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

[Mulligan]

Wow... putting my pref shares and bonds in a worksheet and some really interesting things show up..


I have some with big gains where the yield has come down on the current value to less than I would want.. I will have to look at redeploying that money to a better investment..


As an example, I have SPLP.A with an $11K gain... current yield is 6.47%... for some reason Vanguard has it at 9.57%.... wonder if that is YTM...

I havent dont the math, but they may be treating its yield as a bond since it has a maturity date. Of course they could pay out at maturity with common units instead of cash though.

 

[Mulligan]

Thanks for the tip.... have been looking for some other to buy...


Probably going to look to buy some BBB or above for some safety... lots of mine are lower rated.

Being unsure how things are going to go yield wise and credit spread wise, I keep a healthy stash of ALL-B which is about 8.5% and floating. I bought some more at 25.13 yesterday. Dare them to call it.

 

[pb4uski]

I have some ALL-B too and am surprised they are not calling it. Any other similar opportunities Muligan?

I also have some C-J and C-K that yield about 7%.

 

[Texas Proud]

Yep, not good doing stuff at 1 AM...

Did a quick calc and it looks like YTM is over 9%...

Going to have to add a column for YTM on my spreadsheet...

I might have to buy Excel to get the ability to update it


I have a lot of ALL-B, NSS and CUBI F.... I do have some CPN but at $29 not sure if I want to buy any more...

 

[bobandsherry]

I have some ALL-B too and am surprised they are not calling it. Any other similar opportunities Muligan?

I also have some C-J and C-K that yield about 7%.

Not a preferred, but if interested in floating rate long term bond:

• PPL CAPITAL FUNDING, INC. (CUSIP: 69352PAC7).
• Rated: Baa2/BBB
• It was fixed, flipped over to floating on 3/30 @ 3ML+266.5BP. LIBOR transition will reprice to 3M SOFR + 292.661BP.
• Matures in 2066.
• Trading at ~$91, callable @$100 with 30 day notice.
• Roughly 9% current yield on IG issue.

 

[Texas Proud]

Not a preferred, but if interested in floating rate long term bond:

• PPL CAPITAL FUNDING, INC. (CUSIP: 69352PAC7).
• Rated: Baa2/BBB
• It was fixed, flipped over to floating on 3/30 @ 3ML+266.5BP. LIBOR transition will reprice to 3M SOFR + 292.661BP.
• Matures in 2066.
• Trading at ~$91, callable @$100 with 30 day notice.
• Roughly 9% current yield on IG issue.

Thanks... that is a good one... but wish it was a bit higher over float.. I own 3 over 600 BP bit not as high rated...

 

[bobandsherry]

Thanks... that is a good one... but wish it was a bit higher over float.. I own 3 over 600 BP bit not as high rated...

I have a couple too, but those are "highly speculative" (B2/B or B2/B-) or not rated at all. Always a little give on rating, and it's trading under par. Feel comfortable at position I have with those and not looking to get much deeper.

This rating is closer to ALL-B which is 316bp but seems to be on a def redemption path at trading right around par. I've been looking for a possible home for proceeds if/when ALL-B and WFC-C get called and this one caught my attention. Picked up a small position for now and may increase if/when ALL-B and WFC-C get called.

 

[bobandsherry]

Thanks... that is a good one... but wish it was a bit higher over float.. I own 3 over 600 BP bit not as high rated...

Something else I'll toss into the ring for consideration.... ATLCL. Trading @ $22+, coupon @ 6.125% with maturity 11/30/26. YTM is ~10.5%, not rated though.

 

[Texas Proud]

Glad I am doing this exercise... still have more to finish...YTM is gong to be a deciding factor on some of these...



But.. have JPM-K with current yield of 5.6%... it is rated one step lower than ALL-B with a 8.5% yield...


It seemed like a good buy at the time but now looks silly... then again I bought it when it was cheaper and have a 10% gain...

 

[Mulligan]

Thanks... that is a good one... but wish it was a bit higher over float.. I own 3 over 600 BP bit not as high rated...

One thing one has to remember is when buying these on the bond desk, they need to be viewed more as a long term purchase. As the “spread” kicks in if you need to sell them. I call them the “bond desk thieves”.

 

[Mulligan]

I have a couple too, but those are "highly speculative" (B2/B or B2/B-) or not rated at all. Always a little give on rating, and it's trading under par. Feel comfortable at position I have with those and not looking to get much deeper.



This rating is closer to ALL-B which is 316bp but seems to be on a def redemption path at trading right around par. I've been looking for a possible home for proceeds if/when ALL-B and WFC-C get called and this one caught my attention. Picked up a small position for now and may increase if/when ALL-B and WFC-C get called.

I also own GJT. This is a synthetic adjustable off a 5.9% AllState senior unsecured note. So its rating will be higher than ALL-B because its a subordinate note. The synthetic adjustable is 0.8% spread plus 3 month Tbill. That puts current yield around 7% at $22. I buy on dips with a better yield. You really cant factor a YTM since it adjusts quarterly, but it matures with the actual underlying bond at $25 in 2036. When Fed starts cutting I will leave. These types were issued more back in the day, but floating notes are the norm now. Most of these have been redeemed over the years.
Im trying to be patient but my goal is to buy more IG low coupon issues that have been crushed. And hopefully down the road wide the wave. But been patient here.
Have some PCG preferreds for example and bought a fair amount of IG rated Canadian Utilities 4.5% and 4.9% par issues roached out that are yielding 6.7% QDI range.

 

[Texas Proud]

One thing one has to remember is when buying these on the bond desk, they need to be viewed more as a long term purchase. As the “spread” kicks in if you need to sell them. I call them the “bond desk thieves”.

