Preferred Stock Investing-The Good , The Bad and The In Between 2021

aja8888 said:
Let me mention that I bought a T Bill at Schwab today (one year) yielding 2.954%. Safe money.
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I have a bunch about to hopefully redeem in month or so. Those proceeds will likely wind up there or the 2 year.
 
Mulligan said:
I have a bunch about to hopefully redeem in month or so. Those proceeds will likely wind up there or the 2 year.
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Yields just went up today and once the FED goes 1/2% higher later this week, we may see another jump. I am absolutely loading up on this stuff and staying within one year.

If treasuries ever get to 5+%, I am backing up the big truck and loading it to the sideboards.
 
aja8888 said:
Yields just went up today and once the FED goes 1/2% higher later this week, we may see another jump. I am absolutely loading up on this stuff and staying within one year.



If treasuries ever get to 5+%, I am backing up the big truck and loading it to the sideboards.
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If your bored kind of watch the competition race between comparative duration between treasuries and brokered CDs.
 
Yields on individual 2-3 year notes are finally taking their next leg up. I just transferred $250K from my money market account to my Fidelity account just in case the start of the March 2020 moment arrives this week. I have lot's of dry powder left sitting in money market accounts earning just 0.75%. Bond ETFs were under heavy selling pressure today at exceptionally high volume. So were preferred ETFs but not to the same levels. Corporate note liquidation should continue over the next few days as these funds raise cash. Some of it started during the last two hours of trading today. I'm going to stay with 2-3 year durations for now. The yield curve is sinking deeper into inversion as the smart money is betting on an economic slowdown. The inflation talk will change to deflation later in the year as signs of an economic slowdown become more apparent.
 
Freedom56 said:
Yields on individual 2-3 year notes are finally taking their next leg up. I just transferred $250K from my money market account to my Fidelity account just in case the start of the March 2020 moment arrives this week. I have lot's of dry powder left sitting in money market accounts earning just 0.75%. Bond ETFs were under heavy selling pressure today at exceptionally high volume. So were preferred ETFs but not to the same levels. Corporate note liquidation should continue over the next few days as these funds raise cash. Some of it started during the last two hours of trading today. I'm going to stay with 2-3 year durations for now. The yield curve is sinking deeper into inversion as the smart money is betting on an economic slowdown. The inflation talk will change to deflation later in the year as signs of an economic slowdown become more apparent.
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Some of that spiking may have occurred on WSJ report that Fed wont rule out a 75 bps jump soon. I really should peel back more cash, but assume a nice chunk is to be coming on its own. So this is why I have largely left my live floaters alone. My big 3 are CUBI-E, NSS, and WTREP. Their yields could be pretty juicy come end of year.
 
Freedom56 said:
Yields on individual 2-3 year notes are finally taking their next leg up. I just transferred $250K from my money market account to my Fidelity account just in case the start of the March 2020 moment arrives this week. I have lot's of dry powder left sitting in money market accounts earning just 0.75%. Bond ETFs were under heavy selling pressure today at exceptionally high volume. So were preferred ETFs but not to the same levels. Corporate note liquidation should continue over the next few days as these funds raise cash. Some of it started during the last two hours of trading today. I'm going to stay with 2-3 year durations for now. The yield curve is sinking deeper into inversion as the smart money is betting on an economic slowdown. The inflation talk will change to deflation later in the year as signs of an economic slowdown become more apparent.
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I've been following you on several threads and learned a lot about buying bonds. Thanks

I'm curious why only 2 -3 year notes and not 5 year bonds. I've been tracking some bonds (many you provided in another thread) and noticed some yields were starting to move nicely today.

Was thinking about getting some this week.

If we go into recession wouldn't that limit the rise in yields?
 
PFF fell to 15 in 2007-2009; it fell to 28 in April 2020 down to 32 today 35% on year. I am waiting for another 50% decline to 16 or else the inflation rate to reverse. WFC.PL one of the bellweathers I like to watch is now down to 1172 earning 6.40% yield for Wells Fargo. $1,000 is a nice target to begin accumulation. Interesting to see what the rest of the week brings. Nice thing about these declines from such a low interest rate environment is making calls on a purchase highly unlikely.

