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

[aja8888]

You guys have more guts than I do, or maybe more money and TIME!!

 

[MooreBonds]

Moorebonds, here is the updated offer link below for Handy....And yes originally you were correct....They listed an amount of shares they would offer to buy (pro rata) but that was 20%. But this link below clarifies that all shares will get this opportunity.
News

While I would expect the terms of the 20% early redemption to be extended to the new SPLP-A shareholders....I don't see where they explicitly state that, nor where a legally-binding document states that. The only references I see in the press release is the statement that "the terms of the newly issued SPLP-A shares are identical to the original" - but a press release isn't a legally-binding document (unless it is used in an insider-trading case or something like that). The terms of the original legal document is that 20% of the shares issued in the original deal would be redeemed. The press release is ambiguous towards whether this specific provision is extended to the new share count, or if they are merely referring to the interest rate, payment dates, and final maturity provisions. They do state that a prospectus was sent to holders of the Handy shares - but I don't see a copy of this prospectus on the SPLP website to verify precisely what the language was regarding the early partial redemption clause extending to the new shares.

I don't expect SPLP to be that sneaky...but you know how management of publicly traded companies can be! And as a result of seeing some crazy stuff happen over the years, unless I see it in black and white in a legally binding document, it never did happen, and never will happen!

 

[Texas Proud]

MooreBonds....

I do not see them using this issue to buy any other company... they would probably issue a different pref....

Yes, it would be good to see the original language used, but I would suspect that the tender is for 20% of all outstanding.... once they start trading there is no way to identify which were original and which were forced... they merge... and if it works out to say 15%, then if an original holder never sold then he could complain that he did not get to tender his 20%....

Also about pricing... the price of the company being bought indicates a price for these at around $20.... so the people who are selling now at $21 are thinking they are getting a good deal...

I do not forsee a large number of the T series trading any time soon as a number of the holders probably will not know they own them for awhile... you know, people who buy and hold and do not look at their stmts... who do not read any of the stuff sent to them.... I would think buyers will be smart enough to know that bidding more than the A series is stupid....

 

[Mulligan]

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

While I would expect the terms of the 20% early redemption to be extended to the new SPLP-A shareholders....I don't see where they explicitly state that, nor where a legally-binding document states that. The only references I see in the press release is the statement that "the terms of the newly issued SPLP-A shares are identical to the original" - but a press release isn't a legally-binding document (unless it is used in an insider-trading case or something like that). The terms of the original legal document is that 20% of the shares issued in the original deal would be redeemed. The press release is ambiguous towards whether this specific provision is extended to the new share count, or if they are merely referring to the interest rate, payment dates, and final maturity provisions. They do state that a prospectus was sent to holders of the Handy shares - but I don't see a copy of this prospectus on the SPLP website to verify precisely what the language was regarding the early partial redemption clause extending to the new shares.

I don't expect SPLP to be that sneaky...but you know how management of publicly traded companies can be! [emoji4] And as a result of seeing some crazy stuff happen over the years, unless I see it in black and white in a legally binding document, it never did happen, and never will happen!

Moorebonds, this came from a Steel Partners press release...I dont think my previous link directly could take you to it, so you may have missed this...Look at very last sentence of the below paste... Its a given this will.

Steel Partners currently owns approximately 70% of Handy & Harman’s outstanding shares. Under the agreement, Steel Partners, together with a wholly owned subsidiary of Steel Partners, will commence an exchange offer to acquire all the outstanding shares of Handy & Harman’s common stock (not owned by Steel Partners or any of its affiliated entities) for 1.484 Series A preferred units of Steel Partners for each Handy & Harman share tendered. Receipt of the preferred units, based on their liquidation preference of $25.00 per unit, will thus provide Handy & Harman stockholders with $37.10 of value for each share of Handy & Harman common stock tendered in the offer. The preferred units, which currently trade on the New York Stock Exchange under the ticker symbol “SPLPPRA,” (1) bear a cumulative distribution at a rate of 6.0% per annum, (2) mature in February 2026 and (3) will provide Handy & Harman’s stockholders with either cash or Steel Partners common units upon maturity or earlier redemption at the option of Steel Partners. In addition, Steel Partners will offer to repurchase or redeem, for cash on a pro rata basis, 20% of its preferred units by February 2020.

