Mulligan
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- May 3, 2009
- Messages
- 9,343
So Mul, seeing I just saw this and don't have much time to do the research on SPLP-A, what is the expected return here? Going back to the original offering price at call, Something else besides the dividend?
Its a split maturity issue...In February 2020 you will be allowed to tender 20% of your total shares (its a pro rata system) for $25 cash.. So you buy at say $21 for example, you get the going 7% plus current yield and then the $4 cap gain at that time...In 2026 the other 80% mature at $25... Now it is written in there they can tender common shares in lieu of dividends and at maturity...But the 20% put is cash in 2020. They have had 3 divis and they paid in cash. I suspect the share offering is in case they dont have funds/financing ability in 2026 and just as a protection mechanism. Not totally unique. several preferreds I have come across have this mentioned...
The market is closed so you got time...Go to Seeking Alpha and under SPLP there are a few good articles about it and the actual preferred. Read the comments sections as they flush out some incite...This isnt buying Connecticut Light and Power way below par type issue.. But people smarter than me say it has a strong balance sheet, but it is insider controlled and several hedge funds are in the commons besides the head huncho Lichtenstein.
Its not like I am betting the ranch on this...But risk/reward seem palatable to me for what I am in at. If long rates rise say 100 basis points in a year or two one will be glad to have an income issue that will actually return their capital to them at par. That is why I have bought a few of these types recently.