There ain’t gonna be much today! Month end duties call, with a shrill, unpleasant voice.
However, remember Springfield, MA’s complaint against Merrill Lynch, discussed here on January 4. They’ve settled … and a certain amount of vital information – previously ignored by the media – has finally been reported:
Merrill and two of its brokers sold “unsuitable” securities to Springfield last year after the firm was hired to help manage the city’s short-term investments, Massachusetts Secretary of State William Galvin said in a complaint filed today.
…
“Merrill was supposed to invest in only safe money-market like investments,” Galvin said in the lawsuit.
…
Merrill, the world’s largest brokerage, bought CDOs for Springfield between April and June last year after it was hired to help manage the city’s cash. It didn’t give the city a detailed description of the investment until November, when it sent officials a private placement memorandum on Centre Square CDO, one of the series of securities it bought.
Why it has not previously been reported that Merrill was acting as Portfolio Manager for the city and therefore had a fiduciary obligation (which would not have been the case if they had simply sold it on a principal to principal basis) is something that I don’t understand.
Given my usual month-end woes, there will be no report on the indices today, which is too bad. It was a really strong day! Volume picked up a little, but not to any spectacular extent.
| Major Price Changes | |||
| Issue | Index | Change | Notes |
| PWF.PR.L | PerpetualDiscount | -1.0230% | Now with a pre-tax bid-YTW of 5.52% based on a bid of 23.22 and a limitMaturity. |
| CM.PR.P | PerpetualDiscount | +1.0883% | Now with a pre-tax bid-YTW of 5.67% based on a bid of 24.15 and a limitMaturity. |
| SLF.PR.E | PerpetualDiscount | +1.1450% | Now with a pre-tax bid-YTW of 5.37% based on a bid of 21.20 and a limitMaturity. |
| RY.PR.A | PerpetualDiscount | +1.1483% | Now with a pre-tax bid-YTW of 5.28% based on a bid of 21.14 and a limitMaturity. |
| GWO.PR.I | PerpetualDiscount | +1.1973% | Now with a pre-tax bid-YTW of 5.39% based on a bid of 21.13 and a limitMaturity. |
| BNS.PR.N | PerpetualDiscount | +1.2073% | Now with a pre-tax bid-YTW of 5.43% based on a bid of 24.31 and a limitMaturity. |
| GWO.PR.H | PerpetualDiscount | +1.2935% | Now with a pre-tax bid-YTW of 5.40% based on a bid of 22.71 and a limitMaturity. |
| CM.PR.G | PerpetualDiscount | +1.3687% | Now with a pre-tax bid-YTW of 5.73% based on a bid of 23.70 and a limitMaturity. |
| PIC.PR.A | SplitShare | +1.4237% | Now with a pre-tax bid-YTW of 5.91% based on a bid of 14.96 and a hardMaturity 2010-11-1 at 15.00. |
| FTU.PR.A | SplitShare | +1.4418% | Asset coverage of just under 1.6:1 as of January 15, according to the company. Now with a pre-tax bid-YTW of 5.64% based on a bid of 9.85 and a hardMaturity 2012-12-1 at 10.00. |
| CM.PR.I | PerpetualDiscount | +1.4599% | Now with a pre-tax bid-YTW of 5.68% based on a bid of 20.85 and a limitMaturity. |
| RY.PR.G | PerpetualDiscount | +1.6770% | Now with a pre-tax bid-YTW of 5.32% based on a bid of 21.22 and a limitMaturity. |
| PWF.PR.F | PerpetualDiscount | +1.7175% | Now with a pre-tax bid-YTW of 5.56% based on a bid of 23.69 and a limitMaturity. |
| MFC.PR.C | PerpetualDiscount | +1.7716% | Now with a pre-tax bid-YTW of 5.22% based on a bid of 21.83 and a limitMaturity. |
| WFS.PR.A | SplitShare | +1.8519% | Now with a pre-tax bid-YTW of 4.00% based on a bid of 10.45 and a hardMaturity 2011-6-30 at 10.00. |
