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

[Texas Proud]

Well, with the interest rates going up the prices have come down a bit... and my flipping is not going so well... the price has dropped more than the divi and I will have to hold longer than I was expecting... but might have a permanent loss...


Thanks for the lists... I am going to recommend some pref to one of my sisters who is looking for yield and has been buying common for that... might as well go to the place where you actually get yield...

 

[Mulligan]

Well, with the interest rates going up the prices have come down a bit... and my flipping is not going so well... the price has dropped more than the divi and I will have to hold longer than I was expecting... but might have a permanent loss...


Thanks for the lists... I am going to recommend some pref to one of my sisters who is looking for yield and has been buying common for that... might as well go to the place where you actually get yield...

Texas, just be mindful if rates climb a bit more, todays “bargains” will seem like a ripoff. Especially with people just beginning to dabble in preferreds like a sister. The preferreds that were around in 2013 taper tantrum are trading today at relative nosebleed levels compared to where they were selling at in 2013.

 

[bobandsherry]

Agree with Mulligan, have to be pretty selective. Short term could find div % eaten up by drop in price. If 20 year or so horizon odds are pretty good that cycle repeats.

 

[Golden sunsets]

My preferreds will sound familiar to Mulligan and Coolius: CNTHP, CNLPL, WFP-L and AILLL. My yields all hover around 6-6.25%. Sock drawer stuff to use Mulligan’s terminology. The first three are still well above par and well above my cost. AILLL is .10 below my cost. I think I’ll just hang tight.

 

[Mulligan]

Agree with Mulligan, have to be pretty selective. Short term could find div % eaten up by drop in price. If 20 year or so horizon odds are pretty good that cycle repeats.

Im just afraid “rookies” wont handle the pain, heck even one of the venerable CHS issues is down over 10% this past year...That chews up way over a years divis...People on SA are already screaming Uncle with their preferreds....My above par past call issues have bought me something the market preferreds cant do...Time...I still got time to get out if I want and keep all my gains...But ultimately I am in for income and reinvest so if they do sag, I will reinvest for better yield. But mine wont drop as much that is for sure.

 

[Mulligan]

My preferreds will sound familiar to Mulligan and Coolius: CNTHP, CNLPL, WFP-L and AILLL. My yields all hover around 6-6.25%. Sock drawer stuff to use Mulligan’s terminology. The first three are still well above par and well above my cost. AILLL is .10 below my cost. I think I’ll just hang tight.

Golden, I bet you have kept the same ones for the past few years without trading, or worrying!

 

[bobandsherry]

Im just afraid “rookies” wont handle the pain, heck even one of the venerable CHS issues is down over 10% this past year...That chews up way over a years divis...People on SA are already screaming Uncle with their preferreds....My above par past call issues have bought me something the market preferreds cant do...Time...I still got time to get out if I want and keep all my gains...But ultimately I am in for income and reinvest so if they do sag, I will reinvest for better yield. But mine wont drop as much that is for sure.

Yeah, I think some considered them to be like a high interest CD and forget about the possible loss of principal. Has been quite a good run as rates dropped or unchanged for past few years so the "rookies" haven't experienced anything but relatively good times.

 

[Coolius]

My preferreds will sound familiar to Mulligan and Coolius: CNTHP, CNLPL, WFP-L and AILLL. My yields all hover around 6-6.25%. Sock drawer stuff to use Mulligan’s terminology. The first three are still well above par and well above my cost. AILLL is .10 below my cost. I think I’ll just hang tight.

Golden, am I correct in thinking you meant to type WFC-L instead? If so, then yes, I own all 4. All are very overweight except for WFC-L.



Another overweight sock drawer resident is HE-U; a little underwater on that one, but not concerned.

 

[Running_Man]

I think most of the socks have a hole in them -- just not apparent when they are rolled up in a drawer.

 

[Mulligan]

I think most of the socks have a hole in them -- just not apparent when they are rolled up in a drawer.

