Last Thursday the Ashford Hospitality preferreds were marked down as the shares went ex-dividend–they drifted on Friday and today they are seeing kind of a big dump.
The AHT-G 7.375% issue is down 91 cents right at this moment on darned near 50,000 shares of volume–more than 3 times normal volume. The AHT-F 7.375% issue is off 86 cents on more normal volume. Both are trading in the $20.50-$21.00 area.
When you are dealing with a company that has lost the faith of the common share owners it is usually just a matter of time before the preferreds get hit hard. The common shares are now at $2.83. We have almost no doubt that over time—years—the preferreds will survive, but if I was (and I wouldn’t be) a holder I would be real concerned about the future. The ride could be very bumpy over the next couple of years if we hit a soft economy.
Additionally, I would be concerned with management taking the company private. The market cap on AHT is now a measly $289 million and the company has hinted, in a roundabout way, that maybe they will go private. No, they have not said it directly, but in their presentations they present possibilities of buying the common shares.
In their June presentation–which can be seen here–on page 12 they present some history, and hints.
Preferred Holders should be cautious. We are NOT predicting they go private, but something fishy is going on here. Even though dividends on the preferred are cumulative, there could be massive turbulence ahead.
Food for thought.