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  • Box Ships: A 9.5% Yield For Your Income Portfolio [View article]
    So here is what I have gathered from some digging. It seems the shipping industry is continuing to build vessels. This overbuilding of vessels is causing freight rates to decline. A 4%-5% decline is expected in 2015.

    http://bit.ly/1xeXqF4

    Box Ships had previous contracts are going to be expiring soon. These contracts will see massive decline in rates if renewed. Couple this with the fact that the common dividend has been gone for awhile and high leverage, the investment community believes the preferred dividend could be on the chopping block.

    At the time of this article, my thesis was that shipbuilding would decline to balance out the supply equation. Unfortunately, there is just too much building going on and not enough demand to justify it. The only companies that will survive will be large mergers to provide enough synergies to cut costs.

    Given TEU's size, I think it might be time to sell. Either TEU is forced to get bought out or will continue to see decline in rates and be forced to file bankruptcy. The recent spike in the preferred could be due to a variety of reasons, but given the low float, all it takes is a couple big trades to move the stock. It could either be an insider that bought some or just some individual thinking its a bargain. I think this spike is a good exit point.
    Oct 23 07:41 PM | Likes Like |Link to Comment
  • Box Ships: A 9.5% Yield For Your Income Portfolio [View article]
    Sorry, I have been extremely busy. My apologies, I will respond soon. Thank you.
    Oct 23 10:48 AM | Likes Like |Link to Comment
  • Avoid This 9%+ Yield [View article]
    Its nice to know a major fund is buying, but I try not to blindly follow these individuals when investing. I am a fan of Berkowitz, but I don't know to what level he valued the properties. Has he sought out independent appraisals from 3rd parties to value the real estate? That is really the only way for him to value it, and thats the value the banks lend on, not a number that he believes to be right. Also please read my article, I say the RE has clear value and can be monetized, but most of that payoff will have to be used for the debt thats maturing sooner. Once you monetize the entire real estate portfolio, its hard for there to be anything left when the 2018 debt comes time to mature.
    Aug 23 03:07 PM | Likes Like |Link to Comment
  • Avoid This 9%+ Yield [View article]
    The one thing about real estate is that the value is based on a variety of factors including the quality of the tenant. If Sears is shutting down stores and revenue per store is dropping, the lenders are going to be very cautious. Even if they lend, the terms might not even be that great. It's a complex situation and RE values can fall if the cap rates rise.
    Aug 23 02:26 PM | Likes Like |Link to Comment
  • Gramercy Property Trust: A 7.125% Yield For Income Investors [View article]
    Good question. I believe management is projecting these preferreds could stay in the market for a longer period of time or essentially be even perpetual. The preferreds are not callable for another 5 years. So the net benefit still is there for the company. They would save about $1.8 million or so over a 5 year period. However, I think management is mainly trying to lock in low rates while they still can. If rates rise before this preferred is called, then issuing this new series was a smart move. If they didn't do this and rates rose, they would have been stuck with a 8%+ dividend to pay for the series A. So they are securing themselves over the long run.
    Aug 19 08:24 AM | 1 Like Like |Link to Comment
  • Preferred Stocks Are Not For Everyone [View article]
    Congrats. Either way you are in a great position, depending on the strength of the underlying companies, the yield on cost may not hit 10% for awhile even in a rising rate environment.
    Aug 12 02:11 PM | Likes Like |Link to Comment
  • Preferred Stocks Are Not For Everyone [View article]
    Its a matter of preference. I also wouldn't necessarily say that you make that up by staying invested now. Take Wells Fargos Series T for example. It currently has a $1.5 in distributions which is about a 6% yield. Typically large banks use to have preferred yields of 8%+. If rates rise and yields go back to that level, then the new preferred price would need to be $18.75. The price is currently $24.80, so unrealized loss would be $6.05. That is about 4 years worth of distributions wiped out. So the net gain would be almost nothing for the investor. However, this comes down to how long your willing to hold. Personally, I could care less since my goal is to have a stream of income.

    As to your other point about reinvesting dividends at higher yields. If you plan on continually investing as the price of a preferred declines, thats fine, but thats not the point of this article. Also be careful on how you use this strategy. Dollar cost averaging on fixed income in the start of a rising rate environment would require a lot of capital to get an overall average yield that might be sufficient. The problem with this is that you'll have so many shares of one preferred, which I would never want since I want to be diversified.
    Aug 12 08:26 AM | 5 Likes Like |Link to Comment
  • Preferred Stocks Are Not For Everyone [View article]
    Yes, I agree nobody can time interest rates. I personally prefer a stable distribution stream regardless of what the value is. I just had to get this point across since people would need to realize there might be a period where if you want out of the preferred, investors will have to take a loss.
    Aug 12 08:16 AM | 2 Likes Like |Link to Comment
  • Park Your Cash With This 6% Yield [View article]
    Its non-cumulative and is callable after October 2019.
    Aug 5 09:38 AM | 1 Like Like |Link to Comment
  • Park Your Cash With This 6% Yield [View article]
    Preferreds are priced on a mix of the underlying strength of the company as well as based on the correct coupon rate. Preferreds are still treated as fixed-income, which means as rates rise prices drop. However, this has nothing to do with the underlying company itself. I try to look and see if the yield on cost is sufficient for the company and also for the environment as well. Hope that helps.
    Aug 4 04:55 PM | 2 Likes Like |Link to Comment
  • A 10% Monthly Yield That Investors Should Avoid [View article]
    I'd need to do more due diligence on the stock. There is clear risk associated with the stock. The company is pushing for aggressive growth, which explains the negative free cash flow. The stock could have good value if the company meets its targets, but again there is still significant risk there.
    Jun 28 01:37 AM | Likes Like |Link to Comment
  • A 10% Monthly Yield That Investors Should Avoid [View article]
    Those are all great points, but as an income investors I have to judge a company's ability to pay distributions based on a current income stream. I also have to judge the risk and see if the distributions are sufficient to compensate for that risk. The company may very well have a bright future, but the risk is high for the preferreds. Thanks for reading.
    Jun 27 03:53 PM | Likes Like |Link to Comment
  • Seaspan: An 8.3% Yield For Income Investors [View article]
    In general, I recommend avoiding preferreds over par completely. Rates are likely to stay low for awhile and companies will continue to refinance to lower coupon rates.
    Feb 17 01:31 PM | Likes Like |Link to Comment
  • Seaspan: An 8.3% Yield For Income Investors [View article]
    There is no priority. All preferreds are equal. The problem with the C is that it is over par. If called, investors stand to lose on the principal, since the par is $25. The market may be expecting a call and therefore is pricing in the risk.
    Feb 16 03:58 PM | Likes Like |Link to Comment
  • Seaspan: An 8.3% Yield For Income Investors [View article]
    I never said it was risk free. Yes, its a profitable business, but I also mention its extremely capital intensive. I agree it is volatile and very cyclical.
    Feb 14 10:27 AM | 1 Like Like |Link to Comment
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