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

[Coolius]

Not me, but I made a possible 17 cent loss trade....I went in on 600 shares of WFC-J at 25.67.... Will know in 2 weeks if it gets called at 25.50... Heck any of them could drop 17 cents in one day anyways... Worth a shot to see if that 8% stays outstanding a divi or two more.

17 cents per share over 600 shares is only $102.00. I'm sure you spend more than that on a good steak dinner, so even if it does happen, consider that you saved yourself some unwanted cholesterol and unsaturated fat.

I was actually contemplating buying more WFC-J, following pretty much the logic you just described. Already bought 400 at $25.70 last week.

Something is keeping those evil, conspiring, scheming WFC bankers from calling - anyone with a functional brain can see that it's a no-brainer to save a 8% drain. Why haven't they called it yet? I think there's something that is staying their hand.

 

[Mulligan]

17 cents per share over 600 shares is only $102.00. I'm sure you spend more than that on a good steak dinner, so even if it does happen, consider that you saved yourself some unwanted cholesterol and unsaturated fat.

I was actually contemplating buying more WFC-J, following pretty much the logic you just described. Already bought 400 at $25.70 last week.

Something is keeping those evil, conspiring, scheming WFC bankers from calling - anyone with a functional brain can see that it's a no-brainer to save a 8% drain. Why haven't they called it yet? I think there's something that is staying their hand.

Hey Coolius, I can use it to offset a capital gain...That will bring my losses well under a hundo spot!

 

[Mulligan]

Snagged 500 shares of CTWSP at $16.25 (par $16) and goes exD later this week at 22.5 cents. Also got 99 shares of CtWSO at $19.95 (par $21). They will be merging with San Jose Water by years end. Company already disclosed these tiny old floats will be called by then. So buying in essence short term duration QDI preferreds...A nice place to hide some money short term.

 

[Mulligan]

ALLY-A jumped over $26.50 so I jettisoned the other half. Overall picked up an interest payment plus 50 cent cap gain owning these 2000 shares for about 3 months. That was pretty easy...3 payments above par and rising Libor make this a get out of dodge trade... Took advantage of RILYL dip late in day to snag 600 at $25.28. Have a 1000 of these now. Have another issue in the cross hair, but it wouldnt quite come to me today....Maybe tomorrow.
Tossed 10k into safe keeping today. A secondary remnant 8 month CD was laying for the taking at 2.25% so I bought it.

 

[Coolius]

AILLL made quite a jump today, up to $27.69.

Now way too rich for me to consider adding more. My target add price is in the low to mid $26.

Still watching.

 

[bobandsherry]

ALLY-A jumped over $26.50 so I jettisoned the other half. Overall picked up an interest payment plus 50 cent cap gain owning these 2000 shares for about 3 months. That was pretty easy...3 payments above par and rising Libor make this a get out of dodge trade... Took advantage of RILYL dip late in day to snag 600 at $25.28. Have a 1000 of these now. Have another issue in the cross hair, but it wouldnt quite come to me today....Maybe tomorrow.
Tossed 10k into safe keeping today. A secondary remnant 8 month CD was laying for the taking at 2.25% so I bought it.

I go on vacay and get away from it all and come back to seeing ALLY-A way up... wonder what's up. Hoping to see it open at $26.55 tomorrow so I can get my sell order in. Now to figure out what to do with the proceeds short term, wait for the dip as opportunity to get back in....

 

[Mulligan]

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

I go on vacay and get away from it all and come back to seeing ALLY-A way up... wonder what's up. Hoping to see it open at $26.55 tomorrow so I can get my sell order in. Now to figure out what to do with the proceeds short term, wait for the dip as opportunity to get back in....

