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

[Mulligan]

Quote:

Originally Posted by tmm99 I could be wrong, but I thought you said your mom had PFF and another fund? Sent from my iPad using Early Retirement Forum

I did with my dad....He is pretty astute and has been a lifelong investor, though never involved with preferreds. It goes back to what Thepalmer said...."Its alot easier".... He does have some individual preferreds, but he got tired of buying them and just bought PFF and PFXF to finish out his allotment of money to spend. He also bought 60 shares of WFC-L. I personally wouldn't do it, but that is what he wanted. I dont know his passwords so he did it all himself.
I admittedly am a bit more paranoid and seek a few more protections than most. But like Coolius, I actually enjoy buying some of these illiquids and adding to collection. After my dad realized how much work it was to get his 500 shares of AILLL, he quickly lost interest. Though he bought a big slug CHSCL near par when it came out too, but buying $50,000 of that issue was done in a few minutes.

[tmm99]

Quote:

Originally Posted by Mulligan I did with my dad....He is pretty astute and has been a lifelong investor, though never involved with preferreds. It goes back to what Thepalmer said...."Its alot easier".... He does have some individual preferreds, but he got tired of buying them and just bought PFF and PFXF to finish out his allotment of money to spend. He also bought 60 shares of WFC-L. I personally wouldn't do it, but that is what he wanted. I dont know his passwords so he did it all himself. I admittedly am a bit more paranoid and seek a few more protections than most. But like Coolius, I actually enjoy buying some of these illiquids and adding to collection. After my dad realized how much work it was to get his 500 shares of AILLL, he quickly lost interest. Though he bought a big slug CHSCL near par when it came out too, but buying $50,000 of that issue was done in a few minutes.

Thanks. I for some reason thought it was your mom and you helped set her up with PFF. My mistake.


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[Mulligan]

Quote:

Originally Posted by tmm99 Thanks. I for some reason thought it was your mom and you helped set her up with PFF. My mistake. Sent from my iPad using Early Retirement Forum

Close enough! .... I had to explain what they were...The PFXF is kind of a counter balance to PFF. It doesnt hold bank preferreds, so he split the rest of the money 50/50 in both funds. I think that is smarter than just going PFF.... But he also said he doesnt care if the stocks go to a penny as long as he gets his 6% dividends. Im not like that. I like illiquid, stable 6% issues that dont move much. I wish all mine were like AILNP. It hasnt traded since the last time I was able to get some and that was back in July.
Added thought... There 2 big benefits to the "preferred mutuals" that may be important to some, but are personally not to me... 1) Easier liquidity to sell 2) Diversification (though some of that is negative) that cant be ignored. If an issue blew up in the fund, it wouldnt register a big hit. If one of mine broke historic ground and didnt pay for the first time in history of Utility preferreds, it would blow a king sized hole in my stash! But I dont even spend a penny of dividends so other than making me mad, it wouldn't change my life.

[Coolius]

It might be an interesting exercise to poll the other members of this board - those who have bought illiquid preferred Utes like AILLL, CNLPL & CNTHP.

Could you, based on your experience holding these, answer the following questions:

1) Are you satisfied with your purchase?

2) Do you find the thin trading to be a negative attribute of your stock ?

3) Does the volatility ( or lack thereof ) of the stock concern you ?


Here are my answers:

1) Yes. Not only with the 3 mentioned, but also with HE-U, GLFPO, EYMXP and couple others.

2) I find it to be a negative when trying to buy at a "reasonable". I have sold some on a couple occasions, when a bid appeared at a good price. I suppose if I were forced to sell for whatever reason, the price would be much lower than desired.

3). I am very comfortable with the lack of volatility. My non-preferred holdings exhibit enough volatility to keep me unglued and anxious during the trading day.

[Texas Proud]

Just a question on what (free) site is one that gives info on the preferreds?

When I look at Yahoo or other sites, I do not see any info on the shares concerning call price, if cumulative or not, etc. etc....


I would like to be a bit more informed on the actual shares I am buying.

[Coolius]

Quote:

Originally Posted by Texas Proud Just a question on what (free) site is one that gives info on the preferreds? When I look at Yahoo or other sites, I do not see any info on the shares concerning call price, if cumulative or not, etc. etc.... I would like to be a bit more informed on the actual shares I am buying.

Quantumonline.com

It is free, but because it has been so valuable to me, I donate a modest amount each year. The donation is tax-deductible.

Most symbols are in the format : XXX-X. ( Example, WFC-L, PSA-A, NEE-J )

[Sunset]

My plan was to buy some via Vanguard in regular account. Are folks saying Vanguard won't let me do it online ?
If that is true I might regret moving an account over to Vanguard

[Coolius]

Quote:

Originally Posted by Sunset My plan was to buy some via Vanguard in regular account. Are folks saying Vanguard won't let me do it online ? If that is true I might regret moving an account over to Vanguard

Vanguard will not allow certain types of Preferreds to be bought online.

