JPMorgan Prive Bank has published an article with their thoughts on investing in preferred stocks right now which I though might be of interest.
Users who liked this:
Some Thoughts on Preferred Stocks From JPM Private Bank
POWELL: THERE IS AN ARGUMENT THAT PAYROLLS MAY BE A BIT OVERSTATED
Is it still a conspiracy theory if Powell says it?
****YAWN***….Until it’s not! Economists continue to warn about CRE exposure w regionals.
“JPMorgan Prive Bank has published an article with their thoughts on investing in preferred stocks right now”
It’s sometimes useful to repeat the obvious:
Are these really their thoughts , or is this an article saying ‘Buy, buy, buy!’ published by a company which makes money – or at least their associates do – every time and every way a reader buys?
Thanks.
D.
They don’t need to pump them in order to promote final sales to customers….they want to originate more and are talking up the space so they can do more new business spinning out primary offerings
If you Prefer, my thoughts exactly. Any hint of rates going lower is going to create 2 events.
There are a lot of companies needing new money and a lot of companies with debt coming due that are desperate to continue the game of rolling over debt even if it’s at higher rates.
Investors worried rates are going down and wanting to lock in higher returns now.
A match made in JPM heaven. We are going to see a rush to market. As they say in the Last Crusade, ” Choose Wisely”
Wonder when our 2T annual budget deficits & 1T interest payments on US debt will catch up & push rates on all fixed income products to the sky?
It’s good to remember that there are other issues that banks might have problems with, such as consumer credit card debt and car loans. I think Ally is one to keep that in mind.
Nice chart of banks with CRE exposure.
Tim, I’d say the article serves as a bit of a wake up call to investors. There are opportunities in this space.
I rarely see anything written about EQC, the Sam Zell company, in the financial press. It’s a lifeless company that happened to sell 90% of their commercial real estate portfolio over 5 years ago, at the highs. Their preferred EQC-D is still trading and while it’s rated here as a C for dividend safety, I’d rate it an A. They have no debt, 2 properties left and $2 bil in cash. Why they haven’t retired the small float of the preferred is anyone’s guess but at 6.5% it is a good place for short term money. I’d expect them to call it at some point in the next couple of years
Good info Dave F. I will have to take a closer look at it.
If memory serves that EQC-D didn’t even flinch during the past fall 2023 yield hysteria tank.
During the fall 2022 yield hysteria tank part 1, EQC-D was trading $31 handle and again didn’t move.
Is it a busted convertible? It’s not qdi.
REIT preferreds are not QDI.
I was late in buying SPNT-B. Thanks to Tim, this one seems still good. Sold one mutual fund (ran by some 5 not smart old men, who collectively insist to avoid energy issues; their go go fund is also bad; high risk, cannot beat SPX). Bought also by mistake DX=C, fake floating just lke the low coupon of Morgan Stanley preferred. Market does not know, so, it is highly sought. I just picked up some ATHS, bond like, in my IRA account. Thanks to Gridbird, loaded BANFP to replace NuStar positions. ATHS, as opined by one of the viewers of this website is good, interest X date coming soon, picked up 289 shares a few minutes ago at $25.80. I have ATH-E perpetual but well loved these days.
John-
What is fake floating about DX-C ( 4/14/25) ?
DX-C are supposedly to pay 3 month of Three-Month LIBOR plus 5.461% per annum per QOL.com. FIDO website clearly shows that, it dividend rate did not seem to trigger the floating. Same can be said on MS-I.
We should give QOL.com on MS-I. It says with crosscut, at a floating annual rate equal to the three-month LIBOR plus 3.708% . Sorry I cannot simulate the crossout here. Basically, buyers beware. It is clear that SEC favors the big guys in Wall Street, not small investors. As we can see, MS-I despite it is actually a fixed rate, below most of the other ones, enjoy the premium because most people AssUme that the rate is floating. LOL.
Sorry, JohnKC but I’m not following you…DX-C doesn’t turn into a floater until 4/15/25, not 2024, so why should “its dividend rate [for 4/15/24 I imagine] trigger the floating rate that’s not going to happen in the next quarter? MS clearly stated what was to happen to its F/F MS-I, long before it was scheduled to float…. It was the exception along with a few other issuers, who felt that their specific language did not allow them to transition to SOFR… Has DX done the same anywhere? I did try to find a statement by them quickly and failed. Have they said anything specifically?
Thanks for the correction. I was not aware of the nuances of MS-I. Nonetheless, the yield of MS-I was disappointing. I suppose the presumed safety of MS, most of the time, trading above par.
You are posting bad information DX-C does NOT float until 4-15-25
pretty much busted. The dal with the company is it’s pretty much moth-balled at this point. They liquidated assets at the top and are probably not going to buy anything unless they get a tremendous deal. The common trades at a discount to cash per share…the preferred is very low risk when at a discount to $25
I have a nice chunk of EQC-D; they will either wind up the company(redeem at 25) or bring the $2bil+ cash, last few buildings and possibly the pfd w/o redemption to another REIT opportunity. They tried when Sam was alive to get Monmouth the industrial REIT but did not succeed. Pandemic quashed selling the last few ofc buildings. Guess we’ll see what happens. Plenty on SA on this topic, I use to juice cash returns as Dave notes. Bea
it’s a convertible bond and can’t be redeemed.
The C-Suite has said that they will liquidate if they can’t figure out an investment opportunity by the end of this year (liquidation in first half 2025).
At that point shareholders will be asked to vote to liquidate and they will then close biz.
Preferred should be redeemed at full face value + dividend outstanding.