BPO.PR.NHi again,
What a Week!
BPO.PR.N has been down 3% to 6% in each of the last 9 trading days on volumes ranging from 3,000 to 40,000 shares. Today alone, the issue is down 4% on a grand total of 4,000 shares traded. In total it is down 26% over this period and total volume has been only about 144,000 shares. As a reminder, there is 11,000,000 shares outstanding. As a result, relative to par value, the value of this series has dropped by $71 million on 144,000 shares traded or 1.3% of the total shares outstanding.
Future Returns
As a result, the current yield is 16% and based on current 5yr rates, the reset yield will be a whopping 29% (as "Crazy Trader" has told us all a 1000 times...lol).
Thus, if BPY manages to survive, which I very much think it will, and the 5 year rates remain in the same ballpark, this security is offering a 29% compounded return for almost "forever" and this will be even higher as the share price migrates back to its $25 par value over time. It was $19 per share
Is the Culprit the Pref Share ETFs?
I calculate that over 25% of the 11,000,000 shares outstanding are held in ETFs ZPR CDD HPR and RPF. I compared the shares held at 12/31/22 and 6/30/23 and the balances were largely unchanged except, ZPR had reduced all its BPO holdings by 7%.
Does the selling pressure here in October have something to do with these big ETFs reducing their positions for risk management purposes and this is crushing the stock price. ZPR sold its position down by 70,000 shares in the Jan to June period, most of it probably around the DTLA debacle in February.
Why is BPO.PR.N Trading at a 39% Discount to BPO.PR.T?
The N and T series are the same security except they have different reset dates. I understand N trading at a discount as the T series resets in like 20 trading days to a much higher 5 year rate than the N series, which does not reset until 2026. But 39%?
It sounds to me that these big ETFs want that new juicy dividend from T and are selling things like the N series.
I Have Been Buying And Will Buy all the Way Down!
I have purchased this month, a bunch of the N shares in the $9's, a bunch in the $7's and a bunch in the $6's. And I will be there in the $5's next week.
Have a great weekend everybody and good luck!
Carena