I have added the 8.25% FTAI Aviation fixed rate reset preferred (FTAIN) issue to the hiding spot list.
The issue trades at 8.25% until 6/15/2026 after which it resets to the 5 Year Treasury plus a giant spread of 7.378%.
The company has had 2 other fixed to floating issues outstanding that they have called with coupons below this particular issue and almost without doubt they will call this one in 13 months. With this date approaching in theory shares should trade in the $25 area during the next 4 quarters.
Note that the shares are trading at $25.05-25.24 this morning – BUT shares go ex-dividend on 5/12/2025 for 51.6 cents. There shares trade very thin—very thin so patience is required.
The company released earnings a couple days ago and they were very solid. Potential investors need to do their due diligence on this issue and ensure a comfort level with their business. The company owns and leases jet engines for commercial aircraft which has historically been a very good business. Obviously in recessionary times with reduced travel there could be bumpy roads–and with the current economic outlook we might enter one of these times soon–who knows for sure.
Somehow I bought 100 shares this morning at $25.05 – I had limits at 25.10, then 25.20 and finally I acquiesed to the seller and went $25.24 and lo and behold it executed at 25.05–a gift I guess. This is one I will likely add more shares of when I gain a little comfort. I don’t expect any capital gains to be available in the next year—just $25 plus accrued dividends.
It never fails…… I put in a GTC order for some shares this weekend and FTAIN shoots up closing at $25.59. Tim got a really good deal!
Dj—blind squirrel buy since my gtc was 25.24–of course I just continue to hold it.
III-Tim-
Do you think the reason for the big drop in FTAI ( and some recovery today)
is from travel concerns? Or- could it be that Trump might put further sanctions on Russia? They have 8 leased planes and 17 engines there (unless it has gotten out of there). I really don’t like the idea that they are dealing with Russia, but maybe it has no benefit to Putin.
As you say, the report didn’t seem to be a problem.
The key to ftai is not the leasing business but rather the aircraft engine refurbishment and fda approved spar parts. Overall, there is a global shortage of aircraft engines and ftai is focusing on two models and has gotten some 5 approvals. They also have built up an engine replacement service business and by using some of their own parts have cut both the cost and the time required down significantly. This after service business will drive future growth. The leases to Russian firms are all old and FTAI has actually been trying to get out of these not building up that part of the business. SC
Good to hear they want out of the Russia deals.
I hope they have no connection to the recent flurry of engine fires!
thx
Wasn’t there some discussion on these as being a PFIC, or something? Or something with the dividends, don’t hold in an IRA or ……?
Good question Mark. They were a LLC and issued a K-1, but they converted to a c-corp. Will have to do some more checking on this question.
Mark–found it. They were a PFIC–but now not the case.
https://ir.ftaiaviation.com/tax-information#:~:text=FTAI%20does%20not%20expect%20to,after%20the%202023%20tax%20year.
Just to add to the complexity, if an investor buys a former PFIC while they are a PFIC but then they fall out of the rule, they STAY a PFIC for that investor, unless they file something called a purging election with the IRS.
So buyer beware if you are buying this in a taxable account and you already owned it in the past but did not do the purging election.
Mark-
Before they merged units, they issued a K-1, but changed to 1099 after 11/22
It is a ‘Cayman Islands exempted Co.’ – per their literature.
Thank you for posting FTAI preferred: Cayman Islands.
Benefits the ratios in Form 1116.