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

[Winemaker]

Kimco Preferred J called, at end of December; paid $22.39 for it in 2014. Farewell, my friend!

 

[Mulligan]

Winemaker, Get you some VER-F under 25.20. They are doing a slow gradual call here as they are buying them out instead of a reissue. Has taken 6 months for 30% call. Monthly payer and will anchor closely to par while u wait for a deal.

 

[aja8888]

Winemaker, Get you some VER-F under 25.20. They are doing a slow gradual call here as they are buying them out instead of a reissue. Has taken 6 months for 30% call. Monthly payer and will anchor closely to par while u wait for a deal.

I placed an order to by VER-F (ver/prf) with Schwab for $25.20. Schwab message says this is callable 1/3/2020? Is that correct? It looks to me that there is significant volume.

 

[Mulligan]

I placed an order to by VER-F (ver/prf) with Schwab for $25.20. Schwab message says this is callable 1/3/2020? Is that correct? It looks to me that there is significant volume.

Its in a transition stage of putting 20% of the preferreds. Those have been segregated from account (mine were) so these are free trading preferreds.
Vereit (NYSE:VER) plans to redeem 8M shares of its 6.70% series F cumulative redeemable preferred stock, representing approximately 20.58% of its ~38.9M shares of series F preferred stock, on Dec. 21, 2019.

 

[aja8888]

Its in a transition stage of putting 20% of the preferreds. Those have been segregated from account (mine were) so these are free trading preferreds.
Vereit (NYSE:VER) plans to redeem 8M shares of its 6.70% series F cumulative redeemable preferred stock, representing approximately 20.58% of its ~38.9M shares of series F preferred stock, on Dec. 21, 2019.

So am I crazy putting in an order?

 

[Born2Fish]

I placed an order to by VER-F (ver/prf) with Schwab for $25.20. Schwab message says this is callable 1/3/2020? Is that correct? It looks to me that there is significant volume.

I placed an order at $25.19 this morning but the price never drifted down.

I could have bought at $25.22 but tried to pinch a few cents.

 

[aja8888]

I placed an order at $25.19 this morning but the price never drifted down.

I could have bought at $25.22 but tried to pinch a few cents.

No sale for me too.

 

[Mulligan]

So am I crazy putting in an order?

No, I wish I should have said something a few days ago, there was a dump on the redemption notice. I got again at 25.18 and have the monthly divi in my pocket also though. They clearly want this big issue of their books, but they just want to use cash to get rid of it apparently so it will take time.
I seen some of the dirt bag preferreds took a beating past few days. Im not in those though. Another conservative purchase if your interest is EP-C which I bought again Monday just under $50. Its a 4.75% Baa3 IG trust debt that matures in 2028. KMI can redeem anytime (been callable since 2002) at $50. It goes exD in about 10 days so that make it in essence under par. It has an owner conversion but its way out of the money and useless. It is tendering each share for $25.18 cash and a bit under .72 share of KMI. So KMI would need to be near $40 to make it worth ones time to convert. So I just treat it as a safe income play and 8 yr maturity. When it goes illiquid price drifts up. I have flipped it twice for a couple buck a share gain twice this year.

 

[aja8888]

No, I wish I should have said something a few days ago, there was a dump on the redemption notice. I got again at 25.18 and have the monthly divi in my pocket also though. They clearly want this big issue of their books, but they just want to use cash to get rid of it apparently so it will take time.
I seen some of the dirt bag preferreds took a beating past few days. Im not in those though. Another conservative purchase if your interest is EP-C which I bought again Monday just under $50. Its a 4.75% Baa3 IG trust debt that matures in 2028. KMI can redeem anytime (been callable since 2002) at $50. It goes exD in about 10 days so that make it in essence under par. It has an owner conversion but its way out of the money and useless. It is tendering each share for $25.18 cash and a bit under .72 share of KMI. So KMI would need to be near $40 to make it worth ones time to convert. So I just treat it as a safe income play and 8 yr maturity. When it goes illiquid price drifts up. I have flipped it twice for a couple buck a share gain twice this year.

Thanks, I'm reloading preferreds as with rates down, I'll go for the conservative ones. I have added to the 5 I have now but some additional cash came loose in the IRA I keep these in and I need to put it to work, especially since rates may not rise in a good while the way things look.

 

[Mulligan]

Thanks, I'm reloading preferreds as with rates down, I'll go for the conservative ones. I have added to the 5 I have now but some additional cash came loose in the IRA I keep these in and I need to put it to work, especially since rates may not rise in a good while the way things look.

