Preferred Stock Investing-The Good , The Bad and The In Between 2015 - 2020

[Sunset]

Of course I am just guessing, but I suspect you will have some time to reflect on this. This pressure on SPLP-A may take some time to fully unwind. Moorebonds is sitting patiently with bated breath waiting for that $20 spot to hit and pounce!

I thought of that as I filled another 300 at $20.76 , but maybe it's the influence of Fermion's bio tech purchase up 38% in 2 days that made me want to get something.

 

[bobandsherry]

Also keep in mind that his lotto winner has dropped over 18% in the past week. Bio's are so much as speculative wager. I have AGEN, it's up about 50% since mid-August, unfortunately I'm not fully invested at the low-end. Bought some shares long time ago and watched them drop. Got in again in Jan with almost 30% gain, too bad that just basically offsets my earlier position

 

[Mulligan]

Bob, Its all over and tender went through. Looks like your question about untendered shares was correctly answered by Zach’s article. They are gonna ram rod the whole thing quickly and take all shares.. Notice in link there will actually be two separate SPLP-A preferreds trading until next year when they will be merged.
http://www.steelpartners.com/news/

 

[bobandsherry]

Thanks for link Mulligan. Should now trade free of that uncertainty so should be good for the trade price.

 

[Mulligan]

Thanks for link Mulligan. Should now trade free of that uncertainty so should be good for the trade price.

Just random thinking here, but did you notice there will be a separate ticker for these shares SPLP-T until January and then they will be melted into the A shares? Only 58% accepted tender, so 42% of the 30% outstanding are quickly going to be getting a surprise in their accounts when these are inserted into their accounts. Will they want to dump them since they didnt accept offer? Curious they set this up for “tax reasons” when options were possible. I wonder if this was done to create a dump drop opportunity and Lichtenstein could pounce and buy on the cheap reducing the buyout cost. They have bought their common stock when they felt it traded to far below book value before. It at least bears watching the temporary ticker symbol for that opportunity.

 

[pig pile]

Just random thinking here, but did you notice there will be a separate ticker for these shares SPLP-T until January and then they will be melted into the A shares? Only 58% accepted tender, so 42% of the 30% outstanding are quickly going to be getting a surprise in their accounts when these are inserted into their accounts. Will they want to dump them since they didnt accept offer? Curious they set this up for “tax reasons” when options were possible. I wonder if this was done to create a dump drop opportunity and Lichtenstein could pounce and buy on the cheap reducing the buyout cost. They have bought their common stock when they felt it traded to far below book value before. It at least bears watching the temporary ticker symbol for that opportunity.

Mulligan, reading the press release it indicates 16 OCT as the date SPLP-T begins trading. Any idea what it will be initially priced at?

 

[Mulligan]

Mulligan, reading the press release it indicates 16 OCT as the date SPLP-T begins trading. Any idea what it will be initially priced at?

Wont it just be pairing off the bid and asks and who blinks first? I suspect those arb computer programs will keep it honest though with A, but I will watch anyways. Its just SPLP-A in a different name. Today is a perfect example on why I dont trade on day to day price movement predictions...Its just jumped 68 cents today. I would not have guessed this price snap back. I just kept my trade focused on the end prize of 2020 and 2026.

 

[pig pile]

Wont it just be pairing off the bid and asks and who blinks first? I suspect those arb computer programs will keep it honest though with A, but I will watch anyways. Its just SPLP-A in a different name. Today is a perfect example on why I dont trade on day to day price movement predictions...Its just jumped 68 cents today. I would not have guessed this price snap back. I just kept my trade focused on the end prize of 2020 and 2026.

Monday could be fun.

 

[Mulligan]

Monday could be fun.

I dont know the procedures here...Including the people who did not tender....Do those people get the SPLP-T shares stuffed into their accounts, or are the HNH shares just frozen in their account untradeable until they formally accept the tender?

 

[bobandsherry]

Just random thinking here, but did you notice there will be a separate ticker for these shares SPLP-T until January and then they will be melted into the A shares? Only 58% accepted tender, so 42% of the 30% outstanding are quickly going to be getting a surprise in their accounts when these are inserted into their accounts. Will they want to dump them since they didnt accept offer? Curious they set this up for “tax reasons” when options were possible. I wonder if this was done to create a dump drop opportunity and Lichtenstein could pounce and buy on the cheap reducing the buyout cost. They have bought their common stock when they felt it traded to far below book value before. It at least bears watching the temporary ticker symbol for that opportunity.

Not sure what to make of it. There's obviously an advantage for investors to the "A" vs. the "T" so they get the full quarterly distribution dividend vs. pro-rata for "T".

You make a good reason for "A" to continue to trade at a discount, but I think the bottom is better formed now than it was before.

