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

[Texas Proud]

Well, decided to sell my JSM today.... it looks like they are headed down again... this does not fit into the steady utes, but it does have a good yield... and when the price gets low I am willing to buy...

Cap gain on this is about $3K, so really made out on this...

Still going through the whole thread.... man, this takes time!!!

 

[youbet]

This morning, saw a seller offering 180 shares CNLPL @ $52.71. Bid was $52.70.

So I quickly bought those shares - exactly like the post above, where a good opportunity occurs now & then.

Interesting. I picked up 100 shares of CNLPL this morning. I had a limit order in at 52.71 and it filled. My open order should have filled immediately when the seller offered his shares and, if that's the case, the 180 you saw and got would have been the residual.

At least that's how I think it works.......... Just learning this stuff.

 

[Coolius]

Well, decided to sell my JSM today.... it looks like they are headed down again... this does not fit into the steady utes, but it does have a good yield... and when the price gets low I am willing to buy...

Cap gain on this is about $3K, so really made out on this...

Still going through the whole thread.... man, this takes time!!!

A gain is always good, regardless of the size.
I sold STAG-C today, for a gain of "only" $470. Will buy back if it goes down closer to par.

CNLPL has a bid @ $52.65, ask @ $53.50.

A good strategy would be to enter a AON order ( ex, 100 shares ) at $52.68, and hope some seller decides to dump. Usually AON orders do not show up on Level 2 and will not trigger another buyer from jumping in front.

I have enough CNLPL now, or my position will be so terribly overweight I'll start to feel like Mulligan......

 

[Sunset]

I just picked up 100 CNLPL at $52.65 which is great since I had a limit price of $52.73 AON.

I had entered the order at 10:49 am.

 

[Coolius]

I just picked up 100 CNLPL at $52.65 which is great since I had a limit price of $52.73 AON.

I had entered the order at 10:49 am.

Hee Hee, I bet Mulligan is out on the golf course now.

He would have liked to participate in this, I'd think.

I'm so darned tempted to put in a AON for $52.66, just for the heck of it.
Since the July 1 dividend has already been declared for $0.81, my cost is $51.85. That is only 1 cent above the redemption price !

 

[Mulligan]

Hee Hee, I bet Mulligan is out on the golf course now.

He would have liked to participate in this, I'd think.

I'm so darned tempted to put in a AON for $52.66, just for the heck of it.
Since the July 1 dividend has already been declared for $0.81, my cost is $51.85. That is only 1 cent above the redemption price !

Yep, Just got back from the senior scramble... Sorry, but you have more CLP issues than I do...If only for the reason you did a better job of saving your money over the years than I did so you have more to buy! But I got more AILLL/AILNP than you do only for the fact you are too prudent and wouldn't overload like I did!
But, I noticed that I got my 250 shares of CVB filled today at 10.46. I got 500 shares now so this is a max position even though I think it is safe enough for me to double that amount. I like that 7.4% yield.

 

[Texas Proud]

My order for MNR-A filled today... 7.37 yield, so good enough for me...

And BBB rated...

 

[Mulligan]

My order for MNR-A filled today... 7.37 yield, so good enough for me...

And BBB rated...

Well Texas, for better or worse, you are in bed with Coolius and I on this issue. Coolius though is considering changing his forum name to "Mr. Connecticut Light and Power". [emoji1]

 

[Running_Man]

OK I missed the discussion on MNR-A. I see they are a REIT with 50% of their revenues from one company - FEDEX, which is a solid company but still a huge one company risk to be leasing 20 year property. They plan on continuing to grow by building facilities wherever FEDEX wants them, this is my understanding, is there something else here or is that the basic investment thesis?

 

[Mulligan]

OK I missed the discussion on MNR-A. I see they are a REIT with 50% of their revenues from one company - FEDEX, which is a solid company but still a huge one company risk to be leasing 20 year property. They plan on continuing to grow by building facilities wherever FEDEX wants them, this is my understanding, is there something else here or is that the basic investment thesis?

