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Old 11-04-2021, 08:47 PM   #501
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Same here. I've had a few called and now IPLDP. I may just sell all remaining preferreds I have and book the capital gains before they evaporate through a call.

I have some PFFD in my Roth and it's done well so that may be a good choice for the preferreds in my TIRA.


Yes, you have to be vigilant and keep rotating the stock if you dont want calls slapped on you. Holding above par past call issues well above par can drain returns.
Utility CMS recently issued a 4.2% perpetual. That was a red flag a liquid past call issue was in big danger.
I think I have only had one call this year and it was a low hanging fruit one that netted me a dime gain for a short hold.
What I have largely done is cycle above par past call par anchored issue that went exD or hit a sell off. For example I bought a lot of BRG-D recently at 25.15. If they call out I still net ahead. If it survives another divi it spikes as it approaches exD and then I dump.
Issues like SB-C and D have been good along with GSL-B. I may dump the latter if it spikes near $26 as it goes exD and buy after the spike deflates.
CRLKP was a great one to buy recently. I doubled my position to 2000 shares when a rare dump occurred a week or two ago and I got them at $24. Only about 40,000 shares outstanding and SP the parent is doing fine, but just ignores the old issue that matures in 2028.
So you have to be a creative or your only real option is to buy safe 4% issues with call protection that are ridiculously exposed to capital losses if interest rates rise…even modestly.
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Old 11-04-2021, 08:50 PM   #502
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I suspect that you are right and for at least a while the returns will be attractive. We'll try to do $25k a year for the next 5-10 years as ballast... money that will grow wiht inflation that most likely we'll never use.


PB…I know 3 people now who have intentionally bought 10k more than they should have. And they all got an email getting their hand slapped. One friend of mine actually called and rep said they typically dont do anything the first time but warn you not to do it again.
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Old 11-04-2021, 08:56 PM   #503
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I wonder how hard they slap your hand if you did $100k more than you should have.
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Old 11-04-2021, 09:02 PM   #504
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Yes, you have to be vigilant and keep rotating the stock if you dont want calls slapped on you. Holding above par past call issues well above par can drain returns.
Utility CMS recently issued a 4.2% perpetual. That was a red flag a liquid past call issue was in big danger.
I think I have only had one call this year and it was a low hanging fruit one that netted me a dime gain for a short hold.
What I have largely done is cycle above par past call par anchored issue that went exD or hit a sell off. For example I bought a lot of BRG-D recently at 25.15. If they call out I still net ahead. If it survives another divi it spikes as it approaches exD and then I dump.
Issues like SB-C and D have been good along with GSL-B. I may dump the latter if it spikes near $26 as it goes exD and buy after the spike deflates.
CRLKP was a great one to buy recently. I doubled my position to 2000 shares when a rare dump occurred a week or two ago and I got them at $24. Only about 40,000 shares outstanding and SP the parent is doing fine, but just ignores the old issue that matures in 2028.
So you have to be a creative or your only real option is to buy safe 4% issues with call protection that are ridiculously exposed to capital losses if interest rates rise…even modestly.
Thanks, I'm going to loo at all my preferreds this weekend and see where I should trim and move the funds elsewhere. Maybe I'll buy some Tesla and Bitcoin/Dogecoin!
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Old 11-04-2021, 09:07 PM   #505
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[QUOTE=pb4uski;2685252]I wonder how hard they slap your hand if you did $100k more than you should have. [/
You may find a contracted Goon knocking on your door looking to break a couple knee caps to remind you of the limit, lol.
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Old 11-04-2021, 09:17 PM   #506
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Thanks, I'm going to loo at all my preferreds this weekend and see where I should trim and move the funds elsewhere. Maybe I'll buy some Tesla and Bitcoin/Dogecoin!


