Q: Is it advantageous to convert shares to series 6 by the end of January. What happens to the dividend if I just hold the stock long term.
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Investment Q&A
Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.
Q: Further to my question regarding conversion of series 4 preferred shares, here is a recent comment from James Hymas, who is a pref shares guru: http://prefblog.com/?p=31665
"...If you wanted a true indication of the value of Dundee’s proposal to the Series 4 shareholders, then Dundee could have extended the term for those shareholders, that might be delusional enough to accept the deal. However, on that basis, I’m sure that it would be a small minority.
I agree. The proposal runs contrary to the usual method of term-extension for retractible preferred shares in Canada (which happens frequently, if not exclusively, with Split Share preferreds), in which there is almost always a “Special Retraction Right” allowing unhappy shareholders to exit their investment on the original terms.
That, I should hope, will be the objective of any beneficial shareholders who are in discussions with the company."
"...If you wanted a true indication of the value of Dundee’s proposal to the Series 4 shareholders, then Dundee could have extended the term for those shareholders, that might be delusional enough to accept the deal. However, on that basis, I’m sure that it would be a small minority.
I agree. The proposal runs contrary to the usual method of term-extension for retractible preferred shares in Canada (which happens frequently, if not exclusively, with Split Share preferreds), in which there is almost always a “Special Retraction Right” allowing unhappy shareholders to exit their investment on the original terms.
That, I should hope, will be the objective of any beneficial shareholders who are in discussions with the company."
Q: Please let us know your thoughts on "Principal At Risk" notes, specifically the CIBC Cdn. Banks Auto Callable notes recently offered.
The offering documents make them look very attractive with the potential for high single digit returns appearing to be almost a certainty.
Also any general comments on PPNs and "Principal at Risk" notes would be most appreciated.
The offering documents make them look very attractive with the potential for high single digit returns appearing to be almost a certainty.
Also any general comments on PPNs and "Principal at Risk" notes would be most appreciated.
Q: In a portfolio it is generally recommended that you avoid a weighting of more than 5% per equity. My question is as follows. Assuming your total portfolio is 1M. The split 60% equities and 40% fixed income. On the equity side this would imply 20 stocks at an average value of 30K per stock to meet the 5% guideline. On the fixed income side does the same rule apply or can you say 2 ETF's at 200K each. Say 200K of CBO and 200K of ZSU as an example . It brings the weighting to 20% each. Notwithstanding one could probably go to a product that gives you the entire bond spectrum and put 400K in one ETF. What is your opinion and recommendation.
Always appreciate your incite and all the best in the new year.
Always appreciate your incite and all the best in the new year.
Q: I own shares of Innergex Preferred series A Bought @ $ 22. I am giving the option to convert it to series B floating rate. Could I please have your opinion if I should convert or stay with series A. I was unable to find a Quote for the B series. Is this a new series that is created for that purpose? With only 3.4 Million shares of the series A outstanding, the conversion is subject to a minimum of 1 Million of A to B and become compulsory if less than 1 million shares remain outstanding of series A.
Thanks.
Thanks.
Q: Hello.
I've decided to change my investing strategy for 2016. I'm investing in a combination of Canadian perpetual and rate reset preferred shares and a small portfolio of yielding blue chip CDN stocks.
I'm having trouble finding resets that I actually like. There are a handful that seem to be bargains but most of them reset in the following 1 or 2 years. I'm looking for ways to hedge against rising interest rates should they increase over the next 5 years. Could you provide a strategy of a particular security that would accomplish this. I was thinking of owning a large position in a 1 to 5 yr term bond ETF or shorting one of the more liquid preferred ETF's as a hedge. Neither idea I like very much. Your thoughts???
I've decided to change my investing strategy for 2016. I'm investing in a combination of Canadian perpetual and rate reset preferred shares and a small portfolio of yielding blue chip CDN stocks.
I'm having trouble finding resets that I actually like. There are a handful that seem to be bargains but most of them reset in the following 1 or 2 years. I'm looking for ways to hedge against rising interest rates should they increase over the next 5 years. Could you provide a strategy of a particular security that would accomplish this. I was thinking of owning a large position in a 1 to 5 yr term bond ETF or shorting one of the more liquid preferred ETF's as a hedge. Neither idea I like very much. Your thoughts???
