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Our Latest Preferred Share Trades


  • During February, we placed a handful of trades in the mortgage REIT preferred shares.
  • We recently picked up shares of ARR-C and NRZ-B. We'll highlight the index cards and commentary on those positions.
  • In February, we also closed out positions in NYMTP, TWO-E (which was called) and NRZ-C.
  • This idea was discussed in more depth with members of my private investing community, The REIT Forum. Get started today »

Get ready for charts, images, and tables because they are better than words.

The ratings and outlooks we highlight here come after Scott Kennedy provides his weekly updates in the REIT Forum.

Your continued feedback is greatly appreciated, so please leave a comment with suggestions.

The main section for this article comes from Preferred Shares Week 242.

Open Positions

All our open positions in preferred shares are shown below:

Source: The REIT Forum Google Sheets, “Returns” Tab

The green box highlights positions that were opened since our prior full update (01/26/2021).

We also provided a quick mid-month update (02/16/2021).

Before placing any trade (for any security at any time), verify the bid and ask prices through your broker. Sometimes prices swing quickly and the bid-ask spreads can widen. When investors can’t get the price they want, it is wise to simply wait for a buyer or seller to show up.

If you’re familiar with our work, it should come as no surprise that the positions we opened in ARR-C and NRZ-B were both listed as top picks in Preferred Shares Week 238. That article was published in late January and highlighted the top picks at that time.

Recently Closed Positions

Our recent sales are shown below:

Source: The REIT Forum Google Sheets, “Returns” Tab

These positions were each closed since the prior full update. You may notice the dates we closed positions, 2/4/2021 and 2/10/2021, align with the dates we purchased the other positions. These were simply adjustments to maximize our risk-adjusted returns.

  1. In the case of NYMTP, we decided we would rather have more ARR.PC. We were also interested in NYMTO, but the share price on NYMTO had climbed and made it less appealing for the swap at that time.
  2. In the case of TWO-E, shares were called and we

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This article was written by

Colorado Wealth Management is a REIT specialist who began his decades-long investment career in a family-owned realtor office before launching his own company and embracing his drive for deep-dive REIT analysis. He holds an MBA and has passed all 3 CFA exams. He focuses on Equity REITs, Mortgage REITs, and preferred shares.

He leads the investing group The REIT Forum. Features of the group include: Exclusive REIT focus analysis, proprietary charts and data models, real-time trade alerts posted multiple times a month, multiple subscriber-only portfolios, and access to the service's team of analysts and support staff for dialogue and questions on the REIT space. Learn more.

Analyst’s Disclosure: I am/we are long AGNCO, NYMTM, CIM-A, AGNCP, ARR-C, NRZ-B, NRZ, AGNC, NLY, SLRC, GPMT, PMT, ORCC, CMO. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

As a reminder, Scott Kennedy also is an author for the REIT Forum. You may see his commentary featured in our articles and may notice an extremely high amount of overlap in our ratings, so subscribers reading this article should see Scott’s latest REIT Forum sector update for more detail.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (26)

LongDividends profile picture
Solid column once again.

The real-time portfolio pieces like this one that show what you're doing and why are some of the most valuable ones, in my humble opinion, on here.
Curious why you rate NRZ-B higher than NRZ-A. Lower yield, only advantage is bigger profit if ever called though A is enough below par that it doesn't look like a dealbreaker.
Colorado Wealth Management Fund profile picture
@rbow The discount to call value has a material part to play within the total process of assigning the targets, since it can also influence upside scenarios.
@Colorado Wealth Management Fund That's true but it also has more downside pressure in a down market because of the lower dividend.
I suppose it's a matter of style, my game is many small profits with very minimal losses. That's why I trade preferreds not commons.

I agree with your purchase of NRZ-B and I bought a sizable amount last month.
I disagree with ARR-C. I bought NLY-F, right now NLY-F seems better than ARR-C. Any comments ?

