Volume Remains High, But Trending Lower

After last weeks huge volume in the preferred stock arena we expected it to taper off a bit this week–and it is tapering off, but remains high compared to previous history.

As we noted we normally had around 10 issues a day with greater than 3x normal daily volume (as averaged over a 30 day period) until recently but last Friday we had about 130 issues or so with high volume.

Today we may end with 20-30 issues with more than 3x normalized volume, but quite a few issues with more than 1x normal volume.

You can see the volume on this spreadsheet.

The above will open the spreadsheet directly–we are going to open a few more lists and sheets so that anyone that wants a copy can go ahead a take it. Having some of these sheets ’embedded’ causes performance issues and we want to have the data readily available.

18 thoughts on “Volume Remains High, But Trending Lower”

  1. i sold all mine at $25.20. I have owned a long time. Captured the divy as well. The risk is high enough and the odds are that you would think they would call it. Sold it, and put the money to work in some new issues like MGR and IBBRL where I think money can best be used and gain from the investment. Rates are too low. Investors are gobbling like Pacman on anything that comes out. AGNCM came out with almost 1% lower and at par and it is being scooped up. They would be silly to turn down 1% gain on millions of shares.

    1. Mr Lucky, you would think in such a low interest rate environment a strong company like Ally Financial (ALLY) would call their Preferred A that is currently floating and yielding approximately 8.385% (!) which is 3 month LIBOR now 2.6% plus 5.785%. This Trust Preferred is due 2/15/2040 and has been callable since 2/15/2016. Today Ally announced a whopping $1,25 billion stock buy back https://www.marketwatch.com/story/ally-financial-announces-plan-to-buyback-up-to-125-billion-in-stock-2019-04-01 I have been playing chicken with this issue for each quartly payment and still am amazed it has not been called.
      Forma bonum fragile est, Latin Nomad

      1. Nomad. yeah, that is why i trade in and out of ally-a when i can. AGNC has more of a recent history of issuing new, so the odds are in favor of a redemption if I am gambling person.

        Right now, there is a large profit margin on buying in grey and flipping in 2 weeks to 1 month. Everyone is playing PacMan right now and gobbling anything that hits the market. That is where money is made vs sitting on potential upcoming calls.

      2. I actually added yesterday at $26.04. Saw that about the common buy-back and I think it will give the preferred a couple of quarters of anti-call protection. Some one here also noted that the conference call before the last dividend stated that they have no intention to call. May dip into AGNCM tomorrow if it stays below par, just went ex-div for it’s first partial quarterly payment. Fingers crossed.

  2. Sold off half my MBINP at 26.30 today. Originally the plan was to buy at $25 and dump half at $26, but the underwriter had other plans forcing me to buy at 25.50. I will now keep the other half for a longer term hold. Dont know enough and quite frankly am incapable of knowing enough to be overexposed in this bank. But will keep my skin in the game though.

  3. I added to AGNCB this AM $25.15-.17, not callable until 5/8 and with the accrued interest even IF it is called there is a bit of meat on the bone (I’m a vegetarian though). AGNC issued a 6.875% 2/27/2019 so they could definitely refi this good size $175 million piece. Hoping they skip at least one quarter for the call. Any thoughts would be welcome…
    Not All Who Wander Are Lost, Nomad

    1. I tried to do something similar with KMPA and RF-A when they finished low on Friday but they got away from me before the order could fill.

      I have just been taking the opportunity to derisk while the valuations are up. Lots of stuff I probably shouldn’t have had in my portfolio during the last downturn is being liquidated.

      1. Scott R.
        I have been taking the same action, selling the products that are susceptible to move lower in a market downturn and replacing them with preferred issues that will either not move down as much or will recover even if they move lower. So far it has been a 3 month project and essentially complete now. The only negative is that I have given up income to make these moves and it will take me until the end of the year to recover; however, after last December, it is a welcome changeover, and my ‘down’ days are markedly less severe.