Personally, I hope my AILLL has so many hidden holes in that rolled up ball it opens up at $1, tomorrow and I lose well over 6 figures over night. So I can buy 6 figures more and collect 1.65 yearly off that buck. Im young enough to come out very good if it never rises above a dollar and cranks out that divi!

 

[Golden sunsets]

Golden, I bet you have kept the same ones for the past few years without trading, or worrying!

Yep. And Coolius is right about WFC-L, rather than my typo.


Sent from my iPad using Early Retirement Forum

 

[brokrken]

So, yesterday I noticed that my MAA.I was trading up to near $67. I've had a good til cancel in for quite some time at $66.5 so I went to check and see if I got executed only to notice that not only had I not executed but the order was nowhere to be found. I was going to call my brokerage to see what the hell happened and raise hell, but before I did that I put in an order at $67 and it got executed within a couple hours. Worked out, but still wondering what happened to that order. Anyway, this was a good trade for me. I've held for 8 months, got 3 divies and some cap gain. Annualized return near 9%. Now I have some cash to play with when these others you guys are mentioning get into the buy range!

 

[RE2Boys]

So, yesterday I noticed that my MAA.I was trading up to near $67. I've had a good til cancel in for quite some time at $66.5 so I went to check and see if I got executed only to notice that not only had I not executed but the order was nowhere to be found. I was going to call my brokerage to see what the hell happened and raise hell, but before I did that I put in an order at $67 and it got executed within a couple hours. Worked out, but still wondering what happened to that order. Anyway, this was a good trade for me. I've held for 8 months, got 3 divies and some cap gain. Annualized return near 9%. Now I have some cash to play with when these others you guys are mentioning get into the buy range!

Most brokerage houses have a limit on the amount of time a GTC order is outstanding. Possibly you exceeded your brokerage's limit.

 

[Mulligan]

So, yesterday I noticed that my MAA.I was trading up to near $67. I've had a good til cancel in for quite some time at $66.5 so I went to check and see if I got executed only to notice that not only had I not executed but the order was nowhere to be found. I was going to call my brokerage to see what the hell happened and raise hell, but before I did that I put in an order at $67 and it got executed within a couple hours. Worked out, but still wondering what happened to that order. Anyway, this was a good trade for me. I've held for 8 months, got 3 divies and some cap gain. Annualized return near 9%. Now I have some cash to play with when these others you guys are mentioning get into the buy range!

Congrats and good sell Ken. Yes it has a term date, but factoring in the loss for YTM, you did well on that sell! I went in and bought 400 shares of ALLY-A at $25.98 and 400 of CHSCN at $25.48 late. ALLY-A is back under 2 payments past call, so I am back in again. If it survives 10 more days without a notice, it will be good for at least 2 more payments putting me in the clear. Being a live adjustable this one should hold up fairly well... Probably a bit early on CHSCN, but that is fine. It has dropped almost 10% in one month. It was over $29 just 5 weeks ago. I have always liked owning CHS preferreds but lately they had just been too high. This is a price point I can tolerate owning. If it drops under par, I will buy more.

 

[Mulligan]

No holes in this sock going into the sock drawer. Snagged 400 more of CNIGO at 25.30 today...Nice little QDI 2023 term dated utility preferred from Corning Natural Gas. A nice little 5 year term dated mandatory maturity issue to stuff away.

 

[aja8888]

No holes in this sock going into the sock drawer. Snagged 400 more of CNIGO at 25.30 today...Nice little QDI 2023 term dated utility preferred from Corning Natural Gas. A nice little 5 year term dated mandatory maturity issue to stuff away.

Wow! Why did it drop the 5% today?

 

[Mulligan]

Illiquidity is a double edge sword. He wanted to sell and I had him by the short hairs...I bet I have been involved in 70% of the transactions buying and selling this issue. It was a private placed issue... Vast majority of shares are held only buy a few people who just hold the shares.

 

[aja8888]

Illiquidity is a double edge sword. He wanted to sell and I had him by the short hairs...I bet I have been involved in 70% of the transactions buying and selling this issue. It was a private placed issue... Vast majority of shares are held only buy a few people who just hold the shares.

I saw that you bought all the shares sold today. Nice work!

