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

[RE2Boys]

Did a little digging on SPLP-A today, interesting issue, but found this as part of the filings:

The IRS Schedules K-1 we will provide holders of SPLP preferred units will be more complicated than the IRS Forms 1099 provided by corporations to their stockholders, and holders of SPLP preferred units may be required to request an extension of time to file their tax returns.
Holders of SPLP preferred units will be required to take into account their allocable share of our items of gross ordinary income for our taxable year ending within or concurrently with their taxable year. We have agreed to furnish holders of SPLP preferred units, as soon as reasonably practicable after the close of each calendar year, with tax information (including IRS Schedules K-1), which describes their allocable share of gross ordinary income for our immediately preceding taxable year. However, it may require longer than 90 days after the end of our calendar year to obtain the requisite information so that IRS Schedules K-1 may be prepared by us. Consequently, holders of SPLP preferred units who are U.S. taxpayers should anticipate the need to file annually with the IRS (and certain states) a request for an extension past April 15 or the otherwise applicable due date of their income tax return for the taxable year. In addition, each holder of SPLP preferred units will be required to report for all tax purposes consistently with the information provided by us for the taxable year. Because holders will be required to report their allocable share of gross ordinary income, tax reporting for holders of the SPLP preferred units will be more complicated than for shareholders of a regular corporation.

May complicate tax filing next year.

 

[Texas Proud]

Jim, you got something in common with my girlfriend...She likes malls too. Except she isnt interested in making money off them, she is more into spending it there, lol.
I am going to come up with some scheme here next week to run a circuit again with some cash try to bag 2 or 3 dividends off same money in a cycle like I did last month. Kind of neat catching small cap gains and multi dividends from same cash pile and not miss the divi cycle from where the money came from to begin with. Will need to figure out which ones to bag and what sequence though.

Well guys it may be easier said than done. The last 3 times I did it, it wasnt a plan, just reactionary. It appears I cant make the opportunity, I will just have to wait for it. Something has to drop, then pick it up before exD then unload unto something else that drops. If nothing sags its hard to start the process. Of course since the cash is sitting from the sale, I will need to force it unless I just hold... But that isnt my style.. We are getting close to nut cutting time of CFC-B. I may buy more and stare em down with exD inside 20 days now.

It is difficult... and the results can be mixed... but it is a fun game to play....


I mentioned that I was doing this with a slug of money... not a lot, about $15K... so far in the last 12 months I have made 15 trades... trying to buy 16 right now that goes ex in a few days...


The results are that I have a weighted avg annual return of 6.5% over that time period... however, I got caught with a big loss on my 3rd trade and it cost me... if you look at my last 12 trades I have a 17.2% AAR.....


Now, I will say that you should ONLY buy what you would want to hold... I bought some of the JCPenney stuff and it went down when all retailers went down... I have no problem holding it so I exchanged it with money from a called holding and kept going... I did NOT put the loss in my calculation, but if I did I would be close to zero gain... might be cheating, but I did have to replace the called issued anyhow...

 

[jimnjana]

Did a little digging on SPLP-A today, interesting issue, but found this as part of the filings:


May complicate tax filing next year.

I bought it in an IRA. I only bought 100 shares, may buy more but not enough to worry about any tax consequences for the IRA.

 

[jimnjana]

Jim, you got something in common with my girlfriend...She likes malls too. ....
I am going to come up with some scheme here next week to run a circuit again with some cash try to bag 2 or 3 dividends off same money in a cycle like I did last month. ...

Ha, Hopefully my mall shopping trip will pay off. Nothing like finding what you think is a bargain...until you find something just as nice for a lower price.... I look forward to hearing the outcome of your scheme. That is not something I will try for the time being. Training wheels are still on. I like the idea of setting and forgetting at least with some of the preferred utes and setting and monitoring with the others. I like the idea of a dividend trifecta though.

 

[Mulligan]

I bought it in an IRA. I only bought 100 shares, may buy more but not enough to worry about any tax consequences for the IRA.

That is what I did Jim...I got 300 shares this time. Safely under the UBTI limit. My K-1 form will go in the trash, or just thrown in the tax file folder unopened. RE is correct to study the warts on its skin though. But putting it in Roth under the limit negates the tax junk for me.

 

[Mulligan]

It is difficult... and the results can be mixed... but it is a fun game to play....


I mentioned that I was doing this with a slug of money... not a lot, about $15K... so far in the last 12 months I have made 15 trades... trying to buy 16 right now that goes ex in a few days...


The results are that I have a weighted avg annual return of 6.5% over that time period... however, I got caught with a big loss on my 3rd trade and it cost me... if you look at my last 12 trades I have a 17.2% AAR.....


