Preferred Stock Investing-The Good , The Bad and The In Between 2015 - 2020

[Texas Proud]

As to finding a treasure.... heard this from the couple I sold my mom's condo too...


She worked for the courts and was assigned to manage an elderly man's estate who had passed without a will... so she was having someone clean out the house... while there a neighbor came by and asked if they had found his 'stash'... said he had a lot of precious metal... not knowing what he was talking about she went on a hunt...


Said that he had built a bench in the garage to sit on... but it was in the form of a box... inside was a few hundred thousand dollars worth of gold and silver...


If the neighbor never came by she would not have looked and it would go to whoever purchased the house... if they ever looked also...

 

[pb4uski]

....Said that he had built a bench in the garage to sit on... but it was in the form of a box... inside was a few hundred thousand dollars worth of gold and silver...

Hey... give me a hand moving this bench.... Wow, it's a lot heavier than it looks!

 

[Born2Fish]

As to finding a treasure.... heard this from the couple I sold my mom's condo too...


She worked for the courts and was assigned to manage an elderly man's estate who had passed without a will... so she was having someone clean out the house... while there a neighbor came by and asked if they had found his 'stash'... said he had a lot of precious metal... not knowing what he was talking about she went on a hunt...


Said that he had built a bench in the garage to sit on... but it was in the form of a box... inside was a few hundred thousand dollars worth of gold and silver...


If the neighbor never came by she would not have looked and it would go to whoever purchased the house... if they ever looked also...

Hey... give me a hand moving this bench.... Wow, it's a lot heavier than it looks!

Spewed my coffee on that one!!

 

[Sunset]

Just the other day, we were over to visit Dad, we both wore masks as he is really old and it would be so emotionally painful to think we infected him.
He tells me he got his stimulus check, and I offer to deposit it for him.
When I ask him for his bank card, he proceeds to pull it out with a stick from a hiding spot, and I realize he probably has "papers" and stuff hidden in various places in his packed room and house

It will be a treasure hunt in a few years, as even if I ask him, I won't REALLY know that is everything.

 

[pb4uski]

In 2019 we sold my Mom and Dad's winter home in Florida. Since it would not be beyond Dad to have some currency stashed, I felt compelled to take the drawers out of every nightstand and bureau and check the backs, sides, bottoms, etc for any envelopes pf cash that might have been taped in a hiding place. Didn't find anything.

 

[Texas Proud]

In 2019 we sold my Mom and Dad's winter home in Florida. Since it would not be beyond Dad to have some currency stashed, I felt compelled to take the drawers out of every nightstand and bureau and check the backs, sides, bottoms, etc for any envelopes pf cash that might have been taped in a hiding place. Didn't find anything.

Lol, I found my mom's missing passport between the drawer and the wood under the drawer a few years back.. she swore she had put it in the drawer... never thought to remove it to check...

 

[Sunset]

In 2019 we sold my Mom and Dad's winter home in Florida. Since it would not be beyond Dad to have some currency stashed, I felt compelled to take the drawers out of every nightstand and bureau and check the backs, sides, bottoms, etc for any envelopes pf cash that might have been taped in a hiding place. Didn't find anything.

When my Grandmother lived with us, it was known she put her money under the carpet/very large rug. A habit she picked up from my other Grandfather.
He had old checks taped to the bottom of the rug.

 

[pb4uski]

I hope that Grandfather realized that checks become stale dated after 6 months and banks can opt to not honor checks that are more than 6 months old.

 

[bobandsherry]

I picked up a few incremental shares of PCG-A yesterday (6.4% div after arrears paid). Now have more PCG preferred than I had planned initially, but looks like bankruptcy exit is on track. Saw this article:

https://seekingalpha.com/article/4350223-sales-pg-and-e-fire-victims-trust-overhang-stock

Towards the bottom the writer has included a small write-up and chart of the preferreds.

 

[Mulligan]

Preferred Stock Investing-The Good , The Bad and The In Between

I picked up a few incremental shares of PCG-A yesterday (6.4% div after arrears paid). Now have more PCG preferred than I had planned initially, but looks like bankruptcy exit is on track. Saw this article:

https://seekingalpha.com/article/4350223-sales-pg-and-e-fire-victims-trust-overhang-stock

Towards the bottom the writer has included a small write-up and chart of the preferreds.

Bob, I now own 6 different series of the PCG preferreds, though A is the most... I quite frankly own too much.
I dont agree with his analysis of each preferreds returns as that is dependent on price. Plus he places to much value in non callable as it is skewed because other issues are far under par and have redemption prices higher than par.