They have a 25 year history with Fed Ex. Plus their leases are all spread out over various dates. They have been nicknamed the "Fed Ex Reit" before. Just as important to me they are an "old school" reit. Meaning they treat their leases like a family does their mortgage. They align the term of the note to the amount of years the lease is then "burn the note". They do not leverage and build a bit of equity into the property and then use that to leverage into acquiring another property. Another 25% of companies they sign up to are also investment grade such as Jim Beam and Coke.
I dont like reits but I like this one, as it is hitched to a high quality company in a growing industry (internet buying and use of warehouses to accommodate).
They have 5-10% slush fund dedicated to investing in other reits including a housing one that CEO is tied to which I think is UMH. Not a huge fan of that, but they have used the dividends from it to pay commoners before I know. Its been run by same family since origination back in 1960s. The founder is still the chairman. Always paid a dividend on the common since it was founded. That means the preferreds get paid!

 

[Coolius]

OK I missed the discussion on MNR-A. I see they are a REIT with 50% of their revenues from one company - FEDEX, which is a solid company but still a huge one company risk to be leasing 20 year property. They plan on continuing to grow by building facilities wherever FEDEX wants them, this is my understanding, is there something else here or is that the basic investment thesis?

RM, Monmouth is a Mulligan blue-light special.

In analyzing the financials of MNR, Mulligan discovered that they operate very much like a residential property owner - they lease out based on the length of the mortgage. So, in the case of their long term leases to FEDEX, the lease ends around the time their mortgage on the property ends. Quite a safe arrangement, as opposed to having to risk an empty building with a mortgage between customers.

Mulligan also discovered that they have a "slush fund" that invests in other financial paper, and they use it in case rental cash flow is not enough to fund dividend payments.

But Guru Mulligan is the expert here - I'm just trying to summarize his findings, and doing poorly at that. I'm sure he'll chime in after reading this post.


Update: Wow, Mulligan must be psychic ! He has already posted in reply to RM.....

 

[Mulligan]

RM, Monmouth is a Mulligan blue-light special.

In analyzing the financials of MNR, Mulligan discovered that they operate very much like a residential property owner - they lease out based on the length of the mortgage. So, in the case of their long term leases to FEDEX, the lease ends around the time their mortgage on the property ends. Quite a safe arrangement, as opposed to having to risk an empty building with a mortgage between customers.

Mulligan also discovered that they have a "slush fund" that invests in other financial paper, and they use it in case rental cash flow is not enough to fund dividend payments.

But Guru Mulligan is the expert here - I'm just trying to summarize his findings, and doing poorly at that. I'm sure he'll chime in after reading this post.


Update: Wow, Mulligan must be psychic ! He has already posted in reply to RM.....

Naw, you do as well at summary as I do...I studied MNR pretty hard a while back as best I can. But after a few days, I only remember about 5% what I learned so I do a poor summary too. But I do remember I liked it alot! Or at least I think I remember I liked it a lot anyways.

 

[Running_Man]

Thanks Mully & Coolly

I am going to research MNR-A a bit more, I can see the positives but I want to see what they are doing with debt, in general you are getting a 7.3% yield on property leases to FEDEX- which is pretty good return. MNR weighted average cost of capital is 5.5% and the properties cap rates are about 6.7% so you are getting a better return than MNR itself is. One must realize this is a play on FEDEX in the end though and if FEDEX remains good and holds for future growth MNR actually will get upgraded in investment rating which would mean calling and replacing preferred. This is just a quick look, I will come back tomorrow after I spend a day looking at their financials.

 

[Mulligan]

Thanks Mully & Coolly

I am going to research MNR-A a bit more, I can see the positives but I want to see what they are doing with debt, in general you are getting a 7.3% yield on property leases to FEDEX- which is pretty good return. MNR weighted average cost of capital is 5.5% and the properties cap rates are about 6.7% so you are getting a better return than MNR itself is. One must realize this is a play on FEDEX in the end though and if FEDEX remains good and holds for future growth MNR actually will get upgraded in investment rating which would mean calling and replacing preferred. This is just a quick look, I will come back tomorrow after I spend a day looking at their financials.

