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

[Born2Fish]

Mulli - would SLMBP be a good choice in my Roth IRA? TNCAF?

I am 80% cash since selling stocks in my ROTHs early 2022.

[Mulligan]

Quote:

Originally Posted by Born2Fish Mulli - would SLMBP be a good choice in my Roth IRA? TNCAF? I am 80% cash since selling stocks in my ROTHs early 2022.

Born, TNCAF would not be a good Roth choice. Mainly because Canada will most likely withhold 15% foreign dividend tax even though we have a tax treaty. And being there is an extra intermediary involved in the purchase everybody blames the other person. The 15% can be recaptured at tax filing but only in a taxable account. So I never put CAD issues in my Roth. I fought that battle several years ago and wont do it again.
Also another consideration is issues like TNCAF and SLMBP have very low adjustments attached to Libor. So the reason why they are high yielding now is because prices are well below par, and Libor is very high. If Fed ever starts cutting these could drop like a rock, so you have to stay on top of these.
If your Roth is “sacred” like I am with mine, you may consider a safer play. PLDGP is the only preferred from number 1 power house Prologis. It was issued in 1996, and its first call date is November 2026. Being its an 8.54% BBB+ rated preferred and Prologis has never ever issued another preferred this is likely a goner then. So at todays purchase of $54.90 and back out the $1.06 divi as it goes exD next week, this is about a 6.2% YTC. Technically its a perpetual but they will redeem it. They have bought back half the $100 million issuance over the years so there isnt but $50 million left. And it doesnt trade much but some entity is selling it off at that price.
Prologis has A rated debt and it has a small 13% debt to capitalization. Quality upon quality here. I have personally maxed out my position here. Its not a cap gain play really, just suck the yield out of it until they redeem it.

[Born2Fish]

Quote:

Originally Posted by Mulligan Born, TNCAF would not be a good Roth choice. Mainly because Canada will most likely withhold 15% foreign dividend tax even though we have a tax treaty. And being there is an extra intermediary involved in the purchase everybody blames the other person. The 15% can be recaptured at tax filing but only in a taxable account. So I never put CAD issues in my Roth. I fought that battle several years ago and wont do it again. Also another consideration is issues like TNCAF and SLMBP have very low adjustments attached to Libor. So the reason why they are high yielding now is because prices are well below par, and Libor is very high. If Fed ever starts cutting these could drop like a rock, so you have to stay on top of these. If your Roth is “sacred” like I am with mine, you may consider a safer play. PLDGP is the only preferred from number 1 power house Prologis. It was issued in 1996, and its first call date is November 2026. Being its an 8.54% BBB+ rated preferred and Prologis has never ever issued another preferred this is likely a goner then. So at todays purchase of $54.90 and back out the $1.06 divi as it goes exD next week, this is about a 6.2% YTC. Technically its a perpetual but they will redeem it. They have bought back half the $100 million issuance over the years so there isnt but $50 million left. And it doesnt trade much but some entity is selling it off at that price. Prologis has A rated debt and it has a small 13% debt to capitalization. Quality upon quality here. I have personally maxed out my position here. Its not a cap gain play really, just suck the yield out of it until they redeem it.

Mulli - thanks for the recommendation, I'm gonna grab a few shares!

[Mulligan]

Quote:

Originally Posted by Born2Fish Mulli - thanks for the recommendation, I'm gonna grab a few shares!

Did you get in, Born? There must have been a fund seller liquidating past week. I have watched this thing for years and years and rarely got a chance to buy at a respectable price. Typically it doesnt trade much at all and with wide bid/ask spreads when it did. Only about a million shares left and most are institutionalized. Its not a home run issue but a solid base hit up the middle income play.

[Born2Fish]

Quote:

Originally Posted by Mulligan Did you get in, Born? There must have been a fund seller liquidating past week. I have watched this thing for years and years and rarely got a chance to buy at a respectable price. Typically it doesnt trade much at all and with wide bid/ask spreads when it did. Only about a million shares left and most are institutionalized. Its not a home run issue but a solid base hit up the middle income play.

Yes, I bought a few shares!

Thanks for the recommendation.

[Sunset]

What are the thoughts on QRTEP ?

[Mulligan]

Quote:

Originally Posted by Sunset What are the thoughts on QRTEP ?

I dont for a hold. I made good money on these and sold out. But had no idea it would get this bad so quickly post covid. Their bonds are trading at over 20% last I looked.

[Winemaker]

I have some in my "speculative account"; but John Malone has many, many more in his regular account!

[Mulligan]

Quote:

Originally Posted by Winemaker I have some in my "speculative account"; but John Malone has many, many more in his regular account!

