Preferred Stock Investing-The Good , The Bad and The In Between 2015 - 2020

[pb4uski]

Theoretically yes, but as a practical matter perhaps not.

 

[Mulligan]

At the core of my question is whether I should be willing to pay any sort of premium for a cumulative preferred over a non-cumulative. While it is not a huge factor, I think it is even less so for REIT preferreds.

It depends, and I need the odds tilted my way to do it, but I do it often as trades. Here was a post a made in another forum to kind of show.
I will use two example this past quarter…OSBCP and AILLL… OSBCP tanked about 6 weeks ago apparently on a CEO CC that they may look at redeeming issue (something they have said 3 years ago, and he also stated they are looking to acquire a bank before redeeming as a first priority). So I loaded up on the 40 cent drop and bought up on dump at $10.25…Then a few weeks later I sold them all around 10.60 on a liquid day. Then I bought back at a less amount of shares at 10.49 and sold back at 10.60… Then I repurchased again at 10.52… Then today I sold them at 8 cent higher ave and then turned around this afternoon and bought them all back at 10.51-52.
So I have 54 cents of gains on a 19 cent divi, plus I am still going to get the interest payment, never missed getting it. One has to be willing to let an issue go if it gets away from you. But, Im like Mr. Lucky, there is always something on my rotation list I can move too. But doing these trades mitigates the call risk loss. I have been fortunate to never been smacked with a call. But I mitigate the risk by playing in ones that have compelling reasons not to be called. This helps tilt the playing field in ones favor.
I just dont buy and hold above par, past call issues generally. Even AILLL though it is harder. I have been able to buy and sell my 1000 shares at 27.20 and under and sell at 27.40. Plus I got them back last week again and will also collect the divi when it goes exD in a few weeks. At this point I will hold unless someone wants to pay $27.70 or more then I would sell. In this case this preferred moves in a narrow range, but in essence juice a 6% er into a 12% er on trades like these.

 

[brokrken]

I have been fortunate to never been smacked with a call.

You didn’t get caught holding GWSVP with the rest of us a while back?

 

[Mulligan]

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

You didn’t get caught holding GWSVP with the rest of us a while back?

No I was out of that too. I remember someone on another site getting people out before the loss. But I think I was already long out. I bounced in and out a few times, never holding very much. I never was comfortable owning that issue as I dont like companies that always lose money on paper. I know it was depreciation and such, but I generally like my GAAP profits. I just dont bother mentioning because I rotate so often. And GWSVP was like OSBCP...Im in it, Im in it...Then Im flippin and flippin, and then price gets away from me and then Im out for months or even a year before I can get back in. Or the hard cold realities of Im not a rich guy, and a better buy pops up. Well something has to be sold then to cover the trade, so they fly out the door for that reason too.

 

[Mulligan]

You didn’t get caught holding GWSVP with the rest of us a while back?

Ken, I got a lucky trade yesterday. A while back someone stole 200 of my 1000 shares of my CNIGO when I was playing lead bid and ask to smoke out some shares. So I waited until issue was dead to try the same trick now just to get those 200 back.
The process went on for several days and I noticed at market close when my $27 ask expired a 100 share tracer ask of $27 remained. Then market would open with it and then disappear 2-3 minutes after open...Odd, well I didnt let that happen yesterday and didnt put my ask out and jumped on it getting 200 at $27. Next thing you know someone paid $50 for 25 shares. I quickly put out an ask of $33 out for 200 and 100 were bought instantly, and them that was it.
I think some entity was trying to get back what wasnt meant to be sold. As this wasnt someone like us buying them. Very odd but the quickest $600 I ever made all within minutes and next transaction. Something wasnt quite right there on the entire process of those shares even being available to buy.

 

[brokrken]

I think some entity was trying to get back what wasnt meant to be sold. As this wasnt someone like us buying them. Very odd but the quickest $600 I ever made all within minutes and next transaction. Something wasnt quite right there on the entire process of those shares even being available to buy.

Wow! That’s 2 weeks worth of steak dinners! My recent flip isn’t as quick or profitable but I was proud of it. In addition to my Prefs I juice returns a bit with MLPs, too. One I track, NGL had just come off recent lows so I picked up 500 shares at $10.50. It immediately started creeping up and I was able to sell 4 days later at $11.50 and quick $500. Current quarterly divy is $0.39 so I got 2.5 of them in a few days. I immediately put a buy order back in at $10.50 and while it’s not there yet, it’s down to $11 so maybe I get lucky and can grab it back before it goes ex in early Feb.

 

[Mulligan]

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

Wow! That’s 2 weeks worth of steak dinners! My recent flip isn’t as quick or profitable but I was proud of it. In addition to my Prefs I juice returns a bit with MLPs, too. One I track, NGL had just come off recent lows so I picked up 500 shares at $10.50. It immediately started creeping up and I was able to sell 4 days later at $11.50 and quick $500. Current quarterly divy is $0.39 so I got 2.5 of them in a few days. I immediately put a buy order back in at $10.50 and while it’s not there yet, it’s down to $11 so maybe I get lucky and can grab it back before it goes ex in early Feb.

