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

[pb4uski]

PB, I will be honest, I been buying a sub 4% perpetual but Im trying to buy up the float, ha.

I don't get what "buy up the float" means, Mulligan. What is the play?

 

[pb4uski]

Guys, Its a freakin $20 par , $21 redemption price preferred. All Hawaii ones are...Do they think they are $25 issues?...

That might explain it, but are people really that stupid that they would assume that the par is $25 and think that at $24 they are buying $1 under par when they are really paying $4 over par? Maybe some Robinhood investors?

 

[Mulligan]

That might explain it, but are people really that stupid that they would assume that the par is $25 and think that at $24 they are buying $1 under par when they are really paying $4 over par? Maybe some Robinhood investors?

Yes people are that stupid...It only takes one... Would you pay $145 for a $100 par issue that could be called any day? They did that buying mine yesterday. I do suspect they thought yours was $25... A $20 par issue is not normal at all.... Buying up the float means my goal is eventually to try to own every share of the series!

 

[brokrken]

SPLP-A declared a quarterly "cash" dividend. Glad that's back. However, they did caveat it.

"Any future determination to declare distributions on its units of Series A Preferred, and any determination to pay such distributions in cash or in kind, or a combination thereof, will remain at the discretion of Steel Partners' board of directors and will be dependent upon a number of factors, including the company's results of operations, cash flows, financial position, and capital requirements, among others."

 

[Sunset]

SPLP-A declared a quarterly "cash" dividend. Glad that's back. However, they did caveat it.

"Any future determination to declare distributions on its units of Series A Preferred, and any determination to pay such distributions in cash or in kind, or a combination thereof, will remain at the discretion of Steel Partners' board of directors and will be dependent upon a number of factors, including the company's results of operations, cash flows, financial position, and capital requirements, among others."

I wondered why it had drifted up in value, this would help to explain it.

 

[Winemaker]

Public Storage W 5.20% issue called next month, it has been callable since 1/16/18.

 

[Mulligan]

Public Storage W 5.20% issue called next month, it has been callable since 1/16/18.

Winemaker, They offered a 4.125% issue very recently and it was bought up too. The market has figured out higher quality preferreds can now be issued at yields lower than recently thought possible.
This week my major play (besides just letting most just slowly melt up in price) was catching a liquidity break in CNTHO buying a nice chunk at $52.75. And repurchasing my 300 shares of IPWLK at $103.75 that I just sold a month ago at $105 and $106. Didnt miss the divi either.

 

[BrianB]

Another partial redemption, this time it's Vereit:

04:08 AM EDT, 08/21/2020 (MT Newswires) -- VEREIT ( VER ) plans to redeem six million shares of its 6.70% series F cumulative redeemable preferred stock on Sep. 20 using proceeds from expected dispositions and cash on hand, according to a Thursday press release.

The redemption is about 24% of the outstanding shares. High yield, past call preferred shares are an endangered species.

BrianB

 

[bobandsherry]

Anyone have any news on AHT? Their common is down big time today (14.5%) but the preferreds popped (AHT-I and H up 11%). There was news of them floating an offer to buy their preferreds at $9.75 or 2.64 common. With common trading at $2.50, no longer equitable to the cash yet their preferreds making a move today.

 

[tizod]

AHT Avoid

B&S Seems AHT is in stress and offering common for Pref. Not a good sign. I'd avoid.
https://seekingalpha.com/news/36130...9_0-after-offering-common-stock-for-preferred

 

[yakers]

Any international preferreds to look at? I see PFFD is X-US, how does that fit in a portfolio? I assume it would not qualify for the 15% tax rate but maybe would hold in taxable for recovering foreign tax credit?

 

[bobandsherry]

B&S Seems AHT is in stress and offering common for Pref. Not a good sign. I'd avoid.
https://seekingalpha.com/news/36130...9_0-after-offering-common-stock-for-preferred

Thanks, I had been looking for that news and didn't see it originally. I was aware they were discussing with an offering, on that news I played for a quick profit when share prices jumped on the original news.

I was then able to find the SEC offering that was just filed:

https://sec.report/Document/0001104659-20-103730/#tm2024928-19_sctoia.htm

https://ashfordhospitalitytrust.q4i...ng-Series-of-Its-Preferred-Stock/default.aspx

They've modified the payouts from what had been originally proposed as they were planning to offer 2.4 shares of common or $9 in cash (up to limited amount). But with common price sliding they made it now 5.58 shares (current value of $11) of common or $7.75 cash.

After making the profit on the earlier jump, I have been sitting back and watching the dust settle. After seeing the preferred shares slide back to $4 I picked up some shares of AHT-I to hold, a calculated gamble based on the knowledge of AHT wanting to make the offering. I then put a $6 GTC on some shares and saw that get snapped up. I should have put all my shares out there with that GTC, but still got out on the rest at $5.50 for $1.50 profit per share.

 

[Winemaker]

If you are on the site, "Seeking Alpha" there was a good article about AHT the other day. It more or less read that the best option was to buy the Preferred and short the common, suggested on a previous article. The Board of Directors changed the original offer recently, messing up the arbitrage. While still a profitable strategy from the first article, the return has been reduced. If you hold just the Preferred like I do, the article says we're screwed.

 

[bobandsherry]

If you are on the site, "Seeking Alpha" there was a good article about AHT the other day. It more or less read that the best option was to buy the Preferred and short the common, suggested on a previous article. The Board of Directors changed the original offer recently, messing up the arbitrage. While still a profitable strategy from the first article, the return has been reduced. If you hold just the Preferred like I do, the article says we're screwed.