The debt they are financing is significantly lower, last I heard recent notes were financed at sub 4%. MNR-A is a smaller 25 million issue, while MNR-B is about double that and isn't callable until summer of 2017. Im thinking "A" is safe until then ( its 5 years past call already) and I wouldn't be surprised if they both get called in unison. But I invest with threats of call and just deal with it. A is actually a bit smaller in yield too. So if either sneak by a call after next summer I am thinking its A.

 

[Mulligan]

RM, there is few other components that goes into my thinking that may or may not with others. 1) Yield...Take NNN, a high quality reit whose last issue was around 5.7%. I have no interest in getting stuck with one of these if rates or fear of rate hikes would occur. I would rather have a call on a higher yielder than risk getting stuck with this. Other people prefer issues that are not callable. All dozen of mine (except BGEPF) are past call and bought past call, but are also above average yield due to there relative "yield trapped" nature die to par and initial yield offering price. 2) I also only buy "veteran preferreds". I want to see how they have performed in other rate environment scenarios. MNR-A went down to a bit above $14 during bottom of 09 crisis era and was back at par in 2010. This issue preformed bounds better than most other Reits, some got hammered below $5. Before crisis in the more normalized rate environment it traded around par then.


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[Coolius]

Just another confirmation of the stability of Yield-Trapped Ute Preferreds we've been discussing:

CNTHP went ex-div today, for $0.82 per share.

Zero trades done today. No one selling. Bid @ $52.90, ask @ $54.60.

Truly, a sleep well at night stock - if you are investing for income, and not for capital growth. And, of course, accepting the inherent call risk, since this is well beyond call date.

 

[Texas Proud]

Thanks Mully & Coolly

I am going to research MNR-A a bit more, I can see the positives but I want to see what they are doing with debt, in general you are getting a 7.3% yield on property leases to FEDEX- which is pretty good return. MNR weighted average cost of capital is 5.5% and the properties cap rates are about 6.7% so you are getting a better return than MNR itself is. One must realize this is a play on FEDEX in the end though and if FEDEX remains good and holds for future growth MNR actually will get upgraded in investment rating which would mean calling and replacing preferred. This is just a quick look, I will come back tomorrow after I spend a day looking at their financials.

Just want to point out that they are thinly traded.... if none are sold today I will have bought 98% of all shares sold for 4 days...

Now, how many people can say that about any stock!!!

 

[Mulligan]

Just want to point out that they are thinly traded.... if none are sold today I will have bought 98% of all shares sold for 4 days...

Now, how many people can say that about any stock!!!

I am being stubborn...I want to add to my MNR also but wont go at that price.. I wont give up just yet. Speaking of thinly traded, I got you beat. I have bought 100% of all shares traded in AILNP the last 2 years! But before you get too impressed with my Hunt brothers ability in corning a market, the total amount is about $15,000.

 

[Mulligan]

Texas, here is another strategy to tip toe into preferreds. Last 2 buys I have bought 600 shares of DTZ (DTE Energy, formally Detroit Edison). It is callable at $25 Dec. 1. A total of $1.215 dividends must be paid out before a call. Buying at $25.62 will get you about 60 cents. Math says thats 2.4%. But that is wrong in that you must account for the fact that is 8 months. Annualized you are around 3.2%..
Why is this worth considering? First it is a robust BAA1 debt rating. You are not going to get much higher in absolute safety on baby bond preferreds. Many times these things drag out 3 to 6 months before a call, so you can collect the divi longer if they do. And if they never call you have a Baa1 solid investment grade subordinate debt issue that will pay out 6.35% if not called. So you have your cake and eat it too scenario. If called you get a "high yield" 8 month bond, and then reinvest with a positive return, or you get a "high yield" investment grade long bond if not called with way above current market yield. These are the kinds of scenarios I find very appealing... But I am not a swing for the fences guy.


