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

[Mulligan]

Yeah, I get your approach. But I'll take a bit more risk and for higher yield and liquidity, at least with my "fun fund"... Hopefully [emoji39].

Bob, Im not all puny 5%-6% yields. I have had the old PFX for several years. Current yield of 10.78% and an over 12% YTM at its 2032 maturity date. A.M. Best currently rated it B+ so its slowly improving its credit rating since I bought it. Fitch a few months back rated it BB+. The Fitch drunk credit raters must have been assigned to rate it that day.

 

[bobandsherry]

Yeah, I know you dabble in those "exotic" things, especially with some thinly traded issues. For long time preferred investor like you, you've got some of those gems just reloading your cash drawer. But you took higher yield at expense of liquidity, and sounds like a bit of credit risk. For me I mentioned I take a bit more risk for higher yield and liquidity. Any preferreds I consider typically have a reasonable level of daily trading activity.

 

[Mulligan]

Bob, I take lower yields for illiquidity too. In fact for me I love illiquidity. Its a tool I use, not an enemy to worry over. Buy into liquidity and sell into illiquidity. That is where I usually earn my bonus bucks...PFX is an exception though. I specifically bought several years to collect those interest payments until 2032 maturity, or bankruptcy. Whichever comes first! So far so good the first few years, but this one is a “is what it is” thing, because I am not buying more nor selling it either.

 

[Mulligan]

Bob to give you an example (not suggesting its better, just giving example why I like illiquidity) take IPWLO. Investment grade 4.2% perpetual that trades gray. Put out a feeler bid late spring because it hadnt traded in 6 months a bid at $88 which was a then 5 yr low.
It hit, them I immediately went $85 and hit then $83 and hit. Since then in May it hasnt traded a 100 share transaction since my last purchase. But there have been a couple small 20 something share transactions plus $88. The issue has locked up from illiquidity. I know I could sell them all at $88 plus easily now since it has locked up. But I am holding. There is nothing in the US in ute ville with a 5% QDI, almost 20% under par. Most are around 5% but seriously low YTC being so far over par. One can take advantage of someone needing to sell in illiquid issues, and conversely take advantage of situation when illiquid issues “dry up”. I have time...Lots and lots of it, lol.

 

[bobandsherry]

You are def plugged in to finding those rare birds. Some day I hope to be half as informed as you are with pulling those preferred strings Mulligan.

 

[Coolius]

Another illiquid Ute preferred appears to be stirring from a long slumber.


NSARO - which Mulligan is well familiar with - has a seller. This is a 4.78% coupon, current ask is $102.25, down from $102.80.


The redemption price is $102.80, so buying at the ask means a capital gain if and when it is ever called. One gets a yield of 4.6% indefinitely, a very safe and reliable security.


I bought 100 shares recently at $102.20. Might add more should it go below $101.00.

 

[Mulligan]

You are def plugged in to finding those rare birds. Some day I hope to be half as informed as you are with pulling those preferred strings Mulligan.

Bob its mostly random persistent luck on those types. I have tried off an on haphazardly for years before I hit those 300 shares in quick order. Its a blind grey market (why it is gray but sisters IPWLP and IPWLK for example are not is beyond me) and one needs a motivating price point to buy or they just arent worth it. So I tried a reasonable priced low ball bid at 5 yr low. But they dont trade much so that doesn’t mean a lot.

 

[Mulligan]

Another illiquid Ute preferred appears to be stirring from a long slumber.


NSARO - which Mulligan is well familiar with - has a seller. This is a 4.78% coupon, current ask is $102.25, down from $102.80.


The redemption price is $102.80, so buying at the ask means a capital gain if and when it is ever called. One gets a yield of 4.6% indefinitely, a very safe and reliable security.


I bought 100 shares recently at $102.20. Might add more should it go below $101.00.

Coolius, I thought about that one. The price based over past 5 years is actually a fair price to buy at. This is just me, but with these I like a bit more gap between price and call price for a chance for a possible cap gain if I decided to ever sell. Definitely a safe veteran preferred.

 

[Coolius]

NSARO had unusually big volume today, over 12,000 shares traded with a low of $102.13 and high of $102.75.


Bid is now $102.25, with ask at $150.


Perhaps the selling will be over after today, and we go back to "normal" again. Normal being little or no trading, with very wide spread.

 

[Slow But Steady]

Schwab thinks the issue (my call) is resolved. I mentioned the treaty, etc...go nowhere. For the small amount involved, I'm not going to spend time trying to get resolution in my favor. If they are actually going to pay the tax for me, I'll just deduct it on my tax return.

I just got off the phone with Schwab myself. I was holding EBGEF in my IRA. When I saw that they had withheld part of the dividend, I sold it in my IRA and bought in a taxable account.

I called them, though, to talk about this treaty and ask how to get the withholding back. After two phone calls, the answer was that the preferred shares are held at Citi, and they just make the withholding automatically, and I would have to talk to my tax professional about how to treat the withholding.

Since Turbotax is my tax professional, I'm not holding out a lot of hope of seeing that money. I think there's a way to get foreign tax back from an IRA, but I imagine it's quite complicated. I'll just hold the foreign preferreds in a taxable account.

 

[Mulligan]

Slow, you did the prudent thing. It is what it is. I have some of my TGAPF in Roth after I bought some more. If it is withheld, I will sell that tranche off and move on.

 

[Coolius]

A fairly big seller has emerged out of the mist, for CNLPL.


Down $4, almost 8% from last trade, to $57. Still kinda high, as the redemption price is only $51+. And the stock is way, way, past call.


