Hi Grommit -
I should start a Grommit stock watch list.
I added AHT, LXP and DRE to my REIT watch list as these might make good future additions. I think buying some deep discounted preferreds could be a good strategy (and perhaps a safer) value play than picking up common shares w/ little or no dividend. In the 2008-2009 crash there were some good opportunities to be had buying deep discounted preferreds if you bought at the right time. The key is to buy several of the deep discounted preferred series in a few different sectors and hope the companies will be a survivor after a 2-3 year recover period. Buffet has done this with his own BAC preferred deal but now he says this could be a 10 year marriage rather than something shorter.
I have been building up my preferred watch list which I monitor everyday. When I see the market sell off, I check this watch list to see if the preferred issues are selling off too or perhaps it might be just a sector and/or company issue. For example, GMXRp has been tanking along with the common shares. I own a small position and do not plan on buying any more of their preferred shares as the current weakness may be a company specific thing rather than a sector or market event.
I do plan to eventually sell my common shares in GMXR on any positive run higher and may just put the total proceeds into the GMXRp and collect the dividend and use the discount to Par as my way of participating in company capital appreciation.
Here are the companies on my Preferred Watch list:
finance.yahoo.com
The OFC group may be candidates for buys if they every sell at a significant discount to PAR. I will begin buying more of the MHRpD once it breaks $40.00/share (PAR $50). I own MHRpC and use it as a source of funds to buy other stocks when I can sell over $25.00/share (Par is $25.00). I add to it from time to time at any price below PAR.
GSTpA is one I have recently been adding to below $20.00/share. I see this as a speculative Buy at this level or lower. They have a clean balance sheet and a well capitalized JV investor (see my earlier posts regarding their JV investor: The South Korean Investor - Atinum Partners Co. Message 27635227 ). If their JV deal proves profitable, their investor could easily just buy GST and if that occurs this preferred series would be paid off at PAR w/ a slight premium.
With any of these preferred shares, they are thinly traded especially if an institutional holder needs to cash out. You can scalp shares and put in low ball bids but do use "All or None" limit orders so you get a complete fill. For example, on August 8-10, 2011 DFTpA traded as low as $21.75/share on large volume (82K shares). I missed the opportunity. In only a few days it was back trading around par again. An institution could not transact a separate third party deal and sold their shares ATM offering a 15% discount to the previous day's market price. That was a pretty good and safe bet.
Sergio H mentioned why not buy discounted Bank preferred shares (ie BAC,JPM,WFC)? I just do not like this sector at all but eventually if the discount to Par is w/i a reasonable "Value" range it may make a good candidate. I probably should add a few to my preferred watch list as well as other sectors.
I still own a few shares of ATO and a fairly large holding of AGL (obtained when they merged with NI). I like Both for their NG Pipeline storage, processing & distribution assets. Along with MDU (they also own some of the largest NG storage facilities in North America), AGL and ATO should be good growers as the domestic NG shale is developed. These companies should benefit significantly from the NG reserve expansion w/o directly being impacted by changes in NG & Oil prices (they move volume irrelevant to what prices are). They have diversified regulated operations that shield them from specific sector slumps.
finance.yahoo.com
Presently, my long term theme is that Oil & Gas and the infrastructure that supports this industry is a better collateralized bet (based on the assets they own and the FCF they geneerate) than with a mega financial bank (like BAC, JPM or WFC) and their mortgage loans collateralized by a very weak domestic real estate market. I would rather own a basket of Oil & NG assets than a basket of mortgage loans at this point in the cycle.
EKS |
