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

[capjak]

This is the email alert I got:

Fixed Income Full Call Alert

Fidelity Investments.



Legal Information


Fidelity would like to inform you of an event that will occur on one of the securities which you hold in your portfolio.
The below security was affected by a Full Call.

CUSIP: 02361D852
Description: AMEREN ILL CO PFD 1/4 6.62500%
Rate: 0.000%
Maturity Date:
Quantity:
Redemption Price: 25.00
Redemption Principal:
Call Date: 2021-03-29

To discuss your investment or other fixed income opportunities, please visit Fidelity.com, visit your local Investor Center or call 800-544-5372.

 

[Coolius]

I hold AILLL in a Schwab Account, have not received anything from them.


Well, guess we will find out for sure next week.


It does seem very unusual that the company has not put out any news, announcement or press release concerning this.

 

[Mulligan]

They are supposed to give 30 days notice. Of course that would only mean to broker since they are held in street name. Maybe they did and brokerage sat on it and didnt forward?
I own 4 Ameren preferreds, three are Ameren Illinois ones and I have not received notice in either of the accounts they reside in. Of course I dont own AILLL though. Since the entire lot is only $60 million in value what many utes have done in the past is redeem them all at same time.

 

[bobandsherry]

This is the email alert I got:

Fixed Income Full Call Alert

Fidelity Investments.



Legal Information


Fidelity would like to inform you of an event that will occur on one of the securities which you hold in your portfolio.
The below security was affected by a Full Call.

CUSIP: 02361D852
Description: AMEREN ILL CO PFD 1/4 6.62500%
Rate: 0.000%
Maturity Date:
Quantity:
Redemption Price: 25.00
Redemption Principal:
Call Date: 2021-03-29

To discuss your investment or other fixed income opportunities, please visit Fidelity.com, visit your local Investor Center or call 800-544-5372.

If they called that then wonder what else got called. AILNP is even higher rate and can be called, it's trading at $140, $40 over par. And it's much smaller market cap. Fortunately I don't own either.

 

[pb4uski]

Both Fidelity and Vanguard show that CUSIP as AILLL. Quantumonline has a different CUSIP number for AILLL but I suspect that that info is out of date.

That said, I can't find anything on a call anywhere other than that hopefully wayward Fidelity call announcement... so I'm skeptical

If it is being called then some recent buyers are going to get hosed... I know that it is a thinly traded issue, but the charts show that it's traded mostly in the $27.50-30.00 range for the last year and the 52 week high shows as $45! and the last price was $29.50 from what I can find.

 

[Mulligan]

It was buried in a SEC filing February 22...
i guy on another forum found it.
Long-term Debt and Equity
The following table presents Ameren’s issuances (net of any issuance premiums or discounts) of long-term debt and equity, as well as redemptions and maturities of long-term debt for the years ended December 31, 2020 and 2019. For additional information related to the terms and uses of these issuances and effective registration statements, and Ameren’s forward sale agreement relating to common stock, see Note 5 – Long-term Debt and Equity Financings under Part II, Item 8, of this report. For information on capital contributions received by Ameren Missouri and Ameren Illinois from Ameren (parent), see Note 13 – Related-party Transactions under Part II, Item 8, of this report. Additionally, Ameren Illinois will redeem all outstanding shares of its 6.625% and 7.75% series preferred stock in March 2021.”
Reply

 

[pb4uski]

Wow! I'm glad that I'm not into it and not a recent buyer. It's been over $26 since mid 2015. But I bet that if someone who owns it threw some out there at $26 or $27 at the open on Monday that they might get some takers.

 

[bobandsherry]

It was buried in a SEC filing February 22...
i guy on another forum found it.

