if today was 5/15. Based on current levels, including the perpetual preferreds where do you think RILY could issue a new issue now?? Ooops! Forgive me.. I’m thinking rationally – I lost my mind for a moment and forgot that practically anything can be issued right now for no less than 5.50% LOL.

              1. 2WR, I’d benchmark off of RILYN which is trading near par and yielding 6.43%. If RILY wanted to issue a new baby bond today, I’m guessing the yield would be 6.25-6.5%. If it is 6.5%, I think it makes sense to refi RILYZ but not RILYG (75 bps isn’t really worth it).

                1. LI – N is only a 2026 maturity and I think they’d want to go longer than that in a refi…. It’s RILYH I’m talking about as perhaps the slightly more likely one to be refi’d than RILYZ even if it’s a 1/8 lesser coupon…. If they have to issue in the 7 year range, perhaps you’re right that 6.50% would be ballpark and honestly a refi is what I’m hoping for but I think they’d want to issue a longer maturity and then 6.50% may not be as likely as say 6.75% at best. I realize “hoping for” is counter intuitive, but all I’m really looking to do in this environment is figure out how to beat short term rates with quasi short term investments….In any event, I do think their corporate desire will be to extend their debt load as long as they can with any new refi. Guess we’ll know more only 3 months from now….. i.e. 30 days before 5/31/20. The good thing imho with these issues at these levels is that if I’m wrong, they’re more likely to appreciate in the interrim barring a RILY implosion, so you can win either way.

                  1. 2WR, I take the opposite tack and hope they don’t call it. I want to sit in the zone where a refi is unlikely but the coupon is above market for as long as possible. That’s the zone of highest alpha and provides a margin if safety.

                    I agree they probably call RILYH first but that one has penalties for calling it before 5/31/2022. They probably call a few months after that date. After they call H, then it will be Zs turn and then finally G. This of course assumes no change to their cost of debt capital. If I see RILYN and RILYO break par, I’ll hit the eject button.

                    1. LI – Oh man, I’m getting so sloppy in my old age….. I can’t even read my own notes correctly.. Even though I had it written down correctly regarding call dates and premiums on RILYH, what I last wrote to you assumed that H and Z somehow both were callable at the same 5/31/2020 call date without premium call on H…. Rediscovering that’s not the case naturally has me doing a Rosanne Roseannadanna and saying, “never mind.” That certainly explains why I there’s a huge spread gap between Z and H as to YTW. Your approach is certainly more rational or more recommendable to most people, however I’m hoping Z is experiencing a “pinned to par” phenom because of its near term but not necessarily likely callability without premium and I like that. I just prefer the shorter runway to discovering what might happen on to these kinds of dicier credits in my balliwick. I realize that’s unconventional thinking these days.

    3. I recently started using RILYZ as a “short term” parking spot for some excess cash. 5% YTC. Call is likely, but if not I’m more than happy to hold longer at a $1.88 div. Maybe not quite “sock drawer” but a good fit in one of my buckets.

  36. Can someone please post further information, such as par value, coupon, investment grade, on the Southern Bancshares preferred issues, SBNCM and SBNCN. Quantum does not list and Fidelity provides limited info.

    Also, there is an E series preferred from SBNC (CUSIP 842243404), but no stock symbol. Even less info on this one.


    1. These securities are held primarily by insiders and a few folks on here that have gotten a few shares of SBNCM. They are not covered by any analysts that I have ever seen and hence have no investment ratings.

      SBNCM and SBNCN both pay $0.92/yr. SBNCM does have better “liquidity” I believe.

      The company basically went “dark” in 2006 and delisted the securities. I have been able to find a bit of documentation regarding what led up to the delisting by digging into the SEC Edgar database. This is the most comprehensive document that I can find when they decided to delist:

      and was one of the last things filed with the SEC by the company.

      1. Actually, they only pay $0.90 per year, two quarters of 22 cents and two of 23. I think they didn’t want to deal with half cents. lol

        At any rate, my shares are now more firmly in the vault. No more selling any @ 4.5% yield.

        Not even one. 🙂

    2. That other issue you mention Ken is a total private placement. Here was last quarters financials.
      Actually they say on their website if you want to buy any common or preferreds you need to contact an owner and see if they want to sell. Aint that hilarious?
      I have dug up the details before but had to deep into the 90s and dig around before I first bought in 2018. Im not going there again. Fellow poster Aarod kept some of the link and reposted it not long ago. Maybe go to search box up in corner and type in SBNCM and you may find the link.
      SBNCN is only about 40k shares and insiders own over half. Probably since it was issued. SBNCM has about 250.000 shares, it also has insiders owning.
      The “Holding” family controls the bank. About 6 of them own over half the common float and them and offsprings own a lot of the preferreds too.
      The preferreds were issued in mid 1980s. They originally were a convertible preferred. But that option expired about 25 years ago.