| MFC.PR.B | PerpetualDiscount | +2.1583% | Now with a pre-tax bid-YTW of 5.18% based on a bid of 22.72 and a limitMaturity. |
| HSB.PR.C | PerpetualDiscount | +2.2075% | Now with a pre-tax bid-YTW of 5.57% based on a bid of 23.15 and a limitMaturity. |
| BCE.PR.A | FixFloat | +2.2118% | |
| RY.PR.E | PerpetualDiscount | +2.2456% | Now with a pre-tax bid-YTW of 5.27% based on a bid of 21.40 and a limitMaturity. |
| BSD.PR.A | InterestBearing | +2.3134% | Asset Coverage of just under 1.6:1 as of January 31, according to Brookfield Funds. Now with a pre-tax bid-YTW of 6.67% based on a bid of 9.73 and a hardMaturity 2015-3-31 at 10.00. |
| SLF.PR.C | PerpetualDiscount | +2.4402% | Now with a pre-tax bid-YTW of 5.26% based on a bid of 21.41 and a limitMaturity. |
| ELF.PR.F | PerpetualDiscount | +2.8302% | Now with a pre-tax bid-YTW of 6.12% based on a bid of 21.80 and a limitMaturity. |
| BMO.PR.K | PerpetualDiscount | +2.9282% | Now with a pre-tax bid-YTW of 5.45% based on a bid of 24.10 and a limitMaturity. |
| BAM.PR.G | FixFloat | +4.1237% | |
| BCE.PR.B | Ratchet | +4.3039% | Reversal of yesterday’s nonsense. It didn’t trade a single share today, so the poor wickle market maker was able to keep up. |
| Volume Highlights | |||
| Issue | Index | Volume | Notes |
| BNS.PR.O | PerpetualPremium | 125,385 | Recent new issue. Now with a pre-tax bid-YTW of 5.57% based on a bid of 25.13 and a call 2017-5-26 at 25.00. |
| TD.PR.Q | PerpetualPremium | 82,028 | Recent new issue. Now with a pre-tax bid-YTW of 5.50% based on a bid of 25.25 and a call 2017-3-2 at 25.00. |
| BMO.PR.J | PerpetualDiscount | 63,986 | Nesbitt crossed 50,000 at 21.10. Now with a pre-tax bid-YTW of 5.36% based on a bid of 21.06 and a limitMaturity. |
| RY.PR.A | PerpetualDiscount | 59,615 | Nesbitt crossed 50,000 at 21.20. Now with a pre-tax bid-YTW of 5.28% based on a bid of 21.14 and a limitMaturity. |
| CM.PR.I | PerpetualDiscount | 59,110 | Now with a pre-tax bid-YTW of 5.68% based on a bid of 20.85 and a limitMaturity. |
There were twenty other index-included $25.00-equivalent issues trading over 10,000 shares today.
RBC Continues to Dump Preferreds on Monday, February 4
As of midday today, the pref market continues its new found upward momentum. The popular bank issues (BNS.PR.L, BMO.PR.J, CM.PR.J, the RY’s, etc.) are all slowly moving up on decent, although not massive volume. The insurance companies are all up for the most part, as are the utilities.
Noteworthy is RBC’s relentless, and seemingly random, selection for it’s on-going dumping strategy: DC.PR.A & CCS.PR.C appear to be their “victims of the day” for February 4.
Both of these continue to enjoy non-existant offers, and strong bids; yet, RBC has targeted both with large, and highly discounted, overhangs. As of noon today, RBC has an offering of 2700 shares of DC.PR.A at $21, down .17 on the day, and offering a tempting 5.9% yield at this price.
Their $18 on-going offering of CCS.PR.C (6.8% yield at this price), has been devoured by the market as of this moment, but I’m sure it will re-appear, probably once the fund manager gets back from lunch (of course, this may not be for a couple of hours!).
madequota
3:00PM update on RBC and CCS.PR.C
maybe this RBC manager’s become an assiduous reader! . . . he changes his offer level from $18 to $18.74 . . . and what happens? . . . it starts trading at $18.74, and the bid rises to $18.30 . . . amazing, eh? . . . since the next offer is now at $19.98 (market maker), maybe he should take it up another half dollar or so, and who knows? . . . maybe his clients would lose even less money on his behalf!