Price points if you are interested in EP-C can be tricky. Hopefully there is a bit of liquidity left for another day if you are interested. I think it did finally trade in $50- $50.05 range today. Friday and Monday about 30,000 shares trade and today it drifted to about a 1000. Most days only a few hundred shares trade with big wide bid ask spreads. Hopefully there are some still available if you decide it fits your needs.

 

[Mulligan]

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

Thanks, I'm reloading preferreds as with rates down, I'll go for the conservative ones. I have added to the 5 I have now but some additional cash came loose in the IRA I keep these in and I need to put it to work, especially since rates may not rise in a good while the way things look.

You may keep an eye on SR-A as a nice conservative QDI perpetual as its price hit $26.30 today late in day. I beat this thing like a drum at IPO and flips from $26 and selling in $27s multiple times and then got out as price went to nosebleed $28 range.
But I have been buying back past couple weeks from 26.30-42 lately to reestablish it as my biggest position. You may try to get a lower entry point but it wont hurt to put it on your watch list to monitor.
I have probably made more than $4 a share in flipping and dividends on this issue since issued earlier in year. But now I am just in hunker down mode keeping it as a base hold position and will take the future price movements like a wife....For better or worse, as I know I will get paid. But I do have bias here being its my local utility and its headquarters are based here also.

 

[Born2Fish]

You may keep an eye on SR-A as a nice conservative QDI perpetual as its price hit $26.30 today late in day. I beat this thing like a drum at IPO and flips from $26 and selling in $27s multiple times and then got out as price went to nosebleed $28 range.
But I have been buying back past couple weeks from 26.30-42 lately to reestablish it as my biggest position. You may try to get a lower entry point but it wont hurt to put it on your watch list to monitor.
I have probably made more than $4 a share in flipping and dividends on this issue since issued earlier in year. But now I am just in hunker down mode keeping it as a base hold position and will take the future price movements like a wife....For better or worse, as I know I will get paid. But I do have bias here being its my local utility and its headquarters are based here also.

Thanks for the heads up - I picked up a few shares of SR-A. I am in "for better or worse", too. Good, steady income is nice.

 

[Coolius]

Price points if you are interested in EP-C can be tricky. Hopefully there is a bit of liquidity left for another day if you are interested. I think it did finally trade in $50- $50.05 range today.

Mul,


Was looking at EP-C, and wondering if they issue a 1099 or a K-1?


I suspect a 1099, but with KMI in the picture, I just wondered if that could have changed things somewhat. I know KMI is now a 1099 corporation, but I don't really trust Richard Kinder too much.

 

[aja8888]

You may keep an eye on SR-A as a nice conservative QDI perpetual as its price hit $26.30 today late in day. I beat this thing like a drum at IPO and flips from $26 and selling in $27s multiple times and then got out as price went to nosebleed $28 range.
But I have been buying back past couple weeks from 26.30-42 lately to reestablish it as my biggest position. You may try to get a lower entry point but it wont hurt to put it on your watch list to monitor.
I have probably made more than $4 a share in flipping and dividends on this issue since issued earlier in year. But now I am just in hunker down mode keeping it as a base hold position and will take the future price movements like a wife....For better or worse, as I know I will get paid. But I do have bias here being its my local utility and its headquarters are based here also.

I put a limit order to buy at $26.45. It's good until cancelled so I'll be waiting.

 

[Coolius]

aj,


I am also a holder of SR-A, having bought some time ago, cost basis just below $26.


It's a good holding for reliable and sustainable income. However, if it does go up again to the $28 area, I'm gone, lol.

 

[aja8888]

aj,


I am also a holder of SR-A, having bought some time ago, cost basis just below $26.


It's a good holding for reliable and sustainable income. However, if it does go up again to the $28 area, I'm gone, lol.

And the reason for selling would be to capture the gain?

 

[Coolius]

Aj, the short answer is yes. If I can get up to a year's worth of dividends for the cap gain up front, I am prepared to risk the loss of shares indefinitely.


It is unlikely that any such rise could be sustained, because time marches on and the first call date continues to draw nearer. That pressure will cause the stock price to be limited in upside.


Any large spike up would be grounds for me to consider selling, with the intention to buy back at a lower price before the next XD date.


Of course, this strategy does not always work, but I have used it successfully on many occasions, as I believe Mulligan and Camroc have.


Others would prefer to hold ( whether for long term cap gain rate, or they feel the rise is sustainable ), which is perfectly fine, since that's what makes the market.

 

[aja8888]

Aj, the short answer is yes. If I can get up to a year's worth of dividends for the cap gain up front, I am prepared to risk the loss of shares indefinitely.


