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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: pater tenebrarum who wrote (86809)3/28/2001 11:23:55 AM
From: ild  Read Replies (1) of 436258
 
Heinz, Grant Inv boys yesterday reco FCX preferred that tied to gold/silver. I'm considering FCX-C. Any opinion?

Turning to Freeport McMoRan, we discovered some enticing yields on several unusual securities. There are two series of gold-denominated preferreds for which the dividends and redemption values are directly tied to the price of gold. There is also a silver-denominated preferred and a step-up preferred that is convertible into common stock.

The original gold-denominated preferred shares (FCX B; CUSIP no. 35671D600) pay quarterly dividends equivalent to the value of 0.000875 ounce of gold per share. Additionally, the shares are redeemable on Aug. 1, 2003, at the dollar value of one-tenth of an ounce of gold. Although a more direct play on gold, the shares will still provide a lustrous return even if the yellow dog doesn't rally. Assuming a constant gold price of $261 per ounce over the life of the security, which would provide a constant quarterly dividend of 22.8 cents and a redemption value of $26.10, the internal rate of return (IRR), would be 16.6%. To illustrate the shares' sensitivity to the gold price, a rally of 5% a year would give the investor an IRR of 21.5%.

finance.yahoo.com
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