Brookfield Asset Management Inc. has announced:
the completion of its previously announced Class A Preference Shares, Series 40 issue in the amount of C$300,000,000. The offering was underwritten by a syndicate led by RBC Capital Markets, CIBC, Scotiabank and TD Securities Inc.
Brookfield issued 12,000,000 Series 40 Shares at a price of C$25.00 per share, for total gross proceeds of C$300,000,000. Holders of the Series 40 Shares will be entitled to receive a cumulative quarterly fixed dividend yielding 4.50% annually for the initial period ending September 30, 2019. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 2.86%. The Series 40 Shares will commence trading on the Toronto Stock Exchange this morning under the ticker symbol BAM.PF.F.
BAM.PF.F is a FixedReset, 4.50%+286, announced May 27.
BAM.PF.F traded 760,707 (consolidated exchanges) shares today in a range of 24.80-97 before closing at 24.94-95, 194×19. It will be tracked by HIMIPref™ and has been added to the FixedResets subindex.
Vital statistics are:
| BAM.PF.F | FixedReset | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-06-05 Maturity Price : 23.12 Evaluated at bid price : 24.94 Bid-YTW : 4.36 % |
The issue is trading comparatively with its siblings, according to Implied Volatility Theory:
Click for Big
The highest spread issue is BAM.PR.P, a FixedReset 7.00%+445, which has been called for redemption. It is of interest that the implied volatility is greater than 40%, which implies that Black-Scholes has broken down, presumably due to a marketplace assumption of directionality in prices.
Are you saying the implied volatility is greater then 40% for bam.pr.p? due to its assumption of directionality in prices – well don’t you know its going to 25 and when its going there? why is it limited to an implied volatility of 40%???
reikreik
Are you saying the implied volatility is greater then 40% for bam.pr.p?
The Implied Volatility is clearly greater than 40% for the series of issues, regardless of whether or not BAM.PR.P is included in the calculation. As mentioned in the post, Brookfield has indicated that BAM.PR.P will be called.
why is it limited to an implied volatility of 40%???
Simply because that’s the highest number I consider even halfway reasonable.
Mr. Hymas.
Where do I get your actual fund performance? Net of fees and then versus the benchmark industry for the last 10 years. Do you ever hedge up or are you strictly long only???? (hedge up with some short prefs or pref etfs????)
I like when you mention that you rotate around to value (between like names) and find trading anomalies.
reikreik
Where do I get your actual fund performance?
Via the fund’s main page; there are links under the second sub-heading, “Performance”.
Net of fees and then versus the benchmark industry for the last 10 years.
All fund performance calculations are gross of fees; that is, before fees but after expenses. The reason for this is that fund fees are charged on a sliding scale according to account size; determine the fees that might be applicable to you using the “Fees & Expenses (MER)” [last heading on the page] and then subtract them from the listed performance for an estimate of historical performance.
All performance information is provided with a benchmark, the BMO-CM “50” index.
Do you ever hedge up or are you strictly long only????
Long only and the fund seeks to be fully invested at all times. Cash holdings (or borrowings) are rarely significant.
I like when you mention that you rotate around to value (between like names) and find trading anomalies.
I take the view that relative value analysis is the best way to outperform in fixed income.
Okay and so I see them and so really each quarter would have roughly a 1/4 of .50 deducted for fees assuming they are at the higher tier.
What about a performance fee? do you charge a performance fee on your returns after a certain level of performance??
I see the amounts you have at end 2013? Can you handle considerably more capacity???
Do you handle foreign investments?
So I have looked at your returns? (yearly and monthly) – They are impressive versus the benchmark? But what’s missing here? Why does your fund have 7mil in it with a return that is very impressive?? (no insult intended at all) Why aren’t the big investors jumping all over this? Do they not like Canadian Prefs??
Lots of questions I know but I see 2 angles here if you are interested?
Note I trade myself. I am not a middle man in any way and do not seek a finders fee or anything like that. I stumbled across your blog after also stumbling across 2 reports on Canadian Prefs. Since then I try to use your blog for more information on Canadian Prefs and to learn more in general.
I have a trader up and running now in Canadian Prefs with 500k to 1mil (just completed week 1 – note he trades with a backer and I provide the stocks and strategy) (mostly longs and shorts). He will push to 1 to 2mil next week and continue to grow.