But you can enter an order through broker assistance, and request the online commission, which they will give since you were prevented from doing it online.

Most regular and well-traded Preferreds can be traded online, I have bought stuff like O-F, PSA-A in this way. But they did not allow WFC-L for online order.

[Coolius]

WFC-L has breached the $1,200 level. The last time it was above this price was in May 2015.

Seems like institutions are positioning for a protracted period of moderate interest rate and fewer rate hikes.

It has risen a little too high for me to add more at this price level. I will wait for a pullback to the $1,160 level, but accept that it might be quite some time before that happens.

[Texas Proud]

Thanks for all who has posted on this thread... special thanks to Mulligan since we have been trading PMs.


Just bought my first 200 shares of CNTHP. Put in a bid for 250, but so far only got 200.

Will be looking at some of the others issues that have been mentioned.

Just to disclose, I am moving some of my HY bond fund in my IRA to these preferred shares... they have a better yield and much better rating, at least the ones I plan on buying..

Edit... spoke too soon, while typing the other 50 shares traded...

[Coolius]

Quote:

Originally Posted by Texas Proud Thanks for all who has posted on this thread... special thanks to Mulligan since we have been trading PMs. Just bought my first 200 shares of CNTHP. Put in a bid for 250, but so far only got 200. Will be looking at some of the others issues that have been mentioned. Just to disclose, I am moving some of my HY bond fund in my IRA to these preferred shares... they have a better yield and much better rating, at least the ones I plan on buying.. Edit... spoke too soon, while typing the other 50 shares traded...

Texas Proud, You got a good price for your CNTHP.

As Mulligan must have told you, these are "ring-fenced" and "yield trapped" securities which should give us all a sleep well at night situation.

The only major risk is that of a redemption, which is low because of the size of the issue, and priorities of the parent company. Even if it were redeemed, the price will be $51.44 plus accrued interest.

Your buy price is within 2 dividends of this redemption price, and the next dividend is expected to be declared April 1st, just 4 days away.

So your risk is really for the next 3 months, max at about 1 dividend.

I have a full position in CNTHP as well, happy with it, my buy price over the past several months average $52.34, so you can see that it has not really gone up much during that time ( due to the yield trapped attribute ).

Congrats on the buy ! We will be disappointed if we expect capital gains of any significance from these securities - but the income stream will hopefully continue for a long time.

[Texas Proud]

Quote:

Originally Posted by Coolius Texas Proud, You got a good price for your CNTHP. As Mulligan must have told you, these are "ring-fenced" and "yield trapped" securities which should give us all a sleep well at night situation. The only major risk is that of a redemption, which is low because of the size of the issue, and priorities of the parent company. Even if it were redeemed, the price will be $51.44 plus accrued interest. Your buy price is within 2 dividends of this redemption price, and the next dividend is expected to be declared April 1st, just 4 days away. So your risk is really for the next 3 months, max at about 1 dividend. I have a full position in CNTHP as well, happy with it, my buy price over the past several months average $52.34, so you can see that it has not really gone up much during that time ( due to the yield trapped attribute ). Congrats on the buy ! We will be disappointed if we expect capital gains of any significance from these securities - but the income stream will hopefully continue for a long time.

Thanks, Mulligan was giving me this info on PMs... I could not find the call price on the sites I look at, so that was good news... I will say that the Vanguard rep was telling me a good amount of info on this security, so that was good... even my negative rate of return if called...


Since I am replacing HY bonds, I was not looking for cap gains anyhow...

And I will say again, I would not have known about these securities without this thread... so I am happy to say I learned a lot here...

[Coolius]

Quote:

Originally Posted by Texas Proud Thanks, Mulligan was giving me this info on PMs... I could not find the call price on the sites I look at, so that was good news... I will say that the Vanguard rep was telling me a good amount of info on this security, so that was good... even my negative rate of return if called... Since I am replacing HY bonds, I was not looking for cap gains anyhow... And I will say again, I would not have known about these securities without this thread... so I am happy to say I learned a lot here...

The site that provides a really good snapshot of such securities is Quantumonline.com

They have links to the original prospectus, the parent website, and quotes.
The site is very valuable for investors of income securities.
I find it so useful that I donate a modest amount yearly, to help with its upkeep and improvement.

[Mulligan]

Quote:

Originally Posted by Texas Proud Thanks, Mulligan was giving me this info on PMs... I could not find the call price on the sites I look at, so that was good news... I will say that the Vanguard rep was telling me a good amount of info on this security, so that was good... even my negative rate of return if called... Since I am replacing HY bonds, I was not looking for cap gains anyhow... And I will say again, I would not have known about these securities without this thread... so I am happy to say I learned a lot here...

