i actually own the WSF, looked like wsf is more of a bond then preferred shares. One point today it was yielding 10%. i'll take my chances that wells fargo stays solvent. yielding 10% while they lend money for houses at less then 7%.
A virtually equivalent Merrill preferred MER-PM... Was issued in April 2007 at $25 to yield 6.45% Today, July 15th 2008 that security closed at $12.90 to yield 12.50%. What you ** guess ** about GS you could have ** guessed ** about MER one year ago... And in general... No one can price these securities more efficiently than the NYSE/ECN market. With Merrill bonds well into junk yield territory and priced for a possible bankruptcy... Veiwing ANY financial institution as solid is crazy.
I disagree. that was basically someone blasting out of these stocks to make margin calls and raise capital to do business. you can look and some of the days we had back in aug where the market imploded and they did the same thing. I dont think the NYSE/ECN did a good job today having GS yielding 9% (at $18.01) and here is the kicker that 9% gets the 15% dividand tax rate
Today was the wildest day in terms of swings in financial paper in the 15 years I've been trading... (And I made 480 trades today and made about $20,000 net today... I live for days like this). The only crises that come close... Are the week Russia defaulted summer 1998... And a month of Y2K hysteria December 1999. With all due respect... there are 2 problems with you statement: (1) You judge NYSE efficiency using the worst day in at least 10 years. (2) There was total hysteria when GS-PB bottomed at $18.88 (probably between 9:30 to 10:30)... And the chances of a retail trader just stepping in at such a time and buying are remote... While pros would be extremely cautious and pass... Because there were 100s of better deals than out there at 10:00 or 10:30. Here's the basic problem with the OP's reasoning: He wants to buy a safe, yield stock... But chooses a sector that's undergoing a hysterical meltdown. If GS-PB touched $18.88... it will do so again before the summer is out. Why not just buy GE units and get rock solid AAA and the same yield without the risk? Or buy MER paper at 13% and have big upside.
last time i checked GE was A BANK. and rumored to loose AAA (not my option) After yesterday i had orders in GS-B and WSF way below the market. Yeah im probally not retail. I got hit on 2500 at $18.11 today and much more in the 19.50 area. and some of wsf in the 17's. (i did buy some of both wsf and gs-b that are out of the money today and yesterday). and yes i do understand that most people are after the fact traders here on ET and yes it is ironic im telling you after the fact where i bought close to the lows of the day. i think i have a pretty decent track record so think you can trust my buys. i only got about 25% of my shares today at the lows. I plan on having more bids tomrrow morning with size in the book. i think a 9%+ yeild on goldman (15% tax rate i might add) is pretty dam good, i do agree there where many great deals with preferred this morning. everything was indicated much lower off the open "You judge NYSE efficiency using the worst day in at least 10 years.". this is your words. and this is your last post.......... ."No one can price these securities more efficiently than the NYSE/ECN market." i just made you aware 10% GS yield is NOT efficient. and while no one wil argue that the nyse did not do the best job possible today, but i dont think there is a person on ET who would not take 10% GS at 15% tax rate. they are the best hands down. id still buy the stock of a few tech stocks in 2001 while the rest got killed and why take 13% mer when you can take 10% GS. it amazes me GM is yielding 14% and MER is yielding 13%
every single preferred stock is insane right now. i don't know if it is someone getting forced out or something going on in the debt market that i am not seeing. abn amro's preferreds are at trading at 50 cents on the dollar but the stock is still over 60. this diverence between it's preferreds and the stock started a long while back. does anyone have any clue? i'm not just specifically speaking about abn's but just any of them in general. db's got crazy today too. also, you can look up all the preferred stocks on quantumonline.com if you guys were wondering. i dunno it's crazy stuff...it's like they are pricing in bankruptcy or becoming financially crippled and complete eliminations of the dividends.
It doesn't matter what part of the capital structure you're looking at, if the dividend is at risk the market is pricing in a high probability of dividend suspension.
Do you think after they report earnings and for example the preferred on Freddie and Fannie get downgraded, they are worth buying? Or if not, besides GS, what is a good preferred, that contains a little risk, but strong reward? By the way, I like HRD-PD right now since they are receiving enough rent to pay both the stock and the preferred, but obviously the PD is safer. "July 15 (Bloomberg) -- Fannie Mae and Freddie Mac had their bank financial strength and preferred stock ratings cut by Moody's Investors Service. The financial strength ratings for each company were lowered to B-, while the preferred stock ratings were cut to A1 from Aa3, New York-based Moody's said in a statement today. Both remain under review. The companies' Aaa senior debt ratings and Aa2 subordinated debt rankings were affirmed with a stable outlook. Fannie Mae and Freddie Mac shares fell on speculation that a Treasury Department plan to support the biggest U.S. mortgage- finance companies will sacrifice common shareholders. Now Moody's is raising the possibility that preferred stockholders could also lose, saying the companies' diminished ``financial flexibility'' may lead to a potential suspension of preferred stock dividends. Bank financial strength ratings measure the likelihood a company will need ``extraordinary financial assistance from third parties, such as the government or shareholders.'' Shareholders are at risk from Paulson's plan because the government-chartered companies may require new equity after already raising $20 billion in the past year to cover losses. Washington-based Fannie Mae has slid 79 percent this year, and Freddie Mac, based in McLean, Virginia, has lost 84 percent. Paulson sought to shore up investor confidence July 13 when he said from the steps of the U.S. Treasury that he will seek authority to buy equity stakes in Fannie Mae and Freddie Mac and increase the government's credit lines to the companies. Last week, their shares fell 50 percent and credit-default swaps on Fannie and Freddie bonds approached record highs. "
An Obama victory means the end to the 15% tax rate on some preferreds. Maybe this is also being priced in.