Preferred Stock Investing-The Good , The Bad and The In Between 2021

[Mulligan]

Yea, I saw that.... but am upset that I got nothing from VG that it was happening... did not find out till yesterday looking at my holdings and wondering why I had bonds... also, they date VG has the exchange is 12/15


If I knew they were breaking up the trust I might have sold... now will likely hold to maturity

Bonds were inside a trust. Apparently the trust was dissolved and the trust owners actually received the bonds. These trust type things were set up for tax reasons back in the day. But tax laws dont seem applicable anymore to creating them.

 

[copyright1997reloaded]

So I've picked up/at
JPMpM
SLMBP
CTApA
SRpA
all of which (except for perhaps the Sallie Mae Floater) I would likely buy more if their prices fall (higher yields).

Anything else that has gotten more enticing in the last few weeks? I am doing this mostly in conjunction with a lot of T-Bills to slightly juice my sort-a-fixed returns, hopefully without getting hammered on the risk front.

I have a 3% loss on the JPM preferred, 1.5% loss on Spire, 1.4% gain on the Dow/Dupont/Whatever it came from (CTApA, funny I owned both Dow and Dupont before they merged), 1.2% loss on the Sallie Mae. None of these losses bother me in the least as I am slowly accumulating, and even able to occasionally get a slightly underwater bid filled (e.g. Spire @22.58 near 4PM on Friday).

 

[bobandsherry]

So I've picked up/at
JPMpM
SLMBP
CTApA
SRpA
all of which (except for perhaps the Sallie Mae Floater) I would likely buy more if their prices fall (higher yields).

Anything else that has gotten more enticing in the last few weeks? I am doing this mostly in conjunction with a lot of T-Bills to slightly juice my sort-a-fixed returns, hopefully without getting hammered on the risk front.

Recent adds for me.....

I've sunk a hook lately into EP-C. Trad 10% below par ($50 par). 4.75% coupon, current yield is 5.3%. Matures 3/2028, YTM is 7.35% for 5 year hold.

TDS-V and TDS-U beat down recently, well below par, both now with 11%+ yield has enticed me to give it a nibble.

Also took a bite of BML-J. It's a floater, 3ML + .75%. With 3ML at 4.75% this week, looking at a decent rate reset next dividend payment. It has a floor of 4%, so at $19 current price it's a worse case of 5.25% yield.

Good luck with your investments in the new year.

 

[Mulligan]

Recent adds for me.....



I've sunk a hook lately into EP-C. Trad 10% below par ($50 par). 4.75% coupon, current yield is 5.3%. Matures 3/2028, YTM is 7.35% for 5 year hold.



TDS-V and TDS-U beat down recently, well below par, both now with 11%+ yield has enticed me to give it a nibble.



Also took a bite of BML-J. It's a floater, 3ML + .75%. With 3ML at 4.75% this week, looking at a decent rate reset next dividend payment. It has a floor of 4%, so at $19 current price it's a worse case of 5.25% yield.



Good luck with your investments in the new year.

I dont own EP-C currently but own issues like it (decent YTM with maturities in that 2028 ish range). Dont have enough money to buy everything I like unfortunately.
You are playing different angles like I am. Term, floaters, and perpetuals.
I tend to think I own about a 100 preferred issues or so. But just presently only have cash in less than 20. As I rotate around on price movements. Starting the 2023 NY out I have rotated some things.
Floaters.. ALL-B just starting to float next payment around 8%, SLMBP, NSS, NS-B, TNCAF… Those are moving into the 10%-12% range
Perpetuals CTA-B, UEPEO, AILLM, MAA-I (its most likely being redeemed 2026) CEQP-, BIPI, BEPH, SCE-L, SOCGM, EIX 5.375% reset
Term.. HROWM, KTH, LTSH.
I own some bonds now also. Even cheated for yield with more elevated risk buying 2031 SJI subordinated debt of about 8.7% YTM and an old 2031 Dayton Power and Light hold co issue with a 8.45% YTM. Even those these are bond desk issues I consider them preferreds for their low cap stack slot.
Copyright, Im thinking hard about getting back into SR-A myself too. But if I bring something in, somethings gotta go or be trimmed. So that makes it harder!

 

[bobandsherry]

I dont own EP-C currently but own issues like it (decent YTM with maturities in that 2028 ish range). Dont have enough money to buy everything I like unfortunately.
You are playing different angles like I am. Term, floaters, and perpetuals.
I tend to think I own about a 100 preferred issues or so. But just presently only have cash in less than 20. As I rotate around on price movements. Starting the 2023 NY out I have rotated some things.
Floaters.. ALL-B just starting to float next payment around 8%, SLMBP, NSS, NS-B, TNCAF… Those are moving into the 10%-12% range
Perpetuals CTA-B, UEPEO, AILLM, MAA-I (its most likely being redeemed 2026) CEQP-, BIPI, BEPH, SCE-L, SOCGM, EIX 5.375% reset
Term.. HROWM, KTH, LTSH.
I own some bonds now also. Even cheated for yield with more elevated risk buying 2031 SJI subordinated debt of about 8.7% YTM and an old 2031 Dayton Power and Light hold co issue with a 8.45% YTM. Even those these are bond desk issues I consider them preferreds for their low cap stack slot.
Copyright, Im thinking hard about getting back into SR-A myself too. But if I bring something in, somethings gotta go or be trimmed. So that makes it harder!