Glad to see you on board, Texas! I went golfing today and just came back. I noticed my bid of $52.76 was accepted so I have a 100 more... Geez for me I am overloaded to the gills on this one. But at this price and dividend going ex in 2 weeks or less, it has been too tempting. Usually getting these is a bit harder, someone not wanting to upset the applecart has been unwinding a position provided a fair price is given for them.
Dont let those phone reps scare you with those negative yield to calls. 2 years ago when I got my first order of AILLL in, he was trying to get me not to buy because he saw yearly adjusted YTC was minus 30%...
I told him dude, I am buying at 25 cents over par, as next dividend has already been declared... At most all I can lose is 25 cents a share. I dont care what your calculator says, I am not risking 30%, I am risking less than 1%. And yet 2 years later, it still is paying out the 41 cent divi like clockwork.

[Mulligan]

We are presently in the "black hole" period with these issues...It should go exD about April 8.... But preferreds must officially have a declared dividend from BoD's for the money to be released. In 2015 the Directors met and declared all CLP issues on April 1. So we will not get official confirmation without call hopefully until maybe next week. They wait so late in declaring that next dividend is all but mandatory as 30 day notice must be given anyways. Now "L" issue is left out in the wind more being it just went exD from last directors meeting declaration.


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[capjak]

[QUOTE=Coolius;1712698]It might be an interesting exercise to poll the other members of this board - those who have bought illiquid preferred Utes like AILLL, CNLPL & CNTHP.

Could you, based on your experience holding these, answer the following questions:

1) Are you satisfied with your purchase?

2) Do you find the thin trading to be a negative attribute of your stock ?

3) Does the volatility ( or lack thereof ) of the stock concern you ?


Here are my answers:
1) Yes, I now have $160,000 invested in preferred yielding 6% dividend
2) No, not currently but it maybe an issue if I ever need to liquidate
3) No, there is very little volatility and I see that as a plus as these investments are a pure income play

[Mulligan]

[QUOTE=capjak;1713238]

Quote:

Originally Posted by Coolius It might be an interesting exercise to poll the other members of this board - those who have bought illiquid preferred Utes like AILLL, CNLPL & CNTHP. Could you, based on your experience holding these, answer the following questions: 1) Are you satisfied with your purchase? 2) Do you find the thin trading to be a negative attribute of your stock ? 3) Does the volatility ( or lack thereof ) of the stock concern you ? Here are my answers: 1) Yes, I now have $160,000 invested in preferred yielding 6% dividend 2) No, not currently but it maybe an issue if I ever need to liquidate 3) No, there is very little volatility and I see that as a plus as these investments are a pure income play

If you accumulate too many you have to do what this CNTHP seller is currently doing and wait patiently for a fair price. On the other hand as far as buying goes you have to be patient and get the opportunity that has unfolded here... Example today 1900 shares traded, 10 day average which includes today is 491, while the 90 day average is just 140. So you have to strike when opportunity is there as they are prone to "lock up" for periods of time and when 100 shares does become available you frequently get jumped.
There are only 200,000 shares outstanding for this issue.

[Mulligan]

Eversource has declared the next dividends for CNTHP and CNLPL. April 8 is the record date for CNTHP and payable May 1. CNLPL's record date isn't for several more months.
Had an overlarge position of BGEPF, so I sold half today since I am accumulating Ag common stocks in PAGG.
Have picked up 400 shares of MNR-A in last 2 days...I really liked this one. I had it a few months ago but flipped for a high price. It has come back down, so I am back in for the 7.3% yield or so.
Also bought 200 shares of GWSVP today (Glacier Water Trust) with its 8.85% yield. It is such a quirky issue I had to buy just for that reason alone.


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[Texas Proud]

OK... signed up for Quantumonline....

But, I am disappointed in that site... it does have a list of securities, but it does not show info that I would like to filter... such as current yield...

IOW, I can get a list of some income group, but the info presented just does not tell you enough about the security.... so you cannot cull down the list to a smaller group that you can then research....

The only good thing is that it does have much more info than any other site I have seen so far...

[Mulligan]

Quote:

Originally Posted by Texas Proud OK... signed up for Quantumonline.... But, I am disappointed in that site... it does have a list of securities, but it does not show info that I would like to filter... such as current yield... IOW, I can get a list of some income group, but the info presented just does not tell you enough about the security.... so you cannot cull down the list to a smaller group that you can then research.... The only good thing is that it does have much more info than any other site I have seen so far...

You just have to ping pong back and forth to a website such as marketwatch to see current yield and price...it does have good info such as cumulative, call dates, price, and a few other key points. It also links you quickly to any other preferreds from same company. Plus most prospectus's of the issue is hyper linked there so you can read it; except for the ones that were written on stone tablets such as CNTHP.