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E Split Corp T.ENS

Alternate Symbol(s):  ENSPF | T.ENS.PR.A

The objective of the Class A shares is to provide holders with non-cumulative monthly cash distributions and the opportunity for capital appreciation through exposure to the portfolio. And The investment objectives for the preferred shares is to provide holders with fixed cumulative preferential quarterly cash distributions and return the original issue price of 10.00 Dollars to holders upon maturity. The Company has a portfolio comprised primarily of common shares of Enbridge Inc. Enbridge, a North American oil and gas pipeline, gas processing and natural gas distribution company the Enbridge Common Shares or the Portfolio and intends to purchase Enbridge Common Shares from time to time in the market or through participation in future public offerings by Enbridge. The Advisor believes that the Company offers investors an opportunity to gain exposure to Enbridge, one of the worlds largest energy infrastructure companies.


TSX:ENS - Post by User

Comment by Experiencedon Nov 12, 2024 2:51pm
37 Views
Post# 36308764

RE:Heads up

RE:Heads upObscure...good ponts as usual

Regarding the options, there are variations to this and what is not clear to me is what discretion Middlefield has in terms of its options trading.  There are certainly more complex options strategies than simply selling a call on a share of ENB.  As well, as you pointedt out, we don't even know what calls they may written and also the number of contracts sold.

That said, a quick glance at the options chain on the CBOE for the upcoming expiry date, I see that there are very little options contracts out there with the exception of the one very close to the current to the current SP.  The price decay is significant and usual. So if for example, Middlefieldl had written out of the money calls at this exercise price they would be able to close their positions for a profit.  On the otherhand, if they had sold contracts with a strike price at the ENB share price a couple of months ago they would be at a significant loss.  Given that few of these contracts are left, it begs the question as to whether or not Middlefield closed out their position for a loss or whether they didn't write any at those strike prices.

If the former is the case then they would no doubt have to use the ATM facility to cover their losses and have the money for the payout of the dividends on ENS.  In this situation, depending on how many contracts they wrote, they could be the ones who are depressing the price of ENS and generating the discount to NAV.

As with any "academic" discussion, the question then becomes - "Does any of this matter?"  The answer depends on your investment strategy and whether there are better places to get a risk adjusted return.  It also depends on one's view as to whether this problem is temporary or systemic.

Each of us will need to decide this on our own.
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