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01-15-2019, 03:56 PM
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#4141
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2009
Posts: 9,343
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Quote:
Originally Posted by pb4uski
No, preferreds are ahead of the common in the event of bankruptcy or liquidation.... that is why they are called preferred, they have preference over common.
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PB, I know that...That is why I invest in them.... The sentence was in reference to a receiving any claim if the bonds only received partial recovery. He was stating an example where lower cap stack received partial payment while cap stack above was not fully paid in full. My point was if bonds arent made whole and equity was wiped out would preferreds get anything if bonds above were not made whole first. He was implying they could. My assumption would be if the bonds were not made whole, they wouldnt broach the divide to equity side and allow them to receive anything...preferred or common.
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Preferred Stock Investing-The Good , The Bad and The In Between
01-15-2019, 08:32 PM
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#4142
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2009
Posts: 9,343
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Preferred Stock Investing-The Good , The Bad and The In Between
Quote:
Originally Posted by Texas Proud
Just an FYI on BK... there is nothing that requires that a class is paid in full before giving something to a lower class...
I remember reading about some BK about 20 years ago where a higher class got 80% of what was due, the next class got like 40% and the one below that 20% ish... you would have thunk that the highest would get 100% before any goes to the lower and the bottom gets 0%.... IIRC only the equity got zero... before you ask, I cannot remember who it was....
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Texas, this is interesting...Debt is not debt and preferreds are not all preferreds. EIX subordinate debt Of 1.7 billion sits subordinate to the SCE trust preferreds. So these preferreds of 2.2 billion in par value actually sit above 12% of the companies debt. This is per Moodys...And the trust fund has no debt inside the wrapper either. It is the Series L preferred stock that is inside the trust. So its a true QDI preferred.
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01-15-2019, 09:56 PM
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#4143
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,264
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Quote:
Originally Posted by Mulligan
PB, I know that...That is why I invest in them.... The sentence was in reference to a receiving any claim if the bonds only received partial recovery. He was stating an example where lower cap stack received partial payment while cap stack above was not fully paid in full. My point was if bonds arent made whole and equity was wiped out would preferreds get anything if bonds above were not made whole first. He was implying they could. My assumption would be if the bonds were not made whole, they wouldnt broach the divide to equity side and allow them to receive anything...preferred or common.
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Got ya. Yes, I would think that any securities that are senior to the preferred would need to be paid in full before the preferreds would get anything.... if not what benefit is there to being senior?
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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01-15-2019, 11:18 PM
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#4144
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Posts: 17,203
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Quote:
Originally Posted by Mulligan
PB, I know that...That is why I invest in them.... The sentence was in reference to a receiving any claim if the bonds only received partial recovery. He was stating an example where lower cap stack received partial payment while cap stack above was not fully paid in full. My point was if bonds arent made whole and equity was wiped out would preferreds get anything if bonds above were not made whole first. He was implying they could. My assumption would be if the bonds were not made whole, they wouldnt broach the divide to equity side and allow them to receive anything...preferred or common.
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I do not remember enough about the company... but IIRC there were like 9 to 12 levels of claims...
I would think that pref would be knocked out also with the common...
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01-16-2019, 09:07 PM
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#4145
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2009
Posts: 9,343
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Took one more bite of the MTB- apple today at $1003. The $15.93 divi goes exD in 2 weeks. No redemption notice came with it so this 6.375% par high quality QDI cumulative bank preferred will live on.
I have over 50 shares of MTB- and MTB-C so this is an outside position and probably my favorite preferred now in terms of quality and yield.
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01-16-2019, 11:12 PM
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#4146
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Full time employment: Posting here.
Join Date: May 2010
Posts: 862
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Mulligan, glad to see you joining me on the MTB- train. I hope we will be able to enjoy the income stream for a good long while.
If,as you have said, these shares were initially for institutional holders, they are probably held for an indefinite period ( hopefully forever ) and the bank has no plans to redeem.
I have the same number of shares as you, all MTB-. Unfortunately, I bought them much earlier, at higher prices, so my cost basis is $1,011. But I have enjoyed a couple of dividends already.
Definitely a sock drawer resident.
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01-17-2019, 05:34 AM
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#4147
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2009
Posts: 9,343
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Coolius, you make your price sound worse than it was. That was well under one dividend above par. And who is to say you didnt buy them shortly before exD? That price is equivalent to paying $25.27 for a $25 par. The issue is 37 basis points higher and with higher credit quality than just about any big bank issue on the market.
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01-18-2019, 09:28 AM
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#4148
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Full time employment: Posting here.