Ya, but you earned yours by a legitimate buy and sell. This one I got something doesnt pass smell test. All luck. I think market maker made an ooops and had to cover some small short or something weird. As I noticed a little z marking next to trade. This isnt shown on normal trades. I wish I knew, as I know isnt some bozo making an ill timed buy as it never trades.

 

[BrianB]

Cincinnati Bell being bought by Brookfield Infrastructure

As much as I am ashamed to admit it, I'm still holding CBB Preferred B. After the 30% drop last year I couldn't get myself to sell as the dividends kept coming in.

Today the announcement of the sale broke, and the price is back up over $47. I've looked at Quantum Online but can't find any information on how the Preferred will be handled.

Sell now?

Wait to see if they redeem all of this issue at par?

Or will it become a "broken" issue with no chance of being redeemed?

I think the last one above could be my best outcome. I seem to recall that CBB has some significant debt coming due in 2-4 years. If the Preferred is not redeemable and the parent is financially strong, the 6.75% dividend would be a keeper for me!

Any advice?

 

[Mulligan]

Brian, I am a brother in arms, but only short term until new year as I owe too many investing gain taxes already. I read the info this morning and got several hundred of these at $42 this morning. This is a nice quick hit and run for me.
I cant decipher the change of control terms enough to know. Brookfield would bring a higher quality rating. But this is a partnership company, what would that do to tax structure? Will they keep it an arms length subsidiary (in other words not really under the protective wing)? Will this actually get consummated?
How does the change of control provisions effect the issue?
Too many questions and not enough answers for me. Personally, Im not going to try to decipher what I cant.
I will take the money and run. If things look stable I may try to hold long enough to get the LTCG and lower my tax on it.

 

[Mulligan]

As much as I am ashamed to admit it, I'm still holding CBB Preferred B. After the 30% drop last year I couldn't get myself to sell as the dividends kept coming in.



Today the announcement of the sale broke, and the price is back up over $47. I've looked at Quantum Online but can't find any information on how the Preferred will be handled.



Sell now?



Wait to see if they redeem all of this issue at par?



Or will it become a "broken" issue with no chance of being redeemed?



I think the last one above could be my best outcome. I seem to recall that CBB has some significant debt coming due in 2-4 years. If the Preferred is not redeemable and the parent is financially strong, the 6.75% dividend would be a keeper for me!



Any advice?

Brian, the only actionable info that is not biased is this acquisition will not likely consummate until late 2020 as regulatory approvals will be needed. And the preferred will NOT be redeemed.

Subject to the terms and conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each of the Company’s issued and outstanding shares of common stock, par value $0.01 per share (the “Company Common Shares”) (other than Company Common Shares owned by the Company or by Parent, Merger Sub or any direct or indirect wholly owned subsidiary of the Company or of Parent (other than Merger Sub) immediately prior to the Effective Time and other than Company Common Shares as to which dissenters’ rights have been properly exercised), will be converted into the right to receive $10.50 in cash per Company Common Share (the “Merger Consideration”), without interest. The Company’s shares of 6 3/4% Cumulative Convertible Preferred Shares, without par value (the “6 3/4% Preferred Shares”), will remain issued and outstanding as 6 3/4% Preferred Shares of the Company, without par value, following the Effective Time.

 

[NgineER]

Had a standing sell order of SPLP-A fill today at 23.30. They finally announced their special redemption in February.

https://www.google.com/amp/s/financ...s/steel-partners-holdings-l-p-211500753.html

Steel Partners Holdings L.P. (NYSE: SPLP) (the "Company"), a diversified global holding company, today announced that it will redeem 1,600,000 units of its 6.0% Series A Preferred Units, no par value (the "Preferred Units"), currently representing approximately 20.2% of total outstanding Preferred Units, on February 6, 2020 (the "Redemption Date"). The Preferred Units are currently traded on the New York Stock Exchange under the symbol "SPLP-PRA" (CUSIP 85814R 206). The Company is redeeming the Preferred Units based on its previously-disclosed obligation to repurchase the Preferred Units by the third anniversary of their issuance, February 7, 2020

 

[brokrken]

Been waiting on this. Let’s hope the price doesn’t crater for our remaining shares after the redemption. Also, I seem to recall the redemption being for 30% of the shares, wonder why it’s now 20%

 

[Mulligan]

Been waiting on this. Let’s hope the price doesn’t crater for our remaining shares after the redemption. Also, I seem to recall the redemption being for 30% of the shares, wonder why it’s now 20%

Ken, its always been 20%. If I was you when official notice is served I would het with your brokerage and make absolute certain your shares get tendered. They are not taking the 20%, you have to tender. And since its in street name this could get bungled without your supervision. You may know all this I just wanted to make sure.

 

[Sunset]

It still pays the 6+% which these days is pretty good.

