RE:RE:Prefs?Merci Pierre!
Interesting for sure... If you think about it, from say 15$ to 25$ (on C shares), that would be a 66.67% return on your investment if the company liquidates... Well, you would receive this before common holders get even 1 cent. On top of it, you're earning like 10%+ annually on your money as you wait. Not too shabby.
To get a 66.67% return on common shares, suppose you can buy at 1.45$, you would have to get those share reach 2.41-2.42$ to get the same return and without a dividend.
Seems to me that holding preffered here is pretty much the easy choice.
Obviously, the risk is there is a divi cut at which point it would be accumulated to the prefs (the divi of course) and you'd probably be stuck with a paper loss untill there is a liquidation or major business improvement.
In any case, sounds to me like it's much more attractive than holding the commons... But you have to wonder with today's move in the prefs if there isn't already knowledge spilled to the big boys that there will be an announcement next week on a divi cut and some privileged folks are stumping out.
pierrelebel wrote: Hi Bookends - there was a story in "divestor" a few weeks ago raising the possibility that the board of director would suspend the dividend on preferred shares to protect their cash on hand:
Link to Divestor
"The preferred shares (TSX: BBD.PR.B, BBD.PR.D) also took a dive, and are now trading at around an 11% yield for those that like to gamble. Just be warned that “alternatives to allow accelerating our debt paydown” might include the suspension of preferred share dividends (suffice to say, this would likely result in lower prices for the preferred shares). An interesting gamble for yield chasers!"
'The prefs would get their 25$ regardless... " Unfortunately, there is no such guarantee. In case of liquidation, the bonds, governments and banks typically get paid first, followed by employees, suppliers and pension funds. IF there is some money left, it goes to the preferred before the common shares. However, in this case, check the balance sheet and you will see that - if liquidated (which I doubt very much) - there is no money left to pay all the suppliers and nothing for shareholders (preferred or common)
Once again, I do not expect a liquidation at this time.
I sold my preferred shares (both B and D) years ago.