There remains many solid buys available for those still looking to get into many baby bonds or perpetual preferreds. Certainly they are not as great as they were a few weeks or months ago, but some remain pretty darned good.
Here is a list of some of what I was buying near the lows (mostly maybe a dollar off the lows)–many of these I have mentioned in the past couple months. These are just some of the higher quality issues and this is not a complete list. Some of them remain great deals (of course this is in the eyes of the beholder) and I have added to positions many times. I have 19% cash remaining and use any setbacks to finish getting most of this deployed.
Of course this list is not a recommendation to buy–just what I have bought and we all know that every single 1 of us is different in terms of age, risk tolerance and resources available. For me anything investment grade over 5.5% is reasonable to buy–it isn’t the 6% one could garner at the lows of course. It should go without saying that interest rates higher than ‘expectations’ could drive prices down once again.
American International Group 5.85% perpetual preferred (AIG-A) which is now trading at $26.18. I am no longer buying this issue as the price has risen to a point where the YTC is pretty meager. This had traded as low as the $23.75 area in late May–a super bargain at that time.
Assurant Inc 5.25% baby bonds (AIZN) which are just below investment grade. Traded as low as $21/share in May and now at $23.85. Current yield in the 5.53% area.
Athene Holdings 4.875% perpetual preferred (ATH-D). Investment grade and traded as low as $17.50 and now at $21.26 now with a current yield of 5.73% .
Brighthouse Financial 6.75% perpetual preferred (BHFAO). Investment grade and traded as low as $23.50 area in June–now at $26.00
CMS Energy 4.20% perpetual (CMS-C). Investment grade and traded as low as the $17.25 area–now at $20.58.
Equitable Holdings 5.25% perpetual (EQH-A). Investment grade and traded as low as $20 and now at $23.45.
Liberty Broadband 7.0% (LDRDP) Redeemable preferred. To be redeemed in 2039. Traded as low as $25.50 and now at $26.23. I added to a previous position a number of times.
RiverNorth Opportunities Fund 6% perpetual (RIV-A). Investment grade and traded as low as the $23.25 area. Added to a position that I bought at the IPO of this newer issue. Now trading at $24.98.
RiverNorth/Doubleline Strategic Opportunities Fund 4.75% perpetual (OPP-B). Investment grade and traded as low as the $19.50 area and now at $21.37 for a current yield of 5.62%–excellent current yield for a A1 issue and one of the best issues out there is terms of safety (of course it could move lower).
In addition to the above I have been buying preferreds (and term preferreds) and baby bonds in the following–
Apollo Global, Saratoga Investment, Enstar, SiriusPoint, Prospect Capital, Arbor Realty, Ready Capital, Priority Income Fund, RiverNorth Specialty Fund, Hennessy Advisors, Oxford Lane, OFS Capital, Eagle Point Credit, UMH and XAI Octagon.
I have sold virtually nothing in the last number of months although most of the investment grade buys are very green.
Tim- I’m wondering about the CMS-A on your list. QOnline shows it was called in 2013
Did you mean CMSA? a BB, but never got as low as you state for CMS-A.
thx
Thanks Gary–it should be CMS-C.
https://innovativeincomeinvestor.com/security/cms-energy-corporataion-4-0-cumulative-redeemable-preferred-stock-series-c/
Tim, where would you rate the ARGO preferred and baby bond?
Hi furcal–the baby bonds are investment grade (the preferreds a couple notches under) so no doubt decent–BUT they are small (under a billion in market cap) and I shied away from them thus far because they are a ‘specialty insurer’ and I got burned by Atlas Financial who was a specialty insurer (and obviously poorly run). The last year was rough on them (ARGO). Since they have been around since 1957 I guess they are probably well run (more checking needed).
The common shares have really been hammered in the last 12 months–around $23/share down from a high of around $60—ouch.
Thanks for bringing this up–those baby bonds with a current yield of 6.96%–going to take a deeper look at them for a potential nibble.
Tim,
This list – showing current prices and prices a few weeks ago – is an excellent guide of what the prices could drop to if there is again an interest rate scare, so that buying now , say BHFAO, at $26, one should be prepared to see it drop to $23 if the “exhuberant optimism” under current inflationary conditions fades back to reality.
Personally, I prefer to wait and buy later, hopefully not much higher than $26.
But everyone’s situation is different, so what do I know?
dd–I agree that it shows where things could go if interest rates get too far out of control. Some of these issues I have bought 4-5 times to help even out my average cost–and could buy again at more favorable levels.
Tim,
Thanks so much for the list. I had a little cash left in my IRA to invest and I researched all on the list. Many good ones to choose from. For my age and goals, RIV-A came out on top and I was able to buy it today at $24.85, made my day 🙂
Bill S -a very solid issues, but it will move around if interest rates get out of control higher–in which case I would buy more–rated A1 by Moodys
Thank you for sharing your watch list.
Suncitybill1—stuff I had bought–SOME I will buy more–but a pricing setback would present better buying opportunities.
TIM-
Thanks for a great watch list !
Again, the best site on the internet.
You’re welcome Gary