      1. Thanks Gridbird. I appreciate your historical knowledge of these “oddball” issues. Very entertaining.

        1. Ken, I love the oddball issues too, as they are the ones that have the history and usually are safer too. Another useless tidbit about SBNC is the common and preferreds. They cant totally ignore them as they vote also. There are now only about 85,000 common shares. The preferreds get to vote just like the common stock holders do. So though preferreds through a 38 to 1 ratio actually get about 7600 votes. But as mentioned the family has control and also owns a lot of the voting preferreds so they have their flank covered.

    1. Sorry, but ORCC is not something I would keep in my ‘sock drawer’, much less my vault:

      “Owl Rock Capital Corporation is a specialty finance company. The Company is focused on lending to the United States and middle-market companies. The Company invests in senior secured or unsecured loans, subordinated loans or mezzanine loans and, to a lesser extent, equity-related securities including warrants, preferred stock and similar forms of senior equity, which may or may not be convertible into a portfolio Company’s common equity. Its investment objective is to generate current income and, to a lesser extent, capital appreciation by targeting investment opportunities with favorable risk-adjusted returns.”

      JMO 🙂

      1. camroc – I agree – business development company and sock drawer should never appear in the same sentence…. ha

  37. I’m happy to share my list, as I look for others. As Grid said, price is important, but this should provide some context. This is predominately for my parents account, where they’re spending 3.5% so if I can get 4.5%+, with a lot of safety, then I’m happy. I have a tendency to favor things that are busted, old & forgotten, or are trading below LV and have some behavior that I want. All of their assets are in IRAs, so I’m indifferent on QDI (and ignore Canada). Personally, I pretty much only buy IG, QDI above 5.5%, which I see as the break-even on equity over next 5 years.

    WFC/L, BAC/L: bought at higher yields than current, own
    SLMNP: 5.8%, own
    IPWLK: 5.5%, own
    IPWLO: don’t own
    WELPM: still waiting to acquire
    MS/A: Min rate of 4%, Libor + floater, bought at 4.5%, under LV so if it gets called I’m happy, and if rates move up substantially it hedges things listed above. Also have GS/A as well. Very similar. Much more volatile in price, but I like the hedge.
    LXP/C, RLJ/A – own
    NYCB/U – own
    KTBA – don’t own yet

    That’s my list… still looking for more idea. Thanks all.

    1. MrInprohet, you must have bought the same book I did, ha. I have owned all of those at some time. The trouble with many of my sock drawer issues is I will move in and out of them based on where they are trading in relation to each other. So I wont mention them as it can be fluid. So I will only post the few issues I own I will never sell in my sock drawer.
      SBNCM (learned my lesson and got lucky buying them back)
      SOCGP (will never sell, got in a good entry point and love the uncallable feature and always top shelf credit rating)
      CNIGO (love the term dated 9/23 feature)
      CNIGP (Owner optional convertible anytime with 9/2026, par $20.87 mandatory maturity.)
      CNIGP is the most fascinating issue I own. As they quietly changed provisions to owner converting at anytime into 1.2 common shares. It is already conversion positive for me, but Im gonna wait years to maximize the 1.2 factor. A thing of beauty.
      The CEO and Gabelli own 35% of the common float (CEO 18.3%)
      They both together own 53.7% of the small 245,000 CNIGP share float. They have not sold a single share since 2016 origination of the then issuance to shareholders only (they created a trading ticker later). They aint sellin’, I aint sellin’. Combined as a unit CNIG and CNIGP are my biggest holding.
      I forced out a seller at $23.70 for a 100 today, but this was to top off the tank as the others were bought cheaper.
      German has done a heck of job since he took this company over about 15 years ago. Reinstituted the common divi and it has increased 10 straight years.
      Like SBNCM, this tiny public utility is an insider only club. 7 people collectively own 57% of the common float.
      Caution, CNIG and CNIGP are not issues you just decide to buy and then buy. You have to know the terms and proper entry points.

  38. Another illiquid selling today, besides the CL&P issues mentioned in other threads, is PPWLM. It’s uncallable and yields ~4.6% @ the 152 ask. I added more earlier this week. It’s perfect for me. No sweat, no fears, no tears. Just pay me, Warren, while I sleep well.


