I guess you can look at this stock a couple of ways. While there is going to be a massive dilution of the common shares, those that hold prefer and trust will do really well rewarded during the conversion.
Investing is about the future, so what will be the future for Popular, Inc. I see a company that has enormous value to both the Puerto Rico local economy as well as the US Mainland. To understand its role, one must better understand the market it serves. So lets focus more on Puerto Rico. Even after the elimination of 936 law, Puerto Rico continues to play vital role to the US industrial sector mainly in the pharmaceutical and technology sectors. In addition, it continues to be a main hub for imports and exports to the US. Many people don't realize that the FDA facility in Carolina PR has a staging area for agricultural products to be inspected and properly process. Here products are literally vaporized if they're found to have any potential viral or bacterial danger to the Mainland.
Talking about agriculture, while many get caught up in investing in big companies, farming is still essential to the economic health of any country. Puerto Rico's agricultural sector has been reduced in the later years with major focus in industrialization, research and development. Yet it's still a very abundant source for such products thanks to its tropical and raining climate.
I guess I can go on... So what does this all mean to Popular, Inc.? Simple, this institution is position as the number one bank in this market, second to none. The entire local economic system is some how embedded to Popular, Inc., and its EVERTEC arm.
1. Popular, Inc., raises enough capital and strives to be a better company.
2. Popular, Inc., becomes a candidate for take over by another more stable institution (excellent acquisition for someone like JP Morgan Chase)
Popular, Inc., has too much political influence to simply die. I'm sure that while there many nuts in congress, they realize that this institution serves a very important role as part of the overall stability of the US economy.
Agreed on what you said. Also, they need to get off of their island and spend some time here onthe Mainland - get to know their banking area and customers and shareholders instead of hiding down there.
Unless they no longer care about the N.American franchise.
You know my answer, but just in case, I think management had character in the past, I think they lost it along the way and the conversion offer is enough proof for me. From the small sampling I can make of common and pfd holders, management has lost the confidence of the stockholders. The least they can do is add a full cash buyback of the pfd at $25, or at $25 less dividends paid, so long as we don't have to add more common to our portfolio. Or, if they really don't have the cash and the best they can do is offer common in exchange for the pfd at $20 EA, then price the common at market at the time of the exchange, not at an arbitrarily selected $2.50.... the entire offer as it stands stinks of manipulation and bribery not to mention it adds insult to injury to the many common stockholders who recently placed their confidence in management while holding onto the common with declining dividends while loaning them more money by buying pfd's. Did I mention they could lower their salaries to $1/year and use the savings to return the money to those who bought pfd's. Steve Jobs makes $1/YR, the rest he makes by adding value to the Company! I can think of many honorable things management could have done to deal with this situation, but they have not chosen any of them. I've done many foolish things in the past and huge mistakes to go along with those, but I've never thought others should pay for my mistakes, just me. So in the end, I will pay dearly for my mistake in trusting management but only once!
I beleive you have reaised some great questions - both specific to the Pfds as well as about the Company and Mgmt.
To me, now the root questions are does the Company and Mgmt have the confidence of the shareholder or its customer/client base?
Does Mgmt have character and integrity - either in its past dealings, currently or for the future.
I have my opinions on this topic. Only you can answer for yourself and from that answer decide your course of action.
Character is paramount in this. Do they have it?
You do not support any of your arguments with data:
"I see a company that has enormous value to both the Puerto Rico local economy as well as the US Mainland. To understand its role, one must better understand the market it serves. So lets focus more on Puerto Rico. Even after the elimination of 936 law, Puerto Rico continues to play vital role to the US industrial sector mainly in the pharmaceutical and technology sectors."
Based on what? Sorry, this is strictly your opinion and for all I know it could be based on hearsay and innuendo, not to mention any bias you may have. Where's the data to support your arguments?
Of course this is my opinion. Yet, it's not hear-say, but on personal experience and knowledge. I wasn’t planning on writing a thesis, but simply provide a perspective of Popular, Inc., and its main market which is Puerto Rico. Many think of Puerto Rico as a tourist attraction, and have little if no notion of how the Island plays a large role in the US economy. Puerto Rico serves as a hub for international travel between US Mainland and countries overseas, serves as a hub for import and exports, provides agricultural products, and yes, has a large manufacturing base. While I currently reside in the US Mainland, I spent a good 9 years of my career in Puerto Rico. In fact I was account manager of Puerto Rico and the Caribbean for a Future 100 Company. I still own property and travel there regularly once a month.
I have worked with many different business sectors in the Island, and participated in several occasions as a technical expert for PRIDCO (Puerto Rico's Industrial Development Corporation; a government arm) for promoting the installation and expansion of manufacturing plants in Puerto Rico.
I invite you to do a little research and found out for yourself the relevance of Puerto Rico to the US manufacturing sector. Search for the location of plants for Pfizer, Johnson & Johnson, Wyeth, Lilly (Eli Lilly), GE, Eaton (Previously Cutler Hammer), HP (Aguadilla Facility), Bristol-Meyers, Amgen, Baxter, Microsoft, etc...
Excellent points and one must not over look that Evertec is the fastest growing arm within BPPR. As a leader in POS and electronic processing it is a major player in central America the Caribbean as well as South America. Check out their web site at http://www.evertecinc.com.pr/eng/index.html
A foot print in Latin America for the likes of a JPM would be a sweet deal and would tie in very well with the existing associations JPM has with Venezuela, and Colombia.
I appreciated your thoughts. I bought the common stock recently with all your points in mind plus I saw Popular on other US islands. I also considered the incredible infatuation of baby boomers with tropical islands - who could retire and come forever more to P.R., V.I. then of course HI.
I even see a resurgence of a high end home and condo market in P.R 5 or so years out. Good for P.R. and BPOP.
The potential for a buyout by a big bank that wants a footprint in the Carribean and a business with ties and knowledge of culture to a growing U.S and island territory Spanish population, is an extremely attractive possibility.
I worked 29 years in Pharma and spent many good days on the island.