 

[Winemaker]

Correct me if I'm wrong but I believe the original SPLPA shares were issued to purchase Steel Excel last year, to be redeemed in cash or common units at a later date, issue "maturing" in 9 years (which seems to be a odd number). Now they issue additional shares for H&H, and give the 20% incentive. They issue the SPLPAT shares to those who did not tender as of the 10/11/17, to prorate their quarterly distribution. After the distribution, the SPLPT becomes the SPLPA and everything is smooth again.

Since SPLP is a profitable conglomerate at this point in time, I look for them to return the marketplace and purchase another company with the same strategy, once H&H is placed under its wing.

I guess I read the 20% mandatory redemption wrong in the article if the prospectus states otherwise.

 

[Mulligan]

Correct me if I'm wrong but I believe the original SPLPA shares were issued to purchase Steel Excel last year, to be redeemed in cash or common units at a later date, issue "maturing" in 9 years (which seems to be a odd number). Now they issue additional shares for H&H, and give the 20% incentive. They issue the SPLPAT shares to those who did not tender as of the 10/11/17, to prorate their quarterly distribution. After the distribution, the SPLPT becomes the SPLPA and everything is smooth again.

Since SPLP is a profitable conglomerate at this point in time, I look for them to return the marketplace and purchase another company with the same strategy, once H&H is placed under its wing.

I guess I read the 20% mandatory redemption wrong in the article if the prospectus states otherwise.

They also have a few other companies they own but do not have all the shares. I suspect the same playbook could be used again. The CEO has stated their goal is to fully own all their investments and seek bolt on acquisitions to the segments they are in..... I am pretty certain you will have to tender so one will have to be aware of offer or it will slide by.

 

[brokrken]

OK, I'm convinced. Toe in the water with 200 SPLP-A

 

[Mulligan]

OK, I'm convinced. Toe in the water with 200 SPLP-A

The next few weeks should be interesting, Brokrken. Just dont worry about the swings and focus on the piece of meat thrown in with the soup bone as Winemaker said (the 2/2020 put) and the maturity date.

 

[jimnjana]

I too joined the SPLP-A party again. I sold my original shares purchased earlier in the year. Down to SPLP-A, NLY-F, CBL-D preferred shares. Considering selling NLY-F to free up some money to buy back into AILLL if given the chance at a reasonable price.

 

[Mulligan]

I too joined the SPLP-A party again. I sold my original shares purchased earlier in the year. Down to SPLP-A, NLY-F, CBL-D preferred shares. Considering selling NLY-F to free up some money to buy back into AILLL if given the chance at a reasonable price.

Reasonable is a very pliable word, Jim. Some people wont buy a penny above par...If the thing had the word “non” slapped in front of call, it would be trading $29-$30... It all boils down to ones willingness to accept call risk and not pay bloated ask prices.
So what is your number?

 

[jimnjana]

Reasonable is a very pliable word, Jim. Some people wont buy a penny above par...If the thing had the word “non” slapped in front of call, it would be trading $29-$30... It all boils down to ones willingness to accept call risk and not pay bloated ask prices.
So what is your number?

26.50ish is pretty close to where I bought it the first time around.

 

[Mulligan]

26.50ish is pretty close to where I bought it the first time around.

That is a realistic goal. You know the next divi is in the pocket anyways.

 

[Winemaker]

Reasonable is a very pliable word, Jim. Some people wont buy a penny above par...
So what is your number?

Not a penny above par....count me in!

Just had my Royal Bank of Canada 5.50% called....WTH is up with that?

Royal Bank of Scotland 5.50% called last month...

Made/making $2.80+/share. I'll have to see where SPLPA is then, but I may have to break my $5,000 limit/issue.

 

[Mulligan]

Winemaker, not a recommendation but AGO-E is going ExD Monday, which in theory would put it under par, and a plus 6% yield. Its interest paid though and a high “A” bond rating from S&P. Past call for many years but no call loss risk at par...Maybe worth studying up just to see if interested.

 

[Winemaker]

Thanks, Mully! Limit order in tomorrow for 200! I might have to send you some old grape juice I got laying around!

 

[Mulligan]

Thanks, Mully! Limit order in tomorrow for 200! I might have to send you some old grape juice I got laying around!