Not only the spread but I see a $10 to $15 fee on the purchase... it looks like a pct of the purchase so it can go higher...


I am planning on holding these to maturity unless my new worksheet shows I should sell... well, my new worksheet whenever I get it done


Another question, is there a site where you can download ratings etc into a worksheet? Or is there a site that you can use to track your holdings?

 

[Mulligan]

Not only the spread but I see a $10 to $15 fee on the purchase... it looks like a pct of the purchase so it can go higher...


I am planning on holding these to maturity unless my new worksheet shows I should sell... well, my new worksheet whenever I get it done


Another question, is there a site where you can download ratings etc into a worksheet? Or is there a site that you can use to track your holdings?

For my exchange traded stuff, I use Yahoo finance spreadsheet. I really dont have anything for my bonds and cds. And they really arent organized well in my brokerage accounts so I just list them on a listed I have in my online notes. Nothing special other than I can see them all, ha.

 

[perrytime]

WFC-Q is set for fixed dividend of almost 9%, worried it may get called.
WFC-R will get set for >10%, next year, maybe they will save cash to call that one.

How much notice do they give when being called?

 

[bobandsherry]

WFC-Q is set for fixed dividend of almost 9%, worried it may get called.
WFC-R will get set for >10%, next year, maybe they will save cash to call that one.

How much notice do they give when being called?

Chances are higher now of WFC-Q getting called as in addition to WFC coming out with a new issue (https://www.sec.gov/Archives/edgar/data/72971/000119312523188178/d508398dfwp.htm) they also announced $30 billion stock buyback (https://newsroom.wf.com/English/new...-Common-Stock-Repurchase-Program/default.aspx) and also announced an increase in their common dividend. So they obviously view that they have ample capital.

Anyway, to your specific question: 40-70 day notice for WFC-Q call -> Next Dividend Payment 9/15 -> 8/5 last date for call announcement

 

[Texas Proud]

Oh man... was looking to get some PPL Capital mentioned above but it is not available at Schwab...


Anybody know how to get some? It says to call the desk but I am not sure if that is extra...


Was also looking to get some Enable Midstream Part, but the one I wanted was also not listed... well, never mind... I see the same under a different cusip.... so bought some...


Also bought some GJT... good yield for the supposed rating...

 

[bobandsherry]

Oh man... was looking to get some PPL Capital mentioned above but it is not available at Schwab...


Anybody know how to get some? It says to call the desk but I am not sure if that is extra...

I had no problem with buying online through E-Trade.

 

[Mulligan]

Oh man... was looking to get some PPL Capital mentioned above but it is not available at Schwab...


Anybody know how to get some? It says to call the desk but I am not sure if that is extra...


Was also looking to get some Enable Midstream Part, but the one I wanted was also not listed... well, never mind... I see the same under a different cusip.... so bought some...


Also bought some GJT... good yield for the supposed rating...

GJT will be rated by the underlying bond which backstops the value. It is a 2035 5.9% AllState senior unsecured bond. Its A- rated, so its pretty damn safe. This is not really a preferred but an A- AllState bond held in trust that is artificially created into a adjustable floater.

 

[Texas Proud]

I had no problem with buying online through E-Trade.

Interesting... at Schwab they do not even have any way to input an order... I have to call the bond desk...


At Fidelity I was putting in an order but got a message they have none in inventory... and want me to search for a different bond!!


But I can see that some are being sold on a depth chart... price has gone up to 93 though.

 

[Mulligan]

Interesting... at Schwab they do not even have any way to input an order... I have to call the bond desk...


At Fidelity I was putting in an order but got a message they have none in inventory... and want me to search for a different bond!!


But I can see that some are being sold on a depth chart... price has gone up to 93 though.

I have Vanguard and TD, and they will never have any $1000 preferreds available to buy online. It always has to be a call in.

 

[bobandsherry]

I have Vanguard and TD, and they will never have any $1000 preferreds available to buy online. It always has to be a call in.

This was the PPL Bond, not a preferred.

 

[Texas Proud]

I have Vanguard and TD, and they will never have any $1000 preferreds available to buy online. It always has to be a call in.

These are bonds from what I understand, not preferred. But I will give them a call and see what it takes to get some.

 

[bobandsherry]

Interesting... at Schwab they do not even have any way to input an order... I have to call the bond desk...


At Fidelity I was putting in an order but got a message they have none in inventory... and want me to search for a different bond!!


But I can see that some are being sold on a depth chart... price has gone up to 93 though.

No idea what Schwab is doing. ETrade showing 21 trades today (see below for late afternoon trades). And I can see these available in my Fidelity account as well.

 

[Texas Proud]

No idea what Schwab is doing. ETrade showing 21 trades today (see below for late afternoon trades). And I can see these available in my Fidelity account as well.

View attachment 46628

Yea, I saw the trades but neither had the option for me to buy any... that is without help...


I was a bit surprised that Fidelity said to go find another cusip to buy... at least Schwab gave me a number to call.. will probably call and put in an order at a fixed price and see what happens...

 

[Mulligan]

These are bonds from what I understand, not preferred. But I will give them a call and see what it takes to get some.

Yes, but they are subordinated notes which are generally given 50% equity credit by credit agencies, just like preferreds are generally given 50% debt credit. The fact its a live floater precludes, any chance of it ever being purchasable online with Vanguard and TD. I have tried to buy several of these including a live floating AllState and SCE as they have them too. And they are never available online either.
These are good issues, but its just too much of a hassle calling it in and being exposed to wide bid ask spreads if I ever wanted to dump, since I have too much already in bonds and CDs. I gots ta have me some trading monies!
I have often thought about calling to ask why, but I know the front line guys wouldnt have a clue. And going through the hassle of getting another brokerage that does is too much effort for this sloth, too, ha.