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Wow!! 4.38%

At 5 a.m. (central) the 10 year treasury is trading with a yield of 4.38%–I expected this level to be hit, but not until next year. These falling rates have certainly been profitable for income investors this week and it is hard to argue with green in the portfolios, but I wish I had a little heavier weighting to preferreds in my holdings. It is simply impossible to to time markets perfectly and I am not unhappy holding a quite a bunch of 5.5-5.7% CDs.

Yesterday I got the number I was hoping for in the initial jobless claims. The 231,000 versus forecast of 222,000 was just right – rising but not plunging. Numbers like these add to the argument for a continued ‘no hike’ environment from the Fed for December. With good CPI, PPI and slightly softening employment it would be tough to raise the Fed Funds rate. We see the personal consumption expenditure (PCE) number on November 30th – a decent number there and the rate hike decision for December will be locked in at NO HIKE(if it isn’t already).

I’ve been noticing lately that all of the CLO owning finance company’s have been reporting rising net asset values (NAV)–always good to see. Looking at the balance sheet of Oxford Lane Capital (OXLC) I am impressed with the coverage ratios for baby bond holders–and to a less degree with their term preferreds. Here is the Oxford Lane semi-annual report from last week. Maybe this is area for some investment. To garner a yield 1% above the OXLC yields Eagle Point Credit released their most recent report this week and while inferior to OXLC a bit still decent-the report is here.

Today I don’t know if I will do any buying–if I do it would be an add to a current position. As I posted previously I lightened up on my small bank holdings–but still have a few remaining which I had intended to sell, but may reverse course and buy more–Bridgewater Bank (BWB) 5.875% preferred is trading at a 9.44% current yield and looks pretty darned lucrative. BWB is a smaller ($4 billion) Minnesota bank which is very well run. Like most banks they have had a squeeze on the net interest margin, but this is correcting. Their bad loans have essentially been zilch-stellar management. The updated laundry list of preferreds and baby bonds I hold is here.

65 thoughts on “Wow!! 4.38%”

    1. What makes it the best?

      For example, why is it better than PRIF-G, which has higher CY and YTM?

      1. this makes OCCIO much better:
        If the Company fails to maintain asset coverage of at least 200% as of the close of business on the last business day of any calendar quarter and such failure is not cured by the close of business on the date that is 30 days following the filing date of the Asset Coverage Cure Date, then the Company will be required to redeem, within 90 days of the Asset Coverage Cure Date, shares of preferred stock, including Series C Term Preferred Stock, at least equal to the lesser of (1) the minimum number of shares of preferred stock that will result in us having asset coverage of at least 200% and (2) the maximum number of shares of preferred stock that can be redeemed out of funds legally available for such redemption. (see prospectus for further information).

        1. PRIF is also a CEF, so PRIF-G has a very similar mandatory redemption clause.

          So again, what makes OCCIO the best?

          1. PRIF-G does not have this redemption clause:
            “asset coverage of at least 200% … “

    2. Sorry, there is no singular “BEST” preferred

      It is all relative and subjective

      I own over 100 issues, half of which are preferreds and OCCIO is not one of them. Everyone has different priorities and thinking

      1. Mav I assume you are trying to spread the risk around? I think it was Tex the 2nd or Alpha that said all you need is a loss in one high risk issue to wipe out the profit you made in others.

        1. Charles – Yes, I have always had a highly diversified portfolio

          I disagree with the statement “all you need is a loss in one high risk issue to wipe out the profit you made in others.” on its face. That could be true if you hold a small number of issues, but the larger the number, the less impact there is overall if one blows up

          I like diversification for several reasons (and first remember that unlike some folks here who trade in and out of positions often for smaller gains, I am typically a long term investor so my perspective may be different than traders). Anyway diversification not only spreads the risk around, but also allows me to hedge my bets on who will be winners. For example, lets say I like half a dozen REITS. I am not going to delude myself and say I will always pick the best of the bunch to invest in. If I like all 6, I feel there is a chance any of the 6 could be the best of the bunch long term so I spread my money around all 6 rather than concentrating in 1.

