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

[Mulligan]

Since a few of us apparently have some preferreds, I would be curious to see what some other people own now....I will give my list... 3 Ameren Illinois issues, 3 issues under Excelon, a Pacificorp issue, Connecticut Light and Power, CHSCL, Wells Fargo- L, AES Trust issue, Monmouth Realty, Dominion Resources adjustable issue, AT&T baby bond, Ashford Hospitality (oops forgot that one, I have 2 reits) a hotel reit.


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[Coolius]

Here is my list:

CHSCL
CNLPL
CNTHP
AILLL
BGE-B
BGLEI
GLFPN
WFC-L
HE-U

and other conventional preferred issues ( much smaller holdings ).

 

[Mulligan]

You not have the Indianapolis Light and Power issue anymore Coolius?


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[Coolius]

You not have the Indianapolis Light and Power issue anymore Coolius?


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Yes I have a small position in IPWLK. It's not a full position so left it off list.

 

[Mulligan]

Yes I have a small position in IPWLK. It's not a full position so left it off list.

Hey, you dont have to exclude all issues under a million in value. Not all of us here are able to have "full positions" like you can.


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[Coolius]

Hey, you dont have to exclude all issues under a million in value. Not all of us here are able to have "full positions" like you can.


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I wish !!!!

Just saw a trade for AILLL, 100 shares @ $25.90. Wonder if one of us ?

 

[Mulligan]

I wish !!!!

Just saw a trade for AILLL, 100 shares @ $25.90. Wonder if one of us ?

It was a partial fill of someone who wanted 500 shares, but only got 100.... I almost got back in line to buy more before I bought MNR-A, but I am fully engorged on that position... That being said, I may get more with my fresh money next year. I would sleep fine with all my money in it.


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[Dan32]

I've only been adding individual preferred stocks in the last few months. I still have the ETF IDV as a dividend fund. Individual preferreds I have are: ANH-A, BANC-C, FULLL, and WFC-L. Although not a preferred stock an investment club I'm in has bought and sold BPT several times over the years. We last sold it in the 80s. It's now at 22.5 and pays a royalty of 25%. Even though I have a soft spot for stocks that have been good to me in the past, I can't convince myself that this is worth the risk and the tax hassle.

 

[Golden sunsets]

Do you two guru's of Preferred investing know why CHSCP yields 6.61% and is selling at $5.26 over par, but CHSCL yields 6.91% but is only selling at $2.10 over par? I must be missing something. Why would anyone purchase the first if they can get the second with less of a premium but a higher yield. I await your sage answers on my faulty reasoning.

PS Mulligan would you mind listing the tickers for your issues?

 

[Mulligan]

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

Do you two guru's of Preferred investing know why CHSCP yields 6.61% and is selling at $5.26 over par, but CHSCL yield 6.91% but is only selling at $2.10 over par? I must be missing something. Why would anyone purchase the first if they can get the second with less or a premium but a higher yield. I await your sage answers on my faulty reasoning.



PS Mulligan would you mind listing the tickers for your issues?

"Mediocre Amateur Investor" is my preferred name as opposed to "guru". The differences mostly have to do with call dates, Golden. P gets distorted because its so far above call price and is callable sooner by 2 years. Usually people assume a call, but that certainly doesn't mean it will happen. Plus simple supply and demand of each issue comes in play. "P" is an older higher paying one (par yield) and I assume less liquid since "L" was just issued this year.
They both are on the same level of priority so that doesn't come into play. Me personally I always take the highest yielder closest to par if no difference is priority. Some people will sell out of one issue and into another if opportunity presents itself in company issues.
Tickers are - AILLL, AILLI, AILNP, BGLEI, KTH, BGE-B, CNLPL, WFC-L, AES-C, GJP, KTBA, MNR-A, AHT-D, PPWLM, CHSCL.
Be careful with all of them....Yes, I love them all, but at the price I got and the dividends already received. And they may never be called. ....Some have been callable for 40 years, but that doesn't mean they wont be called tomorrow. If I am feeling frisky I may buy 2 divis above par, but only if next one has been declared. Only a few on the list are not past call.
If interested you need to be patient and set a price you can live with if they called it.




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[Mulligan]

Also I dont know what your tax situation is but be careful with that. Some of above are "qualified 15%" while others are treated like income. Since I would pay 31% as opposed to 21% with the qualified ones, I have make sure those are in either my Roth or HSA account.