I know; you’re thinking that I’m venting a little, and maybe taking out some kind of latent frustration by pounding this guy a little bit here. Well, the reality (as I see it) is that RBC and their trading strategies are . . . well . . . novice, to say the least. Potential fund owners have some kind of right to be warned!
madequota
remind me again, what exactly are the credit concerns regarding CCS c?
madequota … I never get upset about trading that makes no sense to me. I figure that for every time incomprehensible trading strategies cost me money there are at least three times I rake it in.
kaspu … CCS.PR.C is split-rated … DBRS has it as Pfd-3, S&P has it as P-2(low). Such issues will generally trade as the lower credit.
yes, you raise a very valid point about the value of volatile & incomprehensible trading strategies . . . after all, if this did not exist, it would be far more difficult to make money at this!
kaspu, I would add that CCS.PR.C has another “hidden” appeal to me other than the oddly out of whack price level, and relatively high yield it currently enjoys . . . and that is that Co-operators, being a reasonably successful, and more importantly, private company, is always a potential takeover candidate for outfits such as the Power group of companies, Sun Live, Manulife, etc. . . . such a move would probably result in an immediate redemption of this issue of preferreds, and $7 / share is about as good as a redemption premium as you’ll ever see with this kind of quality.
having said all that, I see that CCS.PR.C is trading up at $18.74 last, but more importantly, the bid has solidified from $18 up to $18.65 . . . noteworthy is a 2000 share bid (probably an “iceberg”) at $18.50 . . . who’s bid you ask? . . . RBC . . . go figure . . . maybe he failed to get a refill on his anti-depressent meds, and decided to go “yield” after all!
as of noon today, this market is a good example of why pref-share investing can be gratifying . . . TSX & Dow both down 200+, but the prefs keep on holding up (possibility of recession and those ISM contraction numbers didn’t hurt the cause!) . . . all the bank prefs are strong, especially the RY’s, the insurers are pretty much all up nicely, even CIU.PR.A which went ex yesterday is up .34 . . . scanning the percentage gainers of all these prefs, number one performer today is . . . CCS.PR.C + 2.35% . . . we’re not “hyping” this thing up here, are we!?
madequota
uhh…. that 2000 is/was me. don’t hate me because of RBC, they are actually quite jolly fellows. And yes, I am, in fact, fully medicated today.
I just realize that it might not be entirely kosher to talk about current or pending positions without Mr. Hymas’ permission. I do apologize if I have crossed any lines.
I can’t believe it . . . please don’t tell me that it is you trying to buy back at $18.50 today as well . . . are you saying you are actually the RBC fund manager I’ve been . . . ahem . . . spattering with all my love over the past few days? . . . either way, why in the world would you be flogging this thing at $18? . . . I’ve already described in detail why I believe it’s worth a pile more; what prompted you to unleash at these prices? . . .
Kaspu – no worries! You can talk about your own trades to your heart’s content. I would only be concerned if you referred to any information that I would consider proprietary … recommendations from PrefLetter, for instance. Information that I post on this blog, however, is not proprietary and may be discussed and ridiculed at will.
just to clarify.. I am not a fund manager, strictly a private investor. RBC is one of my buy-side brokers.
. . . but the selling yesterday on CCS was being done in 2000 share increments, with automatic refreshing once depleted . . . my understanding is that this kind of order, sometimes referred to as an “iceberg” order is technically only available to “institutional” investors . . . I’m confused . . . were you selling in there, along with the RBC seller?
Hmmm…. the problem is that, in my opinion, the active Canadian Pref market is small enough, and, as in the case of CCS c, illiquid enough, that my natural tendency to gossip and blab can undermine my pending positions. nevertheless, I can say that I was not a seller yesterday
. . . but, a couple of posts above, you confirm that you were the seller . . . kaspu, are you sure that you are fully medicated today?
noooooo…I said that I was a buyer at 16.50 for 2000
I mean 18.50
OK . . . that makes more sense . . . btw you just got filled for 500 . . . probably RBC the seller! . . . all the best . . . madequota
[…] Assiduous Readers Kaspu and madequota have been watching CCS.PR.C very carefully recently – see the comments to February 1, the comments to the January Index Rebalancing and the comments to February 4. […]