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

[Mulligan]

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

I snuck in a few shares of GLPRU. Got caught up in some other things and missed the real early pricing but should still do OK on the div yield. I've been jumping out of some of the preferreds and into common as I'm watching the potential raising rate environment. Betting on that happening and catching a few $$ on common rising as a result. Done OK [emoji4]

Thanks for info on NSS. You may be right on your read from their call, but seems based on other recent issues they may not get any better pricing than they currently have. This was one of those holdings that I jumped out, reduced my holdings back in June so will hold for now, going to see another div payment but keep on eye on what happens.

My remaining preferred holdings: RLGT-A, CDMOP, RIYLZ, GLPRU, AILLL and NSS

Good jump in, Bob. Nothing wrong with riding the wave of the commons! At this price, one isnt really looking at a call smack down holding NSS. If they redeem next payment its only a few cents loss, and it could be the next one...Or neither. But Moodys clearly stated there is no maturities until 2020, and I checked the SEC quarterly filings and it aligns with Moodys also. See NSS is debt but it got a short term waiver from creditors to treat it as a preferred for debt coverage reasons. This could be expiring so some of that private bloated yield preferred could be assisting in redeeming the NSS as the private preferred is definitely is treated as capital, not debt. This is why I suspect he said “We have a debt refinancing to do later this year”.

 

[brokrken]

Yeah, thanks for the heads up Mully. I'm in it not much over par, though. So, I'm gonna sit tight and collect until they call, if they do. I kind of agree with Bob on this. I was discussing with another friend the same point that based on some of their recent issues, the rate environment and costs of refinancing I'm not sure they can do better. But, if they do, OK, I'll find somewhere else to park the money.


I'm currently holding SPLP-A, RLGT-A, NSS, BGCA, LANDP, IPL-D, MAA-I, RILYZ, SSW-G, TBB

 

[Texas Proud]

Update time... NS management said in conference call this week they “have some debt to refinance later this year”. Except there is a problem. There is no debt to refi or rollover until 2020. So they have to be referring to NSS. So I sold it all at 25.69 previous two days and will just assume its a goner.
GLPRU has been a shoot fish in a barrel trade. Anyone beside Texas get in?
Been buying up old trust debt, and added up to now 1000shares of AGO-B at 25.88 which goes exD this month. Did research and Puerto Rico is not a disaster in waiting. They have 2.8 billion in excess capital that designates AAA rating. Despite PR overhang S&P still rates their profile AA. In fact Moodys projected the PR loss and still said they would remain within their AA profile. All 3 credit rating agencies are in alignment with each other. Plus, AGO shows no desire to ever call anything. They presently have a 7% bond 2034 maturity that has been callable for quite a while and havent touched it and it trades 14% above par. So I like holding this 6.64% debt issue for now.
I now own...GLPRU, AGO-B, BANFP, ASRVP, AILLL, FIISO, MTB-, PFX, GGO-A, RILYL, RILYH, DS-B, PIHPP, HE-U, MSEXP, BRG-A, CNIGP

Are you listening to conf calls? If so... WOW.... So first off, thanks for the heads up.... I can make an informed decision instead of getting blindsided... edit to add... the only place I can see where the conf call is is seeking alpha which you have to sign up for... or NASDAQ which you also have to do, so cannot look at what was said to see contect...



I did a quick look and came across their new issue Pref D.... seems the interest rate on that will become worse than NSS (see below).... it also looks like NSS is part of NuStar Logistics LLP and guaranteed by NS.... I was looking at their new structure and it is still out on its own...


Also, their pref A, B and C is out there.... currently fixed but will go floating in a few years... looks like yield in the 9% range... so not much different than NSS...


As you said, the difference in price selling now or getting called is about the same, so the cost to hold is only the opportunity costs... if called I can flip into the A or C which have a better yield than B right now... and both have better LIBOR plus rates... I think I am going to hold on for now...

