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

[brokrken]

In a 70/30 portfolio, with 70% being stocks and 30% being Bonds. Which bucket does preferred’s fit into?

For me, I figure them into my bonds, or fixed income, bucket.

 

[pb4uski]

I figure them as high yield fixed income... perhaps a tad better than junk bonds.

 

[Winemaker]

Fixed income for me, however, with the big fluctuations in interest rates, fed intervention, tantrums, confusion, misunderstandings, and recent goofiness, I have had some fabulous capital gains since 2010.

 

[Texas Proud]

I got rid of all of my high yield bond funds and went into preferred... that is how I classify them.

 

[capjak]

I got rid of all of my high yield bond funds and went into preferred... that is how I classify them.

#1

 

[Freedom56]

Just dumped my AFC today at $24.82 that I bought last month for a healthy profit plus I received one quarterly interest payment. I am staying out of anything connected to small business financing. The shutdown is going to last for at least another month and things will not return to normal for at least 18 months. I am sitting on a lot of dry powder waiting for the next big sell-off of fixed income securities. With so many passive ETFs around and a market on edge, we may see another one in the near future.

 

[capjak]

I am cash heavy right now as well (25%). I do have large risk in the form of bonds (55%) however and smallish for me in equity (20%).

preferred is only 3% right now (AILLL,CNLPL,CNTHP, CHSCM)

 

[Mulligan]

Just dumped my AFC today at $24.82 that I bought last month for a healthy profit plus I received one quarterly interest payment. I am staying out of anything connected to small business financing. The shutdown is going to last for at least another month and things will not return to normal for at least 18 months. I am sitting on a lot of dry powder waiting for the next big sell-off of fixed income securities. With so many passive ETFs around and a market on edge, we may see another one in the near future.

I am sitting on some cash for first time ever lately myself.
I doubt we see anything near the volatility of last month as the margin calls and such were all flushed out in that mess. Now its a wait and see and determine the sector and risk reward you want to be in.
Im not mentally ready to dive into the riskier areas..So I am avoiding buying now banks, retails, reits in general, hospitality, Mreits, BDCs, shippers, and industrial.

 

[capjak]

I am sitting on some cash for first time ever lately myself.
I doubt we see anything near the volatility of last month as the margin calls and such were all flushed out in that mess. Now its a wait and see and determine the sector and risk reward you want to be in.
Im not mentally ready to dive into the riskier areas..So I am avoiding buying now banks, retails, reits in general, hospitality, Mreits, BDCs, shippers, and industrial.

What's left Utilities?

 

[Freedom56]

I am sitting on some cash for first time ever lately myself.
I doubt we see anything near the volatility of last month as the margin calls and such were all flushed out in that mess. Now its a wait and see and determine the sector and risk reward you want to be in.
Im not mentally ready to dive into the riskier areas..So I am avoiding buying now banks, retails, reits in general, hospitality, Mreits, BDCs, shippers, and industrial.

I would add energy (oil and gas), and travel to that list.

 

[Mulligan]

What's left Utilities?

Cap, ha, you caught my little joke! I do have 2 bank preferreds left, couple insurers, and some oddball one offs like LANDP PW-A and GGO-A. Got a few bids out on a few utes but not really being aggressive.

 

[capjak]

Cap, ha, you caught my little joke! I do have 2 bank preferreds left, couple insurers, and some oddball one offs like LANDP PW-A and GGO-A. Got a few bids out on a few utes but not really being aggressive.

Yep it's just utes are not moving down much if at all, will remain in cash. Been trying to get rid of CHSCM

 

[pb4uski]

Cap, ha, you caught my little joke! I do have 2 bank preferreds left, couple insurers, and some oddball one offs like LANDP PW-A and GGO-A. Got a few bids out on a few utes but not really being aggressive.

So are you mostly all out of preferreds at this point other than the ones you mention above?

 

[Mulligan]

So are you mostly all out of preferreds at this point other than the ones you mention above?