Be interesting to see if Japan gets blown up. That would be the first Central Bank failed monetary policy of the modern era for a top 5 country so I think that is more important this week than the FED meeting. As people can see the demand for bonds without Central Bank buying is not very high and I think we would quickly see 4-5% Fed yields without Central Bank intervention which just kills most of the buy customer companies.
 
Running_Man said:
PFF fell to 15 in 2007-2009; it fell to 28 in April 2020 down to 32 today 35% on year. I am waiting for another 50% decline to 16 or else the inflation rate to reverse. WFC.PL one of the bellweathers I like to watch is now down to 1172 earning 6.40% yield for Wells Fargo. $1,000 is a nice target to begin accumulation. Interesting to see what the rest of the week brings. Nice thing about these declines from such a low interest rate environment is making calls on a purchase highly unlikely.



Be interesting to see if Japan gets blown up. That would be the first Central Bank failed monetary policy of the modern era for a top 5 country so I think that is more important this week than the FED meeting. As people can see the demand for bonds without Central Bank buying is not very high and I think we would quickly see 4-5% Fed yields without Central Bank intervention which just kills most of the buy customer companies.
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As a side note, I would hate to do the math on govt debt increases if they have to finance at 5%-6%…. Something tells me servicing that debt would be a bit of a problem.
 
11522914 said:
I've been following you on several threads and learned a lot about buying bonds. Thanks

I'm curious why only 2 -3 year notes and not 5 year bonds. I've been tracking some bonds (many you provided in another thread) and noticed some yields were starting to move nicely today.

Was thinking about getting some this week.

If we go into recession wouldn't that limit the rise in yields?
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The bond market is already starting to discount a recession. This is why short term yields are moving higher than long term yields. The yields on corporate notes in the tracking list I provided in another thread are moving up as expected. The 2-3 year notes on the list at this time minimizes any downside and will rebound the fastest due to higher coupons and stay close to par as they approach maturity. There is nothing wrong with buying 5 years out but you really need the yield to compensate and they are not at this time. The Ally 5.75% 2025 notes broke below par today and I am watching that one closely as funds dump. My lowball order for that one did not fill today. With 2-3 year notes you really can't go wrong as it's much easier to see the forward risk and earning trends of a company 2-3 years out. The Verizon 2033 notes would be a buy if you can get a 9% YTM but that would be the longest duration I would buy and hold. Telecom companies are great for bond investors but lousy for equity investors. The well managed telecom companies are cash machines. People are not ready to give up their phones or the internet. I plan to add to my ladder as the year progresses.
 
Those holding SOHOB, SOHON or SOHOO.... looks like some (all) of the suspended dividend is about to be paid. Unclear how much "remaining proceeds" are from the sale, but someone brighter than I know that.

https://sotherlyhotels.com/press/so...igh-nc-hotel-partially-repays-corporate-debt/

06/14/2022
WILLIAMSBURG, Va., June 14, 2022 (GLOBE NEWSWIRE) — Sotherly Hotels Inc. (NASDAQ: SOHO) (the “Company”) announced that the Company has closed on the sale of the DoubleTree by Hilton Raleigh Brownstone in Raleigh, North Carolina for $42.0 million. A portion of the proceeds from the sale were used to repay the first mortgage and repay a majority of the Kemmons Wilson secured note. Remaining proceeds will be used to make any required distribution on the Company’s preferred stock related to maintaining the Company’s REIT status and for general corporate purposes.

“We are extremely pleased to complete the sale of the DoubleTree by Hilton Raleigh Brownstone,” noted Dave Folsom, Chief Executive Officer of Sotherly. “The $42.0M above-market price equaled approximately a 14.0x EBITDA multiple and a 6.2% cap rate on 2019 results. The sale represents a transformative event for the Company, as it significantly reduces mortgage debt, repays expensive corporate leverage, while simultaneously removing near term capex required for life cycle improvements at the hotel. These events are all major milestones in restructuring our balance sheet, as our portfolio continues its recovery from the pandemic. Further, in making these important balance sheet improvements, and by removing significant near-term capital outlays, the Company can focus on additional post-COVID efforts, including its accrued and unpaid preferred dividends. The completion of this transaction brings renewed optimism for Sotherly, and we look forward to the ongoing lodging recovery, its effect on our business, and improvements to the health of our balance sheet.”
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Well the water now seems to be muddied on the size of the Fed rate hike.

