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

[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]

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]

Splp-a

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.

...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]

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.

 

[pb4uski]

Yup, it looks like holders had about 3 weeks the last time there was a downward reset.

...TVA announced on April 29, 2020 that the coupon rate on the TVA 1998 Series D (NYSE: TVC) PARRS bonds (CUSIP number 880591300) will be reset from the current rate of 3.550% to the new rate of 2.134% beginning on June 1, 2020. Investors who wish to exercise a put option and return their bonds must contact their financial institution and complete repayment arrangements with the Depository Trust Company no later than Friday, May 22, 2020.

TVA will pay $25 for each bond properly put in addition to the standard quarterly dividend payment occurring on June 1, 2020.

 

[youbet]

Yes, that's what it looks like to me.

Hmmmm...... I'm trying to get my head around the consequences of that policy. So, you buy when the CMT is 5% and your yield is about 5.9%. Then you ride it down to CMT = 2% and your yield is approximately 2.9%. Then CMT goes back up to 5%, but you stay at 2.9%. That doesn't sound like much fun.

I guess being able to put the shares at par if there is a reset is the mitigating factor.

 

[Mulligan]

Hmmmm...... I'm trying to get my head around the consequences of that policy. So, you buy when the CMT is 5% and your yield is about 5.9%. Then you ride it down to CMT = 2% and your yield is approximately 2.9%. Then CMT goes back up to 5%, but you stay at 2.9%. That doesn't sound like much fun.

I guess being able to put the shares at par if there is a reset is the mitigating factor.

You have to remember this issue originated in the late 1990s. Who woulda thunk the interest rate cycle would have came to where we were from the 1990s? This issue has no interest level to me at this point.

 

[pb4uski]

It doesn't to me either other than I was thinking of it as a possible substitute for CD money... TVE has negligible credit risk as it is rated Aaa by Moody's and AA+ by S&P and pays over 2.216% for TVE and matures on May 1, 2029.

So if someone had CD money maturing then TVE @ $25.67 if held to maturity on 5/1/29 yields ~1.90%... better than a ~1.25% for a 9 year CD.

Downside is that the exit value between now and May 1, 2029 may be more or less than what you paid.

But even if you were paid the divvides for 5 years and were able to exit at $25 it would be a 1.68% return and much better than 0.5% for a 5-year CD.

If rates decline and you don't like the new rate then you can put it to the issuer at $25.

 

[tizod]

Folks, this might help some of you looking to move money out of the crazy market but not willing to get almost zero return of CD's. I went to QuantumOnline (please donate if you use it as I do...hate for Quantum to ever go away!) and screened the lowest coupons with the assumption a low risk stock at or under par has to have a low coupon. I then trashed everything but utilities. Ended up here, VERY ILLIQUID and hovers around 3-4% but at or below par: HAWLM, AILLO, IPWLO, CNLTL,WELPP, NMPWP. I have not got them all, but await as rates might tick up thus lowering the price. I also did add some Seaspan bonds discussed earlier. These are, of course, thinly traded and there are some sister offerings from the same groups. For some of these they have been trading for over 20 years. In the world of low rates I'm figuring these are in the safest range and might stay another 20 years even at zero interest...or called at par.

 

[youbet]

Mulligan - pb4uski: Thanks for the comments and explanations.

 

[aja8888]

EP/PRC up 9+% today.....

 

[Mulligan]

Folks, this might help some of you looking to move money out of the crazy market but not willing to get almost zero return of CD's. I went to QuantumOnline (please donate if you use it as I do...hate for Quantum to ever go away!) and screened the lowest coupons with the assumption a low risk stock at or under par has to have a low coupon. I then trashed everything but utilities. Ended up here, VERY ILLIQUID and hovers around 3-4% but at or below par: HAWLM, AILLO, IPWLO, CNLTL,WELPP, NMPWP. I have not got them all, but await as rates might tick up thus lowering the price. I also did add some Seaspan bonds discussed earlier. These are, of course, thinly traded and there are some sister offerings from the same groups. For some of these they have been trading for over 20 years. In the world of low rates I'm figuring these are in the safest range and might stay another 20 years even at zero interest...or called at par.

Tizod, most of those you mentioned above were issued in the 1940s and 1950s. So they have definitely been around longer than 20 years. They are what you would call “veteran preferreds”, lol...

Aja, I saw that but was out of them...Are you ringing the bell on a sale?

If you want a “nickel stacker” try to get in on HLM- at $25.25 or below. This is getting redeemed per SEC filing prior to merger which is anticipated to be in second quarter sometime. Pays almost 25 cents monthly. So if bought at above price, it only has to survive until March 1 to break even then its money good until redemption. It is presently not on 30 day call notice yet. I bought some at $25.25 today.

 

[aja8888]

.

Aja, I saw that but was out of them...Are you ringing the bell on a sale?

No, I was on the golf course all day today and the market was closed when I saw this. I'll ring the bell in the morning if it's still at $54.

 

[Mulligan]

No, I was on the golf course all day today and the market was closed when I saw this. I'll ring the bell in the morning if it's still at $54.

Thats a great excuse! Been too cold here this week. Hoping for 45 degrees plus next week to get out again and play with the group.

 

[Born2Fish]

EP/PRC up 9+% today.....

Thanks for the heads up on EP-C.

 

[aja8888]

Thanks for the heads up on EP-C.

Jump on it.Up about two years worth of dividends above par. Buy it back under $50 later.

I just sold all I had @$54.40.

 

[aja8888]

Thats a great excuse! Been too cold here this week. Hoping for 45 degrees plus next week to get out again and play with the group.

We have been having highs of 75 F making golf days a pleasure. Dress for 45 F but have fun out there.

 

[Freedom56]

Get your buy list ready... We may see the bubble pop soon which will bring fixed income securities down just like last March. Reddit traders are playing a game of chicken with short sellers causing valuations of near bankrupt to astronomical valuations. This will not end well for many.

 

[aja8888]

Get you buy list ready... We may see the bubble pop soon which will bring fixed income securities down just like last March. Reddit traders are playing a game of chicken with short sellers causing valuations of near bankrupt to astronomical valuations. This will not end well for many.

Looks like the hedge funds are going to close out their GME shorts at high prices if this Reddit "attack of the Kids" makes it through Friday expiration. Other highly shorted stocks are being pumped up too (BB, AMC, etc).

I'd like to see my preferreds pull back below par so I can load up on some more.