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

[brokrken]

Sorry Ken, I am no help for you here.

It was worth a try. Actually may replace this REIT common with a REIT preferred that has a better yield.

 

[Mulligan]

I am on the beach in Mexico, so no trading. But wifi is good! Noticed some preferreds are taking some beatings. Nice to know mine are holding strong and a few even rising. Hopefully nobody owns dirtbag AmTrust. Never trusted that outfit. Their preferreds are down 40% in past week....Ouch!

 

[brokrken]

Just to close the loop, I ended up selling the MAA common, thus locking in the big capital gain I had and replacing it with the MAA-I preferred at $66 for 6.4% yield

 

[Coolius]

Just to close the loop, I ended up selling the MAA common, thus locking in the big capital gain I had and replacing it with the MAA-I preferred at $66 for 6.4% yield

Good to read a post about MAA-I. This issue has been totally off radar from the websites I visit, ever since the old Post Properties ticker vanished.

I own a few hundred shares of MAA-I, at average cost basis of $66.20 with 1 dividend received last year.

No call risk for many years, and nice yield, with a relatively strong company behind it. I have no intention of selling this one - at least not in the immediate future.

 

[brokrken]

Coolius, I guess you just recent bought MAA-I? Otherwise, I don't understand that you just got 1 dividend last year. I guess it's off most radars because of how thinly traded it is. I actually didn't expect my bid to get picked up. It only traded 250 shares today and 150 of that was mine!


Also, I just realized that NSS, which quite a few of us own, has just switched from fixed to floating as of Jan 15 with no news of a call. With the 3 Month Libor around 1.7%, this is going to boost our yield by nearly a full 1%. And, with their recent preferred issued at 9% I don't expect a call.

 

[Mulligan]

Coolius, I guess you just recent bought MAA-I? Otherwise, I don't understand that you just got 1 dividend last year. I guess it's off most radars because of how thinly traded it is. I actually didn't expect my bid to get picked up. It only traded 250 shares today and 150 of that was mine!


Also, I just realized that NSS, which quite a few of us own, has just switched from fixed to floating as of Jan 15 with no news of a call. With the 3 Month Libor around 1.7%, this is going to boost our yield by nearly a full 1%. And, with their recent preferred issued at 9% I don't expect a call.

Remember Ken, NSS is debt not a preferred so they are not of similar cap stack. I sure hope your correct though. NS got a waiver on NSS being counted on debt ratio covenants so UBS took that as a sign that would remain outstanding for a while anyways. So they recently recommended buying it after we already had. It should be a strong short term play at a minimum.

 

[Coolius]

Ken, you made me check, so I did, using my broker's transaction search.

I bought 200 shares on 9/12/2017, paid $65.30. Then sold at $66.60 after receiving the dividend on 10/02/2017.

Then bought back in early November, at $66.20. And received another dividend 1/2/2018.

So I actually received 2 dividends instead of one

However, I saw something strange - the November dividend amount was more than the January amount, by a couple dollars. I am guessing it's due to a longer dividend period when MAA-I was first introduced.

I might add more if it swings to the low $65's again.

 

[Winemaker]

I am on the beach in Mexico, so no trading. But wifi is good! Noticed some preferreds are taking some beatings. Nice to know mine are holding strong and a few even rising. Hopefully nobody owns dirtbag AmTrust. Never trusted that outfit. Their preferreds are down 40% in past week....Ouch!

Go ahead rub it in! Like suntan oil on the beach and laugh!

Had 200 bought at about $22.70, DCA another 200 in my spec account at about $20.15. Bought another 100 today for $15.15. Either I'm going to be laughing to the bank or licking my wounds with a wine soaked tongue.

Up to $17 and some change today!

 

[bobandsherry]

Go ahead rub it in! Like suntan oil on the beach and laugh!

Had 200 bought at about $22.70, DCA another 200 in my spec account at about $20.15. Bought another 100 today for $15.15. Either I'm going to be laughing to the bank or licking my wounds with a wine soaked tongue.

Up to $17 and some change today!

Ugh - a pitfall of preferred's without maturity and non-cumulative. If they go private is there incentive for them to pay dividends? Something today really caused rally in price. Good luck on the ride.

 

[pb4uski]

They can't pay common dividends until they resume paying preferred dividends can they?

But you have a good point that non-cumulative gives them an incentive to pay nothing and stiff the preferred until they want to start paying common dividends.

