No. of Recommendations: 3
What on earth is going to become of those PFD's? It will be interesting to see whether the evil financial geniuses in the depths of Blackstone manage to prevail over the SEC's attempts to protect the investors. My gut feeling (the only thing I can go by since I'm way out of my league in understanding this stuff) is that the people who bought at par will be screwed, but the screwing will not be so complete that it hits those who jumped in late at a cheap price. At least that is my hope.
PSB preferred's made me a lot of money in the past. They were considered very secure, nearly a first mortgage position. Their sin was operating too responsibly, and companies like that can always be taken over by someone who will load them up with debt.
When I first posted on getting back into PFD's, I bought heavily with my IRA money: PFF, VNO, PSA, UMH, PEB. I figured the dividend would match inflation, and if the big recession does materialize, moderating interest rates will push up the base value. Many of those have jumped 10% in just a few weeks so I'm hoping I might have done something right this time.
I also picked up a fair bit of PSB, figuring that it was a reasonable high risk play. Those are down 10%. I guess the market worries that in delisting Blackrock will come up with something that works better for them than the shareholders, even at half price. I think I'll hold tight at this level and see where the ride goes.
