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No. of Recommendations: 7
The advantage some of these funds have over an individual buying their own preferred is timing. They bought preferreds back when interest rates were much higher. You try buying the same preferred and your yield won't be close to what the fund has because you'll be paying a huge premium compared to buying that same preferred, 2, 3, 5, 10 yrs ago.

At CPXIX I see things such as:
Metlife Inc 9.25% 4/8/2038 144A
JP Morgan 6.75%
Prudential Financial 5.625% 6/15/43
Emera 6.75% 6/15/76-26


It's not just timing. For instance, the MetLife example you mentioned says "144A" after it. That means that it was a private placement, not for sale on the public markets.

The only JPM 6.75% preferred that www.quantumonline.com shows (JPJQL) has this comment: Notes: The issuer does not intend to list the depositary shares or the Preferred Stock on any securities exchange. meaning that it was a private placement.

You can buy PRS, a Prudential Financial 5.625% note (not preferred) on the public markets, but it's not due until 2058. As of the close today, it was priced at $27.43 - nearly 10% above the $25 par. www.quantumonline.com doesn't list any 5.625% preferreds for PRU, so if the Prudential holding in CPXIX really a preferred, I suspect it was also a private placement.

For example some of us were lucky enough to get Wells Fargo Preferred L at under $1000 (par), now it is 1300+ (still not bad).

WFC-L isn't a straight preferred. It's a convertible preferred, that can be forced to convert if WFC common closes above $203.72 for 20 out of 30 trading days. Since WFC common closed at $24.61 today, that's an increase of over 8 times the current price, so WFC-L is pretty much a 'busted' convertible at this point. Since the WFC-L coupon is at 7.5%, even at today's close of $1384, it's still yielding 5.42% I have owned WFC-L for several years, and recently purchased some more. What I will say is, in the currently unlikely event that a conversion is forced, there will be a principal loss if you pay above $1300 for it. Because of that, albeit remote, conversion possibility, I probably wouldn't pay more than $1375 (the forced conversion price, plus 1 year's dividend) for WFC-L.

AJ
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