Join Date: May 2017
Posts: 797
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I'd be interested in getting the group's thoughts on any of the AFSI preferreds. AmTrust Financial recently went private and since the announcement the prefs have gotten crushed and the yields are ~ 12%. I can't find an S&P or Moody's rating, but Insurance industry specific rater, A.M best, has them at A-. The non-cumulative part scares me and they have issued more preferred shares in the recent years which also worries me. However, they are in a good cash flow business and going private puts me at a ease a bit that the people running the show now are fully vested in the success. Anyway, just a thought. Would love to hear your thoughts.
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01-18-2019, 09:47 AM
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#4149
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2009
Posts: 9,343
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Quote:
Originally Posted by brokrken
I'd be interested in getting the group's thoughts on any of the AFSI preferreds. AmTrust Financial recently went private and since the announcement the prefs have gotten crushed and the yields are ~ 12%. I can't find an S&P or Moody's rating, but Insurance industry specific rater, A.M best, has them at A-. The non-cumulative part scares me and they have issued more preferred shares in the recent years which also worries me. However, they are in a good cash flow business and going private puts me at a ease a bit that the people running the show now are fully vested in the success. Anyway, just a thought. Would love to hear your thoughts.
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The company hasnt performed the greatest. It crapped on MH and has stressed it to major problems. The family doesnt have a trustworthy reputation. The interests of the preferreds are not in alignment with the private shared common stock holders. This is why they are trading low. Usually what is good for the common is good for the preferred. But not in this situation. This is why the butt ass cap stack baby bonds are trading so much higher. They have legal protections. Usually there is not much diff in yield between butt end baby bonds and their preferred sisters.
Now if you are looking for higher risk reward action to trade as opposed to buy and hold that would be a different investing thesis I wasnt opining on.
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01-18-2019, 11:02 AM
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#4150
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Full time employment: Posting here.
Join Date: May 2017
Posts: 797
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Quote:
Originally Posted by Mulligan
The company hasnt performed the greatest. It crapped on MH and has stressed it to major problems. The family doesnt have a trustworthy reputation. The interests of the preferreds are not in alignment with the private shared common stock holders. This is why they are trading low. Usually what is good for the common is good for the preferred. But not in this situation. This is why the butt ass cap stack baby bonds are trading so much higher. They have legal protections. Usually there is not much diff in yield between butt end baby bonds and their preferred sisters.
Now if you are looking for higher risk reward action to trade as opposed to buy and hold that would be a different investing thesis I wasnt opining on.
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Mully, thanks for the input. I knew about MH, but I didn't realize the family has questionable character. In that case, I'll pass and keep looking. Have a small portion of cash that I'm looking to put into something higher yield (8%+) that isn't complete crap.
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01-18-2019, 11:03 AM
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#4151
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Full time employment: Posting here.
Join Date: May 2017
Posts: 797
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I could always just buy more NSS, SSW or SPLP, but already did some of that a few weeks back and looking for something new.
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01-18-2019, 11:14 AM
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#4152
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,264
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Quote:
Originally Posted by Mulligan
Took one more bite of the MTB- apple today at $1003. The $15.93 divi goes exD in 2 weeks. No redemption notice came with it so this 6.375% par high quality QDI cumulative bank preferred will live on.
I have over 50 shares of MTB- and MTB-C so this is an outside position and probably my favorite preferred now in terms of quality and yield.
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Mulligan... where do you get the 6.375%...everything that I am seeing on both Quantum and Fidelity say 5%.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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01-18-2019, 11:23 AM
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#4153
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Thinks s/he gets paid by the post
Join Date: Sep 2014
Location: The Great Wide Open
Posts: 3,789
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Quote:
Originally Posted by brokrken
I'd be interested in getting the group's thoughts on any of the AFSI preferreds. AmTrust Financial recently went private and since the announcement the prefs have gotten crushed and the yields are ~ 12%. I can't find an S&P or Moody's rating, but Insurance industry specific rater, A.M best, has them at A-. The non-cumulative part scares me and they have issued more preferred shares in the recent years which also worries me. However, they are in a good cash flow business and going private puts me at a ease a bit that the people running the show now are fully vested in the success. Anyway, just a thought. Would love to hear your thoughts.
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I bought the proverbial 200 shares in the $22 range before they went private. I still own them and bought some 200 more in my "play" or "speculation" account. The general thinking is that the new private owner/family will screw the preferred investor and default on the divvy. My thought was if they screw their preferred shareholders, who would do business with this insurance company? I mean if you screw over your preferred stock owners how would policy owners feel safe? The company would fold like a deck of cards. So I took a nibble more, thinking that. Hell it's only money!
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Preferred Stock Investing-The Good , The Bad and The In Between
01-18-2019, 11:30 AM
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#4154
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2009
Posts: 9,343
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Preferred Stock Investing-The Good , The Bad and The In Between
Quote:
Originally Posted by pb4uski
Mulligan... where do you get the 6.375%...everything that I am seeing on both Quantum and Fidelity say 5%.
