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Holders of This CHS Issue May Get Burned

We all know that years ago the Cenex Harvest States (no ticker as it is a cooperative) CHSCP 8% cumulative perpetual preferred was issued with bunches of the farmers (owners) being issued shares, but now – 20 years after issuance (in 2003) the dynamics of the ownership may well have changed. We know for sure management of the company has changed since that time.

The issue is now trading at $29.10 and the extended redemption date is 7/18/2023 – just 2 months from now. The current yield is 6.88%–lower than 3 of the other 4 preferreds outstanding. How would a $4/share capital loss feel in 60 days?

My question is ‘are you feeling lucky’? Anyone holding this issue would be wise to sell it and redeploy into one of the other issues. We have no idea of the ownership of this issue NOW–but with new management why would one like to hold on?

6 thoughts on “Holders of This CHS Issue May Get Burned”

  1. Based on past practice, the dividend announcement for the next payment will be next Friday, June 2. I am backing up the truck to short it on May 31 on the off-chance that the call announcement is included with the dividend announcement. If worst comes to the worst, I buy to cover on 6/5. This isn’t coming back as hard to borrow.
    Remember, DYODD.

  2. I sold my P last summer and put the money into the N.

    we might see a bump up in the prices of the other CHSC preferreds as holders of the P issue awaken to this problem.

    Might be worth shorting the P shares. Have to think about that.

  3. I appreciate the heads up Tim. Very, very few preferred do I buy over par. Normally I try not to pay more than one dividend over par like the ALL B
    I have CHS L,N,&O in my wife’s account. I have considered the WCC for example but only if it dropped below 26.00

    1. I was aware of the CHSCP situation when it got extended, and have kept purchases to the other issues.
      Currently have CHSCN and CHSCM, am comfortable with both and intending to hold indefinitely.

    2. WCC-A dumped occasionally near $26 flash rebalance – where we bought… .66/sh quarterly div seems solid

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