          Now it probably helps that at this stage of my life and investing career, I have the necessary funds to so widely diversify. Wasn’t the case when I was younger. I have just kept my level of a full position the same dollar amount today as I used 10 years ago. Now of course some of my stocks have grown into the equivalent of multiple full positions (4x or more on a select few) but it has served me well over the years

          But there is no right answer that fits everyone – so take all “rules” someone says with a grain of salt because it may not work in your situation

        2. Charles,

          Charles, Not sure who said what or when, though for sure a catastrophic loss in one issue will – for a time – wipe out the profit you’ve made in others. We all know Mav a is smart investor and I for one admire his (and Grid’s) deft ability to arbitrage issues much better than most. Mav is also correct in that the number of issues held does matter, but there might be more to the story.

          The numbers:
          Investor owns 100 shares each of ten issues at $25 par value, 6% yield (coupon $1.50):
          Invested: 100 x 10 x $25 = $25,000
          Annual Dividends: 100 x 10 x $1.50 = $1,500

          If one issue goes BK:
          Loss: 100 x $25 = $2,500
          New Annual Dividends: 100 x 9 x $1.50 = $1,350
          Recovery Period: $2,500 Loss/$1,350 Annual Dividends = 1.85 years
          Observation: 1.85 years to break even, no net positive yield during that period.

          With Mav’s 100 issues:
          Invested: 100 x 100 x $25 = $250,000
          Annual Dividends: 100 x 100 x $1.50 = $15,000

          If one issue goes BK:
          Loss: 100 x $25 = $2,500
          New Annual Dividends: 99 x 100 x $1.50 = $14,850
          Recovery Period: $2,500 Loss/$14,850 Annual Dividends = 0.17 years (2 months)
          Observation: 2 months to break even. Including subsequent ten months, total yield for the year is reduced by 17% (2 of 12 months lost to recovery of loss) e.g. 6% becomes 4.98% for portfolio

          The however:
          There’s a major caveat that needs to be included here. All being equal, holding a greater number of issues exposes an investor to a higher frequency of defaults or BKs (and of course they are different). Having a greater number of issues does not in itself do anything to reduce that risk. Default frequency is more correctly measured by credit rating/default rate and not by number of issues.

          For example, if one owns 100 issues with a BB- rating, each issue has an equal 5.11% probability of defaulting within 3 years. Whether ten issues or a 1000 issues are held, every single issue shares the same default risk. Over 3 years we would expect 5 of 100 BB- issues to default and 50 (or 51) of 1000 issues to default.

          For reference and comparison the experience-rated default risk for issues over 3 years:

          A-: 0.26%, BBB+: 0.50%, BBB: 0.64%, BBB-: 1.35%, BB+: 1.91%, BB: 3.19%

          Or referenced here a few days ago: CCC 41.13%

          On Common Stocks
          The same concept applies to commons or REITs. Also, over time and relative to gains via owning an index (or ETF) such as the S&P, hand-picking individual stocks can be likened to climbing the down escalator. If I recall the numbers correctly, only 4% of stocks in the last 100 years are responsible for 100% of the gains. Translated, only 1 in 25 stocks in the last 100 years produced 100% of the gains. Viewed alternatively, 24 of 25 were losers. Adding emphasis, JP Morgan recently reported (IIRC) that in the last 45 years near 50% of commons lost 70% of their peak value and never recovered. Feeling lucky?

          Another important constant at work here – most everyone thinks they can and will beat the odds. 🙂

          Wishing everyone a safe and Happy Thanksgiving. In addition to the many other things for which I am thankful, have to include III and the great people we get to visit with here. Thank you Tim.

          1. Alpha I found this buried in the comments after I scrolled down. Wish I could have seen it sooner. Thank You for taking the time to post this in depth observation. Except for a few unrated holdings I don’t think I have went below BB rated and my losses are from buying this past year 5 or 6% preferred when interest rates were moving up and I failed to average down. Mainly because I had already reached the max I wished to hold, that and funds available with trying to diversity. Some are slowly getting back to my cost and some have a way to go. TY P as an example.
            But unless I sell I haven’t had a loss of capital. The goal has been the income.
            What I found as worse as a holding going BK has been getting something I was planning on holding for a while getting called and I have to look for something to replace it with.
            Again thanks for sticking around this site and sharing

            1. Charles, I so hear you with regard to positions maxing out during the average-down process. Who knew it was going to go on and on and on? Being mostly in boring A or BBB+ rated issues, I was safe, but some of the positions were double what I’d have called ideal. It got to be a bit much! Was grateful for the reversal.

