POW.PR.C: Yes, CPD is the Buyer

Today’s spreadsheet (dated 2010-1-21) from CPD discloses a holding of 0.72% in POW.PR.C compared to the January 19 figure of 0.25% … so we may conclude that CPD is the culprit behind the stupid dumb trading in the TXPR Rebalancing Issues … Assiduous Reader to_be_frank wins a kewpie doll for first spotting the pattern.

Nesbitt – it looks like they are CPD’s agents in this horrific display of gross incompetence – bought 30,000 shares of POW.PR.C today at 25.443 while selling 25,000 at 25.45 (the sale was a single cross, so there’s one institutional investor with a smile on his face, anyway. Give the man a bonus! The other implication is that Nesbitt only bought 5,000 from retail). POW.PR.C closed the day at 25.08-20, 2×10 … so who knows? Maybe things are getting back to normal. POW.PR.C is still trading about 25bp through POW.PR.B at the closing bids, however – despite having significantly more call risk – so they’re still extremely ridiculously expensive.

Fearless Prediction: CPD will show its normally low Trading Expense Ratio on its next financials (the TER shows only commission cost, and makes no attempt to capture the generally much much higher market impact and spread costs). Regulators are very particular about funds reporting their TER, because it’s so VERY VERY important.

Update, 2010-1-22: I have uploaded three charts from HIMIPref™ for your edification and amusement. They compare POW.PR.B (which should normally trade to yield less, due to the lower value of the embedded option) with POW.PR.C:

8 Responses to “POW.PR.C: Yes, CPD is the Buyer”

  1. to_be_frank says:

    Never attribute incomprehensible ingenuity to anything that can adequately be explained by incompetence.

  2. […] continued to trade well in excess of its normal volume but the peak of the idiocy appears to have passed. Moody’s massive downgrade of BMO Prefs did not have any immediate […]

  3. […] was relatively well-behaved today, easing off a little (gently, gently!) from its recent absurd highs. It traded a mere 5,890 shares on the TSX – back to normal there, anyway – in a range of 24.93-04 […]

  4. […] highlights – POW.PR.B, oddly enough, which I have used as a gauge of the market impact of the stupid trading in POW.PR.C. Volume was subdued and dominated by […]

  5. […] error is therefore -0.24% and -0.37%, of which about 0.04% and 0.11%, respectively, is MER. Their efforts at rebalancing cost unitholders a lot of money! The MER may be only 45bp, but the first 2010 semiannual […]

  6. […] must realize that passive models are not immune to liquidity costs. For example, moronic trading in POW.PR.C triggered by index rebalancing, was a large factor in CPD’s large tracking error in January […]

  7. […] bump in the price of ACO.PR.A in the period in which it may be assumed CPD was buying. See the post POW.PR.C: Yes, CPD is the Buyer for another […]

  8. […] It will take me a little time to digest the effect of all these changes. Clearly, they are attempting to make life easier for CPD so that mechanical application of trading rules to a change in relatively small issue doesn’t burn them as badly as POW.PR.C, inter alia, burned them last time. […]

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