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

[Freedom56]

Some perspective on interest rates:

https://seekingalpha.com/article/4228844-u-s-interest-rates-low-hint-europe?page=5

Some main points from the article:

2018 headline growth appeared to be much more robust than the underlying economy was and showed growth rates way above trend. The bond market simply does not believe this is a change in trend and rather, that growth will converge back to trend in the future.

A majority of the GDP gains above trend in 2018 were a result of inventory building and government spending, not true underlying economic growth.

The bond market is too smart to think a cyclical uptick in growth above trend due to government spending and inventories was the result of a structural change in growth and inflation requiring higher yields.

I continue to believe that a long position in long-term bonds such as the iShares 20+ Year Treasury Bond ETF (TLT) will bring large capital gains as interest rates make a new all-time low in the coming years.

This author also wrote this when interest rates moved sharply up in October:

https://seekingalpha.com/article/4211079-worried-rise-interest-rates?page=1

 

[Mulligan]

This week was actually pretty good for me all things considered. I think I am actually up a few pennies due to some timely trades. Im down a bit on EBBNF at 17.89 last trade...But that was a couple days ago, as it locked up. But it is up to $18.40 on TSX on 11,000 shares volume friday. It does ultimately follow TSX trades but it lags both ways due to little liquidity. In past it may trade a couple times a month despite high relative daily volume on TSX.
My preferreds have largely been held for protection on what has happened and it has paid off...My only thought is should I move from these stable ones and move into high quality liquids that have sold off and exploit that?
I have started that process though for longer holds...EBBNF was bought on this thought process.. SRC-A was also too. This issue has been so volatile I have traded a few times to get my cost basis down to almost break even despite buying an entry position almost $1.75 higher than Friday close.
Started an entry position in IPL-D at $21.83. It took all day to get my 400 shares as they came in dribbles despite over 10,000 shares trading. But it was bouncing between $21.81 and all the way over $23 Friday. I would love to see it go under $21 and then I would buy more...And if it got to $20, I would buy again.
The mainstream liquid preferred pain may not be over. What might seem a good deal could become a better deal

 

[RicDee]

Cap, some have bounced back...They make me nervous. I dont know if I can get back in them again. Their management has been an embarrassment for several years now. If it was just the market I would get back in strong.
Anything high quality and plus 6% or decent quality illiquids with a maturity date of under 10 years really has not traded bad at all.
CHSCN is 50 cents lower than when I dumped it. I really didnt think it would go lower, I just wanted out to exploit another issue on sale.

Mulligan, What are the preferreds with maturity dates under 10 years you referred to.

 

[Mulligan]

Mulligan, What are the preferreds with maturity dates under 10 years you referred to.

Ric, I own LANDP, CNIGO, CNIGP, KTN, KTH and KYN-F... Price entry points matter though as bid ask spreads can be high.
If you got to innovativeincomeinvestor who can see various lists of term dated issues. Many are BDC or investment companies, so you would have to evaluate the credit list. Term dated issues can mitigate duration risk, but it still doesnt remove credit credit risk.

 

[Freedom56]

I picked up a bunch of COF-PD at par. This is a high quality preferred with a 6.7% coupon. I'm targeting the highest coupon high grade preferred stocks.

 

[Mulligan]

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

I picked up a bunch of COF-PD at par. This is a high quality preferred with a 6.7% coupon. I'm targeting the highest coupon high grade preferred stocks.

Freedom that is basically for most of my money for past several years have done...Plus buy into liquidity dumps and sell into illiquidity (these of course are all illiquid quality issues I am referring to). This strategy has paid off. Look at AILLL...It hasnt even sneezed let alone take a cold...My biggest issue by far... Quality plus 6% QDI is always going to be respected in the long haul, especially with 3% long end govt bond yields.
I bought a little more IPl-D at 21.73 this morning in San Diego on a Christmas vacation... Im a bit early to this I suspect..But come next recession it will be near par in due time...Mean while it will pay...

 

[Freedom56]

Freedom that is basically for most of my money for past several years have done...Plus buy into liquidity dumps and sell into illiquidity (these of course are all illiquid quality issues I am referring to). This strategy has paid off. Look at AILLL...It hasnt even sneezed let alone take a cold...My biggest issue by far... Quality plus 6% QDI is always going to be respected in the long haul, especially with 3% long end govt bond yields.
I bought a little more IPl-D at 21.73 this morning in San Diego on a Christmas vacation... Im a bit early to this I suspect..But come next recession it will be near par in due time...Mean while it will pay...

