Whoops – Hope You All Got Your AATRL

I bought a 150 shares in total in this ‘gift’ today at $30.97 (a 100 share buy and then a 50 share buy) to add to my 100 in the sock drawer. AATRL which is a $50 trust convertible issue from Affiliated Managers (AMG)—the yield at my cost was 8.3% for an investment grade issue.

I had wrote ‘mark my word this will trade much higher in the month or two ahead“. Looks like I should have written much higher in the next hour or two as shares are now at $36.59. Sometimes it is better to be lucky than good and we are lucky today. Thanks to all discussing this issue–gave me something to buy and write about.

Hope you all got the sock drawer stuffed down at $30 (or below for those that were in early).

50 thoughts on “Whoops – Hope You All Got Your AATRL”

  1. I nabbed some back when this was being discussed. Thanks for the good advice, Tim. Just today I saw it has finally hit its $50 PAR price. It’s IG with 5.15% yield, so I think I’ll just hang on to it and leave the capital gain unrealized.

  2. Hi Tim,
    Been reading your AATRl and AMG (the parent) also has a junior debt MGR. I don’t completely understand the conversion terms: 0.25 of stock today would place it at $16ish unless the conversion has some maximum? Thank you for this idea and also what this site has offered.


    1. Debbie, I think the .25 is at the option of the AATRL holder. But page 26 of the prospectus caught my attention – am I reading that wrong, or does the issuer have the option to convert AATRL to cash at a price that could be at/below .3824 times the share price of AMG common?

    2. Debbie–it is a busted convertible. Only the holder can initiate conversion–and no sane person would do that. The reason why this trades so low is because no one seems to understand the terms–we see these things in more complex securities.

      You’re welcome–glad to have you here.

    3. oh forgot–yes they have MGR also and you can see the difference in current yield–AATRL trades just under 7% and MGR at 5.9%.

    1. “The preferred shares are convertible any time at the holder’s option into cash or 0.25 common shares of Affiliated Managers Group Inc. (NYSE: AMG) as elected by AMG, an initial conversion price of $200 per common share.”

      Not sure what this means. Is the conversion $50, or 0.25 common shares, which are trading at $55 plus change today.

  3. There are thousands of people that read this blog each day. Rida thinks that he can move markets with his couple of minions. 🙂 Whatever is recommended here, and if it trades in the 10k area or less, and over the counter, this blog alone will swing the investment. Sometimes it does not trade at all or has a few hundred in trades.

    It can go the opposite as well. If we dislilke something that is low volume and over the counter, it will get crushed because we will dump it at any cost.

      1. Pickle, They wipe out every post I get through screeners because I expose them for the frauds they are.. I am not a vengeful person, but do despise dishonesty and intentional misinformation. I hope Pendy and Morons portfolios go to zero for the damage they have done to people….I have had 3 main investing rules since I started preferreds in 2013…1) No Mreits 2) No shippers 3) No BDCs…Added a 4th last year even though I never owned any..No mall reits…They were in everything I wasnt and got smoked.
        Shot career low 70 today and still made a few trades…Dumped some bank issues at market opening to save a few bucks and lock in the gains, and added a couple illiquid high quality utes…Slowly getting the ship back towards 100% ute preferreds and cash.

        1. Grid, I have been trying to stay away from SA. When I read the comments I realize I have better company here.
          Could you be kind enough to share some of the ute preferred you have invested in. I am more interested in the ones that are more liquid / volume but if you can point out the reasons you like some of the illiquid ones I would be interested to hear your reasoning. So far I have to say my NEE-I and IPLDP have held up the best in these crazy times.

          1. Charles, keep in mind my reasons are personal and odd (and probably not applicable) and entry points matter. But EVERY down turn from 2008-09 crisis, 2013 taper tantrum, 2016 sell off, Dec.2018 rout, and these past 2 weeks have proven over and over…Illiquids trade in a different manner than liquids. It gives you time and space to adjust without quick violent down drafts liquids get sucked into. Its just the way it is. Fewer shares available, very few are in any funds, they arent shorted, etc. etc.
            Also many of them have out of this world coverage ratios as they in essence stranded forgotten capital from a long ago era that is meaningless on their balance sheet…Take all the Ameren Ill preferreds. Combined the entire series of preferreds cost Ameren ILL about 3 million. Ameren Ill profits could shrink by OVER 99% and they still could cover the dividends from profits. I would suggest in most liquid preferreds a loss of 99% of profits would mean they cant cover the preferreds from profits.
            All 13 of Amerens preferreds combined constitute about 25% in “par” value of what IPLDP is just by itself (and it isnt a big issue either).
            I have been out of IPLDP since it popped to $25 a week or two ago. As other issues had not climbed back as quickly so I bought them and rode them up and sold too.
            SR-A is the only real liquid ute I have now, and I have traded it a lot, but not since my last big buy at $23.30. That was a day I sold a couple thousand over $25 and then bought them all back same same at $23.30. I did pick up a hundred more at $24.37 today just well because I did mostly, ha.

