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

[Mulligan]

Im.gonna hold back...if i start chasing i will buy too hi.

 

[capjak]

KTBA down a little today to 27.80 volume 2,000 shares low 27.67?

 

[bobandsherry]

ALLY-A is ex-dividend as of today, now down to $25.55 so I grabbed another 300 (now total of 1,500 shares). It's 2 years past it's call date and feeling pretty confident this isn't going to be called soon. It's floating rate at 3 month LIBOR plus 5.785%. LIBOR on 2/1 was 1.78698% and at 1.83338% today, so as long as it doesn't get called it should keep a decent yield even in a rising rate environment.

 

[brokrken]

SSW-E has traded down quite a bit from just over par to under $24 since the new year. It's looking quite attractive considering it becomes callable in 1 year. I put in a wishful bid. Let's see if anyone bites.

 

[brokrken]

ALLY-A is ex-dividend as of today, now down to $25.55 so I grabbed another 300 (now total of 1,500 shares). It's 2 years past it's call date and feeling pretty confident this isn't going to be called soon. It's floating rate at 3 month LIBOR plus 5.785%. LIBOR on 2/1 was 1.78698% and at 1.83338% today, so as long as it doesn't get called it should keep a decent yield even in a rising rate environment.

Bob, I was thinking about this same move, but when I look at my portfolio, commons, preferreds and all, I'm a little heavy in banks/financials at the moment. So, I'm looking at other sectors to get some yield.

 

[bobandsherry]

Bob, I was thinking about this same move, but when I look at my portfolio, commons, preferreds and all, I'm a little heavy in banks/financials at the moment. So, I'm looking at other sectors to get some yield.

I've been heavy and long in financials, especially commons, for what seems like forever I don't see this as a big gamble in today's environment, especially being a preferred, but do understand you've got to stick with what you are comfortable with.

FYI - Moody/S&P rating just updated per Quantum, shows as B2/B. I was trying to recall what it was rated previously but can't find any notes I made.

 

[Mulligan]

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

I've been heavy and long in financials, especially commons, for what seems like forever [emoji6] I don't see this as a big gamble in today's environment, especially being a preferred, but do understand you've got to stick with what you are comfortable with.

FYI - Moody/S&P rating just updated per Quantum, shows as B2/B. I was trying to recall what it was rated previously but can't find any notes I made.

Bob, ALLY-A is my second biggest holding behind NSS. Also picked up a couple hundred more OSBCP too today. I am bigger in banks percentage wise than I have ever been. Like you, I feel as long as the economy is purring along banks should be fine...Call risk is way more of a factor with my banks than non payment.

It was rated B3 a couple years ago...And almost rated BANKRUPT 8-9 years ago, lol...

 

[Mulligan]

I have tweaked my roster a bit last 2 days. I am a bit into capital preservation besides income so this is why I am doing what I do in preparation for higher rates. I really have a combination double barbell approach... Mixed with short term dated, adjustables, mid term dated, and longer term dated with mixture of higher risk and very low risk. Very few perpetuals considered safe ones. Only MTB-C and CTWSO fit that bill. And only FIISO and AHT-D in addition to the previous 2 are considered perpetuals. The other 14 are term dated from 2 months to about 15 years.

 

[Texas Proud]

I've been heavy and long in financials, especially commons, for what seems like forever I don't see this as a big gamble in today's environment, especially being a preferred, but do understand you've got to stick with what you are comfortable with.

FYI - Moody/S&P rating just updated per Quantum, shows as B2/B. I was trying to recall what it was rated previously but can't find any notes I made.

This seems to be a low yield for something rated this low... NSS has better yield and is higher rated... plus it is 6.73% plus libor so it will always be a better yield....

 

[Mulligan]

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

This seems to be a low yield for something rated this low... NSS has better yield and is higher rated... plus it is 6.73% plus libor so it will always be a better yield....

I got more in NSS than ALLY-A.....And ALLY-A call risk is greater...But gun to my head for safety I am going with ALLY. It is doing very well for the type of bank it is. NS is heading downward, ALLY is moving upward. When it comes to high yield, the safety is on the company on the upswing. I really wont watch ALLY too closely as there is no reason to for now. My ears are very perked up with NS.