 

[bobandsherry]

Bob, I now own 6 different series of the PCG preferreds, though A is the most... I quite frankly own too much.
I dont agree with his analysis of each preferreds returns as that is dependent on price. Plus he places to much value in non callable as it is skewed because other issues are far under par and have redemption prices higher than par.

I didn't buy into his analysis, but shared and let others decide what's valid or not (like you did). It seems his value added for non-callable is a standard he employs but obviously didn't consider either the likelihood or how great that would be for those below par issues.

I did agree with his rec on PCG-A, but no so with PCG-G, PCG-E looks like better deal right now based on ASK prices, both still hitting the 6%+ div after the arrears, both about 6.3%.

Saw in the article below that Wil Abrams still trying to stop the exit from happening. He and another party "sparking" some noise at the start of the BK hearings.

https://www.marketscreener.com/PG-E...pens-with-attacks-on-voting-process-30682161/

 

[Mulligan]

I didn't buy into his analysis, but shared and let others decide what's valid or not (like you did). It seems his value added for non-callable is a standard he employs but obviously didn't consider either the likelihood or how great that would be for those below par issues.

I did agree with his rec on PCG-A, but no so with PCG-G, PCG-E looks like better deal right now based on ASK prices, both still hitting the 6%+ div after the arrears, both about 6.3%.

Saw in the article below that Wil Abrams still trying to stop the exit from happening. He and another party "sparking" some noise at the start of the BK hearings.

https://www.marketscreener.com/PG-E...pens-with-attacks-on-voting-process-30682161/

Noncallable would carry a premium if the 5% issues were trading above par as their movement above par is limited. I dont think he understands the difference. Especially since the issues are in effect under $20 backing out accruals and redemption prices of $26.75..
As you know one dump in a specific series can make it go from no value to best value, though things are tightening up as interest has increased in them.
WELPP and WELPM are great examples on why his opinion of noncallable is a premium value...WELPP has considerably lower yield despite WELPM being non callable. WELPP has a cap gain call possibility while the non callable doesnt and PCG preferreds would react the same no matter how weak the redemption possibilities are.
There isnt a perfect exit bankruptcy solution and time is running out. This plan had a tentative nod when first presented. My play is still on it squeezing through.

 

[bobandsherry]

There isnt a perfect exit bankruptcy solution and time is running out. This plan had a tentative nod when first presented. My play is still on it squeezing through.

Only issue seems to be from the group of 2, voting overwhelmingly accepted the plan. No better plan proposed. Staying the course.

What's interesting is how much the PCG-I has had. Lowest coupon and now by far the lowest Div % after arrears (only 5.4%) vs 6.3% for PCG-A. I can't wrap my mind on why that's being bought up.

 

[Texas Proud]

OK, was going to sell most of my SPLPA when the partial call occurred but did not...


What do you all think of this issue today... it has gone down a good amount... might be time to sell? Or keep and get the current 9% yield...

 

[Born2Fish]

I picked up a few incremental shares of PCG-A yesterday (6.4% div after arrears paid). Now have more PCG preferred than I had planned initially, but looks like bankruptcy exit is on track. Saw this article:

https://seekingalpha.com/article/4350223-sales-pg-and-e-fire-victims-trust-overhang-stock

Towards the bottom the writer has included a small write-up and chart of the preferreds.

I am at 6.34% after arrears on PCG-A, 6% on PCG-B, PCG-C. Only bought a few of the B, C issues. I could have paid a little less if I'd been as patient as you, Mulligan, others have been.

Still, if all goes through I will be very happy that I made the purchase.

 

[Winemaker]

OK, was going to sell most of my SPLPA when the partial call occurred but did not...


What do you all think of this issue today... it has gone down a good amount... might be time to sell? Or keep and get the current 9% yield...

I'm still hanging on to mine, if I didn't load up on some lodging preferreds, I'd buy some more. 9% isn't too shabby, and I think the divvie is safe.

 

[Sunset]

OK, was going to sell most of my SPLPA when the partial call occurred but did not...


What do you all think of this issue today... it has gone down a good amount... might be time to sell? Or keep and get the current 9% yield...

I still have mine, but I have realized I'm not a terribly active investor unless forced. So by default I'm a buy & hold.

For that reason, I didn't do the PCG-A thing.

So I'm interested in what others think, but the div rate (now) is great.

