Preferred Stock Investing-The Good , The Bad and The In Between 2015 - 2020
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Freedom56
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I love it!
These are the times to buy investment grade preferred stocks not in a few months or so when they are all trading above par and money markets yielding about .4%
capjak
Full time employment: Posting here.
Darn I missed that one. I was at costco watching people run to the water and TP Sections. Mind Blowing..... over water and toilet paper (which Costco had no TP because shipment never arrived? ). Line out the door 15 minutes prior to open.
Wow just tried to put in a buy order and Fidelity will not allow it without a call
?
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aja8888
Moderator Emeritus
When the smoke clears, all that will be left is the BANKS!!
Freedom56
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The banks have started to take out their 2016 lows. Some (the zombie banks) are headed to their 2008 levels.
aja8888
Moderator Emeritus
Last time, Gov bailed them out. Remember too big to fail? LOL
Mulligan
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Damn thats crazy...I had no idea...See I have CHSCO and was watching it (its a sister issue) and it wasnt doing a thing...The funds didnt have it ha. Great buy,Aja... I just bought KTH which dropped under $30. That is over 6% YTM in 2028 with non callable feature and redeems at $27.10..A3/BBB- split rating from PA, largest electric and gas regulated ute.
Freedom56
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From Barron's this morning. Yes preferred shares and bonds have decoupled from treasuries, but solid companies will weather the storm and those bank preferred stocks will be back above par as investors look at spreads versus treasuries. I personally would not buy PFF or PGX or any preferred fund as they hold a lot of garbage. A portfolio of investment grade preferred stocks of large money center banks and utilities is a much better approach.
Preferred Bank Stocks Are Yielding 6% After a Market Selloff
By Andrew Bary
March 17, 2020 10:53 am ET
Photograph by JOHANNES EISELE/AFP via Getty Images
Many preferred bank issues are yielding around 6% following a sharp market selloff on Monday.
The $13 billion iShares Preferred & Income Securities exchange-traded fund (ticker: PFF) fell 10% Monday, to $30.14, lifting its yield to 6.3%. The ETF was off 10 cents in early trading Tuesday, to $30.04.
Preferred yields are up about a percentage point in the past week as shares of financial companies, the leading preferred issuers, have been hit hard.
Wells Fargo’s 4.75% preferred Z (WFC Pr Z) finished Monday at $20.05 for a yield of 6%, and was up 50 cents Tuesday, to $20.55. It traded at around $24 a week ago.
AT&T’s 4.75% C preferred issue (T PR C) ended Monday at $19.60 for a yield of 6.05%. It’s up 60 cents Tuesday, at $20.20, but down from $24 a week ago. MetLife’s series F issue (MET pr F) was trading Tuesday at around $20.65, for a yield of 5.75%. Brighthouse Financial’s 6.6% preferred issue (BHFAP) was up nearly $2 Tuesday, to $23.50, and yields 7%.
The preferred market, like the corporate bond market, has decoupled from the Treasury market as investors worry about the health of corporations and financial companies in particular.
Investors can take comfort that preferred stock is senior to common shares and companies are loath to eliminate preferred dividends.
There could be more volatility ahead for the normally calm preferred stock sector, as the market reacts to news about the economy and the financial services industry.
Preferred Bank Stocks Are Yielding 6% After a Market Selloff
By Andrew Bary
March 17, 2020 10:53 am ET
Photograph by JOHANNES EISELE/AFP via Getty Images
Many preferred bank issues are yielding around 6% following a sharp market selloff on Monday.
The $13 billion iShares Preferred & Income Securities exchange-traded fund (ticker: PFF) fell 10% Monday, to $30.14, lifting its yield to 6.3%. The ETF was off 10 cents in early trading Tuesday, to $30.04.
Preferred yields are up about a percentage point in the past week as shares of financial companies, the leading preferred issuers, have been hit hard.
Wells Fargo’s 4.75% preferred Z (WFC Pr Z) finished Monday at $20.05 for a yield of 6%, and was up 50 cents Tuesday, to $20.55. It traded at around $24 a week ago.
AT&T’s 4.75% C preferred issue (T PR C) ended Monday at $19.60 for a yield of 6.05%. It’s up 60 cents Tuesday, at $20.20, but down from $24 a week ago. MetLife’s series F issue (MET pr F) was trading Tuesday at around $20.65, for a yield of 5.75%. Brighthouse Financial’s 6.6% preferred issue (BHFAP) was up nearly $2 Tuesday, to $23.50, and yields 7%.