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[Texas Proud]

Texas, here is another strategy to tip toe into preferreds. Last 2 buys I have bought 600 shares of DTZ (DTE Energy, formally Detroit Edison). It is callable at $25 Dec. 1. A total of $1.215 dividends must be paid out before a call. Buying at $25.62 will get you about 60 cents. Math says thats 2.4%. But that is wrong in that you must account for the fact that is 8 months. Annualized you are around 3.2%..
Why is this worth considering? First it is a robust BAA1 debt rating. You are not going to get much higher in absolute safety on baby bond preferreds. Many times these things drag out 3 to 6 months before a call, so you can collect the divi longer if they do. And if they never call you have a Baa1 solid investment grade subordinate debt issue that will pay out 6.35% if not called. So you have your cake and eat it too scenario. If called you get a "high yield" 8 month bond, and then reinvest with a positive return, or you get a "high yield" investment grade long bond if not called with way above current market yield. These are the kinds of scenarios I find very appealing... But I am not a swing for the fences guy.


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Thanks for the info....

I am still trying to read through the whole thread and put together a list of what has been recommended and then do research on them... with other things going on it is taking me some time...

I will put in a limit trade to see what happens as I still have not decided what other securities I want to pick up... this seems as good as any right now...

 

[Mulligan]

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

Thanks for the info....

I am still trying to read through the whole thread and put together a list of what has been recommended and then do research on them... with other things going on it is taking me some time...

I will put in a limit trade to see what happens as I still have not decided what other securities I want to pick up... this seems as good as any right now...

Two other reasons this may be worth considering as a starter besides the safety and yield.... 1) you have way more liquidity in this issue as daily volume is 21,000..... Way more than CNTHP which is as of today 258... 2) This issue has begun its descent towards par is it is becoming callable... It was over $27 not to long ago... Often you can buy a slug of these and flip them on a bump up as it nears exD which is in May. Quick hit, take the profits and run, and then reenter again if price drops again. Since this issue is more liquid it is more prone to market movements than the extreme illiquids are. You can take advantage of that buying or selling as the high base yield provides a good relative floor. If a bad market day soon takes it down, Im going back in to get my even 1000 shares.

 

[Mulligan]

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

Texas, I will give you a quick review of mine and ceiling interest level of price. Almost all are what I consider "safe" issues, but all with call risk, so purchase price is more paramount than anything as the risk level is mostly same... 1) Ailll- just went exD... I would not go above $25.80 right now as next D has not been declared so you exposed to the full amount of par. (Been callable for about 20 years). 2) CNTHP has just went exD also, so $52.75 about is top end ($51.44 call price, but Board of Directors historically never meets until right before next D so next 82 cents is almost in the bag. 3) CNLPL I buy up to $53 and next divi isnt for several months but it has been declared already. 4) KCC- A great insurance debt issue if bought under $29 (call is $27.68). It pays every 6 months. It was
an $89 million sliver of a bigger bond issue repackaged into a "trust baby bond". It has been partially called twice and less than 4 million is left outstanding and has been untouched for 2 years. Im betting they are just stranding the rest, as why call $62 million of it last time but not $66 million and be done with it? 4)KTH, solid baby trust bond from Peco Energy, noncallable and matures 2028. Needs to be bought closer to $31 to be worth your time. The $1 divi is fast approaching that is why the price has recently jumped. 5) GJP... Also a trust but an adjustable one from Dominion energy, solid trust issue backed by a Dominion senior bond. It trades as a short term bond due to its adjustable feature. I have flipped this one often and collect the monthly dividends when I own it. I buy around $20 and sell when over $20.70 and play the price wobble.
6) BGEPF, although a preferred it is a convertible preferred that pays a higher dividend than the common though it trades as a "tracker" to the common. If you are wanting true preferreds this wouldnt be one to be interested in. 7) DTZ, we just discussed... 8) Glacier Water...own a tiny amount and we have discussed... I would have to be drunk to recommend buying this one as an entry point for a "safe preferred". But who knows it may be a great play. But whenever a company shuts down their own website, that isnt something I can recommend! 9) CVB- Another trust preferred back by a subordinated bond of Kinder Morgan. Yields 7.4% ish. Baa3 investment grade, and $10.50 and below is a solid price. I had no interest in MLP's when everyone and their dog was citing safety as "toll operators" as I smelled a rat...But now they are committed to the bond holders and not the commons as protecting their investment grade rating is priority over the common owners.. Now I am interested...In the debt only though....10) UEPCO and AILNP... Solid investment grade preferreds. Got lucky to get them... Not worth discussing as you have as much chance getting 100 shares of each as I do being nominated for president at the brokered Republican convention.
11) MNR-A..No need to discuss, welcome to the club!