            1. Thanks Grid, LOL
              Enjoy the sunshine and exercise. At least I have a outside window in front of my desk.
              My CNIG bothered my after I bought and it dropped as people here called it sock drawer. I was born in NW Pa. and hunted there when younger. Talk about decaying infrastructure, some of the gas lines there have to be over 50 to 80 yrs old. I guess I would rather see gas drilling than coal mining though and a lot is still there.

        2. Grid – you said you shot 70 today. Wanted to ask what you shot on the 2nd hole?

          Keep your pecker up!

          1. First time I ever broke par, Bob, 5 birds, an eagle, and the usual 5 bogies. The weather is getting warmer and I can make a better turn and now blow my drives 75-100 yards by my geriatric golfing partners. But I still hit from their tee boxes. We arent playing 7000 yd tee boxes.. Maybe 5900-6000 tops. They are taking 3 swings to get to green on par 5s, and I was roping 280 ish drive and 150 yd 8 irons into green on second shot. I need to enjoy my “youth” while I am still in my 50s ha.

    1. I was thinking about that also. Plenty of AATRL talk the last 2 days. Went to over 36 yesterday. It was 20 just a week ago. I had a buy in for 28 and don’t intend to change it. I’m tempted to sell some I have at a profit but I’ll hold on to it for now.

    2. They are really touting o, main, Newt over at R-DA and company. Some of these down 50% from the high

      1. yup

        I own main and I am foaming at the mouth for o

        but lending and rents are going to get ugly

        but I guess they need to publish articles to remain relevant


  4. One other caveat about AATRL. besides the sizable phantom OID income, this security does not qualify for long term capital gains treatment.
    When you buy and sell it in a taxable account, your broker(if they are on the ball, and most are) will likely mark box 2 of the 1099B as “ordinary”.

    1. Ordinary income is better than no income.
      And we’re going to be in lower tax brackets next year. No capital gains.

      1. Still have that problem with phantom income, which is sizable. For 2020, it comes out to just over $6.00 a share or right around $.016 a day per unit because it accrues at an 8% clip. (it increases with every payment)

        1. Justin,
          Do you have a reference for that $6.00 per share OID for 2020? Seems like a lot.

  5. Every reader of this website before selling out at fire sale prices should read today’s article by Yahoo Senior News Writer, James Morris, entitled Corona virus Why have there been so few deaths in Hong Kong. In four months, a city of 7.3 million PEOPLE have had four deaths. The report states Hong Kong citizens learned from the Saars outbreak in 2003 to ignore the government call not to wear masks. Ninety seven percent of the Hong Kong people wear masks and the result is four deaths and less than 725 cases of covid 19
    Did world class hedge fund buyers know of Hong Kong’s successful approach a month or two months ago. Now the story is out for all to see.
    Lets see what the market does now.

    1. Follow, I only have my limited thoughts but they keep coming back to what you refer to. A “new normal” of masks and separation, ugh….As fire as fire sales go, I have none, (well not counting a few small Canadian reset turds, lol) Im just trying to make sure the winners dont drop and get the preferred stock gun reloaded to shoot again.

    2. It helps to live in the place where the masks are manufactured, Hong Kongers have access to ample supply. I hope this is a lesson America learns once and for all about its own supply lines.

    3. In some of these countries such as Japan, i believe, even when there are no health scares, it is considered very rude and dirty to cough in public. You are expected to cough in the bathroom and wear a mask in public if you are sick.

    4. Few deaths in HK = don’t sell here (not that I am) ? I must be missing something.
      Masks- a lesson we will eventually learn, hopefully.