Make sure its 11% or above or my GF will not be happy, lol... This issue had largely escaped me and long forgotten about but another online passed it on to me. I would sell my 300 shares of Penny baby bonds and buy 200 shares myself with you. But Im ticked I am down $350 on this flaming turd and I am going to hold and hope Christmas sales give it a bounce. My other 5 issues in taxable I dont want to let go of yet...But I am book marking this and will remember it now.

 

[bobandsherry]

Caught this new issue, NYMTN, 8% REIT, 10 year fixed (through call date) and then 3 month LIBOR + 5.695%. Not eligible for preferential tax rate. Traded under par on Friday and closed $25.10.

 

[MooreBonds]

Caught this new issue, NYMTN, 8% REIT, 10 year fixed (through call date) and then 3 month LIBOR + 5.695%. Not eligible for preferential tax rate. Traded under par on Friday and closed $25.10.

I'm extremely skittish of anything from mREITs, given where we are in the interest rate cycle. Count me out. (coming from someone who still has a few zombie positions in my tax-advantage accounts from other finance companies, including mREITs, that were nuked 8 years ago).

True, if this is the new normal, and rates stay fairly low, it will be able to continue the preferred stock payments...but given the amount of leverage these mREITs have, all it takes is a small increase in rates to put the big hurt on them, and a little more to send them to the graveyard with my old shippers/mREITs/oil holdings.

 

[Mulligan]

I'm extremely skittish of anything from mREITs, given where we are in the interest rate cycle. Count me out. (coming from someone who still has a few zombie positions in my tax-advantage accounts from other finance companies, including mREITs, that were nuked 8 years ago).

True, if this is the new normal, and rates stay fairly low, it will be able to continue the preferred stock payments...but given the amount of leverage these mREITs have, all it takes is a small increase in rates to put the big hurt on them, and a little more to send them to the graveyard with my old shippers/mREITs/oil holdings.

Wow, poor Moorebonds getting older and conservative... a few flecks of grey, a tighter haircut, the sports car goes, and now the Mreits, too.... Next thing you know the stay off my lawn sign will be up in your front yard!

 

[MooreBonds]

Wow, poor Moorebonds getting older and conservative... a few flecks of grey, a tighter haircut, the sports car goes, and now the Mreits, too.... Next thing you know the stay off my lawn sign will be up in your front yard!

LOL - No sports car currently, but could have bought one with the money I poured down the drain w/ the mREIT/finance preferreds and commons! I have gone back and forth on the "hot car" idea, but keep coming back to what else I could do with the money (mostly traveling).

 

[MooreBonds]

The next few weeks should be interesting, Brokrken. Just dont worry about the swings and focus on the piece of meat thrown in with the soup bone as Winemaker said (the 2/2020 put) and the maturity date.

Picked up another 100, but of the SPLP-T, at $20.35 this morning. Looks like the T is trading slightly lower compared to the A (including the dividend adjustment), so if you are a buy and holder, you get a little jucier long-term total return from the T.

I'm up to 450 SPLP, definitely need to cut myself off. Like Winemaker, I try to use a self-imposed $5k limit on all preferreds per company (although that does exclude the commons for companies like BDCs, given the relatively conservative leverage BDCs have on baby bonds, which allows me to hold the common and sleep at night). My only exception to the $5k limit has been a few key banks (WFC-L, OSBCP).

 

[Texas Proud]

Anybody know the dates for SPLP-A on when interest is calculated?

Saw the Ts were trading lower... and it looks like more than a full divi which would make it cheaper... but not enough happening yet...

 

[Mulligan]

Anybody know the dates for SPLP-A on when interest is calculated?

Saw the Ts were trading lower... and it looks like more than a full divi which would make it cheaper... but not enough happening yet...

It last went ex D 8/30.

 

[Mulligan]

I followed Winemaker and bought 300 shares of AGO-E. I moved money into Roth as I actually worked some this year to scrap up enough money. Look how compelling the risk/reward is to AGO-F... The Puerto Rico stuff isnt that weighty on AGO. 6.25% higher quality debt risk seems like a strong relative value and under par too.

 

[bobandsherry]

Agree with you Mulligan on risk/reward, I got in on AGO-E as well. With dip after ex-div slightly below par seemed like a good time to get in for decent return.