Ouch – Spark Energy F-to-F Tumbles

While we own only 2 perpetual preferreds personally and 1 is a fixed-to-floating rate issue there is still pain from time to time.

1 of our holdings had a big seller– Spark Energy 8.75% fixed-to-floating perpetual just dropped by a buck.

Guess they wanted out pretty bad.  Given that the shares represent 1% of our holdings for us there is modest pain, but it does show what can happen to these high yield issues with thin trading.

While we don’t build our personal portfolios with a bunch of high yield issues (quite the contrary) if you look at the partially invested High Yield Portfolio you can see that a hit like the above mentioned can take a chunk quickly.

9 thoughts on “Ouch – Spark Energy F-to-F Tumbles”

  1. The floating of the additional 2M shares at $25/share forced all of the outstanding shares in the previous issuance to go down to $25 also. Then it dipped some more. But that was the original impetus.

    1. Hi Wedgehead–yes you are correct as we had written about it a few times. The latest dip is obviously by a larger seller as the volume has spiked higher–but as I mentioned I have modest concern and even have under consideration an additional 100 or 200 shares, but am not acting on a potential add until I see the CPI tomorrow.

  2. The other possibility is the underwriter on the last 2,000,000 is still trying to get all the shares out the door. Regardless, I have reviewed the financials, news etc. and I’m not see anything of consequence.

  3. The seller wanted out bad enough. I was thinking dumping occurs after the dividend. They could not even wait 2 weeks for a .54/share.

  4. I had also bought the common,,,,,up 6% today…..pref seller may have switched to common perhaps.

    1. I looked at that also, the juicy dividend on the common providees the level of safety on the preferred–also the preferred is already out of my normal comfort zone–I am so conservative.

  5. As a wise man once said. ” it’s not about the return ON your money, it’s the return OF your money…….I’m a newbe here, thanks for your input and your website….looking forward to benefiting from your insights.

    1. Hi Martin–thanks for stopping by. Fortunately I am not concerned with the return of capital on Spark, but all items bear watching. On the other hand I hate volatility–but have to take a little taste.

    2. I examined the financials both before I bought and after the sudden drop today. The financials look solid, so I don’t think its company or market issue. As Tim said, someone wanted out badly enough to accept a low price. Its a good buying opportunity now!

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