Bob, market just thinks it will survive yet again. The cost of capital for ALLY to own this is getting very high. I just cant risk owning three divis above par. I rolled half my proceeds into MORE RILYL this week when it dropped to $25.28 earlier this past week. Then I rolled most of other part into BGCA. Bought a couple hundred at 25.80 when it went a few days without trading and I lost the Mexican Standoff. Then a floodgate opened up Thursday and I bought a 1000 at 25.41. Its past call 8.125% BBB- paper. Last traded at $25.52 Friday. The note 4 months ago got shifted from BGC to newly spun off subsidiary (BGC still retains voting control) Newmark. They both are investment grade rated companies. Im gambling they didnt go to effort to move the note to Newmark 4 months ago, just to redeem it. Would make little sense to me. So I am really only risking time loss next 7 weeks before payment, as I am in averaged at breakeven, plus the next interest payment in June.

 

[Winemaker]

You guys make my head spin more than 3 bottles of wine do/does/could......

 

[Mulligan]

You guys make my head spin more than 3 bottles of wine do/does/could......

I split a bottle yesterday, with GF at winery, but none today! It just isnt as fun to buy and hold everything. Besides my brain needs the research workout to stay somewhat sharp. And its fun to whip the PFF benchmark every year...Its down 2% YTD, while I am plus 5.1% so far this year. Gotta keep grinding higher despite income headwinds!

 

[bobandsherry]

Bob, market just thinks it will survive yet again. The cost of capital for ALLY to own this is getting very high. I just cant risk owning three divis above par. I rolled half my proceeds into MORE RILYL this week when it dropped to $25.28 earlier this past week. Then I rolled most of other part into BGCA. Bought a couple hundred at 25.80 when it went a few days without trading and I lost the Mexican Standoff. Then a floodgate opened up Thursday and I bought a 1000 at 25.41. Its past call 8.125% BBB- paper. Last traded at $25.52 Friday. The note 4 months ago got shifted from BGC to newly spun off subsidiary (BGC still retains voting control) Newmark. They both are investment grade rated companies. Im gambling they didnt go to effort to move the note to Newmark 4 months ago, just to redeem it. Would make little sense to me. So I am really only risking time loss next 7 weeks before payment, as I am in averaged at breakeven, plus the next interest payment in June.

I'm thinking a call on ALLY-A is not really likely. But at $26.50+ that's pretty high based on past trend. It has bobbed around at $26 and lower so may be worth removing the risk of call, pocketing the gain and waiting to see what happens.

I bought 1,000 RILYZ before exD date, so probably won't look at RILYL. I had bought 500 of RILYG and then got back out after div was paid as it was just some short term money that I flipped into a common (AMZN) to take advantage of the drop that occurred with all the Trump tweets, that already had a nice bump, thanks Potus....

And have 1,000 of NSS, so risk tolerance to get more is thin. Will take a peak at BGCA but thin trade of shares may cause me to sit out of that one.

 

[Mulligan]

I'm thinking a call on ALLY-A is not really likely. But at $26.50+ that's pretty high based on past trend. It has bobbed around at $26 and lower so may be worth removing the risk of call, pocketing the gain and waiting to see what happens.



I bought 1,000 RILYZ before exD date, so probably won't look at RILYL. I had bought 500 of RILYG and then got back out after div was paid as it was just some short term money that I flipped into a common (AMZN) to take advantage of the drop that occurred with all the Trump tweets, that already had a nice bump, thanks Potus....



And have 1,000 of NSS, so risk tolerance to get more is thin. Will take a peak at BGCA but thin trade of shares may cause me to sit out of that one.

I try to error on caution...At todays Libor, ALLY-A is going to almost 8.15% and Libor continues to rise daily. How long are they going to expose themselves to this rising cost risk, especially when fixed rates are going to market considerably lower? A buy and holder will need this to last 3 payments just to break even. Without a good crystal ball, I took my profits and ran. If it goes below $26 I will look again. BGCA float trade varies...About 9k a day average. But last week it had a day it didnt trade and another over 18,000 did. Since this was essentially bought at par for me, I will feel comfortable holding. Like you, I am not going to expose myself to more NSS purchases.

 

[Texas Proud]

Hey Mulligan....