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[Mulligan]

I've only been adding individual preferred stocks in the last few months. I still have the ETF IDV as a dividend fund. Individual preferreds I have are: ANH-A, BANC-C, FULLL, and WFC-L. Although not a preferred stock an investment club I'm in has bought and sold BPT several times over the years. We last sold it in the 80s. It's now at 22.5 and pays a royalty of 25%. Even though I have a soft spot for stocks that have been good to me in the past, I can't convince myself that this is worth the risk and the tax hassle.

Thanks for throwing them out there, Dan. I like seeing what other people have. I am a little myopic in my choices so it is interesting to see other peoples issues. Many people like those short term "notes" with call dates. I don't understand mechanics of Mreits so I stay away. That doesn't mean they are bad though. If I read something and my eyes glaze over I don't invest in it. More of a reflection of my limited cranial capacity than an indictment on the sector.


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[Coolius]

Do you two guru's of Preferred investing know why CHSCP yields 6.61% and is selling at $5.26 over par, but CHSCL yield 6.91% but is only selling at $2.10 over par? I must be missing something. Why would anyone purchase the first if they can get the second with less or a premium but a higher yield. I await your sage answers on my faulty reasoning.

PS Mulligan would you mind listing the tickers for your issues?

CHSCP was the original issue, done in the early days of the co-op. The owners are overwhelmingly member-farmers, who keep it as an investment as well as support of the co-op itself. This makes the issue very thinly traded, and institutional investors tend to go for other series, as explained below.



CHSCO, CHSCL, CHSCN, CHSCM were subsequently issued, to finance the growing co-op as well as building of a Fertilizer plant ( terminated earlier this year ). These issues are larger and more widely held, by individuals, ETFs, MFs and Hedge Funds. So they are more liquid and more volatile.


That's my take on the subject; of course, I could be totally off track. If anyone has a another reason, I'm all ears.

 

[Mulligan]

CHSCP was the original issue, done in the early days of the co-op. The owners are overwhelmingly member-farmers, who keep it as an investment as well as support of the co-op itself. This makes the issue very thinly traded, and institutional investors tend to go for other series, as explained below.



CHSCO, CHSCL, CHSCN, CHSCM were subsequently issued, to finance the growing co-op as well as building of a Fertilizer plant ( terminated earlier this year ). These issues are larger and more widely held, by individuals, ETFs, MFs and Hedge Funds. So they are more liquid and more volatile.


That's my take on the subject; of course, I could be totally off track. If anyone has a another reason, I'm all ears.

I think you are right on track. If memory serves they were originally going to call it when it was callable the first time, but the farmers raised hell so they extended it. They loved that 8% coupon. Being the company is a co-op, they aren't too worried about squeezing every profit penny they can since ultimately that money is going to their "owners" anyways.


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[Winemaker]

How about these to make your eyes glaze over, Mr. Mulligan:

BBT-F, DLR-G, JPM-D, KIM-J, LTS-A, MS-A, NNN-E, PSA-W, RBS-L, RY-S, SCE-B, WFC-O, MER-K, MER-M, PNC-P, JPM-A, GS-A, MWG, WFC-P, and two ETFs, PGX and PGF.

Except for the ETFs, all were bought $2.00 under par or more, avg. yield of this portion of portfolio, 6.3% of cost. Over $12,000 in unrealized cap gains, half purchased in 2008 and half in 2014. Some still remain under par.

I was blessed with great timing at the right place; no skill on my part.

 

[Mulligan]

Ah, some diversity in the ol portfolio, Winemaker. Cramer would be proud of you too! And diversified on the safety scale too. SCE-B on one end and LTS-A on the other. As in golf, its always nice to be in the clubhouse under PAR too!


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[Coolius]

CNTHP back to normal

A couple trades this morning, CNTHP @ $52.10 - $52.13. Hope some of you guys were able to grab a few.

Note that next dividend of $0.82 is expected Feb 1, exDiv date around Jan 7. If you buy now at around $52.10, cost basis after that dividend would be around $51.30 - LESS than redemption value of $51.44.

So, once you have the first dividend payment under your belt, you can ride the income stream for as long as they do not call it.

Would be reasonably safe to try for this stock at this price.