I think that rates will be headed down late 2019. All those large bank preferred stocks that are below par that have a coupon of at least 6% will be back to par or better in a few months or sooner. I tend to buy bank preferred stocks when their yields exceed 6.5%. COF-PD will likely get called next December. PFF and other ETFs are liquidating now. As long are you hold issues where the company has free cash flow to meet its obligations, you will be fine. I want to get back into the JP Morgan Preferred stocks but they are stubbornly holding above par. Same for Wells Fargo and Bank of America.

 

[bobandsherry]

Freedom that is basically for most of my money for past several years have done...Plus buy into liquidity dumps and sell into illiquidity (these of course are all illiquid quality issues I am referring to). This strategy has paid off. Look at AILLL...It hasnt even sneezed let alone take a cold...My biggest issue by far... Quality plus 6% QDI is always going to be respected in the long haul, especially with 3% long end govt bond yields.
I bought a little more IPl-D at 21.73 this morning in San Diego on a Christmas vacation... Im a bit early to this I suspect..But come next recession it will be near par in due time...Mean while it will pay...

Man, you have a knack of finding those thinly traded shares at near rock bottom trading, even when you are on vacation. Nice!

 

[Freedom56]

Freedom that is basically for most of my money for past several years have done...Plus buy into liquidity dumps and sell into illiquidity (these of course are all illiquid quality issues I am referring to). This strategy has paid off. Look at AILLL...It hasnt even sneezed let alone take a cold...My biggest issue by far... Quality plus 6% QDI is always going to be respected in the long haul, especially with 3% long end govt bond yields.
I bought a little more IPl-D at 21.73 this morning in San Diego on a Christmas vacation... Im a bit early to this I suspect..But come next recession it will be near par in due time...Mean while it will pay...

AILLL trades on pink sheets and today has a volume of 5 shares and has an average volume of 282. How do you even buy a 1000?

 

[Mulligan]

AILLL trades on pink sheets and today has a volume of 5 shares and has an average volume of 282. How do you even buy a 1000?

Freedom, generally you dont...And daily volume is irrelevant, totally...It may trade zero shares for 2 weeks and then 500-1000 in one day and lock up for another two weeks. You have to be patient. I almost got 400 on Friday but Coolius stole a 100 and before I could heat up the Chromebook all I got was 195 more. I own thousands of it, Coolius owns a bunch, a man on another forum took my advice and bought up over a quarter million a couple years ago and will never sell...Its a $12 million old float and basically has become institutionalized so you have to be patient and collect over time.

 

[Mulligan]

Man, you have a knack of finding those thinly traded shares at near rock bottom trading, even when you are on vacation. Nice!

Bob it just basically is following the charts and getting interested in the 6% level for quality utes. 6% utes were issued when 10 year was 4.5%- 5%... Market swings are a given, good and bad..But historically when things settle down 6% quality utes is solid long term threshold to hold at.

 

[Coolius]

I am content with my holding of AILLL - as Mulligan has said, he, I and another ( who shall remain un-named ) own thousands of the shares.


Other sock drawer permanent residents are the CLP sisters, CNTHP & CNLPL, and old favorite HE-U.


I try to buy on dips but lately trading has been extremely sporadic, but these are always on my watchlist for buying opportunities.

 

[bobandsherry]

Bob it just basically is following the charts and getting interested in the 6% level for quality utes. 6% utes were issued when 10 year was 4.5%- 5%... Market swings are a given, good and bad..But historically when things settle down 6% quality utes is solid long term threshold to hold at.

When there is a momentary dip on such thinly traded securities and you can slide in and snag your shares even when you are on vacation, it's more than just reading a chart. Maybe you just hang a long limit order, but gotta think that anyone looking at the books can see where your limit order is and will cut you off just before you snag even a share, especially when there is action on the back-end after the price rises. Must be that lucky rabbits foot you are carrying around

 

[Mulligan]

Im looking at ocean from Coronado Hotel...No trading now, lol, market is closed...I never leave standing bids, I just see active trading and go in....You got to remember, this takes time...Not snapping fingers...I waited 2 years for this HE-U dip last week!