    1. I’m hoping to grab a few PPWLM as well, but got to be patient.

      One day – maybe – it will come.

      1. I picked up a 100 shares of PPWLM yesterday at around $152. 4.6% for non-callable and that level of quality didn’t seem like a bad bet. We’ll see if this was a good deal or if I should’ve been more patient. In any case, I plan to hold it forever.

        1. I also picked up 200 shares PPWLM at $152. Trying to get more at $151, if anyone wants to sell.

          This one joins the rest of the community in my sock drawer. AILLL, CNTHP, CNPWM, IPWLK, NSARO, APRDM, BAC-L, WFC-L, and FIISO.

            1. Yep, got impatient, since I know that KYN-F is going to be called in a couple weeks, wanted to find a solid and secure replacement for the funds.

              BTW, I sold 100 shares of CNPWM today at $51.50. Made a few cents and lowered cost basis on the rest of my position.

              1. I can here it now, Inspbudget, as I type. Your saying to your wife, “Dinner is on me tonight, but lets keep it under $50”. 🙂

                1. Funny you should say that – we have a new pizza store open in our neighborhood, called Pizza Press. Got good reviews about it, so we’re going there tonight. I’ll be sure and keep the cost at or below 1 share of CNPWM.

                  That leaves me the option of bringing her there another 99 times this year.

          1. Great, Inspy. I was afraid you were gonna mess around and miss PPWLM. Sellers can disappear quickly on these illiquid treasures.


            1. Yep, yep. I am glad I did not wait, and try to squeeze out a few more cents. very likely would not have gotten the PPWLM shares.

              I seem to remember that someone – was it you, or Grid – said that there are only about 15,000 PPWLM shares floating around ? Is this correct ?

                1. I was looking at the shares outstanding the other day before I bought (see below). I didn’t want to screw around with trying to get a slightly better price. At one point, I saw a bid of $151.80 and an ask of $152 which I was amused by. If you like it at $151.80, you should probably just pull the trigger at $152. When Capital One is issuing at 4.8% with a BB S&P rating, 4.6% from a BBB+ non-callable utility seems like a much better option.

                  Schedule Page: 118 Line No.: 24 Column: c
                  Outstanding shares of preferred stock as of December 31, 2018 and declared dividends on preferred stock during the year ended December 31, 2018 were as follows:

                  Shares Dividend
                  6.00% Serial Preferred 5,930 $ 35,580
                  7.00% Serial Preferred 18,046 126,322
                  23,976 $161,902


                    1. Sam, that is an excellent question if one doesnt know. The answer is hell no they arent immune if interest rates rise. I just posted a chart that showed PPWLM had a trade at $114, 7 years ago. In fact based on ones entry point, the perpetual non callables are technically the ones MOST exposed to interest rate rises. And the inverse is also true. They are the ones most protected from interest rate declines.
                      And your question also implies the purpose of why they were bought. Basically most like Camroc and Inspbudget are buying these for protected income streams with some undetermined residual annuity sell value after they are underground and unconcerned at the price they are sold at.
                      Well Camroc doesnt care at all, but Inspy will occasionally whine about a price drop, but he is just whining as he knows what he signed up for, ha.
                      What ones goal of buying basically is conceding a trade off exposed to another problem. Take the recent KYN-F that is just been called. Owning that was a protection of capital with some modest income received. But the risk was at redemption being exposed to trying to reinvest at even lower yields and missing out on capital appreciation of the perpetual noncallables. Every purchase has their risks and rewards depending on what your purpose is.

                    2. Sam – Not sure if those are rhetorical questions but I’ll answer. Prices of noncallables should drop if interest rates go up. I’m buying more for the safety and annuity than the market value.

                      Here’s some other considerations…How many Boomers will be retiring in the coming years? Will they be shifting more of their portfolios from stocks to fixed income? If so, what will all that demand do to interest rates? What if the market only requires a 4% return on this type of investment in the future (then PPWLM should trade around $175)?

                      No one knows what the interest rate environment will be over the next 10-20 years. It probably makes sense to diversify holdings (fixed, floating, fixed to floating, resets) to hedge appropriately so you aren’t making a huge bet either way. For my preferreds, I’m about 75% fixed and the remainder in non-fixed. I think interest rates could stay low for a prolonged period of time but I’m not putting all my eggs in that basket because I very well could be wrong. I also hold a certain amount of cash in case of emergencies and that cash sits in an online savings account earning a floating interest rate. My Marcus savings account was yielding 2.25% a year ago and now it’s 1.7%.

                      If prices fall further on PPWLM down the road, I’ll probably buy more. Getting 4.6% on a portion of my portfolio gets me to my goal.