He has got dinged from his net worth, but not from his wallet as all of his preferreds were given to him. He didnt pay anything for them as the entire float was given to shareholders a couple years ago. That is part of the problem, Qurate gave some huge big ass one time cash payments to shareholders also instead of paying down debt or bolstering their balance sheet. Its like they are trying to drain all the cash out of it before it goes bankrupt.

[Sunset]

Quote:

Originally Posted by Mulligan He has got dinged from his net worth, but not from his wallet as all of his preferreds were given to him. He didnt pay anything for them as the entire float was given to shareholders a couple years ago. That is part of the problem, Qurate gave some huge big ass one time cash payments to shareholders also instead of paying down debt or bolstering their balance sheet. Its like they are trying to drain all the cash out of it before it goes bankrupt.

Do you think they are in danger of going BK ?

[Mulligan]

Quote:

Originally Posted by Sunset Do you think they are in danger of going BK ?

Their bonds are certainly trading as if there is a possibility. But I dont have any idea. They have big debt and declining revenues. That is not a good scenario so they need to get er going and soon. Look at this bond.. An 8.25% par 2030 maturity issue. Its trading at $44 and a YTM of over 25%. That is huge! If I had to play, I would rather take the risk of the bond. But Im not playing.

https://finra-markets.morningstar.co...l=QRTEA3695898

[Texas Proud]

Wow, just found out that my PYS was exchanged... with no notice to me...


And the date shown was early Nov but mine in VG is Dec 15th...


Got them cheap so yield is almost 9%... might hold to maturity and hope hey do not go under...

[Mulligan]

Quote:

Originally Posted by Texas Proud Wow, just found out that my PYS was exchanged... with no notice to me... And the date shown was early Nov but mine in VG is Dec 15th... Got them cheap so yield is almost 9%... might hold to maturity and hope hey do not go under...

Texas they busted up the trust and just released the debt inside trust to shareholders. I dont know the reason though. Speaking of trust debt, I just bought some today off the bond desk. And old Dayton Power and Light hold co trust debt issued in 2001 and matures in 2031 at a 8.45% YTM.

[copyright1997reloaded]

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Originally Posted by Mulligan Texas they busted up the trust and just released the debt inside trust to shareholders. I dont know the reason though. Speaking of trust debt, I just bought some today off the bond desk. And old Dayton Power and Light hold co trust debt issued in 2001 and matures in 2031 at a 8.45% YTM.

From Quantum Online:

Quote:

Notes: November 03, 2022 -- The New York Stock Exchange (“NYSE”, the “Exchange”) announced today that the staff of NYSE Regulation has determined to commence proceedings to delist the PPLUS Class A 6.30% Callable Trust Certificates (“Certificates”), Series RRD-1 (Issued by R.R. Donnelley & Sons Company) of Merrill Lynch Depositor, Inc. (“Depositor”) — ticker symbol PYS — from the NYSE. Trading in the Depositor’s Certificates will be suspended immediately. NYSE Regulation has determined that the Depositor’s Certificates are no longer suitable for listing pursuant to Section 802.01D of the Listed Company Manual since they ceased to represent anything other than a right to a redemption in kind in connection with termination of the trust.

Can you expand on what you purchased today?

[Texas Proud]

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Originally Posted by copyright1997reloaded From Quantum Online: Can you expand on what you purchased today?

Yea, I saw that.... but am upset that I got nothing from VG that it was happening... did not find out till yesterday looking at my holdings and wondering why I had bonds... also, they date VG has the exchange is 12/15


If I knew they were breaking up the trust I might have sold... now will likely hold to maturity

[Mulligan]

Quote:

Originally Posted by Texas Proud Yea, I saw that.... but am upset that I got nothing from VG that it was happening... did not find out till yesterday looking at my holdings and wondering why I had bonds... also, they date VG has the exchange is 12/15 If I knew they were breaking up the trust I might have sold... now will likely hold to maturity

Bonds were inside a trust. Apparently the trust was dissolved and the trust owners actually received the bonds. These trust type things were set up for tax reasons back in the day. But tax laws dont seem applicable anymore to creating them.

[copyright1997reloaded]

So I've picked up/at
JPMpM
SLMBP
CTApA
SRpA
all of which (except for perhaps the Sallie Mae Floater) I would likely buy more if their prices fall (higher yields).

Anything else that has gotten more enticing in the last few weeks? I am doing this mostly in conjunction with a lot of T-Bills to slightly juice my sort-a-fixed returns, hopefully without getting hammered on the risk front.

I have a 3% loss on the JPM preferred, 1.5% loss on Spire, 1.4% gain on the Dow/Dupont/Whatever it came from (CTApA, funny I owned both Dow and Dupont before they merged), 1.2% loss on the Sallie Mae. None of these losses bother me in the least as I am slowly accumulating, and even able to occasionally get a slightly underwater bid filled (e.g. Spire @22.58 near 4PM on Friday).

