Preferreds

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Koogie
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Re: Preferreds

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adrian2 wrote: 14 Dec 2017 10:31 For subscribers only. :(
Free online through the PressReader site from your local library.
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Re: Preferreds

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For subscribers only. :(
Try turning off cookies in your browser. I'm not subscriber either, but with cookies turned off can view that article and others. :D
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Re: Preferreds

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I'm sure I read it here - when the page first loads, if you click the "X" at the right side of the URL, _before_ it changes to the reload symbol, the subscriber-only message won't load.
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Re: Preferreds

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DavidR wrote: 14 Dec 2017 10:54 The article mentions Fortis, Manulife etc but there is no specific discussion other than this rationale:
Mr. Grieve calculated that if the bond yield rises to 2.5 per cent, the Fortis preferred shares would be reset at 5.8 per cent, and could send the share price back up to par – implying a gain of $8 a share from the current level, or 47 per cent.
That article may come back to haunt. GoC5 has been falling recently (from about 1.8% three months ago to about 1.65% today) and that is being reflected in the bottom falling out of at least some fixed reset market prices. A return to 2.5% any time in the medium term seems fanciful at the current time.
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Re: Preferreds

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New Issue: CM FixedReset, 4.50%+245, NVCC-compliant
http://prefblog.com/?p=35977

Maybe I'm not reading very well but is this and the new National Bank issue not offering a floor interest rate? Are all the new ones dropping this feature?

National Bank of Canada 4.60% 5-Year Rate Reset Preferred Shares, Series 40
This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed
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Re: Preferreds

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No minimum. I suspect they believe they don't have to offer a minimum any more given GoC5 is blowing through 2% and market sentiment is for higher bond yields. That said, James did say this appears to be an expensive issue so it will be interesting how well the market receives it.
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Re: Preferreds

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BRIAN5000 wrote: 11 Jan 2018 17:24 New Issue: CM FixedReset, 4.50%+245, NVCC-compliant
http://prefblog.com/?p=35977

Maybe I'm not reading very well but is this and the new National Bank issue not offering a floor interest rate? Are all the new ones dropping this feature?

National Bank of Canada 4.60% 5-Year Rate Reset Preferred Shares, Series 40
Bank preferreds (NVCC compliant) have never offered a floor interest rate.
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Re: Preferreds

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adrian2 wrote: 11 Jan 2018 17:51
BRIAN5000 wrote: 11 Jan 2018 17:24 New Issue: CM FixedReset, 4.50%+245, NVCC-compliant
http://prefblog.com/?p=35977

Maybe I'm not reading very well but is this and the new National Bank issue not offering a floor interest rate? Are all the new ones dropping this feature?

National Bank of Canada 4.60% 5-Year Rate Reset Preferred Shares, Series 40
Bank preferreds (NVCC compliant) have never offered a floor interest rate.
OSFI will not accept a floor rate as part of a Tier 1 issue. See New Issue: RY FixedReset 5.50%+453
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Re: Preferreds

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The split share cos. have been spewing out equity recently via overnight offerings. I just tried to sign up for an allocation of LCS.PR.A, but got nothing. These have been reliable short-term money-makers, buying com-free at the offering price and selling back into the market later.
Eleven months ago, I did get 80% of my request for FTN.PR.A.
I'm with BMOIL, 5-star client, but probably a poor fee generator due to a lack of trades and almost no mutual fund holdings.
I'm curious whether other pref investors have been able to get into these offerings from online brokerages. Or are all the pref shares being snagged by richer clients, perhaps on the full-service side?
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Re: Preferreds

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TDDI's new offers for split shares only allows for an expression of interest in either the Class A units or the Matched Units (i.e. Class A unit plus Preferred unit). AFAIK, TDDI's new issue offerings have never included the standalone preferred split share units. I suspect that you are correct that the brokers offer the preferred units to their full service clients, and flog the Matched Units and Class A units to the discount brokers suckers.

If you're very patient, you can often buy the split share units on the open market at below face value, although you might have to wait a few years.
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Re: Preferreds

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So BNS.PR.A has a redemption date of April 2018 and every five years thereafter. Since this is a not NVCC compliant, I presume this issue will be called in April as it is the last call date before the Jan 2022 deadline for these shares to be counted as Tier 1 capital. Or is it possible they could wait until 2023? Is 2022 a hard deadline or does it just mean they have to raise more Tier 1 capital from other sources to make up for it?
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Re: Preferreds

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big easy wrote: 06 Feb 2018 15:58 So BNS.PR.A has a redemption date of April 2018 and every five years thereafter. Since this is a not NVCC compliant, I presume this issue will be called in April as it is the last call date before the Jan 2022 deadline for these shares to be counted as Tier 1 capital. Or is it possible they could wait until 2023? Is 2022 a hard deadline or does it just mean they have to raise more Tier 1 capital from other sources to make up for it?
I noticed on Prefblog that BNS had announced on March 23 that they will indeed redeem the issue and the associated fixed reset BNS.PR.P on April 26. So it seems these non-NVCC issues will be called at par, prior to 2022 where possible. Hopefully, the same thing will happen for the insurance company issues eventually.
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Re: Preferreds

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For Preferreds, I have a bunch of the CPD ETF but am considering switching to DXP instead. Just wondering if anyone has any opinions on either ETF, or other products?

