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

[Mulligan]

But didn't you point out that some of these Trust Preferreds may be on borrowed time, due to the changes coming in 2019 regarding how they are treated on the balance sheets? Or is that only for preferreds issued in 2008-2010 era?



I cut my risk over the past few months and sold some of my bank overhang issues (like C-N, half of my ALLY-a, BOFIL, one or two others))

Banfp was a pre 2010 issued trust with assets under 15 billion (BANF is a bank with 7.5 billion assets, so way under limit). So it is grandfathered and Totally exempted. The company actually specifically mentions this in their SEC filings, too. So any redemption is totally on their whims, not mandated. Bob, found ALLY-A is TARP grandfathered and is totally exempt too. But with a higher yield and adjustable company may be more likely to pull plug. I reentered ALLY-A at 25.90 or so after I gambled they wont redeem next month which they wont now. So its good until February minimum most likely.

 

[Mulligan]

Took my AWRY proceeds and bought 400 shares of UMH-B at 25.80 this morning. Goes exD 50 cents next month so close to par for this 8% par issue. Down 8% past year.

 

[Mulligan]

250 more shares of BANFP today at close of 26.02. This baby is ensconched firmly into the number 2 spot on my holdings list now.

 

[MooreBonds]

250 more shares of BANFP today at close of 26.02. This baby is ensconched firmly into the number 2 spot on my holdings list now.

Picked up 100 at 26.05 today. I hope they let it ride - a 6.9% current yield isn't too bad, as long as it isn't called soon. But my biggest preferred holding is still OSBCP. I just hope both bank CFOs went to the same business school and they both have a similar finance approach and let them be until original maturity!

 

[Coolius]

Picked up 100 at 26.05 today. I hope they let it ride - a 6.9% current yield isn't too bad, as long as it isn't called soon. But my biggest preferred holding is still OSBCP. I just hope both bank CFOs went to the same business school!

I am also pretty overweight in OSBCP. May consider joining you and Mulligan in BANFP, but the over par premium is a little hefty for my liking.


What is the reason for your confidence there will be no call for the next 6-9 months ( that's the time it would take for the premium to be offset by dividends )

 

[Mulligan]

Ask me in 6 months and I will let you know, lol... Actually BANFP for past year or two, I have got in at mid 26 and sold at mid 27 usually within a month or two time. The liquidity has been significantly more in past week which has kept a lid on any price movements. About 60k in past week...I would say it usually averaged less than 1000 daily with many days of no trades. I cant say I like this liquidity but with 1.04 million shares its not like its being dumped, just controlled.
I prefer BANFP because it is a more solid bank, but doesnt mean OSBC is a risk. I just trust this bank more. And they have made zero mentions to ever redeem, and clearly continue to point out in filings it is protected grandfathered trust debt. I feel comfortable holding it longer term and plan to.
Commons took another beating...I would have never guessed my ~ 8% return this year so far would be beating the market. Granted most of this was earlier in the year, and largely been spinning my wheels last quarter or so.

 

[brokrken]

So, Schwab shows JBK callable on Nov 28, 2018. Is this right?

 

[Mulligan]

Im not seeing it anywhere. No SEC filing and TD has no mention. Its not trading like it is. But if it is and you own, it would be a good time to sell. I had to trade out a while back taking 40 cents profit because something hit in my account. Might have been BANFP. Cant remember which. Snagged me an obscure Eastern US bank preferred with an 8.08% yield at purchase. Very very illiquid. In fact on their website they say if you want to buy their common or preferreds to contact an owner directly lol. Common stock price is over $3500.

 

[Mulligan]

Ken, now if your asking if its callable, technically its been callable for almost 10 years, but the entity that could call it is no longer in existence (Lehman). That is why a 3rd party offered a voluntary tender this past August.

 

[brokrken]

Ken, now if your asking if its callable, technically its been callable for almost 10 years, but the entity that could call it is no longer in existence (Lehman). That is why a 3rd party offered a voluntary tender this past August.

No, I understand that. It just struck me that there is an exact date, like it's something new. I guess since it's technically continuously callable, they probably just move the next call date out each month.

 

[Coolius]

Ken, now if your asking if its callable, technically its been callable for almost 10 years, but the entity that could call it is no longer in existence (Lehman). That is why a 3rd party offered a voluntary tender this past August.