The preferred market, like the corporate bond market, has decoupled from the Treasury market as investors worry about the health of corporations and financial companies in particular.
Investors can take comfort that preferred stock is senior to common shares and companies are loath to eliminate preferred dividends.
There could be more volatility ahead for the normally calm preferred stock sector, as the market reacts to news about the economy and the financial services industry.
I have been following this thread for a very long time, but rarely post and haven't done so recently partly because I don't know enough to add to the discussion and also because I haven't been trading much. But looking at the recent turmoil, I couldn't resist getting back in - not that that was necessarily a good decision. In any case in the last few days I added:
60 WFCPRL
1000 ALLYPRA (looks like a bit too early)
250 CBKLP
300 BACPRC
If any of these look like complete mistakes, your comments to that effect would be appreciated. I also have a decent chunk of money left to invest a bit more conservatively and am looking for suggestions on other things to look at. Preferably other than banks.
60 WFCPRL
1000 ALLYPRA (looks like a bit too early)
250 CBKLP
300 BACPRC
If any of these look like complete mistakes, your comments to that effect would be appreciated. I also have a decent chunk of money left to invest a bit more conservatively and am looking for suggestions on other things to look at. Preferably other than banks.
Freedom56
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For those who invest in BDCs, MLPs, and CEFs (I don't own any). There are several leverage funds that are liquidating their holding and putting pressure on their exchange traded holdings and any associated debt.
UBS AG Offers to Exchange
All Outstanding Notes of the Series Specified Below
Final Expiration Date: 5:00 p.m., New York City Time, May 1, 2020, unless extended
We are offering to exchange any and all validly tendered (and not validly withdrawn) and accepted notes of the eight (8) series of UBS AG Exchange Traded Access Securities (the “ETNs”) described in the below table, which are part of a series of UBS AG debt securities entitled “Medium-Term Notes, Series A” (collectively, the “Series A ETNs”) co-obligated by UBS AG and UBS Switzerland AG, for the applicable corresponding ETNs which are part of a series of UBS AG debt securities entitled “Medium-Term Notes, Series B” (collectively, the “Series B ETNs”) issued by UBS AG, as sole obligor, as described herein, on a 1-for-1 basis.
Aggregate Number of Securities Outstanding
as of
December 2, 2019(1)
Title of Series A ETNs CUSIP No. of Series A ETNs Ticker Symbols of Series A ETNs(2) Title of Series B ETNs Being
Offered
CUSIP
17,900,000 ETRACS Alerian MLP Index ETN due July 18, 2042 90267B682 AMU ETRACS Alerian MLP Index ETN, Series B due July 18, 2042 90274D374 AMUB
13,100,000 2xLeveraged Long ETRACS linked to the Wells Fargo Business Development Company Index due May 24, 2041 90267B765 BDCL 2xLeveraged Long ETRACS Wells Fargo Business Development Company Index ETN Series B due May 24, 2041 90274D424 LBDC
4,355,000 ETRACS linked to the Wells Fargo Business Development Company Index due April 26, 2041 902641588 BDCS ETRACS Wells Fargo Business Development Company Index ETN Series B due April 26, 2041 90274D416 BDCZ
17,000,000 ETRACS Monthly Pay 2xLeveraged Closed-End Fund ETN due December 10, 2043 90270L842 CEFL ETRACS Monthly Pay 2xLeveraged Closed-End Fund ETN Series B due December 10, 2043 90269A468 CEFZ
2,938,680 ETRACS linked to the Bloomberg Commodity Index Total Return due October 31, 2039 902641679 DJCI ETRACS Bloomberg Commodity Index Total Return ETN Series B due October 31, 2039 90269A450 DJCB
46,850,000 ETRACS linked to the Alerian MLP Infrastructure Index due April 2, 2040 902641646 MLPI ETRACS Alerian MLP Infrastructure Index ETN Series B due April 2, 2040 90274D382 MLPB
30,240,000 ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN due October 16, 2042 90269A302 MORL ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN Series B due October 16, 2042 90274D432 MRRL
4,728,590 ETRACS linked to the UBS Bloomberg Constant Maturity Commodity Index (CMCI) Total Return due April 5, 2038 902641778 UCI ETRACS UBS Bloomberg Constant Maturity Commodity Index (CMCI) Total Return ETN Series B due April 5, 2038 90274D390 UCIB
UBS AG Offers to Exchange
All Outstanding Notes of the Series Specified Below
Final Expiration Date: 5:00 p.m., New York City Time, May 1, 2020, unless extended
We are offering to exchange any and all validly tendered (and not validly withdrawn) and accepted notes of the eight (8) series of UBS AG Exchange Traded Access Securities (the “ETNs”) described in the below table, which are part of a series of UBS AG debt securities entitled “Medium-Term Notes, Series A” (collectively, the “Series A ETNs”) co-obligated by UBS AG and UBS Switzerland AG, for the applicable corresponding ETNs which are part of a series of UBS AG debt securities entitled “Medium-Term Notes, Series B” (collectively, the “Series B ETNs”) issued by UBS AG, as sole obligor, as described herein, on a 1-for-1 basis.
