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

[Mulligan]

$50.03... A 100 more shares .... Better cool my enthusiasm here!


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[Mulligan]

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

May want to watch opening and see if selling spikes stock lower for AES-C if interested. Sometimes you get a real quick drop before buyers step in... With common and bonds acting just fine, this seems very peculiar for a 5% drop of the preferred this month. I monitor the stock though admittedly this is such a complex company I could never be "in the know" on anything. I just have to go by birds eye view... Just this month management stated 1) paid down 300 million of parent debt, exceeding target by 50% 2)Reduced parent debt by 27% (1.7 billion) since 2011 3) No maturities due until 2019 and only $240 million that year 4) reduced floating rate exposure and refinanced lower yielding debt 5) Reduced parent leverage ratio from 6.5 to 5..... Im just looking to get paid not see a spectacular company. Getting paid seems pretty easy with no debt roll over stress for several years so this seems pretty good... They also are increasing free cash flow and will be looking to raise common dividend.
I will be golfing tomorrow which is good...as I may be tempted to buy more if it drops again... This company has huge loads of debt, thus the preferreds chronic habitual low credit rating for preferred. But around 2/3 to 3/4 of it, is non recourse debt held by subsidiaries not the parent obligation. That is why they refer to parent debt above... Debt holders of subsidiaries could be stiffed while parents obligations can still be paid.
Still I consider this a riskier endeavor on line with my CoreLogic trust preferred debt issue I own. But at this point I would rather try a bit of this than chase 5% issues.... I just don't need to go crazy over it.


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[RE2Boys]

Used to own AES-C, but sold ou for a loss about 2 years ago, can't remember why now.

Might look at getting some to replace the lost income from BGLEN & EYMXP.

Not many alternatives out there in Preferred land. Not many at all.

Was there some news concerning EYMXP? It's down to within 1-2 divi of call recently, my comfort zone.

With schools starting, I've had little time to monitor my investments in last two weeks.

 

[alaska55]

I'm pretty sure EYMXP has been called along with some others.

 

[Sunset]

$50.03... A 100 more shares .... Better cool my enthusiasm here!
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I just picked up 400 shares at $50.03 , I had a buy order in early this morning for $50.11 and $50.12 so its really nice getting it cheaper.

Out of interest, one of the orders was filled a bit oddly:
Quantity: 1
Quantity: 139
Quantity: 60

 

[Sunset]

The odd or dangerous part of preferred shares is that the call information is pretty obscure. So it would be easy to buy something that has in fact been already called.
Unlike dividend dates that are published in lots of places (for stocks), these calls which dramatically affect preferred stocks are pretty hidden to me.

In fact as terrible as it sounds, my best source for knowing is right here

If anyone wants to tell me how to find out about calls, I'd be happy to know.

 

[RE2Boys]

The odd or dangerous part of preferred shares is that the call information is pretty obscure. So it would be easy to buy something that has in fact been already called.
Unlike dividend dates that are published in lots of places (for stocks), these calls which dramatically affect preferred stocks are pretty hidden to me.

In fact as terrible as it sounds, my best source for knowing is right here

If anyone wants to tell me how to find out about calls, I'd be happy to know.

Very obscure, I've spent some time searching Entera investor relations and othe websites this morning regarding EYMXP that is "rumored" to have been called but have found nothing so far. Was about to purchase some additional shares or possibly a cousin EGXKP. Purchase on hold for now.

 

[Coolius]

Very obscure, I've spent some time searching Entera investor relations and othe websites this morning regarding EYMXP that is "rumored" to have been called but have found nothing so far. Was about to purchase some additional shares or possibly a cousin EGXKP. Purchase on hold for now.

I believe EGXKP has been called, but could not find the SEC filing.

Also found nothing official on EYMXP, but the stock is trading in anticipation of a call - will talk to broker next week to find out, and update if anything is new.

 

[Texas Proud]

Heck, if it were not for Mulligan I would not have known BGLEN was going to be called... found out officially when it was posted on my Vanguard account... but STILL cannot find anything filed with the SEC about the call... the only thing was a sentence on their last debt issue...

OH... also put in a bid for AES C.... but did not get any.... seems Sunset got a great price and then it started to go back up...

Oh well....

 

[Mulligan]

I believe EGXKP has been called, but could not find the SEC filing.

Also found nothing official on EYMXP, but the stock is trading in anticipation of a call - will talk to broker next week to find out, and update if anything is new.