Although I'm a big fan of index ETFs, it's possible that the preferred market is one area where active management might be beneficial over passive. The ones that track indexes are constantly switching out old shares (often at a discount) for new ones issued at $25. Also, these guys say they use it for all their model portfolios: http://www.turnerinvestments.ca/pdfs/17 ... eature.pdf.

The drawbacks I see with DXP are that the full list of holdings don't seem to be available, and it has about 1/4 the trading volume of CPD. Any thoughts? Thanks!
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Re: Preferreds

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No opinion, but the word 'active' means? And not so sure why BlackRock wants to team up with Dynamic. I presume you have considered ZPR as well?
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Re: Preferreds

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AltaRed wrote: 24 Apr 2018 21:27 No opinion, but the word 'active' means? And not so sure why BlackRock wants to team up with Dynamic. I presume you have considered ZPR as well?
Well, "active" meaning that they are not totally beholden to the index. Meaning that they can potentially add value in certain circumstances - the index may be forced to have too many of the wrong types of preferred shares (fixed or rate reset, depending) during periods of rising or falling interest rates, or have a ton of beaten down ones nearing the $25 redemption cap. Not being forced into this is a positive feature, if well managed (that's the caveat, I guess). This is more of an issue with the preferreds market; as previously stated I am a big fan of index ETFs on the equity side.

I considered HPR and ZPR as well, and am still in the info gathering phase.
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Re: Preferreds

Post by Peculiar_Investor »

If you haven't already found it and are still gathering information, the best resource without a doubt, for Canadian preferred shares are the websites of FWF member James Hymas. Check out PrefInfo - from Hymas Investment Management Inc. and his daily blog PrefBlog.
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Re: Preferreds

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Peculiar_Investor wrote: 25 Apr 2018 10:26 If you haven't already found it and are still gathering information, the best resource without a doubt, for Canadian preferred shares are the websites of FWF member James Hymas. Check out PrefInfo - from Hymas Investment Management Inc. and his daily blog PrefBlog.
Also note that his fund, Malachite Aggressive Preferred Fund, has consistently trounced the competition over all time periods.

In this case, I do expect past performance to be indicative of future results.
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Re: Preferreds

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That is kind of where I was headed. Does one want an untested...... pseudo-active preferred ETF with a team (Dynamic) that hasn't exactly scorched the earth with performance of their mutual fund offerings in the past, or does one go straight to the guru of active preferred management?
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Re: Preferreds

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Great, thanks for the links, guys. Though if I'm reading his fund information correctly, the requirements for investing in his fund are rather high. His segregated fund, a little less high. I'm aiming smaller in terms of how much I am willing to invest in preferreds.
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Re: Preferreds

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gdogg wrote: 25 Apr 2018 20:48 Great, thanks for the links, guys. Though if I'm reading his fund information correctly, the requirements for investing in his fund are rather high. His segregated fund, a little less high. I'm aiming smaller in terms of how much I am willing to invest in preferreds.
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Re: Preferreds

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Given the outlook for the Canadian economy some experts seem to think a rate cut is more likely then a rate increase. If true this might present some concerns over resets which don’t have floor protection.
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Re: Preferreds

Post by KFried »

Planning to buy ZPR/CPD. Does the recommendation to hold preferreds in a nonreg account apply to the ETFs as well ?

TIA
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Re: Preferreds

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KFried wrote: 17 May 2018 14:18 Planning to buy ZPR/CPD. Does the recommendation to hold preferreds in a nonreg account apply to the ETFs as well ?

TIA
Same rules apply since the holdings of ZPR and CPD are prefs eligible for the DTC. There will be some additional work to maintain your ACB, with the potential of phantom re-invested distributions and/or ROC each year.
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Re: Preferreds

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I have a question.

In the current interest rate environment, how far down might I expect rate-reset preferreds to go each time there is no increase in interest rates or an interest rate increase? Does the pattern tend to be somewhat linear, or does there come a point at which pref. shares stop, or at least slow down their price drop near/after each interest rate announcement.

I made good money the last two times I purchased what I felt to be underpriced rate resets. I'm wondering if I can do it again, this time with CU.PR.C . Their current yield is 5.41% and no reset until June 1, 2021. Of course, the gamble is on interest rates.

Opinions?
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Re: Preferreds

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My guess (and that's all it is) is that rate reset prices are not so much based on next month's BOC rate announcement, but rather on projections that go out years. IOW, the latest rate announcement -- whatever it is, up, down or sideways -- could move rate reset prices in any direction and to any degree based not on the announcement per se, but on how buyers/traders adjust their long-term expectations for rates.
As I said, a guess. Looking forward to reading more informed opinions.
Also, Hogwild, would like to know more about your earlier two trades.
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