 

[capjak]

2020 Starting preferred stock:

Stock Dividend (Growth of stk price from my cost basis)
AILLL 6.0% 4.8%
CNLPL 5.2% 17.1%
CNTHP 5.3% 11.6%
NIPRB 5.8% 12.0%
WFC-L 5.2% 19.0%
CHSCM 6.4% 4.5%

sold KTH and NISOP in 2019

 

[brokrken]

My Starting Lineup:

TBB, RILYZ, LANDP, GLP-A, NSS, PBI-B, SSW-G, SPLP-A

 

[Mulligan]

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

Dear Lord, I flip mine like a pancake so often I cant keep track. Geez I had a helluva December flipping. Most were dirtbag issues like LTS baby bonds and PBI-B that I already flipped and dumped in tax free account. Cant wait to dump my CBB-B tomorrow I bought at $42 last Monday as it was 47.50 yesterday. But I owed so much freaking capital gains taxes this past year I wasnt going to owe any more taxes than I already do!
I got about 30 preferreds but presently my Top 5 in terms of dollar amounts are LANDP (just loaded up a relative buttload at 25.58 combined ave all this week), SLMNP (its a core hold), INBKL (been flipping some on 20 cent bounces and then buying back as a current core hold) AILLL (Have flipped them all twice this quarter for 20 cent bounces and got them all back in time to get the quarterly dividend also. So this is basically a flipping core hold, lol) NPIWF and MBNKP are essentially the same amounts. NPIWF is a core hold that mitigates any upward yield movements on 5 yr Tbill (CAD debt), and MBNKP, which is a flipper bought at $24.50 IPO, that I havent fully jettisoned yet and may wait a bit to sell the remaining shares.
Ooops, correction...ALLY-A actually slides in ahead of NPIWF and MBNKP.... Its a frequent flipper. I like collecting the full interest paying holding half the time to minimize call exposure. Got back in at good price so I use it as a time out for money to hide out in until another opportunity comes again.

 

[Coolius]

First day of 2020 trading, I sold most of my EP-C position at $51.20.


Bought at average cost of $50.06, received 1 dividend.


Will buy back if it swings below $51, which I feel is a very distinct possibility.

 

[Mulligan]

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

First day of 2020 trading, I sold most of my EP-C position at $51.20.


Bought at average cost of $50.06, received 1 dividend.


Will buy back if it swings below $51, which I feel is a very distinct possibility.

I think so too, and it is past call also. I got a bunch at 49 post exD and some like you around $50 pre exD, but unfortunately was a bit too quick to pull the trigger as I sold around $50.60.

 

[brokrken]

For those that own SPLP-A, I expected today to receive a notice in my Schwab account about how to tender these shares. However, I saw nothing, so I called and they told me that there was nothing for me to do. I insisted that the SPLP website said I should contact my broker to find out about redemption, so they said they would escalate and get back to me. Anyone heard anything different? I want to make sure I don't miss the redemption due to some mistake I make.

 

[jim584672]

For those that own SPLP-A, I expected today to receive a notice in my Schwab account about how to tender these shares. However, I saw nothing, so I called and they told me that there was nothing for me to do. I insisted that the SPLP website said I should contact my broker to find out about redemption, so they said they would escalate and get back to me. Anyone heard anything different? I want to make sure I don't miss the redemption due to some mistake I make.

I don't think that action is tender-able. They are redeeming 20 odd percent pro rata. The legal street name holder "Cede & Co." will have 20% redeemed. How that gets divided up amongst the brokers is the question. Don't know if they go down to the beneficial holder level, or they hold a lottery to see who gets redeemed.

 

[Winemaker]

I checked with my broker at Stifel and they will get back to me also. When Colony did a partial call in the past, everybody had some pulled, in fact, twice, IIRC. Colony B is in full call now for remaining shares.

 

[jim584672]

I checked with my broker at Stifel and they will get back to me also. When Colony did a partial call in the past, everybody had some pulled, in fact, twice, IIRC. Colony B is in full call now for remaining shares.

That is usually how it is done, by lottery. DTCC runs a lottery tells each broker x number got redeemed, then the broker runs a lottery to see which customers got hit.

 

[brokrken]

This isn't a "hit". I want these to get redeemed. It's part of the reason I bought them so long ago.

 

[Mulligan]

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

This isn't a "hit". I want these to get redeemed. It's part of the reason I bought them so long ago.

You are wise to stay on them, though the process is only beginning. In case you haven’t read this, here it is an link to the entire notice.

The Company plans to send a notice of redemption, including information about redemption procedures, to all record holders of the Preferred Units after the record date of January 6, 2020 and at least 30 days before the Redemption Date. Investors who hold their Preferred Units in “street name” should contact the bank or broker through which they hold a beneficial interest in the Preferred Units for information about obtaining the Redemption Price for their Preferred Units.

https://ir.steelpartners.com/news-r...s-holdings-lp-announces-partial-redemption-60