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

[brokrken]

You are wise to stay on them, though the process is only beginning. In case you haven’t read this, here it is an link to the entire notice.

The Company plans to send a notice of redemption, including information about redemption procedures, to all record holders of the Preferred Units after the record date of January 6, 2020 and at least 30 days before the Redemption Date. Investors who hold their Preferred Units in “street name” should contact the bank or broker through which they hold a beneficial interest in the Preferred Units for information about obtaining the Redemption Price for their Preferred Units.

https://ir.steelpartners.com/news-r...s-holdings-lp-announces-partial-redemption-60

Mully, I read that which is what prompted me. It says notice will be sent after Jan 6, but 30 days before the redemption date, which is Feb 6. So that’s like a 2 day window unless I am misunderstanding something.

 

[Mulligan]

Mully, I read that which is what prompted me. It says notice will be sent after Jan 6, but 30 days before the redemption date, which is Feb 6. So that’s like a 2 day window unless I am misunderstanding something.

Im taking the reading to imply you will get 30 day window notice, so they will be sending it in the next two days. So you will get time. But my thinking is dont give someone a chance to screw up. Make sure they tender your shares. Hell tender them all if they let you. I remember asking for more preferreds of a Gabelli issue than I was allowed to receive. They gave them to me anyways to buy so I did.

 

[Texas Proud]

Was also wondering about this redemption.... I had thought it was going to be an offer to buy up to the 20% and they would chose based on shares submitted...


It is now looking like they are going to just call 20% and that will come out of everybody's shares...



Blew my plan as I was hoping that a lot of people would not tender and I would get more than my 20% share...

 

[Texas Proud]

OK... need some help on what to buy for my daughters account..


She got some money and I am going to invest for her in pref shares as she will be using the money for college in a few years... so not going equity as I have her 529 100% equity....


What are some safe shares that are not over par and a good yield... or that might be a bit over but not callable for 10 or more years...

 

[Coolius]

Texas Proud, how about the non-callable issues like BAC-L, WFC-L, & SLMNP ?


The yields are reasonable ( for our current environment ), and there is no fear of call. However, you do have risk of decline if interest rates rise.

 

[brokrken]

While I never got anywhere talking to the Schwab reps, I did notice this evening that my accounts now show 20% of my SPLP-A shares being called.

 

[Winemaker]

My rep at Stifel told me he has had no notice of order of redemption. I have multiple accounts with 5 different firms.

 

[Winemaker]

Just happened to check my Fidelity Account. 20% has been separated from the other 80, so I guess it's an across the board recall?

 

[Mulligan]

I have read a couple different posts in other forums. Seems like it has ranged from 17% to 26%. It could be adjusted though later.

 

[Mulligan]

OK... need some help on what to buy for my daughters account..


She got some money and I am going to invest for her in pref shares as she will be using the money for college in a few years... so not going equity as I have her 529 100% equity....


What are some safe shares that are not over par and a good yield... or that might be a bit over but not callable for 10 or more years...

Texas that leaves a very narrow band of issues to choose from with 10 year criteria. Most are issued callable after 5.
Safe, safe type are going to be in 5% range if not lower. The word “safe” and at par or lower just are not compatible. Unless you are looking for an old illiquid 4% utility preferred or a low libor floating bank preferreds in 4% range. But they are under par though.
MNR-C is pretty solid right at par and 6%. This is just me, but I consider that Amtrust debt a lot safer than market thought it was. And I have been rewarded as it continues its slow climb towards par since it was delisted a year ago. People are trusting it again...AFFT and AFFS. Gotta watch for wide bid ask rip off spreads though.
I have issues yielding in the 4% range all the way over 9%. All of various quality and duration. This past month or so has been an incredible floating period. Many issues I have bought and sold and bought and sold in short periods of time.

 

[Winemaker]

Boy, did I screw up. I had some Amtrust debt and doubled up when it inched down before the privatization. I also had some CBL preferreds. Well, I sold just before the privatization, and put all on CBL preferreds, who were rising at the time. Then it eliminated the divvy and I got burnt. Oh well, win some lose some......

 

[Mulligan]

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

Boy, did I screw up. I had some Amtrust debt and doubled up when it inched down before the privatization. I also had some CBL preferreds. Well, I sold just before the privatization, and put all on CBL preferreds, who were rising at the time. Then it eliminated the divvy and I got burnt. Oh well, win some lose some......

