2 Mispriced Preferred Stocks
Summary
- $AI.PC is mispriced comparing to its sibling $AI.PB.
- $PEI.PC is mispriced comparing to its siblings $PEI.PB and $PEI.PD.
Today I'd like to highlight 2 preferred securities that are mispriced and from my point of view have a high potential of significant upside.
First, lets take a look at $AI.PC - a Series C Fix/Float 8.25% Cumulative Preferred Stock from Arlington Asset Investment Corp.
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It seems that $AI.PC is significantly mispriced comparing to its sibling $AI.PB.
Facts:
- It is cumulative
- Price is less that a call/liquidation price (potential upside and call protection)
- It goes ex-dividend very soon on 9/17/2019
- Its current yield is whooping 9.4% and its stripped yield: 9.6%
There is 1.25% yield difference between two preferred stocks from the same issuer. If $AI.PC would have yielded the same as series B, its price would be $24.88, $2.94 of potential upside.
The second mispriced stock is $PEI.PC - Pennsylvania Real Estate Investment Trust, 7.20% Series C Cumulative Redeemable Perpetual Preferred Shares.
| Stock | Call Price | Coupon | Current Price | Current Yield | Accrued div | Stripped price | Stripped yield | Ex-Date | Pay Date | Div | Div frequency | Cumulative | Target price | Upside |
| PEI.PB | $25.00 | 7.38% | $20.02 | 9.21% | $0.05 | $19.97 | 9.24% | Aug 30, 2019 | 9/17/2019 | $0.46 | Q | Y | $21.45 | $1.43 |
| PEI.PC | $25.00 | 7.20% | $18.34 | 9.81% | $0.05 | $18.30 | 9.84% | Aug 30, 2019 | 9/17/2019 | $0.45 | Q | Y | $20.93 | $2.59 |
| PEI.PD | $25.00 | 6.88% | $19.98 | 8.60% | $0.04 | $19.94 | 8.62% | Aug 30, 2019 | 9/17/2019 | $0.43 | Q | Y |
It seems that $PEI.PC is significantly mispriced comparing to its sibling $PEI.PB and $PEI.PD.
Facts:
- It is cumulative
- Price is less that a call/liquidation price (potential upside and call protection)
- Its current yield is whooping 9.81% and its stripped yield: 9.84%
There is 1.21% yield difference between two preferred stocks from the same issuer. If $PEI.PC would have yielded the same as series D, its price would be $20.93 or $2.59 of potential upside from a current price.
If you want to save on brokerage commissions see my previous blog post.
Happy investing!
Analyst's Disclosure: I am/we are long PEI.PC, AI.PC.
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