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

[Mulligan]

Someone sold KTBA at $27.12, I didn't get any

I wouldnt have been upset if I had bought more at that price. I bought 300 more CNIGP at 20.70 yesterday and 60 more at $20.85. The 1.2 conversion into common at owners discretion is a great bonus feature and the 2026 term dated feature into cash is a nice put if things dont work out for the ute common stock. The conversion is already money good, so this isnt no busted convertible.

 

[RicDee]

No, I do not see a big impact, but minor with the fed limiting its expansion it should have more cash on hand for buybacks and dividends, so I see it as a good longterm play, buy/hold 4ever. It just went dividend 5/31.

I think below $1250 would be a good buy for someone holding it like I do. I purchased the bulk of mine in 2016 for $1167 some at $1216

Thanks for the info on WFCPRL. I put it on my watch list

 

[brokrken]

Tried to pick up some COWNZ today, but as usual, as soon as I put in my bid it started to creep back up.

 

[bobandsherry]

Had some cash so went looking for short term play. Picked up 200 each of CDMOP (ExD 6/14) and CAI-A (ExD 7/1). CDMOP is 10.5% coupon with current yield of 10.4%. CAI-A is 8.5% coupon and trading just around par.

Looking at JE-A (ExD 6/14). Canadian company so looking at tax impact. 8.5% coupon, 8.95% CY.

 

[brokrken]

Picked up 200 RILYZ Term dated to 2027 and YTC 2020 near 7%

 

[Mulligan]

I bought 200 more EGRKI a buck under redemption. I am pretty much loaded for bear here. Trying to make good short returns and hope for a perpetual price drop between here and end of July.

 

[Freedom56]

Picked up Ares Capital 2025 notes (BBB stable YTM 4.87%) on Wednesday. I was tired of holding so much in money market funds at 1.8%. The investment grade perpetuals are still holding above par so no bargains yet. Those sub 2% high grade corporate notes continue to erode but at a surprisingly slow rate of decline.

 

[Texas Proud]

I bought 200 more EGRKI a buck under redemption. I am pretty much loaded for bear here. Trying to make good short returns and hope for a perpetual price drop between here and end of July.

Do you think this is going to be called?
And if so when?

 

[bobandsherry]

Picked up Ares Capital 2025 notes (BBB stable YTM 4.87%) on Wednesday. I was tired of holding so much in money market funds at 1.8%. The investment grade perpetuals are still holding above par so no bargains yet. Those sub 2% high grade corporate notes continue to erode but at a surprisingly slow rate of decline.

I've been long in Ares Capital common, paying a much better dividend (currently 8.9%). I calculated my return, and with cap gains, this has returned 13% per year since I bought it.

 

[bobandsherry]

I've been holding AILLL for a while now as a long term play, but had a sell order sitting out there for $27.75 and someone must have been hungry for it as sell order was filled today. Pocketed two quarters of dividends with today's pop. With prior div's in pocket it was 12%+ return. Will monitor to see if this drop again.

 

[Mulligan]

Do you think this is going to be called?
And if so when?

Texas, I cant link it out w/ GF... But if you go to SEC filings under ETR, Look fora bond offerring perpectus somewhere around May 6-11....In the section under use of proceeds it states to redeem the 4 Entergy Ark preferreds. I can link it later tonight if you cant find it.

 

[Texas Proud]

Texas, I cant link it out w/ GF... But if you go to SEC filings under ETR, Look fora bond offerring perpectus somewhere around May 6-11....In the section under use of proceeds it states to redeem the 4 Entergy Ark preferreds. I can link it later tonight if you cant find it.

I will try and look... so if you get below call it is a win!!

 

[Mulligan]

I will try and look... so if you get below call it is a win!!

Yes that is my plan! Here it is...
USE OF PROCEEDS
We anticipate our net proceeds from the sale of the bonds will be approximately $247.7 million after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds we receive from the issuance and sale of the bonds, together with other available funds, (i) to redeem $31.35 million aggregate par value of our preferred stock paying dividends at 4.32% - 4.72% per year and (ii) for general corporate purposes. Pending the application of the net proceeds of the bonds, we will invest them in short-term, highly liquid, high-rated money market instruments and/or the Entergy system money pool.
https://www.sec.gov/Archives/edgar/data/7323/000006598418000143/d533618d424b2.htm#srom533618_4

 

[RicDee]

I would suggest adding a short term dated issue in...Like RILYL under $25.50... That will blend in with your LANDP term dated issue nicely.