Series D Preferred Units Distributions
Distributions on the Series D Preferred Units accrue and are cumulative from the issuance dates and are payable on the 15th day (or next business day) of each of March, June, September and December, beginning September 17, 2018 to holders of record on the first business day of each payment month. The distribution rate on the Series D Preferred Units is: (i) 9.75% per annum for the first two years; (ii) 10.75% per annum for years three through five; and (iii) the greater of 13.75% per annum or the common unit distribution rate thereafter

​

 

[Mulligan]

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

Are you listening to conf calls? If so... WOW.... So first off, thanks for the heads up.... I can make an informed decision instead of getting blindsided... edit to add... the only place I can see where the conf call is is seeking alpha which you have to sign up for... or NASDAQ which you also have to do, so cannot look at what was said to see contect...



I did a quick look and came across their new issue Pref D.... seems the interest rate on that will become worse than NSS (see below).... it also looks like NSS is part of NuStar Logistics LLP and guaranteed by NS.... I was looking at their new structure and it is still out on its own...


Also, their pref A, B and C is out there.... currently fixed but will go floating in a few years... looks like yield in the 9% range... so not much different than NSS...


As you said, the difference in price selling now or getting called is about the same, so the cost to hold is only the opportunity costs... if called I can flip into the A or C which have a better yield than B right now... and both have better LIBOR plus rates... I think I am going to hold on for now...

Series D Preferred Units Distributions
Distributions on the Series D Preferred Units accrue and are cumulative from the issuance dates and are payable on the 15th day (or next business day) of each of March, June, September and December, beginning September 17, 2018 to holders of record on the first business day of each payment month. The distribution rate on the Series D Preferred Units is: (i) 9.75% per annum for the first two years; (ii) 10.75% per annum for years three through five; and (iii) the greater of 13.75% per annum or the common unit distribution rate thereafter

​

Heck no Texas, I read it, I dont listen.
Here it is, easy read less than 5 min. Notice in Q&A part where he mentions a refinancing this year. And there is no maturities for 2 years.
https://seekingalpha.com/article/41...rron-q2-2018-results-earnings-call-transcript

 

[bobandsherry]

Good jump in, Bob. Nothing wrong with riding the wave of the commons! At this price, one isnt really looking at a call smack down holding NSS. If they redeem next payment its only a few cents loss, and it could be the next one...Or neither. But Moodys clearly stated there is no maturities until 2020, and I checked the SEC quarterly filings and it aligns with Moodys also. See NSS is debt but it got a short term waiver from creditors to treat it as a preferred for debt coverage reasons. This could be expiring so some of that private bloated yield preferred could be assisting in redeeming the NSS as the private preferred is definitely is treated as capital, not debt. This is why I suspect he said “We have a debt refinancing to do later this year”.

They also said "As a result, we currently project our year-end 2018 debt-to-EBITDA to be around 4.7, but we’re working on initiatives that will take that number even lower.", so wonder if that projection includes NSS, if not then there's something else in the mix. I am just a bit over par so enough wiggle room should it get called, but hate to give up any of that div back by call. I jumped from ALLY-A as I thought something would happen, hate to jump out of this one too soon, but better than late I guess....

 

[Mulligan]

They also said "As a result, we currently project our year-end 2018 debt-to-EBITDA to be around 4.7, but we’re working on initiatives that will take that number even lower.", so wonder if that projecting includes NSS, if not then there's something else in the mix. I am just a bit over par so enough wiggle room should it get called, but hate to give up any of that div back by call. I jumped from ALLY-A as I thought something would happen, hate to jump out of this one too soon, but better than late I guess....

Your only out pennies Bob, so holding isnt going to hurt worst case, as the next payment is in the bag and even if they did redeem it could be at December payment. I just think the price wont move much with NSS and I have a better chance to get ahead with AGO-B rest of the year. Plus I like to flip, lol.

 

[Texas Proud]

Heck no Texas, I read it, I dont listen.
Here it is, easy read less than 5 min. Notice in Q&A part where he mentions a refinancing this year. And there is no maturities for 2 years.
https://seekingalpha.com/article/41...rron-q2-2018-results-earnings-call-transcript

Except that it is 8 pages and you can only get 1 unless you join... I have been trying to not join... when I searched this came up but not the whole thing...


