What do you think about MVL's $10 par 8% PIK preferred stock (traded under MVLEP.OB). It converts to MVL common at the holder's option at a rate of 1.05 common to one preferred. Fundamentally, I think the long-term value of this company is based on how well they realize value from their library. I haven't taken a position yet. Still doing research and holding a large slab of CXW preferred B's. Any thoughts?
Might make sense to buy MVELP and short MVL. Maybe only a partial short (e.g. 1.5:1 ratio) to hedge your downside while leaving some upside in case the turnaround works. You need a broker that lets you have the short sale proceeds for this play to work.
As for just going long MVELP, I haven't looked closely enough to make a call. History is scary, but 2002 guidance sounds encouraging. If this year is repeatable the preferred is a slam dunk. But if not the debt is a killer.
MVL seems to really be up against the wall...hold your nose stocks..I love 'em. Not sure about this one for a straight long position on the pref.. They have no assets other than goodwill so they need to earn their way out of it, always not too promising. Interest expense up sharply too. But maybe the solution is short some common to protect your interest. It's certainly trading high relative to the common. Thanks for the idea!! Keep them coming. Personally I like lots of assets that may be sold. CXW was a perfect example (CMM too). Good profits margins but too much debt. A few asset sales and trimming here and there and off they went. I'm still waiting for the green light on PMREO (pref stock)..(common PMRE). Much worse than MVL though. They have lots of assets and could pull out a hail mary. Too early to get in though. Better to pay up if they make it at $5-$7. But keep your eye out.
I don't know that MVL is entirely without assets as I wuld think that its library would have substantial value. I think a Spiderman sequel is a given, which should bring in another rush of licensing income, but there's no way I'd own the common since the convert is trading at almost the same price. BIG market inefficiency there.