It has been months since I have felt truly motivated to be buying preferreds and/or baby bonds. It is so darned easy to simply keep rolling 5.3% CDs, but just maybe I need to go ahead and lock down more 7-8% short maturity term preferreds and or baby bonds. Each day that passes means I have foregone incremental dividends or interest or about 2-2.5% annually. Do I increase my overall risk? I probably not only increase my risk, but move the portfolio into the position of being more volatility. As I think about the risk/reward I still can’t convince myself to go ‘all in’ to preferreds/baby bonds, but I can and have convinced myself to go ahead and restart some nibbling–either adding to current term preferreds or to baby bonds with maturities in the next 3-5 years. While these issues will certainly carry more risk than CDs share price movement will be minimized with the short dated maturities.
So today markets look very quiet–it would be typical for markets (both equity and interest rates) to be quiet on the eve of important economic news–we have CPI tomorrow and PPI today. The 10 year treasury is trading at 4.48%–pretty much not changed since last week, BUT tomorrow there is plenty of ‘tension’ in markets for really big movements. Talk of a interest ‘rate cut’ went away for a few weeks and then last week with softer employment numbers the talking heads starting making predictions again on 2 rate cuts yet this year—1 piece of data and they are convinced of rate cuts. Tomorrow will be added data – we’ll see where it takes us.
Yesterday I posted a link to a You Tube video of Tom Majewski who is founder and CEO of Eagle Point Credit Company (ECC) and Eagle Point Income (EIC) explaining, in depth, collateralized loan obligations (CLOs). While it is a very long video (over 1 hour) it helped me to understand with more depth the processes of a CLO. Certainly Tom was ‘talking his book’, but he seems like a genuine and very intelligent person. The video is here.
My best purchase lately has been a Genband G2500 ATM machine I slapped into our business location. A 2500 dollar purchase has been earning me 1.75-5.00 dollars per day in earnings 😉
I am making about 40% on that money per year if I do the estimate for the full year. Now if I could only find a couple dozen more locations with little to no effort :-/
added to my BFS D and E today, even insiders are buying the pfds in small lots!! http://www.openinsider.com/screener?s=bfs&o=&pl=&ph=&ll=&lh=&fd=730&fdr=&td=0&tdr=&fdlyl=&fdlyh=&daysago=&xp=1&xs=1&vl=&vh=&ocl=&och=&sic1=-1&sicl=100&sich=9999&grp=0&nfl=&nfh=&nil=&nih=&nol=&noh=&v2l=&v2h=&oc2l=&oc2h=&sortcol=0&cnt=100&page=1
Interesting website Bea, says not secure though. Looks like they are as big of buyers as you and me lol
I find it better than Insider Monkey w no ads and fluff/ and w all my cyber protection haven’t had an issue..just gives me a feel for the trades which are not a major portion of my decisions but ‘help’ ..yes BFS is a family type bunch like AHH and others I think the pfds are partially penalized for its office but they are all leased up pretty much. 2%ish over cash is good for some allocation I guess. good luck to us…
Insider Monkey is more ‘secure’ w similar info and other stuff if desired. Free for now I guess. https://www.insidermonkey.com/insider-trading/company/saul%20centers%20inc/907254/
Issues mentioned here SR-A O- WFC-L are over 6% reasonably safe and Qualified dividends, Better than CDs in my opinion. Several others too. Maybe VICI or WPC, not qualified but more likely to inch divvy up than cut it. Regional banks paying 7-10% though there are mixed opinions on whether that crisis is over. I don’t get the hate for REIT preferreds in the 8-11% range especially the larger ones with low default rates and good trading opps.
@Martin – yup, I own both AND I own CDs. Just spreading around the yield and risk as best I can. CDs are in tax-deferred accounts mainly, so qualified divvy doesn’t matter there. I use that feature (as well as treasuries) in my taxable accounts.
