Seeking Alpha
View as an RSS Feed

Ryan Brennan  

View Ryan Brennan's Comments BY TICKER:
Latest  |  Highest rated
  • Zions New Preferred Offers Solid Yield With Rate Protection [View article]
    That's why it's important to look at the Yield to Call as well. The protection is that it won't be outstanding forever like many of the fixed rate perpetual preferreds may be. If the fixed rate preferreds are outstanding forever they will trade down to keep the yield competitive - something that shouldn't happen in this case.
    Feb 15, 2013. 09:25 AM | Likes Like |Link to Comment
  • Zions New Preferred Offers Solid Yield With Rate Protection [View article]
    Both are solid investments as well. USB-N closed at $27.05 yesterday and has a 6% coupon, so it gives you a current yield of 5.545%. You do have $2.05 of premium that is going to take 6 quarters to fully recoup - that's the only slight negative. The position is callable in April 2017, which gives it a YTC of 3.86%.

    PNC-P is similar to ZB-G in that it's not callable for 10 years from issue (so callable date is May 2022). It closed at $27.53 yesterday and has a current yield of 5.562%. It's going to take 7 quarters to recoup the premium and has a YTC of 4.761%. The premium exposure is the biggest risk here too (but that's no different then ZB-G, just a little bit longer time to recapture).
    Feb 15, 2013. 09:19 AM | Likes Like |Link to Comment
  • Zions New Preferred Offers Solid Yield With Rate Protection [View article]
    techwonk -

    I wrote one article titled Navigating The Risks of Buying Bank Preferred Stocks
    http://seekingalpha.co...
    Not a pure FAQ and doesn't address everything, but could start you off in the right direction. In terms of other detailed FAQ info - that's a great idea and I will put it on the list!

    juano has pointed you to the right spot - QuantumOnline[dot]com has a ton of information.

    Your last question is a little bit outside my scope - the "safest" type of preferred is going to be a cumulative variable rate (or fixed-to-floating) traditional preferred trading near or below par (you don't want a lot of premium exposure).
    Feb 15, 2013. 09:06 AM | Likes Like |Link to Comment
  • Armour's New Preferred At A Discount Is A Deal [View article]
    Thanks Larry. I agree - the mREIT industry is a higher risk industry that should be invested in with care. The preferreds offer investors the ability of projecting out cashflow but the risks of the underlying company should not be ignored.
    Feb 13, 2013. 11:07 AM | Likes Like |Link to Comment
  • Armour's New Preferred At A Discount Is A Deal [View article]
    seraphos1,

    I understand your point that the YTC metric may not be as pertinent as some of the other metrics, but I think it's still useful to look at. These are all fixed rate perpetual preferreds, so while I agree that there isn't a high likelihood that they will be called, it's still something to make note of.

    I think it's more important to look at where the positions are trading relative to par (picking up ARR-B at a discount vs. all other positions trading at a premium). Also, the additional ~38 bps over AGNCP and ~56 bps over the Annaly positions can add up over time. It may not seem like a big difference, but 8.023% is 104.9% of AGNCP current yield and ~107.5% of the Annaly preferreds current yields.

    Regardless of whether you feel that the extra bps are worth it, it also offers investors a way to diversify within the Agency mREIT space.
    Feb 13, 2013. 11:01 AM | Likes Like |Link to Comment
  • Steady As She Goes - January 2013 Bank Preferreds Review [View article]
    southgent1951,

    All great points! You are 100% correct - the KKR preferred (new ticker as of 2/10 is KFN-) is cumulative. That is a typo on my part.

    I also agree that there probably won't be any change in capital treatment for these preferreds - they are all traditional preferreds and not Trust Preferreds. I know that you mention that but just wanted to make sure that it was clear for everyone.

    One correction - preferred equity is junior to bonds in the capital structure and senior only to common equity.

    I think buying the floating rate preferreds is a great move - especially at a discount. I also like the Fixed-to-Floating preferreds (like ZB-G above) that offer rate increases after the redemption date. This will provide some protection when rates increase.

    I've read your blog in the past - all great articles and you do a nice job.

    Ryan
    Feb 12, 2013. 09:37 AM | Likes Like |Link to Comment
  • JPMorgan's New Preferred Stock Offers A Competitive Yield At A Compelling Price [View article]
    Thanks martinfrosa.