Additionally, Ameren Illinois will redeem all outstanding shares of its 6.625% and 7.75% series preferred stock in March 2021.”
Reply

And yet the market didn't react and didn't sell off. Strange. Must have been buried so deep that people nodded off before they got to that info. So as I suspected, AILNP is also called. That's a $40 (about 30%) drop per share. Ouch. How the heck did the market ignore that. SMH

 

[pb4uski]

I guessing that most of AILLL and AILNP are held by retail investors that will be clueless unless they got a call notification from their broker. Pity the poor retail investor who is trying to buy some and has a GTC order above $25 in place when trading begins on Monday... they will probably be unknowing buyers and be taking it on the chin. It will be very interesting to see how long it takes "the market" to reflect the call.

Can one sell preferred shares short?

 

[Mulligan]

I guessing that most of AILLL and AILNP are held by retail investors that will be clueless unless they got a call notification from their broker. Pity the poor retail investor who is trying to buy some and has a GTC order above $25 in place when trading begins on Monday... they will probably be unknowing buyers and be taking it on the chin. It will be very interesting to see how long it takes "the market" to reflect the call.

Can one sell preferred shares short?

I dont think there is much of an opportunity to short these OTC from what I know anyways. And besides I would be scared to. Take AILNP which only has 4500 shares and who knows how many of them are even tradeable. Some smart ass could buy a share at $1000 and sink ya on a margin call.[emoji2959]

 

[capjak]

Sock drawer is getting a lot smaller.....2500 shares....

My cost basis is 1000 at $26 and 1525 at $26.25

Held since 2015.

 

[Coolius]

I will feel the pain come Monday.


I own 2800 shares, average cost basis of $27.

 

[aja8888]

I have been selling these off at $30 and only have 100 shares left with a cost basis of $26 or so. I was going to sell the last 100 at $30 but have not seen that price in a while. We will see what happens Monday AM.

 

[youbet]

Well, it's Monday morning........

Last trade was at $25.21. High (11k+) volume.

I have 800 shares I purchased in 2016 for $26.11. Can't really complain too much I guess. I've collected a nice div for 4+ yrs and now will give back a bit of it. This is the first pf stock I've had called so a learning experience.

I called Schwab this morning. The bond desk guy was a little embarrassed when I told him that Fidelity sent an email to its clients while I heard nothing from Schwab. He did confirm the call by looking at some data source viewable only by Schwab employees and noted that Schwab.com (viewable by clients) has no info posted as of yet. He also confirmed that Quantum has no info on it yet.

So, kudos to Fidelity and I'm frowning at Schwab who, over the past couple of decades, has been an excellent brokerage for me. Selling last week would have saved me a kilobuck or so. Of course, if Schwab had sent out emails that probably would have meant that all the brokerage houses would have sent out emails and the stock would have fallen to this morning's prices last week.

 

[aja8888]

Well, it's Monday morning........

Last trade was at $25.21. High (11k+) volume.

I have 800 shares I purchased in 2016 for $26.11. Can't really complain too much I guess. I've collected a nice div for 4+ yrs and now will give back a bit of it. This is the first pf stock I've had called so a learning experience.

I called Schwab this morning. The bond desk guy was a little embarrassed when I told him that Fidelity sent an email to its clients while I heard nothing from Schwab. He did confirm the call by looking at some data source viewable only by Schwab employees and noted that Schwab.com has no info on the call. He also confirmed that Quantum has no info on it yet.

So, kudos to Fidelity and I'm frowning at Schwab who, over the past couple of decades, has been an excellent brokerage for me. Selling last week would have saved me a kilobuck or so. Of course, if Schwab had sent out emails that probably would have meant that all the brokerage houses would have sent out emails and the stock would have fallen to this morning's prices last week.

I got nothing from Schwab on this either, but there was no way you could have gotten in front of this call announcement anyway.

 

[Winemaker]

Mully, I picked up 5 of the Edison International Preferred A last week for $1023.85 each.

Second or third time I've ever paid over par, so I may be posting the same thing over on the BTD thread!

