It was a very quiet opening for this issue, with only 11,200 shares changing hands. The leveraging / deleveraging feature appears to have found favour only with DBRS!
However, to my chagrin (and, undoubtedly, CC&L Capital Markets’), this is a teeny-tiny issue: the TSX reports that only 1.5-million shares are outstanding, for a value of $15-million in prefs and total company capitalization of $30-million.
Still, even if you take the view that this thing will trade by appointment only, you can’t deny that a lot of investors will consider it worth holding. It’s Pfd-1 and I calculate the curvePrice to be $10.42, compared to the closing quote of $10.06-25:
| CFS.PR.A | CGI.PR.C | |
| Price due to base-rate | 9.87 | 23.66 |
| Price due to short-term | -0.20 | -0.62 |
| Price due to long-term | 0.52 | 1.55 |
| Price due to SplitShareCorp | -0.21 | -0.90 |
| Price due to Retractibility | 0.30 | 1.24 |
| Price due to Liquidity | 0.15 | -0.27 |
| Price due to error | 0.01 | 0.09 |
| Curve Price (some rounding error) | 10.42 | 24.75 |
| Quote | 10.06-25 | 25.86-09 |
| After-Tax bid-YTW | 3.29% | 2.82% |
| Pre-Tax bid-YTW | 4.14% | 3.55% |
| Presumed Maturity | 2012-1-31 | 2016-06-14 |
Even if one takes the view that the +$0.15 allowance for liquidity turns into -$0.10 for illiquidity (probably a safe bet!) there’s room for some capital gains for those who buy and sell liquidity in small amounts!
This issue has been entered into the HIMIPref™ database with the securityCode A41410, which replaces the preIssue code of P25006. A reorgDataEntry has been processed.
The issue has been added to the SplitShares index.
[…] Recently, assiduous reader Drew had some questions about the volume-average calculation of the recent new issue CFS.PR.A. The HIMIPref summary screen indicates that the average trading volume of CFS.PR.A is 119,000 shares, well in excess of its volume over the recent past. Could you please explain this. I am guessing that higher liquidity is positive for valuation and vice versa. If this guess is correct, what sort of impact would the actual trading volume of CFS have on its valuation score? […]