As most everyone knows REIT Hudson Pacific (HPP) suspended their common share dividend today. The preferred share dividend remains intact.
If you own the 4.75% perpetual preferred (HPP-C) you may be wondering what your next move is–and everyone has their own way of handling bad news from company’s that they hold a position in. The preferreds reacted today with heavy volume of 161,000 shares changing hands and closed down 43 cents at $12.52. Being a low coupon issue shares have been relatively weak all year– the credit ratings of the company have been downgraded this year–the preferred is way down at a B rating from S&P–darned junky.
I don’t have any shares of this preferred issue–and try to avoid ever owning junk like this, but sometimes folks buy a ‘bargain’ that turns out to be a junkier than anticipated and they are ‘stuck’. Some folks may determine shares are a great buy/speculation right now and initiate a new position. Others might average down and buy more shares—but if you are like me you would be out right now—any sign of trouble and I am out and booking a loss if necessary. I personally find no real reason to sit and worry about any given security and in this case I think it might be a year or two before HPP gets the ship righted.
I exit and simply move on from either troubled company’s or from those that might experience a delisting—most recently this happened with insurance company Enstar (ESGR) which is being acquired. I owned shares in the 7% preferred (ESGRO) and exited them immediately on the announcement @$23.83 taking a small 12 cent capital loss. Shares are now at $20.28. While dividends will likely continue to be paid I simply do not want to own delisted shares.
So that is how I handle these situations–how do you handle them?
