What did you buy? What might you buy? (2008)
Thank you for your accounting expertise shared with us here - hope this works out for both of us (bought it today around $12).DavidR wrote:Looks very interesting adrian2, thanks for posting.
BTW, another round of thanks to Mr. Hymas and the Assiduous Readers of him for uncovering YPG.PR.B (a bit early maybe, but patience is a virtue).
I understood that the retractable date was Dec/2012 ..4 years from now?adrian2 wrote:A bit safer is to buy YPG.PR.B, which is a retractable preferred with 8.5 years to go.Joe Clarke wrote:YLO
Back of the envelope calculation, for 8 years you get a little more than 10% in yearly dividends, plus almost 10% annual capital gains until retraction at $25. Round numbers, 20% per annum for 8 years for something that's more senior to the common issue (i.e. the income trust).
If you're gutsy enough, invest $100k to get $400k in 8 years.
Live like you are dying but invest like you are immortal.
"Men do not quit playing because they grow old ; they grow old because they quit playing" Oliver Wendell Holmes
"Men do not quit playing because they grow old ; they grow old because they quit playing" Oliver Wendell Holmes
Opened small position in HOU (Oil bull ETF)- just above $3.00
Reasons:
-Look at HOD (Oil bear ETF) in these posts when oil surpassed $100. I traded in and out of HOD as I thought oil was too high. For those who had the conviction, foresight, or cojones to keep saying "OIL IS TOO HIGH" AND HOLD HOD until recently, KUDOS TO YOU!! It was below $10 in summer and recently above $50....a 5 BAGGER!!!
-I can't assess where the bottom for oil prices will be but I'd say we're a lot closer here than at $147!!!
Reasons:
-Look at HOD (Oil bear ETF) in these posts when oil surpassed $100. I traded in and out of HOD as I thought oil was too high. For those who had the conviction, foresight, or cojones to keep saying "OIL IS TOO HIGH" AND HOLD HOD until recently, KUDOS TO YOU!! It was below $10 in summer and recently above $50....a 5 BAGGER!!!
-I can't assess where the bottom for oil prices will be but I'd say we're a lot closer here than at $147!!!
That is for YPG.PR.A - the B series go until 2017/06/30.biker wrote:I understood that the retractable date was Dec/2012 ..4 years from now?
See the source.
Glad to be able to contribute when I can.adrian2 wrote:Thank you for your accounting expertise shared with us here - hope this works out for both of us (bought it today around $12).
BTW, another round of thanks to Mr. Hymas and the Assiduous Readers of him for uncovering YPG.PR.B (a bit early maybe, but patience is a virtue).
I bought some around $12 too -my first purchase of prefs - I figure they probably have more upside than YLO, athough a lower yield for now.
Thanks. Picked up a bunch this am at $11.30adrian2 wrote:That is for YPG.PR.A - the B series go until 2017/06/30.biker wrote:I understood that the retractable date was Dec/2012 ..4 years from now?
See the source.
Last edited by biker on 10 Dec 2008 15:19, edited 1 time in total.
Live like you are dying but invest like you are immortal.
"Men do not quit playing because they grow old ; they grow old because they quit playing" Oliver Wendell Holmes
"Men do not quit playing because they grow old ; they grow old because they quit playing" Oliver Wendell Holmes
- FranksFinancials
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Thanks for bringing this to my attention, this subject will be on my research list.adrian2 wrote:A bit safer is to buy YPG.PR.B, which is a retractable preferred with 8.5 years to go.Joe Clarke wrote:YLO
Back of the envelope calculation, for 8 years you get a little more than 10% in yearly dividends, plus almost 10% annual capital gains until retraction at $25. Round numbers, 20% per annum for 8 years for something that's more senior to the common issue (i.e. the income trust).
If you're gutsy enough, invest $100k to get $400k in 8 years.
Not to be shy though, I'll "speak out" before I do my research. Assuming YPG is an operating entity of the YLO trust, why would their quasi-debt be a "safer" investment than holding the trust units? The underlying operating entities supporting the cashflow are the same.
I don't think it's accurate to describe the preferreds of an underlying operating entity as being more "senior" than the trust units of the holder. Surely both are "manageable" by management. What about liquidity - quarterlies vs monthlies - this is not necessarily straightforward.
Also, there is potential cap gain in the trust units.
Thanks for this.
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Ok. I've done some research on this YLO - YPG.PR.A and YPG.PR.B question and this is what I find. Very interesting.
According to the YPG financials (which are consolidated, of course so it's about impossible to shakeout hierarchies betwixt YPG and YLO) the Series "A" preferreds (YPG.PR.A) mature 12/31/2012 and the Series "B" preferreds (YPG.PR.B) mature 12/31/2017.
My envelope math gets this for me...
YPG.PR.A yields $1.0625/yr or $4.25 to 2012. Closed at $17.75 today - 33%/annum total return to 2012
YPG.PR.B yields $1.25/yr or $11.25 to 2017. Closed at $12 today - let's call it 34%/annum to 2017.
YLO.UN yields around 18% at today's close with quarterly "dividends" and carries significantly greater liquidity than the preferreds. Cap gain/loss opportunities are ignored.
Different investment vehicles for different purposes, I suppose. I'll stick with YLO for now. Not sure I'm comfortable with the greater "horizon" risk of the preferreds.