 

[Winemaker]

My thought process at this time is that Amtrust is a insurance company used by small business and others, that had some reports of accounting irregularities. The founder's family recently made a $ 300 million private placement for common shares, common shares continued to fall. A recent proposal to take the company private resulting in a 20-25% increase in commons, to the take over amount at $12.25. Why spend so much money for a takeover, where the customers can simply walk away, especially if that company screws over their stockholders. There is almost a $900 million in preferred shares outstanding, and no dividends have ever been missed, and are senior to the common in dividend payments. Hey, it's only money.


I believe the jump up today was the result of a law firm entering into the fray, asking clarification of the preferred shareholders rights in the privatization offer.

https://www.businesswire.com/news/h...ates-Announces-Investigation-Behalf-Preferred

 

[bobandsherry]

They can't pay common dividends until they resume paying preferred dividends can they?

But you have a good point that non-cumulative gives them an incentive to pay nothing and stiff the preferred until they want to start paying common dividends.

Perhaps I'm thinking about this incorrectly, but if it's family taking it private then no need for dividends. There are other options available to get cash out of business and into their pockets.

Also, once private it's also loses it's liquidity. It also loses access and transparency to the companies financials, making it difficult to value. All of these just lower the price of the issues. Might also be a good play for them to drive down the price on the preferred and buy them up on the cheap to essentially retire them for much less than par.

 

[pb4uski]

From just a quick read of the press release, there are 3 parties involved, some PE funds, the CEO and a family. My guess would be that the PE is the majority of the money and that the CEO and family are minority investors. While the PE fund will get some fees, common dividends are the most common way to distribute money to the PE fund investors and the minority investors and I'm pretty sure that they can't pay the common without paying the preferred.

 

[Running_Man]

After the close Archer Daniels Midland announced they are bidding for Bunge, entering a potential bidding war with Glencore, I do not know what this will mean for the preferred shares since they will be taken over at a price under the conversion price favorable for preferred stock holder.

 

[Mulligan]

My thought process at this time is that Amtrust is a insurance company used by small business and others, that had some reports of accounting irregularities. The founder's family recently made a $ 300 million private placement for common shares, common shares continued to fall. A recent proposal to take the company private resulting in a 20-25% increase in commons, to the take over amount at $12.25. Why spend so much money for a takeover, where the customers can simply walk away, especially if that company screws over their stockholders. There is almost a $900 million in preferred shares outstanding, and no dividends have ever been missed, and are senior to the common in dividend payments. Hey, it's only money.


I believe the jump up today was the result of a law firm entering into the fray, asking clarification of the preferred shareholders rights in the privatization offer.

https://www.businesswire.com/news/h...ates-Announces-Investigation-Behalf-Preferred

There are many ways these preferreds could be damaged temporarily or long term. But at this time it just could be the fear factor. Speculation and fear may be the problem and they could bounce back. The company does not have a stellar reputation and that could be the cause. I have seen several preferreds plummet the past few years hard like these and then rebound quickly after the fear and conjecture are proved baseless. I hope they bounce back for you Winemaker. I will sit and cheerlead from the sidelines for you!

 

[Mulligan]

After the close Archer Daniels Midland announced they are bidding for Bunge, entering a potential bidding war with Glencore, I do not know what this will mean for the preferred shares since they will be taken over at a price under the conversion price favorable for preferred stock holder.

Any chance they would just be left outstanding? Isnt that the genesis of WFC-L? There should be a change of control provision in the prospectus. I may look in a day or two...Off to bed now though.

 

[Mulligan]

Go ahead rub it in! Like suntan oil on the beach and laugh!

Had 200 bought at about $22.70, DCA another 200 in my spec account at about $20.15. Bought another 100 today for $15.15. Either I'm going to be laughing to the bank or licking my wounds with a wine soaked tongue.

Up to $17 and some change today!

I didnt need suntan oil, Winemaker...I needed sun block. Got burnt a bit yesterday. Too stubborn and lazy to walk back to our room to get the sun block.

 

[Texas Proud]

My thought process at this time is that Amtrust is a insurance company used by small business and others, that had some reports of accounting irregularities. The founder's family recently made a $ 300 million private placement for common shares, common shares continued to fall. A recent proposal to take the company private resulting in a 20-25% increase in commons, to the take over amount at $12.25. Why spend so much money for a takeover, where the customers can simply walk away, especially if that company screws over their stockholders. There is almost a $900 million in preferred shares outstanding, and no dividends have ever been missed, and are senior to the common in dividend payments. Hey, it's only money.