 

[bobandsherry]

Bob, ALLY-A is my second biggest holding behind NSS. Also picked up a couple hundred more OSBCP too today. I am bigger in banks percentage wise than I have ever been. Like you, I feel as long as the economy is purring along banks should be fine...Call risk is way more of a factor with my banks than non payment.

It was rated B3 a couple years ago...And almost rated BANKRUPT 8-9 years ago, lol...

Thanks Mulligan for the old rating. Ally's capital position has improved quite a bit, good to see ratings reflective of my assumption.

Having worked for a mega-corp bank for my career, I'm comfortable with the market conditions for financials. It's also one reason I'm so heavy into financials since it's what I understood. And particularly heavy in one of them thanks to options and grants. I made efforts to diversify over the years, but that was bad move on my part given the run up financials have had. As I look back at last 5 years, the bank stock I pulled out of to diversify is up over 125% compared to 75% for S&P. Yep, dummy me.....but I guess I just sleep better this way - would have been better to just get some Ambien for that

NSS is currently #3 in my holdings in my "play" account, just behind ALLY-P.

Funny you mentioned OSBCP. I have had that on my watch list for a year, have considered it on/off. It's a small bank in general area I used to live. I've not moved on it as I figured ALLY-P was better play since it was adjustable.

With the drop last week, I took 200 share gamble with FTRPR. I bought and it still dipped, but now up about a buck. I figured 2 div's at $2.78 each would cover half the gamble before the shares become mandatory convertible on 6/29. Hoping for good earnings call at end of the month that gives this some pop. Feel free to slap me

 

[Texas Proud]

I got more in NSS than ALLY-A.....And ALLY-A call risk is greater...But gun to my head for safety I am going with ALLY. It is doing very well for the type of bank it is. NS is heading downward, ALLY is moving upward. When it comes to high yield, the safety is on the company on the upswing. I really wont watch ALLY too closely as there is no reason to for now. My ears are very perked up with NS.

Good point... I saw they were looking to downgrade NSS and from what is here ALLY was upgraded...

 

[bobandsherry]

This seems to be a low yield for something rated this low... NSS has better yield and is higher rated... plus it is 6.73% plus libor so it will always be a better yield....

I'm pretty deep into NSS, which was #2 in my holdings in my "play" account. I had more NSS than ALLY-P. So for me, and especially with Ally upgrade and NSS downgrade I was more comfortable putting more into ALLY-P. With additional shares ALLY-P has now moved up to #2 in my "play" account, just edging out NSS. Can't always just chase yield.

 

[Mulligan]

I'm pretty deep into NSS, which was #2 in my holdings in my "play" account. I had more NSS than ALLY-P. So for me, and especially with Ally upgrade and NSS downgrade I was more comfortable putting more into ALLY-P. With additional shares ALLY-P has now moved up to #2 in my "play" account, just edging out NSS. Can't always just chase yield.

The one thing I suppose NS has over ALLY on a worst case scenario is NS has hard assets to sell, while ALLY being a bank has just leverage. If it really came down to that, I hope I wouldnt own either, lol...Either or, I would take ALLY-A over OSBCP too. My OSBCP is a smaller allotment than ALLY-A. I have kind of went bank heavy for now with FIISO, ALLY, OSBCP, MTB-B, and 2 insurance issues.

 

[Mulligan]

Good point... I saw they were looking to downgrade NSS and from what is here ALLY was upgraded...

Texas, the good thing about NS is the bad... If they werent in a bit of straights, NSS wouldnt even be around. They are kind of boxed in having to hold it. And it being debt protects us some. I noticed the preferreds have taken it on the chin a bit in past week, while NSS is basically unchanged.

 

[bobandsherry]

The one thing I suppose NS has over ALLY on a worst case scenario is NS has hard assets to sell, while ALLY being a bank has just leverage. If it really came down to that, I hope I wouldnt own either, lol...Either or, I would take ALLY-A over OSBCP too. My OSBCP is a smaller allotment than ALLY-A. I have kind of went bank heavy for now with FIISO, ALLY, OSBCP, MTB-B, and 2 insurance issues.

First, you always seem to have a pretty diverse and unique list of preferred holdings. Your list of thinly traded shares is interesting to me.