SEC filings show EGXKP will be called... It was in a bond filing... They never refer to them by ticker. They said directly they "would be" calling the 6.08 % and 6.45% issue... It just hasnt happened yet. But they are issuing the 4.75% baby bond to clean up other higher debt and calling those shares...
I havent seen a EYMXP call notice either...But I agree with Coolius...I bougnt 300 shares several weeks ago and it started trading "funny" so I ditched with a nickel loss, on a lucky quick spike at $25.95. I am through with the Entergy issues... The ones not at call risk are too low for me..


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[Mulligan]

I just picked up 400 shares at $50.03 , I had a buy order in early this morning for $50.11 and $50.12 so its really nice getting it cheaper.

Out of interest, one of the orders was filled a bit oddly:
Quantity: 1
Quantity: 139
Quantity: 60

Great price, Sunset...Congrats!!! If you are buying because I brought attention to it, I hope we did the right thing, so you wont blame me, ha!
I actually am very encouraged...When illiquids come under intense sell pressure such as AES-C has, the tendency is the price to buckle pretty smartly...The buckling actually occurred more early on in process the past week. It held up pretty good past three days considering how much float churned last few days.


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[Mulligan]

Heck, if it were not for Mulligan I would not have known BGLEN was going to be called... found out officially when it was posted on my Vanguard account... but STILL cannot find anything filed with the SEC about the call... the only thing was a sentence on their last debt issue...

OH... also put in a bid for AES C.... but did not get any.... seems Sunset got a great price and then it started to go back up...

Oh well....

I still havent seen a notice. But trust what you all have said, and stock is acting odd to...Hey, I made $1 profit on my past call notice purchase a few days ago...Got lucky. Still ticked BGE hasnt sent official SEC notice like you found on BGLEI...Seems so odd...


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[Mulligan]

Heck, if it were not for Mulligan I would not have known BGLEN was going to be called... found out officially when it was posted on my Vanguard account... but STILL cannot find anything filed with the SEC about the call... the only thing was a sentence on their last debt issue...

OH... also put in a bid for AES C.... but did not get any.... seems Sunset got a great price and then it started to go back up...

Oh well....

Texas, I guess you have noticed CVB crawling upward in price...Its getting close to spitting out that 37.5 cent divi here in a few days.


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[Texas Proud]

Well, just calculated my annualized return on BGLEN... 4.0%... which is better than a loss...

And yes, I looked it up.. on 8/24 at 1:04 AM Vanguard gave me notice of the call... but, if you do not log in you do not get the notice..


But... I just signed up for alerts, so I hope to get an email next time something like this happens....

 

[Mulligan]

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

Must be an internal email...I never check those...Shame on me! Hey a profit is a profit! I know its not natural to do, but with these past call, above par issues higher paying preferreds, you have to treat them like a hired prostitute (not that I would know, as I never have had one, but I digress...) You buy them and you flip them and buy them and flip them...Over and over, even on a couple bucks or so....This is how I build in my profits, so when they call I squeezed more profits from them. You have to assume every day they are going to call them.
Admittedly this is getting harder, but there are always opportunities... Like KTH... Although it is not callable, I wore this thing out like a belt to a red headed step child. It pays $2 a year in dividends...I bet a half dozen times or more I bought 500-700 shares at a time and bought in $32's and sold in $34s over and over...Thought that gig was over and less than just a month ago it feel right back into my lap one day and 5 days later I beat its rear yet again for another $2 share flip profit.
Any time one of those drops, I sell from a preferred that has gained in value from purchase, flip it and then buy immediately into the one like KTH for example that just had a sell off.. It has really juiced my returns this year...I am up 15% this year just basically flipping 6% issues, over and over...


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[Slow But Steady]

I'm still trying to clear my head of that image of Mulligan flipping that hired prostitute over and over.

Other than that I'm having a great vacation and trying not to think about buying or selling anything.

(Was my remark in poor taste for a family rated channel? I guess I'll soon find out.)

 

[Mulligan]

I'm still trying to clear my head of that image of Mulligan flipping that hired prostitute over and over.



Other than that I'm having a great vacation and trying not to think about buying or selling anything.



(Was my remark in poor taste for a family rated channel? I guess I'll soon find out.)

No we cant be talking about that kind of flipping. Not because its a family channel, but because we would have to move this thread to the Health forum as at my age it would then become a back, hip, and knee issue thread .


