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

[Mulligan]

Jim,

I think you'll be pleased with your WFC-PL buy, especially if rate hikes ( after December ) are gradual and strung out over years.

This series is mostly held by institutions, which is both bad & good for us retail types.

Bad because when an institution/HF/ETF dumps big, they drive the price down dramatically. Good because individuals like us can trade small amounts ( 10-20 shares ) for better prices than the posted Bid/Ask.

Yes, 84% held by institutions... But for income investors this is nothing but a free gift. Latest issued preferred WFC-V has a 5.77% yield vs. the 6.44% yield from L. It is nothing but a freebee as they all rank equally in structure. Cant wait until my HSA funds transfer so I get some shares of L while its in $1160s... That rag tag Vanguard brokerage wont allow trading in it or some others I want to buy... They are a poor outfit for trading preferreds.
Speaking of exD snagged up a couple hundred shares of KTBA at $27.38 yielding about 6.4%. Investment grade "baby bond" by ATT. Not callable until almost the 22nd century. Way past my expiration date.


Sent from my iPad using Tapatalk

 

[Coolius]

I submitted a standing order for CNTHP for 200 @ 52.00 that was filled yesterday. But now I see that the last sales were at 51.65 Oh well. Now I just need to sweat it out until the next X dividend date right, to make sure that it isn't called at 51.44? Must be sometime in January - right? Yield 6.30%

Golden Sunsets, your CNTHP buy was very timely. And same goes for the others who picked up a few recently.

We should be getting a dividend announcement shortly, which will put you solidly in the + side even if the stock is called.

There is a current bid for 200 shares @ $53, so that bidder must also be confident of no call risk. Good to see that, eh ?

 

[Mulligan]

Golden Sunsets, your CNTHP buy was very timely. And same goes for the others who picked up a few recently.

We should be getting a dividend announcement shortly, which will put you solidly in the + side even if the stock is called.

There is a current bid for 200 shares @ $53, so that bidder must also be confident of no call risk. Good to see that, eh ?

I have feasted at that CNLPL/CNTHP buffet far too much already though it is always a safe, tasty meal. So I am eagerly waiting for my HSA funds to be transferred so I can reestablish my WFC-L position while its near $1170. Would like to spread the rest in a 12 year termination one and an adjustable issue though they will take some work just to sneak a few hundred shares of each into the fold.


Sent from my iPad using Tapatalk

 

[Golden sunsets]

I have feasted at that CNLPL/CNTHP buffet far too much already though it is always a safe, tasty meal. So I am eagerly waiting for my HSA funds to be transferred so I can reestablish my WFC-L position while its near $1170. Would like to spread the rest in a 12 year termination one and an adjustable issue though they will take some work just to sneak a few hundred shares of each into the fold. Sent from my iPad using Tapatalk

Mulligan; what do you mean by a 12 year termination? And why the distinction of 12 years?

 

[Golden sunsets]

Golden Sunsets, your CNTHP buy was very timely. And same goes for the others who picked up a few recently. We should be getting a dividend announcement shortly, which will put you solidly in the + side even if the stock is called. There is a current bid for 200 shares @ $53, so that bidder must also be confident of no call risk. Good to see that, eh ?

Looking forward to the declaration.

 

[Mulligan]

Mulligan; what do you mean by a 12 year termination? And why the distinction of 12 years?

This preferred is actually a baby bond trust preferred. It is not a perpetual issue like a CNTHP. It was issued in 2001 and matures in 2028 and is not callable. Buying these isn't material for you, since your portfolio is more diversified. But I pretty much have all my assets in preferreds and trust preferreds as I am a total income investor. But if I was a more traditional investor and was allocating 10% of my portfolio for preferreds, I would just go long and not worry about.


Sent from my iPad using Tapatalk

 

[jim584672]

Yes, 84% held by institutions... But for income investors this is nothing but a free gift. Latest issued preferred WFC-V has a 5.77% yield vs. the 6.44% yield from L. It is nothing but a freebee as they all rank equally in structure. Cant wait until my HSA funds transfer so I get some shares of L while its in $1160s... That rag tag Vanguard brokerage wont allow trading in it or some others I want to buy... They are a poor outfit for trading preferreds.
Speaking of exD snagged up a couple hundred shares of KTBA at $27.38 yielding about 6.4%. Investment grade "baby bond" by ATT. Not callable until almost the 22nd century. Way past my expiration date.


Sent from my iPad using Tapatalk

Vanguard's web platform choked on my WFC-L order. Had to call, they transferred me to the bond desk. By that time the price moved and I told them not to enter the order. grrrr...

