According to the Spark Energy (NASDAQ:SPKE) website the company should announce earnings late Thursday or early Friday and I wanted to make sure investors were positioned correctly for the release in case of ‘surprises’.
Recall that Spark announced earnings which were not well received by investors last quarter and shares of the Spark Energy 8.75% fixed to floating rate preferred shares fell sharply as shown on the chart below.
The company has given no forewarning of poor earnings and has declared both preferred and common dividends for next quarter already on 7/19.
We do note that the common shares fell by 8% today although the preferred shares closed at $23.77–up 7 cents.
As we had previously conveyed we had owned a very large position in the preferred shares (NASDAQ:SPKEP) which we cut back to normal weighting when we were able to exit some shares with a 3-4% profit.
In our opinion investors should not be overweight these preferreds going into the earnings as any upside to preferred price is likely extremely limited–but downside could be great if there are negative surprises.