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

[Mulligan]

Got it, thanks.

Its not a life changer trade...But sometimes ya gotta do something easy to make one think he is smart occasionally, ha!

 

[Texas Proud]

I just got the rest of my Ts today....

Now I am looking to flip like Mulligan and pocket a few hundred$$$s....

 

[Mulligan]

I just got the rest of my Ts today....

Now I am looking to flip like Mulligan and pocket a few hundred$$$s....

Its such an easy trade a dummy like me could do it. Now the spread could widen if less motivated people havent seen the SPLP-T surprise in their accounts yet...But you know how the computer bot traders work, so I wasnt getting greedy. If I miss out on some so be it...What I did was better than doing nothing...

 

[pig pile]

I "mulliganed" the crap out of SPLP-A(T) today. Took several hundred dollars in profits and jumped into the T.

 

[aja8888]

I "mulliganed" the crap out of SPLP-A(T) today. Took several hundred dollars in profits and jumped into the T.

Hmmm, I thought the only time you can call a "Mulligan" was in golf.

 

[Mulligan]

Or it could mean, dumb people doing smart things!

 

[Winemaker]

I got a Mulligan for you. I had a limit order on CBL-D at $24.64 for weeks, no takers. This AM, it opened at $24.56, and I picked up my 200 shares. It made up for the 111 AGO-E that I didn't buy because I couldn't afford a dollar the day earlier. It pays to be a tightwad.

 

[Mulligan]

I got a Mulligan for you. I had a limit order on CBL-D at $24.64 for weeks, no takers. This AM, it opened at $24.56, and I picked up my 200 shares. It made up for the 111 AGO-E that I didn't buy because I couldn't afford a dollar the day earlier. It pays to be a tightwad.

Patience is virtue, as they say! CBL, huh? Nice to know you like a modest dose of excitement in your investing life every once in a while.

 

[jimnjana]

I "mulliganed" the crap out of SPLP-A(T) today. Took several hundred dollars in profits and jumped into the T.

I pulled a mini-Mulligan with my A shares today.

 

[Texas Proud]

I pulled a mini-Mulligan with my A shares today.

Still in the process..... will make a few bucks also....

 

[Texas Proud]

Still in the process..... will make a few bucks also....

OK... finished my flipping and made $358 net...

Wish I could do more of it!!!

 

[Freedom56]

Was completing an installation of a new 4K TV on the wall this morning and then just checked on the market as I took a break for lunch. AGO-E just went up 80 cents today on very high volume. Judging from the buy order it must be funds. So I'm up almost $5200 in just 4 days. I was getting ready to sell but the buy orders just kept coming in during the last five minutes. The volume was about 866K. It closed at $25.90

 

[Mulligan]

OK... finished my flipping and made $358 net...

Wish I could do more of it!!!

Well today takes the cake...My worst sell a day before I should have trade of all time...AGO-E jumped 59 cents today...A huge jumped for a preferred. Congrats to Freedom for loading up!

 

[Freedom56]

Well today takes the cake...My worst sell a day before I should have trade of all time...AGO-E jumped 59 cents today...A huge jumped for a preferred. Congrats to Freedom for loading up!

I feel silly dumping AFC at $25.71 the other day. It's at 25.99 today. However, I'm still holding a lot of AFC from a purchase below par about 2 years ago. Thanks again Mulligan for catching the drop below par. It's a long dated note (2102 maturity) so the yield is fair now. I have a lot of EBAYL (rated BBB+) with a coupon of 6% trading at 27.19 with a 2056 maturity. So comparing the two AGO still can inch up a bit but there is no call protection.

 

[Sunset]

Well today takes the cake...My worst sell a day before I should have trade of all time...AGO-E jumped 59 cents today...A huge jumped for a preferred. Congrats to Freedom for loading up!

Misery loves company

I also got rid of my AGO-E but it went too early, so only made 24 cents on each one. Totally incredible how high it jumped today..

I also did very poorly on the Mulligan move, basically added to my pile by collecting 400 more SPLP-t , and NOT selling any SPLP-A.

 

[Freedom56]

There was a 147K block that traded at $25.90 at 3:59. Given the volume today and the block sizes, it was fund driven. This is another reason not to buy ETFs and mutual funds. They buy high and sell low and the holders of these ETFs and mutual funds get the shaft.

 

[Sunset]

There was a 147K block that traded at $25.90 at 3:59. Given the volume today and the block sizes, it was fund driven. This is another reason not to buy ETFs and mutual funds. They buy high and sell low and the holders of these ETFs and mutual funds get the shaft.

I would love to sell to them HIGH and buy from them LOW any day, how do I get on their mailing list

 

[Freedom56]

I would love to sell to them HIGH and buy from them LOW any day, how do I get on their mailing list

Check for unusual volume on PGX and PFF and then check the change in share count reported daily. A large decrease means a sell-off in holdings is coming - a large increase is the opposite.

