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

[Freedom56]

Ya, I nowhere near those type of trainwrecks!

Stay away from National General Holdings also. It's another one tied up with Amtrust.

I'm moving LMHA to the chopping block. It's up over 15% plus an interest payment since I bought in December and I'm willing to bet that the programs will kick in to sell off PFF, PGX, PSK, and others and create another golden buying opportunity. In the mean time, I will earn 2.3% in a money market while I wait. If I can get two round trips this year with these baby bonds and preferred, It will be pretty stellar year.

 

[Slow But Steady]

I made a mistake. I own some shares in my IRA that issue a K1. The total dividends paid is more than $1,000.

What kind of mess have a gotten myself into, and how expensive will it be to get out of it?

 

[RE2Boys]

I made a mistake. I own some shares in my IRA that issue a K1. The total dividends paid is more than $1,000.

What kind of mess have a gotten myself into, and how expensive will it be to get out of it?

Total dividends doesn't matter. Look at the K1, box 20, code V (if any). That is your share of unrelated business taxable income (UBTI). If the sum (k1s in IRA) of the code V is greater than $1,000, then a form 990T would need to be filed. The good news.......the custodian of your IRA must file as the owner, not you.

See: https://www.fidelity.com/tax-information/tax-topics/ubti

 

[Slow But Steady]

Total dividends doesn't matter. Look at the K1, box 20, code V (if any). That is your share of unrelated business taxable income (UBTI). If the sum (k1s in IRA) of the code V is greater than $1,000, then a form 990T would need to be filed. The good news.......the custodian of your IRA must file as the owner, not you.

See: https://www.fidelity.com/tax-information/tax-topics/ubti

That's what I thought.

It wasn't completely clear from the K1, though, because box 20 just said "STMT", then the statement was "UBTI (Code 20V) If your investment in the Partnership was made through an IRA, Keogh, or other qualified retirement plan, or if you are any other tax-exempt entity, your trustee may be required to report a portion of the taxable income or loss as unrelated to your tax-exempt purpose on IRS Form 990-T (Exempt
Organization Business Income Tax Return)."

 

[Mulligan]

If one is looking for a place to “hide out” from low yield risk and dont mind a call, KMPA is laying there in low $25.20s for a 7.3% yield. Just went past call last month, but looks good for at least one more divi minimum since it paid out end of last month.

 

[NgineER]

My CHSCM holding has gone up from 25.13 to 26.76 over the last five weeks. It is almost a whole years worth of dividend. Is it time to think about selling?

 

[aja8888]

My CHSCM holding has gone up from 25.13 to 26.76 over the last five weeks. It is almost a whole years worth of dividend. Is it time to think about selling?

Well, I sold when it got to near $29. Then bought back in ~$25. Too bad you didn't pick up any on 12/20/18 when it was $22+.

Regardless, this is a long term hold, for me, anyway.

 

[Freedom56]

If one is looking for a place to “hide out” from low yield risk and dont mind a call, KMPA is laying there in low $25.20s for a 7.3% yield. Just went past call last month, but looks good for at least one more divi minimum since it paid out end of last month.

With money market rates where they are, it's easy and liquid enough to hold a steady there.

Next on my chopping block is COF-PF. I will dispose of these over $26.70 for about a 12% gain.

 

[Mulligan]

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

MBFIO has had selling and volume pressures this week. MB is being acquired by 5th Third Street Bank. The issue will delist and go to the pink sheets. 5th Street is not redeeming the issue. 5th Street is actually a stronger bank so this is a positive for MBFIO despite lower price. I am sure many owning entities have to sell and cannot own delisted stocks. I went in today and bought at $24.30. Call protected until 2022. A 6% par issue.
I have been back in the get above 6% mode in issues without pushing risk too much. Doesnt appear rates are running away..
Bought more CKNQP in past few weeks also that is call protected until 2024. Even bought smaller amounts of NSS and GLP-A both at even par recently for a little juice... Have a bunch of 5 year fixed reset preferreds off 5 yr USD and 5 yr Canadian dollar bought 20-25% below par. All are reset through 2022 and 2023 except for one which is due for a reset in 2020.

 

[aja8888]

Mul, got any opinion on FPI-B 6% Cumulative issue (call date 9/30/2022)? This is for a friend's portfolio. Thanks, Tony

 

[Mulligan]

Mul, got any opinion on FPI-B 6% Cumulative issue (call date 9/30/2022)? This is for a friend's portfolio. Thanks, Tony

Aja, I really dont know. I made like $3 a share on a hit piece a year ago when they cratered. Its hard to figure out the details. What the land was paid for, what its worth, how the rents are going in a down Ag economy. I followed it a lot from interest, but just cant get back in for whatever reason. Many pros and cons articles out there. The terms are nice on the preferreds, but I just dont have anything of real value to help you with.

 

[aja8888]

Aja, I really dont know. I made like $3 a share on a hit piece a year ago when they cratered. Its hard to figure out the details. What the land was paid for, what its worth, how the rents are going in a down Ag economy. I followed it a lot from interest, but just cant get back in for whatever reason. Many pros and cons articles out there. The terms are nice on the preferreds, but I just dont have anything of real value to help you with.

