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

[Coolius]

For more adventurous treasure hunting, you might want to try and find FIISO. An 8.4% cumulative preferred from Financial Institutions, an East Cost bank.

Mulligan & I have a couple hundred each, but know of no one else owning this.

Have tried several times to get the trading desk of my broker to search around, with zero success ( other than the first purchase ).

Just another of those elusive illiquids that are perfect for the sock drawer.

 

[Texas Proud]

Texas, It is June 22... A lot of accrual for this dividend is built in to pay out... Surprised you have been hit with a lot of calls. I seem to side step them most of the time despite being knee deep in the past calls most of the time...
Pig, yes BOFI seems like its a sister of Bank of California with accusations here and there... BOFIL bounces up and down. I hit it on a down just a few cents above par. This is in my flip pile but will consider holding a while. The common acted fine and was up today. BOFIL started creeping back up after the early morning dump. I rarely will buy if common is dropping with the preferred. But today the preferred dropped and the common was going up. Of course being a debt issue they have to pay of become insolvent unlike a true bank non cum preferred. It will give me something to watch, lol...
Also bought 300 shares of ALMBP yesterday at $25.90. Wanted more today but it wouldnt come back to me. So I bought 100 shares of GLFPN today. Not thrilled to be under SO's umbrella but I checked pretty thorough yesterday how Gulf and Alabama Power are set up. No entanglements with Georgia Power or Mississippi Power financially which have been downgraded. Gulf and Ala. are stable and highly rated with needing no parent support, which their debt is lower rated than the 2 purchased subsidiaries.

Well, it seems like a lot of calls to me...

KCC, MNR-A, BGLEN, BGLEI (held for an hour or so), CVB... now AES-C.....

Since I only own about 6 securities that seems like a lot...

 

[Mulligan]

Well, it seems like a lot of calls to me...

KCC, MNR-A, BGLEN, BGLEI (held for an hour or so), CVB... now AES-C.....

Since I only own about 6 securities that seems like a lot...

Yep, that is a high percentage, since you do not own many at a certain time. If you want to keep your streak intact it is time to load up on WFC-J and MH-A, lol.

 

[jimnjana]

Prior to posting on the thread I was already underwater on some of the AFSI common. So, afIer asking about the AFSI preferreds on the thread I went ahead and bought some, just not as many as I would have. I ended up with 200 shares of AFSI/PRA at 21.56 avg cost, and 100 of GBLIL at 25.18 after commission. Earlier in the week I also bough some of the BOFI common prior to the exchange on the thread about the preferred. I bought the common because, I'm also a BetterInvesting club member and the Stock Study I did looked pretty good. I have had limit orders for AILLL as well that haven't hit. I will likely place a few GTC orders in for AILLL and let them ride. My intent is to increase preferred holdings to about 10% of the portfolio I'm managing with majority going to utility preferred stocks or CEFs. I sold out of UTG earlier in the year after a lucky short term nearly 20% gain. AFSI is rallying because of one of the original owners/founder families buying 300 million worth of shares in a private placement, addressing liquidity fears.

 

[Mulligan]

Jim, AFSI is having a nice pop today for you. The preferred is popping too. I just cant read detailed balance sheets so I have to get the aerial view and rely on other peoples opinions. I kind of got poisoned a year ago on them with the financial question marks. But clearly these types of trades that you got in have the better potential for nice cap gains in addition to income.
I am getting less skittish about investing in preferreds as time goes by. But I still would prefer buying preferreds from companies, that are highly profitable, guaranteed profits, and have zero debt... I havent found one yet. And if I ever did I suspect it would be a 3% perpetual preferred, lol.

 

[jimnjana]

Jim, AFSI is having a nice pop today for you. The preferred is popping too. I just cant read detailed balance sheets so I have to get the aerial view and rely on other peoples opinions. I kind of got poisoned a year ago on them with the financial question marks. But clearly these types of trades that you got in have the better potential for nice cap gains in addition to income.
I am getting less skittish about investing in preferreds as time goes by. But I still would prefer buying preferreds from companies, that are highly profitable, guaranteed profits, and have zero debt... I havent found one yet. And if I ever did I suspect it would be a 3% perpetual preferred, lol.

I got lucky on the preferred so far.

 

[Coolius]

WFC-PL went ex-div today.

And currently trading at $1,265, recovering almost 40% of the $18 QDI dividend.

Here is a clear example of why dividend capture techniques do not always work. Anyone who sold their stock yesterday in hopes of capturing the dividend just lost out on a close to $8 gain per share.

 

[Mulligan]

WFC-PL went ex-div today.

