Public Storage Vs. JPMorgan Chase Preferred Stock Spreads

Summary

  • PSA-J and JPM-J preferreds, issued simultaneously with similar yields, show a pricing misalignment favoring PSA-J for better credit quality and upside potential.
  • Public Storage is less leveraged than JPMorgan, with both offering strong dividend coverage and 'Single-A' IDR, making PSA-J the safer pick.
  • A pair trade—long PSA-J, short JPM-J—locks in a $1.70 spread with manageable shorting costs, capitalizing on mean reversion in pricing.
  • For directional investors, switching from JPM-J to PSA-J is attractive due to PSA-J's superior credit quality, lower price, and greater appreciation potential.
  • Looking for a portfolio of ideas like this one? Members of Trade With Beta get exclusive access to our subscriber-only portfolios. Learn More »
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Co-authored by Relative Value.

Overview

Having the long-duration fixed-income up a bit from its low for the year, we, along with many other investors in this market segment, try to position ourselves as best as possible for the months to come. Whether you are

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This article was written by

14.78K Followers

Arbitrage Trader, aka Denislav Iliev has been day trading for 15+ years and leads a team of 40 analysts. They identify mispriced investments in fixed-income and closed-end funds based on simple-to-understand financial logic.

Denislav leads the investing group Trade With Beta, features of the service include: frequent picks for mispriced preferred stocks and baby bonds, weekly reviews of 1200+ equities, IPO previews, hedging strategies, an actively managed portfolio, and chat for discussion. Learn more.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of PSA.PR.J either through stock ownership, options, or other derivatives. 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.

Short in JPM preferreds

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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