Q: Hi Peter
I own this floating Rate Preferred share issue which pays out a dividend which is based on 70% of the prime rate, it has taken a significant hit to say the least.
Recently it was downgraded to pfd-3 (high) i imagine because of debt risk,i hope this doesn't translate into Junk.
Could you comment on this Preferred share rating and the risk associated with it.
Thanks Gord
I own this floating Rate Preferred share issue which pays out a dividend which is based on 70% of the prime rate, it has taken a significant hit to say the least.
Recently it was downgraded to pfd-3 (high) i imagine because of debt risk,i hope this doesn't translate into Junk.
Could you comment on this Preferred share rating and the risk associated with it.
Thanks Gord
Q: These Dundee series 4 preferred shares tanked during the past week after Dundee announced plan to exchange them (redeemable in June 2016) to class 5 shares redeemable in June 2019) - http://dundeecorp.com/pdf/2015-12-10-QandA.pdf
The exchange incentives are clearly not sufficient considering the fact that these pref shares now have junk rating (re prefblog.com). What is the most concerning is that the company is now offering extra payment to shareholders who vote in favour of exchange (see Globe and Mail article here: https://t.co/HseE5rIvF8). I would never think something like this is even legal in Canada... What's your opinion of this?
The exchange incentives are clearly not sufficient considering the fact that these pref shares now have junk rating (re prefblog.com). What is the most concerning is that the company is now offering extra payment to shareholders who vote in favour of exchange (see Globe and Mail article here: https://t.co/HseE5rIvF8). I would never think something like this is even legal in Canada... What's your opinion of this?
Q: Hi Peter & team:
I own CF.PR.A and RON.PR.A (along with a couple of others) which are preferred the rates of which will be reset in March and September 2016, which explain in part why they down so much. These are part of the income portion of my portfolio, so I am still fine in staying in that space. My question is whether I should be worried about the credit risk of those two specific names. Would it make sense to switch to other beaten down resets with a better credit risk, such as BCE or FTS? If so, would you have suggestions. Thanks.
I own CF.PR.A and RON.PR.A (along with a couple of others) which are preferred the rates of which will be reset in March and September 2016, which explain in part why they down so much. These are part of the income portion of my portfolio, so I am still fine in staying in that space. My question is whether I should be worried about the credit risk of those two specific names. Would it make sense to switch to other beaten down resets with a better credit risk, such as BCE or FTS? If so, would you have suggestions. Thanks.
Q: Hi there
I know there have been some heavy losses this year in the preferred space, and new preferred shares are being issued at slightly more favorable terms but I really am perplexed by their short term movements in price given the market knows the direction for interest rates. I bought BAM.PR.M preferred in mid October for 16.50, in short order it was over $20 and now it is back to $16.10 today. I could see this in a market where the direction of interest rates are in some question but everyone know there is an interest rate coming in the states, we have know that for 1/2 a year other than the timing of it, and it is expected that rates will continue to go up. So nothing has really changed since September of 2015 yet preferred shares prices move around like crazy (I own others like Brookfield). I have owned preferred for quite a while but have never seem this volatility. Can you give me some ideas why at this time the prices move around so much and another question - are these solid investments for long terms income still and will prices recover somewhat?
Thanks
I know there have been some heavy losses this year in the preferred space, and new preferred shares are being issued at slightly more favorable terms but I really am perplexed by their short term movements in price given the market knows the direction for interest rates. I bought BAM.PR.M preferred in mid October for 16.50, in short order it was over $20 and now it is back to $16.10 today. I could see this in a market where the direction of interest rates are in some question but everyone know there is an interest rate coming in the states, we have know that for 1/2 a year other than the timing of it, and it is expected that rates will continue to go up. So nothing has really changed since September of 2015 yet preferred shares prices move around like crazy (I own others like Brookfield). I have owned preferred for quite a while but have never seem this volatility. Can you give me some ideas why at this time the prices move around so much and another question - are these solid investments for long terms income still and will prices recover somewhat?
Thanks
Q: hi experts; if they get a sale what would be the possible out come be to the debentures. thanks brian
Q: Can you comment on the recent issue of Royal Bank reset preferred
shares Series BK? Are they a suitable investment in the current
climate or are they in the same boat as other reset prefs? Thanks.
