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by jiHymas
19 Feb 2024 10:18
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Preferreds
Replies: 2575
Views: 317118

Re: Preferreds

canadian.100 wrote: 18 Feb 2024 08:04 ... I consider my present Pref Shares be treated as an "Annuity" and I should just keep collecting the dividends and ignore the market value
clason wrote: Like MaxedOut, I buy the yield (or a pseudo-annuity) rather than a security. I don't fret over the price, unless it's time to add.
Geez, I wish this forum had a "like" button!

Fixed income investment has a fundamental choice between Security of Income vs. Security of Principal. Preferred shares are way, way over to the 'security of income' side. If that's what you want, great!
by jiHymas
13 Jan 2024 00:46
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Preferreds
Replies: 2575
Views: 317118

Re: Preferreds

MaxedOut wrote: 12 Jan 2024 23:48 But I guess I will be disappointed by having to wait literally forever to find out if I used the right rate. So I will try the calculator as you suggest to see if I find it more useful.
I should take the opportunity to repeat something I've said before:
jiHymas wrote:The yield calculator is not magic. It merely takes a standardized input of your assumptions and gives back a standardized output of what those assumptions mean in terms of yield Just like every other forward-looking yield calculator you will ever see.

So ... we all have to wait forever to find out if we used the right rate. You, me and Jerome Powell, together. The important thing is to use the same assumptions for each of the issues you're comparing.
by jiHymas
08 Nov 2023 10:21
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Preferreds
Replies: 2575
Views: 317118

Re: Preferreds

What a shitshow of a document from Solactive AG. We don't have the data because we're not paying millions of dollars to subscribe to it, but it strikes me that: BMO reports weights based on the market value of its holdings. Its holdings are based on what Solactive's index publishes Solactive AG's buckets include the issues, adjusted negatively for past dividends (sections 3.3 and 3.4) So, you're not supposed to see a BMO holding of 20/20/20/20/20. You're supposed to see a weight that is represented by something like: 20% which is the sum of the market value of all 2023/2028 resets PLUS the sum of their past dividends back to 2015 20%, which is the sum of the market value of all 2024 resets PLUS the sum of their past dividends back to 2015 ...
by jiHymas
02 Nov 2023 21:38
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Preferreds
Replies: 2575
Views: 317118

Re: Preferreds

Hogwild wrote: 02 Nov 2023 20:46 You have a large portfolio, James. You've made a name for yourself across the country.
Well, maybe. The thought is good for my ego, anyway!

Mind you, I'm still trying to get a straight answer from BMO about their ZPR reset-date bucketting screw-up with weekly follow-ups for about two months now! So thinking of that will keep me humble.
by jiHymas
02 Nov 2023 15:27
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Preferreds
Replies: 2575
Views: 317118

Re: Preferreds

But apparently it worked ok for PPL? Why not eMail them and ask? I'm always amazed at the posts I occasionally see where people get very upset about lack of information from a company, occasionally getting into furious arguments about something like 'is there a comma in the company's legal name' and never once think of eMailing Investor Relations and asking politely. That's what they do. That's their job. eMail them and ask. Here's a sample eMail I sent in December 2019: I would appreciate greater detail regarding the reset rate for [REDACTED] announced December 2, specifically the Government of Canada 5-Year Bond Yield used as the basis for this calculation. Can you please tell me the effective date and time that the Government of Canada ...
by jiHymas
02 Nov 2023 14:27
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Preferreds
Replies: 2575
Views: 317118

Re: Preferreds

Peculiar_Investor wrote: 02 Nov 2023 14:14 Perhaps James can explain or inquire.
See FixedReset Prospectuses Are Imprecise!
by jiHymas
18 Oct 2023 10:49
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Preferreds
Replies: 2575
Views: 317118

