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Flaherty & Crumrine Preferred S Message Board

  • thugman1965 thugman1965 Jul 29, 2010 7:00 PM Flag


    I predict it will hit it's initial ipo price of $25 sometime in 2011....Probably 20 by the end of this year.

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    • Finally, to address a few of points that have come up over the course of this thread.

      1. If you look at the historical chart for FFC, you will see that it did, indeed, trade at 20+ for quite some(2003 thru the crisis). As such, it could very well return there as the financial world normalizes.

      2. It has traded from ~$5 per share to nearly $18 over the last couple of years. Nice return and trumps far more widely followed securities. So, I agree one should buy it primarily for income but, like any asset, a very nice capital gain can occur if purchased at the correct price.

      3. The inflation argument - If FFC returns 9 percent(let's call it 7 percent after return of capital for argument's sake), that is still 6-7 percentage points above core inflation. Thus, that income is a true spread credited towards net worth. Until real inflation is higher than the yield of FFC, then you will still end up in the green assuming a fixed FFC market price. From there, the only other question that must be addressed is what higher returning alternatives compete for the same money. As the market continues to recover, those opportunities become fewer as the market rises(i.e. competing assets get more expensive).

      Having said all that, I agree with another poster who said that purchases should not be made above NAV and I quit buying since early August due to the run it had. Again, if one picks and chooses buy points selectively, that same person should do quite well with FFC. If care is not taken, then the nice yield can be wiped out pretty quickly. All of this is no different than any other holding.

      The above kind of summarizes my thoughts regarding the attractiveness and risk of FFC.

    • Call it what you will. I'm still well up and, yes, I bought it for the income. On that point, I agree.

      Bottom line: Frankly, I could care less if it goes up another penny. If it will return 9 percent worth of income per year, it will have served the purposes for which I bought it in the first place. This isn't complicated stuff.

    • your prior messages did sound 'dillusional', this is not a stock for capital gain, only for income and very modest gain if bought low.

    • I wouldn't argue against that. However, inflation has yet to kick in, at least not the core kind. Bottom line is I'm up 12 percent and the thing is yielding over 9 percent.

      If I'm delusional you are in a state of "paralysis by analysis".

      Have a nice day.

    • you are all wet dude! Price here is predicted on the NAV of fund investments. The investments stock prices and yields are very unlikely to rise 56% (to $25) for years. You clearly do not understand the structure of the FCC closed end fund, price premium, new legislation and sluggish market performance.

    • agree

      Been in since May and I keep buying on every dip(like earlier today). I cringe every time because it's had one heck of a run but it keeps on going like the ever-ready bunny!

      Yield is precious these days.

    • It's not often I'm in agreement with a Yankee, but, this is an exception. We believe in this fund so much that we added shares on 4 occasions from Nov 09 to Feb 10 and now hold 3198 shares My dollar store calculator shows we could cash in and end up with 8104 in capital gains. Tempting, but, will probably ride this fund for a while. Good luck to you.

18.60+0.12(+0.65%)Aug 3 4:00 PMEDT