              After the reversal I plowed into Treasuries and shorter-dated bonds but after that window closed looked for similar near risk-free term-dated issues and found it in TVE and TVC. Not recommending them as preferreds exactly, but as Treasury-esqe proxies they were a perfect fit into the ladder and at above-Treasury yields. I have to keep reminding myself of their purpsoe when I see them sitting there.

              I’m remaining edgy about LT rates. We often talk of “rates” as it’s a one-size-fits-all parka, but I do believe the yields will bifurcate at some point back into distinguishable short and long rates. Seems an inevitablility the yield curve will normalize. For this reason, seeing the fixed-income ladder as a stream of ammo for the next event. There’s always another one.

              …and I may need your drywall guy when he has time. We’ve got some major remodel and expansion plans on hold until contractors are no longer saving for Rolls Royces.

              1. Lol, I got out of the distribution business selling to contractors a long time ago. Now I sell to the distributor. Rarely see the installer anymore.
                Even the day labor on the street corner is saving for a GMC Sierra.
                They have to charge enough to buy a SB grande latte every day. I got myself my annual pumpkin spice latte and was floored it cost 6.50 couldn’t afford it and the tip

          2. Alpha

            Thanks – that was a good analysis. You know we share some of the same philosophies. That said, I think the two points on your analysis I would disagree with is:

            1. that the portfolio of 10 stocks and 100 stocks are both designed to earn the same 6% yield
            2. that hopefully your loss if a company goes BK if you are paying attention ahead of time is not 100% because you have sold out on the way down

            I can only speak from personal experience. While I own my share of what I consider very solid using your example 6% yielders, I also feel with the large number of issues I can afford to reach for yield with a portion of the portfolio so I also own higher yielders bringing up the overall yield to lets say for our example 7%

            So for sake of a different example – let’s look at

            The numbers:
            Investor owns 100 shares each of ten issues at $25 par value, 6% yield (coupon $1.50):
            Invested: 100 x 10 x $25 = $25,000
            Annual Dividends: 100 x 10 x $1.50 = $1,500
            One issue goes bust and you take a $15 a share loss

            If one issue goes bust:
            Loss: 100 x $15 = $1,500
            New Annual Dividends: 100 x 9 x $1.50 = $1,350
            Recovery Period: $1,500 Loss/$1,350 Annual Dividends = 1.11 years
            Observation: 1.11 years to break even, no net positive yield during that period.

            Investor owns 100 shares each of 100 issues at $25 par value, 7% average yield:

            Invested: 100 x 100 x $25 = $250,000
            Annual Dividends: 100 x 100 x $1.75 = $17,500

            If one issue goes bust:
            Loss: 100 x $15 = $1,500
            New Annual Dividends: 99 x 100 x $1.75 = $17,325
            Recovery Period: $1,500 Loss/$17,325 Annual Dividends = 0.086 years (1 month)

            Observation: 1 month to break even. Total yield for the year is reduced from 7% to 6.4% due to the one loss

            Obviously we can play with the numbers up or down. I can only go by my own experience. I can’t recall ever being caught off guard with a company going BK . I did get burnt this year when I broke one of my own rules and invested in a California based preferred – PACWP when it was selling under par. Then the crap hit the fan and it dumped much more and I immediately bailed and took my loss. In hindsight I could have held and seen it recover in a few months but when bad news hits, I usually cut and run. I guess that is what I mean by when I said if you are paying attention, you hopefully should not have a stock surprise you and go to zero. Only had that happen once to me over 10 years ago on an under a $1 a share micro cap extremely speculative play. Even though it was not a lot of money and I was prepared to lose it knowing it was speculative, it still taunts me as the bankrupt shell of the shares still sit in my rollover IRA so they serve as a nice reminder.