No, not all. Im 75% ish invested in preferreds and about 25% cash. I wont worry about getting to 100% again and deal with it provided I am in safe ones. Just looking to see if I can reeenter on some at lower prices.
As cap stated they are basically back at their all time highs so no panic for me to be fully invested. In fact I went down to 10% cash the other day then SR-A dropped to 25.50 area and I loaded up like a big dog. Sold those all off 2 days later Friday at over a buck gain. But that being said SR-A is still right up there as my biggest hold next to KTH even after selling the ones I held for 2 days.

 

[Mulligan]

All be damned if SR-A didnt drop that buck already and I bought the shares right back end of day at 25.80...Plus it goes exD in a couple days. What a fun stock to trade!

 

[Coolius]

Mul,


Think I'm going to follow you into your SR-A forays; I've been sitting on 600 shares doing nothing between XD days.


What is a good price target for sell? Around $26.50 would be OK?

 

[Mulligan]

Mul,


Think I'm going to follow you into your SR-A forays; I've been sitting on 600 shares doing nothing between XD days.


What is a good price target for sell? Around $26.50 would be OK?

Coolius, that and a little above has been the number the past few trades on buck swings. Of course during that nutty week I was making $3 a swing and one day made $9 in an hour...Times change and we have to adapt. Last fall and winter when it DIPPED to $26.50 I would buy and flip a dollar higher many times....But as you know well we got to have a core to build around.
And this was a core from IPO, but I would be forced out all together for extended weeks worried I made a mistake getting out. It always worked out fortunately.
But since last month rout I keep double the amount leaving half as an untraded core. That way I wont sell and be totally out of position anymore.

 

[Hamster]

Been trying to get rid of CHSCM

Why?

 

[capjak]

Why?

I obtained over the years 3,000 shares which is more than want in one issue.

 

[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

I just want to thank you for sharing the details on PCG. I'm still watching PCG, flipping the PCG preferred's. I've managed to put away a few bucks from flipping, average of $4.65/sh on PCG-A. About a quarter of my current position is funded by gains from flips.

I caught another drop this week with a low ball GTC order with PCG-A at $25.48, right where you bought. As you know, it popped back and closed Friday at $27.40.

According to this, PCG still on course to exit BK at end of June. Fingers still crossed and will use that time to see if I can make a few more bucks on flips. Keeping an eye on the BK proceedings, but since Bill Johnson already announced his departure, he must be feeling pretty confident that the company will emerge from BK at end of June.

https://www.nasdaq.com/articles/pge...onfirmation-of-reorganization-plan-2020-05-01

 

[Mulligan]

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

I just want to thank you for sharing the details on PCG. I'm still watching PCG, flipping the PCG preferred's. I've managed to put away a few bucks from flipping, average of $4.65/sh on PCG-A. About a quarter of my current position is funded by gains from flips.

I caught another drop this week with a low ball GTC order with PCG-A at $25.48, right where you bought. As you know, it popped back and closed Friday at $27.40.

According to this, PCG still on course to exit BK at end of June. Fingers still crossed and will use that time to see if I can make a few more bucks on flips. Keeping an eye on the BK proceedings, but since Bill Johnson already announced his departure, he must be feeling pretty confident that the company will emerge from BK at end of June.

https://www.nasdaq.com/articles/pge...onfirmation-of-reorganization-plan-2020-05-01

Bob, you actually helped me some too. I sold those shares over $27 a few weeks ago, and then repurchased 500 at market close at $25.50 again Thursday, and 200 more after market that were there for some reason. So I have 700....You helped me see the light on the pricing differences in the series to exploit, so I played a couple series for a couple buck swings too.
Now the good news, it looks good to be a winner....First I will probably just hold these. Backing out the accrued divi your looking at about a 7% (at the $25.50 purchase price),QDI BB+ rated which is on par credit with SCE and their SCE-G series trades about 5.4% yield. Non cumulative could be gold down the road.