OK, thanks, I can't figure it out either.

 

[brokrken]

MBFIO has had selling and volume pressures this week. MB is being acquired by 5th Third Street Bank. The issue will delist and go to the pink sheets. 5th Street is not redeeming the issue. 5th Street is actually a stronger bank so this is a positive for MBFIO despite lower price. I am sure many owning entities have to sell and cannot own delisted stocks. I went in today and bought at $24.30. Call protected until 2022. A 6% par issue.
I have been back in the get above 6% mode in issues without pushing risk too much. Doesnt appear rates are running away..
Bought more CKNQP in past few weeks also that is call protected until 2024. Even bought smaller amounts of NSS and GLP-A both at even par recently for a little juice... Have a bunch of 5 year fixed reset preferreds off 5 yr USD and 5 yr Canadian dollar bought 20-25% below par. All are reset through 2022 and 2023 except for one which is due for a reset in 2020.

Does the Non-cumulative nature of the issue worry you, at all?

 

[Mulligan]

Ken, all bank preferreds are non cumulative. So one has to accept that if they want to invest in financial preferreds. It is regulation not the banks choice.

 

[brokrken]

Ken, all bank preferreds are non cumulative. So one has to accept that if they want to invest in financial preferreds. It is regulation not the banks choice.

OK, I didn't realize they didn't have a choice. This seems like a good play, going from a Ba3 to Baa3 due to the acquisition with a better yield than any 5th 3rd issues.

 

[Green_and_Gold]

MBFIO has had selling and volume pressures this week. MB is being acquired by 5th Third Street Bank. The issue will delist and go to the pink sheets. 5th Street is not redeeming the issue. 5th Street is actually a stronger bank so this is a positive for MBFIO despite lower price. I am sure many owning entities have to sell and cannot own delisted stocks. I went in today and bought at $24.30. Call protected until 2022. A 6% par issue.
I have been back in the get above 6% mode in issues without pushing risk too much. Doesnt appear rates are running away..
Bought more CKNQP in past few weeks also that is call protected until 2024. Even bought smaller amounts of NSS and GLP-A both at even par recently for a little juice... Have a bunch of 5 year fixed reset preferreds off 5 yr USD and 5 yr Canadian dollar bought 20-25% below par. All are reset through 2022 and 2023 except for one which is due for a reset in 2020.

MBFIO's volume spiked again today. Share price seems to be holding steady.

 

[pb4uski]

Looks like quantumonline is down... anyone know what the story is there?

 

[bobandsherry]

Looks like quantumonline is down... anyone know what the story is there?

Message posted on the website:

QuantumOnline.com


The QuantumOnline website has experienced a server failure or a successful attack on the website today (Thursday, March 21, 2019) and the website is down probably for the reminder of the day. We are working on a solution and the website will most probably be back in operation tomorrow.



Don Doan

QuantumOnline.com

 

[Freedom56]

We may get another round of irrational fund selling of investment grade preferred and baby bonds again just like December. This time in the face of plunging yields. It will be time to reload LMHA, COF-PD and others if they drop well below par again.

 

[misanman]

I've been mostly admiring you guys that are doing the preferred stock thing but not sure I could give it the attention that seems to be required. How far off the mark would PFF be for someone who wants some preferred exposure but doesn't have the time or inclination to track things as closely as you do? I know that ETF costs could be a negative. Would I be better off spending some time to get educated on individual issues or is PFF a reasonable compromise?

 

[brokrken]

Tried to buy some MBFIO today and Schwab gave me an error message saying it was restricted. Anyone have any idea why?

 

[Coolius]

ken, MBFIO was delisted as scheduled and expected - yesterday IIRC - and now is in the "twilight zone" before an OTC symbol is issued.


I tried entering the symbol but my broker website rejected it.


Guess we have to wait for it to be announced and trading before we can buy or sell.

 

[Mulligan]

Tried to buy some MBFIO today and Schwab gave me an error message saying it was restricted. Anyone have any idea why?

Ken, on the delistment announcement a few weeks ago, it implied it could take up to 10 days to occur. OTC will assign a new ticker symbol to it when it becomes tradeable.

 

[Mulligan]

I've been mostly admiring you guys that are doing the preferred stock thing but not sure I could give it the attention that seems to be required. How far off the mark would PFF be for someone who wants some preferred exposure but doesn't have the time or inclination to track things as closely as you do? I know that ETF costs could be a negative. Would I be better off spending some time to get educated on individual issues or is PFF a reasonable compromise?

Misanman, this is just my opinion, but PFF hasnt come close to matching my returns for 6 years running. They seem to buy just what some index says that makes no rhyme or reason. Then they dump shares to reset without any care to capital. They then also have a performance dragging expense costs...And they are overloaded in financials.
But that being said, if you only want a small splash, not really interested in taking individual company risk or wanting to research stuff, it would probably be better to go that route. As there is a benefit in diversity by owning the fund instead of buying your own if you dont want the hassle.

 

[steelyman]

Good comment re: PFF. It describes what I want and am willing/able to do. They are in the process of changing their index (see? I do a little homework!)

I think of it as an easy and fun way to pretend to be in the preferred market without huge risk. I’ll watch/read what the varsity does.