New preferred stock IPOs, June 2022

*As June 2022 draws to a close, we look back at the new preferred shares and ETDs introduced during the month, offering annual returns ranging from 6.25% to 13%.

*Here is a comparison with the highest quality preferred stocks in our universe of coverage, ranked by our internal CDx3 Compliance Score metric:

* CDx3 favorites ranked 10 out of 10 sell on average delivery at par of 3.6% and offer an average current yield of 5.77%.

* Past preferred stock IPOs are now trading below par: A look at recent par crosses.

About new numbers

PacWest Bancorp completed an offering of 20 million non-cumulative perpetual preferred shares, offering a fixed dividend rate of 7.75%. The new shares were rated BB- by Fitch, BBB- by Kroll and BBB by Egan-Jones. The shares temporarily traded on the OTC under the symbol PACWL before moving to the permanent symbol PACWP on the Nasdaq, where they now command a premium at par, with recent trades above the $25 offer price. As we reported in our monthly Research Notes Subscriber Newsletterseveral PacWest insiders participated in the offer:

Source: CDx3 Monthly Bulletin “Research Notes”

[As also reported in our monthly newsletter, there were also a number of after-market/open-market insider buys among several other preferred stock issuers in June, ranging from small to large insider buys, including among the preferred shares of Eagle Point Income (EIC), NexPoint Real Estate Finance (NREF), Harbor Custom Development (HCDI), New York Community Bancorp (NYCB), Sotherly Hotels (SOHO), and Fat Brands (FAT). Links in this paragraph point to relevant example SEC filings on form 4. ]

Bitcoin mining firm BitNile Holdings completed an offering of 144,000 shares of new Series D Cumulative Perpetual Preferred Shares, offering a fixed dividend rate of 13% paid monthly. The company said the proceeds would be used to acquire bitcoin miners. Following the offering, the company filed an “into the market” offering program to sell up to an additional $46.4 million of the new preferred series. The new shares are unrated and trade on the US Nyse stock exchange under the symbol NILE-D, where they are currently changing hands at around $21.90/share.

Oxford Lane Capital has priced an offering of new 7.125% forward preferred shares due 2029, raising gross proceeds of $60 million. The company said the proceeds will be used to acquire new investments. Dividends are paid monthly and the new shares temporarily trade on the OTC under the symbol OXFCP before moving to the permanent symbol OXLCN on the Nasdaq.

Great Elm Group has priced a $25 million offering of new exchange-traded notes due 2027, offering a fixed coupon of 7.25%. The company said proceeds from the offering will be used to make investments in its private real estate investment trust Monomoy Properties REIT, whose investment management agreement was recently acquired by Great Elm. The new notes were rated BBB- by Egan-Jones and traded on the Nasdaq under the symbol GEGGL.

Horizon Technology Finance has priced a $50 million offering of new 6.25% exchange-traded notes due 2027. The company said the proceeds would be used to repay its revolving credit facility. The new notes have been given a credit rating of BBB by Egan-Jones and trade on the New York Stock Exchange under the symbol HT
excluding tax
CF.

Sources: Table of Preferred Shares: CDx3 Notification Service Database.

Filings with the SEC: PACWP, NIL-D, OXLCN, GEGGL, HTFC

Buy new stocks for wholesale

Preferred stock IPOs often involve a temporary period in which OTC symbols are assigned until those securities are transferred to their retail exchange, at which time they will receive their permanent symbols.

But there is no need to wait. Individual investors, armed with a web browser and an online trading account, can often buy newly introduced preferred shares at wholesale prices, just like the big ones (see “Preferred stock buyers switch tactics for double-digit returnsfor an explanation of how the OTC can be used to buy stocks at discounted prices).

Those who have followed this strategy of using the OTC wholesale exchange to buy newly listed stocks for less than $25 are better able to avoid a capital loss if prices fall (if they choose to sell). Our CDx3 notification service offers email alerts are a useful tool for investors looking to buy during the temporary OTC period, with alerts notifying you when new OTC preferred stock symbols begin trading.

Your broker will automatically update the trading symbols of all stocks you buy on the OTC, once they switch to their permanent symbols. A special note regarding preferred stock trading symbols: Unlike common stock trading symbols, the format used by exchanges, brokers, and other online quoting services for preferred stock trading symbols does not is not normalized.

For example, a given Series A preferred stock may have a symbol ending in “-A” at TDAmeritrade, Google Finance and several others, but that same security may end in “PR.A” at E*Trade and “. PA” at Seeking Alpha. For a correspondence table of how preferred stock symbols are quoted by sixteen popular brokers and other online quoting services, see “Preferred Share Trading Symbol Crosswalk.”

Past Preferred Share IPOs Below Par

Here are some of the recent dips/crosses below normal for which our CDx3 notification service subscribers have received email notifications (while the primary purpose of our subscription service is to alert on new IPOs and categorize them with a CDx3 compliance score, we too monitor past IPOs and offer email alert options when past high-ranking IPOs drop below par – Learn more here):

Source: Free CDx3 Preferred Share Weekly NewslettersJune 2022. Note: All entries highlighted in yellow indicate eligibility for the CDx3 Bargain Table page (one of our most popular subscriber pages).

Until next time…

Here at CDx3, our typical articles will provide month-end Preferred Share (and ETD) IPO summaries, as well as an overview of some past Preferred Share IPOs currently trading. below par; often, the reward offered for “imperfect” preferred stocks is very high relative to fully CDx3-compliant professionally rated securities.

Whether you’re the kind of investor who sticks to preferred stocks with a CDx3 Compliance Score rated 10 out of 10, or if your portfolio has room for stocks 9 points and below, stay tuned for future articles summarizing new IPOs and the interesting preferred stock activity we’re noticing here at CDx3 Notification Service. Thanks for reading!

About Barbara J. Ross

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