Joe
shares Series BK? Are they a suitable investment in the current
climate or are they in the same boat as other reset prefs? Thanks.
Joe
Q: This floating reset preferred share, bought for "portfolio stability and income", is down 43% as its yield is tied to prime, and many other more attractive prefs are available. Would you hold in anticipation of future price appreciation , or move on. No tax loss needed!
Q: Royal's latest preferred offering seem to be surprisingly good one, is it?? 5.5%yield and 4.53% reset. Is it a good buy? How will future interest increase effect the price? Is it trading, has a trading symbol?
Many thanks for your help. J.A. P, Burlington
Many thanks for your help. J.A. P, Burlington
Q: Hello- I found this article interesting and concerning:
http://www.theglobeandmail.com/globe-investor/inside-the-market/big-yields-in-banks-preferred-share-offerings-raise-questions/article27653310/?cmpid=rss1
In your opinion, what does this say about the banks' need to raise capital, and about their long term view of interest rates and the economy here in Canada? Should we be nervous?
http://www.theglobeandmail.com/globe-investor/inside-the-market/big-yields-in-banks-preferred-share-offerings-raise-questions/article27653310/?cmpid=rss1
In your opinion, what does this say about the banks' need to raise capital, and about their long term view of interest rates and the economy here in Canada? Should we be nervous?
Q: should we submit to get new series at .7136 of a 25 par value.to think we would be redeemed at $25 was a pipe dream. thanks for the great service.what would the floating rate be today,on a different preferred. thanks brian
Q: I own 1000 shares of capital power cumulative rate reset preference shares series 1 which are down 60 percent. I am being given the option of converting ie to receive one capital power corp floating rate preference share series 2 for each capital powerccorp cumulative rate reset preference share series 1 converted. Shareholders who do not wish to convert their shares to this offer need not submit instructions. So would I be better off converting. I bought these preferred shares not really understanding preferred shares. Lesson learned.
Q: I hold 200 BRF.PR.E series 5 preferred shares. My ACB is $20 so I'm yielding 6.25% on my original investment. The current price is pretty close to my cost price, which is Ok since I bought for income and these shares are only a very small part of my overall portfolio. I've read your answers to a couple of other questions about the proposed exchange to the new preferred "units". From what I can tell by reading the prospectus the new units will be transferred on a 1 to 1 basis so I'll get a bump in the payout to $1.3976/unit, from $1.25/share, which would yield 6.98% on my ACB. And the distribution would still be cumulative. However, I understand some of the return on the new "units" will be classified as return of capital as opposed to a 100% dividend on the old pref shares. This is not an issue for me since I hold the shares in an RSP account. I don't see any real negatives for me on the exchange. But I think I might have a different opinion if I held the shares in a non registered account. Do I have this right? Thanks in advance for your answer.
Q: Hi Peter & Co.,
I own 3000 shares of BRF.PR.F, preferreds which pay $1.25 each annually, or 5% of the original issue price.
Brookfield has offered a share exchange in which I would receive one new Class A, Series 5 preferred share unit for each of my current shares. The new units would pay 5.59% annually. Sounds good at first glance, but I am wondering why the company would do this, and whether there are other features of the new Class A, Series 5 units that are less desirable. My original cost for my shares is $19.84 each.
Can you comment please? Thanks!
Brian
I own 3000 shares of BRF.PR.F, preferreds which pay $1.25 each annually, or 5% of the original issue price.
Brookfield has offered a share exchange in which I would receive one new Class A, Series 5 preferred share unit for each of my current shares. The new units would pay 5.59% annually. Sounds good at first glance, but I am wondering why the company would do this, and whether there are other features of the new Class A, Series 5 units that are less desirable. My original cost for my shares is $19.84 each.
Can you comment please? Thanks!
Brian
Q: I was thinking of buying this ETF for my RRSP. RRP shares which are laddered - down a lot due to concerns about interest rates I assume - however, these type of preferreds would benefit from a slow increase in interest rates in Canada when that happens - rate reset means increased payouts. I think this would be a better bet than the CPD? Big potential for capital gains and get paid 6% to wait.