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

[Mulligan]

Bastards or not...there are reasons lawyers are involved in drafting a 50 page prospectus for a preferred share issuance. There are laws for a reason. If the judge in the UK allows this, then how could any company NOT redeem....errr, sorry, I mean "cancel" not just any preferred stock, but even any debenture whenever it suits them? How can all of that legalese be just thrown out the window on a whim when one party feels like it? That would rewrite the very essence of contract law and the structure of corporations!

Moorebonds,
As Aaron Rodgers famously said....R-E-L-A-X, Relax...Its all over...You vigorous protesting worked! They have withdrawn their efforts to cancel the preferred.
http://www.proactiveinvestors.co.uk...ition-from-investors-fca-scrutiny-193682.html

 

[Texas Proud]

Moorebonds,
As Aaron Rodgers famously said....R-E-L-A-X, Relax...Its all over...You vigorous protesting worked! They have withdrawn their efforts to cancel the preferred.
Aviva abandons plans to cancel preference shares after opposition from investors, Financial Conduct Authority scrutiny

I actually think that there should not be any pref shares that is not callable at some time... the question is just when... I mean... should they have it out there 1,000 years?


Now, the company can go out and start buying them on the open market and just get rid of them that way, but there will probably be some that sit out there forever...

 

[Mulligan]

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

I actually think that there should not be any pref shares that is not callable at some time... the question is just when... I mean... should they have it out there 1,000 years?


Now, the company can go out and start buying them on the open market and just get rid of them that way, but there will probably be some that sit out there forever...

Texas, that is essentially what happened and is happening. Take MSEXP. Its float is down to 780 shares from near 3000 issued close to 100 years ago. Heck they bought 13 shares from me $50 bucks higher than I bought them just the day prior last spring and retired them. Then you have non callables like CTPPO and NEWEN that had way above par price tender offers that a huge chunk of preferred owners accepted and tendered them. But... Interesting quirks on some...Some of these bad boy old school preferreds have tremendous power that is not given today...Take CTPPO, yes they tendered and received the vast majority, but did not retire them. The parent continues to hold them, themselves. Why? Because now they own the majority of the voting stock of the preferreds. If they retired and I personally got a hold of just 800 of them, peon nobody me, could literally take control of the board of this multi mullion dollar subsidiary if they missed a couple of dividend payments to me. No way in hell are they letting a little nit wit middle class nobody literally take control of the board from them and dictate all actions....

 

[Texas Proud]

Texas, that is essentially what happened and is happening. Take MSEXP. Its float is down to 780 shares from near 3000 issued close to 100 years ago. Heck they bought 13 shares from me $50 bucks higher than I bought them just the day prior last spring and retired them. Then you have non callables like CTPPO and NEWEN that had way above par price tender offers that a huge chunk of preferred owners accepted and tendered them. But... Interesting quirks on some...Some of these bad boy old school preferreds have tremendous power that is not given today...Take CTPPO, yes they tendered and received the vast majority, but did not retire them. The parent continues to hold them, themselves. Why? Because now they own the majority of the voting stock of the preferreds. If they retired and I personally got a hold of just 800 of them, peon nobody me, could literally take control of the board of this multi mullion dollar subsidiary if they missed a couple of dividend payments to me. No way in hell are they letting a little nit wit middle class nobody literally take control of the board from them and dictate all actions....

I could be wrong, but I thought that if a stock was held in the treasure of the company then it had no voting rights.... so I think you could take control if it happens...

NOW, if there are only 800 shares I would bet that the divi is the safest in the world... heck, pay the divi before the utility bill!!!!

 

[Mulligan]

I could be wrong, but I thought that if a stock was held in the treasure of the company then it had no voting rights.... so I think you could take control if it happens...

NOW, if there are only 800 shares I would bet that the divi is the safest in the world... heck, pay the divi before the utility bill!!!!

Yes, that is true! There is about 1500 shares, If memory serves give or take. So I was just assuming getting a bit over 50%of the float to control it, lol...
Some of these old preferreds arent what they seem. AILNP float appears to be $450,000 par. But that is just the tradeable outstanding shares. The holding company AEE actually owns 9.55 million par of the float in their investing accounts and they were never retired. No they are not held in treasury, they are actually held in investment accounts. Now, practically all new issued preferreds will be done the way you mentioned. But the old ones of non callable issues are actually held on the books in investing accounts. Take AEE as an example. The preferreds are from subsidiaries of a once independent utility. The parent actually owns the commons. The commons were never retired, just not publicly traded. This is how they control the board of directors. As these subsidiaries are actually companies that must have votes to determine who is on the subsidiary Board of Directors. So guess who determines this? Yes, the parent, as they own all the common stock and vote it all as a block. Very interesting, if largely irrelevant stuff.