 

[Mulligan]

Vanguard's web platform choked on my WFC-L order. Had to call, they transferred me to the bond desk. By that time the price moved and I told them not to enter the order. grrrr...

There is no choking Jim, it just plain SUCKS for preferred investors. I cant tell you how many issues I have tried to buy there without having to call desk. Thankfully my HSA accounts are competent and can handle the orders. WFC-L has never worked online through Vanguard. And I don't want to have to listen to an adolescent having to tell me a purchase is "minus 30%, 30 day YTC". I then have to tell him I know what I am doing and it isn't -30%. BTW- that minus 30% issue he was trying to talk me out of is up 10% for the year including dividends.


Sent from my iPad using Tapatalk

 

[Slow But Steady]

Vanguard's web platform choked on my WFC-L order. Had to call, they transferred me to the bond desk. By that time the price moved and I told them not to enter the order. grrrr...

The Ask price is back down to 1166. Go for it!

 

[Mulligan]

The Ask price is back down to 1166. Go for it!

The liquidity is such you may at times be chasing a ghost and looking back may not get what was traded, as your present bid will always be put at the back of the bus.The best way is to set the bid at the price you are comfortable buying at, and let it come to you in time.


Sent from my iPad using Tapatalk

 

[Slow But Steady]

The liquidity is such you may at times be chasing a ghost and looking back may not get what was traded, as your present bid will always be put at the back of the bus.The best way is to set the bid at the price you are comfortable buying at, and let it come to you in time.

If I'm ready to buy something, I usually put in my bid a bit above where I see the current ask. Is there a better way?

 

[Mulligan]

If I'm ready to buy something, I usually put in my bid a bit above where I see the current ask. Is there a better way?

You mean the current bid offering correct? In theory yes, if that is a price you can accept purchasing at. Though at times you will get "front run" and "computer botted" so dont get in a chasing game. Over time your order will move to the head of the list. I confess I am not as good as being patient as say Coolius is. He will set a bid even if its lower than the current bid and will wait weeks for his bid to strike. But he is also comfortable knowing the transaction may not occur. Patience truly though is a virtue with preferreds as you are buying for yield not capital appreciation.


Sent from my iPad using Tapatalk

 

[Coolius]

Vanguard's web platform choked on my WFC-L order. Had to call, they transferred me to the bond desk. By that time the price moved and I told them not to enter the order. grrrr...

I bought more at $1,166 a few days ago. You might be able to get them lower as we approach the Fed meeting.

From a % POV, a dollar/share is less than 0.1%, about 2.5 cents on a conventional $25 par issue. It just looks humongous to those of us used to $25 issues .

The next exDiv is 3 months away, so you have time - chances are good you could get it for $1,164 by being patient.

 

[Mulligan]

If I'm ready to buy something, I usually put in my bid a bit above where I see the current ask. Is there a better way?

Btw- If you stick with your name, Slow, you will do fine. I am a bit conservative, but all 13 issues I own are positive on the year in price, not counting the yield. That isn't as important as the fact they will always pay and I will not be hurt on a call as I don't drift much above par on a past call issue...Stay away from BDC's, shipping companies, and energy production unless you are man enough to accept a possible ass whipping chasing yield. Many aggressive income investors on their forums are crying like babies that have just had their first trip back from the woodshed. If the yield is too good to be true...IT IS! I feel very comfortable with Wells preferred, but don't engorge too much on them.
The utilities, strong banks, insurers, and select Reits are the best areas to indulge in.


Sent from my iPad using Tapatalk

 

[Golden sunsets]

Patiently waited for a week with an offer of 1164.25 for WFC-L - a whopping 10 shares. Finally filled today!! Now I'm wondering if I should have bought more?

 

[Slow But Steady]

Patiently waited for a week with an offer of 1164.25 for WFC-L - a whopping 10 shares. Finally filled today!! Now I'm wondering if I should have bought more?

I've put this one on my radar screen too. I'm thinking of waiting until the Fed does their thing, hoping for a knee-jerk price drop.

 

[Coolius]

Patiently waited for a week with an offer of 1164.25 for WFC-L - a whopping 10 shares. Finally filled today!! Now I'm wondering if I should have bought more?

Congrats! A good price, IMO.

I've been communicating with Mulligan about this, but if you take a close look at the 1 year chart of WFC-L, you might be able to see something interesting occurring around the time of each dividend.