            One final comment – for me with common stocks, it is still all about generating an annual income. Unless the common stock pays me a reasonable dividend, I won’t own it. Now for some the return may be a combination on their yield and capital appreciation while others is mainly the dividend. Whether I get 6% annual dividends from a reit or BDC or a preferred doesn’t matter to me. I am not looking for all of them to beat the market – rather I am looking for them to help generate the overall income target I set. So I don’t view them any different than preferred stocks in market beating abilities.

            Anyway, a good discussion. This is why I always try to add a caveat in some of my posts that everyone have different goals / risk tolerance / etc and there really is no one answer that fits all.


            1. Good stuff Mav. You know half the battle is knowing the math of it all and being able to see and navigate it like you show above. I previously mentioned running a back of envelope regression on rating v credit. For years now each step down the risk-ladder has been a losing propostion as current spreads are too slim. Short time periods maybe, but risk times time has an inexorable effect on ultimate return. It’s inescapable.

              Not being as good at swapping as you or Grid, I stay in my lane and avoid risk, using the preferreds and fixed income as ballast to the other holdings. Rip Van Winkle would not be woken by most of my term fixed holdings (mostly Treasuries and <10 year bonds) into which I plowed heavily after locking on cap gains on a portion of preferred holdings when Treasuries hovered around the 5.5% level.

              Still holding more than half of original preferred holdings as hedge against lower “rates", but remain in the camp the long-end of the curve will be rising relative to the front – just have no idea how or when it will happen.

              Much as I blathered on about the risks of holding common and REITs, I’ve been scooping some select res reits as inflation hedges with yield – especially as the multiples on so many of them has returned to a low orbit (from Pluto). Provided the NAVs are intact will have no problem expanding the positions over time via averaging-down when the opportunity presents itself, while holding hedges on everything. Best to you.

              1. Alpha, again with my wanting to jump into some income preferred I may have jumped the gun on already entering select shopping center and industrial REIT’s a little bit early but I was basing entry on the return and the past 52 week lows. Some have risen enough that I fear I may have waited too long but who knows?

              2. Alpha, the swapping is really a no brainer as all preferreds being of equal quality, and terms will generally follow the same OVERALL price movement IN TIME. Its really just catching the ones that lag or lead due in general to volume dumps or lack there of. More important than trading is just being in the correct preferreds to match the interest rate climate at the time. IE, be in live floaters and short term dated during rising rate periods, etc. etc.
                Directionally for me, Im thinking we are about done interest rate wise. Been toeing in more in fixed perpetuals recently and feeling good about it. Half my money is locked up in what is now 2 month duration to almost 5 year CDs. But getting issues I have never seen priced this low before and basically at 2003 ish pricing QDI is becoming more alluring now.
                Its been another great trading year finishing strong. Next year wont be anything special just because the better part of half my money is locked down in essentially 5% CD range. At least I cant lose capital next year like PennYlessY does an a near annual basis.
                FWIW, when looking at credit ratings I personally view the percentage chance of bankruptcy off the senior unsecured, not the preferred. The preferred cant go bankrupt without the senior unsecured going bankrupt. So I would view a BB+ preferred as an BBB percentage default risk. There is an admitted “art” in credit ratings to begin with, but a mental midget can credit rate a preferred. Just slot 2 pegs lower off senior unsecured and viola you have a preferred credit rating. So those arent really rated at all. In fact they admit it, as they state they just slot it. A BBB senior unsecured utility, could issue one share of a preferred with $1 par price that costs the company 5 cents annually in dividends is still going to be rated BB.

                1. Grid, Great summary. You’ve inspired me to swap a number of them in the last few months but not executing with your and Mav’s fluidity. The barrier I think is residing in the higher-IG issues. Within groups such as PSA and their ilk there must be bots running these as the spreads between them open only during periods of volatility – otherwise it’s like panning for gold.

                  But seeing success via average-down bids which provide a spread to their cousins on the buy-side generated by anxious sellers. Then just need to decide what to sell if anything.

                  Continuing to reduce/right-size holdings/lock gains and rolled off another 1500 or so today. Preparing for an (im)possible rate reversal north while on the other side of the equation holding a good number of low-coupon perps in case rates plummet; bunkering-in against any (im)possible resurgence of issues being called.