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PB, this was one of those odd duck preferreds and presumably wasnt even issued in the beginning for public trading. It was a TARP issue during 2008 crisis that started out as a 5% issue. Then it got moved to a preferred that was to become a 9% issue in 2014 unless preferred owners agreed to it becoming 6.375%. Not wanting to lose it and knowing it would be redeemed if not voted for approval the preferred holders approved the adjustment.
This is why its a bank cumulative. This do not exist anymore. Only 3 in existence that trade...MTB-, MTB-C, and FIISO (I own all three). Since it was originally a TARP issue it has grandfathered status and is allowed to still be trading....
The dividend rate is scheduled to increase to 9.00% on and after 2/15/2014 if the amendment detailed in the prospectus is not approved by shareholders. On approval of the amendment the dividend rate will increase to 6.375% on and after 11/15/2013.
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01-18-2019, 12:21 PM
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#4155
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Full time employment: Posting here.
Join Date: May 2010
Posts: 862
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MTB Bank just released a good earnings report, one can interpret that as good or bad news from the viewpoint of a MTB- shareholder.
Good, the bank is doing well, so dividends will continue.
Bad, because they may now have money to redeem the preferred series, thus destroying our income pipeline.
Like Mulligan, I have an overweight position in MTB-, and a small position in FIISO.
These are great sock drawer candidates if you can buy them at a reasonable price.
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01-18-2019, 12:32 PM
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#4156
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2009
Posts: 9,343
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They dont think of it that way bankwise, Coolius. This is Tier 1 cap. The profits allow them to expand the balance and use for other things. It wont be called for that reason. Many of these small trust preferreds have their banks earning more profits annually than the value of the preferreds are and they dont redeem. They are looking at cost on capital. Actually the new JPM issue at 6% is a good benchmark for MTB. They wont redeem these preferreds for a reissuance on that differential. Not worth the cost. They need probably 5.75% to interest them unless they redeem for other unrelated reasons.
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01-18-2019, 12:35 PM
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#4157
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2009
Posts: 9,343
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Quote:
Originally Posted by Mulligan
They dont think of it that way bankwise, Coolius. This is Tier 1 cap. The profits allow them to expand the balance and use for other things. It wont be called for that reason. Many of these small trust preferreds have their banks earning more profits annually than the value of the preferreds are and they dont redeem. They are looking at cost on capital. Actually the new JPM issue at 6% is a good benchmark for MTB. They wont redeem these preferreds for a reissuance on that differential. Not worth the cost. They need probably 5.75% to interest them unless they redeem for other unrelated reasons.
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Think of it this way as the CEO of FISI said when asked about trying to buy out FIISO owners with an offer...He said..Our return on equity is over 10% so we still are making money off the 8.48% preferreds....Why would we waste money overpaying to buyout preferreds at 8.48% when our return on equity is higher?
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01-18-2019, 02:02 PM
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#4158
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Full time employment: Posting here.
Join Date: May 2010
Posts: 862
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Quote:
Originally Posted by Mulligan
This is Tier 1 cap.
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Good catch, I forgot about that, the Tier 1 capital. Problem with trying to keep facts about 30+ issues all at once, gets tough for a old hat like me.
Well the MTB preferreds seem to have shaken off their recent lethargy, now showing 427 shares traded today - HUGE volume for them, eh!
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01-18-2019, 02:13 PM
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#4159
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2009
Posts: 9,343
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Quote:
Originally Posted by Coolius
Good catch, I forgot about that, the Tier 1 capital. Problem with trying to keep facts about 30+ issues all at once, gets tough for a old hat like me.
Well the MTB preferreds seem to have shaken off their recent lethargy, now showing 427 shares traded today - HUGE volume for them, eh!
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These MTB preferreds actually have two prices...The official one on a 100 block trade and the unofficial trades that occur 5-25 shares at a time...The MTB- bounced on a 100 block moving it to 1017. That was going to happen with exD approaching. MTB-C official pricing hasnt reflected where it has been trading. It has coming dribs and drabs around 1016... But is showing 1001 that cant be bought at. I have had a very nice run here loading up on these. But with present yield, and safety they just cant be considered as issues to sell.
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01-19-2019, 08:17 AM
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#4160
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2009
Posts: 9,343
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Quote:
Originally Posted by pb4uski
Mulligan... where do you get the 6.375%...everything that I am seeing on both Quantum and Fidelity say 5%.
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PB, I saw this and thought of your post. Here is the definitive proof of the payout. M&T just declared the quarterly preferred dividend this week for both series at $15.9375. You times that by 4 and divide by $1000 par and one gets the 6.375% par yield.
https://ir.mtb.com/news-releases/new...-series-and-22
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