[bobandsherry]

Quote:

Originally Posted by copyright1997reloaded So I've picked up/at JPMpM SLMBP CTApA SRpA all of which (except for perhaps the Sallie Mae Floater) I would likely buy more if their prices fall (higher yields). Anything else that has gotten more enticing in the last few weeks? I am doing this mostly in conjunction with a lot of T-Bills to slightly juice my sort-a-fixed returns, hopefully without getting hammered on the risk front.

Recent adds for me.....

I've sunk a hook lately into EP-C. Trad 10% below par ($50 par). 4.75% coupon, current yield is 5.3%. Matures 3/2028, YTM is 7.35% for 5 year hold.

TDS-V and TDS-U beat down recently, well below par, both now with 11%+ yield has enticed me to give it a nibble.

Also took a bite of BML-J. It's a floater, 3ML + .75%. With 3ML at 4.75% this week, looking at a decent rate reset next dividend payment. It has a floor of 4%, so at $19 current price it's a worse case of 5.25% yield.

Good luck with your investments in the new year.

[Mulligan]

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Originally Posted by bobandsherry Recent adds for me..... I've sunk a hook lately into EP-C. Trad 10% below par ($50 par). 4.75% coupon, current yield is 5.3%. Matures 3/2028, YTM is 7.35% for 5 year hold. TDS-V and TDS-U beat down recently, well below par, both now with 11%+ yield has enticed me to give it a nibble. Also took a bite of BML-J. It's a floater, 3ML + .75%. With 3ML at 4.75% this week, looking at a decent rate reset next dividend payment. It has a floor of 4%, so at $19 current price it's a worse case of 5.25% yield. Good luck with your investments in the new year.

I dont own EP-C currently but own issues like it (decent YTM with maturities in that 2028 ish range). Dont have enough money to buy everything I like unfortunately.
You are playing different angles like I am. Term, floaters, and perpetuals.
I tend to think I own about a 100 preferred issues or so. But just presently only have cash in less than 20. As I rotate around on price movements. Starting the 2023 NY out I have rotated some things.
Floaters.. ALL-B just starting to float next payment around 8%, SLMBP, NSS, NS-B, TNCAF… Those are moving into the 10%-12% range
Perpetuals CTA-B, UEPEO, AILLM, MAA-I (its most likely being redeemed 2026) CEQP-, BIPI, BEPH, SCE-L, SOCGM, EIX 5.375% reset
Term.. HROWM, KTH, LTSH.
I own some bonds now also. Even cheated for yield with more elevated risk buying 2031 SJI subordinated debt of about 8.7% YTM and an old 2031 Dayton Power and Light hold co issue with a 8.45% YTM. Even those these are bond desk issues I consider them preferreds for their low cap stack slot.
Copyright, Im thinking hard about getting back into SR-A myself too. But if I bring something in, somethings gotta go or be trimmed. So that makes it harder!

[bobandsherry]

Quote:

Originally Posted by Mulligan I dont own EP-C currently but own issues like it (decent YTM with maturities in that 2028 ish range). Dont have enough money to buy everything I like unfortunately. You are playing different angles like I am. Term, floaters, and perpetuals. I tend to think I own about a 100 preferred issues or so. But just presently only have cash in less than 20. As I rotate around on price movements. Starting the 2023 NY out I have rotated some things. Floaters.. ALL-B just starting to float next payment around 8%, SLMBP, NSS, NS-B, TNCAF… Those are moving into the 10%-12% range Perpetuals CTA-B, UEPEO, AILLM, MAA-I (its most likely being redeemed 2026) CEQP-, BIPI, BEPH, SCE-L, SOCGM, EIX 5.375% reset Term.. HROWM, KTH, LTSH. I own some bonds now also. Even cheated for yield with more elevated risk buying 2031 SJI subordinated debt of about 8.7% YTM and an old 2031 Dayton Power and Light hold co issue with a 8.45% YTM. Even those these are bond desk issues I consider them preferreds for their low cap stack slot. Copyright, Im thinking hard about getting back into SR-A myself too. But if I bring something in, somethings gotta go or be trimmed. So that makes it harder!

My holding different types of issues may have been influenced by following some of those I feel are knowledge in these preferred issues. [emoji12]

I would buy SLMBP, but both Fido and E-Trade won't allow it to be bought online, have to call in to trade. Not worth the hassle to deal with that when other good options.

Yeah, NSS-B is another good one with yield, but been holding that for a while so it wasn't something new that enticed me. That floating rate enticed me a while back. [emoji39]. Also have been holding CEQP- for a long time now, getting in on the big dip a couple years ago. That has done very well. Recent small dip (relatively speaking) has me thinking of taking a bigger bite though.