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

[MooreBonds]

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....

True, the ambulance chasers would be on the scene within minutes of the announcement hitting the wires....but then it is up to the company reaching a settlement for a portion of a potential loss - IF the company doesn't want to roll the dice and take a chance in a full-blown court proceeding. Given that the company was forthcoming in their public statements, they could argue that they were merely being open and upfront with their plans, and they could get out scott free if a judge rules in their favor.

A gov't regulator, however, could throw all of that out the window and still stick it to them. If I had a choice between an honest gov't regulator (HA! I know, but just keep playing this "what if" game) going to bat for me and an ambulance chasing class action lawyer, I would likely side w/ the gov't regulator, because I don't believe they are as beholden to legal precedent as a judge may be.

 

[Texas Proud]

True, the ambulance chasers would be on the scene within minutes of the announcement hitting the wires....but then it is up to the company reaching a settlement for a portion of a potential loss - IF the company doesn't want to roll the dice and take a chance in a full-blown court proceeding. Given that the company was forthcoming in their public statements, they could argue that they were merely being open and upfront with their plans, and they could get out scott free if a judge rules in their favor.

A gov't regulator, however, could throw all of that out the window and still stick it to them. If I had a choice between an honest gov't regulator (HA! I know, but just keep playing this "what if" game) going to bat for me and an ambulance chasing class action lawyer, I would likely side w/ the gov't regulator, because I don't believe they are as beholden to legal precedent as a judge may be.

I don't think regulators have the ability or conviction to get back what was lost.... very few that I have seen makes the injured party whole..

 

[Coolius]

AILLL upcoming XD is Thursday, I decided to pull the trigger and bought a couple hundred more shares at $26.70.

After Thursday my effective buy price will be around $26.30, which is just slightly more than I have been bidding for a long time without success.

 

[Mulligan]

AILLL upcoming XD is Thursday, I decided to pull the trigger and bought a couple hundred more shares at $26.70.

After Thursday my effective buy price will be around $26.30, which is just slightly more than I have been bidding for a long time without success.

Buy this is a disease....You are infected, lol... I sold my Exxon last week and GWSVP today....Used the proceeds and some cash to buy a TBill that matures in 9 months. Money sent to the corner for some timeout... First time I ever bought TBills.

 

[brokrken]

Buy this is a disease....You are infected, lol... I sold my Exxon last week and GWSVP today....Used the proceeds and some cash to buy a TBill that matures in 9 months. Money sent to the corner for some timeout... First time I ever bought TBills.

You sold GWSVP? Why? That thing pays like clockwork and is mostly owned by insiders, so I don't see so much risk.

 

[Mulligan]

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

You sold GWSVP? Why? That thing pays like clockwork and is mostly owned by insiders, so I don't see so much risk.

I bought at 26.45, got 3 divis, and got out 20 cents higher... I wanted a certain block of TBill to be bought so something had to go. Especially since I was showing a negative balance in my account after I bought all the TBills... Also, almost all of my preferreds are nosebleed $1-$2 over par and past call. It wasnt a “I want to get rid of GWSVP” trade, it was a I have to sell something trade...And being all this was in my Roth, my choices that had enough money to cover things was either it, AHT-D, ALLY-A, NSS, or MER-P. 2 of those are riding the adjustable wave, MER-P not willing to sell (in fact I bought 200 more at $26.12in a separate account., and AHT-D is trapped near par and less exposure to call loss risk....So it wasnt a hate sell, it was a “I should have been born with more money, but I wasnt”, sell... [emoji4]

 

[brokrken]

I bought at 26.45, got 3 divis, and got out 20 cents higher... I wanted a certain block of TBill to be bought so something had to go. Especially since I was showing a negative balance in my account after I bought all the TBills... Also, almost all of my preferreds are nosebleed $1-$2 over par and past call. It wasnt a “I want to get rid of GWSVP” trade, it was a I have to sell something trade...And being all this was in my Roth, my choices that had enough money to cover things was either it, AHT-D, ALLY-A, NSS, or MER-P. 2 of those are riding the adjustable wave, MER-P not willing to sell (in fact I bought 200 more at $26.12in a separate account., and AHT-D is trapped near par and less exposure to call loss risk....So it wasnt a hate sell, it was a “I should have been born with more money, but I wasnt”, sell... [emoji4]

I hear you. Although my choice would have been NSS. In any case, hope you find some finds laying around soon to get back in. I really like this one and think we'll be clipping those divies until it matures in 10 years.

 

[Mulligan]

I hear you. Although my choice would have been NSS. In any case, hope you find some finds laying around soon to get back in. I really like this one and think we'll be clipping those divies until it matures in 10 years.

