Midday Commentary: Preferred stocks firm despite limited liquidity in first trading session of 2014

By Stephanie N. Rotondo

Phoenix, Jan. 2 - Though trading was on the muted side, preferred stocks were still trending higher on the first trading day of 2014.

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

One trader said the lack of volume was due to some people settling into the New Year, while some others remained absent from their desks. However, he noted that there was a new report out that indicated investors were searching for yield. That could help the preferred space move even higher, he said.

The trader also mentioned that he had heard the new issue calendar was going to be "pretty active," though he had no specifics as of yet.

As for the day's goings-on, AmTrust Financial Services Inc. announced a $150 million common stock repurchase program on Thursday. The news was helping the 6.75% series A noncumulative preferreds (NYSE: AFSIPA) move higher.

As of mid-morning, the issue was trading up 39 cents, or 2.08%, to $19.18.

In early December, the name began to trade in volatile fashion after research firm GeoInvesting claimed the company's accounting practices were wonky. The company responded that the firm was simply trying to get the market to react to its advantage, given that it was a large short seller of the company's securities.

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