Re: Preferreds

So just added up the quarterly payments for each option using trial and error GOC5 until simple yields on the different purchase prices were the same. If I understand you correctly, I suppose that could be called Cash-on-Cash Yield . For comparing two investments, it will differ from "regular" yield calculations in that the later-dated cash flows will have a greater relative weight in the C-o-C calculation than they do using "regular" weights, which will be discounted more due the greater time since investment. Maybe other ways too, but I'd have to do some algebra to find them! That's not the end of the world. "Yield" is not a well-defined term and you can define it any way you please that suits your purpose. ...
by jiHymas
17 Oct 2023 23:57
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Preferreds
Replies: 2575
Views: 317118

Re: Preferreds

From what I can see it's more of a "what if" calculator though to be fair it come with the caveat " Warning: if share is not called only current yield will be realized " and that being said the 7% on perpetuals is real compared with calculated possibilities based on this or that possible scenario. The warning only shows up if you input a 'call price' (which in these discounted days is usually just a projection of the price 30 years hence) that is higher than the current price. Given current yields, many people will be surprised at how little difference it makes .... at 7.03%, the discounting factor over 30 years is about 0.1123, which means that of the current price of 17.40, less than $2 is due to an expectation of ret...
by jiHymas
12 Oct 2023 19:50
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Preferreds
Replies: 2575
Views: 317118

Re: Preferreds

BCE announced a Normal Course Issuer Bid to buy back preferred shares in November 2022. These NCIBs can usually be dismissed as more talk than action. But not in this case. Insider trading reports seem to show BCE has bought back shares of all their outstanding preferred shares. They have apparently bought and cancelled more than 5.7 million shares at a cost of nearly $100 million. I hadn't known that! Thank you! From the 23Q2 Shareholder Report : Normal course issuer bid for BCE First Preferred Shares For the three and six months ended June 30, 2023, BCE repurchased and canceled 1,848,950 and 3,560,950 First Preferred Shares with a stated capital of $46 million and $89 million for a total cost of $32 million and $63 million, respectively....
by jiHymas
15 Sep 2023 15:06
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Preferreds
Replies: 2575
Views: 317118

Re: Preferreds

If I simply type in the domain from that link (https://bmogamhub.com/), I get a login page. So it appears to be something not intended for the public but tucked away in a hidden page of sorts. I get some research with those sorts of non-public links that are accessible to anyone...if you have the URL. It seems to be (currently) intended for the public - a member of FWF eMailed me and with his help I was able to work out: 1. Go to the BMO ETF Dashboard at https://www.bmoetfs.ca 2. Type "Monthly Metrics" into the search box and search 3. The results page shows a link to "Monthly Metrics Summary - ZPR Canadian Preferred Shares" 4. Click to download the document. It's very strange and I don't understand why this document is...
by jiHymas
15 Sep 2023 11:04
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Preferreds
Replies: 2575
Views: 317118

Re: Preferreds

jay wrote: 15 Sep 2023 08:42
jiHymas wrote: 14 Sep 2023 09:50
jay wrote: 12 Sep 2023 17:09 First, according to this, ZPR's YTW is now 9.85% based on Aug GOC-5 rate of 3.9%.
Can you tell me where you found this link? There does not appear to be a link to the document via ZPR's main page. How would an average investory find this link?
I really can't remember how I found it. Most likely on this board. I saved it and I check it once/month.
Not the answer I was hoping for - but thank you! The link turns out to be rather important and I'm wondering just how investors are supposed to find it.
by jiHymas
15 Sep 2023 11:03
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Preferreds
Replies: 2575
Views: 317118

Re: Preferreds

Clason wrote: 14 Sep 2023 19:12
jiHymas wrote: 14 Sep 2023 10:57 Given clason's avowed emphasis on capital preservation (as I interpret the term), he would be quite right to minimize his holdings in preferred shares or even to avoid them entirely.
I think you either misread my comment
I apologize - I misread your comment.
by jiHymas
14 Sep 2023 10:57
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Preferreds
Replies: 2575
Views: 317118