 

[MooreBonds]

Today is a perfect example on why I dont trade on day to day price movement predictions...Its just jumped 68 cents today. I would not have guessed this price snap back. I just kept my trade focused on the end prize of 2020 and 2026.

I went ahead and added another 100 at $21.33. FOr the record, while I'd love a price of $20, I was just waiting for it to dip into the sub-$21 level. Of course, I made the decision to diversify into some private real estate deals over the past month, and have been painfully culling stuff to raise cash to invest in the deals. So I didn't have any spare cash yet to buy it over the past week. I have one preferred getting called next week, and was going to use that cash to pick up more SPLP but managed to find a debt issue from a mortgage REIT....I bought it back in the day and the mortgage REIT aspect was forgotten, but I dumped it as soon as I noticed it since I don't have a good feeling about mREIT companies. So I took the money for another round of SPLP-A.

 

[Texas Proud]

I dont know the procedures here...Including the people who did not tender....Do those people get the SPLP-T shares stuffed into their accounts, or are the HNH shares just frozen in their account untradeable until they formally accept the tender?

It sounds like a corporate action and will be forced upon them... no holding the HNH shares....


I remember when I was doing corp trust work and took over an issue... there were two tiers of bonds on an asset... the previous trustee had calculated who was supposed to get paid first and by how much since there was not enough cash flow to pay all bonds outstanding... I had to call back 1 full year of divis on the bonds... the people had zero choice in the matter... the money was taken from their accounts... the ones who actually had physical bonds did not get payments until that amount of money was withheld from future payments...

The brokerage firms follow legal corp actions... and the corp action is to retire all outstanding common shares....



NOW, this does not mean that this is the final word on the matter... IOW, the people who did not tender can sue saying that the price they received was not 'fair value'.... which is why they did not tender.... it would then be a fight in court on who was better at calculating fair value... but the non-tendering shareholders still will not own any common shares... it is now just a question of how much they get for their shares....



Edit to add... decided to look and found an old article talking about this...

http://ir.lawnet.fordham.edu/cgi/viewcontent.cgi?article=3054&context=flr

 

[Sunset]

I added another 100 SPLP-A for $20.91.

 

[Mulligan]

Preferred Stock Investing-The Good , The Bad and The In Between

I added another 100 SPLP-A for $20.91.

Its really moving up and down today. I just am not going to get in the flipping game on this one. I would probably zig on the zag. Im just going to hold and ride the waves. If some bad dump occurs on the “new” issue next week, I may buy a small amount to play with while keeping my others as holds.
How many do you have now Sunset?

 

[Texas Proud]

Its really moving up and down today. I just am not going to get in the flipping game on this one. I would probably zig on the zag. Im just going to hold and ride the waves. If some bad dump occurs on the “new” issue next week, I may buy a small amount to play with while keeping my others as holds.
How many do you have now Sunset?

Me also.... I now have 800 shares and saw the run up today.... I still want another 200 or so, but can live without it if it goes back up... I am hoping to fill if it gets to the low 20s... or below...

Now, I will flip if the price goes up to par or above... will have to lock in that cap gain and look for another high yielder and be happy with the win...

The new issue should trade as a small discount... due to interest payment days difference... but not horribly... I guess someone can calculate the amount of discount as it is just math...

 

[Mulligan]

Texas, I am going with the belief that this issue will not ever get to par until maturity. They got to issue the yield on this, not the market. It has never traded ever at par. I think it had one quick trade at $24 and largely after that sunk into the $22 range. The par means something thankfully because of the put and the maturity date. The only reason I suspect minority shareholders even agreed to the 6% yield was the 20% put and 9 year maturity. Since its term is less than a perpetual this allowed them to get away with a lower par yield. But if it ever does I wont complain...And I will sell, lol.

 

[Winemaker]

Texas, I am going with the belief that this issue will not ever get to par until maturity.

I have to agree with you on that, Mully. I bought 200 shares right after I read the article on SA, but never put the two and two together that the H&H folks would dump their shares, flooding the markets. I picked up another 400+ yesterday.

These shares were issued to be "funny money", shares created to be currency for their takeovers, I think the redemption in a few months at par, was just an attempt to throw some meat onto the soup bone. I'll take their 6%, and their ~$4.00 cap gain in 9 years.

 

[Sunset]

Its really moving up and down today. I just am not going to get in the flipping game on this one. I would probably zig on the zag. Im just going to hold and ride the waves. If some bad dump occurs on the “new” issue next week, I may buy a small amount to play with while keeping my others as holds.
How many do you have now Sunset?

I have 800 now.

I wasn't thinking of flipping unless it rockets up really high,and I don't have any sell orders in, so I'd miss it.