I do not remember you mentioning BGCA before.... you might have, just do not remember...

I like this one... high yield and very good rating... might have to get rid of some of my lower rated ones and get this to bring my weighted avg rating up a bit.... I have been chasing yield a bit and had gotten rid of all my BBBs since their yields were lower by a good bit...

Sitting on some losses as I went out for PIY and PFH for yield... at least they are my 2 smallest holdings...

 

[bobandsherry]

Sitting on some losses as I went out for PIY and PFH for yield... at least they are my 2 smallest holdings...

I have been watching PIY, and also then took a look at PFH. Perhaps PFH could go sour (I just don't know what JCP future looks like), but PIY at face value seems to be weak but don't think Frontier will go bust. The current price would give you a loss, but only if you sell. Do you think Frontier is going to go BK? If not, if you were OK with the div payment why dump out now when the yield is even higher?

 

[Mulligan]

I have been watching PIY, and also then took a look at PFH. Perhaps PFH could go sour (I just don't know what JCP future looks like), but PIY at face value seems to be weak but don't think Frontier will go bust. The current price would give you a loss, but only if you sell. Do you think Frontier is going to go BK? If not, if you were OK with the div payment why dump out now when the yield is even higher?

I have stayed away from PIY. First because it was miss priced too high in relation to underlying bond. Then because the actual bond trades at 50 cents which basically that means its equity not a bond anymore, so there is considerable risk for restructuring here. Just too much risk for me. Doesnt mean I think its bad buying now, just not my comfort.
Texas, no I havent mentioned BGCA before. Found it digging for more “high yield, high safety, high call risk” issues... Like the WFC-J trade I did a few weeks ago. It jumped 17 cents Friday after it broke out of a very tight 4 cent window for the past month.

 

[bobandsherry]

I have stayed away from PIY. First because it was miss priced too high in relation to underlying bond. Then because the actual bond trades at 50 cents which basically that means its equity not a bond anymore, so there is considerable risk for restructuring here. Just too much risk for me. Doesnt mean I think its bad buying now, just not my comfort.

Yep, to be clear I wasn't suggesting PIY as a buy. But looking that for Texas who already has his foot in the muck it may be an option to just hold and pocket the $2/yr (15%+ CY). Do you think there is significant risk and PIY goes to zero? If not then dividend should be secure. If Texas pulls out now he'll take several years just to come out ahead by selling and putting the proceeds into another issue which may also see slippage in it's price as interest rates move higher.

 

[Mulligan]

Yep, to be clear I wasn't suggesting PIY as a buy. But looking that for Texas who already has his foot in the muck it may be an option to just hold and pocket the $2/yr (15%+ CY). Do you think there is significant risk and PIY goes to zero? If not then dividend should be secure. If Texas pulls out now he'll take several years just to come out ahead by selling and putting the proceeds into another issue which may also see slippage in it's price as interest rates move higher.

Bob here is the secondary risk of PIY.... IF Frontier went into bankruptcy provisions the interest payment to bond held in trust would be suspended. By prospectus trust immediately dumps all bonds at whatever price they are. So you cant hold and wait for a rollover into equity or see how negotiations work for bond holders. This is why if I wanted PIY, I would just buy the actual 2046 bond it represents.

 

[bobandsherry]

Bob here is the secondary risk of PIY.... IF Frontier went into bankruptcy provisions the interest payment to bond held in trust would be suspended. By prospectus trust immediately dumps all bonds at whatever price they are. So you cant hold and wait for a rollover into equity or see how negotiations work for bond holders. This is why if I wanted PIY, I would just buy the actual 2046 bond it represents.

Yep, agree with you on those points. I could be wrong, but I don't think Frontier BK is high probability. What's your take on Frontier's longevity?

 

[Mulligan]

I dont know anyhing. I just know generalities. IRS allows bonds trading in 50s to be viewed as equity from probability of bankruptcy/conversion. People who research this think the
2021 or 22 wall of debt will do them in. So much of the players here are buying for other reasons than income. The longer debt is more stressed though that is for sure.