 

[brokrken]

OK, was going to sell most of my SPLPA when the partial call occurred but did not...


What do you all think of this issue today... it has gone down a good amount... might be time to sell? Or keep and get the current 9% yield...

Holding on to mine, but not increasing my exposure. That's not an indictment of the issue. My risk level on preferreds throughout this pandemic has been really highlighted and I need to increase the quality of that portfolio. Luckily, I was able to do a bit of that when things plummeted in March with MET-F, MS-F and more TBB.

 

[bobandsherry]

I still have mine, but I have realized I'm not a terribly active investor unless forced. So by default I'm a buy & hold.

For that reason, I didn't do the PCG-A thing.

So I'm interested in what others think, but the div rate (now) is great.

You didn't need to be an active investor, a buy and hold on PCG-A would have worked out well by buying in early. Could have picked up shares at around $22 in early April, would then have had over 8% div after collecting the div in arrears and be up about $5 on the share price. I did some trading to pocket some $$ along the way but a buy/hold would have worked out pretty well too.

 

[pb4uski]

I bought some PCG-D a week ago at 23.45 so it must have been right about the time he was writing his article because that was the market price that he used... I view it as yielding 6.25% after we get the arrears.

Any idea what he means by stripped value?

 

[Mulligan]

OK, was going to sell most of my SPLPA when the partial call occurred but did not...


What do you all think of this issue today... it has gone down a good amount... might be time to sell? Or keep and get the current 9% yield...

Tough call...SPLP has turned into a real POS down over 60% in a years time and 75% down in a bit over 2. The dark cloud over SPLP-A is the fact that the “divis” can be paid in the common units, and the preferred itself redeemed into common units at any time.
I would think they dont want equity dilution, but clearly the company is struggling.
Im basically almost all in utility preferreds and been that way for quite a while. Its been a good year so far and I dont want to screw it up. Im thinking the economy is in for a longer slog getting out of this self induced recession.

 

[Mulligan]

I bought some PCG-D a week ago at 23.45 so it must have been right about the time he was writing his article because that was the market price that he used... I view it as yielding 6.25% after we get the arrears.

Any idea what he means by stripped value?

I use stripped yield which is what you already did for your yield...His stripped value, I believe is his projection of what the issue will trade at once the dividends have been paid out and is an actual quarterly divi payer again. This is just his meaningless guess, and means nothing.

 

[Mulligan]

You didn't need to be an active investor, a buy and hold on PCG-A would have worked out well by buying in early. Could have picked up shares at around $22 in early April, would then have had over 8% div after collecting the div in arrears and be up about $5 on the share price. I did some trading to pocket some $$ along the way but a buy/hold would have worked out pretty well too.

I agree Bob...The trouble is I was never fully convinced it would get this close to paying so I kept locking in whenever I got a chance, ha. Now if I had been a 100% believer I could have been fine holding also.

 

[Mulligan]

Only issue seems to be from the group of 2, voting overwhelmingly accepted the plan. No better plan proposed. Staying the course.

What's interesting is how much the PCG-I has had. Lowest coupon and now by far the lowest Div % after arrears (only 5.4%) vs 6.3% for PCG-A. I can't wrap my mind on why that's being bought up.

The volume may have bid it up some. But in general all lower yielding preferreds from same company will yield less than the highest. Why? Because of the “pull to par” any issue usually has. As this is a big cap gain play if company ever redeemed, thus this is why it stays more within earshout. Because in theory there is more money to be made immediately on I and H than there is the non callables, or even the callable 5% series. That is just the way things work.
This is why AILIH trades at $94 and a 4.3 yield even though AILLL trades at a ~ 6% yield. AILIH has a possible near $10 instant cap gain on a call why AILLL has a possible12% call loss. AILIH is not going to drop to $70 to match AILLL yield...
Another example...WELPP is a 3.6% par trading at $88, or a ~ 4.1% yield. WELPM 6% non callable at $125 or 4.8% yield. WELPP trades with lower yield because of the cap gain possibility at $101. The market isnt going to let it sink to WELPMs yield as that would leave an even bigger cap gain on the table...Even though its highly unlikely. But with quality issues there is always a loose “anchoring” or “pull to par” no matter what the par yield is as long as company is strong financially and not on the ropes like a hospitality or mall reit preferred currently as an example.

 

[bobandsherry]

Mulli - I get it if this had a reasonable probability of being called, but that seems closer to 0% than 100%, especially being the lowest yield of the callable issues. I bet those holders would love to see it called.