Let me know if you are interested.
reikreik
What about a performance fee? do you charge a performance fee on your returns after a certain level of performance??
No.
Do you handle foreign investments?
Not at this time. I’d like to, but not unless I can do it properly, which means staff, which means a fair bit of excess cash flow from Canadian operations, which isn’t happening at this time.
Why does your fund have 7mil in it with a return that is very impressive??
Ha! Every now and then I look at my results and wonder why I’m not running every dollar there is. Sadly, performance and $2 will get you a cup of coffee. The business is all about brand-names and sales ability. I don’t have much of either.
Why aren’t the big investors jumping all over this?
Big institutions basically won’t look at you unless you have staff of 20+. Big individual investors … well, see above.
Do they not like Canadian Prefs??
A lot of institutions – particularly in Canada – are tax-exempt pension funds, and a huge proportion of individual investments is in RRSPs, which are also tax exempt. Canadian prefs lose a lot of their allure without the tax advantages.
Let me know if you are interested.
Interested in what? I’m always interested in ways to leverage my knowledge of the market… send me an eMail!
I clicked on the email link and I get a reject.
info@himivest.com
is this correct?
reikreik
reikreik70@yahoo.com
I hope I didn’t lose your interest. Perhaps if you believe you can generate data and opinions on a stock like
BBT-G (bb&t bank series G) (note there is bbt prefs d, e, f, and g) and there are many more names and many more larger names and much more volume
data:
NYSE
Chart 5.20%
$1.3 $25.00 par
6/01/2018 call date
None (maturity)
Baa2 / BBB (rating)
Would you be able to generate similar data (your analytics) on USA prefs?
If so we might build 2 ideas much large in scale simply because the sector is larger and more liquid here.
1 – add investments into your current Canadian funds
2 – new fund – USA – your own fund with your own analytics with some anomalies that I have found that will add 4 to 6% yearly (long only)
3 – new fund – USA – long/short – I have my own ideas running already (some stocks would overlap but only some not most.
Im thinking 1 or 2% management fee and 10 to 20% performance fee
I have a party who is interested to fund it all.
Let me know.
reikreik
Another example
Today Mer (Merrill lynch now via Bank of America)
Mer-K moved up to 25.50 with a dividend coming in 2 days
The other mer’s are lagging (there are 6 of them total) but actually country wide and bank of America itself – there are about 15 to 20 BAC prefs.
Mer-k out and loaded up Mer-M (the 2 are nearly identical
Mer-k has done 162k shares today and its only 1pm eastern time.
more stock, more liquidity, and multiple similar series within same name – We rotate out of 30k shares and over into the others.
Again its not a stretch if you can provide analytics which you should since we are talking about a pref with pref properties.
And worst case you might just get some funds for your Canadians (dictated purely by your excellent performance v. benchmark) – and you are no worse off.
That’s how I see this – Im wasting some time worst case. But Im growing the Canadian side either way.
reikreik
This is very interesting … but time to take this discussion out of the comments section!
I have sent you an eMail.
I emailed you back. I hope it got to you.
If you aren’t interested no problem. Just let me know either way.
reikreik
I am considering your proposal. I will be back to you in a week or so.
Another Mer example
out of Mer-pp at 25.50 – we shed a bunch and rotated out and into
Mer-pf near 25.72 (Mer-pp at 25.50 just had .46 divi today so really near 25.96 if adjusted)
this action adds up as well.
another example is psa (public storage)
new issue $250mil
but there are nearly 12 psa issues with varying duration
example psa-o is close to call but rates where they are now its not sure if they will but that versus another with 4 to 5 years to call has had its duration flattened out a bit.
many many names.
all state insurance just issued 4 new names about 250 to 350mil each
capital one another issue today $500mil
so even before today there are many many
entergy (electric and nuclear) a- rated just issued new one for the texas subsidiary 120mil they have about 7 or 8 names (they are in texas, Arkansas, Louisiana, etc) not as big or liquid (100 to 150mil most of them) but good rating
same for next era energy about 7 names
etc.
lots of names to value and rotate around in
banks, insurance, reits, and utilities, etc.
Sorry, this comment was held up in the moderation queue.
I clicked on the email link and I get a reject.
I don’t understand what this means.