And currently trading at $1,265, recovering almost 40% of the $18 QDI dividend.

Here is a clear example of why dividend capture techniques do not always work. Anyone who sold their stock yesterday in hopes of capturing the dividend just lost out on a close to $8 gain per share.

For me anyways, I do the opposite, especially the past call issues I buy... I wait until divi is declared and strike at last possible moment on a price dip...For example UMH-A last month....I bought a few days before exD at $25.95... Didnt chase the previous few days run up to $26.20 and held out and got the dip. So now I have the 52 cent in my pocket with current price of $25.69... So the cost value of my stock is $25.43.... It never got near that price exD. So the only call risk I had was a brief one of 43 cents which is under next divi and I am accruing already... If I waited exD I would have to wait 2 dividends to get in the clear... Now I am all but in the clear and will collect the 8% as long as it is trading or I am holding. I will be very resistant though to sell this one.

 

[Coolius]

AILLL just turned on the afterburners. Someone wanted it real bad.

Hope RicDee was able to get some shares......

 

[Winemaker]

AFSI's founder family just injected $300 million into the firm, showing their support. I have 300 shares, purchased after the SHTF.


http://www.wsj.com/articles/BT-CO-20170525-709695

 

[jimnjana]

I have 500 shares of AFSI common to go with the 200 Shares of preferred. I bought some common every time the SHTF in the last 3months.

 

[RicDee]

AILLL just turned on the afterburners. Someone wanted it real bad.

Hope RicDee was able to get some shares......

I waited and got it at 26.55
This is my second preferred purchase.
And I am now looking for number three to buy and hold
Any suggestions?

 

[Mulligan]

I waited and got it at 26.55

This is my second preferred purchase.

And I am now looking for number three to buy and hold

Any suggestions?

Nice patience...Your basically getting at $26.15.... I need suggestions too, lol... I dumped all my MHO-A and have 50,000 plus now to find a home... When one buys past call preferreds from companies that will call, I get conservative and sell a bit early to avoid call loss. UMH just refinanced 6% mortgage debt yesterday to 4.25% or so...So they are looking to save money... Well UMH-A could be that extra source to save...And it may not... But wasnt waisting a blended 77 cents trying to find out.

 

[Coolius]

I waited and got it at 26.55
This is my second preferred purchase.
And I am now looking for number three to buy and hold
Any suggestions?

Congrats on getting a good price, Ric.

AILLL dividend has already been declared, so you have $0.41 in the bag.

ExDiv date is July 6.

 

[Free To Canoe]

Sold my MNR-C today for 25.5. Bought at 25.0 I had it in my Roth account and I changed my mind about it being there and decided to get rid of it, if I could make a profit. If not, I would continue to get 6%. Bought some ALBMP a while back. It has went up in value recently. I guess no one is worried about the imminent call any more.

I enjoy lurking around this thread. Window shopping.

 

[Mulligan]

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

Sold my MNR-C today for 25.5. Bought at 25.0 I had it in my Roth account and I changed my mind about it being there and decided to get rid of it, if I could make a profit. If not, I would continue to get 6%. Bought some ALBMP a while back. It has went up in value recently. I guess no one is worried about the imminent call any more.

I enjoy lurking around this thread. Window shopping.

I dont think that was a bad idea to sell and pocket the profit, Free...
Now ALBMP.....I reentered at 25.95 and then sold off at $26.15 just a few days later...Just me, but I have come to conclusion it will get called...
Gulf Power (a sister to ALB as Southern controls both) just issued a big bond and in the fine print stated they are calling the 6.45% issue, GLFPN 6% par, and GLPPO (only 5.6% par). I also recently last week bought GLFPN at $102. I found the info and got out at $102.30... Got lucky...As investors dont seem to know they are goners...In fact somebody bought GLFPO at $106 today and is buying to hold for a year and get nothing when it is called next July. Yes Gulf already got the cash to call an issue that cannot be called until next July!
Usually the sisters will do what the others do.
ALB has 2 issues that can be called in Oct. I bet they are goners...You still have 80 cents of divies left so no need to panic. But you may want to consider selling into any price spike if a call loss would bother you.

I have started tip toeing in MLP notes to avoid the K-1 and horrible tax expenses from AMLP. Bought 100 the other day and 50 today of AMJ. Not convinced it wont drop some more. My goal is only 400 shares so I aint drinking the MLP Koolaide...But the plus 6.5% yield is drawing my eye.

