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

[Mulligan]

It looks like I won't get paid for the VER-F for a few weeks, but I'm looking for someplace to get a replacement (plus add some $ that are ready to go to work).

Can't find any preferreds in the REIT area that appeals to me, but over at the Fidelity investors forum someone mentioned a new issue from BAC, the Preferred M.

Fidelity lists it as BACPRM, but they have no details. Quantum Online doesn't even show it. According to the forum poster it is 5.375%, paid quarterly, and first call is 5 years. Price today is $24.92 and par is $25.00

Anyone have any thoughts on this, or at least know where I can get more details? I'm looking for a "sock drawer" issue that is at or under par.

Brian, if you are comfortable with VER-F why dont you just buy more of it? They are redeeming about 10% correct? The July divi will mitigate call loss and who knows when they redeem more. Its not priced too far over par.

 

[RE2Boys]

It looks like I won't get paid for the VER-F for a few weeks, but I'm looking for someplace to get a replacement (plus add some $ that are ready to go to work).

Can't find any preferreds in the REIT area that appeals to me, but over at the Fidelity investors forum someone mentioned a new issue from BAC, the Preferred M.

Fidelity lists it as BACPRM, but they have no details. Quantum Online doesn't even show it. According to the forum poster it is 5.375%, paid quarterly, and first call is 5 years. Price today is $24.92 and par is $25.00

Anyone have any thoughts on this, or at least know where I can get more details? I'm looking for a "sock drawer" issue that is at or under par.

Possibly consider MNR-C in the REIT universe? Yields less than ver-F and pays quarterly. Callable after 9/21. 6.125%

 

[Mulligan]

Possibly consider MNR-C in the REIT universe? Yields less than ver-F and pays quarterly. Callable after 9/21. 6.125%

I just bought some of that and NYCB-U myself.

 

[brokrken]

This thread has lost a bit of steam. I guess everyone is on vacation!

Anyway, I am sitting on between $1.25, $1.50, and $2.00 cap gains in TBB, RILYZ and SSW-G, respectively. However, I can't find any deals out there that I'd want to swap into. Any ideas?

 

[Winemaker]

I'm sitting and holding, except for some AHT-D, which cut the divvy on the common. Steady as she goes, most of my under pars are higher and some are over par.

 

[Golden sunsets]

Help guys. I've forgotten how to get the recent sale prices and lots for preferreds. The info is available for tickers on either Big Charts or Free Real time. I know I have to select a certain screen, but for the life of me I can't recall how to find that screen. Can anyone enlighten me?

 

[LarryMelman]

I have a bunch of browser bookmarks such as:
https://quotes.freerealtime.com/quotes/nrz.pa/TimeAndSales

 

[Golden sunsets]

I have a bunch of browser bookmarks such as:
https://quotes.freerealtime.com/quotes/nrz.pa/TimeAndSales

That's it Larry. Thanks so much.

 

[pb4uski]

This thread has lost a bit of steam. I guess everyone is on vacation!

Anyway, I am sitting on between $1.25, $1.50, and $2.00 cap gains in TBB, RILYZ and SSW-G, respectively. However, I can't find any deals out there that I'd want to swap into. Any ideas?

OK, you prompted me to look at my preferreds. One, SCEPRL, is up $3.26... 16% from when I bought it in early March. Next largest gain is METPRE, up 8% since January (one of my first preferred purchases).

I had intended to buy and hold for income, but that 16% gainer is beconing me to sell (tax-deferred account so no taxes to worry about) but then what? I haven't really looked around a lot lately but with prices up I'm guessing that pickings are slim... it looks like everything on my Watch List is above par.

 

[LarryMelman]

SCEPRL, is up 16% ... METPRE, up 8% (one of my first preferred purchases).

I had intended to buy and hold for income, but that 16% gainer is beconing me to sell (tax-deferred account so no taxes to worry about) but then what? I haven't really looked around a lot lately but with prices up I'm guessing that pickings are slim... it looks like everything on my Watch List is above par.

You've been in preferreds for a very short time. We all have to start somewhere... I was new to preferreds in 2012. Like you, I didn't really "get" what price movements mean. They are fundamentally different than what you see in common stocks.

