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

[Mulligan]

Quote:

Originally Posted by Coolius pb, Call risk is exceptionally high with this issue, I expect a call soon. It is way past FC, recent rumblings out of the company have raised call concerns. I do not know the exact details, but Mulligan is usually on top of these things, so I hope he will chime in and provide the details. It closed at $25.30 today, buying at this level is not a risk as accrued interest already baked in provides a gain ( although minuscule ) even if called tomorrow. I do not expect it to remain outstanding much longer, but maybe, just maybe, if they decide to push out the call for a quarter or two.....who knows?

Coolius, geez I got an assload of this one today. But I have been in and out of this one since probably around 2014 or so. I bought around 25.37, then a bunch at 25.07 and again at 25.13.
The reason for call risk is this...This did a recent secondary common offering for about $50 million. They said it was for future acquisitions, but also was generically stated it could be used to redeem debt and or preferreds. The preferred is only about $4 million. Its genesis was cash raised to fight NorFork Southern (I think that is the RR they lease line to) a legal battle and break the perpetual lease (it failed). The company has went from a sleepy rail line reit, to some solar farms, and now big into pot land to grow weed. The common stock has just exploded...
If by some miracle its not redeemed I will lighten my load when it drifts up. This has been on stable preferred. While most preferreds were crashing 50-75% briefly in March, this one barely and briefly drifted below par to around $24.
About 10% of the float has rolled the past 2 days. Someone is getting call antsy dumping especially down at $25.07 as that was a flat giveaway to me.

[Mulligan]

Now is the time to be careful with rising rates. Typically lower yielding IG issues get the heat first. I have been the past month or so drifting into higher yielding issues and ones that should have been called but havent...Such as UZA, TDE... Others such as PW-A, ABR-A and shorter duration notes such as SCCC and SESCF. Some I own especially some illiquids, I will just bite bullet and let them drop if they do..So be it, I will use divis to buy more lower. I cant drift totally to other end of credit risk to overly protect capital erosion from dropping prices from higher interest rates.

[pb4uski]

I don't look at my preferreds very often, but Mully's post above caused me to. Altagas ALTGF and Enrbridge EBBNF both had big gains today... 3.50% and 2.86% respectively. But why?

They had taken a beating back in the spring when the SHTF but have recovered and are now both at nice gains.

[Mulligan]

Quote:

Originally Posted by pb4uski I don't look at my preferreds very often, but Mully's post above caused me to. Altagas ALTGF and Enrbridge EBBNF both had big gains today... 3.50% and 2.86% respectively. But why? They had taken a beating back in the spring when the SHTF but have recovered and are now both at nice gains.

PB, Because these trade “anti” to fixed perpetuals. When expectations of higher interest rates happen these will rise. And when rates are dropping they fall. I just sold the only one I had a day or two again. It popped 20% in two months so I took the money and ran, lol.

[bobandsherry]

Heads Up on Golar LNG Partners

I saw a pop in my GMLPP today, up 12% (yahoo!).... saw this news:

MW New Fortress Energy to acquire Hygo Energy Transition and Golar LNG Partners in $5 billion combined deal

Quote:

New Fortress Energy Inc. (NFE) said Wednesday it has agreed to acquire Hygo Energy Transition Ltd. and Global LNG Partners LP (GMLP) in a combined deal valued at $5 billion. The deal will make New Fortress the leading gas-to-power company in Brazil, the company said in a statement. Hygo is a 50-50 joint venture between Golar LNG Ltd. (GLNG) and Stonepeak Infrastructure Fund II Cayman Ltd., a fund managed by Stonepeak Infrastructure Partners. "The addition of Hygo will quickly expand our footprint in South America with three gas-to-power projects in Brazil's large and fast-growing market," New Fortress Energy Chief Executive Wes Edens said in a statement. "With GMLP, we gain LNG ships and world-class operators that are an ideal fit to support our existing terminals and robust pipeline." Under the terms of the deal, New Fortress will acquire all of Hygo's shares for 31.4 million of its own shares, pulse $580 million in cash. That deal has an enterprise value of $3.1 billion and an equity value of $2.18 billion. GLNG will receive 18.6 million New Fortress shares plus $50 million in cash, while Stonepeak will receive 12.7 million New Fortress shares plus $530 million cash. The deal is expected to close in the first half. In the case of Golar LNG Partners, New Fortress will pay $3.55 per common unit is cash, in a deal with an enterprise value of $1.9 billion and an equity value of $251 million. That deal is also expected to close in the first half. New Fortress shares were up 2.7% premarket, while Golar LNG was up 15% and Golar LNG Partners shares rose 16%

[brokrken]

Finally got my head above water on SPLP-A with the pop today. So, I dropped them. Overall not a bad investment. Got that 30% put at par a while back (which was the reason for buying), made the divies (including that 1 we got in shares) and sold out at a slight gain.

Also on PBI-B, I'm sitting on nearly 3 years worth of divies in cap gains, so I have an ask out there and we'll see if anyone grabs it.

