Well we have seen interest rates move up smartly over the last 3 months or so from all the way down around .85% back in December to as high as 1.60% (on a closing basis).
So with muted inflation numbers being released by the government, employment numbers that were fairly strong and this week some decent treasury note auctions it looks like we are to the ‘back and fill’ period–the ‘pause that refreshes’.
February was tough on holders of investment grade issues–including me–BUT March has been pretty darned good with all of the February loss completely erased with nice capital gains as well as interest and dividends payments.
As I had mentioned before I had lightened up on investment grade issues in December and January and then loaded up with some investment grade issues in February as they tumbled pretty hard. So today and yesterday I reversed course and got rid of some shares of the investment grade issues that I had been overweight in for a month.
So as we go through the month of March I’m not looking for higher rates to speak of – but a month from now we will once again have more data–inflation and employment, as well as more treasury auctions from which to gauge the appetite for buying our high yield debt (high yield in the sense that much of the globe still has negative rates).
With some sales in the last few days I am looking to be a buyer if we get another set back in pricing in the quality issues once again.
I remain is the same ‘mid tier’ issues I have had for some time. Some of these issues are from Telephone and Data Systems (TDS) and US Cellular (USM), UMH Properties, Monmouth Real Estate (MNR), Vornado Realty (VNO) – all of which I feel good about, relative to risk/reward.
Speaking of Telephone and Data Systems, the new 6.625% perpetual preferred (TDS-U) popped today and now is up about 2% from where one could have bought in the OTC grey market. I was fortunate to have bought a 2X full position on the 1st or 2nd day of OTC trading–a full position to hold and a full position to ‘flip’.
So for now I will sit back and collect bunches of dividends over the course of the next 30 days while we see what develops in the interest rate complex.
Rob,
Should I just snicker or LOL on the government data?
Saw on Yahoo today unemployment in Vegas was 29% last April and not much better now. Must of killed the residential building market there. I had a bid on the Lead shielding for the Culinary union’s clinic, wonder if its going to get built now.
The only pause that refreshed me was completing tax reporting today. The refreshing part was the six times distilled vodka that I rewarded my self with each day as I did it in stages, There’s still a spider in there for the PO drop. REMEMBER: use a return receipt and check the USPS online confirmation. Last year, 2019, was NEVER delivered and I never checked the receipt. Luckily, we did not owe either. Recently, my wife went on IRS.gov to look for stimulis data and saw NOTHING filed for 2019. I did not even check the old return receipt just remailed fresh copies. It took a month to show up on USPS site as delivered. Apparently there are many millions of 2019 the IRS has just piled up and not gotten to yet. Where’s Steve Forbes?
Mail is SNAFU, IRS is FUBAR and that vodka spider is looking really good right now!
tos wants to charge 6.95/grrrr
When I read this headline this morning, I thought you referring to the finance function on Google Sheets 🙂
Yeah, my net worth went to zero this morning.
I ended up after 3 purchases buying 6,409 shares of TDS+U. From $24.98 to $25.05. Long Term Hold for me.
I also picked up a full position @$24.98. I plan on this being a long term hold. This morning I also added a full position in TDJ.
Thanks to discussions here, I too bought a 2x position in TDS-U when it IPOed. Part of the reason it was cheap as it IPOed when the rates were rising rapidly and the usual big owners were likely trying to exit stuff they owned rather than buy new ones.
Wonder what others think is a good level to flip it. Say 5% in gains? My assumption for 5% flip is that rates remain here or even a bit lower next 3-4 months past the ex-divd date for TDS-U
My flip point is one years of dividend payments as my capital gain.
I also bought a 2x full position on TDS-U under $25, but I just want to hold on to it for quite a while. I don’t see the Fed allowing long term rates to rise very much in the short to intermediate time frame. They’ll sell the short term and buy the long term if required to keep rates low. JM2C—which is probably worth just about that!
I will also buy more of the TDS-U if it drops back under par. Long term hold.
Bill, you could hang out in the 7% TDS note TDJ which I flipped out of UZA today into more TDJ at 25.19. I would make a strong bet TDS-U would slide under $25 before TDJ ever does.
Grid, I joined you in TDJ @25.19. What are your thoughts on a call? Seems unlikely but at that price it would hardly be a bother if there is a call.
Mikeo, they should call. TDA shows they could. But its been that way for a long time as their last redemption of anything was 2011. I buy these types in my “call anchored higher relative yield” segment of stash. They really kind of move in a general predictable manner. Call risk is never too much of a risk as they generally trade like they are on daily call notice.
Was TDJ ex div yesterday?
Interest distributions of 7.00% ($1.75) per annum are paid quarterly on 3/15, 6/15, 9/15 & 12/15 to holders of record on the record date which is one business day prior to the payment date while the notes remain in book-entry form (NOTE: the ex-dividend date is one business day prior to the record date).
Yes it was.
Thanks – I probably will. Bought a little more of the UBP-H today at while it hangs around a bit under par. I look at that as a parking place for some cash until 9/22.
Randy:
Why do you say, “I don’t see the Fed allowing long term rates to rise very much in the short to intermediate time frame.”?
The Fed has not yet announced Operation Twist #3 (or hinted at it) and right now the market clearly is deciding the appropriate level of the 10-year Treasury rate (and not the Fed). That rate appears to be heading higher.
Everyone knows the low inflation data being reported by the government is comical.