Yes, you buy and hold these for income. Absent any serious problems in the issuing businesses, preferred prices all move up and down in similar fashion, largely due to anticipation of where interest rates may go. You rightly notice that everything else is trading high right now too. That's the general trend in the preferred marketplace, preferreds being a strange flavor of fixed-income investment.

Should you sell something that's up 16%? That's perhaps 2+ years of dividend payments so it's a valid question. What else might you do with the proceeds? (Assuming you want to keep the money in preferreds which of course you don't have to.) I can think of three things.

1. Sit in cash and wait for the next big correction in the preferred market. We had one in Dec. 2018 (you're seeing the recovery from that in your YTD gains now). I did a lot of buying there. Trouble is, since 2012 there have been only 2 events like that - one in 2013 and one in late 2018. Who knows when the next one will come.

2. Wait for new issues to come along, learn the sites where people talk about them, learn the personalities, learn the ins and outs of buying in the "grey market" where preferred shares are born, and buy that way. It took me at least 2 years to develop that ability. It's not hard but it's an art of sorts, and I don't know of any book that teaches it.

3. Bottom-fish, look for issues trading below par. Unfortunately, there is usually a good reason for that.

Actually a fourth thing is to look at your watch list and calculate effective rates. I don't do that with issues above par because I simply don't buy above par.

I just posted similar advice on another forum so the ideas are fresh in my head. So I thought I would also offer them here. Hope they are helpful.

 

[Freedom56]

1. Sit in cash and wait for the next big correction in the preferred market. We had one in Dec. 2018 (you're seeing the recovery from that in your YTD gains now). I did a lot of buying there. Trouble is, since 2012 there have been only 2 events like that - one in 2013 and one in late 2018. Who knows when the next one will come.

Not true. After the 2013 correction there was pretty nasty correction in August 2015, then again in February 2016, then November 2016, then January 2018 and again November-December 2018. I sold out my preferred and baby bond holdings that I purchased in December back in March and April after realizing gains as much as 19%. My cash is earning 2.38% waiting for the next correction. Right now I am holding 80% short and medium term bonds/notes and 20% cash. I'm not buying anything and just waiting for the next sell-off which will arrive in due course.

 

[LarryMelman]

Not true. After the 2013 correction there was pretty nasty correction in August 2015, then again in February 2016, then November 2016, then January 2018 and again November-December 2018.

I can't agree or disagree that these were all periods of general declines in the preferreds. I just looked at a couple of my holdings that go back a few years, and I see a decline from about Aug-Nov 2016. However that was from what I remember as very high prices (nearly $30) back down to their normal levels of $26-27 range.

The year-end 2018 decline was much more obvious- everything I owned went below par. I used every loose dollar I had to buy more of what I already had, and added to my income very handsomely. I "knew" they wouldn't stay below par, and even if they did, I was buying income at 6-7% instead of the usual 5.5-6%.

 

[Coolius]

Like many, I have been holding to the Preferred Stocks in my portfolio, and occasionally flipping and/or swapping some for better yield, or longer call protection.


Added some new ones like SR-A, SREA, and NEE-N, yields way lower than what I had hoped, but these have all gone up too, and the yields are now in the very low 5% range, which is disappointing.


If rates remain low for a protracted period, will likely not see much decline of prices from their current high level.

 

[Mulligan]

I have been peeling off some SR-A today. It was an easy ride up to over $26.70. I was way overexposed there. Been quietly building my position of Canadian Utilities Series DD from $15.46. Bought most of them in that range a month ago or so. Did pay up for 200 more at $16.16 today.
I bought too much of NYCB-U a few weeks ago at $47.80-85 to beat the oncoming rise for the approaching interest payment. Keeps moving up. Dont know how long I will be here.
As most said its slim pickings for relative bargains (no absolute bargains in the quality issues...Wanted to do like Winemaker and buy some AHT preferreds. But I just dont have the nerve for that type anymore...Getting old I guess.
Most of what I have that trades keeps creeping up almost daily it seems. Of course I have some that never trade... Own a few Canadian resets that have sputtered but I want them to go down so I can buy round two.