Now, I will say that you should ONLY buy what you would want to hold... I bought some of the JCPenney stuff and it went down when all retailers went down... I have no problem holding it so I exchanged it with money from a called holding and kept going... I did NOT put the loss in my calculation, but if I did I would be close to zero gain... might be cheating, but I did have to replace the called issued anyhow...

The key that has worked for me Texas, has always been to jump on a quality issue right before exD that has just dropped for some unexplained reason, and then buy. If it keeps rising as it approached exD, then its a no buy for me.

 

[Mulligan]

Ha, Hopefully my mall shopping trip will pay off. Nothing like finding what you think is a bargain...until you find something just as nice for a lower price.... I look forward to hearing the outcome of your scheme. That is not something I will try for the time being. Training wheels are still on. I like the idea of setting and forgetting at least with some of the preferred utes and setting and monitoring with the others. I like the idea of a dividend trifecta though.

I didnt flesh out my thoughts fully and oversold the idea. It will only work if the opportunity presents itself. I just have to keep watching the group of issues I will buy and wait for it to happen like it has a few times the preceding month. And you may only have a few minutes to act. The GBLIL opportunity was only about 30 minutes at the end of the market day. So its one of those things you would have to do when sitting at home bored and just watch. Im kind of busy this week so I may not get a chance even if I wanted to.

 

[Mulligan]

100 degrees today....Too hot to play outside... So my fingers were eager to hit buttons so I didnt disappoint. Sold off my GAINN for 25 cent easy profit holding a couple weeks. Used the proceeds to buy back LANDP at $25.95. In essence bought back my LANDP I sold at $26.15, snagged the 25 cents holding GAINN, and reentering LANDP back in time for next monthly divi without missing a divi. Kinda like this issue but 600 shares will suffice. Flipped out of my SPLP-A at $22.40, so made an easy $150 holding a couple weeks. Havent found a home for that bit of cash. Supposed to be 100 tomorrow, so after a quick early 9 holes in morning with my neighbor, I will find a home for those greenbacks.

 

[Texas Proud]

OK... were any of you the lucky one who sold CNTHP at 61.84


I thought that was a typo, but it has shown up as actual sales.... wish I had a standing order to sell at 61.....


BUT, lost all that gain...

 

[Mulligan]

I think that fool or small group of fools left the building already. I didn't sell my shares, but just as important....I wasn't the one who bought either, lol.

 

[Running_Man]

SPKEP dividend just got paid, so the sparks are flying on this particular issue. I liked the company obviously should have bought the common instead of the 8.75% fixed to floating preferred, but at least the company is doing very well. Certainly is helping the overall yield of my preferred issues

 

[Mulligan]

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

I know a few people happy they are owning SPKEP, also. I just never could concentrate long enough to understand the company and its affiliations. Sometimes my brain just wont cooperate. Preferreds in my normal arena just keep edging higher. No entry points. I have been playing a bit of a different game with my non sock drawer issues. Being I still like being fully invested despite not liking anything, I have lately been buying term issues and "short life" issues... Have maintained my oversized position in CFC-B. Recently added a bit more to LANDP. This week I bought NSS, UBP-F, and GBL-B.
GDL-B and KYN-F provide enough cash and price stability to jump out of into something else down the road if long perpetuals ever drop. I suspect NSS will stay outstanding and convert to its adjustable feature early next year...UBP-F, I strongly suspect will be called in October and basically I will get my money back plus money for a few happy meals. But if it stays outstanding the quality 7% issue will be a nice hiding spot until call. ARE-E and O-F stalled their calls out a bit before call. So playing this as a short term yield instrument. Needing one last purchase and will probably go with another very safe 3 year term issue.

 

[Coolius]

Mulligan,

Another candidate for a stable income stream without fear of call, is ARE-D. Might be worth consideration as a parking spot similar to KYN-F.

This is a convertible Preferred from Alexandria Real Estate, who leases its properties to the Medical industry, IIRC.

Current yield at today's stock price is 4.7% - not great, but enough for a parking spot. Stock price not too volatile - between 33 and 37 over the past year.

I bought this around $35 some time ago.

 

[Mulligan]

Coolius, that one doesnt fit my criteria because it is not term dated and being a convertible it is tethered to the price of the common stock. Not suggesting it is a bad issue, it just doesnt fit my criteria for parking money. I need a term date as a back stop in price support for parking money.

 

[Coolius]

Ah, yes - overlooked the fact that a convertible is always tethered to the price of the common. Good catch.

It could still merit consideration as a stand alone holding, but yield is poor in that instance, perhaps offset to some degree by the lack of call risk. Anyone looking at it should really consider the facts before acting.

