As I mentioned previously on Monday I lightened up on a number of preferreds and baby bonds that I held–primarily higher quality issues. I did not sell the entirety of any holding. Those I sold are—
Tricontinental $2.50 (5%) perpetual (TY-)
Rivernorth Opportunities Fund 6% perpetual (RIV-A)
WR Berkley 5.70% baby bonds (WRB-E)
Federal Agricultural Mortgage 5.75% perpetual (AGM-E)
Note that a few issues were sock drawer issues and certainly they are extremely safe, but in the interest of preserving capital lightened up on on them a bit.
I put some of the proceeds from these sales in this very short duration security.
Trinity 7% baby bonds (TRINL) @ $25.15. Will mature on 1/16/2025. Obviously this is just getting a little extra interest versus CDs or money markets.
We’ll see how markets (in particular interest rates) shake out in the next week or two.
I went to about 20% cash today. I was pretty much all in and trimmed back mostly on things that weren’t issuing qualified dividends or where not all the dividend was qualified, as for me I need about a 7.6% non qualified dividend to equal a 6% qualified dividend. Also I wanted to lock in some of the capital gains in case long term yields do continue to rise.
I guess the cash will just go into treasuries or other short term instruments for now.
Late last week I reduced my exposure to baby bonds and preferred stocks to zero. I put the proceeds into six month T-bills. With 23 year Treasury Bonds currently yielding 4.65%, I simply think preferred stocks and baby bonds are overpriced. I still own a lot of utility stocks and PTPs because there is hopefully some protection from inflation.
TIM; Iam somewhat surprised that you are selling AGM+E. I don’t mind telling everyone that I own a boatload + of that issue. I have spoken to “Jalpa, I R MGR) numerous times over the last few years including just a week ago and she asures me that everything if fine and rock solid. Its around $23.90 today so represents a “Great Yield” to the call in July of 2025.
You probably know this, but July 2025 is a “1st call”, not a maturity for AGM-E. Do we have reason to think it will get called at that time? Based solely on the coupon, I wouldn’t think it would get called, but I see they called AGM-C, but it was fixed/float. AGM-F looks interesting as well.
Wow, Tim got rid of some TY- , the essence of Sock Drawer?!? 😉
Seriously, we appreciate your updates, as always.
Yes Dave–I kept some as well–think I have owned some level of this for a decade.
TY- is pretty invulnerable to credit risk, but as vulnerable if not more related to interest risk because its somewhat illiquid.
legend.vs–exactly correct–in both ways. Extreme safety, but can move a buck or two in a day sometimes.
Tim have you considered MGR as a sell? Call is out quite aways and maybe it will offer a good entry point if it falls.
Charles—yes I have–it is on the list of possibilities. I didn’t want to ‘knee jerk’ a bunch of sales because I can’t utilize the proceeds well right now.
Tim you finally motivated me and I looked at what I was holding in different accounts. Past couple months I was listening to the noise and trying to buy a couple issues that were solid but in the 6.5 to 6.8 range and I was getting partial fills. I also realized I might have been buying at a peak price.
I started by putting in good to sell orders on the odd lots
Also what concerns me is Fido kept popping up warnings like my order exceeded the average daily sales and another one was something like I was outside the asking price limit. This was one I was 9 cents over the closing price!!
If this is happening in what I consider a normal market I can imagine what could happen in a market panic.
Maybe just my imagination but is something going on behind the scenes I don’t know about? Strange that several people have been having to break up orders into multiple lots to sell
I can say that I have had to break up orders on multiple occasions with Fidelity and have also run into some of the errors you note here.
The no margin on the preferreds is kind of annoying. Schwab gives margin on some issues of the Eversource if I remember correctly .
YH, I sold about 1/2 my holding of BHFAM yesterday for approx. $2.00 capital gains and put 1/2 the profits in TRINI and kept the rest in SPAXX