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[Winemaker]

The odd or dangerous part of preferred shares is that the call information is pretty obscure. So it would be easy to buy something that has in fact been already called.
Unlike dividend dates that are published in lots of places (for stocks), these calls which dramatically affect preferred stocks are pretty hidden to me.

In fact as terrible as it sounds, my best source for knowing is right here

If anyone wants to tell me how to find out about calls, I'd be happy to know.

My past experience with Fidelity, a preferred share that is called, has it's ticker symbol changed with a -cld or -clx suffix.

 

[Mulligan]

The odd or dangerous part of preferred shares is that the call information is pretty obscure. So it would be easy to buy something that has in fact been already called.
Unlike dividend dates that are published in lots of places (for stocks), these calls which dramatically affect preferred stocks are pretty hidden to me.

In fact as terrible as it sounds, my best source for knowing is right here

If anyone wants to tell me how to find out about calls, I'd be happy to know.

Winemakers post and my morning coffee made me think to reply... Yes preferred calls can be very quite. But if you can find them first, it allows you to bolt first out the door. That is what I did when I read BGE preferreds were on chopping block in a bond offering. I did it on a few others and Texas has done it also. Usually it is released in an SEC filing under the subsidiary that is calling or the parent itself.
I would say unusual trading volume can indicate possible calls, but that is not very reliable at all. I made good money on buying BGE issues past 18 months on heavy volume dump days.


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[Mulligan]

Went back to my favorite and biggest holding by far. Bought 655 additional shares of AILLL at $26.41 and $26.35 today. Next divi has been declared.


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[Texas Proud]

Well, AES-C is selling a lot again today... I decided to bite the bullet and up my bid to 50.15.... it hit right away....


Now see it slowly going down to 50.12.... but, no money left for me...


As I said before, I will grab this divi and see if I want to cut my holding in half when whomever is dumping stops dumping... and hopefully it goes back up... might hold for longer...

 

[aja8888]

Well, AES-C is selling a lot again today... I decided to bite the bullet and up my bid to 50.15.... it hit right away....


Now see it slowly going down to 50.12.... but, no money left for me...


As I said before, I will grab this divi and see if I want to cut my holding in half when whomever is dumping stops dumping... and hopefully it goes back up... might hold for longer...

I just bought 100 shares for $50.15. If it goes to $50.00 I may buy another 100 shares.

 

[Mulligan]

AES-C is kind of an odd issue. It is a "preferred" but there are traded companies with market caps smaller than the debt is from this issue. Over a half billion! Yet, as a rule, its normal daily trading volume is under 10k. Again today it traded 8X normal volume. Until selling pressure subsides there wont be any uptick in pricing.
I have 500 shares and really am looking to unload 300 after receiving divi and a little price appreciation...If I don't get price appreciation, then I will just hold. The company is not under any financial stress. It is looking to increase common divi next 3 years. The key for trading indebted companies is make sure they have no upcoming debt to roll over...They have none for 3 years, and its only 240 million or so that year...Half the amount of this issue.


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[Running_Man]

OK on AES-C I am a little confused, what is the part about the company having the right to defer interest payments for up to 20 consecutive quarters? (5 years), are the distributions cumulative in such a circumstance?

 

[Mulligan]

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

OK on AES-C I am a little confused, what is the part about the company having the right to defer interest payments for up to 20 consecutive quarters? (5 years), are the distributions cumulative in such a circumstance?

I should have mentioned this, but I am so numb to it trading so many issues that have that written in prospectus, I dont really even consider it, though a few years ago, I was scared of it..
Almost all trust issues I have traded have this option. It is only a bullet used when finances are about to lead to bankruptcy. OSBCP had to defer for 4 years as it about went under in last banking crisis. KCC, KTH, AES-C all have same provisions and never used it. AES about went under in 2002 "Enron crisis" and "C" went all the way down to $7. Yet it never missed or deferred a payment. That would be 50% annual return on your money if bought 15 years ago. That would have been sweet!!!
Now here is the kicker with these trust preferreds.... IF they would ever suspend payment of "dividend" you would have to pay a yearly "phantom tax" as if you actually received the proceeds. When they paid the deferral later to you in an upcoming year, you would not have to pay taxes as it was already paid. If company later goes bankrupt and never pays you get to reclaim the taxes paid on the phantom income.


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