In this case however, there is another plausible explanation. Both PGX and PFF hold a lot of ENH-C which is being called on Monday the 23rd. I had a large position in ENH-C (5300 shares). I decided to bail at the end of last week and then bought AGO-E on the 16th. There were 9,200,000 shares of ENH-C issued. From their latest holdings data PGX holds 362,742 shares of ENH-C and PFF holds 1,037,341 shares. Both hold AGO-E. ENH-C and AGO-E are both in the financial/insurance sector so expect more buying in this sector (assuming that they maintain their sector weighting) next week as their positions in ENH-C are redeemed on Monday. Other funds have started their replacement already. This explains what happened today.

Just my thoughts on this.

 

[Mulligan]

Check for unusual volume on PGX and PFF and then check the change in share count reported daily. A large decrease means a sell-off in holdings is coming - a large increase is the opposite.

In this case however, there is another plausible explanation. Both PGX and PFF hold a lot of ENH-C which is being called on Monday the 23rd. I had a large position in ENH-C (5300 shares). I decided to bail at the end of last week and then bought AGO-E on the 16th. There were 9,200,000 shares of ENH-C issued. From their latest holdings data PGX holds 362,742 shares of ENH-C and PFF holds 1,037,341 shares. Both hold AGO-E. ENH-C and AGO-E are both in the financial/insurance sector so expect more buying in this sector (assuming that they maintain their sector weighting) next week as their positions in ENH-C are redeemed on Monday. Other funds have started their replacement already. This explains what happened today.

Just my thoughts on this.

Once again, congrats and very pleased for you, Freedom. Even if I had held we are talking peanuts for my 10k ish purchase... If your theory is correct that is just an example for me not to ever own funds...They will will liquid for liquid over quality to maintain needed share count and will enter at ridiculous prices to get it filled.

 

[Mulligan]

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

Misery loves company

I also got rid of my AGO-E but it went too early, so only made 24 cents on each one. Totally incredible how high it jumped today..

I also did very poorly on the Mulligan move, basically added to my pile by collecting 400 more SPLP-t , and NOT selling any SPLP-A.

SPLP-T trading volume is now higher than A. Of course the float is bigger so it should now. I may buy a couple hundo more if it drops some more.
After reading what some people were talking about on AGO the losses in PR are going to be worse than management originally expected as that was pre hurricane... They were already chirping about one rating agency already looking to downgrade them and that was before. That economy is now a mess and unable to fund what they need, plus many are fleeing permanently to mainland and you know those arent the sloths. Just too many question marks for me and I have no answers. Probably fine, but its best just for me to move on.

 

[Freedom56]

Once again, congrats and very pleased for you, Freedom. Even if I had held we are talking peanuts for my 10k ish purchase... If your theory is correct that is just an example for me not to ever own funds...They will will liquid for liquid over quality to maintain needed share count and will enter at ridiculous prices to get it filled.

Read this from Barron's. I believe I posted a link previously.

Is PFF Getting Too Big for the Preferred Market? - Barron's

At the time of the article the AUM for PFF was $17B now it's $18.3B. This fund is loaded up with convertible preferred stocks and they are taking a beating on those holdings - FTRPR, SWNC, AGN-A, etc...
This explains the poor performance of this fund. SPFF is much smaller fund with even poorer performance.

Investing these days is all about computer driven trading. A spike in interest rates causes a sell-off of bond and preferred funds which then causes a sell-off of the underlying securities leaving active managers to sweep up the bargains in bonds, preferred stocks, notes, etc... I have been playing this game since mid 2013.

 

[Mulligan]

Read this from Barron's. I believe I posted a link previously.



Is PFF Getting Too Big for the Preferred Market? - Barron's



At the time of the article the AUM for PFF was $17B now it's $18.3B. This fund is loaded up with convertible preferred stocks and they are taking a beating on those holdings - FTRPR, SWNC, AGN-A, etc...

This explains the poor performance of this fund. SPFF is much smaller fund with even poorer performance.



Investing these days is all about computer driven trading. A spike in interest rates causes a sell-off of bond and preferred funds which then causes a sell-off of the underlying securities leaving active managers to sweep up the bargains in bonds, preferred stocks, notes, etc... I have been playing this game since mid 2013.

Yes, I have looked inside the holdings of these before. That largely convinced me I can buy what suites my needs better. I can buy higher quality at higher yields that suites my needs. They cant buy into what I as a general rule own.. I segregate some money for flipping, but it is getting smaller and smaller as I just burrow into quality illiquids and term dated issues and become more like Winemaker without the wine making. I flipped hard for several years and really juiced returns. This year it has become less and I am probably only at 10% or so returns. Quality Illiquids have stiffer backbones historically and avoid mass drop selloffs. And above all, they pay without monitoring or worry.