@LD7071 NLY-F floats in less than 2 years, lower dividends until rates go up.
Colorado Wealth Management Fund profile picture
@LD7071 ARR-C carries quite a bit of call protection along with a fixed-rate dividend. So if rates don't go up materially, no loss in income. If shares are called, it can't happen for a few years. I would expect ARR-C to trade above $25.00.
@Colorado Wealth Management Fund

Great. Thanks. I got filled some today.
I bought TWO-E a little while back for $24.25, and was surprised to see it being called. I wondered why sell now, when in less than a month it will be called at $25 plus the accrued dividend, which would end up being a little more than your $25.25. Is it just that the additional amount wouldn't be worth the wait on a gain/time focus?
Colorado Wealth Management Fund profile picture
@waveydavy We would've been waiting for a month or so to pick up a few pennies. So we opted to just turn it back into cash and reallocate.
WSLegend profile picture
The only preferreds you analyze and write about are mREITS?
Colorado Wealth Management Fund profile picture
@WSLegend We've found the area is ripe for rewards. We're here to earn money from our investments, no need to complicate it. A few equity REIT preferred shares can be mixed in for diversification. We like to focus in on this niche though.
pauldr77 profile picture
I noted NLY-I wasn't included in your open positions. Are you still bullish on these shares?
Incidentally, I was able to capture a dividend lately on a portion of my position(bought @24.98 prior to ex-date, sold after ex-date @24.79, bought most of them back again after the ex-date @24.57, and finally I sold that position once again at $24.785. All of these trades took place over a 6 day period. I simply owned too many of the NLY-I shares and profited in reducing the position)

Also determining whether I should dump my remaining small position in ANH-A, at these prices. Seems the common shares would actually be better to own, now. I already own a position in the common shares, it's just that the A shares seem risky at these levels and could be called away. After the recent reduction, to $.04 per share payout for ANH common shares, I would think that there is a higher likelihood of the A shares being called away at any price above a stripped price of $25. Yields 8.625%! I realize there is an accrued dividend of about $ .37 per share, at this time. Current price ANH-A = $25.54, stripped yield = 8.58%. Current price of ANH common = $2.90, stripped yld = 5.58%. Thoughts?

Colorado Wealth Management Fund profile picture
@pauldr77 Great question. That kind of detail is usually something we answer in subscriber chat. You might like our service for more detail on the stocks we cover.

NLY-I is in our neutral range. There are some alternatives in the risk-rating 1 preferred shares at a more attractive valuation today.

For ANH, there is a buyout in process. The dividend declaration might be a partial period dividend due to the upcoming merger.
pauldr77 profile picture
@Colorado Wealth Management Fund
I forgot to consider that that could be an issue with ANH's div., the merger.
@pauldr77 ANH-C pays more than Ready preferreds and it's below stripped par so I'm not afraid of a call
Bilbozark profile picture
Nice job. People, research the companies!
Is this article actually moving the price of ARR.C?
02 Mar. 2021
@Echocampfire I literally just thought the same thing. It can't be a coincidence it moved that much today
Colorado Wealth Management Fund profile picture
@Echocampfire It moved less than 1%. Among the mortgage REIT preferred shares we track, there were 5 that moved by more than 1%, including 2 that moved by more than 2%. I don't think the move was particularly unusual for the sector.
02 Mar. 2021
arr-c is my darling. nothing better than an 7% monthly cum dividend.
@Jb25 I remember when ARR-A at 8% was considered too risky for years. They've sure cleaned up their act.
03 Mar. 2021
@rbow i got in at arr-b at 22.50ish was like 7.9%. ive made a chunk on b and c.
UberB profile picture
Colorado, I'm a little confused by this statement: "In the case of NRZ-C, we simply wanted to own NRZ-B instead because it carried a slightly more favorable price."

Currently, NRZ.B is trading at ~23.60 with a 7.5% yield and is callable in August of '24. NRZ.C is ~22 with a 7.2% yield and is callable 6 months later. Assuming both are called, the total return for "B" would be $7.63 or 32%. For "C" it would be $9.37 or 42.6% (albeit 6 months delayed). Unless my math is off, I think I'm in the right place holding "C" unless no call is ever made in which case holding "B" over the long term would indeed prove to be the better avenue. What is your thought process on this?
Colorado Wealth Management Fund profile picture
@UberB Correct. I'm handicapping the call potential by picking a middle point between valuation based on a call scenario and valuation on a "no call" scenario.

If you pick either scenerio and run it exclusively, it will push you firmly towards one or the other. For your 100% call scenario, the C would be the winner.
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