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

[aja8888]

The bankruptcy filings showed a cash disbursement to be paid out for all suspended dividends this year. If they are true to the filings the next traditional end of Oct. exD should pay all the accrued dividends...But i have heard nothing since emerging from bankruptcy.

Thanks!

 

[Born2Fish]

A dropped into $26 range and bounced a bit..Im out of those CA utes with all the fires going around...What is keeping them a month or two from now from blaming them for some of the fires and then the problems start all over..Im too nervous...
QRTEP just needs to get all the sellers off the books. I wish I could buy more, but I never chase high yield and I already have 300 shares which is too much already, ha!

Is QRTEP a preferred stock?

Edit: TDAmeritrade/yahoo finance does not show a dividend associated with QRTEP. I may not be searching in the right place.

 

[Time2]

I have not read any of the 5400 posts, I followed Seeking Alpha and then subscribed to a REIT Guru. He really did a lot of research and had loads of actionable information with much of it in preferreds. I made money... until Covid, when suddenly I was down $100,000 grand. I'm sticking with VTI, I thought the REITs were a little diversification, that didn't work for me.

 

[brokrken]

I have not read any of the 5400 posts, I followed Seeking Alpha and then subscribed to a REIT Guru. He really did a lot of research and had loads of actionable information with much of it in preferreds. I made money... until Covid, when suddenly I was down $100,000 grand. I'm sticking with VTI, I thought the REITs were a little diversification, that didn't work for me.

Did you sell them all?

 

[Mulligan]

yes its QDI preferred.

 

[Mulligan]

Those guys no nothing wish I could have warned you. Im up close to 20%. Mostly flipping ute preferreds and a few issues like LXP -C. They dig into trash and get smoked.

I have not read any of the 5400 posts, I followed Seeking Alpha and then subscribed to a REIT Guru. He really did a lot of research and had loads of actionable information with much of it in preferreds. I made money... until Covid, when suddenly I was down $100,000 grand. I'm sticking with VTI, I thought the REITs were a little diversification, that didn't work for me.

 

[Time2]

Did you sell them all?

No, I haven't sold them all. I have one that is in a taxable acount, I may sell it to take the long term loss. Some of the others have temporarily stopped paying dividends, so that hurts.

 

[yakers]

I want to bump this up for any imput from the prefered knowledgeable folks here. I bought some IPFF and it promptly went down a bit. I want something I can hold as part of my fixed income and foreign holdings. Looks like diversification works sometimes. But it is unclear how to evaluate foreign preferreds and whether there is a benifit (foreign tax) to holding them in taxable Vs tax deferred. AFAIK there is a large quantity of foreign preferreds, someone must know how they best fit in a portfolio.

Just for humor, some years back I bought (and still hold) a small position (now smaller) of GIM, which has been net positive but deinitely suboptomal. Sometimes diversification isn't so great.

Any international preferreds to look at? I see PFFD is X-US, how does that fit in a portfolio? I assume it would not qualify for the 15% tax rate but maybe would hold in taxable for recovering foreign tax credit?

 

[tizod]

WELPM ouch

Aja, though lower yield, I bought 200 of WELPM at 124 the other day...Non callable and pristine credit rating.

Even at 124, thats $24 over par! now at $150ish. Either way, thats out for me.

 

[Mulligan]

Even at 124, thats $24 over par! now at $150ish. Either way, thats out for me.

Tizod, par is a meaningless blather number to a preferred that was issued “uncallable”. Unless you think Wisconsin Electric is going to be liquidated for cash and no one in that area having electricity is possible.
What matters to these type is current preferred yield compared to credit market spread, and ones risk profile and need for income in relation to the perpetual nature an issue such as this has.

 

[Texas Proud]

QRTEP now over $98...

 

[Mulligan]

QRTEP now over $98...

If yields werent going to hell in a handbasket I would have flipped mine already, Tex. But there is a dearth of decent yield so I will hold as they basically are protected for 7 years and have a 11 year maturity.
PSA just issued a 3.875% perpetual non QDI today. That is insane..Past couple months have been locking in more uncallable issues like KTBA, GLIBP, PPWLO, etc.

 

[Golden sunsets]

Guys; What's the story on AILLL today. Up 11+% to over 33?

 

[Coolius]

Golden Sunsets,


I don't know what started it, but during the course of the morning I saw that AILLL had a bid of $30 and ask of $32. So I quickly put in an ask of $31 for 300 shares.


Took quite a while, but I received an alert my sell order had filled, most at $31, and the rest at $32.


Appears the buying was not exhausted, and later trades took the price up to $33. Unfortunately, I had not put up any more to sell.


And Friday ( tomorrow ) is ex-dividend day.

 

[Mulligan]

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

Guys; What's the story on AILLL today. Up 11+% to over 33?

I will tell you what the story is... I sold mine again last week at $29.75-80, and Coolius was, well cool handed, and waited and pocketed a helluva lot more cash than I did!

 

[aja8888]

I have a limit order in to sell all mine at $33.00. Let's see what happens.

 

[CoolChange]

AHT Tender Offer

So, if you were holding this preferred, did (or would) you cut your losses and tender for cash, take a flier on the new common stock, or do nothing? Why did (or would) you make that particular move?


Thank you.

If you are on the site, "Seeking Alpha" there was a good article about AHT the other day. It more or less read that the best option was to buy the Preferred and short the common, suggested on a previous article. The Board of Directors changed the original offer recently, messing up the arbitrage. While still a profitable strategy from the first article, the return has been reduced. If you hold just the Preferred like I do, the article says we're screwed.

