Pro Pref Manager still holds YLO He's still holding, was still buying before the pref div cut. Was shocked about it, like me,
Hymas is one of the country's foremost experts and managers of prefs. You should all be reading prefblog.com
See https://www.prefblog.com/?p=18009
The horrible performance of the YLO preferreds over the month (losses of between 60% (YLO.PR.A) and 76% (YLO.PR.D)) can be ascribed to the suspension of dividends on these issues, followed by sharp downgrades from DBRS and S&P. Unitholders and casual readers will know that these issues have been a nightmare for me since the renegotiation of their bank credit facilities in September. With the benefit of hindsight, it is easy to say I should have sold everything then – or at least stopped purchases after the credit downgrades in August – but … I didn’t. While I have been quite cognizant of the fact that credit quality of YLO has been deteriorating, I have also considered the decline to be more than fully reflected in the market price of these issues – and why sell for less than there estimated value?
One question that springs to mind is: just why, exactly, did the company suspend preferred dividends? This is a drastic measure to take and most companies maintain payouts until the very day they file for CCCA protection; in addition, YLO is both profitable and cash-flow positive. It is my belief that the board looked at the price their public securities – common, preferreds and bonds – were trading at and decided that since the public was of the view that bankruptcy was imminent they ‘might as well have the game as the name’.