  1. Tim ; can you help here ; the comments to your posts are many , and I read them all, but they don’t appear in chronological order; why is this and is there something I can do on my end to change this ; thanks

    1. ted—I checked and everything seems to be in the correct order as far as I can see. My setting is for most recent on top. Of course if someone replys to some one elses comment a later comment would be under that earlier comment. For example if a comment was made on 11/10/2023 and then some one comments on that comment on 11/20/2023 the 11/20/2023 comment would be way down the page. But a fresh comment will show up on top. Don’t know if that solves your issue.

  2. All good things come to an end … between the folds on Fridays and weekends before long holidays?

    Once upon a time some minion tapped out,

    “GRANT ALL ON *.* TO ’Sam_Altman’@‘OpenAI.*’ WITH GRANT OPTION; …”

    and all was well for Sammy. Each morn he’d gleefully log-in and enter,

    “SHOW GRANTS FOR ’Sam_Altman’@‘OpenAI.*’;
    | Sam you are the GOAT! |

    and all was well with Sammy Boy.

    Until one day storm clouds appeared seemingly out Nowhereville in the Enchanted Kingdom of AI. Some minion had tapped in,

    “DROP USER ’Sam_Altman’@‘OpenAI.*’;

    and then a double-tap to the old cranial vault just be on the safe side,

    “SHOW GRANTS FOR ’Sam_Altman’@‘OpenAI.*’;”


    “ERROR 1141 (42000): Who dat be? There is no such grant defined for some luser named ’Sam_Altman’ on host ‘OpenAI’.”

    So Dead is Dead. Apparently, this fairy tale wasn’t written in Hollywood.

    Do I smell the smell of Crypto around me?

  3. https://www.benzinga.com/news/23/11/35856564/foreign-buyers-desert-us-treasury-bond-market-as-supply-increases

    Foreign Buyers Desert US Treasury Bond Market As Supply Increases

    Foreign buyers of U.S. government debt are drying up as investors look for higher yields.

    Data from the Treasury Department showed that foreign buyers, including central banks, financial institutions and private investors, were net sellers to the tune of $1.7 billion in September. The first time foreign investors were net sellers in more than two years.

    And, as foreign demand is dropping, supply is increasing. The Federal Reserve, as part of its program to slim down its balance sheet following a period of hectic buying during the pandemic, is selling around $60 billion a month.

    The Treasury has issued around $2 trillion in new debt so far this year

  4. Time to shift from FtF preferreds to fixed rate preferreds? Maybe not yet but we have to be ahead of the curve to profit form it.

    1. Martin, I already started transition. In fact I have already traded some of the fixed I bought from proceeds, and plowed into others that didnt move. But I stay in a regimented apples to apples trading with the fixed brethern. I still have my NSS and some NS preferreds and a couple others, but I trade some like the NSS 2-3 times a payment cycle to goose the returns on them also.
      I can mentality afford to be a bit aggressive since I already more than met my returns for the year and over half my money is in >1 to 5 year CDs. And then some more is in IBonds, TIPS, and some Tbills too. So I have no market insight, I am just not deviating from my plan.

      1. Grid i like the LP Preferreds; i have NSpC at 24.99 ; one trading strategy i use is buy after the ex date and sell just before ex; i’m going to exit before the ex 11/30 if it reaches 26; this works taxwise if you prefer capital gain vs non qualified Dividend; i always like reading your posts;

        1. Hey Ted. Yes, the K-1 thing doesnt bother me either. Taxes are just the cost of doing business to me. Just depends on where the free money is at the moment dictates if its a tax or tax free trade. The NS preferreds (NSS included) have been great traders and holders at the same time for me. Last NS preferred payment cycle, I actually did the opposite. I bought right before exD and dumped on exD. As the price dropped just a dime exD from purchase, but large “divi” was captured. Then a few days later after exD they sagged 30-40 more cents and I repurchased. So if you are real aggressive you can actually use both methods if situations present themselves. . Many times you may notice, the “peak price” of a preferred is actually several weeks prior to exD, then they sometimes sag into exD. So its a bit random and situational for me.
          Right now I really only have NS and GLP stuff in the floating rate. I keep buying older fixed stuff that is around 2000-03 pricing, and trade off those issues. Slowly adding more. Being I have so much fixed short duration 0-5 year CD, tbill, etc. stuff, this allows me to clinically barbell on the other end. As with each maturity of the short end stuff, I can evaluate whether to run a draw, go deep, or punt on 3rd down and go play some tough Iowa Hawkeye defense.

