Screen: S&P investment grade; callable; price <$25.50; coupon >4%, descending by coupon
Security Name Symbol S&P Call' Price Coupon Emps
OAKTREE CAPITAL GROUP LLC OAK/PA BBB Yes $25.50 6.63% 978
SPIRIT REALTY CAPITAL INC SRC/PA BB+ Yes $25.05 6.00% 84
REXFORD INDUSTRIAL REALTY INC REXR/PB BB+ Yes $24.96 5.88% 186
ASPEN INSURANCE HOLDINGS LTD AHL/PD BB+ Yes $24.37 5.63% 1,151
REXFORD INDUSTRIAL REALTY INC REXR/PC BB+ Yes $24.67 5.63% 186
BROOKFIELD RENEWABLE PARTNERS BEP/PA BBB- Yes $22.16 5.25% 2,875
DIGITAL REALTY TRUST INC DLR/PJ BB+ Yes $24.80 5.25% 3,030
DIGITAL REALTY TRUST INC DLR/PL BB+ Yes $24.73 5.20% 3,030
BROOKFIELD ASSET MANAGEMENT INC BROXF BBB Yes $17.78 4.90% 182,300
Moodys investment grade (>Baa3); callable; price <$25.50; coupon >4% (excluded if already in above)
(Different columns because Fidelity, and dinner…)
RIVERNORTH OPPORTUNITIES FUND INC RIV/PA 6.00% $24.85 A1
GABELLI DIVIDEND & INCOME TRUST GDV/PH 5.38% $25.31 Aa3
GABELLI UTILITY TRUST GUT/PC 5.38% $25.45 A1
HIGHLAND INCOME FUND HFRO/PA 5.38% $23.18 A1
ELLSWORTH GROWTH AND INCOME FUND LTD ECF/PA 5.25% $24.72 A1
GAMCO NATURAL RESOURCES GOLD & INCOME TRUST GNT/PA
GABELLI MULTIMEDIA TRUST INC GGT/PE
GABELLI MULTIMEDIA TRUST INC GGT/PG
GABELLI EQUITY TRUST INC GAB/PK
GAMCO GLOBAL GOLD NATURAL RESOURCES & INCOME TRUST GGN/PB
RIVERNORTH/DOUBLELINE STRATEGIC OPPORTUNITY FUND INC OPP/PB
RIVERNORTH/DOUBLELINE STRATEGIC OPPORTUNITY FUND INC OPP/PA
GABELLI DIVIDEND & INCOME TRUST GDV/PK
All of these are in the highest 3 of Moody’s ratings except Gamco which is in the 4th highest.
Any of these look intriguing, or held by anyone here?
…and then again, RIV is a lightly traded preferred issued by a CEF investing in microcap cannabis companies… oo boy… A1 investment grade? Yeahhh…
You listed some pfds and then asked “Any of these look intriguing, or held by anyone here?”
You listed OAK-A, but not OAK-B. Same issuer. But I don’t like either, because both are trading above their call prices and neither matures. (Their YTCs would be 5.4% and 4.3%, which is sucky.) OTOH, three weeks ago they were trading sub-$24 bucks. So put 'em on a watch list and trail a lowball, GTC, limit order.
I’d make the comment about SRC-A. It doesn’t mature, and you’re late to the trade. Current price is $24.5. But three weeks ago, it was sub-$23. Ditto Rexford’s pfds, Digital’s, and Brookfield’s. They don’t mature, and they were much cheaper a while ago. So, clearly you worry about different things than I do, and you should ignore my comments.
Arindam, I posted that list to get a conversation going with people who may know a lot more about preferreds than I do. It’s just a snapshot of a point in time, based loosely on CDX3 criteria - not a declaration of righteousness or what I “worry about”.
If you don’t like what I said, then ignore what I said instead of trying to pick a fight.
The point I was making --and that you misunderstood-- is there is no one right way to do any of this investing/trading stuff. But goals and beliefs do drive choices, and the list you created has embedded assumptions that cannot be justified if one’s intentions are to make good use of the asset class.
Case in point. You obsess about agency-assigned ratings, but fail to realize how meaningless they mostly are. What matters --always-- is market-implied ratings. Secondly, you failed to address the risks of buying preferreds that never mature, or are so long-dated they might as well be considered ‘perpetual’ versus pdfs that have a stated and nearby maturity. Third, you failed to address ‘call risk’. Fourth, you completely ignored the impact of price on achieved return.
Forums like this are no place to learn anything meaningful or useful about investing. But they can be good place to have one’s ideas challenged.
My most recent purchase of a preffered was NEE/PN, but I’ve mostly been buying investment grade corporate bonds ranging from 1 year to 6 year maturities, just filling in my bond ladder.
FWIW, I’m seeing a few signs of some things cooling off, like lumber prices. lumber futures peaked a little over $1,300 back in March and yesterday closed at $593. 4x8 Sheets of 7/16" OSB peaked at Lowes at $47.75 back in March and are now down to $27.25 as of yesterday. Pre-Pandemic they were selling for around 9 bucks a sheet.
I’m not claiming to know anything. Just noting what I’ve been watching.
Update, OSB priced at $24.05 this morning…
Thank you for making it clear that you are one of “those guys” on the internet. Assumptive, accusatory, aggressive, arrogant, and confrontational for no reason other than chest pounding self-righteousness. You immediately deserve the Ignore poster button.
You should probably set your feelings aside and at least listen to Arindam. I’m not a bond investor, but I have read Ben Graham’s Security Analysis so I understand the basics of bond analysis. Arindam knows his stuff and knows it well. I’ve followed him on this board for years and his calls and analysis are almost always spot on. I wouldn’t be so quick to judgement.
Much thanks for being a voice of reason and civility as we all try to navigate our own individual ways through the current political and financial insanities.
Reading Ben Grahman’s The Intelligent Investor was what got me into bond investing. Back in the Fall of '99, every no-earnings, just-come-to-market stock was being bid to the moon, but the bonds of old-time companies with solid assets and credible earnings were being despised. “Value is value”, I said to myself. “I need to take a look.”
Back then, like nearly everyone, I knew nothing worth knowing about bonds. For sure, I was familiar with passbook savings accounts, CDs, and T-Bills. But the world of corporates was foreign and hostile territory. I can still remember setting up my first purchase, ten of someone’s something or other and all but vomiting in fear. For sure, each subsequent purchase became less of an emotional trauma. But more than once, my stomach would rebel at what my head was telling me to do, and I’d have to back away and repeat my analysis before buying.
What really made me switch from stocks to bonds as my principal investment vehicle was the outcome of trades like buying World Airway’s bonds at 70 and then getting made whole (plus all back interest) in a BK workout, or buying Xerox’s 8’s of '27 at 34 and then getting called at par a couple years latter, or ending 2009 up 34% (which is about what the stock guys did that year). For sure, more than once, I’ve lost my whole position. But on average, in past years, anyone who made the effort to poke around in the asset class could make decent enough returns, plus have some fun, like buying Friendly Ice Cream’s bonds and making 15%-18%. That’s not the case these days, though there’s still serious money to be made. But that money cannot be made just by running a minimalist scan that pays no attention to the risks embedded in its outputs.
All of us are facing horrific losses going forward for reasons that are too obvious to repeat. Therefore, what is already owned and what bought now has to be thought about very carefully, which was the point of my warnings about buying preferreds that never mature, at prices that offer scant downside protection.