 

[Mulligan]

I got plenty of this and even more of CNIGP. Good thing I never need to sell, so I dont ever get screwed, lol.

 

[aja8888]

I got plenty of this and even more of CNIGP. Good thing I never need to sell, so I dont ever get screwed, lol.

It's a good thing because there probably won't be any buyers to pay you!

 

[Mulligan]

It's a good thing because there probably won't be any buyers to pay you!

Now that is the chance you take, lol...Actually 5 or 6 times in past 18 months I have bought at $26ish and sold between $27.00 and $27.50 very easily. Actually a couple months back I decided to just accumulate and buy and hold until maturity. Some I even chased over $26 too. But I am holding them all now, until their 2023 maturity, taking them off the market.
As for my flipping disease, I am back doubly in ALLY-A buying 500 more at 25.88 (or .87cant remember already). Crossing my fingers until Friday no redemption notice is served. If I squeeze through that it will be an easy 50 cent flip within 2 months max plus the interest payment.

 

[bobandsherry]

As for my flipping disease, I am back doubly in ALLY-A buying 500 more at 25.88 (or .87cant remember already). Crossing my fingers until Friday no redemption notice is served. If I squeeze through that it will be an easy 50 cent flip within 2 months max plus the interest payment.

Gotta stay long and strong ALLY-A has been very, very good to me. Even if there is a call Friday it's given me a great run.

 

[Mulligan]

Gotta stay long and strong ALLY-A has been very, very good to me. Even if there is a call Friday it's given me a great run.[/

Bob, I havent been able to learn the steely eye stare down of a call like you have mastered! ALLY-A has resumed its pattern it skipped last time, so it gave me a window again to be timidly brave. Usually a week before the redemption notice window opens up it sags with sellers. It did it again going back under $26. The way trust preferreds almost always operate is to announce a redemption just outside the 30 day call window of payment which is Nov. 15. If crickets are chirping still on Friday, this issue is good until February 15 minimum.

 

[bobandsherry]

Bob, I havent been able to learn the steely eye stare down of a call like you have mastered! ALLY-A has resumed its pattern it skipped last time, so it gave me a window again to be timidly brave. Usually a week before the redemption notice window opens up it sags with sellers. It did it again going back under $26. The way trust preferreds almost always operate is to announce a redemption just outside the 30 day call window of payment which is Nov. 15. If crickets are chirping still on Friday, this issue is good until February 15 minimum.

Heh - sometimes it pays to be stupid But it was more I considered what other options would that ALLY would have. I don't think they want to pull the $$$ to call the issue, but perhaps partial? But if they need capital again would they get a more beneficial pricing? Looking at current pricing, JPM just priced their new issue at 5.75% and JPM is much healthier. So would ALLY be able to price much below their current 8.2%+? Maybe slightly, but then they have the expense to call one and issue another.

But looks like you stepped up this time, dipping your toe and then entire foot into the ALLY-A water just before possible call. So you must be following a similar viewpoint. Guess we'll see, won't be first time I've been wrong.

 

[Mulligan]

Heh - sometimes it pays to be stupid But it was more I considered what other options would that ALLY would have. I don't think they want to pull the $$$ to call the issue, but perhaps partial? But if they need capital again would they get a more beneficial pricing? Looking at current pricing, JPM just priced their new issue at 5.75% and JPM is much healthier. So would ALLY be able to price much below their current 8.2%+? Maybe slightly, but then they have the expense to call one and issue another.

But looks like you stepped up this time, dipping your toe and then entire foot into the ALLY-A water just before possible call. So you must be following a similar viewpoint. Guess we'll see, won't be first time I've been wrong.

Dirtbag banks like Ally should be able to squeeze a 6.75% QDI in, but allowing for tax break that the trust preferred allows the call and reissue savings could be minimal like you are thinking...However there is a separate fly in the ointment...Those final phase in Basel 3 regs....Most trust preferreds from banks above 15 billion in capital will be disallowed from Tier 1 capital in 2019. I dont quite understand it fully though, but it could be used as Tier 2 if they desire or need it...That is the main wild card.