 

[Mulligan]

Im looking at ocean from Coronado Hotel...No trading now, lol, market is closed...I never leave standing bids, I just see active trading and go in....You got to remember, this takes time...Not snapping fingers...I waited 2 years for this HE-U dip last week!

I leave daily standing orders but not long ones..Like HE-U you see the sudden liquidity and jump in and hold your nose!

 

[bobandsherry]

Im looking at ocean from Coronado Hotel...No trading now, lol, market is closed...I never leave standing bids, I just see active trading and go in....You got to remember, this takes time...Not snapping fingers...I waited 2 years for this HE-U dip last week!

I've watched for dips for long time, rarely get a nibble as deep as you find stuff that's thinly traded. Hey, enjoy your trip and guessing a steak and wine dinner is on your short list of things to do there. [emoji3]. Merry Christmas. [emoji319]

 

[Mulligan]

Bob if I hadnt had to need to go to the toilet at the right moment and take "reading material" I would have missed it...It was like a 10 minute window of mass selling.

 

[Mulligan]

Oh Bob, and hell no to steak dinner out here...We spent 30 for a glass of wine and one beer! Im a cheepo...Back to the Gas Lamp district for dinner...Coronado costs too much! Merry Christmas!

 

[brokrken]

Merry Christmas fellas! Here's to a very high yielding 2019!

 

[Mulligan]

Coolius, got me in on MTB- today at $955 today...Many thanks to him! Sold some of my SRC-A at $20.92 today on a spike to cover my MTB- trade. Had some fortunate timing there. Did that trade in hotel room after Coolius posted on another website, and I just happened to check it at the right time.

 

[bobandsherry]

Coolius, got me in on MTB- today at $955 today...Many thanks to him! Sold some of my SRC-A at $20.92 today on a spike to cover my MTB- trade. Had some fortunate timing there. Did that trade in hotel room after Coolius posted on another website, and I just happened to check it at the right time.

Interesting to see 3,500 shares traded today as daily average is 460. Someone must have needed to unload. Should I assume that you and Coolius bought up the majority of the 3,500 shares Decent yield, but did we do something to p*ss Coolius off and he didn't want to share that good news here?

 

[Mulligan]

Interesting to see 3,500 shares traded today as daily average is 460. Someone must have needed to unload. Should I assume that you and Coolius bought up the majority of the 3,500 shares Decent yield, but did we do something to p*ss Coolius off and he didn't want to share that good news here?

I plucked 15 shares. It was all I could do without access to my other brokerage accounts while out of state. You need to follow innovativeincomeinvestor and silicone income investor forums. More posting goes there.

 

[bobandsherry]

I plucked 15 shares. It was all I could do without access to my other brokerage accounts while out of state. You need to follow innovativeincomeinvestor and silicone income investor forums. More posting goes there.

OK, so have to ask, since you managed to get in again near the low trading... Was this timing also tied into grabbing prior referenced "reading material"? If so, maybe we need to start monitoring something else

Thanks for the site suggestions. I've poked my head in on innovativeincomeinvestor a few times, Tim seems to have some interesting perspectives on issues.

Enjoy the rest of your trip.

 

[Mulligan]

Im back home to crappy MO weather and rain now......Bob, you give me too much credit...Coolius posted on SI I believe, that MTB- had sold at 950. I put in bid at 952... I forget what ask price was but it was bogus and higher... About 5 minutes later I moved it up to 955 and it sold instantly...The base ask price was $950 as it only shows highest 100 share bid, not small lot bids like mine was. So I knew I was higher than the base bid. Its was one of those throw it out there and see if it hits thing...It hit. Sometimes they do and sometimes they dont.

 

[RicDee]

Ric, I own LANDP, CNIGO, CNIGP, KTN, KTH and KYN-F... Price entry points matter though as bid ask spreads can be high.
If you got to innovativeincomeinvestor who can see various lists of term dated issues. Many are BDC or investment companies, so you would have to evaluate the credit list. Term dated issues can mitigate duration risk, but it still doesnt remove credit credit risk.

Mulligan Thanks, that site is a good resource for term dated issues.
Do any of you reading this now own any on the list at https://innovativeincomeinvestor.com/short-medium-maturity-income-issues/ ?