 

[Mulligan]

Said good bye to an old friend today. Sold 200 shares of FIISO at $150. Bought at $102, 3 yrs ago and collected 8.4% QDI for 3 years plus. Time to pay Uncle Sam. Basically used proceeds to buy noncallable busted convertible BBB- industrial reit, LXP-C at 53.76. That issue has been a fun profitable flipper several times in past month as it sometimes jumps up and down over a buck during a day. Today alone it range from almost $55 down to my near market close purchase at $53.76.

 

[brokrken]

Mully, heck of a nice gain on FIISO!

 

[Texas Proud]

Well, have to make a decision...


Bought some PYS for a quick flip early this year but did not flip them...


Now Origen LLC is making a tender offer of $18 per share for them... this means something is up but I cannot find anything... I see that this company has made tender offers on other pref shares but can not see what has happened to those issues...


Anybody have any idea on what is going on?

 

[Mulligan]

Texas Origen was the outfit that tendered for non callable JBK at $25.50 or so last year...Its now over $29 that didnt tender. They are out for themselves to make a buck...The difference here is the company that issued the debt of this tender is a dinosaur business in a horse and buggy business. Stock is way down credit stressed . I would tender but that is coming from a person who would never have bought the issue to begin with because it is out of my credit profile comfort zone. So that basically means I have no advise for you, lol.

 

[MooreBonds]

I came across a new issue: AIRTP. It’s a Trust Preferred for AIRT, a logistics-based firm that appears to have decent growth and financials. The AIRTP was issued to existing shareholders recently as part of a stock split (don’t worry if you look at a chart of AIRT, and see it dropping off a cliff! – some charts don’t reflect the stock split.)

The interesting thing is that many small holders may not want odd lots of some preferred that they don’t understand or don’t want, and given the newness of the issue, it’s currently trading slightly under par (par is just $2.50). Currently bid/offered at $2.40/$2.45. I picked up 1,400 at $2.45. Coupon is 8%, for both AIRTP and the underlying debenture held by the trust. Callable 2024, final maturity 2049.

Seemed like a decent risk/reward for some new cash I had.

 

[Coolius]

MooreBonds, I will check out AIRTP, thanks for the heads up. I am not familiar with the company, but at $2.45 with an 8% yield, the risk/reward ratio is not bad.


I might just buy a few hundred for the heck of it.


Today was another sad day for my sock drawer community - another long time resident decided to leave. Fortunately, not all left.


CNTHP, which I have held since 2016 - sold a few hundred shares @ $59.00. My cost basis was $52.75, so had a nice gain. Maybe I can buy them back at a later date.


Update: I decided to live dangerously, and rather than take up bungee jumping or skydiving, bought 500 shares of AIRTP at $2.45. Now the fingernail biting starts.......

 

[Mulligan]

MooreBonds, I will check out AIRTP, thanks for the heads up. I am not familiar with the company, but at $2.45 with an 8% yield, the risk/reward ratio is not bad.


I might just buy a few hundred for the heck of it.


Today was another sad day for my sock drawer community - another long time resident decided to leave. Fortunately, not all left.


CNTHP, which I have held since 2016 - sold a few hundred shares @ $59.00. My cost basis was $52.75, so had a nice gain. Maybe I can buy them back at a later date.

You will some day, I am sure, Coolius!

 

[Mulligan]

Ok, I had to look...What difference a year makes...I had 17 issues last year and only have 2 I had then...PFX and CTGSP (bought only recently to get back in it).
Most of these you would need a preferred reference guide to know what they are, lol
PFX, CTGSP, CNIGO, IPWLO, PPX, LXP-C, SLMNP, ERRAF, EBBNF, EBGEF, TGAPF, BCEFF, CDUTF, CNUTF, NYCB-U, MNR-C, GLP-A,and UEPCO.

 

[pb4uski]

Here are mine: not much overlap... in fact, no overlap!

ACGLP, AEH, ALLPRD, ALPPRQ, AXSPD, BACPRM, BBTPRE, BKPRC, DUKPRA, HAWLN, HIGPRG, IPLDP, IPWLK, JPMPRH, METPRE, PNCPRQ, PSAPRU, SCEPRL, USBPRO, WFCPRT

 

[Mulligan]

But, PB, at least most of yours are recognizable to the eye though! [emoji106]

 

[pb4uski]

Yeah, pretty plain vanilla.