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

[bobandsherry]

^^^ I read it as being revised quarterly. IOW, on Apr 15, 2023 we'll get interest for Jan 16, 2023 to Apr 15, 2023 based on three-month libor on Jan 15 2023 plus 3.175% and that on July 15, 2023 we'll get interest for Apr 16, 2023 to Jul 15, 3023 based on the Apr 15, 2023 libor plus 3.175%, etc.

I'm doubting this remains outstanding until July, but unless something changes the 3ML rate ceases as of June 30, 2023. So the July reset rate and future will be different. SOFR to replace but haven't seen any official on how that will be adjusted. Current 3MS is 3.81 while 4.81. Something to be aware of with any issues resetting with 3ML.

 

[pb4uski]

Yes, I was aware that 3ML was being replaced but didn't want to make the explanation more complicated than necessary.

 

[Mulligan]

I'm doubting this remains outstanding until July, but unless something changes the 3ML rate ceases as of June 30, 2023. So the July reset rate and future will be different. SOFR to replace but haven't seen any official on how that will be adjusted. Current 3MS is 3.81 while 4.81. Something to be aware of with any issues resetting with 3ML.

What was proposed I have seen is 3 month TERM SOFR. This is different and higher. Its supposed to be 3 MT Sofr which is about 4.6 plus a 26 bps additional adjustment. So its been pretty tight with 3 ML. Im with PB and think it wont be long for life. Allstates preferreds are sub 6% and their debt even lower. They have options if they wish to pursue. Im treating it as a HY ST own. Milk it while I can.

https://www.cmegroup.com/market-data/cme-group-benchmark-administration/term-sofr.html

 

[bobandsherry]

What was proposed I have seen is 3 month TERM SOFR. This is different and higher. Its supposed to be 3 MT Sofr which is about 4.6 plus a 26 bps additional adjustment. So its been pretty tight with 3 ML. Im with PB and think it wont be long for life. Allstates preferreds are sub 6% and their debt even lower. They have options if they wish to pursue. Im treating it as a HY ST own. Milk it while I can.

https://www.cmegroup.com/market-data/cme-group-benchmark-administration/term-sofr.html

Thanks Mulli. I figure they'll need to make it somewhat equivalent, at least from the inception. If ST hold that's fine, if not that's fine too. [emoji39]

 

[Mulligan]

Thanks Mulli. I figure they'll need to make it somewhat equivalent, at least from the inception. If ST hold that's fine, if not that's fine too. [emoji39]

Bob this stuff is all kind of iffy though. This substitute is supposed to give legal cover for Libor based contracts that dont have a back up. This issue ultimately has a back up….Last reported Libor rate. That would make it essentially fixed when Libor ceases. I have no idea if it gets converted, follows “last reported Libor”, or just gets redeemed before it even happens. I really havent heard any company saying anything about their Libor issues yet.

 

[copyright1997reloaded]

Mulligan - just wanted to thank you for the Spire 5.9% Pr A recommendation. I started to leg in on this 12/13 @ 23.12 and got some as low as $22.58. Yesterday, I trimmed some at $25.08, mostly because of a bird in the hand philosophy.

 

[Mulligan]

Mulligan - just wanted to thank you for the Spire 5.9% Pr A recommendation. I started to leg in on this 12/13 @ 23.12 and got some as low as $22.58. Yesterday, I trimmed some at $25.08, mostly because of a bird in the hand philosophy.

Congrats, I was about to pull plug where you did and got greedy and it shot back up. Dont blame you for trimming. Its above par and trading where it was issued yet rates are considerably higher.

 

[G-Man]

Is it late to get into ALL-B? Would ALL-B be a better option in my Fidelity cash management account. Currently I have $35K invested in Fidelity Money Market fund SPRXX.

 

[Mulligan]

Is it late to get into ALL-B? Would ALL-B be a better option in my Fidelity cash management account. Currently I have $35K invested in Fidelity Money Market fund SPRXX.

It ended 25.10 today. May watch and see if it sags. It will pay almost a 50 cent interest payment after going exD end of March… If its not redeemed. If 30 day call notice went out tomm, one would get around 17 cents.
Its a hard comparison because it depends on if or when Allstate redeems. Plus ALL-B is exposed to market risk which a money market is not. Sorry I dont have a good answer.