    2. I’ve been buying EQC-PD all week . It’s fixed rate but what is often overlooked is the credit quality. This REIT has no debt and just this $100mil or so preferred outstanding. A Sam Zell office REIT that sold almost all of their properties prior to 2020. No debt, roughly $2 bil in cash and a measley $100 mil 6.5% preferred issue at a discount to par. I’m sure it will be called within the next 24 months but as long as it is at a discount to par I’ll be buying it

      1. David F
        Lots of old verbiage at quantumonline- it’s a convertible, but what stock is it tied to presently? Symbols seem defunct.

        1. As of September 30, 2023, we had 4,915 series D preferred shares outstanding that were convertible into 4,032 common shares. The series D
          preferred shares are anti-dilutive for GAAP EPS for all periods presented. Refer to the schedule of Common & Potential Common Shares for
          information regarding the series D preferred shares and their impact on diluted weighted average shares outstanding for EPS, FFO per share
          and Normalized FFO per share.

          https://s23.q4cdn.com/138786379/files/doc_financials/2023/q3/2023-Q3-EQC-Supplemental.pdf p4

          1. How do you all get comfortable with the assymetric payoff with the eqc pref? Capped upside at par but much more downside if they buy a weaker portfolio, say office.

            Seems like the common is the better play.

            1. They have been selling properties since 2015. I can’t help but wonder what the plans are? Do they plan to fold the whole operation and distribute whatever cash is left to shareholders? Rebuild a portfolio of properties? Hold the remaining four properties forever?

              1. They will either return all capital to shareholders or use the cash to make a major purchase.

                I forget the exact number but the cash per share is something like $18.60,
                Meaning you get the 4 buildings for free at these prices.

                Too bad mr zell is no longer with us. Marched to his own drum, did right by stakeholders.

                1. Maine the common usually pays out a special end of year profit sharing. I think they have to as a REIT. I would have to research the date you have to own it by, but I think the payout is like March.

                  1. Payout dates were October 18, 19, 20 and 22 and March 2023 with a record date of 2/23/2023.

                    They have also repurchased over 15 million shares combined in 2021, 2022 and the first 9 months of 2023.

                    1. Newtothis I followed EQC for a while. That pot of gold at the end of Feb. was clouding my mind, but the stock price dropped by the amount of the special dividend and only recovered by about a dollar. I used to flip the preferred for nickels and dimes but its been in a slow decline so hard to judge the top and bottom of its range.

    3. Not a fan of FTF preferred’s. Reminds me a bit of Las Vegas, the house always wins. If the floating rate is high they just call them or find some verbage in the prospectus that legally keeps them at the original issue rate. The only ones that seem to last are ones that have a low FTF fixed component or companies that are on the edge and would have to float new issues at a high rate anyway. Could be I am still a bit ticked of at MS, sorry for the rant.

      1. Bill ; there are some companies or LPs with safe high yielding floaters; ; the parents for one reason or other leave them outstanding
        long after they could have called them ; for example GLPpA ; yield over 12%
        just buy them at or around $25 and its kind of a no lose situation imho

    4. Martin, there also are “tweener” issues one can search for that could fit the bill also. That being current fixed issues with fair adjustments that are well under par presently and dont reset for several more years. If it suits ones entry point and credit comfort profile, KMPB is a good example I am describing profile wise. It has a nice 4.14% adjustment off $25 that resets off 5 yr. and is bogged down in the teens. I have personally just used this as a trader. Red headed step children havent taken the relative beating I have put on this issue since July. Especially the last 3 months. Look at the chart, a traders dream! Unfortunately I dont really like insurers and certainly not this issue either, (amongst many other things) so I have had to keep the pitch count between 1000-1500 shares buying and selling.

