In an interesting move Teekay Offshore Partners LP (NYSE:TOO) cut their dividend – from 1 penny to 0 and the preferred shares are paying the price.
The 8.875% issue (TOO-E) is off $2.31 to $19.10, the 8.50% issue (TOO-B) is off $2 to $19 and the 7.25% issue (TOO-A) is off $2.05 to $16.77. The current yields are 11.62%, 11.18% and 10.81% respectively.
We are always hesitant to call these types of issues ‘bargains’ but we think they are ‘bargains’.
Teekay Offshore units are trading around $1.44/unit. This of course is a warning sign to stay away, BUT there may be some special circumstances here that may make the preferred shares a bargain.
Huge Canadian Asset manager Brookfield Asset Management (NASDAQ:BAM) has taken a controlling position in both Teekay Offshore LP and the general partner of TOO. They now own 64% of TOO and 51% of the general partner while Teekay Corp now owns just 14% of TOO and 49% of the general partner.
BAM has put $800 million into TOO in the last year. We think BAM is a safety net.
THIS IS JUST AN ALERT–NOT A RECOMMENDATION TO DO ANYTHING AT ALL. EVERYONE SHOULD DO SOME DUE DILIGENCE.