Since I had sold some at $61 recently, bought back what I sold. The risk here is the call risk, but I'm willing to take that chance.


If it goes back toward the $61 level again, I'll sell.

 

[Mulligan]

Went in pretty big on GLSDP a premarket new issue from Gladestone at 25.13 and 25.15...For a flip..Bought a more modest 700 shares of UTBPP today premarket today at 24.79

 

[Mulligan]

Went in pretty big on GLSDP a premarket new issue from Gladestone at 25.13 and 25.15...For a flip..Bought a more modest 700 shares of UTBPP today premarket today at 24.79

That Gladstone issue is going crazy. Already up to $25.66 in 2 trading days. Held EP-C for all of two days at booked well over a buck a share profit. That thing spiked right at close and I gave whoever what they wanted. The flipping has just been crazy this month..I bet 3 or 4 trades a day, with easy takes.

 

[brokrken]

For those still holding NSS:

https://seekingalpha.com/article/42...aby-bond-nustar-offers-improving-fundamentals

Buy more?

 

[Golden sunsets]

Guys; I've lost my link to the website that goes into great detail on the legal history of the preferred issue, including call dates, premiums paid upon call, whether or not the issue is a qualifying dividend or not, baby bond etc. I think it may have been suggested by Mulligan or Coolius. Could someone send me that link? I'd appreciate it. I tried to find it amongst the 4500+ posts in this thread, but there is just too much info. LOL

 

[brokrken]

Guys; I've lost my link to the website that goes into great detail on the legal history of the preferred issue, including call dates, premiums paid upon call, whether or not the issue is a qualifying dividend or not, baby bond etc. I think it may have been suggested by Mulligan or Coolius. Could someone send me that link? I'd appreciate it. I tried to find it amongst the 4500+ posts in this thread, but there is just too much info. LOL

are you referring to QuantumOnline.com Home Page ?

 

[Golden sunsets]

are you referring to QuantumOnline.com Home Page ?

Bingo. Thanks so much.

 

[brokrken]

Just can't find any deals out there. So, I bought a little more PBI-B today. Will probably sell these additional shares once I get the divy in early December.

 

[bobandsherry]

Just can't find any deals out there. So, I bought a little more PBI-B today. Will probably sell these additional shares once I get the divy in early December.

Yeah, nothing really a "deal" with preferred's. Over past 60 days, only two preferred trades, RILYP and ALTGF. And cash I've turned to common with yield and what I had viewed as upside pop on price, CCL, IRM and XOM, so may be more a trade than long term investment. Other than that I've been putting extra money on the sideline, into MINT for now.

 

[brokrken]

Bob, if you get a chance, check out this post over on Tim McPartland's site about B. Riley. I own the RILYZ issue and it's been paying, but this read got me worried and thinking I might sell. Again, but what to buy.......

https://innovativeincomeinvestor.com/for-the-forensic-investor/

 

[Mulligan]

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

Guys; I've lost my link to the website that goes into great detail on the legal history of the preferred issue, including call dates, premiums paid upon call, whether or not the issue is a qualifying dividend or not, baby bond etc. I think it may have been suggested by Mulligan or Coolius. Could someone send me that link? I'd appreciate it. I tried to find it amongst the 4500+ posts in this thread, but there is just too much info. LOL

Golden, Preferred stock channel is a good source also.
It definitely is getting harder. I plowed a bunch into TDE and TDJ around 25.15 ish a couple weeks ago for place to hide. It keeps creeping up towards interest payment dates. Been having some fun in Canadian resets. ALTGF has bounced a buck on TSX in just past 3 days. I bought a little slug of Fairfax Series G on OTC at around 10.10 and 10.40 a couple weeks ago and it has jumped 10% since first purchase. These resets are roller coaster rides unlike the current genteel US fixed preferreds.

 

[Mulligan]

For those still holding NSS:

https://seekingalpha.com/article/42...aby-bond-nustar-offers-improving-fundamentals

Buy more?

Ken, Rida is Moron. The issue is fine for what it is but he mischaracterizes it as “safer”. It in reality is no safer than the preferreds IF NuStar ran into deep doo doo. Moodys gives it the same B1 rating as the preferreds. Their creditors have waived it off as a preferred for covenant purposes. And Fitch rates NSS with a 0-10% recovery if insolvency occurs. For the worst case investor the dumbass misdirects...I put that all in a comment on that article and it was never allowed to be posted.
I used to own it but it got away from me. I just sold NS-C this week for a nice short term profit. Not scared of it, just bought as a trade and moved on. May get back in it some time.

 

[bobandsherry]

Bob, if you get a chance, check out this post over on Tim McPartland's site about B. Riley. I own the RILYZ issue and it's been paying, but this read got me worried and thinking I might sell. Again, but what to buy.......

https://innovativeincomeinvestor.com/for-the-forensic-investor/

Thanks, nothing that makes me really nervous, but worth keeping an eye on it.

 

[brokrken]

Ken, Rida is Moron. The issue is fine for what it is but he mischaracterizes it as “safer”. It in reality is no safer than the preferreds IF NuStar ran into deep doo doo. Moodys gives it the same B1 rating as the preferreds. Their creditors have waived it off as a preferred for covenant purposes. And Fitch rates NSS with a 0-10% recovery if insolvency occurs. For the worst case investor the dumbass misdirects...I put that all in a comment on that article and it was never allowed to be posted.
I used to own it but it got away from me. I just sold NS-C this week for a nice short term profit. Not scared of it, just bought as a trade and moved on. May get back in it some time.

Mully, love your perspective. Thanks for keeping us straight around here.