Yazzer, I own 13% YTM all the way down to lowly 5% CDs and IBonds. Its never an either or situation in my opinion. The first job is determining one’s asset allocation one wants to have (credit quality, duration, guaranteed interest, etc. etc. ) and then plugging in appropriate said issues that fit ones personal objective. So I really dont determine if a perpetual is a better deal than a CD, as they arent in the same income subset class to compare too. But I do definitely own both types. I am just in a limit zone now. For example I allocate a top limit of 25% in QDI perpetual fixed issues. And like DaddyDollars opined I like getting these well under par if I can. But I have to trade off though to stay under my limits. For example CNTHO had a nice spill off yesterday and I snagged some. But then I had to sell some off with lower yields to keep under my limit. At some point I will lift the limit, but not ready to yet. I can afford to wait and be comfortable knowing I may miss out on some gains.
I’m the opppsite. CD’s belong in taxable accounts where they can just sit there. My taxfree accounts have aggressive dividends and are highly tradeable.
PPI came in higher than expected and Powell today said going to keep rates the same for even longer than anyone thought……so I don’t see the reason to rush and lock anything in. However, the global recession is always out there waiting to strike, which always brings us back to 0%. Why not lock in as much as you can for duration while you got the chance.
With the debt we have I doubt we will go back to Zero. Issuing more debt, who is going buy it to finance America’s spending at lower rates?
Looking at ECC quarterly report. Good distribution yield but you are getting paid for the risk. Over 50% of the loans are B to B minus. I am new to CLO’s and trying to understand the product better. Also, looks like ECC drops when the market is volatile. Like the video.
NuStar C (11.78%) trading under par at 24.92 for the first time in a while. I just picked up a grundle. Thought the Aquisition was supposed to close early may so was surprised to see this trade under 25 even with the dividend having just been paid today.
Anyone have an update as to when that acquisition closes?
They’re supposed to be called June 3 (or May 31, I found the announcement confusing)
Dan and Irish,
I found the press release confusing too.
The final FULL dividend pay date is May 31st.
The redemption date is June 3rd:
“DALLAS, May 3, 2024 /PRNewswire/ — Sunoco LP (NYSE: SUN) (“SUN” or the “Partnership”) today announced that, on June 3, 2024 (the “Redemption Date”), (a) SUN will purchase all outstanding units of …”
Since the redemption is 3 days after the final full dividend’s pay date, it made me wonder if holders were going to get a partial div for 3 days.
The May 3rd press release mentioned accrued interest for NSS but nothing about any accrued div for NS-A, -B and -C, so I asked Sunoco’s IR.
They replied:
Hi Michael,
The three days specified will be included in the payment to preferred unitholders, the payment just has to be made before the units are redeemed.
Thanks,
Christina
So for the preferreds, the redemption price is $25 plus 3 days of accrued div.
This was very helpful MBG.
Happy to earn 11.78% on this issue even if for just half a month. Was surprised to see it trade under $25.
Dan,
IIRC, today was the ex-date, so whoever owned the issue at market open today gets the dividend that is payable May 31 (which covers through that date).
If that is correct, and you buy today (or anytime before June 3) and hold through redemption, all you get is $25 + 3 days dividend, not half a month.
That is why it is trading below $25 – it has to “earn” its way back to $25 by May 31.
Dan and Private, just to be clear.
I was wrong about which shares will get the 3 days of accrued dividend. They’re going to the May 15th record date holders, not to any of the shares bought on or after May 14th. Anyone who bought shares beginning May 14th will get only the $25.00 per share, not $25.00 + 3 days accrued dividend.
Those 3 days are part of the final dividend that go to the May 15 record date holders (i.e., those who held the shares at the close on May 13).
This morning, Sunoco verified this:
Good morning, Christina.
Yesterday was the ex-date (May 14) for the NuStar preferred stocks’ final full quarterly dividends.
Yesterday I purchased additional shares of NS-B. I know those new shares are not entitled to that final quarterly dividend.