Aggregate Number of Securities Outstanding
as of
December 2, 2019(1)
Title of Series A ETNs CUSIP No. of Series A ETNs Ticker Symbols of Series A ETNs(2) Title of Series B ETNs Being
Offered
CUSIP
17,900,000 ETRACS Alerian MLP Index ETN due July 18, 2042 90267B682 AMU ETRACS Alerian MLP Index ETN, Series B due July 18, 2042 90274D374 AMUB
13,100,000 2xLeveraged Long ETRACS linked to the Wells Fargo Business Development Company Index due May 24, 2041 90267B765 BDCL 2xLeveraged Long ETRACS Wells Fargo Business Development Company Index ETN Series B due May 24, 2041 90274D424 LBDC
4,355,000 ETRACS linked to the Wells Fargo Business Development Company Index due April 26, 2041 902641588 BDCS ETRACS Wells Fargo Business Development Company Index ETN Series B due April 26, 2041 90274D416 BDCZ
17,000,000 ETRACS Monthly Pay 2xLeveraged Closed-End Fund ETN due December 10, 2043 90270L842 CEFL ETRACS Monthly Pay 2xLeveraged Closed-End Fund ETN Series B due December 10, 2043 90269A468 CEFZ
2,938,680 ETRACS linked to the Bloomberg Commodity Index Total Return due October 31, 2039 902641679 DJCI ETRACS Bloomberg Commodity Index Total Return ETN Series B due October 31, 2039 90269A450 DJCB
46,850,000 ETRACS linked to the Alerian MLP Infrastructure Index due April 2, 2040 902641646 MLPI ETRACS Alerian MLP Infrastructure Index ETN Series B due April 2, 2040 90274D382 MLPB
30,240,000 ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN due October 16, 2042 90269A302 MORL ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN Series B due October 16, 2042 90274D432 MRRL
4,728,590 ETRACS linked to the UBS Bloomberg Constant Maturity Commodity Index (CMCI) Total Return due April 5, 2038 902641778 UCI ETRACS UBS Bloomberg Constant Maturity Commodity Index (CMCI) Total Return ETN Series B due April 5, 2038 90274D390 UCIB
Mulligan
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Hamster, if you are not expert that qualifies you to say what you want as we arent either!
Not criticism or praise just info in case you were not familiar. ALLY-A is a floater and Libor is heading to zero or .25. So payment will be lower. But price has dropped a lot so this will mitigate some of that.
The volatility could continue for a while. As preferreds in times of turmoil (which is where we are at, ha) will trade with equity characteristics. So as long as volatility is around and credit spreads widening it will create what is happening.
Not criticism or praise just info in case you were not familiar. ALLY-A is a floater and Libor is heading to zero or .25. So payment will be lower. But price has dropped a lot so this will mitigate some of that.
The volatility could continue for a while. As preferreds in times of turmoil (which is where we are at, ha) will trade with equity characteristics. So as long as volatility is around and credit spreads widening it will create what is happening.
Running_Man
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Hamster, if you are not expert that qualifies you to say what you want as we arent either!
Not criticism or praise just info in case you were not familiar. ALLY-A is a floater and Libor is heading to zero or .25. So payment will be lower. But price has dropped a lot so this will mitigate some of that.
The volatility could continue for a while. As preferreds in times of turmoil (which is where we are at, ha) will trade with equity characteristics. So as long as volatility is around and credit spreads widening it will create what is happening.