    2. Nomadicist—I’m glad you raised that question. I was looking at it this morning. At first, I was thinking that the dividends cover the first quarter, so that the buyer would certainly get credit for the period from April 1 to the earliest call date of 5/8. But after reading the prospectus, I don’t think that is correct. (I wish the prospectus gave an example, which would make it clear.). As I read the prospectus, the dividends are paid in arrears for the period up 4/15. I understand the stock has already gone ex-dividend. But I believe that the holder on the record date gets the dividend paid for the period through 4/15, not3/31. If that seems strange, consider that the stock started trading in the middle of November, which may be why they used the 15th of the month for payment. My best read is that if you buy today, you are entitled to dividends for the period from 4/16 till call. If that reading is correct, AGNCB is trading at a slight negative yield to call.
      Most mReits are a bit sloppy about calling their preferreds. AGNC is internally managed and also well managed. They just succeeded in issuing AGNCM at a huge savings to AGNCB. And rates have gone down since issuing AGNCM. So the risk of a call on the earliest possible date is real.
      I would appreciate other opinions on my reading of the prospectus. The yield on this preferred is excellent given the credit quality of AGNC. So buying it at even a zero yield to call is worth it if there is a chance they will call it even a month after 5/8.

      1. When an issue gets called, you need to look at both the XD date and the payment date. If AGNCB was called on the earliest call date, that being May 8, you would be entitled to a dividend from 4-15 (the pay date for the next dividend, through 5-8, or about 3 weeks worth of dividend. The XD date was a couple days ago, so is not a factor in this scenario.

        It’s a reasonable risk to my mind. There are a good number of issues in more or less the same boat.

      2. Roger, I just emailed AGNC Investment Corp the question of IF the AGNCB is called 5/8/2019 how many days do we get paid for. Do you start counting from the EX date 3/29 or the pay date 4/15?
        AGNC Investor Inquiries
        Phone: (301) 968-9300
        Email: IR@AGNC.com
        I will report back if they respond and will call them later this week if I haven’t gotten any response…
        Stay Tuned, Nomad

        1. AGNCB dividend on a call should be paid from 4/16/2019. If you read the prospectus and do the calculation on the initial dividend it was paid from the IPO date (5/8/2014) through 7/15/2014. Therefor, the call value on the earliest redemption date would be around $25.12. I sold all of my AGNCB holdings on 3/31/2019 at prices between $25.27 to $25.32

    3. Your risk is 15 cents per share for a 7.7% stripped yield, a full percentage point above the other AGNC issues. I like the bet.

      The real date to watch is the first notice date, meaning April 8, 7 days off.

    4. Have been holding the AGNCB thinking that it may be called like the called P’s in a low int rate environ. Hey, this is a spread business. Bot a 2/3 position of the new M for that reason, overweight in AGNC, but I like the Agency insurance and have learned that the NAV may be a lazy metric to use and may not be as imp as the cashflow and guarantee of principal. I have positions in the three agency mREITs. Not a great balance sheet whiz so I just avert from risk. I’ll hold both for the time being and see that M is also a FtoFl . I am spreading out positions in Prefs and BBs for some eventual raises in rates which I know is unfashionable right now. I may live long enough to see that work.

      1. Joel, I got it hedged out also. I have tbill fix to float adjustables, perpetuals, and a modest dosage of even perpetual noncallables to cover the angles. Most of the adjustables are fixed out for 3-5 years though.

        1. If you sold the AGNCB at $25.15-.17 it probably was to me.; I think I bought every share that was offered I have a virtual boatload now…
          Time flies over us but leaves it’s shadow behind, Nomad

    5. This is what 8 just received back fromAGNC:
      Nomad, the preferred stock accrues (and pays) dividends through each dividend payment date, so any stub dividend would be calculated from the dividend payment date to the redemption date.

      AGNC has not made any announcements with regards to a redemption of its Series B Preferred.


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