Are they, however, entitled to the 3 days of dividend that will accrue (May 31st through June 2nd) before they get redeemed?
In other words, what is the record date for this partial dividend?
Hi Michael,
Just to clarify, the dividend paid May 31st will include the three days from the 31st to the 2nd, there is no additional partial dividend.
I rolled a chunk that matured yesterday from a 5.4% treasury to the 5.50% JPM CD maturing 5/20/25…callable 11/24. Hot PPI is the canary in the coal mine? Maybe? We’ll see what happens with the CPI…but I’m willing to take 5.5% for 6 months to a year here.
Taking the pulse of the group here or in my case the temperature, I still feel like the people here want to do the same Tim and move forward with buying something but the talk here has been subdued about what that might be.
Seems like talk has been about higher risk plays like the CCLD preferred or what the Reddit crowd is doing or the BXSL short term notes being offered for 5-7/8% due 2027 which still doesn’t seem enough reward for the risk.
I look to look at the shape of the yield curve and duration. When the curve is this flat, and odds still favor Fed cuts over raises eventually, I think a duration around 3 years makes sense. So I buy maturities in that 3-5 year range.
I think ATHS the 7.25% coupon not callable almost 5 years and floats after is a decent buy here almost at par if taxable is ok.
Adding some to BHFAP and BHFAM paying over 7% seems good too depending on your rates higher for longer view
If you like 7% and want a proven veteran that made it through preferred Covid rout without even coming close to sniffing par. And during GFC just briefly went under $23 while many bank preferreds crashed down to $6-$7 a share, you may want to look at BANFP. A little liquidity past couple days has provided a decent opportunity to buy now. Past call since 2009 anchors it, along with grandfathered Tier 1 capital debt status, while it matures in 2034 from a very solid bank.
For some reason BANFP won’t pull up on Schwab.
Dan
try the old, reliable research tool (from before they started “re-imagining” it to be useless).
https://client.schwab.com/secure/cc/research/stocks/stocks.html?path=/Research/Client/Stocks/Overview/
Im still playing around with Schwab. But I bought BANFP on Schwab, but through their regular interface. I keep screens on the ToS but I never have traded on it, for whatever reason that is unbeknownst to me.
Schwab price for my AILLO shares is $6.75. lol
Can you spell Roth Conversion!!!!?
Pig, who did you make mad over there that is trying to seek their revenge on you? All of mine transferred with the correct price. Unfortunately I have no regular IRA or 401k to exploit like you do.
Schwab sometimes struggles with decimal points.
I have a couple of issues that show a per share price of $25xx , but the total value is correct ($25.xx). I had them price a couple of things several years ago with the decimal moved the other way, but they fixed it after a phone call.
Private, good info, thx. You think it will correct itself? Trying to avoid a phone call.
Grid, crazy times!!!! Despite a few hiccups, I’m pretty happy with what I see at Schwab. Most functions seem intuitive, they have a decent interface. Dare I say happy despite the sudden 10k loss on AILLO, lol.
Pig, you definitely stay on top of things better than me. I noticed this morning I had more money in my tax cash account today. I looked and saw it was labeled “internal cash transfer”. Evidently something left over from TD I was unaware of or some left over interest/dividend payment. So maybe your CD monies switched over to your account today.
Grid, it looks like they are still reporting anything that hits the ghost TDA account, then again the daily transfer into the Schwab with those same monies. My pea brain took awhile to figure it out. Probably will be a month or a bit longer to clear out everything from TDA (for me) as some dividends from securities that hit their ex-date as a TDA account holder work their way out. I play alot of small ball, so many positions.
I usually give schwab a day or two for obvious things to clear themselves. often works, but if not, then I have to call and wake them up.
Issue did clear up this morning on its own.
Just bought some at Schwab for 25.38. Thank you!
That worked – thank you Private! I just rolled over from AMTD, pretty happy with Schwab so far.