PM me or Mulligan, and you're welcome to join the discussion; not sure if it would be fruitful or not. But hey, we're all retired and need something to do, right ?

 

[Mulligan]

Patiently waited for a week with an offer of 1164.25 for WFC-L - a whopping 10 shares. Finally filled today!! Now I'm wondering if I should have bought more?

I hate to play financial advisor to anyone.... But at this current time and price and the fact its not callable makes it a good purchase. But... whether you should have bought more is more dependent on how much of your portfolio you are investing it in. If I had a $3 million portfolio and no pension, I would lose no sleep in having it all in my top 3 utility preferreds (yes that violates every rule of diversity). But no way would I consider ever having more than 5% of my portfolio in a bank preferred. Wells is the safest by far, but not worth piling in overboard.
Worst case scenario (and yes Wells was one of few that avoided the crisis last time) and if 2009 occurred again, the Feds will not bail out preferreds like last time. They were constructed as trust preferreds and got treated like debt and got bailed out. Don't count on that as they are now non cumulative preferreds. Ultimately bank preferreds are just money being covered by money.
If I am going to get greedy it will be with companies that can grease public service commissioners, who are allowed a guaranteed ROE by law, and get more guaranteed profits by building out more T&D lines.



Sent from my iPad using Tapatalk

 

[Coolius]

The Black Friday Sales Event for Preferred Stock is now on !!

Come in for the best selection of Preferred stock in all sizes and shapes, all priced to move at some of our lowest prices for the year!!

I have spent some of my dry powder, and looking to pick up more bargains if possible.

 

[Mulligan]

The Black Friday Sales Event for Preferred Stock is now on !!

Come in for the best selection of Preferred stock in all sizes and shapes, all priced to move at some of our lowest prices for the year!!

I have spent some of my dry powder, and looking to pick up more bargains if possible.

Four of my biggest 5 issues are unchanged and the other is up 73 cents today.....Quit peddling junk to the uniformed masses, Coolius, you snake oil salesman!


Sent from my iPad using Tapatalk

 

[Coolius]

Now, Now, Mulligan --- you know we never peddle junk to the masses. Consider them diamonds buried in coal mines. The trick is to find 'em.

Seriously though, today's action just proves the validity of what you & I have maintained earlier in this thread; Utility Preferreds, especially those that are thinly traded ( i.e., low liquidity ) tend to be very stable in tumultuous times.

If these Ute Preferreds are a small issue, say about $50 Million or so, ETFs/Funds have little interest in them; owners tend to be trusts and individuals who have no need to dump out of desperation or because of cash requirements.

And the parent company of small issues may have less incentive to call them, due to costs of redemption and perhaps other, more pressing matters to tend to. Mulligan says that some of these Ute Preferreds have been paying for 50 years - those are the ones to try and get.

Having said all that, today was a bad day for income oriented issues.

But I remain confident this will pass; for example look at Realty Income O; the preferred issue O-PF went down by 1.8%, but the common went up by about 1.4%. That is NOT a sign of selling because of company specific problems - that's a ETF/Fund throwing the baby out with the bath water.

 

[24601NoMore]

I absolutely LOVE O as a stock. Own a very few (<100) shares and am looking to buy a lot more in RE. It's remarkable stable in down markets, up in even slightly green markets, and pays a nice DIV monthly.

 

[Coolius]

I absolutely LOVE O as a stock. Own a very few (<100) shares and am looking to buy a lot more in RE. It's remarkable stable in down markets, up in even slightly green markets, and pays a nice DIV monthly.

+300 ( that's the number of O shares I own )

 

[Sunset]

These P's are hard to buy.
I just had an email saying my order was about to expire, and I didn't recognize the symbol. Naturally I thought my account was hacked, but after looking it up I realized it was a Util preferred.
I had wanted to buy 200 but got no bites on an all or none order...

I'm not much of a fisherman, so that might be the issue.

 

[Coolius]

These P's are hard to buy.
I just had an email saying my order was about to expire, and I didn't recognize the symbol. Naturally I thought my account was hacked, but after looking it up I realized it was a Util preferred.
I had wanted to buy 200 but got no bites on an all or none order...

I'm not much of a fisherman, so that might be the issue.

Those thinly traded Ute Preferreds are, indeed, very hard to get. Putting a AON order, unfortunately, makes it even less likely to fill.

I have had bids on AILNP open for weeks on end, renewing the bid when it expires, no special instructions, without bites.

So, I'm as poor a fisherman as you are.....

Looks like only Mulligan knows the right kind of bait to use. Gotta pick his brains a little......