 

[Mulligan]

I forgot I did buy something...Bought 500 shares of UMH-B at $26.63. Own way less than half of what I had with UMH-A. Still wanted a skin in the game with UMH. B is call protected for 3 plus years. Liked the A better but was afraid of getting caught with the call bag. I have done very well avoiding the stings and want to keep it that way as long as I can.

 

[MooreBonds]

Gulf Power (a sister to ALB as Southern controls both) just issued a big bond and in the fine print stated they are calling the 6.45% issue, GLFPN 6% par, and GLPPO (only 5.6% par). I also recently last week bought GLFPN at $102. I found the info and got out at $102.30... Got lucky...As investors dont seem to know they are goners...In fact somebody bought GLFPO at $106 today and is buying to hold for a year and get nothing when it is called next July. Yes Gulf already got the cash to call an issue that cannot be called until next July!

With GLFPN, you'd get $1.50 at the next interest payment (assuming they don't call it between payments), so would have to get more than $102 (only have 40 shares, so commissions add up). I tried my damndest to sell it when it ran up to $108-111 just last month! But the bastards traded around me, despite having sell orders at under $108. Sigh....so goes the nature of the gray market. I pity the fool that bought at $111 just last month!

Also, the press release notes they may or may not call the securities they list. So I'm hoping they only call part (or none) of GLFPN. But will just let it ride and take my chances, since I'll at least get 6% annualized in the meantime.

I am glad that I didn't free up money to buy another 60 shares and make my position an even 100 to guarantee my sell orders would get visibility (they never show orders under 100 shares as the current bid/ask prices), because I would have been willing to pay $102 or $103 to top off.

 

[Mulligan]

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

Yes, do not dump, and if there is no "dumb buyers" you just hold until call. They are goners though...Every semi liquid 6% ute with a float above $20 million is gone. In fact only 4 individual issues at plus 6% is even around that is past call and they are from 2 companies and tiny floats. Just dont go buying GLFPO, thinking it is safe, lol.

The Company intends to use the net proceeds from the sale of the Series 2017A Senior Notes (i) to repay at maturity $85,000,000 aggregate principal amount of the Company’s Series 2007A 5.90% Senior Notes due June 15, 2017, (ii) for the proposed redemption of all or a portion of 550,000 shares ($55,000,000 aggregate liquidation amount) of the Company’s 6.000% Series Preference Stock, 450,000 shares ($45,000,000 aggregate liquidation amount) of the Company’s Series 2007A 6.45% Preference Stock (the “Series 2007A Preference Stock”) and 500,000 shares ($50,000,000 aggregate liquidation amount) of the Company’s Series 2013A 5.60% Preference Stock (the “Series 2013A Preference Stock”), (iii) to repay all or a portion of the Company’s outstanding commercial paper borrowings, which aggregated approximately $15,000,000 as of May 12, 2017, and (iv) for general corporate purposes. In addition, the Company may use net proceeds from the sale of the Series 2017A Senior Notes to repay all or a portion of the Company’s $100,000,000 short-term floating rate bank loan (the “Term Loan”), which is scheduled to mature in October 2017, in the event the Company elects to prepay the Term Loan prior to maturity. The Term Loan bears interest based on one-month London Interbank Offered Rate and the applicable interest rate was 1.7% at March 31, 2017.

 

[Texas Proud]

With GLFPN, you'd get $1.50 at the next interest payment (assuming they don't call it between payments), so would have to get more than $102 (only have 40 shares, so commissions add up). I tried my damndest to sell it when it ran up to $108-111 just last month! But the bastards traded around me, despite having sell orders at under $108. Sigh....so goes the nature of the gray market. I pity the fool that bought at $111 just last month!

Also, the press release notes they may or may not call the securities they list. So I'm hoping they only call part (or none) of GLFPN. But will just let it ride and take my chances, since I'll at least get 6% annualized in the meantime.

I am glad that I didn't free up money to buy another 60 shares and make my position an even 100 to guarantee my sell orders would get visibility (they never show orders under 100 shares as the current bid/ask prices), because I would have been willing to pay $102 or $103 to top off.

I am with Mulligan... it is gone... the reason they said 'may' is probably one of the lawyers... if they said "we will' then if for some reason they decide not too they can be in trouble...

I think it will be called as soon as they get around to it... the company has to have someone on staff that know what to do and if they are busy with other things it might be a short while.... if not, then it will come very quickly after they get the money....

When I was a trustee, the call was usually the same day they floated the other bond, so I do not know why they would wait any time....

Edit to add... I would sell if bid is over $101.50.......



Here is from the prospectus.... pretty clear to me it is a done deal...