Preferreds are just a tough area to be in now. Crappy companies are sneaking them in to exploit chase for yield. Quality companies are calling and issuing perpetuals so low they may never be called again.
This happened in the 1940s and 50s. I own a couple just because basically. For example I own NMPWP. I bought near $80 which sounds great being BBB quality and 20% under par. But…It was issued over 70 years ago as a 3.4% perpetual…arg!
I bought NSS a few weeks ago under par. Its a live adjustable and pays 7%. But NuStar isnt the highest credit quality MLP in the world, so that is a risk also.
I own some low quality. crap now, that I wouldnt have a few years ago. But I watch them closely and they are profitable, so I continue to run with them.
I have even dabbled in some commons for yield. I bought ALX when it was yielding over 7.1% a few months ago and hold. Hell I even bought NSYC which is an old cattle stockyard auction business out of Oklahoma. I bought it at $266 and it has been paying a $20 annual divi and has no debt. But it only has 43,000 shares and rarely trades.
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Old 11-05-2021, 11:29 AM   #507
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Same here. I've had a few called and now IPLDP. I may just sell all remaining preferreds I have and book the capital gains before they evaporate through a call.

I have some PFFD in my Roth and it's done well so that may be a good choice for the preferreds in my TIRA.
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I'll check out PFFD as well.
Thanks for the references to PFFD, EPRF.

I added a little PFFD in my tIRA.
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Old 11-08-2021, 06:10 PM   #508
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I'm notorious for not paying enough attention to my holdings. Maybe you folks could look this list over and speak up if anything looks particularly risky to own right now.

Here's what I have at the moment, all owned below PAR acquisition cost in an IRA.

SPLP+A
MNR+C
SLMNP
CNTHP
CNLPL
DTB
CHSCL
CHSCM
SCHW+J
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Old 11-08-2021, 06:40 PM   #509
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Here's CHSCM/ Info found on Quantum. It looks pretty safe to me.

CHSCM: Call date - 09/30/2024

CHS, Inc., 6.75% Class B Reset Rate Cumulative Redeemable Preferred Stock Series 3, liquidation preference $25 per share, redeemable at the issuer's option on or after 9/30/2024 at $25 per share plus accrued and unpaid dividends, and with no stated maturity.

Cumulative distributions of 6.75% per annum ($1.6875 per annum or $0.421875 per quarter) will be paid quarterly on 3/31, 6/30, 9/30 & 12/31 through 9/30/2024 to holders of record on the record date that will be the 10th day prior to the payment date or on the record date fixed by the board, not more than 30 days or less than 10 days prior to the payment date (NOTE: the ex-dividend date is one business day prior to the record date).


On and after 9/30/2024 distributions will be paid at an annual rate equal to three-month LIBOR plus a spread of 4.155% but in no event will the rate be greater than 8% per annum. At a change in control, each holder of the Class B Preferred Stock will have the right, for a period of 90 days from the date of the change in control, to require the Issuer to redeem the shares of Class B Series 3 Preferred Stock owned by that holder at $25.00 per share plus all accumulated and unpaid dividends.

Dividends paid by this preferred security are eligible for the preferential income tax rate of 15% to a maximum of 20% depending on the holder's tax bracket (and under IRS specified holding restrictions) and are also eligible for the dividends received deduction for corporate holders (see page S-34 of the prospectus for further information). This security was not rated by Moody’s or S&P at the time of its IPO. In regard to the payment of dividends and upon liquidation, the preferred shares rank junior to the company's senior debt, equally with other preferreds of the company, and senior to the common shares of the company.
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Old 11-09-2021, 05:24 AM   #510
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I'm notorious for not paying enough attention to my holdings. Maybe you folks could look this list over and speak up if anything looks particularly risky to own right now.

Here's what I have at the moment, all owned below PAR acquisition cost in an IRA.

SPLP+A
MNR+C
SLMNP
CNTHP
CNLPL
DTB
CHSCL
CHSCM
SCHW+J


MNR is finally getting bought out it appears. Later next year at close it appears it will be redeemed. Market has it priced to expect this and a few crumbs are still left to hold.
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Old 11-09-2021, 11:45 PM   #511
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Thanks aja8888 and Mulligan!