In recently filed documents with the court, more than 98% of the victims who have voted regarding PG&E’s bankruptcy plan have voted in favor, with roughly 2/3 of the votes of the major law firms representing ~31.5k claims received (only ~47k of the 70k claims’ votes need to be received). While final votes and objections are not due until May 15, it seems unlikely that there would be anything that would endanger the acceptance of the deal at this point. PG&E appears to be on track to exit bankruptcy before June 30th and has full access to the wildfire fund established by the state.

 

[bobandsherry]

Bob, you actually helped me some too. I sold those shares over $27 a few weeks ago, and then repurchased 500 at market close at $25.50 again Thursday, and 200 more after market that were there for some reason. So I have 700....You helped me see the light on the pricing differences in the series to exploit, so I played a couple series for a couple buck swings too.
Now the good news, it looks good to be a winner....First I will probably just hold these. Backing out the accrued divi your looking at about a 7% (at the $25.50 purchase price),QDI BB+ rated which is on par credit with SCE and their SCE-G series trades about 5.4% yield. Non cumulative could be gold down the road.

In recently filed documents with the court, more than 98% of the victims who have voted regarding PG&E’s bankruptcy plan have voted in favor, with roughly 2/3 of the votes of the major law firms representing ~31.5k claims received (only ~47k of the 70k claims’ votes need to be received). While final votes and objections are not due until May 15, it seems unlikely that there would be anything that would endanger the acceptance of the deal at this point. PG&E appears to be on track to exit bankruptcy before June 30th and has full access to the wildfire fund established by the state.

It is interesting to see different series popping and dropping differently. Over time they all seem to settle to a basic level of dividend return. I did the same as you on the PCG-A, had jumped in at around $22 and when it popped to $27 in a week, it was sell-sell-sell. Bought PCG-D (it's up almost $1.50) then just put in a GTC at $25.50 on PCG-A, took 3 weeks, but back in with nothing lost. A buck here, buck there, it all adds up. Same company so with eye on the dividend yield and not seeing any of these being redeemed, just catch a drop and then sell off a different series to balance. I have some PCG-H that will return 7.6% after the div arrears collected.

I'm just keeping an eye on this over next 10 days. Watch to see if anything suddenly goes south quickly with finalizing the acceptance votes.

 

[Mulligan]

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

If my math is right based on existing votes, about 22k out of the 50k ish yet to vote need to vote yes to maintain the 2/3 vote. PCG-A basically lived over $32 pre fire in late 2017 the previous two years. And that of course was with no $4 accrual in the pipeline. This could easily go near $35 before dispersement whenever that would come.

 

[brokrken]

Well, I bought PBI-B a couple times all the way down to about $10. I didn't have the cajones to keep buying down to $7.59. Thank goodness it is back up over $17 now. I was sweating this one big time.

 

[bobandsherry]

If my math is right based on existing votes, about 22k out of the 50k ish yet to vote need to vote yes to maintain the 2/3 vote. PCG-A basically lived over $32 pre fire in late 2017 the previous two years. And that of course was with no $4 accrual in the pipeline. This could easily go near $35 before dispersement whenever that would come.

I had seen the mention in SA, but details seemed fuzzy so didn't give me enough details to calculate that, so I'll trust your math.

The other positive sign is that the CA Gov is dropping his opposition to the BK plan. He's been a continual pain in the backside with opposing just about everything (or so it seems). So getting him on board and the current vote, along with a favorable nod from the judge overseeing the case, are all positives.

I had looked at the various series like you did, what could share price pop to post emerging. I did a best and worst case, best being roughly what shares were in 2017 and worst being current price less the div arrears. Across the board, looking at XIRR at end of 2 years, the best case was around 16% and worst case was right around 6%.

Now if this pops to the high before the div arrears paid, I'd have to think long and hard on holding this vs cashing in and putting proceeds someplace else. I might look at what that could look like. Did you noodle over that prospect, thoughts?