With the preferreds, 80% and 70% of the gains are postponed until 2012 and 2017, respectively for the B's and A's. That's a long time to hold out for cap gains on what is arguably a dot.com enterprise.
According to the YPG financials (which are consolidated, of course so it's about impossible to shakeout hierarchies betwixt YPG and YLO) the Series "A" preferreds (YPG.PR.A) mature 12/31/2012 and the Series "B" preferreds (YPG.PR.B) mature 12/31/2017.
My envelope math gets this for me...
YPG.PR.A yields $1.0625/yr or $4.25 to 2012. Closed at $17.75 today - 33%/annum total return to 2012
YPG.PR.B yields $1.25/yr or $11.25 to 2017. Closed at $12 today - let's call it 34%/annum to 2017.
YLO.UN yields around 18% at today's close with quarterly "dividends" and carries significantly greater liquidity than the preferreds. Cap gain/loss opportunities are ignored.
Different investment vehicles for different purposes, I suppose. I'll stick with YLO for now. Not sure I'm comfortable with the greater "horizon" risk of the preferreds.
With the preferreds, 80% and 70% of the gains are postponed until 2012 and 2017, respectively for the B's and A's. That's a long time to hold out for cap gains on what is arguably a dot.com enterprise.
Last edited by Joe Clarke on 11 Dec 2008 04:24, edited 1 time in total.
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Check your envelope (or spreadsheet / calculator) - mine is closer to 20%.Joe Clarke wrote:My envelope math gets this for me...
YPG.PR.A yields $1.0625/yr or $4.25 to 2012. Closed at $17.75 today - 33%/annum total return to 2012
YPG.PR.B yields $1.25/yr or $11.25 to 2017. Closed at $12 today - let's call it 34%/annum to 2017.
Not necessarily - if / when the market realizes what's going on, it won't wait until the last day to bid up the price.Joe Clarke wrote:With the preferreds, 80% and 70% of the gains are postponed until 2012 and 2017, respectively for the B's and A's.
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Agreed. It's really quite easy to envision a relatively rapid appreciation of the "B" preferreds by as much as 50%. In fact, I would expect that the preferred shares will move more-or-less in lock step with the trust units thus mitigating any advantage that JC is implying.adrian2 wrote:Not necessarily - if / when the market realizes what's going on, it won't wait until the last day to bid up the price.Joe Clarke wrote:With the preferreds, 80% and 70% of the gains are postponed until 2012 and 2017, respectively for the B's and A's.
[Disclosure] I own YPG.PR.B shares.
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
Thomas Babington Macaulay in 1830
Thomas Babington Macaulay in 1830
Added to my position in CUF.UN
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Err...so which is it? for YPG.PR.A ? It yields $1.0625 per year in dividend payments, and in 2012 it's retractable at what value? $25 ? so based on current yield and the 2012 date, what return would you get per year?adrian2 wrote:Check your envelope (or spreadsheet / calculator) - mine is closer to 20%.Joe Clarke wrote:My envelope math gets this for me...
YPG.PR.A yields $1.0625/yr or $4.25 to 2012. Closed at $17.75 today - 33%/annum total return to 2012
YPG.PR.B yields $1.25/yr or $11.25 to 2017. Closed at $12 today - let's call it 34%/annum to 2017.
Plus those dividends get the canadian tax dividend credit right?
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Yes, you are right - that'll teach me to run numbers at 1:00 AM. It's more like 20% on the B - less on the A.adrian2 wrote: Check your envelope (or spreadsheet / calculator) - mine is closer to 20%.
...if / when the market realizes what's going on, it won't wait until the last day to bid up the price.
As to the market seeing the brilliance of the math and bidding up the preferreds. Yeah I've been beaten up a few times because the market "just doesn't get it", I have a hard time investing on that contingency.
As to the return - this makes it dead simple for me, no contest. I'll take the trust units at 18% with monthly cash flow and huge liquidty vs. lesser, delayed gratification with the preferreds.
I see the investment risk as being almost identical between the trust units and preferreds. This is not a brick and mortar enterprise.
What are the formulas used to give you that 20% ?Joe Clarke wrote:Yes, you are right - that'll teach me to run numbers at 1:00 AM. It's more like 20% on the B - less on the A.adrian2 wrote: Check your envelope (or spreadsheet / calculator) - mine is closer to 20%.
...if / when the market realizes what's going on, it won't wait until the last day to bid up the price.
As to the market seeing the brilliance of the math and bidding up the preferreds. Yeah I've been beaten up a few times because the market "just doesn't get it", I have a hard time investing on that contingency.
As to the return - this makes it dead simple for me, no contest. I'll take the trust units at 18% with monthly cash flow and huge liquidty vs. lesser, delayed gratification with the preferreds.
I see the investment risk as being almost identical between the trust units and preferreds. This is not a brick and mortar enterprise.
I'm thinking due to tax differences if you're outside of an RRSP. The difference between 20% (preferred) and 18% (normal-unit-yield) is probably bigger.
Since the 20% is partially capital gain, and partially divs that are taxed lower due to canadian dividend tax credit? i.e. I think on just the yearly ypg div yield versus ylo div yield, on one if you're at the highest marginal rate you'd be taxed around 24% while the other more around 46%, again going with highest marginal tax rates.
Then on the capital gain side with the YPG you're again taxed lower than the YLO. So trying to calculate what my real-world-differences would be.
Granted I'm not taking into consideration possibility of YLO div increases or share-price increases (or the reverse, decreases)
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