Re: Preferreds

Welcome back and thanks for chiming in, James. Please take it easy on clason, he's a good guy :) (that's my dry sense of humour) Now, can someone explain in layman's terms, where preferreds might fit into my portfolio 50/50 (middle aged, 0-10 years to stopping work), considering the current market/world conditions. Thanks. I suggest that you begin by reading my essay Security of Income vs. Security of Principal . Preferred shares excel at the former portfolio objective and therefore are really crappy at the latter - the more you have of one, the less you have of the other. The trade-off between the two goals is the fundamental decision to be made in fixed income investing. Given clason 's avowed emphasis on capital preservation (as I inter...
by jiHymas
14 Sep 2023 10:28
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Preferreds
Replies: 2575
Views: 317118

Re: Preferreds

It's all voodoo math to me. For a perpetual, YTW requires a make-believe world with an unrealistic redemption date. For rate resets, we must increase the make-believe story to also include perpetually predicted interest rates. I don't know of a better way to value a rate reset share, but YTM or YTW are not helpful to me. I can't find a use for these values, except maybe for stock-by-stock comparison. There are a lot of things I don't understand, and one of them is the purpose of YTM/YTW in valuing prefs without a hard retractable feature (which no longer exist anywhere). ... On constant prices, I see no faults in the calculations. The last time GOC-5 was 0.85%, a 5% pref yield was attractive. What we can't predict though, is how other pref...
by jiHymas
14 Sep 2023 09:50
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Preferreds
Replies: 2575
Views: 317118

Re: Preferreds

jay wrote: 12 Sep 2023 17:09 First, according to this, ZPR's YTW is now 9.85% based on Aug GOC-5 rate of 3.9%.
Can you tell me where you found this link? There does not appear to be a link to the document via ZPR's main page. How would an average investory find this link?
by jiHymas
16 Aug 2023 11:08
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Preferreds
Replies: 2575
Views: 317118

Re: Preferreds

There's always a price to pay when one reduces or eliminates uncertainty. Or perhaps it's a market inefficiency just not eliminated by a lack of liquidity. Perhaps like long bonds the perpetuals have more upside price volatility in the event of falling interest rates. Perhaps the possibility of a greater capital gain if any of these are ever redeemed is a factor. Or perhaps the people who own perpetuals are just older and lazier like me :) Perhaps James Hymas is looking in and might offer an expert opinion. Well succinctly : The market it showing some signs of a possible recovery; I feel it is only a matter of time before investors start paying attention to the fundamental risk of these instruments compared to their eye-popping interest-eq...
by jiHymas
14 Jul 2023 13:48
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Preferreds
Replies: 2575
Views: 317118

Re: Preferreds

and we are currently at 3.80% (which could change by the close, of course) Why would the close matter? Did you not read the relevant section of the prospectus? Add the often quoted "dividend tax credit" factor of 3 percentage points, Why would one add a factor? And once we've cleared up any disinformation about grade 8 math, who quotes a "'dividend tax credit' factor of 3 percentage points"? Based on some of the announced reset rates lately, it seems like they just "ballpark" it lol. I am not aware of any recent disputes over the GOC-5 rate used for resets, although there have been some over past years. Which resets do you dispute and on what basis? Did you make any inquiries to the relevant Investor Relations...
by jiHymas
14 Jul 2023 11:12
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Preferreds
Replies: 2575
Views: 317118

Re: EMA.PR.C

PrefPundit wrote: 14 Jul 2023 10:33 Is anyone aware of exactly what "date" GOC5 rate they will apply?
This information is available on page S-10 of the prospectus (page 13 of the PDF); Emera is one of the 'good companies' that publishes these prospectuses on its website.
PrefPundit wrote: 14 Jul 2023 10:33 Based on some of the announced reset rates lately, it seems like they just "ballpark" it lol.
I am not aware of any recent disputes over the GOC-5 rate used for resets, although there have been some over past years. Which resets do you dispute and on what basis? Did you make any inquiries to the relevant Investor Relations department?
by jiHymas
28 Jun 2023 14:39
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Preferreds
Replies: 2575
Views: 317118

Re: Preferreds

PrefPundit wrote: 28 Jun 2023 14:34 jihymas . . . it's been the mantra of the business (and general) media ever since late last fall . . . do you really expect someone to verify an opinion comment with such a condescending one liner?
So you have no links to support your claim that "... Most of the "professional investing world" believes interest rates will be near zero ... by [2025] ..."