 

[bobandsherry]

And yet the market didn't react and didn't sell off. Strange. Must have been buried so deep that people nodded off before they got to that info. So as I suspected, AILNP is also called. That's a $40 (about 30%) drop per share. Ouch. How the heck did the market ignore that. SMH

Interesting that while AILNP is down from $140 (where it last traded as of Friday) last trade today at $111 and bid size is $106. Only 300 shares traded. Seems investors still not aware as the pro-rata dividend isn't going to close much of that gap.

 

[youbet]

Fidelity Alert that AILLL is part of a Full Call......

Not happy........

When did you receive the notification from Fidelity? Before or after the close Friday?

 

[capjak]

When did you receive the notification from Fidelity? Before or after the close Friday?

Friday after the market was closed so no opportunity to get out.

 

[Mulligan]

Mully, I picked up 5 of the Edison International Preferred A last week for $1023.85 each.

Second or third time I've ever paid over par, so I may be posting the same thing over on the BTD thread!

Winemaker, Thanks for update on price. I thought about buying 8 more but too embarrassed to call bond desk for a sub 10k purchase. I bought 12 under $1000 first day out. Should have bought 20. Oh well. $1023 with 5 yr call protection doesnt expose you too much to a loss, lol.. Come to think of it I shouldnt have been embarrassed to call in 8 if you did 5. And I am pretty sure you could buy me out and sell me into slavery.
AILLL dropped hard quickly. I went opposite way for nickel stacking. Bought 1000 at $25.05 and 1000 at $25.06 on margin. Aint that crazy, huh...Should pay out about $25.27 March 29.

 

[youbet]

Friday after the market was closed so no opportunity to get out.

Thanks capjak. My irritation with Schwab has somewhat subsided since their lack of notification didn't actually cost me any money. But there still is nothing at Schwab.com when I go to the "research" page for AILLL. Nothing on Quantum either for that matter.

Well..... sigh..... I was hoping AILLL would go on forever. But, again, can't complain. It was a good 4+ year run for me.

 

[Winemaker]

Winemaker, Thanks for update on price. I thought about buying 8 more but too embarrassed to call bond desk for a sub 10k purchase. I bought 12 under $1000 first day out. Should have bought 20. Oh well. $1023 with 5 yr call protection doesnt expose you too much to a loss, lol.. Come to think of it I shouldnt have been embarrassed to call in 8 if you did 5. And I am pretty sure you could buy me out and sell me into slavery.
AILLL dropped hard quickly. I went opposite way for nickel stacking. Bought 1000 at $25.05 and 1000 at $25.06 on margin. Aint that crazy, huh...Should pay out about $25.27 March 29.

I don't like to go more than $5000 on any one issue. Yeah, I have more issues, but if something goes south, I'm not out much. However, I did vacuum up a bunch of of Hospitality type preferreds in my speculation account last spring, and I'm sitting pretty good there.

I rolled the dice with the Pennsylvania Real Estate Trust Preferred and the jury is out on that issue. I sold all my Ashford when they started south, and put my "moneyies" into PREIT-D. It has languished/floundered a bit, but the Ashford has come back nicely, if it is still the same issue, after the reorganization.

 

[Mulligan]

I don't like to go more than $5000 on any one issue. Yeah, I have more issues, but if something goes south, I'm not out much. However, I did vacuum up a bunch of of Hospitality type preferreds in my speculation account last spring, and I'm sitting pretty good there.

I rolled the dice with the Pennsylvania Real Estate Trust Preferred and the jury is out on that issue. I sold all my Ashford when they started south, and put my "moneyies" into PREIT-D. It has languished/floundered a bit, but the Ashford has come back nicely, if it is still the same issue, after the reorganization.

Yes...I remember now, makes sense...That is why it was 5 shares, and not just busting the piggy bank to buy. You will stick to $5k per issue even if your net worth passed Bezo’s.

 

[Winemaker]

Yes...I remember now, makes sense...That is why it was 5 shares, and not just busting the piggy bank to buy. You will stick to $5k per issue even if your net worth passed Bezo’s.

You mean Bozo's, don't you?

 

[capjak]

Am I missing something why would someone pay 25.75 for AILLL today?