I did miss MNR’s announcement Nov 5th. Of course the common shareholders have to approve it but with the offer at $21/share I’m thinking they will.
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Old 11-10-2021, 11:26 AM   #512
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To all my fellow MNR aficionados:

</title> </head> <body bgcolor="#ffffff" style="font-family: 'Times New Roman'; font-size: 10pt; text-align: left; color: #000000;"> * <div> <hr align="center" style="border: none; border-bottom: 1px solid black; border-top: 4px solid black; height:

It appears we'll get $21 for our common shares (which are currently trading at about that price now). And we'll get $25 for our preferred shares (which are currently trading at about $25.48). Common and preferred divs declared before the deal closes will be paid. It's not as clear as to how pro-rata divs will be handled.

The goal is to close the deal in the first half of 2022. The common shareholders (MNR) have to approve. ILPT seems to have the sources for the $4B identified.

While this will likely pass the common shareholder vote, I'm wondering if there is some small possibility it won't. I'm fine with either outcome. Or at least I think I am. If the common shareholders reject, MNR seems solid enough standing on its own and the divs have been great. But if I'm bought out, it'll be at a profit on both my common and preferred shares, although I'll have to noodle up something else to do with the money.
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Old 11-10-2021, 02:49 PM   #513
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Yes, you have to be vigilant and keep rotating the stock if you dont want calls slapped on you. Holding above par past call issues well above par can drain returns.
Does anyone have a good rule of thumb for how soon to sell above par issues BEFORE they are callable? For example, I have a lot (for me) of CHSCM bought below par which are now selling close to $28. These aren't a perfect example since they aren't callable until 2024, but when does a potential call start depressing the price?
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Old 11-13-2021, 03:37 PM   #514
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Does anyone have a good rule of thumb for how soon to sell above par issues BEFORE they are callable? For example, I have a lot (for me) of CHSCM bought below par which are now selling close to $28. These aren't a perfect example since they aren't callable until 2024, but when does a potential call start depressing the price?
No rule of thumb here but I'm doing my best to watch and learn.

I'm trying to follow along with MNR+C right now. It was trading at $25.48. Then it went Ex on Nov 12th (yesterday) and dropped to $25.11. That $0.37 drop is what the div will be. I have no clue how much of the time that relationship holds true, but it's interesting to observe.

MNR+C is callable but MNR is in the midst of a buy out offer from ILPT so the preferred shares will likely be redeemed in the middle of 2022 as part of the final deal. MNR common shareholders must approve.
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Old 11-14-2021, 07:25 AM   #515
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A lot of times the buying company will keep the preferreds, just change the symbol.

This happened recently, CMO-E became FBRT-E.
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Old 11-22-2021, 09:19 PM   #516
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^^^^^

In this case the preferreds will be redeemed:


Quote:
As previously announced, on November 5, 2021, we entered into a definitive merger agreement with Industrial Logistics Properties Trust, a Maryland real
estate investment trust (“ILPT”), under which, on the terms and subject to the conditions set forth in the merger agreement, ILPT will acquire us in an all-cash
transaction, with our common stockholders receiving $21.00 in cash for each outstanding share of our common stock in connection with consummation of the
transaction. ILPT’s acquisition of us is subject to obtaining the requisite approval of our common stockholders and the satisfaction of other customary closing
conditions. Upon closing of the merger with ILPT, holders of our outstanding 6.125% Series C Cumulative Redeemable Preferred Stock (“Series C Preferred
Stock”) will receive the amount of $25 per share plus any accrued and unpaid dividends.
We plan to continue to pay our regular quarterly common stock dividend
and our Series C Cumulative Redeemable Preferred Stock dividend for each full quarterly dividend period completed prior to the closing of the transaction. This
transaction with ILPT represents the culmination of the publicly announced comprehensive strategic alternatives review processes conducted by our Board of
Directors during 2021. Our Board re-initiated its strategic alternatives review process in September 2021 after a previous agreement for a merger that we entered
into with another party, following a strategic alternatives review process earlier this year, did not receive the requisite approval of our stockholders.
I also own some common and I haven't received my proxy voting material yet but I have received the schedule/invite to the annual meeting. So still unclear on the timing. They did say the target timing was to get 'er done in the first half.
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Old 11-23-2021, 07:09 AM   #517
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What are y'all thinking about the interest rate risk of preferreds?