 

[Phroig]

SOFR seems to about a percent lower than LIBOR. C and GS also have some preferreds that will float later in the year. Some of these issuers could be speculating that SOFR/LIBOR will head back down if we go into a recession. I think both were under 1% less than a year ago.

Of course if rates fall, prices will rise, but in that case, the fixed-rate preferreds might be more attractive.

 

[Mulligan]

SOFR seems to about a percent lower than LIBOR. C and GS also have some preferreds that will float later in the year. Some of these issuers could be speculating that SOFR/LIBOR will head back down if we go into a recession. I think both were under 1% less than a year ago.

Of course if rates fall, prices will rise, but in that case, the fixed-rate preferreds might be more attractive.

Remember its 3 month TERM SOFR. Presently its 4.65% plus there is a 26 bps adjustment. At least that is what is proposed.

https://www.cmegroup.com/market-dat...MI3qzXjZ7X_AIV5IFbCh0T0wbyEAAYASAAEgKpf_D_BwE

 

[Born2Fish]

Mulligan - PLDGP down a little after earnings.

OK to add more or just hold for the nice Div?

Do you have a buy point?

 

[Mulligan]

Mulligan - PLDGP down a little after earnings.



OK to add more or just hold for the nice Div?



Do you have a buy point?

I have already sold which I bought MAA-I and then sold it. With PLDGP at current price its about 5% YTC. There just isnt a lot of upside here. But that is a personal preference. One can get 4.7% one year CDs. My personal preference is to scratch out more yield, but there is no right or wrong, just what your expectations and goals are owning.

 

[perrytime]

Purchased AQNU, a callable preferred for Canadian utility, AQN. Issued at $50, but sank with the price of AQN, 13% yield. From what i read AQN may have some volatility yet, but for next 12 months I will take the div and watch closely. Anyone else have thoughts.

 

[tutan]

It's a mandatory convertible with some convoluted terms IMHO. I got lost real quick reading the following from quantumonline.com:

"The stock purchase contract requires the holder to purchase for $50 a variable number of shares of Algonquin Power & Utilities Corp. (NYSE:AQN) common stock no later than 06/15/2024 and pays a contract adjustment rate of 6.57% per annum. The stock purchase settlement rate will be 2.7778 shares per unit if the then current market price is equal to or greater than $18.00 and 3.3333 shares per unit if the market price is equal to or less than $15.00. For market prices between those values the settlement rate will be $50 divided by the market value. Prior to the IPO of this security, the last reported sale price of the common stock on 06/15/2021 was $16.08 per share. The stock purchase contract may be settled any time at the holder’s option and the company will deliver 2.7778 shares of common stock for each purchase contract."

I wouldn't want common shares most of the time if I buy the preferreds.

 

[jim584672]

WFC-PL down to 1,090, -83. Bargain?

 

[bmcgonig]

WFC-PL down to 1,090, -83. Bargain?

Lots of preferred stocks down this morning. Hmmm.

 

[Winemaker]

WFC-PL down to 1,090, -83. Bargain?

I bought some at a little bit higher price today. DCAing.

 

[Free To Canoe]

cubif down 36% today. I bought some.

 

[Texas Proud]

cubif down 36% today. I bought some.

WOW.... must like them a lot...


Banks seems to be missing on their earnings...

 

[copyright1997reloaded]

Bought some Shire Pr A that I had sold a while back.

 

[ownyourfuture]

Lots of preferred stocks down this morning. Hmmm.

I'll say. My preferred ETF is down 5.80%

 

[copyright1997reloaded]

cubif down 36% today. I bought some.

Glad (so far) you mentioned this. I bought some CUBI Pr F @ 16.80, up 7% from then (as of now).

 

[Mulligan]

Bought some Shire Pr A that I had sold a while back.

Did you mean Spire, SR-A? I just recently reentered in 23.20s myself. Today I bought CMSD at $22.24 when it dropped for some odd reason hard, despite common was up strongly today. My walk on the wild side purchase was some NYCB-U at various purchases at $35.70 today.
Past 3 months I have been mostly buying more and more CDs, some bonds, a few TBills, and yearly IBond allotment. I would say about 70% of my money is there, maybe 30% preferreds but a lot of that is also baby bonds and ultra safe GBIL.

 

[Hamster]

Glad (so far) you mentioned this. I bought some CUBI Pr F @ 16.80, up 7% from then (as of now).

Got some Monday at 9.50, some at 9.75 and some at 11.75. Interesting to see what it does today.