Some investors may be thinking that there is a quick capital gain opportunity coming next week when the currently open "premature call window" for bank trust preferred stocks (TRUPS) expires.
Preferred stocks that are "call-protected" tend to command a higher market price than otherwise similar preferred stocks that do not enjoy such protection (those that have already exceeded their published call dates). Looking at the current market prices of traditional preferreds (non-TRUPS), we can see that investors are paying an average $1.59 per share premium for call-protected issues.
Since a multitude of TRUPS that are currently redeemable will become call-protected next week, it is tempting to think that the market prices of such issues are likely to increase accordingly, delivering a quick capital gain to this week's buyers...
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Preferred stocks that are "call-protected" tend to command a higher market price than otherwise similar preferred stocks that do not enjoy such protection (those that have already exceeded their published call dates). Looking at the current market prices of traditional preferreds (non-TRUPS), we can see that investors are paying an average $1.59 per share premium for call-protected issues.
Since a multitude of TRUPS that are currently redeemable will become call-protected next week, it is tempting to think that the market prices of such issues are likely to increase accordingly, delivering a quick capital gain to this week's buyers...
Note To Readers: This article was chosen to appear on the popular investing website 'Seeking Alpha'.
By clicking here a new window/tab will open on your screen to this article as it appears at SeekingAlpha.com.
Receive my Seeking Alpha articles by email: When viewing one of my articles at Seeking Alpha, click on the "Follow" button under my picture. You will be notified by email when I post a new article to Seeking Alpha.
Please enjoy reading this article at Seeking Alpha.
Many Happy Returns.