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[Golden sunsets]

Texas, I will give you a quick review of mine and ceiling interest level of price. Almost all are what I consider "safe" issues, but all with call risk, so purchase price is more paramount than anything as the risk level is mostly same... 1) Ailll- just went exD... I would not go above $25.80 right now as next D has not been declared so you exposed to the full amount of par. (Been callable for about 20 years). 2) CNTHP has just went exD also, so $52.75 about is top end ($51.44 call price, but Board of Directors historically never meets until right before next D so next 82 cents is almost in the bag. 3) CNLPL I buy up to $53 and next divi isnt for several months but it has been declared already. 4) KCC- A great insurance debt issue if bought under $29 (call is $27.68). It pays every 6 months. It was an $89 million sliver of a bigger bond issue repackaged into a "trust baby bond". It has been partially called twice and less than 4 million is left outstanding and has been untouched for 2 years. Im betting they are just stranding the rest, as why call $62 million of it last time but not $66 million and be done with it? 4)KTH, solid baby trust bond from Peco Energy, noncallable and matures 2028. Needs to be bought closer to $31 to be worth your time. The $1 divi is fast approaching that is why the price has recently jumped. 5) GJP... Also a trust but an adjustable one from Dominion energy, solid trust issue backed by a Dominion senior bond. It trades as a short term bond due to its adjustable feature. I have flipped this one often and collect the monthly dividends when I own it. I buy around $20 and sell when over $20.70 and play the price wobble. 6) BGEPF, although a preferred it is a convertible preferred that pays a higher dividend than the common though it trades as a "tracker" to the common. If you are wanting true preferreds this wouldnt be one to be interested in. 7) DTZ, we just discussed... 8) Glacier Water...own a tiny amount and we have discussed... I would have to be drunk to recommend buying this one as an entry point for a "safe preferred". But who knows it may be a great play. But whenever a company shuts down their own website, that isnt something I can recommend! 9) CVB- Another trust preferred back by a subordinated bond of Kinder Morgan. Yields 7.4% ish. Baa3 investment grade, and $10.50 and below is a solid price. I had no interest in MLP's when everyone and their dog was citing safety as "toll operators" as I smelled a rat...But now they are committed to the bond holders and not the commons as protecting their investment grade rating is priority over the common owners.. Now I am interested...In the debt only though....10) UEPCO and AILNP... Solid investment grade preferreds. Got lucky to get them... Not worth discussing as you have as much chance getting 100 shares of each as I do being nominated for president at the brokered Republican convention. 11) MNR-A..No need to discuss, welcome to the club! Sent from my iPad using Tapatalk

Why not mention WFC-L. Mulligan. Is the yield down recently? I haven't been paying attention since I snagged it at 1,064.

 

[Mulligan]

The reason why I didnt mention it was because I do not own it. The issue has been nothing but problems...Couldnt get it bought through my Vanguard account, finally got me a slug of them in my HSA, then less than a month later my HSA liquidated and I had to sell all my shares and by the time I got money in a new account I went another way. Nothing wrong with issue. I just have no passion for it because I have no passion for bank issues and non cumulative preferreds in general. Just a personal preference though.


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[Texas Proud]

Why not mention WFC-L. Mulligan. Is the yield down recently? I haven't been paying attention since I snagged it at 1,064.

The reason why I didnt mention it was because I do not own it. The issue has been nothing but problems...Couldnt get it bought through my Vanguard account, finally got me a slug of them in my HSA, then less than a month later my HSA liquidated and I had to sell all my shares and by the time I got money in a new account I went another way. Nothing wrong with issue. I just have no passion for it because I have no passion for bank issues and non cumulative preferreds in general. Just a personal preference though.


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I am very much overweight in financials as I worked for one for years and still have their common stock in my 401(k).... even thought it is a preferred, I do not want to go with any financial institution as it would be too much concentration risk...