I was also thinking of picking up a few of the new issue, as I suspect a lot of new owners will be dumping them fast, so they may crater a lot (I'm hopeful).

 

[Mulligan]

Preferred Stock Investing-The Good , The Bad and The In Between

I have to agree with you on that, Mully. I bought 200 shares right after I read the article on SA, but never put the two and two together that the H&H folks would dump their shares, flooding the markets. I picked up another 400+ yesterday.



These shares were issued to be "funny money", shares created to be currency for their takeovers, I think the redemption in a few months at par, was just an attempt to throw some meat onto the soup bone. I'll take their 6%, and their ~$4.00 cap gain in 9 years.

Winemaker, I think you have provided in a nutshell, the best summary of SPLP-A I have read by far!
Do you intend to just hold all to maturity or will you tender your 20% at put time?

 

[Mulligan]

I have 800 now.

I wasn't thinking of flipping unless it rockets up really high,and I don't have any sell orders in, so I'd miss it.

I was also thinking of picking up a few of the new issue, as I suspect a lot of new owners will be dumping them fast, so they may crater a lot (I'm hopeful).

Remember like Texas mentioned about the accrued dividend factor in SPLP-A vs. SPLP-T. Also remember “T” is rolled into “A” as one issue come next January.

 

[Winemaker]

Winemaker, I think you have provided in a nutshell, the best summary of SPLP-A I have read by far!
Do you intend to just hold all to maturity or will you tender your 20% at put time?

The way I understood the article was that it was a mandatory 20% redemption.
Everyone will have 20% of their shares redeemed. I own some Colony Northstar that recently did the same thing. Everyone took a 20% redemption.

I plan on holding at this point but it's early in its life; a lot can happen in 9 years. Hell, I could be pushing daisies by then.

 

[MooreBonds]

Winemaker, I think you have provided in a nutshell, the best summary of SPLP-A I have read by far!
Do you intend to just hold all to maturity or will you tender your 20% at put time?

One small clarification that may be a "gotcha" or a point of contention:
(from the original prospectus issued in 2016)

In addition, SPLP will offer to repurchase or redeem, for cash on a pro rata basis, 20% of the SPLP preferred units to be issued in the transaction within the first three years after completion of the offer.

Note the specific wording: They will redeem 20% of the units issued in the transaction. The specific transaction they are referring to is the purchase of a specific company. it does NOT say that they will redeem 20% of all outstanding units of SPLP-A.

I didn't read any prospectuses related to the buyout of Handy & Harman to see if they clarified that they would indeed redeem 20% of ALL SPLP-A or not....but if htey continue to issue SPLP-A to buy other companies, it might end up being a much smaller % that gets redeemed after the original 3 year window. As long as they stay solvent and pay me cash at final maturity, I'm ok....but this might get a little less appealing if they try to pull shenanigans by only calling 20% of the units "issued in the [original] transaction".

 

[Mulligan]

Preferred Stock Investing-The Good , The Bad and The In Between

One small clarification that may be a "gotcha" or a point of contention:
(from the original prospectus issued in 2016)


Note the specific wording: They will redeem 20% of the units issued in the transaction. The specific transaction they are referring to is the purchase of a specific company. it does NOT say that they will redeem 20% of all outstanding units of SPLP-A.

I didn't read any prospectuses related to the buyout of Handy & Harman to see if they clarified that they would indeed redeem 20% of ALL SPLP-A or not....but if htey continue to issue SPLP-A to buy other companies, it might end up being a much smaller % that gets redeemed after the original 3 year window. As long as they stay solvent and pay me cash at final maturity, I'm ok....but this might get a little less appealing if they try to pull shenanigans by only calling 20% of the units "issued in the [original] transaction".

Moorebonds, I was worried about that also when the Handy stuff started stirring...But they are getting the same terms... So its all good...But they will not just buy your 20%, you will have to tender them when they make an official declaration of offer to buy...I have been assuming all along they will wait until the end to do it..Of course it wont bother me if they do it earlier.

 

[Mulligan]

Preferred Stock Investing-The Good , The Bad and The In Between

Moorebonds, here is the updated offer link below for Handy....And yes originally you were correct....They listed an amount of shares they would offer to buy (pro rata) but that was 20%. But this link below clarifies that all shares will get this opportunity.
http://www.steelpartners.com/news/

 

[Sunset]

Remember like Texas mentioned about the accrued dividend factor in SPLP-A vs. SPLP-T. Also remember “T” is rolled into “A” as one issue come next January.

Right, so my simple thought is that the SPLP-T will suffer a weakness in price causing it to swoon lower than SPLP-A as people literally throw it away to clean up their portfolio's of these odd number of shares they get handed.

That would more than make up for the accrued dividend factor.

If I'm totally wrong, at least I got 800