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

[Mulligan]

OK, I'm now in on SPLP'A, IPL'D, NSS and LANDP. Think I'll sit tight for a while unless I have something called (these or one of my bonds)

Brokrken, was it accident or grand design....I see you have a short term dated preferred...A long term dated preferred...A true perpetual...And an adjustable... You about covered all the duration bases in just 4 issues!

 

[brokrken]

I wish I could say I was that smart. Just learning about these issues, so I'm glad to see I have a lot of those bases covered. By the way, thanks a lot for all the good info and advice on this preferred thread. I've dug through many of the 100+ pages here over the last few weeks and it has really helped me.

 

[Mulligan]

I wish I could say I was that smart. Just learning about these issues, so I'm glad to see I have a lot of those bases covered. By the way, thanks a lot for all the good info and advice on this preferred thread. I've dug through many of the 100+ pages here over the last few weeks and it has really helped me.

I bet you got tired of reading about AILLL, then, lol.

 

[brokrken]

Haha, actually tried to get in on that one, too. but ultimately gave up.

 

[Sunset]

OK, I'm now in on SPLP'A, IPL'D, NSS and LANDP. Think I'll sit tight for a while unless I have something called (these or one of my bonds)

Any chance you bought SPLP'A for $21.37 today ?

Someone took 200 off me, as I finally pulled a mini-Mulligan.

 

[brokrken]

Any chance you bought SPLP'A for $21.37 today ?

Someone took 200 off me, as I finally pulled a mini-Mulligan.

Nope, I got in at $20.89 week before last.

 

[Mulligan]

Brokrken...Keep warching T and lower your cost basis and flip out . The opportunity may arise... the T sell pressure will be there possibly.

 

[Mulligan]

Remember T becomes A overnight after Turn of calender...one way or other this gets resolved...either T crawls back to A come Jan. Or A drops to T. As this thing will be arb traded with shorts and longs to force it together...No way will there be this 60 cent arb difference come merging time...Its the same stock!

 

[Texas Proud]

Remember T becomes A overnight after Turn of calender...one way or other this gets resolved...either T crawls back to A come Jan. Or A drops to T. As this thing will be arb traded with shorts and longs to force it together...No way will there be this 60 cent arb difference come merging time...Its the same stock!

It will probably be in the middle.... I do not know how many As vs Ts are out there, but when they become one pool the selling pressure of the Ts will be less because of what I think are lower A pressure....

Wish I had more to flip.... or if I could short As and buy Ts.... but alas, I do not have this option...

 

[Mulligan]

Texas the best I can determine its about a 2-1 ratio of T shares bigger than A...Handy was a lot bigger swallow for them than Exel was. I dont know what that means other than the new float is a lot bigger and it looks like the recent trading volume is showing this now too.

 

[brokrken]

Texas the best I can determine its about a 2-1 ratio of T shares bigger than A...Handy was a lot bigger swallow for them than Exel was. I dont know what that means other than the new float is a lot bigger and it looks like the recent trading volume is showing this now too.

Mully, is the 20% put related to the original issued A shares or is it 20% of the A's after they combine with the T's?

 

[Mulligan]

Mully, is the 20% put related to the original issued A shares or is it 20% of the A's after they combine with the T's?

Yes, it was amended to include all the Handy and Harmon owners as well as the original Exel purchase....
Steel Partners currently owns approximately 70% of Handy & Harman’s outstanding shares. Under the agreement, Steel Partners, together with a wholly owned subsidiary of Steel Partners, will commence an exchange offer to acquire all the outstanding shares of Handy & Harman’s common stock (not owned by Steel Partners or any of its affiliated entities) for 1.484 Series A preferred units of Steel Partners for each Handy & Harman share tendered. Receipt of the preferred units, based on their liquidation preference of $25.00 per unit, will thus provide Handy & Harman stockholders with $37.10 of value for each share of Handy & Harman common stock tendered in the offer. The preferred units, which currently trade on the New York Stock Exchange under the ticker symbol “SPLPPRA,” (1) bear a cumulative distribution at a rate of 6.0% per annum, (2) mature in February 2026 and (3) will provide Handy & Harman’s stockholders with either cash or Steel Partners common units upon maturity or earlier redemption at the option of Steel Partners. In addition, Steel Partners will offer to repurchase or redeem, for cash on a pro rata basis, 20% of its preferred units by February 2020.

 

[MooreBonds]

For anyone looking for a new issue, I was just notified by TD Ameritrade of a new issue: AT&T, Senior note, 5 3/8% coupon, maturity in 2066 (49 year issue). nothing to write home about.....but if some of you are shoving past 80 year old widows to get 5% preferreds, might consider a senior note issue if you can get it in the IPO before it hits the secondary market, since it will likely trade up a little.

Edited to add: Rated BAA1/BBB+

 

[bobandsherry]

NSS is same situation...Could be called in January but there is meat on bone here still. And if not called it goes to adjustable rate in January. This one is higher near term call risk I believe. But enough divi is there to make it worth the shot, I think anyways...Its hard matching yield, to duration risk, if rates do rise going forward. So one has to know if cap losses for income stream matters. Term dated issues resolve that problem mostly.

OK, got in on NSS at $25.10, hurt me to pay the dime over par but figure if it gets called in Jan it's still nearly 7% return. If not then will by paying pretty healthy dividend. Since it's so close to par and price has been on slippery slope it seems there's more than a feeling it will be called.

 

[Mulligan]

OK, got in on NSS at $25.10, hurt me to pay the dime over par but figure if it gets called in Jan it's still nearly 7% return. If not then will by paying pretty healthy dividend. Since it's so close to par and price has been on slippery slope it seems there's more than a feeling it will be called.

