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

[Mulligan]

Damn there was some easy money out there buying the sold off issues from last week. I already sold some of them already with almost a years divi holding a couple days.

 

[Born2Fish]

I was able to pick up a little more EP-C this morning.

Initial order was for 50 shares at 49.80...nothing.

Moved to $49.90...nothing.

Couple hours later moved to $49.91...sold!!

Weird that a penny made the difference.

 

[Mulligan]

I was able to pick up a little more EP-C this morning.



Initial order was for 50 shares at 49.80...nothing.



Moved to $49.90...nothing.



Couple hours later moved to $49.91...sold!!



Weird that a penny made the difference.

Born, it wont make you rich or famous but it is a very solid core hold. Im glad right now I am loaded up on it.

 

[Freedom56]

Man I though interest rates were headed lower but not this fast. We may see the ten year go negative soon. The fund selling should push those investment grade preferred stocks below par soon at which point we will some some pretty wide spreads between the 30 year bond and perpetual preferred stocks. It feels like a combination of 2008 financial crisis and the 2000 dot com bubble.

 

[pb4uski]

Yeah.... after I posted above I did a search for posts including "partial call" in this thread and after reading a bunch of them that seemed to be a common theme that shares to be called are as Mulligan put it 'impounded". I'm not sure if it makes sense because they impound the shares before the call date.... in my case a whole month... rather than lock up my money for a month, just change the call date to today and pay me the par and prorated dividend and let me go.

Ok... so given the market for the last couple weeks I'm really pissed at WFC and Fidelity for locking up my investment in WFC-T for a whole freaking month! WTF is that all about! WFC.. if you want to partial call it then fine but just pay me my call price and accrued dividends through the call date (Feb 14).... don't annouce it on Feb 14 and lock up 80% of my shares for a whole freaking month!

 

[thepalmersinking]

PFF and PFD, thoughts on these two during these times. Buy, sell or hold?

 

[Freedom56]

PFF and PFD, thoughts on these two during these times. Buy, sell or hold?

Passive funds like PFF, PFD, PGX and other create opportunities for retail investors when panic selling starts or when they re-balance. They will under-perform a portfolio of investment grade/high quality preferred stocks. You have to ask yourself, why would anyone sell a high quality preferred stock with a coupon over 6% when interest rates are going to zero? The universe of preferred stocks is relatively small and there are a lot of garbage issues out there that these funds tend to buy just for "diversification". This also leads to under-performance. I personally stay away from them. There are many passive funds that are just plain bad like SPFF from Global X that lure investors in with a higher yield but rob them of their capital. If I wanted a fund, I would stick with a high quality CEF like IHIT rather than PFF, PFD, or PGX.

 

[Born2Fish]

Mulli - EP-C still looking ok in your eyes. Price has fallen, would like to pick up a few at a time sub-$45.

 

[bobandsherry]

A promising higher yield play I personally own is CEQP-, pays over 9%. A good high yield, higher risk preferred is one that its financials are improving and this one is...It is a K-1 issued MLP however.

Hey Mulligan - I bought a few of these and well, what the hell has happened today? Down to $5.65. What's your crystal ball showing on this one? I asked my magic eight ball and it told me to try again later.

 

[Mulligan]

Hey Mulligan - I bought a few of these and well, what the hell has happened today? Down to $5.65. What's your crystal ball showing on this one? I asked my magic eight ball and it told me to try again later.

Hey guys should have checked in here earlier. If you think the biggest gas pipeline company will stay solvent until 2028 it has to be good. All MLPs and real bonds have got smoked. All in all EP-C has held up well. See KMI 2043 dropped to 90 which is about 5.7% ish. Its a senior unsecured so the subordinated debt had to fall in line. I bought 200 more under $44 yesterday.
The issue can be volatile with market but KMI is fine. I dont see insolvency like some dirtbag MLP outfits.
Overall things havent been to bad for me.. Down maybe 3% or so. But I did some trading around a bit and got into very high quality preferreds. They havent absorbed the blows lower tier crap has...Some have been absolutely pummeled. Esp in MLP, hospitality, and MReit type stuff..
Im getting a bit nervous not so much from Corona but its repercussions. When NBA suspends season and NCAA cancels, wow...Some major paranoia is going to set in and paralyze everything.

