Annuity company Jackson Financial (JXN) has announced a new fixed-rate rest preferred. A fixed-rate reset preferred has a fixed rate for 5 years and then ‘resets’ every 5 years at the 5 year treasury plus a fixed spread (yet to be announced).
JXN is new to the retail market and we will have to do some due diligence on them.
The preliminary prospectus can be found here.
mcg was right on top of this one.
13 thoughts on “Jackson Financial Selling New Preferred”
Flipping IPOs has been a mediocre strategy this past year. I’m still doing it in small numbers to keep my eye on the prize.
Jackson has $4.4 billion in cash, 39.15% profit margin, Return on equity 56.75%, $14.55 billion in revenue/$170.16 per share, their equity is positive +22.91% verses the S&P 500 Negative -3.70% the last 52 weeks and a $101.86 book value per share. Will DEFINITELY buy this preferred if it prices right and aggressively. Please do your OWN deep due diligence my friends, I am Azure
I got some of the offering at $25. My hope is this will trade >$25.
Is this already trading, and if so, where?
Seeking Alpha had an article on Jackson and how undervalued it is. Right now annuity stocks are hurting. To my untrained eye, Jackson seems to offer high operating risk and I have seen no decent discussion of why gains on derivatives are such a large share of profits. I do continue to hold AEL.A.
A number of SA folks look at the P/B of <0.5 and conclude the stock is cheap. Jackson was spun out of Pru about 2 years ago at 40 $/share, IIRC, (they still own a fair amount) current price about $43. The P/B upon spin-off was around 0.4. Either Pru messed up pricing big time or they wanted to do everyone a favor by giving away cheap stock.
As for the derivatives, they are adopting a new accounting treatment which is explained in the 10-K.
The common has been a roller coaster, mostly due to the derivatives and the subsequent change in accounting position. I will note the company did increase the common dividend from $0.50 to $0.62 a share in the time I have owned the stock and has repurchased a fair amount of stock in that time as well.
To me this issue is a logical next step in growing their capital structure and I was expecting a preferred sometime later this year. I might be tempted by an 8.25+ yield and will be watching the pricing.
At such a low price to book, they can’t issue common for the dilution. Good points. I guess I tend to react against most SA articles.
Security Ratings (M / S / F)* Ba1 (N) / BB+ (S) / BB+ (S)
Initial Price Talk: 8.125% – 8.250%
Done at 8% some 550 million
Seems some inevitability to the UST 5/7/10 trending (considerably) more favorably for investors over the next 5-10 years than SOFR.
This is not a suggestion on the suitability of JXN as an investment. Please do your own due diligence.
the issue for me is the base rate as with the Huntington issue, truly a variable rate with little ‘base’ security unlike the Wintrust issue or WesBanco one which have strong base rates and reset off the 5yt. So these 3%ish or less base rates resetting off the 5yt are not for me. Using the 5yt vs SOFR may be catching on more.
Me too Bea, trying to build positions in HTLFP, PACWP, and WSBCP for the resets and CHSCL for the yield.