Investment Q&A

Q: in answer to Stephen's question today did you mean Capstone was acquired; if so by whom?
Hugh

Q: Hello 5i Team
There are three companies that have issued preferred shares (Capstone Infrastructure, Co-operators General Insurance and Empire Life) which do not have publicly traded common shares.
As far as I can determine, the companies still file quarterly/annual financial statements on SEDAR, so I can review the financials of the underlying company.
Questions are:
1 - Why do these companies continue to maintain the listing of these preferred shares and given the low interest rates and low trading price, would it be possible that the companies could redeem the preferred shares or purchase them under a NCIB?
2 - Are there potential opportunities in purchasing these preferred shares at opportunistic prices (similar to mid March lows) if we have a general pull-back in the market. I understand that I could have a long hold period for these preferred shares as a result of low trading volume.
3 - Should I concentrate my effort in reviewing other preferred issues and simply ignore these three issues as "noise".
Thanks

Q: Can you give me 5 US based companies with perpetual preferred shares. Safety is the most important factor.
Thanks

Q: trp.pr.c:ca , do you guys have an opinion about buying this one? thanks.

Q: What is your opinion on these 6% minimum reset preferred. Are they still considered AAA and, as they (B.P.O.) are now under the Brookfield Real estate umbrella, how safe are the preferred dividends in the foreseeable future, anticipating some decline in Office occupancy worldwide?

Q: What wouldyou think of a switch from ENB.PR,F into AQN as i am looking
for growth not just a dividend.Ihave a large loss on ENB.PR.F ,but i dont think it will give me much capital gain.
Thanks Phil.

Q: Lowest sp in 7 years. Down 50 % over 7 years. Ouch !!
Preferred shares overall have been hit very hard for some years.

I don"t get it.... Why ?
The current yield is 6.3%. Why would you not buy?
....thank you

Q: What is the general feeling about this specific issue relative to the current market and interest rate outlook? How does it stackup against other preferred issues of Brookfield? Thanks for all you do for us in these times of turbulence.

Q: Last year I received a "Transfer in Kind" to my RRSP for Polaris Infrastructure senior unsecured convertible debenture; Maturity May 2024 with coupon 7%.
I don't really understand the risks of the convertible debenture world.
Would it be more prudent to hold the debenture to maturity and collect the interest quarterly; or convert to the common stock that is paying dividends of 6.7% ?
What are the risk factors I should compare for Polaris?
Is there a process to convert / sell that I should be aware of?
Thank you.

Q: Can you please recommend a couple of attractive convertible bonds of Canadian blue chip companies. Thanks

Q: Preferred shares.
If a company get taken over by another, do their preferred shares if not redeemed at par, get listed on the other company pref.shares.
for example , hypothetically If Husky got taken over by Suncor, would their preferred then get the benefit of higher rating?
Caution fellow members do not take this as a hint!!
Thank you.

Q: good morning.what would be the downside possibilities of buying this preferred stock.thanks brian w

Q: Hi Team,
Can you please comment on TRP.PR.B $7.97 yield 6.7% ?
Thanks as always,
Tak

Q: Hi Team,
This husky prefer is reset, how often they reset the rate and is it worth to hold this one? Your comment is highly appreciated.
Thanks as always,
Tak

Q: Thank you for your explanation of floating rate versus fixed rate preferreds with my two examples of BAM.PR,B and BRF.PR.E. { I assume by fixed rate you mean perpetual } ..... I don't really understand the preferred space but have been researching the effects of the virus crash versus these stock prices. Overlaying the price pre crash on the various kinds.... Perpetuals had a little drop and climbed back to close to where they were. Whereas fixed rate resets and floating rates fell between 20% and 40% and are still down there. Well we all know interest rates aren't going up any time soon and it sure looks to me like there isn't a lot of room to fall. Two I'm looking at are FTS.PR.I a floating rate preferred and ENB.PR.H a fixed rate reset preferred.... I'm trying to understand why they were hammered so badly when realistically interest rates don't have much room to drop . I'd still be getting the interest rate based on the stock price which would be close to 10% on one and 7% on the other less whatever the amount of the interest rate drop is wouldn't I ? . What is the investment theory that made them correct so much ? And what market conditions would exist to gain back those losses ? ...Visually it looks to me like in the case of the Enbridge product if interest rates were to drop a half a percent my yield would drop from 10% to 9.5% ..... I know there is something I'm not grasping here . I just don't know what it is . Thank you for your guidance through these financial conditions.

Q: France is starting to see food inflation. In some cases, it's quite impressive numbers percentage wise. If we do get more wide-spread inflation, due to the massive stimulus, would that be a positive for preferred share resets, which I've read go up with higher interest rates? The ETF ZPR currently pays 7% annually, which is usually a sign of future cuts, but on the other hand, it's been going up for 3 weeks. This question is for an account that is 60% in bonds and needs more income.

Q: Question on minimum rate reset and simple rate reset Preferred shares:
Minimum rate reset preferred shares lists distribution rate as higher of Minimum and the BOC 5 year rate +x%. The questions are:
1. Can they change distribution rate before the next reset date?
2. can they change distribution rate formula at the time of the next reset date
3. At the reset date, can they swap with other preferred with lower distribution?
4. I suppose they can recall and pay the face value at the next reset date
5. I understand company can not reduce or stop distribution on preferred shares until they cancel dividend on their common shares, correct?
6. is it possible to have any other fine prints on the prospectus that makes them more riskier investment?

Q: Good morning 5i team
My wife and I are retired, conservative investors with ~ a 45/55 equity to fixed income asset mix. I have an 8-year bond ladder in my RRIF which, along with our CPP/OAS and dividends from blue-chip Canadian stocks cover our expenses. I have some cash to invest in my RRIF. What do you think of investing in a high quality (e.g. Royal Bank) rate reset preferred stock in my RRIF as a bond proxy. I realize this would not have the same protection as a quality bond, but the yield at over 5% looks attractive relative to buying a longer-term quality bond that is yielding ~ 2%.
Thank you 5i for your comments.
Edward

Q: Good morning,
I have just been informed of a Conversion Privilege on FTS.PR.H. Two options (1) do nothing - retaining FTS,PR.H or (2) Convert to FTS.PR.I on a 1 to 1 basis.
I am always puzzled by these conversions.
These two preferred shares both seem to trade at either 10$ or just below that mark. However FTS.PR.I 's average volume is half of that of FTS.PR.H (2083 vs 4549 Ref. Globe Investor). FTS.PR.I has 2.9 M outstanding shares and FTS.PR. H has 7.0 M
I am wondering what is the catch,,, should I take the conversion ?
Looking at all this information, I think I would likely keep my FTS.PR.H since it has more outstanding shares therefore the average trading volume is more than double that of the FTS.PR.I ... easier to sell if need be.
Is this reasoning sensible or am I missing something. What is the point of this "Conversion Privilege"?
This is the last time I invest in preferred shares, as frankly they have not been a good investment.

Best Regards in these difficult times and stay healthy.

Elaine

Q: I hold this in my Cash account (for income) and it is underwater (has been for a while). In your opinion, would I be better off to harvest the loss and purchase 2 or 3 individual top quality preferred shares? If so, can you provide some specific suggestions (I am overweight financials). I assume I would have to wait 30 days to purchase the individual shares to avoid the superficial loss?
Please deduct credits as appropriate.
Thank you.