Screwed is all relative I guess. With current price you were already screwed if you bought in before the pandemic hit. They are throwing a bone here, no meat on it for the original holders but a little recovery of what's already been lost. Those giving it a gnaw now could make a few bucks. In true hindsight fashion, def could have made a killing shorting the AHT when news of the original proposal came out. Can do Mar21 $2.50 CC @ $1.28.

 

[bobandsherry]

Article on the revised AHT exchange offering.

https://seekingalpha.com/article/4373768-ashford-preferred-shares-get-full-monty

 

[Graust]

Any international preferreds to look at? I see PFFD is X-US, how does that fit in a portfolio? I assume it would not qualify for the 15% tax rate but maybe would hold in taxable for recovering foreign tax credit?

PFFD is the “Global-X US Preferred ETF” or something similar. So it’s actually a US preferred fund lol. “Global” is only in the name of the sponsor.

Actually, it looks like IPFF is the international “equivalent” to PFF. Haven’t done any further DD other than seeing the name. Will look for some others and add them here if I find any. Not sure the taxation either.

 

[Happyras]

I am stewing on this preferred and would like to know opinions on this revised structure;
, Series A, Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units, liquidation preference $25 per unit, redeemable at the issuer's option on or after 11/1/2020 at $25 per unit plus accrued and unpaid dividends, and with no stated maturity. Cumulative distributions of 9.00% per annum ($2.25 per annum or $0.1875 per month) will be paid monthly on the 15th day of each month to holders of record that will be the last business day of the month prior to the payment date (NOTE: the ex-dividend date is one business day prior to the record date). On and after 11/1/2020, distributions on the Series A Preferred Units will accumulate at an annual floating rate equal to the one-month LIBOR plus a spread of 7.71%. Upon the occurrence of a change of control the company will have the option within 120 days to redeem the preferred units at $25 per unit plus accrued and unpaid dividends. If the company has exercised their redemption right, the holders will NOT have the following conversion right. Upon the occurrence of a change of control, and the company has NOT provided notice that they intend to redeem the preferred units, the holder will have the right to convert the preferred units into common units under certain circumstances (see the prospectus for details). Holders of the Preferred Units will receive specific tax information from the company, including a Schedule K-1 which generally would be expected to provide a single income item equal to the preferred return (see page S-43 of the prospectus for details). This security was rated as Ba3 by Moody’s and B+ by S&P at the date of its IPO. In regard to the payment of dividends and upon liquidation, the preferred units rank junior to the company's senior debt, equally with other preferreds of the company, and senior to the common units of the company. See the IPO prospectus for further information on the preferred stock by clicking on the ‘Link to IPO Prospectus’ provided below.

This is a small issue stock, the management is somewhat difficult to deal with, but I have friends who know them well and expect it to do well. They are a resources partnership and generates a K-1, I asked for last years K-1 to check UBTI. I am not certain of other tax issues within an IRA but UBTI will trigger tax due. Note the B+ S&P rating. PM me for the symbol, but I am more interested in thoughts on the restructured shares. High yield, and currently trading well below call price.

 

[tizod]

I'd do HMLP-A or ATCO or ALIN before this!

 

[Mulligan]

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

If you like a bit riskier here is one..QRTEP... This is an 8% “special dividend” given to shareholders from QRTEA. This is a John Malone special..Preferred is BB Fitch rated. Over a billion issuance to shareholders, and is being dumped for cash as people or entities prefer the cash instead. It is now around $89 ($100 par. John Malone and another individual received about 8% of the float and intend to keep theirs. Which makes sense as he helped create it for a tax free issuance off the common stock in which he owns an assload.
The selling pressure is fierce with no underwriters to support it near term coming out the gate since it isnt an IPO. I bought a bit too early at $93 and $91. I may take one more bite of the apple...Its also an 11 year term dated issue, 5 year callable, but penalties until year 8 if redeemed in years 6 and 7.
Fitch is given the preferred 0% equity credit for credit ratings because of the protective covenants of the issue (that is a good thing). This is the holding company that owns QVC amongst others.

 

[brokrken]

Just looked at QRTEP, it's up $3.25 already this morning!

 

[Graust]

Did anyone catch (as in, buy more) PCG-B’s 5% drop before noon (central time) today? I was scrambling looking for news but it seemed to be isolated to the B issue (I own -E and -G)

Also bought QRTEP

 

[Mulligan]

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

Did anyone catch (as in, buy more) PCG-B’s 5% drop before noon (central time) today? I was scrambling looking for news but it seemed to be isolated to the B issue (I own -E and -G)

Also bought QRTEP

A dropped into $26 range and bounced a bit..Im out of those CA utes with all the fires going around...What is keeping them a month or two from now from blaming them for some of the fires and then the problems start all over..Im too nervous...
QRTEP just needs to get all the sellers off the books. I wish I could buy more, but I never chase high yield and I already have 300 shares which is too much already, ha!

 

[aja8888]

Still holding PCG-A and wondering when the unpaid back dividends will be paid?

 

[pb4uski]

I was thinking the same thing... but I have D.

 

[Mulligan]

Still holding PCG-A and wondering when the unpaid back dividends will be paid?

The bankruptcy filings showed a cash disbursement to be paid out for all suspended dividends this year. If they are true to the filings the next traditional end of Oct. exD should pay all the accrued dividends...But i have heard nothing since emerging from bankruptcy.