Yep, this is how preferreds trade when approaching call date...Each passing divi they dont recover as much....the decent towards par... If I was you I wouldnt think of it as paying over par, but simply collecting 37 cents come mid January.

 

[bobandsherry]

Yep, this is how preferreds trade when approaching call date...Each passing divi they dont recover as much....the decent towards par... If I was you I wouldnt think of it as paying over par, but simply collecting 37 cents come mid January.

I was just joking about the 10 cent "premium". I had some cash sitting around and viewed it just as you mentioned.... 37 cents collected for short term yield of 6.7% if it gets called. Thanks for the suggestion.

 

[Freedom56]

For anyone looking for a new issue, I was just notified by TD Ameritrade of a new issue: AT&T, Senior note, 5 3/8% coupon, maturity in 2066 (49 year issue). nothing to write home about.....but if some of you are shoving past 80 year old widows to get 5% preferreds, might consider a senior note issue if you can get it in the IPO before it hits the secondary market, since it will likely trade up a little.

Edited to add: Rated BAA1/BBB+

This one is overpriced. AT&T notes and bonds are on review for a downgrade. I got a cold call from TD Ameritrade on this issue which means they have a lot to sell.

 

[Mulligan]

Speaking of overpriced... The 10 year yield has crept up to within 20 basis points of the big selloff last November. Many of these preferreds with 5% ish yields dropped $2-$3 a share real quick. One might want to review such holdings if cap losses bother one if yields continue moving north... I have a few but I never plan on selling those as they are in my antique collection. I have a decent amount in term dated ones, so all I have to do is ride it out with those.

 

[Coolius]

Speaking of overpriced... The 10 year yield has crept up to within 20 basis points of the big selloff last November. Many of these preferreds with 5% ish yields dropped $2-$3 a share real quick. One might want to review such holdings if cap losses bother one if yields continue moving north... I have a few but I never plan on selling those as they are in my antique collection. I have a decent amount in term dated ones, so all I have to do is ride it out with those.

I came to the same conclusion yesterday, unfortunately would have been far better to have had my revelation a day earlier

Sold several of my 5.00%-5.25% preferred issues today, most for small gain, a few for small loss. But at least I got rid of those most likely to react badly to further increases in the 10yr yield.

I suspect that this is yet another speed bump, and the income issues will eventually recover somewhat.

 

[Mulligan]

I came to the same conclusion yesterday, unfortunately would have been far better to have had my revelation a day earlier

Sold several of my 5.00%-5.25% preferred issues today, most for small gain, a few for small loss. But at least I got rid of those most likely to react badly to further increases in the 10yr yield.

I suspect that this is yet another speed bump, and the income issues will eventually recover somewhat.

The liquid ones have not seen the beginnings of drop off if investors are convinced yields are rising more... I have some modest exposure of 5% ish and below illiquids, DMRRP, BURCP, CTGSP, CTWSO, and MSEXP. I will never sell even though I could get out fine now. They are my antique preferred collection. Took too long to get them and I will keep those permanently.

 

[bobandsherry]

I hear you Mulligan on the potential hit to share price as rates move up. I've been locking in either those that are floating rate (or will shortly) or have a yield of 6.5% or more. If 10 year starts to approach 5% the overall stock market may shrink a bit as well as people no longer yield shopping in the market and pull money out back to safer harbors. The next "market correction" may be driven by this reaction.

 

[Mulligan]

I hear you Mulligan on the potential hit to share price as rates move up. I've been locking in either those that are floating rate (or will shortly) or have a yield of 6.5% or more. If 10 year starts to approach 5% the overall stock market may shrink a bit as well as people no longer yield shopping in the market and pull money out back to safer harbors. The next "market correction" may be driven by this reaction.

Bob, dont you dare bring up 5% treasury yield again. [emoji24]It hasnt been there since 2002. You want to talk about a preferred smoking, that would do it. That would drop even my rock solid CNTHP under $40!

 

[bobandsherry]

Bob, dont you dare bring up 5% treasury yield again. [emoji24]It hasnt been there since 2002. You want to talk about a preferred smoking, that would do it. That would drop even my rock solid CNTHP under $40!

What's old is what's new, or so they say.... Short chin-up in 2007 and 2006 to 5%+. CNTHP seemed to hold up during that period, so maybe a little comfort it won't be a disaster.

Some think that even 3% 10yr rate would be enough to siphon money from the market and back to safety, not sure I agree with that.

Now maybe rates back to 15% would give everyone the willies, but I'd find that a great time to lock in some repo's like the 80's, nothing like a long term 13% repo to boost your portfolio especially when I'm no longer in a mode to secure new hard assets. With no debt, bingo!

 

[Sunset]

OK, got in on NSS at $25.10, hurt me to pay the dime over par but figure if it gets called in Jan it's still nearly 7% return. If not then will by paying pretty healthy dividend. Since it's so close to par and price has been on slippery slope it seems there's more than a feeling it will be called.

Well you can feel good as I bought in at $25.15

It's ok, as I figure I'll make some $ either way it goes..

 

[Mulligan]

What's old is what's new, or so they say.... Short chin-up in 2007 and 2006 to 5%+. CNTHP seemed to hold up during that period, so maybe a little comfort it won't be a disaster.



Some think that even 3% 10yr rate would be enough to siphon money from the market and back to safety, not sure I agree with that.



Now maybe rates back to 15% would give everyone the willies, but I'd find that a great time to lock in some repo's like the 80's, nothing like a long term 13% repo to boost your portfolio especially when I'm no longer in a mode to secure new hard assets. With no debt, bingo!

Yes, your right it did sneak up there for a bite. I think the fact the curve was near inverting kept it from falling too much. But last extended rates of 5% and higher in late 90s to 2002 sent it to near $35. Ouch....3-3.5% doesnt really scare me and that isnt on the immediate horizon either.