Thanks, I put in an order for RILYL

 

[Texas Proud]

Yes that is my plan! Here it is...
USE OF PROCEEDS
We anticipate our net proceeds from the sale of the bonds will be approximately $247.7 million after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds we receive from the issuance and sale of the bonds, together with other available funds, (i) to redeem $31.35 million aggregate par value of our preferred stock paying dividends at 4.32% - 4.72% per year and (ii) for general corporate purposes. Pending the application of the net proceeds of the bonds, we will invest them in short-term, highly liquid, high-rated money market instruments and/or the Entergy system money pool.
https://www.sec.gov/Archives/edgar/data/7323/000006598418000143/d533618d424b2.htm#srom533618_4

I think you got a prelim version.... it looks like the final version is different... well... edit... just looked at your link again and it seems like it was filled out... below is the link from the one I saw...




SEC Filing Document For ENTERGY ARKANSAS INC: 424B2, Sub-Doc 1, Page 6

USE OF PROCEEDS ​

Except as otherwise described in a prospectus supplement, the net proceeds from the offering of the New Bonds will be used either (a) to repurchase or redeem one or more series of our outstanding securities on their stated due dates or in some cases prior to their stated due dates or (b) for other general corporate purposes. The specific purposes for the proceeds of a particular series of New Bonds or the specific securities, if any, to be acquired or redeemed with the proceeds of a particular series of New Bonds will be described in the prospectus supplement relating to that series.
​

 

[Mulligan]

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

The bond is big enough to chew off a lot of projects. There is no certainty, but it isnt like they couldnt redeem these the last 40 years because they couldnt scrap up ~ $35 million. So the fact they specifically brought them up out of the blue is telling. There has been a consistent plan by Entergy last 3 years....Entergy Louisanna all preferreds called, Entergy Texas redeemed, Entergy New Orleans all redeemed...They do them one at a time. Now Entergy Ark appears to be next man up, then the last Entergy Mississippi will be the final man standing waiting their turn. No guarantees so it is what is, but Im not losing sleep. You noticed normally it would be exD in less than 10 days and not a peep of a divi declaration? My bet is its all cleaned up at same time, divi declaration, exD, and redemption notice...

 

[Texas Proud]

The bond is big enough to chew off a lot of projects. There is no certainty, but it isnt like they couldnt redeem these the last 40 years because they couldnt scrap up ~ $35 million. So the fact they specifically brought them up out of the blue is telling. There has been a consistent plan by Entergy last 3 years....Entergy Louisanna all preferreds called, Entergy Texas redeemed, Entergy New Orleans all redeemed...They do them one at a time. Now Entergy Ark appears to be next man up, then the last Entergy Mississippi will be the final man standing waiting their turn. No guarantees so it is what is, but Im not losing sleep. You noticed normally it would be exD in less than 10 days and not a peep of a divi declaration? My bet is its all cleaned up at same time, divi declaration, exD, and redemption notice...

I usually look at dividends.com to check days till ex date... but none of these show up as even existing..

 

[Mulligan]

I usually look at dividends.com to check days till ex date... but none of these show up as even existing..

These old illiquid subsidiary preferreds many times do not. I went way back in time a few weeks ago and dug it out somewhere. It usually has occurred, but its flying blind and may not be suitable for you since its not really a life changer. I am counting on the pattern with the other subsidiaries in addition to the “suggestion”. If it happens I suspect its possible it will just be an email notice without any public declaration. So its a flying blind thing...

 

[RicDee]

I would suggest adding a short term dated issue in...Like RILYL under $25.50... That will blend in with your LANDP term dated issue nicely.

Thanks again Mulligan,
I bought some RILYL
Do you have another one to buy and hold?

 

[brokrken]

Just curious why you guys are buying the RILYL instead of the RILYZ? The Z has a couple of years of call protection and higher current yield.

 

[Mulligan]

Just curious why you guys are buying the RILYL instead of the RILYZ? The Z has a couple of years of call protection and higher current yield.

Ken, that is precisely the reason I own it. I want this short duration and a head of the others in redemption. I love the terms of the issue, but not as enthused with company as its a bit unwieldy for me.

 

[Mulligan]

Thanks again Mulligan,

I bought some RILYL

Do you have another one to buy and hold?

Ric, are you wanting a buy and hold longer duration? Short? What risk level in terms of yield?

 

[RicDee]

I would prefer longer duration, but 6% conservative is more important.

 

[brokrken]

I would prefer longer duration, but 6% conservative is more important.

If you don't mind a REIT and are doing this in a retirement account (so you don't need the preferential tax treatment) you could look at MAA-I. BB+ rated and current yield is about 6.6%. It's a perpetual, but callable in 2026. YTC is 4.5%. but, you could increase that if you watch it and get out a few years prior to call.

 

[Mulligan]

I would prefer longer duration, but 6% conservative is more important.

Ric, you are looking for plus 6% with duration protection, correct? This would mean a longer maturity and capital exposed to duration risk which means they could drop several dollars despite having a safe income stream. Are you ok with that? Just checking before I give any thoughts.