Generically speaking preferreds are going to get killed. These payments are going to be stopped for the good of the country.
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
^^^^ Do you have a source or citation for that assertion? Rationale?
You seem to be suggesting that the government will intervene in a financial contract between a company and investor and tell the company not to pay the investor. Is that what you are suggesting? If so, what precedence are you relying on?
You seem to be suggesting that the government will intervene in a financial contract between a company and investor and tell the company not to pay the investor. Is that what you are suggesting? If so, what precedence are you relying on?
Running_Man
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Preferred dividends are only dividends that have a preference over common. Companies are commonly forced to stop paying dividends and I fully expect to see that as a result of the relief that all the banks, auto industry, hotels, gambling establishment, financing companies and auto parts suppliers, steel mills etc will be seeking. 1st wave was 850 billion, but on CNBC they said that timid response will never do. The FED is going to need to do 10 trillion by my estimation and there will be a price to pay and stopping preferred dividends will be one of the solutions for most industries. Utility preferreds may continue to pay so long as they are not in the oil industry, but oil has dropped to $24 so that whole sector is about to implode anyway.
Heck GLPA is down 20% today WFC Z is down to 19
COFF is at 21.2 EP-C is at 41.50 NI'PRB is at 23.64 SR A is down to 23
ALLA is down 25% today to 15 it was 26 a week and a half ago.
\
The pressure is just beginning. Fed is injecting 1.5 trillion dollars into reserves.
I am waiting on deals for these, as eventually preferred will be the best investments by far, but need to analyze the survivors in real time as this continues but right now preferreds since they are dependent on dividends being paid, are the most vulnerable security in the market today.
Heck GLPA is down 20% today WFC Z is down to 19
COFF is at 21.2 EP-C is at 41.50 NI'PRB is at 23.64 SR A is down to 23
ALLA is down 25% today to 15 it was 26 a week and a half ago.
\
The pressure is just beginning. Fed is injecting 1.5 trillion dollars into reserves.
I am waiting on deals for these, as eventually preferred will be the best investments by far, but need to analyze the survivors in real time as this continues but right now preferreds since they are dependent on dividends being paid, are the most vulnerable security in the market today.
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Freedom56
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Bonds in technology, healthcare, telecom, pharma , and some financials will be the best investments going forward. Investment grade preferred stocks will recover (the one's from large banks). For now they can be traded.
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bmcgonig
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Look at PFD. Down 25% today
bobandsherry
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Wow - even the well regarded dropping big. SLMNP down 11%, now under par at $882.
ALLY-A was one of my faves, unloaded and moved to C-J (which is "only" down 5%). glad I did as I see ALLY-A down 23% today and now $15 and change. That's crazy.
ALLY-A was one of my faves, unloaded and moved to C-J (which is "only" down 5%
). glad I did as I see ALLY-A down 23% today and now $15 and change. That's crazy.
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aja8888
Moderator Emeritus
Just remember how low stocks got in 2009. Ford was a buck.
These preferreds will come back.
These preferreds will come back.Freedom56
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Fixed income does not normally trade at high volume. When these funds are forced to liquidate, there are not enough bids to support the securities. Just keep in mind that investment grade notes, bonds, preferred stocks eventually end up at par. I have been trading these preferred stocks buying and selling but stopped yesterday when I didn't see any fund flows into PFF or PGX. Some ETNs are in the process of automatic liquidation of their holdings which is putting a lot of pressure CEFs and BDCs. I have a lot of dry powder to buy up when I see some signs that the corona virus new cases curve starts to flatten like China. I'm watching the countries in Europe to see if their containment is working.
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bobandsherry
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CHSCM doing another bounce? I had a bottom feeder GTC sitting at $17 and it got snagged today. Opened at $22, now at $16.21. Any news?
SR-A and EP-C down pretty good. Should I trim these positions or just hang on? I'm in no hurry so long as they don't go to zero value.
Edit to add: I started buying div stocks around 6 years ago - D, T, PG, SO, DUK, MO, BTI and just recently added a few preferred stocks. I was surprised that the preferreds fell more than some of my common stock holdings.
Still holding on.
Edit to add: I started buying div stocks around 6 years ago - D, T, PG, SO, DUK, MO, BTI and just recently added a few preferred stocks. I was surprised that the preferreds fell more than some of my common stock holdings.
Still holding on.
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