I have been an Amtrust player AFTER the privatization and have hit good several times. Admittedly just buying and holding would have been better (but I was too chicken) as basically its on a mountain climb up since the fiasco. In fact it is now my largest high yield bucket issue and has done great.
But for a high yield play consider this..Enstar is an equity owner of Amtrust. Last quarter it received 1.9 million in quarterly dividends and 5.5 million last 9 months. So they are doing well or Enstar would not be getting those dividends. Plus Amtrust has one 6.125% public trading 2023 bond. It is trading at $103.18 with a 5.13% YTM. If Amtrust was having trouble this bond would not be over par. It is what it is but not a bad play for the yield. Its down near 8.5% now, as I got in closer to 10%. But the chart shows it wants to slowly return to the price it was at pre delisting. Note I only play the baby bonds AFFS and AFFT. No interest in the preferreds.
Now I post not because I was smart and waited. I just got lucky. Read a few articles that got my courage up. I largely ignored Amtrust do to some other crap they had with Maiden. But apparently they crapped on Maiden to help themselves. But tomorrow who knows...

 

[53anddone]

Texas that leaves a very narrow band of issues to choose from with 10 year criteria. Most are issued callable after 5.
Safe, safe type are going to be in 5% range if not lower. The word “safe” and at par or lower just are not compatible. Unless you are looking for an old illiquid 4% utility preferred or a low libor floating bank preferreds in 4% range. But they are under par though.
MNR-C is pretty solid right at par and 6%. This is just me, but I consider that Amtrust debt a lot safer than market thought it was. And I have been rewarded as it continues its slow climb towards par since it was delisted a year ago. People are trusting it again...AFFT and AFFS. Gotta watch for wide bid ask rip off spreads though.
I have issues yielding in the 4% range all the way over 9%. All of various quality and duration. This past month or so has been an incredible floating period. Many issues I have bought and sold and bought and sold in short periods of time.

Also a fan of the MNR preferred but have reached my comfort zone as far as that one. Any others similar?

 

[Sunset]

While I never got anywhere talking to the Schwab reps, I did notice this evening that my accounts now show 20% of my SPLP-A shares being called.

Mine is 19.6% of shares held (196 out of 1,000) .... no idea why not the 20%.

I didn't get any notice or anything, was on a trip so just logged in and saw this.

 

[NgineER]

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

I got 101 out of 500 redeemed.

 

[Mulligan]

Also a fan of the MNR preferred but have reached my comfort zone as far as that one. Any others similar?

There arent many in that 6% near par. Only a few industrial reits. I have done well buying and flipping PLYM-A. Look at prospectus, and company, you may find appealing its terms if u can get in closer to $26.
A promising higher yield play I personally own is CEQP-, pays over 9%. A good high yield, higher risk preferred is one that its financials are improving and this one is...It is a K-1 issued MLP however.

With its cash flow expected to grow sharply this year, Crestwood expects to cover its recently increased payout by about 2.0 times. That's by far the best level in its peer group, where the average is around 1.5. Meanwhile, the growth in both its earnings and excess cash will drive a notable improvement in its leverage ratio. While its debt-to-EBITDA level was a bit elevated at 4.2 times at the end of the third quarter, it's on track to fall within Crestwood's 3.5 to 4.0 target range by year-end. That would give it the second-lowest ratio in its peer group.

They also just raised common “dividend” of unit holders 4% also.

 

[bobandsherry]

Hey Mulligan - have a family member who's got a pot of gold (so to speak) to invest. He's nearing 70 and just wants to find a place to park some money. I talked to him about putting some of that stash into preferred's and he asked me for suggestions. He's in a different position than I am as I'm willing to stretch a bit for return (just hopefully doesn't turn out I do something really dumb), but he's more focused on security of the investment and willing to give up some % to ensure security of the investment (he knows nothing in life is guaranteed).

He's got around $250K to find a home for (nice problem, right?). Knowing you are neck deep into a lot of these preferred issues, I was wondering if you have any suggestions on issues he should do his due diligence on?

Maybe I can talk him into throwing a steak dinner and wine your way Thanks

 

[bobandsherry]

Anyone with money to toss into total speculation issue, YGYIP, caught my eye. Pays dividend monthly and company has approved next 3 months. Currently $17.50 (down almost 3% today) and now paying 13.5% yield. WOW! I find these interesting to keep an eye on, issued in September so could this issue crap out within a year of issue? Certainly seems like a possibility.

 

[brokrken]

He's in a different position than I am as I'm willing to stretch a bit for return (just hopefully doesn't turn out I do something really dumb), but he's more focused on security of the investment and willing to give up some % to ensure security of the investment (he knows nothing in life is guaranteed).

Hi Bob, something like IPLPD is a BBB rated perpetual that is yielding about 5% at current price. Only issue is that it is past call. However, with it only being about $0.50 above par, you'd more than cover that with 2 divies. So, by June you'd be in the clear.