If I recall, Mulligan, we had a discussion about JBK a while back, and we did agree then the calling entity is no longer in business, one reason a 3rd party offered the tender at $26.50, to try and grab shares, convert into the underlying bonds, and make money on the arbitrage.


So, unless another 3rd party attempts to tender for the rest of JBK, there is no fear of any kind of call. And any tender should have a premium in it to be attractive to shareholders.



Am I remembering this correctly? The memory cells sure deteriorate with advancing age.....

 

[brokrken]

Also, IPL.D up $2 today? Maybe I missed the boat, but I put in a sell at $26.90

 

[Mulligan]

Also, IPL.D up $2 today? Maybe I missed the boat, but I put in a sell at $26.90

Wow, that is crazy...Huge up volume...Some preferred index fund buying? I dont blame you....Sell Sell!

 

[Mulligan]

If I recall, Mulligan, we had a discussion about JBK a while back, and we did agree then the calling entity is no longer in business, one reason a 3rd party offered the tender at $26.50, to try and grab shares, convert into the underlying bonds, and make money on the arbitrage.


So, unless another 3rd party attempts to tender for the rest of JBK, there is no fear of any kind of call. And any tender should have a premium in it to be attractive to shareholders.



Am I remembering this correctly? The memory cells sure deteriorate with advancing age.....

That is the way it is presented... Now there could be any fine print technicalities that is certainly never discounted. I checked the JBK sec filings, and there is nothing but that last tender offer from August.

 

[brokrken]

Wow, that is crazy...Huge up volume...Some preferred index fund buying? I dont blame you....Sell Sell!

Dang, I missed it. I lowered to $26.70 and still couldn't get executed. Some folks got real lucky. 2550 shares went at $27.86 earlier in the day. I got to start paying more attention!

 

[Mulligan]

That thing was near $23.50 not couple weeks ago. I was looking to buy at $23...Missed the mark!

 

[bobandsherry]

That thing was near $23.50 not couple weeks ago. I was looking to buy at $23...Missed the mark!

Now how did that happen? You must have been at the 19th hole.... [emoji466]

 

[Mulligan]

Now how did that happen? You must have been at the 19th hole.... [emoji466]

Nope, it was greedy or chicken one of the two, lol.. i remember 2013 when it went to $20.

 

[Mulligan]

Nope, it was greedy or chicken one of the two, lol.. i remember 2013 when it went to $20.

I wonder if IPL- D caught a momentum program that kicked in. Gonna be some loses there...Someone needs to fine tune the program, lol.

 

[brokrken]

I wonder if IPL- D caught a momentum program that kicked in. Gonna be some loses there...Someone needs to fine tune the program, lol.

This makes me wonder if I should put a good til cancel sell order on my preferreds a couple bucks above where I bought them and just wait. if they go, fine, I'll buy back in when they come back or find something else. If they don't execute, fine, I'll hold, which is what I was doing anyway.

 

[Mulligan]

This makes me wonder if I should put a good til cancel sell order on my preferreds a couple bucks above where I bought them and just wait. if they go, fine, I'll buy back in when they come back or find something else. If they don't execute, fine, I'll hold, which is what I was doing anyway.

Wouldnt hurt to try would it. I dont know what all the stress has been about "rate hike mania". 2 months left and another banner year working on just income issues. Up solidly on returns and have actually increased yield also without compromising total credit quality. Still perturbed I started buying BANFP a day early. Averaged cost basis down to 26.22 for my slug, and it seems to be staying above that for now. Should have been at a cost basis of 26.05, dangit.

 

[Mulligan]

Wouldnt hurt to try would it. I dont know what all the stress has been about "rate hike mania". 2 months left and another banner year working on just income issues. Up solidly on returns and have actually increased yield also without compromising total credit quality. Still perturbed I started buying BANFP a day early. Averaged cost basis down to 26.22 for my slug, and it seems to be staying above that for now. Should have been at a cost basis of 26.05, dangit.

Found out my old bank preferred I got at 8.08% yield is a 9% par issued 1987. Pretty sure its noncallable. This will reside next to FIISO in the sock drawer.

 

[Mulligan]

Looks like the air is out of the IPL-D tire already..Im shocked!

 

[capjak]

KTH tempting to add more......6.6%, $5 over call 2028

 

[Mulligan]

KTH tempting to add more......6.6%, $5 over call 2028

Cap its redemption price is $27.10 not $25, which is good. But its YTM is more in mid 5% range.