Preferred stocks muted; Fannie, Freddie slip; Goodrich, Vanguard Natural Resources up

By Stephanie N. Rotondo

Phoenix, Sept. 3 – The preferred stock market was firm again on Thursday, but liquidity remained constrained going into the holiday weekend.

“I think once we get into September, we should probably see the calendar build up a little,” a trader said.

In the meantime, he speculated that the market would remain subdued for the rest of the week as desks empty early ahead of Labor Day.

Furthermore, while preferreds did end with a positive tone, they followed the trend of the broader markets and pared some gains.

The Wells Fargo Hybrid and Preferred Securities index ended up 3 basis points. The index was up 6 bps at mid-morning.

Fannie Mae and Freddie Mac preferreds were initially moving up during the session on chatter the GSEs “might start entertaining the idea of retaining capital,” a trader commented. The mortgage giants have had the bulk of their profits conscripted by the federal government under amended terms of its conservatorship agreement since 2013.

The profit-taking has resulted in a slew of shareholder lawsuits, most of which allege the government acted illegally in taking most of the agencies’ quarterly earnings.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were up 4 cents in early trading at $5.04 but ended off a nickel, or 1%, at $4.95. Freddie’s 8.375% fixed-to-floating rate noncumulative perpetual preferred stock (OTCBB: FMCKJ) were up 19 cents, or 3.89%, at $5.08 but finished losing a penny to close at $4.88.

Goodrich, Vanguard rise

In terms of percentage gains for the day, some oil and gas names were among the biggest upward movers.

The movement came as U.S. domestic crude prices jumped as much as 4% intraday, though prices eventually gave back a little, ending just 1.3% higher on the day.

Goodrich Petroleum Corp.’s 10% series C cumulative redeemable preferreds (NYSE: GDPPC) closed up nearly 15 cents, or 7.08%, at $2.7487. The 9.75% series D cumulative redeemable preferreds (NYSE: GDPPD) improved 14 cents, or 7.78%, to $1.94.

Meanwhile, Vanguard Natural Resources LLC’s 7.875% series A cumulative redeemable preferred units (Nasdaq: VNRAP) rose $1.64, or 7.88%, to $22.44.

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