It is unlikely that any such rise could be sustained, because time marches on and the first call date continues to draw nearer. That pressure will cause the stock price to be limited in upside.


Any large spike up would be grounds for me to consider selling, with the intention to buy back at a lower price before the next XD date.


Of course, this strategy does not always work, but I have used it successfully on many occasions, as I believe Mulligan and Camroc have.


Others would prefer to hold ( whether for long term cap gain rate, or they feel the rise is sustainable ), which is perfectly fine, since that's what makes the market.

What I figured. Thanks.

 

[Mulligan]

What I figured. Thanks.

Sometimes Aja, the price just gets above its skis and will deflate in time like this one did... My thoughts are like Coolius’s here...Though admittedly some go up and away and you lose them too.
If one is just looking at ....This looks like a good income stream and all I want to do is collect it, like an annuity, then one really doesnt have to follow the stock price. I like to have a little trading fun and juice returns when I can. But there certainly is nothing wrong with the residual annuity value with permanent income stream purchase either.
That really is the entire genesis of the preferred stock to begin with... Buy and hold forever. They were bought when a broker called you on a new issuance, and then just kept. As pre internet and online brokerage, good luck finding a preferred ticker symbol and price anywhere. You would have to bug your broker with a phone call as these were never posted in the newspaper.

 

[pb4uski]

Aj, the short answer is yes. If I can get up to a year's worth of dividends for the cap gain up front, I am prepared to risk the loss of shares indefinitely.....

Interesting perspective. While my intent is to buy and hold I do have one 5% coupon issue that I bought at a 20% discount from stated value and is now 14% above my cost so if I sold I would get over 2 years worth of income (no tax implications because in tIRA).

Only problem is then I would need to reinvest it.

 

[aja8888]

Picked up a few hundred shares of SR-A at Schwab today. Keeping it for income with the rest of my preferreds unless, of course, it goes up a couple of dollars.

 

[pb4uski]

Interesting perspective. While my intent is to buy and hold I do have one 5% coupon issue that I bought at a 20% discount from stated value and is now 14% above my cost so if I sold I would get over 2 years worth of income (no tax implications because in tIRA).

Only problem is then I would need to reinvest it.

I did sell SCEPRL at a nice 14% gain from my cost and now have money in my pocket. Thoughts on reinvestment?

Looking at OBCSP which I see some of you have held in the past. Still have it? Happy with it? It looks like it is trading at ~50c premium to par but still yielding 7.42%. Call risk?

 

[Coolius]

pb4, I hold OSBCP as well.


The bank survived hard times in the last financial crises, but appears to be more healthy now.


I think OSBCP is regarded as Tier 1 capital, so that might be one reason for them to not call it, but not sure.



I consider call risk to be high, but at this stage dividends received have more than offset the premium over par, so while losing shares to a call is painful, I know I won't be losing money out of pocket.



Mulligan is the hands-down expert on this one. It was he who introduced me to OSBCP years ago.


Hope Mul will chip in when he reads this post.

 

[Mulligan]

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

I did sell SCEPRL at a nice 14% gain from my cost and now have money in my pocket. Thoughts on reinvestment?



Looking at OBCSP which I see some of you have held in the past. Still have it? Happy with it? It looks like it is trading at ~50c premium to par but still yielding 7.42%. Call risk?

I just got in it, at 10.25 a month or so ago and sold last week at 10.57. I doubt it gets called this time. But I made 2 quick interest payments. CEO said in last conference call that caused the sell off to 10.20 that they were looking at redeeming it. But they may try to acquire a bank instead... I took advantage of the drop and exploited it. But I never get caught holding the call bag. But I move in and out of similar issues on 25-50 cent wobbles. So this is more my style with trading/holding above par, past call issues.

I got what I got, but have moved a bit more defensive lately. My more recent add ons have been EP-C, INBKL, GGO-A. So I have a more definitive amount of shorter duration issues of decent quality. But of course I have others that do not mirror that genre though I am holding.

 

[Free To Canoe]

Price points if you are interested in EP-C can be tricky. Hopefully there is a bit of liquidity left for another day if you are interested. I think it did finally trade in $50- $50.05 range today. Friday and Monday about 30,000 shares trade and today it drifted to about a 1000. Most days only a few hundred shares trade with big wide bid ask spreads. Hopefully there are some still available if you decide it fits your needs.

Sounded like a good idea. I limit ordered 100 on 12/5. Filled 2, then 2. On 12/6 I got 2 more. The price went up and the liquidity down. Didn't want to be stuck with 6. Sold them today. Fido's free trades policy helped take the sting out of it. Try again another day.