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Strategies & Market Trends : BAK - Investing -- Ignore unavailable to you. Want to Upgrade?

To: kollmhn who wrote (2809)	5/30/2012 8:41:52 PM
From: Flipper2058	Respond to of 3249

Re: Flipper- FOR ALL OTHERS>>>>BUY GDL PREFERRED B AS AN ALTERNATIVE MONEY MARKET FUND.....I say this to encourage better liquidity for us all to move in and out as we need it. I keep a simple spread sheet of the accrued interest to date to see where it stands. www.quantumonline.com for info. AAA..less than one year to put...ex 6/15...yield 2.2%.Presently there is $.31 of accrued so $.10 of premium.. Kollhmn...... You have been puzzling along the same lines as I have lately. From my talks to Gabelli Funds I get the impression if they are put a lot of stock back they will consider GDL-B a fail. I assume they went this route because the ARP's (Auction rate preferred) market was dead due to lack of market makers. Gabelli STILL says this is case and hard to see when it will come back. The more fixed preferred like GAB-F is what they are going for but too many puts doesn't make that viable as premanent equity capital. Believe or not the guy I talk with was unhappy with a low reset for the mentioned concerns. They thought a single A bond yield (as a reset low) would cover them to getting put a lot of shares back. Who guessed rates would be THIS low. Obviously even the great Mario didn't. So my guess they will go a different route, back the same, but I hope not. If you notice in 2009 they called an equal amount of ARP's AND GAB-F....even though the F was vastly higher in yield. Permanent equity capital is a small cushion for an inflationary future for shareholders. I see why they do it. As I mentioned, Batman indicated the correct answer that even though the rate, maturity and quality are great, liquidity will make the yield naturally higher. With a vast amount of puts next year it will get worse. It is why I likely will put it and take my changes at a lower price. Mario loves to pig out on rights offerings himself so yes I easily see them going that route.

To: kollmhn who wrote (2809)	5/30/2012 9:00:55 PM
From: Flipper2058	Read Replies (1) \| Respond to of 3249

Re: Flipper- "If they have not re-fi'd the GAB F 6.20s by then, why wouldn't one prefer the Fs to a new B for an extra 3% per year?" I own a lot of GAB-F but you know the reason why I don't own too much. It is just a different animal. The call on it makes the yield 100 BP higher and that is some protection from rates going higher. I am told they have no plans to call it as it is likely they could not do a lot better. This is the key question to ask...not "will you call it?" As I mention I love the fact I am not dealing with credit issues on these family of preferreds. Any sell-off is rates or liquidity and I am OK with liquidity sell-offs. Rates have me a tad worried but I keep spread sheets on the spread between the 10 year and 30 year T-bomb. Both spreads to GAB-F are at new highs. So I am not inclined to hedge for yield risk much here. PEople paying $26+ I think are paying too much. Break even is too far away then given the call risk. It has taken me since last Fall to build a position and I continue to build it when the timing is right.