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Non-Tech : Income Investing

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To: FL_Guy who wrote (46968)	12/4/2021 10:39:11 AM
From: E_K_S	Read Replies (3) of 52143

Re: Broken preferred; SOHON/SOHOB & OTRKP I peeled off a few of my high cost SOHON bought 9/15/2021 to book a small gain. Still have a few left of the SOHON and SOHOB to see if we get some/all of the suspended div payments. --------------------------------------- Added a few of the OTRKP @ $12.27/share 12/15/2020: On Line Medical Company Ontrak Re-opening Preferred Issue–UPDATED UPDATE–Ontrak has announced they are selling 1.73 million shares in this follow on offering. They will also have 259,500 shares available for over allotment. The offering price is $24.75. Ontrak (OTRK) has announced a reopening of their 9.50% cumulative preferred stock which originally was issued in August. OTRKP close to a new low (10/2021 @ $11.71/share) so I picked up a few more at $12.27/share and more if it breaks to a new low (perhaps from tax loss selling). ---------------------------------------------------------- A review of their balance and cash flow statements shows they are still burring cash but have sufficient cash assets to continue operations for perhaps 24 months (or more). The company made their November distribution 11/30/2021 w/ their next scheduled payment 2/28/2022. That's an effective yield to market price of 19.3%. The company has several exit strategies looking forward (past 24 months); (1) do another sale of these preferreds, (2) do a reverse split on the common and issue more common shares along w/ a warrant 'kicker' to attract Private Equity and/or large shareholder/Partners; (3) search for a large well capitalized Partner (like CVS) and structure a buy-out deal and/or combination of 1-3; or (4) suspend distribution on the Preferred and operate company at a loss, 'hoping' to obtain the necessary new customers to generate a positive FCF and achieve positive EBITDA. #4 is doable in 24-48 months but must get their services Medicaid/Medicare 'approved'. Definitely a long term speculation but low risk for the preferred holders compared to holding the common shares. A takeover by Private Equity and/or CVS may/could trigger the 'change of control' provisions in the preferreds and those would be paid off at PAR (perhaps shares in the acquirer if it is CVS). --------------------------------------------- FWIW, now at an 8% holding in my preferred basket w/ this issue. It's my No 4 position in the basket. However, the preferred basket only represent a 6.3% of taxable portfolio value making OTRKP only a 0.5% holding. My limit on any one stock/company 'speculation' holding is between 0.5% to 1% depending on the Risk/Reward.

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