We had plenty of junky preferred issues sold in the last few years. Of course there is always junk being sold, but during the age of zero interest rates we had more than our fair share.
Tonight we have CareCloud (CCLD) announcing the suspension on their 2 preferred issues. Monthly dividends were suspended on their 11% monthly payer (CCLDP) and its 8.75% monthly payer (CCLDO).
Shares which were trading around $15.25 and $13.82 respectively at the close of todays trading are now trading down in the $10.50/share area.
Now the difference between this company and some others that have suspended is CareCloud has a real business with $89 million in revenue through the 1st 9 months–unfortunately their cash position is running very low and with common shares at $1.02/share raising cash through a common share sale is not a great option.
Dividends are cumulative so we will see where this ones goes in the future.
Maybe I comment a little too much here, but I remember one of our posters here pointed out that any company whose stock is trading for less than it’s preferred or BB is a warning sign to him and he wouldn’t invest. I think this might be a little too broad a rule if you consider a lot of the MREIT’s are in this category. I have looked lately at some of the new preferred and baby bonds that have come to market and I refined this thesis to the extent I look to see if the common is below $10.00 and my second criteria is what is the market value of the company? The recent ABLLL has a 400 mil parent company compared to CCIA parent company is 50 billion market cap.
Charles – no such thing as commenting too much as long as you have something to say.
Ha that was me…
The Justin rule of preferred investing….
Anybody know how that $830.00 portfolio of bank stocks that Tex put together are performing?
had several thousand shares but in September got nervous and sold them.
Good for you Duane – better to sell them than crossing your fingers and just hope.
The care cloud decima has been he imbalance between the common and the preferred. They have a lot of preferred and many of the A were held by executives. While they bought back some of the A a few years ago the volume relative to their total outstandings remained high which itself made it hard to issue common .As Tim said, they do have a real business and have expanded through acquisitions. At this point not enough information has been released to understand the full story at this point in time. SC
sc–seems like there is some potential here, but since I don’t personally play around with distressed securities I won’t be a buyer.
Tim
I owned the preferred for income but in changing market conditions, sold as the risk seemed to great. I know several people in management and they are serious. I think the last round of acquisitions’ though led them to bite off a bit more than they could easily take in. One of their main strengths is the ability to generate low cost software from India. With present ai advances, not sure if this ability becomes more valuable or less. Best to watch it for a while and see how they do. Directly after their last buy, they lost a major hospital system which cut into their revenue and I’m not sure that they have been able to replace it. Time will tell. Wish you and yours a safe and happy holiday and a productive New Year. All your efforts are greatly appreciated.
SC