I thought this was deliberate disinformation and I'm pleased to learn my instincts were correct.
by jiHymas
28 Jun 2023 12:13
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Preferreds
Replies: 2575
Views: 317118

Re: Preferreds

PrefPundit wrote: 28 Jun 2023 11:08 In the case of CU.PR.I, it doesn't reset until 2025. Most of the "professional investing world" believes interest rates will be near zero, and the economy in full recession mode by then ...
Oh, really? Can you provide any links that might substantiate that assertion?
by jiHymas
18 May 2023 14:37
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Preferreds
Replies: 2575
Views: 317118

Re: Preferreds

I would be interested in input from James. So far all I could find on Prefblog is this: https://prefblog.com/?p=45042 I too would like to hear from James. ... He points at $800M of annual dividends passing through, but he describes them as "dividend capture trading", which in my mind is a narrow area of trading (buy before ex-dividend, sell next day, flow dividends to shareholders). I'll get to it, promise! Someday... Anyway, I thought I should post to clarify what I meant in my post Dividend Capture by Banks Now Less Profitable . I mean basically the same thing as you do by dividend capture, although I do not insist that the sale be executed on the very next day. When I read of the tax change though, it was this type of trading ...
by jiHymas
19 Apr 2023 12:08
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Preferreds
Replies: 2575
Views: 317118

Re: Preferreds (choosing a Perpetual)

Implied Volatility Theory treats a preferred share as being comprised of two parts: (i) a non-callable perpetual annuity, and (ii) an embedded call option. So, the above is is what the security looks like to the issuer? The obligation to make payments in perpetuity (the annuity) and the right to buy it back for $25 (the call option)? From the holder's perspective, I don't see how a call option figures into it. The holder is short a call option. Calls are bad for the holder. Calls cost the holder money. Say the yields on the Straight Perpetuals on my chart above decline to the point where the highest-coupon issue is redeemed. If that issue had been a true perpetuals, it could not have been redeemed and would have been worth (say) $26.00. Bu...
by jiHymas
19 Apr 2023 10:03
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Preferreds
Replies: 2575
Views: 317118

Re: Preferreds (choosing a Perpetual)

My simple minded view, was that any of those discount straight perpetuals with P1L rating should pay me approx 6% on my investment. Question was, which ones to choose. Ones with high price and coupon or lower price and lower coupon? In simple terms, could you explain how Implied Volatility chart would influence my decision? Implied Volatility Theory treats a preferred share as being comprised of two parts: (i) a non-callable perpetual annuity, and (ii) an embedded call option. It then looks at a series of preferred shares that are as homogeneous as possible (all of the same type [Straight or FixedReset], all of similar, or preferably identical, credit quality] and calculates the best combination of volatility and 'pure' price that fits the...
by jiHymas
18 Apr 2023 14:06
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Preferreds
Replies: 2575
Views: 317118

Re: Preferreds (choosing a Perpetual)

Springbok wrote: 18 Apr 2023 11:20 ChatGPT gave a very comprehensive answer.
I would be very interested in seeing a transcript of the session with ChatGPT, because according to me the answer is "it depends". Here's what Implied Volatility Theory has to say:
PWFPOW_SP_FWF.jpg
PWFPOW_SP_FWF.jpg (40.78 KiB) Viewed 940 times
by jiHymas
28 Jan 2023 01:00
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Real Return Bonds
Replies: 1545
Views: 242249

Re: Real Return Bonds

My understanding is that the markets for many corporate bonds are also very illiquid. That doesn't stop their issuance, and trading in them. Corporate issuers don't have a choice. You might enjoy my article Credit Spreads and Default Risk , which discusses the liqudity premium for corporate bonds. As for RRBs, I have never had any trouble getting an order filled, perhaps at a price higher than I would have liked, but that's the nature of markets, especially less liquid ones. How many millions do you buy at a time? I do know that just one ETF, VTIP, trades some USD 150 million daily and has assets of USD 53 billion. That looks pretty liquid to me, but of course your criteria for liquidity may differ. In 2018, trading of US Treasuries amount...