 

[Sunset]

I sold my AGO-E because of reports on PR.
How the majority don't have electricity (~80%) or water (75%) and it's a month after the storm.
The videos show how it still looks like a disaster, except where the cars went, the road was bulldozed open.
It was reported 23,000 have flown to FL, and it was estimated another 300,000 would leave the island permanently.
This situation is going to continue to be bad for many months at a minimum.
I thought, how most folks there are not working as the companies don't have power, or transportation is bad, and how this is going to kill any debt servicing.
If everyone leaves the island, who pays the debts ?

 

[Mulligan]

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

I sold my AGO-E because of reports on PR.
How the majority don't have electricity (~80%) or water (75%) and it's a month after the storm.
The videos show how it still looks like a disaster, except where the cars went, the road was bulldozed open.
It was reported 23,000 have flown to FL, and it was estimated another 300,000 would leave the island permanently.
This situation is going to continue to be bad for many months at a minimum.
I thought, how most folks there are not working as the companies don't have power, or transportation is bad, and how this is going to kill any debt servicing.
If everyone leaves the island, who pays the debts ?

Exactly, but also, this issue is holding company debt which is the worst to have, if their subsidiaries are told by regulators to protect their assets and quit sending money to the holding company...This is how insurers can go “bankrupt” but yet still keep paying claims safety as it is all subsidiary based usually. Just too many questions
for the risk of payment and yield for me.

n Cooke, Contributor
Comments (473) |+ Follow |Send Message
Guys the Puerto Rico exposure here is pretty catastrophic. AGO has around $5.4 billion in principal guarantees and over 8 billion in interest payment guarantees to PR bondholders. AGO has about 6.5 billion in equity value. The position AGO insures currently has mark to market losses of about $3.5 billion and currently they are set to pay an additional $2 billion in coupons on defaulted Puerto Rico bonds in the next 4 years PR bond prices: (http://bit.ly/1JC86Yq). AGO has only reserved less than $500 million for this exposure. AGO is way under reserved at this point. AGO has between $20-40 PER SHARE in current value losses on the Puerto Rico portfolio. The losses also may diminish or eliminate their ability to attain new business or dividend cash to the holding companies to service the bonds. I would not buy this for a 6% coupon and urge you guys to buy anything else that pays 6%.
The Hurricane devastated the already weak outlook for the island. I expect recoveries between 0-20 cents for most of the bonds and currently estimate AGOs losses to be at least 2.5 billion on the principal guarantees and 2-3 billion for interest guarantees. Most of the island is still devastated at this time with 30-50% of businesses still closed and the tourist business offline. There is no way a post bankrupt PR can assume more than 20% of the currently outstanding debt. At this time the island is accessing loans that will be senior to what AGO has insured and tax receipts have fallen 50-80%. Just to be clear the islands government barely has the ability to operate essential services and has no working capital, much less the ability to make bond payments. Search the word Puerto Rico in the AGO 10K: http://bit.ly/2yoj2Jx
17 O

 

[Freedom56]

Exactly, but also, this issue is holding company debt which is the worst to have, if their subsidiaries are told by regulators to protect their assets and quit sending money to the holding company...This is how insurers can go “bankrupt” but yet still keep paying claims safety as it is all subsidiary based usually. Just too many questions
for the risk of payment and yield for me.

n Cooke, Contributor
Comments (473) |+ Follow |Send Message
Guys the Puerto Rico exposure here is pretty catastrophic. AGO has around $5.4 billion in principal guarantees and over 8 billion in interest payment guarantees to PR bondholders. AGO has about 6.5 billion in equity value. The position AGO insures currently has mark to market losses of about $3.5 billion and currently they are set to pay an additional $2 billion in coupons on defaulted Puerto Rico bonds in the next 4 years PR bond prices: (Bonds Home). AGO has only reserved less than $500 million for this exposure. AGO is way under reserved at this point. AGO has between $20-40 PER SHARE in current value losses on the Puerto Rico portfolio. The losses also may diminish or eliminate their ability to attain new business or dividend cash to the holding companies to service the bonds. I would not buy this for a 6% coupon and urge you guys to buy anything else that pays 6%.
The Hurricane devastated the already weak outlook for the island. I expect recoveries between 0-20 cents for most of the bonds and currently estimate AGOs losses to be at least 2.5 billion on the principal guarantees and 2-3 billion for interest guarantees. Most of the island is still devastated at this time with 30-50% of businesses still closed and the tourist business offline. There is no way a post bankrupt PR can assume more than 20% of the currently outstanding debt. At this time the island is accessing loans that will be senior to what AGO has insured and tax receipts have fallen 50-80%. Just to be clear the islands government barely has the ability to operate essential services and has no working capital, much less the ability to make bond payments. Search the word Puerto Rico in the AGO 10K: http://bit.ly/2yoj2Jx
17 O

AGO-E is liquid enough for me to exit next week with a nice profit. I was looking for one quarter of dividend payments for a flip. However, if these funds keep buying I should be able to exit at 25.70 or higher.