North American financial split co. (Symbol - FFN.TO)

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Arby
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Re: North American financial split co. (Symbol - FFN.TO)

Post by Arby »

shellybear wrote: 02 Nov 2017 09:51 Where did you read that the underwriters received that much stock at that big of a discount?
It's a good idea to read the prospectus before buying a split share. The FFN prospectus says for the Class A shares:

Price to the Public = $9.10
Underwriters’ Fee = $0.455
Net Proceeds to the Company = $8.645
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Re: North American financial split co. (Symbol - FFN.TO)

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OK so you are saying the underwriters that sold these shares to investors getting into the offering, immediately turn around and short those shares, because they get .45 commission? Isnt that sort of illegal?
And the cost was 9$
North American Financial 15 Split Corp. has completed the overnight offering of 3,664,000 preferred shares and 3,664,000 Class A shares of the company. The total proceeds of the offering were $69.2-million, bringing the company's net assets to approximately $270.1-million. The shares will trade on the Toronto Stock Exchange under the existing symbols of FFN.PR.A (preferred shares) and FFN (Class A shares).

The preferred shares were offered at a price of $9.90 per preferred share to yield 5.30 per cent and the Class A shares were offered at a price of $9 per Class A share to yield 13.33 per cent.

The offering was co-led by National Bank Financial Inc., CIBC, Scotia Capital Inc., RBC Capital Markets and also included BMO Capital Markets, TD Securities, Canaccord Genuity Corp., GMP Securities LP, Raymond James, Desjardins Securities Inc., Echelon Wealth Partners, Industrial Alliance Securities Inc., Mackie Research Capital Corp. and Manulife Securities Inc.
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Re: North American financial split co. (Symbol - FFN.TO)

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Selling shares that are available from an offering is not considered shortselling. Why were not all the shares sold in the offering considered shortsold ?
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Re: North American financial split co. (Symbol - FFN.TO)

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shellybear wrote: 02 Nov 2017 12:43 Selling shares that are available from an offering is not considered shortselling. Why were not all the shares sold in the offering considered shortsold ?
They are short sales if the underwriters sold some shares before the settlement date of the offering.
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Re: North American financial split co. (Symbol - FFN.TO)

Post by Bril »

As Adrian2 said if some of the shares in the offering did not have an expression of interest the underwriters could sell these ( short in this case) into the market. The cost per preferred share for the underwriters is $9.603 and the capital shares $8.55. I would assume you would find the same shorting pattern for the preferred shares FFN.PR.A.
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Re: North American financial split co. (Symbol - FFN.TO)

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Bril wrote: 02 Nov 2017 13:22I would assume you would find the same shorting pattern for the preferred shares FFN.PR.A.
I think the underwriters generally don't have any problem getting rid of the preferred shares. For this type of split share IPO, the underwriters typically offer to sell the Matched Unit (i.e. Capital share + Preferred share), or the standalone Capital shares. The underwriters almost never offer to sell the standalone Preferred shares. The underwriters need to sell an equal number of Capital and Preferred shares. Presumably there is a demand for the preferreds, but no demand for the capital shares.
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Re: North American financial split co. (Symbol - FFN.TO)

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The short sales, as you say could have been from underwriters who held no FFN shares and so sold short ( borrowed from some entity who has shares) before actually getting the shares on paper. ALL shortsales have to eventually be covered. As you say in this case they may have covered with the shares acquired in offering, and might make a little profit buying back at current levels. Not ethical, but then again , i suppose most brokers arent.
At any rate , this not my first rodeo on these split shares, and in every case the shortselling after the offering is announced has created a buying opportunity where i made a profit, and collected a handsome dividend on the way. I suppose the timing was right for being into financial stocks.
I like FFN actually more than the others i got into, as their premium to NAV is much lower.
Previous plays were 2 times on DGS offerings and 1 time on FTN.
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Re: North American financial split co. (Symbol - FFN.TO)

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There were also shorts on FFN.PR.A as I thought. By the end of October I would expect all the shorts would be covered.
T : FFN.PR.A 2017-10-15 526,100 4.48 %
T : FFN.PR.A 2017-09-30 0 0.00 %
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Re: North American financial split co. (Symbol - FFN.TO)

Post by shellybear »

Quadravest has now posted the NAVs to OCT 31....
FFN / FFN.PR.A nav before distributions was 18.13 or 8.13 for FFN ,last trade today at 8.72 I suspect it has increased since then...
Here is the link to the latest Split Fund navs from Quadravest.
http://docs.wixstatic.com/ugd/78f11d_d1 ... 9d58f4.pdf
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