 

[Freedom56]

Out of the carnage thus far, the yield curve has almost normalized. With everyone staying home streaming movies and playing video games and businesses doing more video conferencing and virtual conventions, technology and telecom should do fine. Healthcare and pharma companies will also do well.

 

[Born2Fish]

Hey guys should have checked in here earlier. If you think the biggest gas pipeline company will stay solvent until 2028 it has to be good. All MLPs and real bonds have got smoked. All in all EP-C has held up well. See KMI 2043 dropped to 90 which is about 5.7% ish. Its a senior unsecured so the subordinated debt had to fall in line. I bought 200 more under $44 yesterday.
The issue can be volatile with market but KMI is fine. I dont see insolvency like some dirtbag MLP outfits.
Overall things havent been to bad for me.. Down maybe 3% or so. But I did some trading around a bit and got into very high quality preferreds. They havent absorbed the blows lower tier crap has...Some have been absolutely pummeled. Esp in MLP, hospitality, and MReit type stuff..
Im getting a bit nervous not so much from Corona but its repercussions. When NBA suspends season and NCAA cancels, wow...Some major paranoia is going to set in and paralyze everything.

I have held EPD for a long time. Unfortunately I held as it got smoked. Ouch.

Hoping it holds on but we'll see.

 

[Running_Man]

WFC.pl is now at 1300 down 250 points (16.1%) from it's peak. At 1250 you are back to a 6% yield. Starting to see some real hits now to the preferred issues.

NIPSCO preferred down under par to 24.81 RPTD at 45.34 down from 54. MY IDA stock is down to 86 a little while ago I sold at 110. At 67 it is a 4 percent yield in a growing area of the country and I would start nibbling there on IDA.

 

[Freedom56]

I have been on a buying binge this morning. PFF and PGX sold off so expect more fire sales as these funds continue to liquidate over the coming days.

 

[Sunset]

I have been on a buying binge this morning. PFF and PGX sold off so expect more fire sales as these funds continue to liquidate over the coming days.

Which ones have you found exciting ?

 

[Freedom56]

Which ones have you found exciting ?

I picked up:

4000 COF-F at $23.10
2000 AFC at $21.11

the rest were regular corporate notes Seagate 2024 and Seagate 2022.

I have a lot of dry powder in MM funds that will be yielding near zero pretty soon. There is a lot of irrational selling as always by funds.

 

[Running_Man]

I picked up:

4000 COF-F at $23.10
2000 AFC at $21.11

the rest were regular corporate notes Seagate 2024 and Seagate 2022.

I have a lot of dry powder in MM funds that will be yielding near zero pretty soon. There is a lot of irrational selling as always by funds.

We come from a historic high in corporate debt relative to GDP,
Then through on top a historic drop in speed from an all time high to a 10% drop, fastest in history.
We have the lowest interest rates world wide in the history of civilization.


I don't think it's a one week fire sale. There are massive problems in the financing of the world governments and corporations. I am waiting for either time - one year or else drops in S&P500 below 1300. Growth is going to be slowed for a time no matter what, the debt levels are too high to borrow and governments at state level are going to be seeing reduced income. This will cut the amount being allocated to pensions around the world from governments which will slow fundings as at the same time pension payments continue. Does not bode to me for a V type recovery.

If S&P500 got back to 3100 I'd get back in since that is the point where I disposed of everything and it would prove me wrong and I'd be missing out on this sale for sure, but from my position I would not be harmed in any way.

 

[Freedom56]

We come from a historic high in corporate debt relative to GDP,
Then through on top a historic drop in speed from an all time high to a 10% drop, fastest in history.
We have the lowest interest rates world wide in the history of civilization.


I don't think it's a one week fire sale. There are massive problems in the financing of the world governments and corporations. I am waiting for either time - one year or else drops in S&P500 below 1300. Growth is going to be slowed for a time no matter what, the debt levels are too high to borrow and governments at state level are going to be seeing reduced income. This will cut the amount being allocated to pensions around the world from governments which will slow fundings as at the same time pension payments continue. Does not bode to me for a V type recovery.

If S&P500 got back to 3100 I'd get back in since that is the point where I disposed of everything and it would prove me wrong and I'd be missing out on this sale for sure, but from my position I would not be harmed in any way.