You could be correct. But, I think more short term, not longer term. Short term NSS yield will climb. If it gets called, so be it, the next accrual has the over par spread covered....Always something else to buy, and GWSVP is always buyable below my sell point. But as far as safety goes, NSS is considerably safer.... GSWVP and its 9.1% yield cant be called until the bank which holds the revolver releases permission to call it which it hasnt...That tells you spades about where Glacier sits capital safety wise... But it has been that way for a long time... Gun to my head I would say if rated it couldnt be any higher than B3 tops... NS isnt in any position to call NSS now. Only a 75 more bps rise in Libor would force their hand.

 

[wannabe]

A portion of our securities portfolio -- about 15% -- is invested in 11 high quality preferred stocks, mostly banks but a few others as well. Four of these have call dates coming up later this year. If they are called we want to replace them with 4 others that have call dates further out -- 3-4 years or so. We are looking for investment grade issues with a 5% yield, plus or minus. Any suggestions?

We've looked through Quantum Online and not found much -- any advice from experts here?

Also, a heartfelt thanks to Mulligan who showed us the way to preferreds.

 

[Coolius]

Well, I deviated a little from my investing principles today.

Bought a few hundred shares of JPM-E at $26.09, well above par, first call date in 9/2019. Coupon rate is 6.3%, but YTW ( or YTFC ) is 3.26%

Rationale behind this move, ( I accept that some will disagree with ), is to lock in an equivalent of a 1.5 year, 3.26% CD.

It is most unlikely that JPM will fail in the next 18 months; the income is assured, as are proceeds when called.

Should September 2019 roll by and no call occurs, then its a gravy train ride of indefinite length that I can live with.....


( Of course, like everything else, this whole thing could crash & burn if the 10 year Treasury goes to 6% )

 

[Mulligan]

Wannabe glad I could be of any assistance. Are you looking for call protected issues for 3 or 4 years or ones that mature in that time frame? Are sure the present ones will be called? One never knows..Wells Fargo still hasnt called its ridiculous 8% par issue and it went callable last year.

 

[Mulligan]

Well, I deviated a little from my investing principles today.

Bought a few hundred shares of JPM-E at $26.09, well above par, first call date in 9/2019. Coupon rate is 6.3%, but YTW ( or YTFC ) is 3.26%

Rationale behind this move, ( I accept that some will disagree with ), is to lock in an equivalent of a 1.5 year, 3.26% CD.

It is most unlikely that JPM will fail in the next 18 months; the income is assured, as are proceeds when called.

Should September 2019 roll by and no call occurs, then its a gravy train ride of indefinite length that I can live with.....


( Of course, like everything else, this whole thing could crash & burn if the 10 year Treasury goes to 6% )

Coolius, keep an eye on BML- I. This one gets you to the 6.3% quicker if ya hold your nose on call a few months....Throw me jail. Bought 200 more NSS..Market dont know this yet but this debt issue is now turtleheaded over 9% at the $25.05 purchase price I got. Thinned this issue out a month ago or so, but I am getting deeper again. Until Moodys says differently I am holding strong now in my high yield part.

 

[wannabe]

1. We are looking for issues with call dates 3-4 years out. Very few, if any, of the issues we have reviewed have maturity dates. Also, we are looking only at issues subject to the 15% tax rate.

2. We are not sure the present ones we hold will be called. Hope they are not. But the banks are hard to predict. We own 2 JPM's that become callable n 2020. We had another one that was called on the date it became callable -- 9/1/17. Prefer not to take that risk.

3. We are also looking to invest new money in issues with call dates further out.

 

[Mulligan]

Have you considered the just issued ALL STATE preferred..Ticker is ALL-G. All state was my very first preferred I ever bought besides AILLL, as I didnt even trust banks back then. Its a 5.625% par and is about $25.09 right now and will have 5 years call protection...I am more of the opposite type buying past call issues, but I understand many prefer just collecting safe i come.

 

[wannabe]

Thanks -- good call (no pun intended). Keep 'em coming!

 

[bobandsherry]

Bought 200 more NSS..Market dont know this yet but this debt issue is now turtleheaded over 9% at the $25.05 purchase price I got.

What does "turtleheaded" mean? And what doesn't the market know yet? Curious minds want to know.... (never mind, I think you are referring to jump in LIBOR now pushing that the rate to over 9%).

I snuck in 200 more shares of NSS as well, got in at $25.09. Someone popped a big block at the end of the day at $25.24, so looks like market may have caught on

 

[Coolius]

Coolius, keep an eye on BML- I. This one gets you to the 6.3% quicker if ya hold your nose on call a few months.....

BML-I is way past call date, and current price ( $25.55 ) is about 1.3 times quarterly dividend premium. It will take the next dividend plus another month to break even.