 

[Mulligan]

On RLGT-A I noticed something strange when looking at the dividend history. According to Morningstar, the 10/31/2016 dividend wasn't paid. I guess this must be a typo. Otherwise, how can that happen on a cumulative?


RLGT.PRA Radiant Logistics Inc Pref Share Stock Upcoming and Historical Dividends and Splits

They screw those up all the time. CNBC website should it as that dividend being paid. And never trust current yields from websites either. Always do the math.

 

[Texas Proud]

Yes, that is true! There is about 1500 shares, If memory serves give or take. So I was just assuming getting a bit over 50%of the float to control it, lol...
Some of these old preferreds arent what they seem. AILNP float appears to be $450,000 par. But that is just the tradeable outstanding shares. The holding company AEE actually owns 9.55 million par of the float in their investing accounts and they were never retired. No they are not held in treasury, they are actually held in investment accounts. Now, practically all new issued preferreds will be done the way you mentioned. But the old ones of non callable issues are actually held on the books in investing accounts. Take AEE as an example. The preferreds are from subsidiaries of a once independent utility. The parent actually owns the commons. The commons were never retired, just not publicly traded. This is how they control the board of directors. As these subsidiaries are actually companies that must have votes to determine who is on the subsidiary Board of Directors. So guess who determines this? Yes, the parent, as they own all the common stock and vote it all as a block. Very interesting, if largely irrelevant stuff.

OK... I can see where it is different if the parent of a company is buying the pref shares... that is an investment as it is not the company itself...

As a company I would want to be able to call any pref or debt so I can arrange the capital structure the way I want.... having something out there that is not callable is stupid IMO...

BTW, even the common stock can be 'called'.... take a company private and you can force the stragglers into selling their shares back to you...

 

[Mulligan]

OK... I can see where it is different if the parent of a company is buying the pref shares... that is an investment as it is not the company itself...

As a company I would want to be able to call any pref or debt so I can arrange the capital structure the way I want.... having something out there that is not callable is stupid IMO...

BTW, even the common stock can be 'called'.... take a company private and you can force the stragglers into selling their shares back to you...

Ol Warren Buffet found out you can take a company private, but not the preferreds. He bought PacificCorp and took private and called all the preferreds. Except for 2 pesky little ones that still trade because they are non callable....PPWLO and PPWLM.

 

[njhowie]

Interesting development across the pond with an insurer's preferred (Aviva). Apparently, even though the preferred isn't redeemable, the insurer actually has the gall to try and cancel the issue ("it's not a redemption" is their argument). Will be an interesting legal fight. The preferred dropped overnight from 175/share down to a little above 120 (par is 100). Wonder if any companies have the cojones to try that over here?

https://www.bloomberg.com/gadfly/articles/2018-03-09/aviva-s-fight-to-redeem-the-irredeemable

This has now been resolved. Management was at least smart enough to see that they would be in for trouble if they proceeded.

Aviva abandons plans to cancel preference shares after opposition from investors, Financial Conduct Authority scrutiny

 

[Coolius]

This has now been resolved. Management was at least smart enough to see that they would be in for trouble if they proceeded.

Aviva abandons plans to cancel preference shares after opposition from investors, Financial Conduct Authority scrutiny

It would have been a very ugly development if they had succeeded; the loss of confidence in everything Preferred or Baby Bond issues would have devastated the fixed income market.

I am sure happy it has been terminated.

 

[Mulligan]

Coolius, I bought more AILLL today at 26.61, and going exd in 10days... Its back in its rightful perch as the big lead dog in the stash.. Im done flipping this..Our friend Camroc has done so much damage to thefloat I will have to keep them as the flip and rebuy game is just getting too hard with this one.

 

[Coolius]

So that was you buying the 520 shares of AILLL today - great! I had a GTC bid at $26.25, looks like it's unlikely to hit unless someone has an urgent need to sell.

Look at CNLPL today - someone had to sell and dropped the price by 1.3% on a dump of 556 shares. I put in a bid at $53.81, but it's now gone up to $54.01.


Good idea to keep accumulating these illiquid Utes upon every opportunity.
I remain very confident they will not be called in the near future, and hopefully for many years to come.

 

[Mulligan]

Coolius, I have gotten away with it and it has been certainly profitable, but I had the scales tipped too far to the risk side. The more money impounded in 70 times divi coverage, the less money available for promiscous investing behavior!

 

[Coolius]

Mulligan, we welcome you back, as one who has ventured from the light, and returned from the dark side.


Lord Darth Mulligan is back ! Rejoice, Jedi Knights!!

 

[Mulligan]

Went back to Exxon well for 3rd time at 73 today. Should sell right now and lock in another 5star steak dinner, lol. XOM has bought me some tasty meals the past few baby trades.

 

[bobandsherry]

Went back to Exxon well for 3rd time at 73 today. Should sell right now and lock in another 5star steak dinner, lol. XOM has bought me some tasty meals the past few baby trades.