As I said, I will take the chance and if it is called just move into one of the other issues they have...

 

[Mulligan]

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

Its no big deal to join. They do not spam you in any way...I didnt realize you couldnt look at the entire thing.
Jeremy Tonet

Great. Thanks. And just last one if I could, as far as how you think about your funding plan going forward post of that preferred here. And if there is any other kind of asset sales that might make sense if you as you look to kind of optimize the portfolio? Thanks.

Brad Barron

Yes, as far as the financing plans going forward, obviously, the preferred we just did was a big step to the overall plan that Brad laid out. And so, the objective there was to minimize our equity needs going forward. And I don’t think we have any plans to go into the equity market anytime soon, probably for the next couple of years. So I think we’re done there. The only thing really left to do we still have some bonds that we need to refinance this year. We still plan on doing that. So that’s kind of the financing plan going forward.

So clearly he means they “plan to” which means they dont have to so it isnt not maturing debt. They arent refinancing the cheap debt senior bonds that already have low relative yields. So that only leaves NSS debt.

 

[Mulligan]

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

They also said "As a result, we currently project our year-end 2018 debt-to-EBITDA to be around 4.7, but we’re working on initiatives that will take that number even lower.", so wonder if that projection includes NSS, if not then there's something else in the mix. I am just a bit over par so enough wiggle room should it get called, but hate to give up any of that div back by call. [emoji4] I jumped from ALLY-A as I thought something would happen, hate to jump out of this one too soon, but better than late I guess....

I doubt seriously NSS is included because it got credit waivers to remove it as debt and treat it as capital. But it was only a temporary waiver. NS new they were in a tight spot with the acquisition and poor results so creditors gave them some breathing room by waving the magic wand....And remember NSS had the 5 year deferral clause in it which basically made it a preferred in that regards of not having to pay near term.

 

[MooreBonds]

GLPRU has been a shoot fish in a barrel trade. Anyone beside Texas get in?

I snagged 200 at 24.90. Been holding my nose and buying a few different shipping-related stocks recently (I guess old habits die hard - although far more selective since my past wayward transgressions with the likes of NM, et. al.)

I have 200 NSS, but will likely change out at least 100 for either the A or C preferred...might dump all NSS into whichever yields higher. Now that they are a new entity, they likely have better access to debt yields, so you can't necessarily look at previous preferreds or debt issuances to say "their existing is higher, so they can't get new debt/preferreds lower".

 

[Mulligan]

I snagged 200 at 24.90. Been holding my nose and buying a few different shipping-related stocks recently (I guess old habits die hard - although far more selective since my past wayward transgressions with the likes of NM, et. al.)



I have 200 NSS, but will likely change out at least 100 for either the A or C preferred...might dump all NSS into whichever yields higher. Now that they are a new entity, they likely have better access to debt yields, so you can't necessarily look at previous preferreds or debt issuances to say "their existing is higher, so they can't get new debt/preferreds lower".

To be honest I wanted some of the NSS proceeds to roll into one of the preferreds. But I dont understand UBTI on K-1 issue in Roth so I make sure I dont broach that. And worst case I am pushing it now for this year so I will pass until Jan at least. No more K-1 buying this year.

 

[MooreBonds]

To be honest I wanted some of the NSS proceeds to roll into one of the preferreds. But I dont understand UBTI on K-1 issue in Roth so I make sure I dont broach that. And worst case I am pushing it now for this year so I will pass until Jan at least. No more K-1 buying this year.

Remember that just because a security issues a K-1 doesn't mean it will have any UBTI....you can even ask a company for a sample K-1 to see what htey generated in a given year. Some years might vary, if they are involved in actual natural resource holding/selling (versus, say, just a pipeline offering transportation), but many don't ever generate any UBTI.

I went ahead and swapped all of my NSS for equal parts NS-A and NS-C. I know I took a hit on the safety ladder, but willing to take the chance...

