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

[Sunset]

Thought I'd check with folks.

How do you feel about MNR-C, and ALLY-A

MNR-C seems to be pretty close to it's YTD high, and interestingly so is the common shares, The difference being the common pays 4.7% and preferred shares pay 6.15%. The common shares don't seem to have any advantage as they have not really been much higher over the past 3 years, more of a slow small bumpy decline

I'm asking as I have both, and I'm not as diligent as Mulligan in observing the stocks.

 

[bobandsherry]

Thought I'd check with folks.

How do you feel about MNR-C, and ALLY-A

MNR-C seems to be pretty close to it's YTD high, and interestingly so is the common shares, The difference being the common pays 4.7% and preferred shares pay 6.15%. The common shares don't seem to have any advantage as they have not really been much higher over the past 3 years, more of a slow small bumpy decline

I'm asking as I have both, and I'm not as diligent as Mulligan in observing the stocks.

I've been in and out of Ally-A, got out when it was significantly over par and it's past call. But back in again with it below par, got back in on the dip, and with decent yield currently at 7.15%. Still below par so I'd still be ok with it as new purchase. MNR-C being a REIT, is just not something I usually invest in. Only paying 6.16% yield, other options available. Just my thoughts

 

[Mulligan]

Thought I'd check with folks.

How do you feel about MNR-C, and ALLY-A

MNR-C seems to be pretty close to it's YTD high, and interestingly so is the common shares, The difference being the common pays 4.7% and preferred shares pay 6.15%. The common shares don't seem to have any advantage as they have not really been much higher over the past 3 years, more of a slow small bumpy decline

I'm asking as I have both, and I'm not as diligent as Mulligan in observing the stocks.

Sunset, I am no bank expert, and only follow MNR from peripheral. But in general all industrial reits have been holding up well, and are perceived by people who write as being one of the safest reit areas of the market. I dont think there is any problem there other than the usual market volatility which can toss this preferred stock price around..Shouldnt be a factor in terms of paying divi though.
Its hard to know about banks being the leverage they have and what the quality of the loans are and how the deferments are exposing them on their balance sheets.ALLY-A is getting hit from Libor that dropped so its yield going forward will be lower going forward.
Might want to keep abreast on ALLY is situation gets worse. Certainly isnt panic time though.

 

[bobandsherry]

ALLY-A is getting hit from Libor that dropped so its yield going forward will be lower going forward.
Might want to keep abreast on ALLY is situation gets worse. Certainly isnt panic time though.

Yeah, ALLY-A is rate sensitive, but that's part of it's charm for me. I consider that LIBOR is already very low. This issue is paying a reasonable div now and should rates rise this will pop, fixed rate will then most likely see a drop. Funny how not too long ago we were concerned about rising rates, and they fell. So just using this now as to balance things out a bit. Also a positive to see several directors buying up shares of the mothership this year.

 

[Mulligan]

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

Yeah, ALLY-A is rate sensitive, but that's part of it's charm for me. I consider that LIBOR is already very low. This issue is paying a reasonable div now and should rates rise this will pop, fixed rate will then most likely see a drop. Funny how not too long ago we were concerned about rising rates, and they fell. So just using this now as to balance things out a bit. Also a positive to see several directors buying up shares of the mothership this year.

Bob, if your in the yield chasing mood consider new IPO that just came out today, HRLLL, from Heartland Financial.
A gawdy 7% QDI non cum bank, reset with 5 yr Tbill plus 6.67% adjustment at 5 year reset. I bought 500 at $24.72 today when it opened. Heartland is interesting the last banking crisis it never lowered its common stock dividend. Kroll which is a respectable niche financial rater has it BBB-.
https://www.sec.gov/Archives/edgar/data/920112/000114036120014419/nt10012733x4_424b2.htm

 

[Mulligan]

Yeah, ALLY-A is rate sensitive, but that's part of it's charm for me. I consider that LIBOR is already very low. This issue is paying a reasonable div now and should rates rise this will pop, fixed rate will then most likely see a drop. Funny how not too long ago we were concerned about rising rates, and they fell. So just using this now as to balance things out a bit. Also a positive to see several directors buying up shares of the mothership this year.

Its funny but now that adjustment for Ally is kind of soft which was unthinkable 6 months ago. If you noticed preferreds are moving to resets off 5yr plus adjustment. Since current 5 yr is so low, the adjustment has to be big to match the released current yield. These will be sweet if they stay outof trouble.

 

[aja8888]

Bob, if your in the yield chasing mood consider new IPO that just came out today, HRLLL, from Heartland Financial.
A gawdy 7% QDI non cum bank, reset with 5 yr Tbill plus 6.67% adjustment at 5 year reset. I bought 500 at $24.72 today when it opened. Heartland is interesting the last banking crisis it never lowered its common stock dividend. Kroll which is a respectable niche financial rater has it BBB-.
https://www.sec.gov/Archives/edgar/data/920112/000114036120014419/nt10012733x4_424b2.htm

Mull; where did you buy this from? I can't find the issue on NYSE using HRLLL and I can't find any news announcement. Thanks.