The Company intends to use the net proceeds from the sale of the Series 2017A Senior Notes (i) to repay at maturity $85,000,000 aggregate principal amount of the Company’s Series 2007A 5.90% Senior Notes due June 15, 2017, (ii) for the proposed redemption of all or a portion of 550,000 shares ($55,000,000 aggregate liquidation amount) of the Company’s 6.000% Series Preference Stock, 450,000 shares ($45,000,000 aggregate liquidation amount) of the Company’s Series 2007A 6.45% Preference Stock (the “Series 2007A Preference Stock”) and 500,000 shares ($50,000,000 aggregate liquidation amount) of the Company’s Series 2013A 5.60% Preference Stock (the “Series 2013A Preference Stock”), (iii) to repay all or a portion of the Company’s outstanding commercial paper borrowings, which aggregated approximately $15,000,000 as of May 12, 2017, and (iv) for general corporate purposes
​

 

[Running_Man]

NOVEMBER 25th 2015 For those who may be interested, today is exDiv for Wells Fargo preferred Series L, symbol WFC-PL.

At current bid of $1,164, yield is 6.44%. There is no call risk since this is a convertible with no danger of the common hitting convert price anytime soon ( if ever ). Qualified dividends.

The yield is very high for WFC, but this is because the issue was acquired when WFC bought over Wachovia. WFC preferreds usually yield 6% or lower.


Disclosure: this is my largest single holding.

18 months ago when prevailing thought was the surety of rising interest rates and the negative impact on securities such as preferred, this issue, which is my favorite has had a total return of 20% from the date of this post which is better even than S&P500 spiders or the Wellington Fund. And a 5 year CD would have yielded you a total of 3 percent if you were parked out in a secure income note awaiting the interest rate hikes protecting your capital.

Now by rising to the current price of 1272, you are only getting current income of 5.92% so nearly 1/2 percent income return has been eliminated and a 10% capital gain has been eliminated as well while the potential for rate increases are still there. In fact I saw it is an 82% chance presently the FED will raise rates again, however the long end has simply not co-operated with the FED hiking short term rates.

This security will very likely provide a 5.92% cash return for a very long time, but that is basically the long term return potential of this issue. However the alternative to wait for a market correction in short term CD’s at 1-1.5 percent returns loses nearly 4.5 percent per year to WFCPL. This continues to illustrate the trap of future expectations that is created by holding interest rates at a prolonged term at zero.

I still have no expectations of selling this preferred and still see the fair market price relative to other securities of it’s kind being 1400.

Still watching and letting actual interest rates tell me what the market is thinking.

http://stockcharts.com/freecharts/perf.php?VWENX,SPY,WFC/PL

 

[Mulligan]

Texas, can you believe they are rounding up the cash in a bond offering to pay the 5.6% issue off that doesnt even become callable for a year? Utes have been notoriously slow in calling...When they start doing this, people who have capital preservation on the mind have been served notice to get out of past call above par issues if they are much above par. GLFPN was callable since 2010 and they could have saved cash calling a long time ago, now they are in effect calling issues that arent even callable yet with significantly lower yield....I should heed the warning, but I wont. If my big two get called I dont know yet what I would do...

 

[Mulligan]

Running Man....Could you liven up the thread a bit and post something I could disagree with...Every time you post something damnit, I am nodding my head in agreement.

 

[Coolius]

Running Man....Could you liven up the thread a bit and post something I could disagree with...Every time you post something damnit, I am nodding my head in agreement.

But..but..but...Lord Darth Mulligan, you are the mighty Sith Lord who taught us neophytes how to interpret these things!

We are but using the power of the dark side, which you, O venerable Master, have so rigorously drummed into us, day after day, illiquid after illiquid, call after call.

Should you not be justly proud of how your trainee Jedi knights have developed?

 

[Texas Proud]

Texas, can you believe they are rounding up the cash in a bond offering to pay the 5.6% issue off that doesnt even become callable for a year? Utes have been notoriously slow in calling...When they start doing this, people who have capital preservation on the mind have been served notice to get out of past call above par issues if they are much above par. GLFPN was callable since 2010 and they could have saved cash calling a long time ago, now they are in effect calling issues that arent even callable yet with significantly lower yield....I should heed the warning, but I wont. If my big two get called I dont know yet what I would do...

Back when I was a trustee there were a number of issues that would sell the assets that backed up a bond, buy zero treasuries and escrow the call... and pocket a big hunk of cash.... these were mtg securities and some still had 15 to 20 years outstanding on the bonds!!!

No, I am not surprised.... I think companies are now pushing to refi as fast as they can.... if they can...