 

[bobandsherry]

Hi Bob, something like IPLPD is a BBB rated perpetual that is yielding about 5% at current price. Only issue is that it is past call. However, with it only being about $0.50 above par, you'd more than cover that with 2 divies. So, by June you'd be in the clear.

Thanks Ken, I'll IPLDP on the list.

 

[Mulligan]

Thanks Ken, I'll IPLDP on the list.

Hey Bob, I agree IPLDP makes a decent base case hold. I just reentered last week at 25.47 for 500 shares. It will have a past call anchoring effect and a higher base yield than new issues. And at 5.1% “par” not really a compelling call issue. What does he need, QDI? Higher yield? Capital protection? Different variables and people have their own twist of what words mean when crap hits the fan, lol...
I am presently in Mexico sunning and drinking, but my work is never done. Snagged a but over 1000 shares of SBNCM on beach other day. 6% non callable issued in 1980s as a convertible that long ago expired. An insider owned bank in North Carolina. Largely dark and doesnt want to be annoyed by investors. The common stock trades around $3900 a share with little to no volume.
SBNCM was issued about 35 years ago as a 9% ish $10 liquidation issue...From the weeds of the OTC pink sheets, lol.

 

[bobandsherry]

What does he need, QDI? Higher yield? Capital protection? Different variables and people have their own twist of what words mean when crap hits the fan, lol...

This is part of the proceeds from sale of his second home. He was originally just going to put into "safe CD's". Meh, pennies! So I mentioned maybe a relatively safe bet with some good quality preferred issues.

Let's see if I can give you enough background.... As I understand him, his main "need" is relatively safe, buy and hold, generating some income now and into the future for his wife should he pass. No current health issues, but ya never know until it's too late. I don't think he'd want something that is too illiquid, after all he was considering putting into CD's.

I don't have full look into his other assets, but what he's shared is he's in indexes/ETF's, mutual funds and a few individual stocks. He did mention he loves APPL. Seems to be mostly following a Boglehead approach. Given the current market running at all time highs, and his age, he said he's got enough into equities and looked at CD's as he's thinking the market is due for correction. He's not doing too bad for himself with other investments, so QDI would be nice, but like anything else, a trade off on return vs. tax benefit.

I'm not expecting him to dump everything into one issue, but splitting it up for diversification and protection from one point of failure. Given his concern with market correction, I figure he may be in a position to lock in some additional money, but that's on him to figure out. I'm just trying to give him some good options on how to get a reasonable return off his recent found money.

I am presently in Mexico sunning and drinking, but my work is never done. Snagged a but over 1000 shares of SBNCM on beach other day. 6% non callable issued in 1980s as a convertible that long ago expired. An insider owned bank in North Carolina. Largely dark and doesnt want to be annoyed by investors. The common stock trades around $3900 a share with little to no volume.
SBNCM was issued about 35 years ago as a 9% ish $10 liquidation issue...From the weeds of the OTC pink sheets, lol.

So, traded steak dinner and wine for burritos and margarita, eh? Have fun in the sun!

 

[pb4uski]

Am I doing this math right?

I own 1200 shares of OSBCP which is being called on 3/2/2020, has a $10 call price and pays 7.8% dividend or 78c a share annually.

As I figure it on 3/2/2020 I'll receive ~$10.13... $10 call price + prorated dividend for 62 days since 12/31/2019.... the prorated dividend as of today (2/7) is ~$0.08... so if I can sell today for $10.11 why would I not sell?

Or better yet, why would someone buy today for $10.11 to get $10.13 in 24 days? Unless perhaps they are happy with 3%?

-------------------
Now the next question... any ideas for a safe, "investment grade' preferred paying 5%+? at or below call if callable?

 

[Sunset]

My SPLP-A shares went though (the 196 lot) , so that is great !

 

[bobandsherry]

Am I doing this math right?

I own 1200 shares of OSBCP which is being called on 3/2/2020, has a $10 call price and pays 7.8% dividend or 78c a share annually.

As I figure it on 3/2/2020 I'll receive ~$10.13... $10 call price + prorated dividend for 62 days since 12/31/2019.... the prorated dividend as of today (2/7) is ~$0.08... so if I can sell today for $10.11 why would I not sell?

Or better yet, why would someone buy today for $10.11 to get $10.13 in 24 days? Unless perhaps they are happy with 3%?

-------------------
Now the next question... any ideas for a safe, "investment grade' preferred paying 5%+? at or below call if callable?

I had calculated 13 cents as well. I guess 3% annualized relatively safe return is worth it to someone.

As for second question, Ken had suggested IPLDP earlier.

Hi Bob, something like IPLPD is a BBB rated perpetual that is yielding about 5% at current price. Only issue is that it is past call. However, with it only being about $0.50 above par, you'd more than cover that with 2 divies. So, by June you'd be in the clear.