TSX:BPO.PR.A - Post by User
Comment by
SONOFFERGUSon Jan 26, 2024 5:13pm
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Post# 35847927
RE:RE:RE:RE:RE:BPO Prefs
RE:RE:RE:RE:RE:BPO PrefsNicely done!
Indeed, I didn't buy prefs (or frankly look at them) this century, so I missed the markdowns and now am happily rummaging through the discount bin.
Virtually every fixed reset, floater, ratchet floater I look at seems so cheap.
In fixed income (my primary) world, term floaters don't deviate much from par given their short duration unless there's a change in credit/liquidity/tax circumstances from issuance. See, for example, the chart of XFR, which holds government floaters and trades like it should.
Pref floaters as a whole trade at half price and yield 10%+. Yes, credits have deteriorated since issue but this is nuts. See PWF.PR.A as the poster child for a mispriced floater. Cumulative and pays 70% of prime on par, which provides a lovely floor if we get back to a low bank rate. I can understand this issue trading in the low $20s given that Power Financial Corp. was a AA credit way back when versus A(high) now and bid/offer is wide, but $12.75 yielding almost 140% of prime? Nope. Nope nope nope. It is so laughably off of theoretical value and makes it easy to think that the whole market is due for a big move up.
My working assumption is that retail drives pricing across the market except in special situations -- hello BPO -- and won't buy because of previous losses, the terrible 10-year price chart, or lack of info because there are no new issues and hence no brokers pushing/covering the market.
I see the upcoming BN Q4 call (Feb 8) and dividends (Mar 15) as good reasons for shorts to cover. I see fixed resets as a whole bubbling up -- ZPR has marched up every day this month. I see markets, rightly or wrongly, repositioning for lower rates. I see BPO profits!
That was a lot. Thx for your response and good luck out there!
Sonoffergus