If I look at the published durations for some preferred stock funds they are in the 3-4 range, much lower than I would expect and similar to an intermediate term bond fund. For ample, Schwab shows PFF's duration at 3.06 and PGX at 3.73.

On the other hand if you have a newly minted 4% investment-grade preferred that sells for face value of 25 and interest rates increase by 1%, then it would seem that the preferred could drop to 20 [(25*4%)/(4%+1%)] suggesting much higher interest rate risk and a duration of about 20.

I can live with a duration of 3-4, but 20 would make me very uncomfortable.

That said, in the couple years that I have owned preferreds the 20 year treasury has bounced around quite a bit but it hasn't seemed to impact the value of my preferreds very much so in reality perhaps the interest rate risk is realistically lower than it would appear at first blush.
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Old 11-23-2021, 11:18 AM   #518
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Looks like Schwab is walking back some of the $0 trades, which will apply to some of the OTC traded preferreds we discuss here.

All US OTC and and Canadian trades will be $6.95 starting Dec 6.
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Old 11-23-2021, 06:44 PM   #519
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What are y'all thinking about the interest rate risk of preferreds?

If I look at the published durations for some preferred stock funds they are in the 3-4 range, much lower than I would expect and similar to an intermediate term bond fund. For ample, Schwab shows PFF's duration at 3.06 and PGX at 3.73.

On the other hand if you have a newly minted 4% investment-grade preferred that sells for face value of 25 and interest rates increase by 1%, then it would seem that the preferred could drop to 20 [(25*4%)/(4%+1%)] suggesting much higher interest rate risk and a duration of about 20.

I can live with a duration of 3-4, but 20 would make me very uncomfortable.

That said, in the couple years that I have owned preferreds the 20 year treasury has bounced around quite a bit but it hasn't seemed to impact the value of my preferreds very much so in reality perhaps the interest rate risk is realistically lower than it would appear at first blush.


PB, interest rate risk is very real if one assumes it will occur. Not many people can make a living on interest rate predictions though. If 10 got over 2% and was assumed to be climbing higher, those 4% IG preferreds would sink to $20 ish or lower. “Safe” is a pliable word. While a 4% IG preferred may be safer in coverage ratios of payment than say a 7% call anchored issue, but that issue most likely has more capital protection than the IG does as long as economy is fine.
Personally right now, I have very little sub 5% high quality stuff. I have a lot of past call, call anchored stuff, term dated, and a few adjustables and resets. And one of my biggest holdings (the old WTREP) is delisted and deregistered. So it doesnt matter what interest rates do, as it is unbuyable and unsellable, ha.
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Old 11-24-2021, 08:43 AM   #520
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What are y'all thinking about the interest rate risk of preferreds?

If I look at the published durations for some preferred stock funds they are in the 3-4 range, much lower than I would expect and similar to an intermediate term bond fund. For ample, Schwab shows PFF's duration at 3.06 and PGX at 3.73.

On the other hand if you have a newly minted 4% investment-grade preferred that sells for face value of 25 and interest rates increase by 1%, then it would seem that the preferred could drop to 20 [(25*4%)/(4%+1%)] suggesting much higher interest rate risk and a duration of about 20.

I can live with a duration of 3-4, but 20 would make me very uncomfortable.

That said, in the couple years that I have owned preferreds the 20 year treasury has bounced around quite a bit but it hasn't seemed to impact the value of my preferreds very much so in reality perhaps the interest rate risk is realistically lower than it would appear at first blush.

For an issuer of preferreds, this is a great time. For a buyer this is a terrible time. You have a built-in capital loss and/or you are locked in to a low interest rate for decades. Because when going rates are 5%+, they will not be redeeming their 2% & 3% preferreds.

"For every thing there is a season."

This is not the season for buyers of preferreds.
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