4/16/2025
Our site runs on donations to keep it running for free. Please consider donating if you enjoy your experience here!
As noted by aj in the comments just now Brighthouse Financial (BHF) is looking to sell itself.
I have very modest exposure to 2 preferred issues which I may/may not exit with losses. My concern is a potential delisting of preferred shares–I will need to read the prospectus to see what it has to say on the matter.
B Riley (RILY) announced a suspension of their preferred stock dividends today. The beleaguered financial firm has 2 issues outstanding which can be seen here.
Honestly they are a quarter or two too late on this–they should have done it previously. Both issues traded down sharply today–to close in the $6/share area. Dividends are cumulative.
This could be disaster for some holders OR it may present great opportunity for the speculators. The company finally filed old financials last week showing there is now a negative $143 million in equity as of 6/30/2024.
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?
Once again B Riley has negotiated to have terms of their debt terms changed to extend the time available for filing financial statements. The company could have been found in default on some loans because they have not filed within the 45 day covenant limit after the end of the quarter.
The company had received a notice from NASDAQ for not timely filing the financials.
This is a real mess and one short seller mentioned that baby bonds would go to zero if the company files chapter 11 since assets are pledged for more senior securities. Extreme caution is necessary with this mess.
A few items of special mention in the news of late.
As most of you know giant Net Lease REIT Realty Income (O) has made a call on all shares of their 6% perpetual preferred (O- or OPR or O.PR etc., etc.). The call is for 9/30/2024. These preferred were from the old Spirit Real Estate acquisition and it is no surprise that O would call them.
Carlyle Credit Income Fund (CCIF) has sold some term convertible preferred shares in a private deal. The shares carry a 7.125% coupon and are redeemable in 2029. At the same time CCIF announced a direct placement of common shares. Each of the deals has net proceeds in the $11 million area for total proceeds of around $22 million. No surprise in this deal. CCIF is a smaller CLO CEF and they needs to continually raise new funds to buy more CLOs.
Lastly LuxUrban Hotels (LUXH) had to restate their earnings (losses) for the quarter ending 3/31/2024. This company is a mess–and I would guess a potential bankruptcy candidate. The company’s restatement took their net income to a minus $42 million–much worse than the previous loss reported of $17 million. The common shares now trade at 7 cents and amazingly the perpetual preferreds trade at $15. The preferreds should trade around $4-5, and likely will when they finally suspend the dividend which is bound to happen eventually. RECALL that this issue required LUXH to escrow 18 months of dividends–so the issue date was 10/2023. I guess folks are staying until the last moment (in April, 2025).