Puzzled by performance of the pref B sharesI'm somewhat puzzled by the share price performance of the preferred B shares. They are floating rate, tied to the BOC prime rate and no conversion into common so there should be no link to the price of the common.
The only risk that I can see is BBD insolvency and that has risk alleviated over the last few weeks. They rank ahead of the common shares and are trading well below the par value 0f $25. Any rise in the BOC rate is reflected immediately in a dividend increase.
From this level near $6 the chance of a double is probably better than a double in the common. The only factor that comes to mind is that due to low trading volumes and the small size of the issue (about 9 million shares) they may possibly be held mainly by retail investors or small funds and there is still tax loss selling going on.
Am I missing something? I think the pref B's are the safest way to participate in any improvement in BBD performance.