UnThreaded | Threaded | Whole Thread (26) | Ignore Thread Prev | Next
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
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 5
"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.
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (26) | Ignore Thread Prev | Next


Related Boards
Real Estate Investing
This is a great board for Real Estate other than REITs.

Buying & Selling a Home
Get your personal advice about mortgages, agents, etc. here.
Post of the Day:
Value Hounds

Medallion Financial: TAXI!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.