A shout out to the IR people at BromptonI have recently spoken with the two individuals at Brompton that deal with public inquiries.
Both discussions were helpful as their answers were transparent and concise.
The trick is asking the right questions. That means asking questions that they are allowed to answer without crossing lines that could get them fired. If you do call them, please be respectful of the boundaries that they have to maintain.
I now feel 99% confidence in being able to determine when Brompton will Raise capital so that I can get out of the way when it happens. Tthe $0.60 or greater smack in the face associated with each Raise is annoying.
I recently spent a couple of hours creating a simple spread sheet to determine the live value for the Unit and LBS NAV's. I did that so that I can compare them to the live prices of LBS and LBS-PR. The comparison is important because it allows you to determine the premium to the unit NAV. From there, it is a simple matter of tracking historical data for past Raises to determine how much of a premium is required to the unit NAV to trigger a Raise.
In order to confirm that benchmark values for a NAV premium do indeed act as predictable trigger points of future Raises, you just have to check to see if the expected trigger points actually applied to past Raises. They do.
The next step was to determine if there are any timing factors that affect when Raises are done. There are.
As I mentioned above, I only invested a couple of hours to get to this point as this stuff ain't rocket science. The point of this post is to demonstrate how pros have a clear advantage over retail investors. Even though I have been out of the game for 30 years, the math doesn't change.
In the big picture, none of the above matters unless you are willing to put in the time to track trading opportunites which really means knowning when to get out of the way of future Raises.
Ultimately, the real issue in choosing whether or not to invest in Splits is whether you believe in the future performance of the underlying securities and if you are comfortable in living with the risk of the leverage inherent in owning Splits.
As an example, LBS typically trades in a range based upon 2.5x the movement of the Unit NAV. That's great when things are going up, but can be brutal when things are going down. In addition, you should be aware that while the $0.10 per month payout ($1.20 per year) is nice, each LBS share only ends up receiving about $0.15 in dividends per year after paying out the Prefs and expenses. That means that if the price of the underlying shares remains flat over the course of the year, the NAV will drop by $1.05.
I hope the above LBS Split recap helps. If not, I just wasted a few minutes writing this which is ok as I have time for this stuff as a retired geezer.