I don't think it's a one time fire sale. The pain will continue for a while but I don't own stocks and prefer to invest in fixed income instruments of companies that are doing relatively well. That is to say, I avoid energy, retail, REITS, and industrial companies. I believe that the market will bottom at around where it was in October 2016. But many sectors have been totally wiped out like energy and retail. There are a the trillion dollar market cap stocks that are holding the S&P up and when they fall, It will bring the index down to it's true value.

 

[Sunset]

I picked up:

4000 COF-F at $23.10
2000 AFC at $21.11

the rest were regular corporate notes Seagate 2024 and Seagate 2022.

I have a lot of dry powder in MM funds that will be yielding near zero pretty soon. There is a lot of irrational selling as always by funds.

Just checking is AFC: Allied Capital Corp. 6.875% Notes 2047 ?

 

[Freedom56]

Just checking is AFC: Allied Capital Corp. 6.875% Notes 2047 ?

8.14% at my buy price plus the capital gain when it gets called or matures.

 

[Running_Man]

And just like that WFC.PL is at a 6% yield down 200+ points today..............
PFF ETF is now a couple points below the low of the Sep-Dec 2018 route in interest rates and stock market. Lowest level since May 2009 Next stop 22...............

 

[Freedom56]

And just like that WFC.PL is at a 6% yield down 200+ points today..............
PFF ETF is now a couple points below the low of the Sep-Dec 2018 route in interest rates and stock market. Lowest level since May 2009 Next stop 22...............

My cash will soon be yielding near zero in the MM funds. I buy my preferred stocks and bonds when they go on sale. The last big fire sale was November-December 2018. I bought then and sold April 2019. I'm buying back in now and have plenty of dry powder to buy more. The market has gone through these irrational panic selling of fixed income securities several times over the past 12 years. I don't see this time as being any different other than interest rates will stay near zero for a long time which is good for investment grade income securities and many high yield bonds from stable cash generating businesses. Money eventually flows back into income securities. (bonds, preferred stocks) as investors look for stability and yield. I wouldn't buy a preferred stock fund or a bond fund as they buy high (over par) and are forced to sell low (below par) which severely limits their performance.

 

[Running_Man]

My cash will soon be yielding near zero in the MM funds. I buy my preferred stocks and bonds when they go on sale. The last big fire sale was November-December 2018. I bought then and sold April 2019. I'm buying back in now and have plenty of dry powder to buy more. The market has gone through these irrational panic selling of fixed income securities several times over the past 12 years. I don't see this time as being any different other than interest rates will stay near zero for a long time which is good for investment grade income securities and many high yield bonds from stable cash generating businesses. Money eventually flows back into income securities. (bonds, preferred stocks) as investors look for stability and yield. I wouldn't buy a preferred stock fund or a bond fund as they buy high (over par) and are forced to sell low (below par) which severely limits their performance.

Your cash outperformed the average total market ETF by 10% today and 25% this week. From what I can gather much of the corporate debt is held in ETF's and is held by pension and hedge funds and in order to goose returns they are held in margin. Now redemptions are hitting and they have to sell, but to sell the ETF there is not enough individual buyers of the corporate bonds to relieve bond funds of their positions so the ask price is not being met. In the meantime preferreds and stocks are being sold because those still have a market. Even in some cases treasuries are being sold. But as this continues forced sales are going to occur and you can have a couple of days with air pockets and you will know when it is time to buy because you'll feel too scared to buy. Unlike 2008 the total bond market as BND showed today, might get crushed by this due to all of the corporate credit outstanding. This will directly influence the preferreds.

 

[Freedom56]

Your cash outperformed the average total market ETF by 10% today and 25% this week

Over the long run, I will outperform a zero interest account. My investment portfolio was up 20.5% last year and is down YTD as of today 4.6%. However most of that loss was due to the bond premiums (price over par) coming down. I normally hold to maturity and these premiums go to zero when the security matures or gets called. I always buy these securities below par. I have no exposure to equities.

 

[Running_Man]

Over the long run, I will outperform a zero interest account. My investment portfolio was up 20.5% last year and is down YTD as of today 4.6%. However most of that loss was due to the bond premiums (price over par) coming down. I normally hold to maturity and these premiums go to zero when the security matures or gets called. I always buy these securities below par. I have no exposure to equities.

I am not directly trying to change your strategy and it can make great sense so I understand. Keep some powder and it sounds like you will and you will have opportunities to do very well.