 

[Mulligan]

Right now I am just looking for capital preservation at expense of yield. So for now (until I change my mind, lol) I am looking at issues just above par with high relative yields and not worrying about a call. Or buy low yielding high quality term dated issues and sit the cash here until something else I like drops to a suitable price. And that may be a long wait! But history shows drops will occur without real yield change every so often. I will try to be patient.

 

[jimnjana]

I picked up a few shares of the KMI preferred. Selling under par, yielding over 10%. KMI common has been hammered since the dividend cut a few years back. The outlook for KMI has improved and a dividend raise for the common might be in the cards for 2018. Also, learned a lesson on limit orders with RSO B. I was gonna pull a Mulligan and flip out of RSO but I didn't set my limit order for all or nothing. So I got to sell 3 shares.

 

[Coolius]

I picked up a few shares of the KMI preferred. Selling under par, yielding over 10%. KMI common has been hammered since the dividend cut a few years back. The outlook for KMI has improved and a dividend raise for the common might be in the cards for 2018. Also, learned a lesson on limit orders with RSO B. I was gonna pull a Mulligan and flip out of RSO but I didn't set my limit order for all or nothing. So I got to sell 3 shares.

You are aware, I hope, that the KMI preferred is tethered to the price of KMI common ?

I don't remember the details, but if the common stock is way down at the timne of conversion, you could end up with KMI common worth a lot less, and a lot more volatile, than the preferred.

I decided when it first came out that this was not something I was interested in. I had my share of being taken to the cleaners by Richard Kinder before, prefer not to enter that arena again.

 

[jimnjana]

You are aware, I hope, that the KMI preferred is tethered to the price of KMI common ?

I don't remember the details, but if the common stock is way down at the timne of conversion, you could end up with KMI common worth a lot less, and a lot more volatile, than the preferred.

I decided when it first came out that this was not something I was interested in. I had my share of being taken to the cleaners by Richard Kinder before, prefer not to enter that arena again.

I knew it was convertible, but I didn't think conversion date was anytime soon.

 

[Texas Proud]

I knew it was convertible, but I didn't think conversion date was anytime soon.

I guess 'anytime soon' is different for some than others..... just a bit over a year means that the stock price is going to be driving this one from now on IMO....

From quantumonline....

The preferred shares are mandatorily convertible on 10/26/2018 into a variable number of Kinder Morgan, Inc. (NYSE: KMI) common shares based on the then current price of the common shares for 20 consecutive trading days immediately prior to the conversion date
​

 

[jimnjana]

I guess 'anytime soon' is different for some than others..... just a bit over a year means that the stock price is going to be driving this one from now on IMO....

From quantumonline....

The preferred shares are mandatorily convertible on 10/26/2018 into a variable number of Kinder Morgan, Inc. (NYSE: KMI) common shares based on the then current price of the common shares for 20 consecutive trading days immediately prior to the conversion date
​

Thanks. I bought 50 shares right now I'm up 40+ plus the dividend. I'll likely sell it next week.

 

[Coolius]

Oh, I am ----SO---- tempted to sell some CNLPL @ $55.94. Bid $55.94, ask $55.95.

Someone sell to the buyer and take away this agonizing indecision on my part!!

 

[Mulligan]

Oh, I am ----SO---- tempted to sell some CNLPL @ $55.94. Bid $55.94, ask $55.95.

Someone sell to the buyer and take away this agonizing indecision on my part!!

I hear ya....But I am done trading them. Probably should set a $60 stupid sell, but I wont. Made 2 trades that I have churned successfully pretty easy a few times each. Got back into GBLIL at $25.54 today after a quick 60 cent gain last time holding a couple weeks. Same with SPLP-A. Flipped it back at $22.40 a couple weeks ago and repurchased back at $21.88. I had my GDL-B in wrong account and tried to sneak it into my taxable with high bid a few cents above what I bought, but a darn computer bot snagged it. Whatever... Since I moved up the risk chain again with those two, I put $6k in sock drawer penalty box. Bought 59 shares of WGLCP at $102. With patience I could have got it less but I have been jumped before. Ask dropped usually they leave around $105-$110 and just do a small out of blue drop which I never get. For a 5% par this one has remarkable relative price strength even when rates are higher. Probably because it has a rating higher than most investment grade bonds do.
Im probably sitting tight until I pull rip cord on CFC-B...Getting closer as the upward creep continues.

 

[Mulligan]

Hit the sell button Coolius....600 share bid at $55.25... Clean that CNLPL trash out of your portfolio.

 

[Coolius]

CNLPL. Well, someone smarter and more rational than me took the 100 bid @ $55.94.

Now the bid is $55.25 - not for me, no.

Can we ever see the $54 handle again? I'd bet we can, and will. But it could be a darned long time in coming.....

Patience, grasshopper. Patience.