      1. I still have more floaters, just constantly adjusting the way I evaluate them. Some issues that float up soon are undepriced but with REITs I like issues that don’t float for several years they are priced lower than their counterparts that float sooner. Adding up the extra divs paid by the early floater doesn’t account for the bigger difference in price. That’s what I consider a Buy.

      2. Grid, Your Red headed stepchild has been in a downtrend since it was issued but has stayed in a narrow trading range of about 50 cents to a dollar. The reset in 2027 is decent so it might actually reset at the current yield but who knows what 5yr T bills will be then. Couple of the things I don’t like is Kemper hasn’t been around as long as some companies and it has the lowest rating for an auto insurance co. by J.D. Powers. Also I have been trying to shy away from investments that have call dates 30 to 40 years out.
        But having bought at 17.25 I shouldn’t complain and I haven’t tried trading it. I don’t need any more trading ideas, but then NYCB U has been working out good averaging down buying and selling.

        1. That is what I did, Charles. I couldnt take it anymore and dived in lower $17s in early summer I think. I then kept dumping over $19 and buying back in $17s. Its been in a nice trading range past several months. Just this week I sold at $19.20 and bought all back under $18.70 just 2 days later. . Broke my $17-$19 rule since exD is fast approaching to capture that. I already have these under a cost basis of around $11-$12 just from trading them from this summer. Like anything it works until it doesnt so I have rode that horse hard while it does. Though it hasnt equaled anywhere near like the first three months of the year, after a 4-5 month lull, the trading has worked real well past month or two to juice returns up a nice bit.
          BTW, in case you didnt mistype, it doesnt have a call date 30-40 years out, it has a maturity date out then. It becomes callable in a couple years. The 4.14% may or may not incentivise a redemption depending on whats going on with company and credit conditions. But if rates stayed the same presently you are looking at over 12% reset. Considerably higher than today so it will have potential for backside price support down the road. Even if ZIRP ish returned.

          1. Grid, I have been known to mis-speak more than I have miss typed! With Tim upping the time limit to 10 minutes gives me plenty of time with my dyslexia to correct typing errors. You read me correctly though, I meant maturity date on something of this credit quality bothers me a little as to being a swan.

    5. >>Time to shift from FtF preferreds to fixed rate preferreds? Maybe not yet but we have to be ahead of the curve to profit form it.

      Thanks for mentioning that possibility. I’ve been reluctant to short any of the FtF preferreds when defending long holdings on those big down days but they could be candidates for the short list if/when rates decline.

  5. I hardly ever buy common stock, but EIC seems to be perking along pretty well. And yeah, yield looks overly high, bit coverage (along with EICB, etc)
    is good.
    Giving it consideration. Have owned a little ECCC for some time.

    1. I didn’t like the premium on EIC, so I bought CCIF instead. Not sure if that was a great idea.

      1. I looked at this one too ; i decided against taking a position because this is a tiny Closed End Fund (61 million in assets) and it has only 10 holdings ; but it could work out great . discount of 11% indicates a bargain price.

      2. David-
        Some articles explain that NAV varies month to month on CLOs, so not a great indicator. That said, it can trade at 10-15% above vs the current near 5%.
        3d qtr report looked pretty good – They are mainly in Jr debt as opposed to ECC being mainly in equity tranches (riskier). I wouldn’t put a large amount in it, but it might also be tradable.
        As ever- DYODD

  6. I like both OXLC and ECC stuff — and ECC has the better balance sheet. Zero refinancings there until 2028. Income is 8.5x interest/pref expenses. Assets 4x liabilities (yes the values are weird but that’s a ton of cushion).

  7. “wish I had a little more weighting to preferreds in my holdings”

    My father-in-law was a farmer. Each spring I would ask him how the crops were doing. It was always an issue – too hot or cold, too wet or dry, couldn’t get the seed he wanted, and on and on. One year, it seemed that everything was just perfect. Got to the fields at the right time, nice warm weather, just the right amount of rain at the right time. – in my eyes, PERFECT.

    When I asked him how things were going, the response was “not too bad, but the d__n stuff is growin too fast.