So risk window extends to about 2 months from today, assuming XD is around May 14, 2018. The upcoming dividend should be in the bag, so a realistic risk window is from May 28 - June 28.

I will add it to my watchlist and if there is a dip to below $25.40 ( or 1 div above par ), I will likely jump in.

 

[Mulligan]

BML-I is way past call date, and current price ( $25.55 ) is about 1.3 times quarterly dividend premium. It will take the next dividend plus another month to break even.

So risk window extends to about 2 months from today, assuming XD is around May 14, 2018. The upcoming dividend should be in the bag, so a realistic risk window is from May 28 - June 28.

I will add it to my watchlist and if there is a dip to below $25.40 ( or 1 div above par ), I will likely jump in.

Yes, for you just to monitor now...Now me, if I had to buy either you know my mantra.....Dare the call....If both these issues get called 9/19/19... The BML has a better return for you. But you would lose too much sleep from lack of call protection. [emoji3]...It simply wouldnt be worth the risk!

 

[Mulligan]

What does "turtleheaded" mean? And what doesn't the market know yet? Curious minds want to know.... (never mind, I think you are referring to jump in LIBOR now pushing that the rate to over 9%).

I snuck in 200 more shares of NSS as well, got in at $25.09. Someone popped a big block at the end of the day at $25.24, so looks like market may have caught on

Yes, turtlehead means to “poke out”. In this case its poking out over 9%... If you look at present yield on most websites it just shows its last yield of about 8.45%... This one will never fly away from par too much no matter what, as market just wont trust a no call. Yet, NS is showing no likely hood of doing it...Best case scenario is another Fed hike or two, tops and then they sit tight. Because if Libor forces this yield much above preferreds it really will stress the call pressure.
FWIW.... Teenagers around here often use the term “turtle head” when they are in dire need of heading to the restroom... before its too late...You feel enlightened now, ha!

 

[Mulligan]

Thanks -- good call (no pun intended). Keep 'em coming!

Wannabe, you are comfortable with price erosion owning the safer perpetual issues correct? They will get hit if long end ever decides to move north. Just confirming.....I will see if there are any other recent higher quality QDI issues that have came to market.

 

[aja8888]

Have you considered the just issued ALL STATE preferred..Ticker is ALL-G. All state was my very first preferred I ever bought besides AILLL, as I didnt even trust banks back then. Its a 5.625% par and is about $25.09 right now and will have 5 years call protection...I am more of the opposite type buying past call issues, but I understand many prefer just collecting safe i come.

Mull, what exchange does that ALL-G show a quote?

 

[Mulligan]

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

BML-I is way past call date, and current price ( $25.55 ) is about 1.3 times quarterly dividend premium. It will take the next dividend plus another month to break even.

So risk window extends to about 2 months from today, assuming XD is around May 14, 2018. The upcoming dividend should be in the bag, so a realistic risk window is from May 28 - June 28.

I will add it to my watchlist and if there is a dip to below $25.40 ( or 1 div above par ), I will likely jump in.

This is just me, Coolius...But risk/reward the BML looks inviting...Why? BAC just issued their latest preferred...It went to market at 5.875%. Allowing for cost to reissue that really doesnt leave much meat on the bone...Plus its been callable since 2010. We have seen 10 year go below 1.5% several times in recent years and they made no effort to call it even then. Im not recommending you buying it, just pumping unsolicited info into that conservative take no chances noggin of yours, lol...

 

[Mulligan]

Mull, what exchange does that ALL-G show a quote?

Aja, I seen it just now on Marketwatch and my TD screen. Apparently closed at $25.15 today on 1.2 million shares. Had a low today of 25.02 and high of 25.18. It just changed from its grey market ticker to its permanent ticker symbol. This issue probably has only been on Big Board a day or couple at most.

 

[aja8888]

Aja, I seen it just now on Marketwatch and my TD screen. Apparently closed at $25.15 today on 1.2 million shares. Had a low today of 25.02 and high of 25.18. It just changed from its grey market ticker to its permanent ticker symbol. This issue probably has only been on Big Board a day or couple at most.

On Marketwatch symbol lookup, ALL-G gets me "no match". Am I missing something??

 

[Mulligan]

On Marketwatch symbol lookup, ALL-G gets me "no match". Am I missing something??

The stinking thing must be caught between big board and premarket ticker...Try ALLSP.... This is the temporary ticker.. When I type in ALL-G on CNBC the price pops up then it switches name to ALLSP...ALL-G will be its ticker...I bet ALLSP will pop it up for you...Very weird. I know I linked it to Marketwatch earlier, but like you it isnt showing... It may trade ALL-G tomm. Or it may be ALLSP.