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

[Freedom56]

Dont get me going on the bond market, Freedom...ugh. I poked around 2 days ago in some issues and they were pricing like it was January but offering bids like they were going bankrupt. I mean 30-40% spreads and they were ready to fleece!

Bond desks will take advantage of desperation. The spreads I saw were insane. Some of these bond desks must have made a fortune and some funds and retail investors lost a fortune liquidating. The $1 per bond commission is totally BS in normal trading times but absolutely insane during these times when spreads open. I always put low ball limit orders on bond trades.

 

[brokrken]

Was able to finally grab some LANDP at $22.25 today. Also, I know it's risky, but i added to my NSS at $11.02

Well, sold out of the additional NSS at $16.05. I'll take that nice 45% gain!!

 

[Mulligan]

Well, sold out of the additional NSS at $16.05. I'll take that nice 45% gain!!

Nice trade and you dont have to sweat anything...Just count the cash! I have bought and sold so many things including buying and selling the same thing multiple times, lol..
I got a few stragglers in my fold that I am sitting on gains and havent sold yet...For example INBKZ. Bought tues and wed in low 14s and 15s doubling down and overexposed...But still holding at $19 today...Gonna have to think on this one..

 

[bobandsherry]

Had no horse in this race, but will we see some others follow suit?

MFA Financial, Inc. (MFA) (the "Company") announced today that due to the turmoil in the financial markets resulting from the global COVID-19 virus pandemic and in order to preserve liquidity until it can more accurately assess the impact that current market conditions will have on the Company's business, the Company will revoke its previously announced first quarter 2020 quarterly cash dividends on each of the Company's common stock and 7.50% Series B Cumulative Redeemable Preferred Stock.

https://seekingalpha.com/pr/17819341-mfa-financial-inc-provides-update-on-dividends

 

[pb4uski]

Wow, I've never seen an announced dividend be revoked before... never crossed my mind that was possible. At least it is cumulative but from what is it trading at holders probably are not going to get much... 21% yield.

 

[brokrken]

Well, someone must have just put in a market order for LANDP. The additional shares I bought the other day at $22.25, just sold for $25. Didn't even have to wait til 9/21. Now, where to bottom feed the proceeds. Tim has a good piece on mREITs yesterday which piqued my interest. May look at NLY

 

[Running_Man]

Will be interesting the Senate bill has a provision that any company accepting any aid or loan through the program will not be able to pay any dividend for one year:

5. Borrowers cannot pay dividends until the loan is no longer outstanding or one year after the date of the loan.

 

[brokrken]

Will be interesting the Senate bill has a provision that any company accepting any aid or loan through the program will not be able to pay any dividend for one year:

I wonder if this only refers to common dividends.

 

[Mulligan]

I wonder if this only refers to common dividends.

It certainly would need to be studied. I know PCG as part of bankruptcy settlement agreed to no common stock dividends for 3 years, but it also specifically stated at the Hold Co level. The preferreds are at the subsidiary level. And their recently issued financial projections should in balance sheets all accrued dividends to be paid out this year. PCG-A come this summer will have $4.12 in arrears to disburse. I went in for 400 today at $25.48 today. A high risk bucket play. But backing out the accrued one will have a freshly recapitalized company and PCG-A effectively paying 7% QDI non callable.

 

[Mulligan]

Well, someone must have just put in a market order for LANDP. The additional shares I bought the other day at $22.25, just sold for $25. Didn't even have to wait til 9/21. Now, where to bottom feed the proceeds. Tim has a good piece on mREITs yesterday which piqued my interest. May look at NLY

I still own mine I bought last week at $21.75 and are sitting on the cap gains. I suspect I will just keep these as a core hold. I cant flip all my preferreds.

 

[Graust]

Mully (or anyone else), since TDA won’t let me trade (opening bids) SLMNP online, and I sold mine off a couple weeks ago, does anyone know a workaround? Do I just call the trading desk to buy and will they waive transaction fees? Thanks in advance

 

[Mulligan]

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

Mully (or anyone else), since TDA won’t let me trade (opening bids) SLMNP online, and I sold mine off a couple weeks ago, does anyone know a workaround? Do I just call the trading desk to buy and will they waive transaction fees? Thanks in advance

Graust, Why cant you just wait until the market opens to enter the bid?

 

[pb4uski]

I wonder if this only refers to common dividends.

It looks like it is only common dividends.

Loans under this program also will include limitations on the recipients of federal aid designed to protect the government’s investment. Executive compensation and severance benefits will be limited for the term of the loan plus one year. Businesses are restricted from paying dividends and making other capital distributions with respect to their common stock, and businesses and their affiliates are prohibited from buying back public stock (unless contractually obligated prior to the enactment of the CARES Act), until one year after the loan is repaid.

(emphasis added)

https://www.skadden.com/insights/publications/2020/03/cares-act-provides-much-needed-stimulus

 

[Mulligan]

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

For the “do ya feel lucky punk” crowd. PCG is heading towards exiting bankruptcy this summer... If you look at this link below on the state ordered plan, one can see on page 9 the preferred payment in arrears is scheduled to be disbursed this year. Come August 15th first normal exD payment after projected bankruptcy, PCG-A is owed $4.15 in arrears at that time. PCG-A is a 6% non callable QDI preferred. So you are basically getting a freshly recapitalized company at about 7% non callable going forward.
I went in for 400 at $25.48 Friday.

http://s1.q4cdn.com/880135780/files...ancial-Forecast-and-Assumptions-2020-2024.pdf

 

[Sunset]

For the “do ya feel lucky punk” crowd. PCG is heading towards exiting bankruptcy this summer... If you look at this link below on the state ordered plan, one can see on page 9 the preferred payment in arrears is scheduled to be disbursed this year. Come August 15th first normal exD payment after projected bankruptcy, PCG-A is owned $4.15 in arrears at that time. PCG-A is a 6% non callable QDI preferred. So you are basically getting a freshly recapitalized company at about 7% non callable going forward.
I went in for 400 at $25.48 Friday.

http://s1.q4cdn.com/880135780/files...ancial-Forecast-and-Assumptions-2020-2024.pdf

I always thought bankruptcy wiped out the shareholders.