  8. lol, yup. to get in while the yields are still juicy, or wait for better entries.

    like you and many others, i have a bit of a barbell. some juicy yields, and then a lot locked up in muni’s. selling the muni’s is not impossible, but the bid/ask is wide enough to prevent an “el cheapo” person to hesitate. I just don’t like getting ripped off, unless absolute necessary. like getting work done on the house these days..

    besides BWP, a few other juicy ones look good (on the surface) including WAFDP, TFINP, and of course the many MREIT prefs. AGNCL isnt bad around $21 if you prefer the “safer” of the bunch.

    1. some of the munis I bought two weeks ago mark 10% up, but bid request gets an offer more like 5-6%. I like muni cefs too, and after black rock upped the distros and announced buybacks, I bought quite a bit more. would be interested to read about oxford or eagle and would consider purchasing.

      1. Jbosch, congrats on the muni cefs purchases! I had them on my list but never pulled the trigger. I have a disdain for widgets that consistently apply leverage, regardless of the borrow costs or investment opportunity. But (most) everything can be cheap enough to provide enough compensation for the bad features. Congrats!

        BTW, some of the new issue muni’s still can offer value. I was able to snag some single family housing names at 5%+ yield yesterday. Yes, they can be pre-paid but I’ll take that risk at 5%+ double tax free.

        1. I have a pretty motley assortment of home state bonds. I play a game with friends where we calculate how many shares or bonds if will take to cover a certain expense like fuel, electric or, in this case, property tax. I for the life of me have no idea who was buying the new issues in 2021 with ytm of 1.5 but I’ll buy them now!

          1. You know how it goes.

            When rates were at 1%, “lower for longer.”

            Now that rates are back up again, “higher for longer.”

            And yup! good to know my newfound muni coupons can help offset my increasing RE tax bill.

          1. Hey SC. I look at the new issue calendar at fidelity and Schwab each day. I’m not even sure if the names I got are trading yet.

            The pickings are slim on the secondary market now, and any new issue is instantly marked up for sale once it hits secondary, especially with fixed income being “cool” again!

    2. Maine , I would be cautious with TFINP at this stage. If I understand it correctly the bank makes over 50% of it’s income from advancing transportation companies capitol by buying their discounted receivables and taking a share plus interest when the companies get paid. With several well know trucking companies going out of business and freight shipments slowing down and rates dropping almost in half from what they were a year ago it’s squeezing transportation companies margins. Yes the bank can collect what its owed but the time and cost will cut into that profit.
      This is just what I have seen running rate quotes lately and the slow down of what we are shipping and seeing territory reps showing up asking how business is going.

      1. Thanks Charles.

        Good points. I am not in the name now but was a buyer when it was lower.

        It is very possible my weak understanding of the situation is incorrect. But i did some research a few months ago. The CEO has lots of interviews and their quarterly calls are very well done.

        I am the last person to provide advice on “truck factoring,” but my understanding was that there is less credit risk by they way the loans are structured, kind of like a pay day loan to a poor credit. This could be a naive statement.

        Their balance sheet is in relatively very good condition. They avoided the large CRE and mortgage book like others, and have a massive stash of super high quality CLO paper.

        I wish I had more confidence to delve deeper into the name, because there is lots of alpha potential if my thesis above is true. Would be good to hear some addtl counterpoints from you or the rest of the group.

        1. I know Grid was flipping it earlier in the year and you could be right from what you have researched. I am just not sure where the economy is going and we get higher unemployment numbers 1st qtr.
          After the holidays who knows?
          I know it goes x-dividend in less than 30 days so good chance you collect the dividend but then the stock price drops. It’s been in a down trend last 3 months and could continue after Dec 15th
          BTY did you see BFS reported a 4.4% increase in income?

          1. Definitely. At least TFIN has been honest about it. This is from Q3 earnings:

            “The freight market has not rebounded, and it could get worse before it gets better. ”

            And yeah, that’s a solid print from BFS. open air / grocery anchored retail is one of the few CRE sectors showing accelerating growth. It’s worth listening to the latest FRT conference call, extremely bullish.

            BTW, long RPT-D here at $52

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