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Doug K. Le Du

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  • 17 New Preferred Stocks Offer 6.65% And More Diversification [View article]
    The email alerts received by subscribers to my CDx3 Notification Service when new preferred stocks start trading on the wholesale Over-The-Counter exchange has become one of the most popular features of the service.

    Glad to hear that the CDx3 Notification Service is working well for you. I appreciate your taking the time to say so.
    May 14 12:24 AM | 1 Like Like |Link to Comment
  • 17 New Preferred Stocks Offer 6.65% And More Diversification [View article]
    Regarding the Fed and rates, there are two milestones to watch for: an exit from their current $85 billion/month bond buying QE program and an increase in the fed funds rate. See the following charts regarding the reaction of preferred stock market prices:

    http://seekingalpha.co...

    Regarding credit quality: While there is definitely an ongoing relationship between credit rates and yield (reward vs. yield) that relationship is currently not as strong as it normally is. Investors are currently giving more priority to call protection. Check out the chart here:

    http://bit.ly/13tpTKy

    Thanks for posting.
    May 13 01:53 PM | 1 Like Like |Link to Comment
  • 17 New Preferred Stocks Offer 6.65% And More Diversification [View article]
    With exceptions, convertible preferreds have not treated preferred stock investors very well over the years. Investors have no way of knowing whether the return will be great or horrible at the time the investment is made. Sorry I can't be of more help on this, but my research is generally more focused on non-convertible issues with a more known return/behavior. Maybe one of our readers who favors convertible issues can share some of their thoughts with you on APA-D.

    Thanks very much for posting.
    May 13 12:52 PM | 1 Like Like |Link to Comment
  • 17 New Preferred Stocks Offer 6.65% And More Diversification [View article]
    Given the daily trading volumes and prices, preferred stocks are unmistakably popular and ratings have become less important to investors.

    As you point out, rating agencies and investors are viewing risk very differently.

    See "Moody's And Preferred Stock Investors View Same Market But See Very Different Risks" here for some interesting data on this point:

    http://seekingalpha.co...

    Also, Simon Wadsworth, in his book REIT Cash is King, proposes that rating agency formulas were never designed to measure the risk of the REIT business model. It's an interesting read.

    Thanks for posting.
    May 13 12:10 PM | 2 Likes Like |Link to Comment
  • 17 New Preferred Stocks Offer 6.65% And More Diversification [View article]
    Thanks for the suggestion John. New article ideas are always welcomed.
    May 13 11:55 AM | 1 Like Like |Link to Comment
  • Moody's And Preferred Stock Investors View Same Market But See Very Different Risks [View article]
    I know it seems that way, but I really don't think that's the case. These are probably investors who are intending on selling before prices fall, collecting the dividend income in the meantime.

    The 2nd chart in this article shows the relationship between increasing federal funds rate and preferred stock market prices. Note how gradual the drop is (after the initial knee jerk):

    http://seekingalpha.co...

    Thanks for posting.
    May 2 11:42 AM | 1 Like Like |Link to Comment
  • Moody's And Preferred Stock Investors View Same Market But See Very Different Risks [View article]
    Thanks for your thoughts. As you mention, demand is huge for these securities right now. At a high level, the driver is the lack of a better alternative for income investors. The Fed's monetary policies have wiped out about half of the annual income of bond/CD investors over the last few years. Devastating to many. Throw in the effects of the eurozone crisis (investors there seeking safety here) and unusually high redemptions due to changes in domestic and international banking regulations and you get pretty high demand for US-issued preferreds. Thanks again.
    Apr 30 06:45 PM | 1 Like Like |Link to Comment
  • Moody's And Preferred Stock Investors View Same Market But See Very Different Risks [View article]
    There are a number of factors that go into a redemption decision. In addition to the ability to issue a new issue with a lower rate (dividend cost savings), there could be litigation concerns, regulatory requirements, their ability to attract investors, etc.

    You might be interested in the article on this topic "Is Your Preferred Stock About To Be Called?" here:

    http://seekingalpha.co...

    Thanks for posting.
    Apr 30 01:33 PM | 1 Like Like |Link to Comment
  • Moody's And Preferred Stock Investors View Same Market But See Very Different Risks [View article]
    Exactly right Ward. The investor need to remain mindful of what it is the rating agencies are measuring (creditworthiness). Thanks for posting.
    Apr 30 01:29 PM | 1 Like Like |Link to Comment
  • Moody's And Preferred Stock Investors View Same Market But See Very Different Risks [View article]
    That's EFM from Entergy Mississippi (4/8/2010, 6.20%). It was selling for $27/sh on 4/22 when I collected this data. It trades with very light volume so that may explain the price that is higher than its peers here. Good to hear from you Spoon.
    Apr 29 09:37 PM | 1 Like Like |Link to Comment
  • Moody's And Preferred Stock Investors View Same Market But See Very Different Risks [View article]
    Absolutely right TW. As always, it pays to know the market you are considering investing in. Thanks for posting.
    Apr 29 05:43 PM | 0 Likes Like |Link to Comment
  • Moody's And Preferred Stock Investors View Same Market But See Very Different Risks [View article]
    Thanks for posting WW. For some real data showing the relationship between an increasing federal funds rate and preferred stock market prices see the 2nd chart at "Fed Policy Fails On Jobs But Highlights Opportunity For Income Investors" here:

    http://seekingalpha.co...
    Apr 29 05:41 PM | 0 Likes Like |Link to Comment
  • Moody's And Preferred Stock Investors View Same Market But See Very Different Risks [View article]
    Thanks for the article idea John. Buy and hold preferred stock investors will have to consider the value of this strategy once rates head back up (2015?). Holding, rather than upgrading along with rates, will be a personal decision. You can read more about upgrading along with rates in this Nov 2011 article here:

    http://seekingalpha.co...
    Apr 29 04:39 PM | 0 Likes Like |Link to Comment
  • Moody's And Preferred Stock Investors View Same Market But See Very Different Risks [View article]
    Please see footnote #3. Thanks for posting.
    Apr 29 04:29 PM | 1 Like Like |Link to Comment
  • Moody's And Preferred Stock Investors View Same Market But See Very Different Risks [View article]
    Please see footnote #3 re using YTC. If an investor pays a higher price/sh their return goes down regardless of how you measure it. Thanks for taking the time to post.
    Apr 29 03:48 PM | 1 Like Like |Link to Comment
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