As for NS and ALLY going bust, I hear ya. But by the time NS would go bust any hard assets of value would probably be sold off just to make bank. I guess good news is if you feel call is a risk then Ally is in pretty stable position. I'm waiting to see the 2017 annual report, but from the 2016 read one area of concern (and seems to be reflective in their loan loan provision) is they appear to be stretching for loan growth, their growth was sub-prime borrowers. Given the market it's unclear why except to maintain NIM.

 

[Mulligan]

First, you always seem to have a pretty diverse and unique list of preferred holdings. Your list of thinly traded shares is interesting to me.



As for NS and ALLY going bust, I hear ya. But by the time NS would go bust any hard assets of value would probably be sold off just to make bank. I guess good news is if you feel call is a risk then Ally is in pretty stable position. I'm waiting to see the 2017 annual report, but from the 2016 read one area of concern (and seems to be reflective in their loan loan provision) is they appear to be stretching for loan growth, their growth was sub-prime borrowers. Given the market it's unclear why except to maintain NIM.

Bob, you would understand bank financials 10 times better than me. My call concern is just a more aerial view. They called ALLY-B less than 2 years ago with a modest float rate higher than A is. And they called a 7% perpetual 2 years ago. So this is their last “preferred” standing. Being a trust preferred I dont quite know the beneficial standing it has for leaving it long term outstanding. If Libor rises and long curve doesnt move as much that could push them over the edge too on a call. It is a very big issue....But BoA has left a couple outstanding that appeared profitable to call and didnt....I certainly would rather risk the call than to sell it though!

Some preferreds have had a bit of a sell off. None that I own have and more importantly, none that I want have sold off. Just the ones I have no interest in. Im hoping fear will grab some that I want and rotate into them.
I dont blame you for dabbling into FTRPR at this point. You didnt buy early and get smoked like most did. It does appear to be gaining some traction in this price area.

 

[Coolius]

Was out for most of the trading day, but saw that AILLL had bounced back and recovered most of the drop from a day before.

I really wonder who would just dump 1,000 shares at market of a thinly traded issue like AILLL ? Guess there are always weak hands out there - oh well, another weak hand out of the way now.

Was not able to get any shares, unfortunately. Hope some of you folks did better.

 

[jimnjana]

Added some more CBL-D. Under 18. Largest position is still SPLPA.

 

[Freedom56]

Added some more CBL-D. Under 18. Largest position is still SPLPA.

If you really wanted a position in CBL & Assoc, the notes may be safer:

The 2023 notes (12505JAA1) are trading at a YTM of 7.454% - rated BBB- (probably will be downgraded)

The 2026 notes (12505JAD5) are trading at a YTM of 8%

However, the entire retail commercial leasing space will be under pressure for the next few years as more and more stores shut down.

 

[bobandsherry]

However, the entire retail commercial leasing space will be under pressure for the next few years as more and more stores shut down.

That's my take as well. They may fill vacated space but will be at much lower $/sq ft basis. Raising rate environment doesn't bode well for the REIT's and I'm very cautious to get into fixed rate instrument tied to REIT.

 

[Freedom56]

There are many Ally notes with maturities from 2018 through 2021 that can yield 3.8% to 4.5%. I have multiple bids in at Fidelity just below par. The issues are all fairly small. These are better than CD rates.

 

[Mulligan]

There are many Ally notes with maturities from 2018 through 2021 that can yield 3.8% to 4.5%. I have multiple bids in at Fidelity just below par. The issues are all fairly small. These are better than CD rates.

Im greedy so I am in pretty good on ALLY-A the trust debt. But I dont have the nerve for any CBL issues.

 

[Freedom56]

Im greedy so I am in pretty good on ALLY-A the trust debt. But I dont have the nerve for any CBL issues.

I'm not buying any CBL either. I'm looking for a place for all the cash from the sale of preferred shares in December. I was waitng for those high grade preferred shares to fall below par, but the have not yet. Plus I just got more cash from a GE 10 year note that just matured today. I just started moving money from my brokerage account to my Amex account that pays 1.45% versus .0001%.

 

[bobandsherry]

I just started moving money from my brokerage account to my Amex account that pays 1.45% versus .0001%.

FYI - Ally is paying same rate. Crazy they are paying more on savings vs. 3 month CD's.