It hit low of $72.75 today and you paid $73.... Not like you to overpay Mulligan, you're gonna have to cut back on the wine to compensate

 

[Mulligan]

It hit low of $72.75 today and you paid $73.... Not like you to overpay Mulligan, you're gonna have to cut back on the wine to compensate

I screwed up and set too high a bid! I saw early it was like $73.75 and thought about cancelling and then forgot about it. Then I saw an email, I bought something. I was trying to think what it even was as I thought Exxon was well above that price. So it must have
roller coasted today... Of course dumping the same amount of money in an index fund would have made more....But that isnt any fun!

 

[Running_Man]

If you are struggling for yield Tesla 2025 bounds crashed to over 7 percent tonight

 

[bobandsherry]

If you are struggling for yield Tesla 2025 bounds crashed to over 7 percent tonight

The old saying that "Pioneers get arrows, settlers get the land" may yet come true.

 

[Mulligan]

If you are struggling for yield Tesla 2025 bounds crashed to over 7 percent tonight

Thanks, but I got 16 issues of various size allotments and none would be traded for that....And they havent crashed either, lol.

 

[aja8888]

Thanks, but I got 16 issues of various size allotments and none would be traded for that....And they havent crashed either, lol.

Besides the Tesla bonds crashing, a Tesla crash killed the driver a few days ago:

The United States National Transportation Safety Board is conducting an investigation into a fatal car crash involving a Tesla Model X car. On March 23, a Tesla car crashed into a freeway divider, killing the driver, causing a fire and shutting down two lanes of Highway 101 near Mountain View, Calif. It's not clear if Tesla's automated control system, Autopilot, was active at the time of the crash, the NTSB said in a tweet

https://finance.yahoo.com/news/tesla-fatal-car-crash-prompts-163338753.html

 

[Mulligan]

Besides the Tesla bonds crashing, a Tesla crash killed the driver a few days ago:







https://finance.yahoo.com/news/tesla-fatal-car-crash-prompts-163338753.html

But still, Aja, they are my kind of company. They are profitable every quarter. Oh wait, never mind my mistake, that is what the companies of my preferreds do, not Tesla.

 

[MooreBonds]

Moorebonds,
As Aaron Rodgers famously said....R-E-L-A-X, Relax...Its all over...You vigorous protesting worked! They have withdrawn their efforts to cancel the preferred.
Aviva abandons plans to cancel preference shares after opposition from investors, Financial Conduct Authority scrutiny

[said from the comfort of his clean underwear, sitting on a mound of American Utility preferreds ]

I have no bone in the Aviva fight - was just worried about the potential brainstorming that it might have triggered in the US, given how [-]greedy [/-]financially creative some corporate boardrooms are.

And now, an even more shocking (to me, at least) move on the part of UK regulators: they are now looking into possible measures to make Aviva compensate investors that were harmed!

https://finance.yahoo.com/news/uk-w...over-preference-shares-091350791--sector.html

Granted, talk is cheap, and it's just an announcement on paper that they will "look into it" (which may just be forgotten and buried after 6 months)...but the surprising thing is that they are actually going to the effort to seriously consider penalties against the insurer for how it went about announcing and suggesting they would do this. Perhaps they could send their regulators over to the US for a 12 month internship to teach ours a thing or two?

The big question for Mulligan - would you have had the cojones to buy a non-redeemable preferred from a good insurer with an 8%+ coupon that fell from 180 to 120 overnight (with a 100 par value), and banked on it not actually being redeemed?

 

[Texas Proud]

[said from the comfort of his clean underwear, sitting on a mound of American Utility preferreds ]

I have no bone in the Aviva fight - was just worried about the potential brainstorming that it might have triggered in the US, given how [-]greedy [/-]financially creative some corporate boardrooms are.

And now, an even more shocking (to me, at least) move on the part of UK regulators: they are now looking into possible measures to make Aviva compensate investors that were harmed!

https://finance.yahoo.com/news/uk-w...over-preference-shares-091350791--sector.html

Granted, talk is cheap, and it's just an announcement on paper that they will "look into it" (which may just be forgotten and buried after 6 months)...but the surprising thing is that they are actually going to the effort to seriously consider penalties against the insurer for how it went about announcing and suggesting they would do this. Perhaps they could send their regulators over to the US for a 12 month internship to teach ours a thing or two?

The big question for Mulligan - would you have had the cojones to buy a non-redeemable preferred from a good insurer with an 8%+ coupon that fell from 180 to 120 overnight (with a 100 par value), and banked on it not actually being redeemed?

In the US this job would fall to attorneys.... it is common for a company to be sued when a stock goes down due to some announcement from a company, even if it is a warranted announcement....

 

[Mulligan]

Moorebonds if it was $120, sure! Right now I am still basking in my 400 shares.of GDL-C I got at par and went to 50.50 already. Need a few safe widows issues with nice put options on them.