Dan,
I sometimes have this happen with Schwab as well on their website platform. Sometimes (not always), if I enter the issuing company (BANF) under Research/Stocks, the resulting company information often includes an embedded ‘Preferreds’ section near the bottom which includes the necessary preferred symbol(s) which I then select for the trading page. *Note: if memory serves me correctly, this only works if you’re using the latest interface they rolled out versus opting to keep the previous look.
hey Monk
if you use the old research link I posted above and put in the parent ticker, it will have a “preferred” tab that will pull all the preferreds up for that parent on one page with data like yield, price chart, etc.
IMHO, vastly superior to any of the new pages – but I liked the simple old pages (didn’t need to be fancy, just to have the data and to function).
here it is again.
https://client.schwab.com/secure/cc/research/stocks/stocks.html?path=/Research/Client/Stocks/Overview/
Private,
Appreciate the comment. I just spent a little time getting reaquainted with an old friend, the Schwab ‘classic view’. I didn’t realize it was still available and like yourself I really liked the older UI. One item I do like about the newer UI is being able to view the stock summary and then toggle via tabs to the options info and then toggle back quickly to the summary. A little smoother for the way I tend to interact. But, definitely glad to know the ‘classic view’ is still in place and will visit more often. Thanks for the reminder and link.
Grid you old Bird, You bought at 25.20 are you trying to do a quick flip? I was looking but I can’t get it as cheap as you have.
I got around 25.26 blend ave I believe. Like you mentioned earlier I’m just not too active in flipping game now. Just largely in CDs/treasuries, a bunch of Ameren ones (but not very much in perpetual fixed overall), and punt on 3rd down issues like this one, SPNT-B etc. So unless it runs back to $26 soon, I will just hold them.
My best returns have been on NHL hockey series bets…Making money “hand over fist” as the worthless SA bloggers obfuscate about.
Grid, I wasn’t old enough or rich enough in the days of New Jersey boiler rooms or the Florida call centers to have dealings with that. I did get my share of calls and seminars for vacation time shares though!
When I first found SA it reminded me a lot of that type of shady dealings and more. I was on Stock house briefly and that is even wilder. I guess when you live on the frontier and visit the saloons you have to keep an eye on the exits and know when to leave.
I opened new position today on your SPNTprB at 25. TY for heads up..!
Jerrymac–I love spnt-b, but am ‘full up’ on it.
They had a very good qtr. I would not be surprised if they didn’t call it early. Why it is staying close to par.
Grid-
A glance at the financials and chart of BANF shows a solid performer and well-liked stock. My only comment would be to wonder if the stock has topped out for now.
The BANFP chart shows price down to a level that was only briefly seen in 2011 after which price stayed well above par for (the ZIRP) years.
BANFP monthly log scale https://www.tradingview.com/x/8bQhxggU/
What’s the message in the current price slide? The easy answer is the yield has adjusted higher as yields in general have risen. Beyond that, who can say? Fascinating chart.
Yes, everything has to be compared to current interest rate environment in relation to price/yield. For example during ZIRP it was occasionally in $28 plus range despite being above then market yield and way past call. Only a fool would pay $28 in todays environment thus its pull back towards par. But overall in the scheme of market volatility this one just didnt really have it be it the GFC, Taper Tantrum, or Covid rout. That is why I refer to it as a punt on 3rd down play. Chart wise very defensive, with yield collecting potential, very limited upside due to new yield environment. It traded at this level with higher yields of the early 2000s. Very stable bank, though common stock is of no interest to me. BANFP is no new issue idea for me though. I have owned it and traded it off and on for over a decade now. In the good old days it was buy at $26 on a dump and quickly sell as it went back over $27 quickly. Awe the good old ZIRP era days, where did they go….
shh M , your’e not supposed to tell the audience what 007 is going to do in the next scene.
My concern is they haven’t come close to re-testing their lows so maybe just a nibble. You’re too close to the next x-dividend date so you might be over paying.