Preferred stocks climb higher; bank earnings to start next week; Ally paper rises

By Stephanie N. Rotondo

Seattle, Jan. 5 – The preferred stock market continued to gain ground in the second trading day of the New Year.

“Everything is green for the most part,” a trader said.

The Wells Fargo Hybrid and Preferred Securities index ended up 18 basis points. Liquidity, however, remained thin, though it looked to be picking up a touch.

“There’s no new issues on the horizon yet,” the trader said, adding that the hope was more volatility would seep into the market by next week.

Next week will bring with it the beginning of bank earnings season, which could in fact increase market activity. JPMorgan Chase & Co., for instance, is slated to release its fourth-quarter and full-year 2015 results on Jan. 14.

In Tuesday trading, the New York-based bank’s 6.15% series BB noncumulative preferreds (NYSE: JPMPH) were on the active side, though they held steady at $26.10.

Ally gains

Ally Financial Inc.’s preferreds were moving up Tuesday following news out Monday regarding a fight between the company and one activist investor group.

The 8.125% series 2 fixed-to-floating rate trust preferred securities (NYSE: ALLYPA) gained a nickel to close at $25.46. The 8.5% series A fixed-to-floating rate perpetual preferreds (NYSE: ALLYPB) were also up a nickel, trading at $25.83.

On Monday, the former lending arm of General Motors Co. said it would consider adding two new board members nominated by Lion Point Capital, a hedge fund founded by Jim Freeman, formerly of Perry Capital, and Didric Cederholm from Elliott Management.

In addition to wanting a seat at the table, Lion Point is also pressuring the company to look into strategic alternatives, including a possible sale of the company. But the fund would need to rally support from other investors in order to push its agenda – a feat that could be difficult considering that Lion Point holds less than a 1% stake in Ally.

For its part, Ally has said it would consider the nominations but that there was no need to review its options at this time.

Ally has faced its share of struggles, however. In the last year alone, its stock has crumbled by 20%.

AdCare moves higher

AdCare Health Systems Inc.’s 10.875% series A cumulative redeemable preferreds (NYSE: ADKPA) firmed up on Tuesday as the company held a conference call to discuss recent developments.

One such development was the company’s recent announcement that it was suspending its common stock dividend for the time being.

The 10.875% preferreds rose 49 cents, or 2.52%, to $20.00.

The Atlanta-based health care-focused real estate investment trust said Monday that it was halting the dividend. Additionally, it said that it had completed the transition of moving all of its facilities to third-party operators or to management contracts with indefinite terms.

But in the ensuing conference call held Tuesday, investors and analysts called the company’s current strategy and style into questions, even going so far as to call for a sale of the company.

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