Never mind, Schwab found it. On NASDAQ it's HTLFP.

 

[Mulligan]

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

Mull; where did you buy this from? I can't find the issue on NYSE using HRLLL and I can't find any news announcement. Thanks.

Never mind, Schwab found it. On NASDAQ it's HTLFP.

Yes, Aja. That is correct. That is the permanent ticker remember though. It will trade under the temporary ticker HRLLL for a week or so OTC, until it moves to the permanent ticker.

 

[aja8888]

Yes, Aja. That is correct. That is the permanent ticker remember though. It will trade under the temporary ticker HRLLL for a week or so OTC, until it moves to the permanent ticker.

Interesting bank and area of the country. I did some "time"up that way when I was in consulting. Helped a chemical plant get sold on the Illinois side of Dubuque. This is really the heartland of America with lots of nice people and slow living. Kind of like where you are, Mull!

So I threw in an order for 200 shares @ $24.70 to add to my pile. We'll see tomorrow what happens.

 

[Mulligan]

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

Interesting bank and area of the country. I did some "time"up that way when I was in consulting. Helped a chemical plant get sold on the Illinois side of Dubuque. This is really the heartland of America with lots of nice people and slow living. Kind of like where you are, Mull!

So I threw in an order for 200 shares @ $24.70 to add to my pile. We'll see tomorrow what happens.

Aja, Im eventually heading back to 200-300 shares here. Just trying to be a bit greedy and see if I can flip a few for a Big Mac dinner special and then hold a smaller core. It looks like its trading range today was $24.70 to $25. It will take a few days to get all the shares sold.
I “deserve” a little yield chase. I have been on a steady diet of 4% type issues lately. Im starving for yield, ha!

 

[aja8888]

Aja, Im eventually heading back to 200-300 shares here. Just trying to be a bit greedy and see if I can flip a few for a Big Mac dinner special and then hold a smaller core. It looks like its trading range today was $24.70 to $25. It will take a few days to get all the shares sold.

My purpose for buying is to up my preferred percentage. I do have some GTC sell orders in on a few issues at elevated price points. I'm paying more attention to the preferred issues now that interest rates are in the tank.

 

[Mulligan]

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

My purpose for buying is to up my preferred percentage. I do have some GTC sell orders in on a few issues at elevated price points. I'm paying more attention to the preferred issues now that interest rates are in the tank.

I went off on a side tangent last week and after 2 years of off and on attempts that netted me 2 shares, I finally bagged INPAP for 100 at $94.50. My life is complete. Dang thing traded about 1500 shares in past 18 months, and 800 of that was two transactions last month that went by me.
A older online friend from another forum (yes he is older than you Aja by several years) and lives in Texas was teasing me about it. He is an oil guy and said oil will be around longer than paper will... So I had to tease him back and say, “Amazon aint shipping your orders in aluminum foil while your trying to avoid that dangerous Chinese/Texas Corona. IP is big into that packaging material its shipped in, ha.

 

[aja8888]

I went off on a side tangent last week and after 2 years of off and on attempts that netted me 2 shares, I finally bagged INPAP for 100 at $94.50. My life is complete. Dang thing traded about 1500 shares in past 18 months, and 800 of that was two transactions last month that went by me.
A older online friend from another forum (yes he is older than you Aja by several years) and lives in Texas was teasing me about it. He is an oil guy and said oil will be around longer than paper will... So I had to tease him back and say, “Amazon aint shipping your orders in aluminum foil while your trying to avoid that dangerous Chinese/Texas Corona. IP is big into that packaging material its shipped in, ha.

Yeah as long as we have soft trees and recycled cardboard, IP will be around for a long time. And trucks will need fuel. And that plastic junk people buy from Amazon requires natural gas to make it. So it's all good! And of course, the electrical power to run all the machines and buildings and keep us warm/cool/and not in the dark.

 

[bobandsherry]

Its funny but now that adjustment for Ally is kind of soft which was unthinkable 6 months ago. If you noticed preferreds are moving to resets off 5yr plus adjustment. Since current 5 yr is so low, the adjustment has to be big to match the released current yield. These will be sweet if they stay outof trouble.

3 mo LIBOR and 5 yr Treasury seems to run pretty close to each other, so not a big change to the overall rate. I understand why the move from LIBOR. Here's chart of avg yearly closing rate for both.



Thanks for sharing the info on HRLLL.

