As we had noted last week when we published details on the Gaslog Partners LP (NYSE:GLOP) new fixed to floating rate preferred we planned to purchase shares in the issue. On 5/10/2017 we purchased what to us is a full position of 500 shares of the issue at $24.97/share. The issue is still listed on the OTC Grey Market and is now trading in the $25.10 to $25.15 area.
While most long time readers know we are negative on any perpetual preferreds we have decided that we have to move into an occasional issue when they are attractively priced–such as in this case a 8.625% coupon. Adding to the attractiveness of this issue is the fact that it is a fixed-to-floating rate issue. F-to-f issues have performed quite well in the last 6 months with issues trading much higher than we would have guessed at the time of issue. Apparently investors believe that even in the rising interest rate environment that these issues will protect them–we believe actually they are unlikely to protect investors over the long term.
Additionally we have carried plenty of cash in this portfolio for the last 18 months and it isn’t financially smart to continue holding too much cash. With the above purchase we move our cash position down to the 11.9%, which is more than adequate to purchase bargains when/if they appear in the near future.
At this point in time it is not our intent to add substantial numbers of perpetual preferred stocks as it still appears that interest rates are likely to move higher in the years ahead.