A Plethora of New Issues
By: Tim McPartland,
June 9, 2014 9 pm
There is a selection of new preferred shares coming to market–one which began trading on Friday.
1st is Resource Capital Corporation (a specialty finance REIT)(ticker:RSO) which has issued a 8.625% fixed to floating, cumulative preferred stock. This is a bit unusual in that all of the fixed to floating rate preferreds issued to date have been issued by bank and insurance companies (there is one issue from Miller Energy Resources that is out there–but no REITs). This is a pretty juicy yield, but RSO is a lower grade issue and for now we are going to pass on this one (although for those with some risk tolerance it maybe will work as long as we stay out of recession). Resource Capital is a specialty lender in the commercial real estate space.
This issue is now trading on the OTC under the temporary ticker RCSCP and closed today at $24.85. Details of the issue are here.
The 2nd issue coming to market is Allstate Corporation6.25% non cumulative preferred. This issue will be sold by Incapital under their LEOPARD program which gives better access to individual investors (so they say). At this point in time no trading has been announced on the OTC and if we recall the last time Allstate sold some preferreds under the LEOPARD program it took a while before the shares finally hit the market. This is an investment grade issue.
The 3rd issue coming to market is a 10% monthly pay cumulative preferred issue from Enerjex Resources, a very small oil and gas exploration and production company. This is a tiny 400,000 share cumulative preferred issue that is likely to come to market at a discount to the $25 par value. Enerjex is a $10,000,000 company that holds a significant number of acres in Kansas, Nebraska, Texas and Colorado on which they can drill new wells. Additionally there are significant numbers of shut in or abandoned wells on their acreage that the company has begun to rework back into producing wells–some of these wells produce as little as 10 barrels of oil per day, but as long as oil prices remain high the wells are profitable. You should research this one very closely before deciding to take a position.