Screwed is all relative I guess. With current price you were already screwed if you bought in before the pandemic hit. They are throwing a bone here, no meat on it for the original holders but a little recovery of what's already been lost. Those giving it a gnaw now could make a few bucks. In true hindsight fashion, def could have made a killing shorting the AHT when news of the original proposal came out. Can do Mar21 $2.50 CC @ $1.28.

 

[tizod]

Tizod, par is a meaningless blather number to a preferred that was issued “uncallable”. Unless you think Wisconsin Electric is going to be liquidated for cash and no one in that area having electricity is possible.
What matters to these type is current preferred yield compared to credit market spread, and ones risk profile and need for income in relation to the perpetual nature an issue such as this has.

@mulligan I agree with your comment (old one) but want to add: an over par pref trades based on interest rates and loses it's threshold value. So it can, when you want to get out, have a loss that is not proportional to the underlying company situation but more based on interest rates. Now, I agree interest rates can't go down much (they can go negative ask anyone in Japan). But I still avoid the wide delta when the underlying business might be effected. IMHO of course.

 

[bobandsherry]

So, if you were holding this preferred, did (or would) you cut your losses and tender for cash, take a flier on the new common stock, or do nothing? Why did (or would) you make that particular move?


Thank you.

The offer has been revised, cash offer no longer being made. Exchange offer now extended to 11/20.

https://www.hotelnewsnow.com/Articles/304989/Ashford-extends-stock-exchange-offer

This was also mentioned in today's earnings call.

https://sec.report/Document/0001232582-20-000076/

 

[Mulligan]

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

@mulligan I agree with your comment (old one) but want to add: an over par pref trades based on interest rates and loses it's threshold value. So it can, when you want to get out, have a loss that is not proportional to the underlying company situation but more based on interest rates. Now, I agree interest rates can't go down much (they can go negative ask anyone in Japan). But I still avoid the wide delta when the underlying business might be effected. IMHO of course.

Tizod, A preferred in general will trade on general credit quality of company and interest rate environment. The actual underlying common stock value is largely immaterial. Lets look at ATT versus KTBA (ATT uncallable 2095 baby bond). The company as a common stock has floundered. In fact KTBA the past 13 years has totally destroyed the common stock in terms of total returns.
All things equal, a noncallable 3.50% preferred trading at $90 ($10 under par) is not nearly as valuable as a 7% noncallable trading at $140 ($40 over par). So its not just where the issue is trading at in terms of “par” but current yield, credit quality, call feature in relation to what the market is trading at in terms of the above.
Future interest rate rises will also have a negative impact on both of the above. There are some perpetuals that were issued back in 1940s that are presently IG and have never got back to par since they were issued, 70-80 years ago because they were issued in a very low rate environment (actually a bit lower then than now in terms of preferred yields).
Keep in mind I am not suggesting above par noncallables are better than others, as there are a lot of variables, and each can vary in importance to each individual investor.

 

[pb4uski]

The bankruptcy filings showed a cash disbursement to be paid out for all suspended dividends this year. If they are true to the filings the next traditional end of Oct. exD should pay all the accrued dividends...But i have heard nothing since emerging from bankruptcy.

PCG filed a 10-Q today. It says:

... any decision to declare and pay dividends in the future will be made at the discretion of the Boards of Directors and will depend on, among other things, results of operations, financial condition, cash requirements, contractual restrictions and other factors that the Boards of Directors may deem relevant. As of September 30, 2020, it is uncertain when PG&E Corporation and the Utility will commence the payment of dividends on their common stock and when the Utility will commence the payment of dividends on its preferred stock.

Sounds like we might be waiting a while longer.

 

[aja8888]

PCG filed a 10-Q today. It says:


Sounds like we might be waiting a while longer.

I'm saying goodbye to the PCG-A I hold Monday morning.

 

[bobandsherry]

I'm saying goodbye to the PCG-A I hold Monday morning.

I wasn't sure I was doing the right thing, seems I usually zig when I shoulda zagged. But unloaded everything back in June as someone whispered in my ear the old saying about bulls, bears and pigs. I looked back and sold PCG-A for $30.50 and PCG-B for $27.75. Had other issues too and all are trading lower today. It was a great flip opportunity and give kudos to Mulli for sharing his info on the PCG preferreds.

I did spin some of those profits into the common and wrote covered calls, still have time for those to expire but looks doing ok as they currently have 25% return, XIRR of 45%.

 

[Mulligan]

PCG preferreds are a tough call now. I have been out quite a while. But as it drops, they become more interesting. But I want to know more about these CA fires and who is going to be blamed for them first.... The commons probably wont have a divi until 3 more years at least. So preferreds could be held on suspension until then..At $14 million a year its chump change, and immaterial. So withholding now must just be an image thing. But they keep accruing at least until another bankruptcy anyways.

 

[pb4uski]

I hear you... I may wait and see what happens when the Nov 15 dividend date comes around. I'm trying to reconcile the clear play to pay the dividends in arrears in the bankruptcy plan with the statement in the 10-Q.... but they do word it as at Sept 30, so perhaps they put that in to give them flexibility if needed/SHTF.

My cost basis is $23.45. If the cumulative divvy pays anytime soon and the issue trades close to par then I'll be looking pretty.