Not so worried right now about where to put the proceeds as I expect we'll have plenty of opportunities in the next 6-12 months.

[Sunset]

So how do other people feel about SPLP-A.
I was certainly peeved at the time they did the share distribution for a dividend.
But I still like the ~7% dividend rate (when paid in cash)

Is this an opportunity to get out, or is it pretty safe and maybe even will be called in 2026 for a nice price pop

[brokrken]

Quote:

Originally Posted by Sunset So how do other people feel about SPLP-A. I was certainly peeved at the time they did the share distribution for a dividend. But I still like the ~7% dividend rate (when paid in cash) Is this an opportunity to get out, or is it pretty safe and maybe even will be called in 2026 for a nice price pop

It actually matures in ‘26, not just callable.

[pb4uski]

Quote:

Originally Posted by Sunset So how do other people feel about SPLP-A. I was certainly peeved at the time they did the share distribution for a dividend. But I still like the ~7% dividend rate (when paid in cash) Is this an opportunity to get out, or is it pretty safe and maybe even will be called in 2026 for a nice price pop

I dunno... fool me once, shame on you, fool me twice, shame on me.

[Mulligan]

Congrats Bob and Ken. Everything appears to be going well in preferred land or at least the ones I monitor.
I just havent followed Steel Partners enough the past couple years to offer anything.
CNIG has an offer to be bought out at $24.50 which made the preferred CNIGP worth $29.70, plus a couple or three more dividends in addition while waiting for regulatory approval. I missed my chance to load up as I went golfing. But market wasnt totally aware of the 1.2 conversion multiplier so I bought a slug Thursday at $27. Approvals on this will be a breeze so it should be easy money hold for me. They do have a 45 day shop window so if someone offered more then the return would be even better.

[Coolius]

Count me among the ignorant masses who had no idea of CNIGP 1.2 multiplier. In fact, I was not even aware of the existence of a multiplier, LOL.


I own the non-convertible issue CNIGO, which has come down a bit since the news. Not that it matters, I fully intend to hold until maturity date of 9/2023.


Hats off to Mulligan for being so on top of things, and a well deserved profitable trade.

[Mulligan]

Coolius, I think CNIGO is redeemed at acquisition date.

[Coolius]

Mul, you are correct! yet another indication of my advancing age
CNIGO is not callable until maturity date, in Sept 2023


Heck, I don't trust myself to remember such things anymore, sigh....

[Mulligan]

Quote:

Originally Posted by Coolius Mul, you are correct! yet another indication of my advancing age CNIGO is not callable until maturity date, in Sept 2023 Heck, I don't trust myself to remember such things anymore, sigh....

Inspy, Just be careful with the number button punching when you get older. My dad was trying to buy some IPWLK 5-6 years ago, while I was visiting. And buy order wasnt going through and he didnt know why...I looked and said, “Dad it isnt going through because you are trying to buy $5 million dollars worth of it. You dont even have a million in the account.” Too many zeroes, lol.

[CoolChange]

Quote:

Originally Posted by Sunset So how do other people feel about SPLP-A. I was certainly peeved at the time they did the share distribution for a dividend. But I still like the ~7% dividend rate (when paid in cash) Is this an opportunity to get out, or is it pretty safe and maybe even will be called in 2026 for a nice price pop

I have decided to hold my nose and [hopefully] keep collecting the dividend on this one until it matures, unless I see some kind of huge pop where it starts trading at or above par for some reason.


It's not exactly a sleep easy holding; but, the risk/reward until maturity seems reasonable to me.

[Born2Fish]

HTLFP down ~5% today. Anything up or just folks flipping?

[pb4uski]

Dunno... but it was up sharply yesterday.

[youbet]

pb4uski mentioned TVC and TVE on another thread prompting me to check 'em out. My reading left me with a question. It looks like the annual interest rate reset that occurs every spring can only move in one direction: down. Once a lower rate is set, it can move still lower but never reverse and head back up. Do I have that right?

[pb4uski]

Yes, that's what it looks like to me, but if you don't like that lower reset rate you can opt out at $25.

Quote:

...the Coupon Rate will be reset to a lower rate, if on the Calculation Date the 30 Year Constant Maturity Treasury rate (CMT) plus 0.84% is lower than the Coupon Rate in effect on the Calculation Date. If the Coupon Rate is reset to a lower rate, the holder can put (return) any or all of their Bonds to TVA and receive $25 for each Bond they put. ...

It looks like the next reset will be at the current 2.134% for TVC and 2.216% for TVE rate unless the index rate decreases dramatically between now and May 1.

[Mulligan]

Quote:

Originally Posted by pb4uski Yes, that's what it looks like to me, but if you don't like that lower reset rate you can opt out at $25. It looks like the next reset will be at the current 2.134% for TVC and 2.216% for TVE rate unless the index rate decreases dramatically between now and May 1.

There usually is a window time if it resets lower. If it doesnt have a lower reset you get no option to put it back. There definitely is no higher reset to the issue.