 

[bobandsherry]

PG&E Stock Is Jumping Because the End of Bankruptcy Might Be in Sight

https://www.barrons.com/articles/pg...ility-wildfires-victims-creditors-51580740825

 

[Mulligan]

I always thought bankruptcy wiped out the shareholders.

Sunset, this is why I invest in primarily ute preferreds. They are backstopped by the public from stupid management and incompetence. You just cant kill them off... PCG has went bankrupt twice in past 20 years and yes the preferreds are made whole yet again...Ya gotta love capitalism...Uhm well maybe it aint...How about socialist capitalism with a little backstop protection.

 

[Mulligan]

I always thought bankruptcy wiped out the shareholders.

Sunset, the commoners arent getting wiped out either, just diluted...And no common dividend can be paid for 3 years at the holding company level which is where PCG would pay the divi. The preferreds are at the subsidiary level and will be paid do to their cumulative status. These are ancient preferreds btw. Most were named something else and originated up to over a 100 years ago.

 

[bobandsherry]

For the “do ya feel lucky punk” crowd. PCG is heading towards exiting bankruptcy this summer... If you look at this link below on the state ordered plan, one can see on page 9 the preferred payment in arrears is scheduled to be disbursed this year. Come August 15th first normal exD payment after projected bankruptcy, PCG-A is owed $4.15 in arrears at that time. PCG-A is a 6% non callable QDI preferred. So you are basically getting a freshly recapitalized company at about 7% non callable going forward.
I went in for 400 at $25.48 Friday.

http://s1.q4cdn.com/880135780/files...ancial-Forecast-and-Assumptions-2020-2024.pdf

Hey Mulli - Any reason you looked at "A" vs. the other issues? I know most of the others are redeemable, but heck if they want to pay up on the redemption price seems those could be sweet deals too.

 

[Mulligan]

Hey Mulli - Any reason you looked at "A" vs. the other issues? I know most of the others are redeemable, but heck if they want to pay up on the redemption price seems those could be sweet deals too.

Bob that is a good point. For me it was a time and space thing. It was time I wanted to buy and had the free space of money to do it. I briefly looked at the other issues and the bid and spread were too wide and I didnt want to play a game of hit and miss. At the moment I went in the spread on A was about 25 cents and ask was $25.59. So I played this little trick I use often when I smell an opportunity and sent out a 400 share market bid and it hit at 25.48. I forced the interceptors hands and got it a bit cheaper. I dont recommend doing this but I have a certain way that works for me. But someone could get burned doing that so I do not advocate. Anyways the ask of $25.59 was also fair in relation to what was bid and ask on other issues. So long story short you may find better relative value poking around on the other issues. Especially if you are patient maybe...But when I looked the B/A spreads were well over a dollar and I wasnt wanting to play the waiting game.

 

[bobandsherry]

Thanks Mulli for the info. I had done a quick analysis on all the issues and seemed to be sitting around the same overall return, some higher, some lower. Without B/A spread to look at, and with all other things being relatively equal, I peeked at the size of the issues and thought perhaps a smaller issue (like PCG-C) might have better chance of redemption if rate just slightly lower rate but small # of outstanding issues. I didn't know if there was some other underlying issues that I hadn't considered.

 

[Mulligan]

I doubt any get redeemed being they are all so old. 50-100 years if memory serves. And of course the lower the par yields the less likely ever. They are very small irrelevant floats. Annually combined its about $4 million in yearly dividends for all series.

 

[bobandsherry]

Yeah. I doubt that either. According to page 9 you shared, their dividends are $14 million/yr, right?

Like you, I just considered what the QDI rate would be. I put some bids in on several issues, got these picked up:
PCG-A @ 25.45 (7.03%)
PCG-C @ 21.08 (7.09%)
PCG-H @ 18.68 (7.22%)

Now to watch and wait.

 

[BeachOrCity]

Yeah. I doubt that either. According to page 9 you shared, their dividends are $14 million/yr, right?

Like you, I just considered what the QDI rate would be. I put some bids in on several issues, got these picked up:
PCG-A @ 25.45 (7.03%)
PCG-C @ 21.08 (7.09%)
PCG-H @ 18.68 (7.22%)

Now to watch and wait.

Man you guys are brave!

 

[Mulligan]

Yeah. I doubt that either. According to page 9 you shared, their dividends are $14 million/yr, right?

Like you, I just considered what the QDI rate would be. I put some bids in on several issues, got these picked up:
PCG-A @ 25.45 (7.03%)
PCG-C @ 21.08 (7.09%)
PCG-H @ 18.68 (7.22%)

Now to watch and wait.

Duh, my bad, yep your right, I forgot the 1 in front from senility, ha.. At $14 million the total preferred capitalization of all series is about $300 million. That is chump change in terms of capitalization.
To put in perspective NI-B is a $500 million issuance by itself.