My holding different types of issues may have been influenced by following some of those I feel are knowledge in these preferred issues. [emoji12]

I would buy SLMBP, but both Fido and E-Trade won't allow it to be bought online, have to call in to trade. Not worth the hassle to deal with that when other good options.

Yeah, NSS-B is another good one with yield, but been holding that for a while so it wasn't something new that enticed me. That floating rate enticed me a while back. [emoji39]. Also have been holding CEQP- for a long time now, getting in on the big dip a couple years ago. That has done very well. Recent small dip (relatively speaking) has me thinking of taking a bigger bite though.

 

[tutan]

Thanks to Mulligan's numerous posts touting the virtues of utes, I've been keeping an eye out for utes perpetual preferreds. Just recently bought SOCGP at par and CNLPL below $53. I believe they are as safe as any IG 6% corporate bonds. Am I wrong?
I am really tempted to buy PCG-A which is trading at around $20 or 7.5%. Can't blame PG&E for every wild fire. I am also a captive customer. For even higher yields, I prefer selling puts and call options at this time.

 

[Mulligan]

Thanks to Mulligan's numerous posts touting the virtues of utes, I've been keeping an eye out for utes perpetual preferreds. Just recently bought SOCGP at par and CNLPL below $53. I believe they are as safe as any IG 6% corporate bonds. Am I wrong?
I am really tempted to buy PCG-A which is trading at around $20 or 7.5%. Can't blame PG&E for every wild fire. I am also a captive customer. For even higher yields, I prefer selling puts and call options at this time.

I have traded them myself, but dont presently own. I have too much SCE/EIX already at present moment, ha.
CNL preferreds are basically bonds anyways. They are a minute total of their cap stack. Maybe around 60 million in total par value…If they can afford the bond payment they can cover the preferreds too.
Im assuming market has factored in the yield increase expectations going forward. So I am fine there. What concerns me is a different shoe to fall. Credit spreads widening. They really havent at all, yet. And if a recession comes credit spreads always widen and that would put more pressure on perpetual preferreds.

 

[tutan]

Thanks. It has been hard for me to keep track of individual stocks all the time, especially those that are supposed to go in the sock drawer, so I’d better not get into too many of them. But if I miss the chance to sell them at a good price, I’ll just keep on collecting that 5-6% indefinitely.

 

[Mulligan]

Thanks. It has been hard for me to keep track of individual stocks all the time, especially those that are supposed to go in the sock drawer, so I’d better not get into too many of them. But if I miss the chance to sell them at a good price, I’ll just keep on collecting that 5-6% indefinitely.

Preferreds really rocked this week. I bet I am up close to 3% this week alone. So I sold some of the junkier ones that raced up past few days I recently bought. May were up 5%-6% this week alone.

 

[bobandsherry]

Preferreds really rocked this week. I bet I am up close to 3% this week alone. So I sold some of the junkier ones that raced up past few days I recently bought. May were up 5%-6% this week alone.

Year-end tax harvesting done.... perhaps increasing rates cooling off. I bought TDS-V (sold off some TDS-U as well and rolled into TDS-V to harvest the December drop) up over 17% since year-end. Hopefully still room to run. Happy investing.

 

[Mulligan]

Year-end tax harvesting done.... perhaps increasing rates cooling off. I bought TDS-V (sold off some TDS-U as well and rolled into TDS-V to harvest the December drop) up over 17% since year-end. Hopefully still room to run. Happy investing.

I pretty much assumed both events, as you would have had to been the most unluckiest person in the world to not made money on preferreds this week. The tax loss junkies as you stated made the most this week. Even the safe ones rose too, a benefit of lower rates…And for some issues both reasons.
Some have returned to par and I dont know if they deserve that. If economy is going to weaken the credit spreads havent moved yet to smack these things. Unless of course economy keeps purring along.

 

[bobandsherry]

Some have returned to par and I dont know if they deserve that. If economy is going to weaken the credit spreads havent moved yet to smack these things. Unless of course economy keeps purring along.

Seems to be an active group of "experts" who just want to keep talking us into the "R" word. Not sure what the short term is, but I'm in for the long term and unless the entire country ends up in the crapper, things should level out. If not, there's a lot more going on wrong in the country. Happy Investing.

 

[Mulligan]

Seems to be an active group of "experts" who just want to keep talking us into the "R" word. Not sure what the short term is, but I'm in for the long term and unless the entire country ends up in the crapper, things should level out. If not, there's a lot more going on wrong in the country. Happy Investing.