                  1. Tex, ya got me thinking about the “good old days” ha about preferreds. Here is some comparative pricing of some old illiquids with a ute issued that year. I chose Apr. 2013 as it was one month after IPLDP went to market (and just prior to the Taper Tantrum that rocked preferreds in a beat down manner) and people were appalled with the hideous 5.1% yield and immediately balked. Here we go.. No statement is being made here just reviewing. Not earth shattering results here being illiquids. I remember back in that time period buying PPWLM several times a year and flipping for $10 gains, rinse and repeat. But that was before everyone found the illiquids besides me.
                    April 1, 2013 10 year was 1.76%… Today its 1.51%
                    PPWLM (uncallable) $114 6.14%
                    NEWEN $112 5.35%
                    SOCGP (uncallable) $29.05 5.16%
                    WELPP $84 4.28%
                    IPLDP $23.55 5.41%

                    PPWLM $151.80 4.61%
                    NEWEN $122 4.92%
                    SOCGP $32.40 4.63%
                    WELPP $90.10 4.0%
                    IPLDP $25.46 5.01%

                    1. You know me well, Grid. You know me so well. And BAC-L was $1244.68 on 1 Apr 2013. Even lower when I started buying it a little later.

                      BTW, all this interest in the precious illiquids you so lovingly uncovered is your own damn fault, darlin’, due to your magnanimity and generosity, your sharing spirit.

                      Had you kept all that fine research to yourself, you’d likely still be able to play happily in that field of rarities without much encroachment or competition from us folks in the peanut gallery.

                      But I would be ever so much worse off in my dotage. I can’t even begin to thank you enough for my portfolio’s solid foundation.


                    2. Camroc, thank you for the kind words. But I must confess, I didnt like you at all the past 2019 year for agreeing to sell to you my SBNCM shares despite it being a very then generous offer. But I forgive you now since I was able to buy them back and plus a few additional ones last week finally. All is forgiven, HA!
                      Remember our discussion a few days ago with goofy ways to force some sales on illiquids? I found another trick to snuff out 200 more CNIGP on two different days. I would put an ask at a price and nothing would hit. Then one day right at market close I put a sell out at exact same price I was bidding at (I had closed the bid out before). The ask of course expired, but the next day the exact ask price come up and I then jumped on those. That worked twice. I got the idea from when it happened on same situation with CNIGP at 26.70 when I left an ask expire overnight. Except on that snag, it resulted in a crazy bid that resulted in someone buying 50 shares at $40 immediately after my purchase. So I threw 100 out at $33 and they were bought immediately. Very weird. That was the easiest and quickest $600 bucks I ever made in a few minutes time off a 100 share purchase though.

                    3. Some additional thoughts, the recently issued MET-F (BBB, non-cumulative) closed at 25.58. That yields 4.64% but the YTW is 4.2%.

                      PPWLM (BBB+ and cumulative) doesn’t trade a lot so it can be hard to acquire shares. Over the past couple weeks there has been a lot of volume. Specifically, 1,405 shares moved from 1/28 to 1/30 which represents 7.7% of all shares outstanding. The financials for PacifiCorp note that the company controls the majority of the outstanding preferreds too (“BHE controls substantially all of PacifiCorp’s voting securities, which include both common and preferred stock.”) so it’s hard to tell if and when these will be available at “market” prices again. Yesterday the ask was $184 and no shares moved so the selling may be done for now. In today’s environment, $152 for a 4.6% yield seemed like a fair price to me so I picked some up.

                      Here are some other illiquid utilities that traded Friday for comparison:

                      – AILIO (BBB-) – Shares bought for $100.60 (97.7% of redemption price) and 4.2% yield
                      – UEPEO (BBB-) – Shares bought for $109.99 (99.9% of redemption price) and 4.1% yield
                      – CNPWN (BBB+) – Shares bought for $51.50 (101% of redemption price) and 4.1% yield.
                      – HAWEL (Ba1 – non-investment grade) – Shares bought for $22.70 (108% of redemption price) and 4.4% yield. I tried to save the best for last with this one.