  6. Another little nibble at AATRL today, been nibbling since it was down at 21.50, but only 50 shares at time. Didn’t have a truck to back up…its been in the repair shop.
    To that end, over last few days have been a consistent seller…anything that I could get out of without losing shirt, although lost a few sleeves and collars.
    REITS like EPR, BPY, BFS and UBP are now my biggest losers, and haven’t bounced back. But staying the course with them. No option really.
    Like many on here, feel there is another big leg down to come. And probably sooner rather than later. And maybe both. Who knows? Crazy to think of where we were at the start of this month! Enjoy reading you all, this has been a haven in the hurricane.

  7. Tim,
    Unfortunately I did not get my AATRL; on the contrary: I think it was me that sold you the $30.97 on a GTC order I did not cancel.
    Who knows? In a few weeks I may be able to reload the truck well below <$30.
    And if not, then I will be happy for those who got it. Not gonna chase it now.
    Good call of yours!

    1. d–thanks if it was you–volume today was quite heavy. Hopefully you were a buyer much lower and thus realizing a good capital gain.

      1. Tim Congratulations, and, remember, when you are humbly citing luck, how Vince Lombardy described the process by which anyone is lucky!

  8. I commented on the Sock Drawer category last week that it was available under 30–I think my last buy was 26.30. I did not get any response–but glad for the move today.

    1. furcal–I saw the discussion but didin’t have time to wade into it. Hope you got a boat load.

  9. Thanks to everyone who talked about it past month or so. I’m in under 31, not gonna wonder why I hesitated when it went under 20. Building a sock drawer.

  10. I wonder how much sparsely traded issues can be moved by a recommendation on this site now? At some point the readership will be enough to show up on the ticker price of the rare stuff.

    I know I bought 165 shares (all the free cash in that particular retirement acct) @31 so I am happy with $5 and change gain on the day so far.

    One thing I have learned through this downturn, the people who have to work have no chance of coming out as well as those who can babysit their portfolio and take action. I was building a business from the ground up during the last downturn and all I saw were the lower, and lower numbers until I just had to get out. But when you can make a little every day on the way down, it is a lot easier to handle.

    Thanks for being part of making that possible Tim. I consider you and the guys here part of our effort to get through this thing together.

    1. I picked up a 100 shares with some extra unexpected liquidity from my AYR being sold off via a merger, was bummed it got to $35 by the time I got to it.

      I’ve been trying to preserve liquidity since I think this is a bear market rally, but Tim’s post twisted my arm.

    1. alpha8–I just stole everyone else’s idea–I’ll always steal a good idea. I think it was Gary H talking it up.

    1. Todd–about $3-$4 million in trades today so guess it was a bit more than my 150 shares.

        1. Ha, Scott no I didnt partake of any of the bounty. In fact I only bought about $4k combined of 2 separate issues just to get to round figures on them from previous odd lot purchases. I actually sold a lot more today. Will probably continue to sell more. Im back up near my all time highs and want to catch my breath a bit and not give it right back, lol.

          1. Grid–you should stay off the golf course so you wouldn’t miss these things.

            1. Tim, I was out yesterday golfing and will be tomorrow. I was actually home. I traded AATRL a couple times at $46-47 range for a quick couple buck flips last year and havent touched it since. I realized I just dont understand what is behind the curtains of this company and what its real purpose and activity is. Right or wrong when I get something in my head I cant change it. If I cant figure something out with my brains I use my emotions and they always say run away. Im certainly glad everyone is scoring nicely here though! Now if I was shorting AATRL (I dont even know how to short a stock though) I wouldnt be so happy for everyone though, ha.

              1. Grid–I know you have done a bunch of quick flips for good money so was just harrassing you. Yes I used to be like you, but a quick glance at the balance sheet made me act—12/31/2019 $7.6 billion in assets and $3 billion in liabilities—$722 billion assets under management–recently their performance is so/so but assuming the ratings agencies know anything Moodys has their senior debt at A3–Jr Sub at Baa1.

                1. Ha, yes I know you were teasing. If I wasnt bull headed and already made up my mind months ago, I would have joined as you never lead the buffaloes over the cliff when you buy something. 🙂
                  Its going to take time but eventually I am going to get where to where I used to be. Just owning nothing but utility preferreds. I got to get good entry points and some regional diversification. So I am drifting back that way.

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