 

[Texas Proud]

Its no big deal to join. They do not spam you in any way...I didnt realize you couldnt look at the entire thing.
Jeremy Tonet

Great. Thanks. And just last one if I could, as far as how you think about your funding plan going forward post of that preferred here. And if there is any other kind of asset sales that might make sense if you as you look to kind of optimize the portfolio? Thanks.

Brad Barron

Yes, as far as the financing plans going forward, obviously, the preferred we just did was a big step to the overall plan that Brad laid out. And so, the objective there was to minimize our equity needs going forward. And I don’t think we have any plans to go into the equity market anytime soon, probably for the next couple of years. So I think we’re done there. The only thing really left to do we still have some bonds that we need to refinance this year. We still plan on doing that. So that’s kind of the financing plan going forward.

So clearly he means they “plan to” which means they dont have to so it isnt not maturing debt. They arent refinancing the cheap debt senior bonds that already have low relative yields. So that only leaves NSS debt.

Thanks... I might join at some time...


I see what you mean.... but I take that as they are going to issue a new bond to refinance, or get some other bank loan... if so, then NSS should be safe for a bit... I will wait till next divi and then roll over to either A or C...


As always, thanks for the heads up... this gives us plenty of time to think about what we want to do and adjust

 

[Mulligan]

Thanks... I might join at some time...


I see what you mean.... but I take that as they are going to issue a new bond to refinance, or get some other bank loan... if so, then NSS should be safe for a bit... I will wait till next divi and then roll over to either A or C...


As always, thanks for the heads up... this gives us plenty of time to think about what we want to do and adjust

The price has sagged a bit past few days since I sold. At this price you definitely have time to ponder as next payment is in the bag.
Yes, the comment is vague and he definitely didnt guarantee anything even if he was referring to NSS. But none of their true bonds are worthy of any refinancing as those are very low as they are senior debt not subordinate debt like NSS is. Just to me it seems logical based on that “short term waiver” of NSS. That means creditors were allowing them some breathing room to do a few things for a shorter period of time.....One never knows...Management of Maiden said over a year ago they would be redeeming MH-A last year. Things hit the fan and next thing you know MH-A is still trading. But unless you want something else, holding isnt a bad idea at all.

 

[Texas Proud]

Well, I did a flip that is my second shortest time wise (the fist was an hour when I found out the share I bought were called , but only lost a small amount)...


I was trying to do a flip on share that went ex tomorrow... but was only able to buy 100 at my price late yesterday... but then today someone was running up the price and it went above what I wanted to get out of the divi (I usually try and keep half)... so sold today...


Got a whopping $36 but it calculates to 494% annual gain!!


This month has been hard as there does not seem to be that many pref with large divis this month that have not gone up in price more than I am comfortable with before me buying...

 

[Coolius]

I was able to join you guys this week in the flipping game, in between my care giving responsibilities.


Sold a portion of CNLPL for average price of $56.75; bought them all back at average of $56.10. Could have achieved better if I had been around during late morning and early afternoon today, as a seller dumped shares to as low as $54.77.


But, a profit is a profit. Need to continue to avoid becoming a pig getting slaughtered from being too greedy.


If CNLPL has a seller next week at $55, will likely add to my position.

 

[Mulligan]

Well, I did a flip that is my second shortest time wise (the fist was an hour when I found out the share I bought were called , but only lost a small amount)...


I was trying to do a flip on share that went ex tomorrow... but was only able to buy 100 at my price late yesterday... but then today someone was running up the price and it went above what I wanted to get out of the divi (I usually try and keep half)... so sold today...


Got a whopping $36 but it calculates to 494% annual gain!!


This month has been hard as there does not seem to be that many pref with large divis this month that have not gone up in price more than I am comfortable with before me buying...

Texas, I think you are being too narrow minded in your math. Lets assume this isnt about investing, but being “a job”. Assume it takes 1 minute for you to hit the buy and sell buttons on your computer. That $36 pro rates out to $86,400 a week in wages...Not a bad job to have!