                    4. Tex, Holding companys (or the actual issuing subsidiary company) owning the majority of old non callables is basically a given for the few out there.
                      See most of these were issued by an independent company. When they got acquired typically the preferreds have to give their blessing too. So they would get a tender buy the majority of the float to get the approval. Plus many old preferreds have some very protective covenants. By controlling the float you control the wavering process.
                      Lets use CTPPO as an example. It is non callable but has a float of 2000 shares. The prospectus shows preferreds take over the board if 4 non payments occur. Lets say I own 1001shares ($101,000 par value) and somehow Central Maine or Avangrid got into trouble and didnt pay the preferreds for 4 quarters.
                      Do you think they are going to let a ~ $1 billion in sales subsidiary ute be totally controlled by Gridbird and his $101,000 investment? Hell I would never declare a dividend again, control the entire company myself. Then when Im 80, I would declare all the past dividends the past 25 years and step away. 🙂 But that wont happen because the 2000 float isnt the amount available. The company never retires the preferreds they repurchase, they keep them for ownership control.

                    5. To further Camroc’s post, I add my gratitude & thanks to Grid for introducing me to the mystical world of Illiquid Ute Preferreds several years ago – probably 2015 or 2016, no longer remember.

                      A whole new language appeared out of the fog, that I had to learn quickly. Terms like TRUPS, ring-fenced, underlying bond collateral, Tier 1 capital, and others.

                      I called Grid the Jedi Master of Illiquid Utes, and a well deserved title, for sure.

                      Would have been far better off today if I had just bought everything he mentioned at that time, and hung on thru thick & thin, ignoring the noise of battles near and far.

                    6. Gridbird – Here’s the weekly volume of PPWLM over the past few weeks:

                      – 3,950 for the week of 1/17
                      – 7,748 for the week of 1/24
                      – 1,479 for the week of 1/31

                      In total, that’s 13,117 shares that moved. The week of 1/24 was the heaviest volume week in the past 10 years. We know that 18,046 are outstanding and the company controls the majority. I get curious about what the activity represents. It looks like at least some portion of these were being flipped over the past several weeks. Perhaps some portion is coming out of someone’s estate that is being liquidated for heirs?

                    7. Tex, yes that is an interesting amount of roll over on the float isnt it. PPWLO hasnt followed in kind though I see. One never knows the source, so your guess is as good as any. Logic would lean your way wouldnt it. Im mean whats the odds of a bunch of people with 200 odd share lots all deciding to sell at the same time on one of these types?
                      I havent looked but has there been enough price volatility for any of the shares to be recycled during this stretch?
                      Its hard to tell..Take CNIGO I own. It has about 255k float but less than half that available. But last couple years it really was just a very small amount of shares being recycled over and over. The reason I know is either me or another online friend were either directly buying or selling on one end of the transaction probably 90% plus of all the transactions. So in essence just a few thousand were really rolling around and the rest never were being traded.

  39. An example of esoteric happenings in my vault concerns recent trades in SBNCM.

    Somebody dumped a bunch on 21 Jan @ 15.02 ask, which never changed as a few of us gobbled it up.

    A couple days later, the 15.02 ask was still showing but there were no shares available in level 2. So I put up 100 @ 20 just to change the scenery. It did.

    Then the bid began slowly increasing until it hit 15.56. And on 27 Jan someone bought 25 of mine @ 20. The shares disappeared and the $ hit my account, but I don’t see the transaction anywhere else and there’s no time & sales data for it either, at least not anywhere that I can see.

    So. This is day 2 after my little surprise trade and the transaction is not showing up anywhere.

    Grid tells me this is not that unusual and that it might take a while to show publicly. Then he posted some of the arcane tactics he’s had to use to shake these illiquid things free without a tree falling on him. Wow.

    Anyway, that’s a recent tale from my vault. I’m still waiting and trying very hard to learn patience and caution with these delicacies because they do seem to fit my timeline and personality to a T.


    1. I believe internalized transactions don’t have to be reported to the tape. So if the buyer & seller are at the same brokerage and the brokerage can internally match shares, the beneficial owner doesn’t change so it doesn’t get reported.

      1. Tim. The fruit isnt always there. And it doesnt always work either. Remember they usually are illiquid for a reason. Either a very low available trade float, or nobody is willing to sell. The SBNCM was just a gift laying there for everyone to see. I bought 800 plus on the beach of Mexico and remembered Camroc was wanting some so I messaged him. By the time I waited I was only able to get 200 more. Fortunately he got his. I sold some to him over a year ago in a “private placed transaction” and regretted it ever since, ha. So I was pleased to get more this time than I originally had.

      2. It was a different stock and different circumstances, Tim. I think he posted about his tactics on another thread here, but I haven’t figured out how to find all of anyone’s posts here. I’m not sure you can on this site’s configuration.


    1. SDMarc–issued so long ago I think they have forgotten it–or maybe as sometimes happens an insider owns a huge chunk of it so they don’t want it disturbed. Honestly they could call it tomorrow if they wanted.

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