 

[BrianB]

Partial redemption of Vereit Preferred F

For the second time, Vereit is taking a large chunk of my holding

https://seekingalpha.com/pr/17907470-vereit-announces-partial-redemption-of-6_70-series-f-cumulative-redeemable-preferred-stock

Edit to add: I should have seen it coming, they just priced $600M debt offering at 3.4%. The redemption will be $150M of 6.7% Preferred F. I guess the savings will be great for them but I will miss the dividends!

https://seekingalpha.com/news/3584380-vereit-prices-debt-offering

 

[Born2Fish]

Bob, if your in the yield chasing mood consider new IPO that just came out today, HRLLL, from Heartland Financial.
A gawdy 7% QDI non cum bank, reset with 5 yr Tbill plus 6.67% adjustment at 5 year reset. I bought 500 at $24.72 today when it opened. Heartland is interesting the last banking crisis it never lowered its common stock dividend. Kroll which is a respectable niche financial rater has it BBB-.
https://www.sec.gov/Archives/edgar/data/920112/000114036120014419/nt10012733x4_424b2.htm

Mulli - I am in the hunt for some yield but have a few questions about this offering.

How does this issue compare to the PCG preferreds we were recently involved with? I do not have a working knowledge of various rating agencies. Is BBB- a higher rating than that of the PCG preferreds?

Do you have concerns about the "non-Cum"? The way it reads, the issuer may simply suspend all future divs at any time.

I am looking for buy-and-hold.

 

[Mulligan]

Born, Different raters rated each but yes BBB- is low investment grade and B1 is weak junk. Yes non cum annoys me but banks by law must issue them. They will do everything they can not to miss a divi as no one would buy from them if they did. Risk reward wise, I think this bank issue is better not only with better yield but future interest rate protection long term too.

 

[Mulligan]

3 mo LIBOR and 5 yr Treasury seems to run pretty close to each other, so not a big change to the overall rate. I understand why the move from LIBOR. Here's chart of avg yearly closing rate for both.

View attachment 35411

Thanks for sharing the info on HRLLL.

Bob as you noticed its still sneaky on them...5 yr is more closely tethered to short end of yield curve. However they issue these in theory for perpetuity. So they get the benefit of the short end curve, and if long end ever collapses, they can still call it, issue a fixed perpetual then if they want. So though its better the advantage is still with issuer.

 

[Born2Fish]

Mulli - thanks for clarifying - I was not aware of the non cum div requirement.

I grabbed some earlier this morning and plan to add a little more depending on price tomorrow.

 

[Mulligan]

Mulli - thanks for clarifying - I was not aware of the non cum div requirement.

I grabbed some earlier this morning and plan to add a little more depending on price tomorrow.

Born, its annoying and as in PCG case it came in handy. But largely cumulative is a freebee thrown in. Rating agencies say they dont even factor it in to the safety because a suspension and repaying overall is generally rare and not worth factoring in. Most that suspend usually go bankrupt anyways is what they are suggesting. Still...I like it though...I do own a bank issue SBNCM that was issued non cumulative in the 1980s. And its never missed a payment.

 

[pb4uski]

Does anyone know what is going on with Hawaiian Electric 5% preferred... HAWLN?

Both MarketWatch and Fidelity say last trade was $28.70 and I'd love to sell at that price, but trading volume seems really thin and bid is $21.76 and ask is $28.75.... a pretty wide bid/ask spread.

$28.70 just seems to good to be true and may just be an anolamy.

 

[bobandsherry]

Does anyone know what is going on with Hawaiian Electric 5% preferred... HAWLN?

Both MarketWatch and Fidelity say last trade was $28.70 and I'd love to sell at that price, but trading volume seems really thin and bid is $21.76 and ask is $28.75.... a pretty wide bid/ask spread.

$28.70 just seems to good to be true and may just be an anolamy.

Big spreads in thinly traded shares not uncommon, especially shares that someone doesn't really want to trade except for the right price with a GTC order. And then when someone puts an order in without a limit price -- boom, it gets executed at the crazy price. I usually stay clear of low volume issues because if can be hard to get out when you want at the price I want.

 

[pb4uski]

Understood. I'm usually buy and hold and bought HAWLN slightly below par and the ~5% yield was good at the time for a Ba1 issue. I'm happy to hold and keep collecting that 5% yield but if someone comes along and I can sell for par + 8 years of interest then I'm game to sell.

 

[bobandsherry]

Understood. I'm usually buy and hold and bought HAWLN slightly below par and the ~5% yield was good at the time for a Ba1 issue. I'm happy to hold and keep collecting that 5% yield but if someone comes along and I can sell for par + 8 years of interest then I'm game to sell.

If you have a "make me sell it" price, put a GTC limit sell out there. Costs you nothing and maybe you find another person who forgets to put a limit price on their order, or just need to the shares for one reason or another.

 

[pb4uski]

Yes, that is what I have done... put a GTC limit at the "last" price and we'll see if anyone bites.... I could even lower it a bit and be quite happy.