Preference shares sell off

Any reason for the recent sell off of preference shares in general, such as ELLA, RSAB, GACB, etc? Surely not that Greek nonsense. An opportunity to buy more?


  • I suspect the summer budget had a effect?
    Insurance Premium Tax
    The measure From 1 November 2015, the standard rate of Insurance Premium Tax (IPT) will be increased by 3.5% to 9.5%.

    In addition most "Fixed Interest Securities" have dropped in price over the past 6 weeks

    Any other reasons?
  • Yep.

    The reason is that the whole world is in deep doo doo from false printed money and unbelievable levels of debt.

    America is about to raise interest rates, increasing over the next few years, UK to follow.

    China is trying to plug a crash of stocks with the equivalent of a "finger in the dyke" and that is going to blow up their's and everyone else's face.

    Water finds its own level in the end

    Anyone with any sense will get rid of all their equity and bond holdings, get into cash, and wait for the crash.

    It might take a few months to arrive, but, believe me, it is on it's way

  • I agree and have sold off most of my equities. I'm still sitting on the bonds for now. If you are are able to sit on cash for some while, you'd hope that there might be some really good bottom fishing to be done.
    If we get deflation, your purchasing power for cash goes up too.
  • I reckon the changes to dividend taxation have also had an effect. Without the prospect of capital growth, changes to dividend taxation mean that Pref. Shares are not as attractive as they once were. Now going to have to migrate my holdings slowly into ISAs. If you look back at the prices they traded at 10 years ago when interest rates were "normal", the valuations still look good. I can't really justify buying much more, seeing as I have quite a lot already, but otherwise I would probably be waiting for about another 5% correction before buying.
  • Does anyone know why REA 9% Prefs have fallen so much recently?
    I know they are riskier than most preference shares but they now under a pound, either they are a bargain or there is something I need to know!
  • They have just issued a half year report. Apparently "2015 has seen a significant fall in CPO prices and this has had an inevitable negative impact on the group's cash flows." No idea what CPO prices are but sounds like bad news! Also all sorts of refinancing going on as well. Not a company I follow or understand I'm afraid . . .
  • Article on BBC may be of interest, in essence too much Palm Oil on the market, like most other commodities!
  • Regarding the REA Holdings prefs, last month's disappointing results have had a significant effect. The preference shares are now yielding over 9%.

    The deferment of a decision on the 2015 dividend on the ordinary shares potentially removes the "prop" supporting payment of the next preference share dividend in December.

    However I believe it will be paid for the following reasons:
    1) It is cumulative, so there is no long-term benefit to the company in not paying the preference share dividend;
    2) The company is still profitable (if only just!)
    3) The company's financing plans still seem to have institutional backing
    4) The plans for expansion/cost reduction are still in place

    While I wouldn't want to risk buying the ordinary shares, IMO we have reached a "weak buy" situation on the preference shares. I say "weak" because the price may still drop further, and it would be a safer bet to wait until it becomes clear that the December dividend payment on the prefs will be made (although the price will probably rise as soon as this happens).
  • Could be with a punt in the near future, should oil prices start to rise if the major country producers limit their supply. This could then divert more palm oil to bio-fuel use.
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