    Gabelli Utilities Trust is a whole different ballgame - with this you're buying into a closed fund that invests 80% in common stocks of utilities. Very different then buying a well capitalized bank.

    GUT-A, while cumulative, is also tying up money in perpetuity at 5.51%, whereas JPMSL is tying up money at 5.48%. GUT-A has a 10 Day Average Volume of 905 - which means that it is an incredibly illiquid position that you are not going to be able to get out of without taking a hit. It is also past its call date and trading at a level where it's going to take you two quarters to recoup any premium (and can be called at any time, so you are putting your premium at risk). GUT just raised $54 million with a secondary offering of almost 9mm common shares in December so they have more then enough capital to call GUT-A.
    Feb 11, 2013. 04:13 PM | Likes Like |Link to Comment
  • JPMorgan's New Preferred Stock Offers A Competitive Yield At A Compelling Price [View article]
    Thanks Gratian.

    All of the new issue bank preferreds are non-cumulative and there aren't that many exchange-traded debt new issues out there (especially from the banks that are issuing preferreds).

    I think it comes down to what sector you want to be in - if you go through QuantumOnline and take a look at the new issues, many of them that are cumulative are REITs which offers a totally different set of risks than banks. Not necessarily a bad thing, but just something to be aware of.

    Ryan
    Feb 11, 2013. 03:53 PM | Likes Like |Link to Comment
  • Steady As She Goes - January 2013 Bank Preferreds Review [View article]
    There's a big concentration in financials in each of these (as well as below investment grade positions).

    I am with you on the individual preferreds - no reason to pay fees! 50bps is a hefty percentage when you are talking new issues between 5.5% and 6%!
    Feb 11, 2013. 01:36 PM | Likes Like |Link to Comment
  • Steady As She Goes - January 2013 Bank Preferreds Review [View article]
    The new rules apply to all preferred stocks.

    You are right in that TruPS are the ones that have been affected the most. Essentially all preferred stocks have a clause that says that if there is a change in capital treatment, then they have the right to call them early. This happened with TruPS since they are no longer treated as Tier 1 Capital.
    Feb 11, 2013. 01:32 PM | Likes Like |Link to Comment
  • Steady As She Goes - January 2013 Bank Preferreds Review [View article]
    smurf - PGF, PGX, and PFF are three Preferred ETFs that you can take a look at.
    Feb 9, 2013. 04:44 PM | Likes Like |Link to Comment
  • Annaly: Adding This Stock To The Team Alpha Portfolio [View article]
    Yes - they are both NorthStar preferreds. There is a third as well NRF-A. All three positions traded ex-div this past week so if you're thinking about getting into them this could be a good time to do it.

    NRF-A and NRF-B are both past their call dates (9/14/2011 and 2/7/2012, respectively) while NRF-C was just issued in October 2012. NRF-C is paying its first dividend and it is inflated because of the longer accrual time to this payment.

    NRF-A 8.75% coupon $25 par / $25.00 Fri closing 8.75% Curr Yield
    NRF-B 8.25% coupon $25 par / $24.52 Fri closing 8.41% Curr Yield
    NRF-C 8.875% coupon $25 par / $25.01 Fri closing 8.871% Curr Yield 8.865% Yield to Call
    Feb 9, 2013. 04:37 PM | Likes Like |Link to Comment
  • Is It Finally Time To Sell American Capital Agency Corp? [View article]
    smurf - I think it continues to be a solid sector that has generated fantastic returns for investors and will continue to do so.
    Feb 9, 2013. 04:23 PM | Likes Like |Link to Comment
  • Is It Finally Time To Sell American Capital Agency Corp? [View article]
    Vartu - I don't think so. I think that the CreXus purchase helps diversify them into the commercial space and they have a lot of upside potential. They are less levered and trade at a large discount to NBV.
    Feb 9, 2013. 04:20 PM | Likes Like |Link to Comment
  • Steady As She Goes - January 2013 Bank Preferreds Review [View article]
    My only hesitation with it is the impact of the acquisition on the capitalization ratios - they will still be "well capitalized" but much closer to the threshold. Given the other preferreds that you can pick up with a 6% current yield, I don't love the relative risk.
    Feb 8, 2013. 04:08 PM | Likes Like |Link to Comment
COMMENTS STATS
137 Comments
49 Likes