Which to means a lot of volatility. The rest of the week should be interesting.
 
The bond market has priced in a 75 basis point hike tomorrow already and a target Fed funds rate of 4.08 by May 2023 and then declining to 3.75 into August 2023. Some are calling for a 100 basis point hike. Rates have adjusted up already (treasuries, mortgage rates, loans) and are impacting the economy. Runaway home prices have started pulling back. Used car prices are falling. The crypto bubble has popped. However many stocks are still overpriced and yields on investment grade bond funds are not high enough relative to treasury yields. I'll just add to my bond ladder as we progress through the year focusing on the short end.
 
Trying to dip my toes into buying bonds/treasuries.

I just read that TD Ameritrade charges $25 for Treasury trades.
Bond trades are built into the spread.

Do other brokerages charge the same way for treasuries ?
 
pb4uski said:
^^^ +1 the only thing I have left is WTREP, which seems to be unsalable.

While it ws a good ride, the downdraft was more than I could bear. Actually, being out of internet service on a camping trip at the wrong time cost me a bit as well.

I'm dabbling a bit at writing OTM 2-week to one month puts on some dividend aristocrat or blue-ship stocks that I wouldn't mind owning at 20% below current trading prices. Thus far, it seems like a reasonable way to generate fixed income on dry powder.
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My position in WTREP was redeemed yesterday. Ride was good while it lastd but it was a bit annowing when it was delisted, so I'm fine with being out of it. It was my last preferred, but I may be looking to get back in later in the year.
 
pb4uski said:
My position in WTREP was redeemed yesterday. Ride was good while it lastd but it was a bit annowing when it was delisted, so I'm fine with being out of it. It was my last preferred, but I may be looking to get back in later in the year.
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My biggest sized preferreds were CNIGP, BKEPP, and WTREP. Two of the three have been redeemed in past week and the other likely next month.
 
Mulligan said:
My biggest sized preferreds were CNIGP, BKEPP, and WTREP. Two of the three have been redeemed in past week and the other likely next month.
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Preferreds have not all went down collectively. If you had term dated, call anchored, or some fixed to floats that are starting to floating you would have seen mostly positive gains. A couple worth watching with Libor exploding are CBKPP, CUBI-E, and CUBI-F. CBKPP after next payment goes floating for example with 4.55% adjustment plus Libor. Libor is already 2.4. So one could be looking at owning a 7% BBB+ rated Top 50 in world bank in terms of safety. And if they follow through with rate increases in could be pushing 8% if they dont redeem it. It stays near par because of call risk, but it can only be redeemed on payment date.
 
GEO bonds called

Just got notice my GEO are called: 36159RAG8 & 36162JAA4. Sweet deal @+2.5%. Maybe move it to CBKPP, need to check into that one.
 
Actually, the GEO conversion is NOT what I mention...if you have them check it out as its cash+notes etc.
 
Mulligan said:
Preferreds have not all went down collectively. If you had term dated, call anchored, or some fixed to floats that are starting to floating you would have seen mostly positive gains. A couple worth watching with Libor exploding are CBKPP, CUBI-E, and CUBI-F. CBKPP after next payment goes floating for example with 4.55% adjustment plus Libor. Libor is already 2.4. So one could be looking at owning a 7% BBB+ rated Top 50 in world bank in terms of safety. And if they follow through with rate increases in could be pushing 8% if they dont redeem it. It stays near par because of call risk, but it can only be redeemed on payment date.
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For those that have NSS its exploding next payment from 7.77% off par, to 9.24% off par…Sweet and thank you very much NuStar. The preferreds will be escalating shortly behind NSS in jumps. NSS jumped over a buck recently as I am sure buyers took notice. So I flipped out half with some profits and rolled it into the more maligned B series in the $20 to $20.18 range.
 
Grid, I am amazed at the NSS..why the high yield? Seems fairly safe from my research (just started it from your comment). I like the floating issues. But why has the market kept these as "stressed" yields? What am I missing? Thanks!!
 
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