 

[Texas Proud]

I have been watching PIY, and also then took a look at PFH. Perhaps PFH could go sour (I just don't know what JCP future looks like), but PIY at face value seems to be weak but don't think Frontier will go bust. The current price would give you a loss, but only if you sell. Do you think Frontier is going to go BK? If not, if you were OK with the div payment why dump out now when the yield is even higher?

This was one of the issues that I was flipping on my divi quest... when it took a big drop I was watching it... there was a bit of an upturn and I decided to buy in at 16.50 and get the yield... it has been bouncing around between the 13s and 15s for awhile... I have not done a deep dive, but not as concerned with BK... but I am thinking about selling if it comes back into the mid 15s....

JCP seems to have turned their problems around... I think the chance of BK has gone down a good amount.... I will be holding on to this one as the yield is good for the risk IMO...

As for PIY, the yield is higher, but I am starting to think the risk is not worth the yield....


Both of these were about 20% of my pref holdings... and pref is a bit over 5% of my total portfolio.... so maybe about 1/2 of 1% of my total... I can live with whatever happens to these if I do nothing....

 

[brokrken]

Mully, I like the BGCA trade. At current price, one divi and you break even. I'm gonna throw in an order and see if someone grabs it.

 

[Texas Proud]

Mully, I like the BGCA trade. At current price, one divi and you break even. I'm gonna throw in an order and see if someone grabs it.

I did also.... paid a few cents more to get it, but hey....

Probably will sell half of my OSBCP to buy more... this was my second largest holding of pref, but BGCA is better yield and better rating... and I just got a divi a few weeks ago!!!

 

[Mulligan]

I think its a great trade if one isnt concerned with income stream. Either it will work or you get your money back basically. Just going to try to milk the cow here as long as it will, and maybe by then otjers may have dropped.

 

[Mulligan]

I did also.... paid a few cents more to get it, but hey....

Probably will sell half of my OSBCP to buy more... this was my second largest holding of pref, but BGCA is better yield and better rating... and I just got a divi a few weeks ago!!!

Texas, I cashed out also last week.at
$10.55 also. When these types get 3 divi over call price and I can find something tighter to par, I rotate.

 

[Mulligan]

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

I did also.... paid a few cents more to get it, but hey....

Probably will sell half of my OSBCP to buy more... this was my second largest holding of pref, but BGCA is better yield and better rating... and I just got a divi a few weeks ago!!!

Dont feel bad paying a few cents more.....My first 200 shares I bought at 25.80. Wouldnt trade for a few days and when it did I got jumped. Its way more liquid now...I got lucky buying the 1000
at 25.41. I was on treadmill at workout facility and saw it in a momentary dump and jumped in while on treadmill. The most you are out is a dime or whatever if you bought today. This issue will have a stiff backbone in price support. The call risk will minimize any cap gains most likely, but I will gladly clip 8% BBB- indefinitely if it continues to trade.

 

[Texas Proud]

Dont feel bad paying a few cents more.....My first 200 shares I bought at 25.80. Wouldnt trade for a few days and when it did I got jumped. Its way more liquid now...I got lucky buying the 1000
at 25.41. I was on treadmill at workout facility and saw it in a momentary dump and jumped in while on treadmill. The most you are out is a dime or whatever if you bought today. This issue will have a stiff backbone in price support. The call risk will minimize any cap gains most likely, but I will gladly clip 8% BBB- indefinitely if it continues to trade.

My thinking also.... which is why I am reducing my 7.5% BB- for this...

I am keeping the SPLP-A as my largest holding.... I actually think that when it comes time for them to pay for the call in 20 that we will be able to put more in if others do not put theirs.... IOW, from what I read they are going to allow up to 525000 shares... if some people do not put theirs we can get a higher pct. of ours in that put... so, YTC (or put) is pretty high on this one... like 15%.... heck, even without the call it is around 11% YTM.... pretty good for what I consider a BB to BB- security...