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Cohen & Steers Quality Income R Message Board

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  • chiquitbumbalabimbomba chiquitbumbalabimbomba Nov 20, 2008 7:15 PM Flag

    Redemption - Please explain what it means to RQI

    The AMPS are the source of money originally used to leverage this fund, it's kind of perverse that the shareholders got most of the negative effects of the leverage on the way down but will get none of it on the way back up.

    I don't see why they couldn't have just deleveraged by selling stock and holding it for even cheaper purchases later, I guess it's part of the problem of the incentives of chasing relative performance (i.e. my gut tells me to go to high cash level but none of my competitors are doing it and my biggest concern is not underperforming the other funds, ie I go to cash and then prices start going up).

    Anyway, here's the post from ddavid from October describing the source of funds for AMPS redemptions, if he's not an insider I have to assume he got the info from IR.

    I'm guessing this LOC was locked in a long time ago.

    "RQI is buying/redeeming the Preferred Securities(57% of them) with the new Bank of America Line of Credit. RQI is not selling assets (REITs) to fund the redemptions. The cost of the LOC is significantly less than the Preferred Securities at the penalty rate, which they have been paying since 2/2008 (ARPS became locked)."

    Anyway, this is a brutal market, makes previous bear markets I've lived through since 97 look like child's play.

    I don't own RQI but a small amount I set aside in CMGRX in an UTMA account for my daughter's education has been annihilated. Sometimes the tax regs are a good thing, if I could have gifted more than 12k tax free to that account I probably would have.

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    • So, if RQI is not selling stock or units, the income generated should remain relatively stable? If and when the markets settle down and things get back to relative normal, the unit value could start to claw its way back up?

      • 1 Reply to lystgl
      • One would think and that's the hope.

        REITS have been the poster child for rabid short selling over the last 2-3 months. At some point, that should be mitigated.

        If they aren't selling huge blocks of stock for AMPs redemption and in order to sustain dividend, then the asset base may remain intact.

        I cleared a substantial part of my position at $10/share, but the part I held is certainly bleeding.

        If it drops lower than this, I probably will pick up some more....

11.27-0.01(-0.09%)Jul 29 4:03 PMEDT