 

[Dan32]

I did pick up 110 of the shares traded at 52.10. My order was for 200 shares so it hasn't been completely filled.

On a side note, someone in one of these posts mentioned Lord Xot on a different message board. Some excellent info on preferred and some good google docs spreadsheets. There doesn't seem to be any recent updates or posts from him though. Hope that he is OK.

 

[Coolius]

I did pick up 110 of the shares traded at 52.10. My order was for 200 shares so it hasn't been completely filled.

On a side note, someone in one of these posts mentioned Lord Xot on a different message board. Some excellent info on preferred and some good google docs spreadsheets. There doesn't seem to be any recent updates or posts from him though. Hope that he is OK.

I have followed Lord Xot for about 3 years. He's fine, doing well, and posts occasionally on Silicon Investor. He is still on the low quality, high yield preferred side, so I do not buy his recs, although his posts have been VERY informative.

As an interesting aside, CNTHP only has 198,000 shares outstanding. I wonder how many are held by ER.org members - whom I consider as strong hands. This makes the issue very stable and illiquid - just the way Mulligan ( and myself ) likes it.

 

[Mulligan]

Dan, like Coolius says, he is very informative. But he invests in a total different type of preferred. Most issues if were rated (many are just not rated) by a bond agency would definitely fall into "high yield junk". Nothing wrong with that provided you know what you are dealing with and accept all that entails with it including price volatility and dividend risk. I am a safe if not juvenile preferred investor. I mostly invest in investment grade preferreds that are issued because the company just wanted too, not because they HAVE to. What reasonable company would want to pay 9-12% dividends in this rate environment unless they are financially stressed? Who really knows what is in those financial books.


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[Mulligan]

I did pick up 110 of the shares traded at 52.10. My order was for 200 shares so it hasn't been completely filled.

On a side note, someone in one of these posts mentioned Lord Xot on a different message board. Some excellent info on preferred and some good google docs spreadsheets. There doesn't seem to be any recent updates or posts from him though. Hope that he is OK.

By the way, Dan remember CNLPL is essentially the same issue. It also is about 70% bigger issue (though still small at 15 million) and may be bought easier at times if you ever consider buying more (proper bid/ask price always applies).
There is absolutely no diversity in owning half in each, or all in each. I doubt either will be called, but almost certain they would call both if it ever happened.


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[Coolius]

CNLPL has a higher redemption value if called - $51.84 ( vs $51.44 for CNTHP ).

It is very illiquid; I've had bids in at around $52 for months and never had a bite. Patience is the word here.

 

[RE2Boys]

CNLPL has a higher redemption value if called - $51.84 ( vs $51.44 for CNTHP ).

It is very illiquid; I've had bids in at around $52 for months and never had a bite. Patience is the word here.

Very much agree. First time I tried to pick some up, I got 130 shares in two transactions the same day for under $52. Haven't been able to get anymore since then even with a GTC order with a higher limit. Just luck that one day.

 

[capjak]

Since a few of us apparently have some preferreds, I would be curious to see what some other people own now....I will give my list... 3 Ameren Illinois issues, 3 issues under Excelon, a Pacificorp issue, Connecticut Light and Power, CHSCL, Wells Fargo- L, AES Trust issue, Monmouth Realty, Dominion Resources adjustable issue, AT&T baby bond, Ashford Hospitality (oops forgot that one, I have 2 reits) a hotel reit.


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I have the MMF (Mulligan Mutual Fund):

AILLL
CNLPL
CNTHP
WFCPR-L
OSBCP
MNRPRA

 

[Mulligan]

Very much agree. First time I tried to pick some up, I got 130 shares in two transactions the same day for under $52. Haven't been able to get anymore since then even with a GTC order with a higher limit. Just luck that one day.

The reason you and Coolius cant get much, is because you two are cheap ba$tards. .... I have over a 1000 of them mostly from last year, and I bought none of them under $52. Most around $52.50. If I had implemented that strategy, I would have lost out on over $4 in dividends. A person doesn't want to overpay but waiting for absolute bottom dollar is a lottery ticket as usually only one person gets that low price, then it locks up again. With that being said, right now is a time for patience as it just basically went exD so you have 3 months for next divi and the coming dividend hasn't been declared.
When I paid $52.50-75 it was usually within 2 weeks of exD. Much better odds of acquiring it at $52.75 pre exD, than trying to get it at $51.95 exD.


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