I dont know if I have mentioned this, but if ones goal is relative price stability and present above market yield with higher than average credit quality, one should take a look at ALL-B. It starts floating next interest payment at 3.16% plus 3M Libor which is now 4.8%. So you are looking at 8% floating debt off Allstate. The lower cap preferreds are now yielding sub 6%. Its not “normal” for higher stack to have a considerably higher yield than its lower sisters. They may redeem soon but its a good place to bleed more safer income if that is ones goal.

 

[Coolius]

ALL-B

Mulligan,


I have a small amount of ALL-B, and waiting to see what's going to happen after next week.


if they had wanted to avoid the reset this coming weekend, they would have announced a call weeks back - and they didn't ( i think )


so we get to have at least a month to enjoy the yield of almost 8%, and continuing as long as they do not call.


and a call gives a very modest cap gain, so there is no possibility of loss in this case.

 

[Mulligan]

Mulligan,


I have a small amount of ALL-B, and waiting to see what's going to happen after next week.


if they had wanted to avoid the reset this coming weekend, they would have announced a call weeks back - and they didn't ( i think )


so we get to have at least a month to enjoy the yield of almost 8%, and continuing as long as they do not call.


and a call gives a very modest cap gain, so there is no possibility of loss in this case.

Coolius, I trust Allstate more than probably any company I track. They have a 6.5% 2067 fixed subordinate debt last trade around 6%. So they have same stack paying 200 bps lower, so it may just last this divi. Therefore I am playing it as a short duration high yielding hideout. The longer is stays outstanding I will be fine with that too.

 

[pb4uski]

+1 While I hope that it lasts with that juicy 8% floater at the same time since I bought it at a discount just yesterday if they do call it between the discount and the next divi my IRR will be really, really good... not much in $$$ though.

 

[Texas Proud]

Well, decided to place an order as I had some cash laying around from prior calls...


Unfortunately for you all that means it will be called...

 

[pb4uski]

^^^ We are doomed. [emoji16]

 

[Mulligan]

^^^ We are doomed. [emoji16]

Ah, Tex, its all good for us. We will milk the cow as long as it produces. The CEO probably will notice that 8% on first floating payment and chew some accounting dept ass and redeem it right around then!
Hey tutan, I forgot to mention I am presently with you on So Cal Gas preferreds. I bought 500 shares of the identical sister SOCGM at $25.50 ish pre exD last month. Plan on holding for now.

 

[tutan]

Ah, Tex, its all good for us. We will milk the cow as long as it produces. The CEO probably will notice that 8% on first floating payment and chew some accounting dept ass and redeem it right around then!
Hey tutan, I forgot to mention I am presently with you on So Cal Gas preferreds. I bought 500 shares of the identical sister SOCGM at $25.50 ish pre exD last month. Plan on holding for now.

Good price! But come on Mulligan, buy some PCG-A too while the price is low! We’ve been having a lot of rain in northern CA so no more wildfires to blame them for. Seems PCG-A is slowly creeping up so it may be a good flipper.

 

[Sunset]

I got excited and bought 200 of ALL-B about 15 cents below par.

 

[Mulligan]

Good price! But come on Mulligan, buy some PCG-A too while the price is low! We’ve been having a lot of rain in northern CA so no more wildfires to blame them for. Seems PCG-A is slowly creeping up so it may be a good flipper.

Actually I couldnt resist. Last week I rotated into Series A at 20.40 and D at like 16.50 as they havent recently moved up like others had, so I sold some jumpers and bought these as a divi capture play. I recently bought SCE-L in $16s. I also have an EIX reset I have owned for a couple years that I am down modestly on, but I love the reset feature. So counting SOCGM I presently own all the Big 3 Ca utes. A fair amount also for me. Some may just be traders as I will want to raise cash soon as the spike in returns I have got in past week calls for culling the herd for a reset. It may not be any of these yet for a while.

 

[finnski1]

Mulligan,


I have a small amount of ALL-B, and waiting to see what's going to happen after next week.


if they had wanted to avoid the reset this coming weekend, they would have announced a call weeks back - and they didn't ( i think )


so we get to have at least a month to enjoy the yield of almost 8%, and continuing as long as they do not call.


and a call gives a very modest cap gain, so there is no possibility of loss in this case.

It looks like it was fixed at 5.1 % thru 1/15 then it goes to 3.165% plus 3 month LIBOR. How often does that float formula get revised?

 

[pb4uski]

^^^ I read it as being revised quarterly. IOW, on Apr 15, 2023 we'll get interest for Jan 16, 2023 to Apr 15, 2023 based on three-month libor on Jan 15 2023 plus 3.175% and that on July 15, 2023 we'll get interest for Apr 16, 2023 to Jul 15, 3023 based on the Apr 15, 2023 libor plus 3.175%, etc.

 

[finnski1]

^^^ I read it as being revised quarterly. IOW, on Apr 15, 2023 we'll get interest for Jan 16, 2023 to Apr 15, 2023 based on three-month libor on Jan 15 2023 plus 3.175% and that on July 15, 2023 we'll get interest for Apr 16, 2023 to Jul 15, 3023 based on the Apr 15, 2023 libor plus 3.175%, etc.

Thanks. That sounds reasonable.