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Author: tjberko One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 77108  
Subject: Re: COR-A Buy Alert Date: 11/1/2013 6:11 PM
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"I share your overall analysis of the distinction between the common and preferreds. My only difference is that today I tend to look for the higher face rate in the mix."

When the current yield is the same on 2 different preferreds issued by the same company, always buy the one that is furthest below par. A higher face rate provides no additional protection versus the lower face rate unless the current yield is also higher. Often the preferred with the higher face rate will also carry a higher current yield because the preferred with the lower face rate will have more upside due to it's lower price. This is how it should be. The higher current yield compensates for the lower prospect for capital gains. But when 1 preferred is selling at 2 or 3 points below another, and still has the same current yield, this is really a mispricing situation, as the preferred furthest from par is mistakenly given no credit for it's increased upside potential. You get no additional downside protection by buying the higher face rate preferred.
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