I believe the jump up today was the result of a law firm entering into the fray, asking clarification of the preferred shareholders rights in the privatization offer.

https://www.businesswire.com/news/h...ates-Announces-Investigation-Behalf-Preferred

Just started to look at this as a play....

But, why not buy the debt securities.... I do not think they can not pay those and the price does not seem to have gone down like the pref....

AFST looks like it is yielding 7.8%.... not like the 10%, but not as much risk either...

 

[Mulligan]

Just started to look at this as a play....

But, why not buy the debt securities.... I do not think they can not pay those and the price does not seem to have gone down like the pref....

AFST looks like it is yielding 7.8%.... not like the 10%, but not as much risk either...

Did you ever look at the Phoenix debt, Texas?

 

[Texas Proud]

Did you ever look at the Phoenix debt, Texas?

Yes... I will probably get some... just do not have money right now and interest is not due for a bit...

However, with one of the other threads where I saw my AA I have been moving a bit more money into my 'bond' bucket... might move some to get this...

Thanks for the info on this.... I would have never found it on my own...

 

[Mulligan]

Texas here is a bit more info from someone who has owned it for a good while...


Seven Corners Capital Management, Contributor
Comments (655) |+ Follow |Send Message
Re PFX, de-stacking was the key thing - Phoenix Life Insurance Company and PHL Variable Insurance Company now separately owned by Nassau, meaning that dividends from Variable cannot be blocked by the insurance regulators at the Life level, as previously was the case. So Nassau's ability to make interest payments on PFX is more secure (it has 2 separate dividend streams instead of 1).
http://bit.ly/2FRoqpF
18 Jan 2018, 06:28 PM Report Abuse Reply 0 Like

Seven Corners Capital Management, Contributor
Comments (655) |+ Follow |Send Message
...we also read PFX's financials whenever they come out. Nassau reversed the tax valuation allowance in Q3 2017, meaning they think that future profitability will allow them to use the NOLs (note that shareholder equity is positive post-reversal - although they may now have to write a portion of the NOLs back down since the tax rate has been reduced from 35% to 21%).

 

[Mulligan]

My thought process at this time is that Amtrust is a insurance company used by small business and others, that had some reports of accounting irregularities. The founder's family recently made a $ 300 million private placement for common shares, common shares continued to fall. A recent proposal to take the company private resulting in a 20-25% increase in commons, to the take over amount at $12.25. Why spend so much money for a takeover, where the customers can simply walk away, especially if that company screws over their stockholders. There is almost a $900 million in preferred shares outstanding, and no dividends have ever been missed, and are senior to the common in dividend payments. Hey, it's only money.


I believe the jump up today was the result of a law firm entering into the fray, asking clarification of the preferred shareholders rights in the privatization offer.

https://www.businesswire.com/news/h...ates-Announces-Investigation-Behalf-Preferred

Your a bad influence Winemaker...AfSI declared nothing is changing with preferreds so I dabbled with a 200 share purchase this morning. I should sell already and book a small steak dinner profit already!

 

[Mulligan]

WINEY, I Should have listened to you...Bought 200 more of the B series ago also.. Already up on that one too. Once they came out with the public release it has been shoot fish in a barrell time!

 

[Mulligan]

WINEY, I Should have listened to you...Bought 200 more of the B series ago also.. Already up on that one too. Once they came out with the public release it has been shoot fish in a barrell time!

So I have 200 each of the F and B series now.

My thought process at this time is that Amtrust is a insurance company used by small business and others, that had some reports of accounting irregularities. The founder's family recently made a $ 300 million private placement for common shares, common shares continued to fall. A recent proposal to take the company private resulting in a 20-25% increase in commons, to the take over amount at $12.25. Why spend so much money for a takeover, where the customers can simply walk away, especially if that company screws over their stockholders. There is almost a $900 million in preferred shares outstanding, and no dividends have ever been missed, and are senior to the common in dividend payments. Hey, it's only money.


I believe the jump up today was the result of a law firm entering into the fray, asking clarification of the preferred shareholders rights in the privatization offer.

https://www.businesswire.com/news/h...ates-Announces-Investigation-Behalf-Preferred

 

[Texas Proud]

WINEY, I Should have listened to you...Bought 200 more of the B series ago also.. Already up on that one too. Once they came out with the public release it has been shoot fish in a barrell time!

LOL... I did not see the article but did see them going up.... bought a bit over 200 of the C.... might buy a bit more now that you have given a reason for the uptick... also makes them safer....