 

[Mulligan]

I was able to join you guys this week in the flipping game, in between my care giving responsibilities.


Sold a portion of CNLPL for average price of $56.75; bought them all back at average of $56.10. Could have achieved better if I had been around during late morning and early afternoon today, as a seller dumped shares to as low as $54.77.


But, a profit is a profit. Need to continue to avoid becoming a pig getting slaughtered from being too greedy.


If CNLPL has a seller next week at $55, will likely add to my position.

You better get the funds to work soon, Coolius, as your idle investing mind will promote investing promiscuous behavior. You will be investing in Turkish currency soon if that money lays around too long!

 

[Texas Proud]

Texas, I think you are being too narrow minded in your math. Lets assume this isnt about investing, but being “a job”. Assume it takes 1 minute for you to hit the buy and sell buttons on your computer. That $36 pro rates out to $86,400 a week in wages...Not a bad job to have!

LOL, but that is not the time taken... with research on what to buy and looking at it off and on I have at least an hour into this, maybe two... I was hoping to buy 500 shares and make about $180... my avg gain this year is $183.... and that includes a loss on one and a few stinkers like this...


It is kinda a hobby for me know... something I enjoy doing.. hope nobody tells me it is a job since I am making money ... BTW, YTD is over $4200 gain...

 

[Mulligan]

LOL, but that is not the time taken... with research on what to buy and looking at it off and on I have at least an hour into this, maybe two... I was hoping to buy 500 shares and make about $180... my avg gain this year is $183.... and that includes a loss on one and a few stinkers like this...


It is kinda a hobby for me know... something I enjoy doing.. hope nobody tells me it is a job since I am making money ... BTW, YTD is over $4200 gain...

Well that is a different story...Your earning that money! Largely I did my studying 4-5 years ago as I only follow the same 50 preferreds or so, and just briefly scan quarterly earnings report to make sure everything is still good. I just buy and sell in and out of those on price movements. But last couple weeks I did have to research AGO-B and GLPRU companies....Or make that read research from credit rating agencies research about them, lol. It didnt take much of a reality session to realize that those boys know way more about the underlying credit profile than I do!

 

[Coolius]

Mulligan, well, you got me going on AGO preferreds now, I'm starting to figure out what their bond portfolios contain and the weighting of Puerto Rico stuff in the mix.



But have to assume your statement that they are well fortified against default on those as correct.


I might dip a toe into the water next week, on an AGO preferred.

 

[Mulligan]

Mulligan, well, you got me going on AGO preferreds now, I'm starting to figure out what their bond portfolios contain and the weighting of Puerto Rico stuff in the mix.



But have to assume your statement that they are well fortified against default on those as correct.


I might dip a toe into the water next week, on an AGO preferred.

If you havent yet Coolius, open up an account with Moodys. Its free, and you can see many current corp credit evals and some olders. Fortunately AGOs is current and open to read. I dug around and found S&P and AM best somehow and they were all on the same page the company has the resources and excess capital to deal with PR.

 

[Mulligan]

Mulligan, well, you got me going on AGO preferreds now, I'm starting to figure out what their bond portfolios contain and the weighting of Puerto Rico stuff in the mix.



But have to assume your statement that they are well fortified against default on those as correct.


I might dip a toe into the water next week, on an AGO preferred.

capital position could absorb losses on its entire exposure to issuers in Puerto Rico of roughly $3 billion and…there would be no change in Assured’s capital adequacy score or financial risk profile”
https://assuredguaranty.newshq.busi...a-financial-strength-ratings-stable-outlook-1

 

[redduck]

Mulligan...
You seem so busy with The Good, The Bad and the In Between, that I just wanted to remind you that the football season is nearing.

 

[Mulligan]

Mulligan...
You seem so busy with The Good, The Bad and the In Between, that I just wanted to remind you that the football season is nearing.

Yes, Redduck, I am ready to go!..My season win total over bets are Titans 8 , Cards 5.5, Lions 7.5, and Bengals 6.5