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ORH-A


StubbleJumper
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Hmmm...just looking at Friday afternoon trading, and it appears that ORH-A is up over $26/sh.  This thing just paid a dividend, so it's not like the market should be accruing something for that reason. 

 

Anybody think that FFH will call them at $26?  I can't seem to think of any other reason why it would trade that high (given that you might get called next year at $25).

 

SJ

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They are callable this yr., Oct. 20, I believe , same day as div. payout

 

Also the volume has been higher than usual -  noticed the volume increase right after last div.

 

cost to FFH would be the same either way , little more than a $1 in div., to $1 more for early call price

 

 

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$26 redemption is a nonstarter.

 

From the IPO prospectus...

 

On and after October 20, 2010, we may redeem the series A preferred shares, in whole or in part, at any time, at a redemption price of $25 per share, plus declared and unpaid dividends, if any, to the date of redemption. [glow=red,2,300]We may not redeem the series A preferred shares before October 20, 2010, except that we may redeem the series A preferred shares before that date at a redemption price of $26 per share, plus declared and unpaid dividends, if any, to the date of redemption, if we are required to submit to the holders of our common stock a proposal for any matter that requires, as a result of a change in Delaware law after the date of this prospectus supplement, for its validation or effectuation an affirmative vote of the holders of the series A preferred shares at the time outstanding, whether voting as a separate series or together with any other series or class of preferred stock as a single class.[/glow] The series A preferred shares have no stated maturity and will not be subject to any sinking fund or mandatory redemption and will not be convertible into any of our other securities or property.

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Ok ,  Only if you believe FFH wont call them in Oct. would one buy over $25.  I think they will, there is cheaper money available. 

Now , I would be happy if they never called , but dont think that will happen

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A pretty good question about this was asked at the AGM. Someone asked if Fairfax would call these, both issues A and B would be about $100 million, or if they would prefer to hold onto the cash. Prem said at the time that they were considering it but that it would be important for them to maintain about $1 billion in cash.

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Who thinks that they will call the A shares at the first opportunity?

 

Who thinks that they will call the B shares at the first opportunity?

 

SmallCap

Shouldn't they call A shares first before calling B shares?

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I would guess you are right based on the interest rate but I was wondering if they would not call any of them at first opportunity or call just the A shares or call both the A and B shares.

 

I don't own any A shares but I do own some B shares

 

SmallCap

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I would guess you are right based on the interest rate but I was wondering if they would not call any of them at first opportunity or call just the A shares or call both the A and B shares.

 

I don't own any A shares but I do own some B shares

 

SmallCap

I was in the same boat as you are.  I figured that they probably would not get called at $26 so when B shares hit $24 a few months ago, I sold out. 

 

I did try to figure out how much it costs for Fairfax to keep ORH-B around with all the associated paper work to regulatory agencies.  But I was stuck as I had no contacts in the industry.  That was also one of the reason why I sold. The other one is I had bought at mid-teen when it was fairly cheap.  I was not so sure whether it still was cheap a few months back when I sold.

 

I know this does not answer your question. But wouldn't GS-PD offers a better opportunity presently?

 

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  • 1 month later...

Anyone have  thoughts or ideas on ORHpA trading above 25.50/sh??

 

I believe that FFH will call these pfd's in Oct., and  have sold most of my position at these prices.

 

Am I missing something???

 

GAF

 

Nope, I don't think you're missing anything.  FFH issued more preferreds in Canada earlier this week at a dividend rate way lower than the ORH-A shares.  I'd say the Odyssey preferreds are toast.

 

SJ

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  • 1 month later...

I think its a foregone conclusion that all of the ORH preferreds will be called. Odyssey paid $3.5 million to alter their bond indentures so that they don't have to make SEC filings to be in compliance with their bonds, and can instead make their NAIC filings available to bondholders free of charge. Plus, as has been said here, there is cheaper money available. $80 million to call both series of pref's will in no way break the bank given the level of capital at ORH right now.

They can call whenever they want, but they need to give 30 days notice...so if they want the call to take effect at the time the next divi is due, they will need to call by Sept. 20th....

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  • 2 weeks later...

I've been selling the last few weeks,  and sold the last today over 26

hate to lose the div. , but agree that FFH should call them this Oct.

 

Good timing. I chickened out and sold all of mine at 25.40. Did not think people would be crazy enough to bid it any higher. Still don't get why people paid over 26 to take the risk of a highly probable 4% absolute (i.e. not annualised) loss just for the prospect of getting an 8% annual yield.

 

Another nail in the coffin of Efficient Markets, I guess.

 

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Regarding the post below - The reason it traded above 26 was because of a large circulation email to generally unsophisticated investors - sent by an Agora Inc. subsidiary, Stansberry & Associates.  This company was the reason for many of the sudden spikes in the series A pref.  To see a similar effect by the same publishing house, look at TPL in mid August.

 

(I'm new here on this board, happy to see such high quality information here)

 

"Good timing. I chickened out and sold all of mine at 25.40. Did not think people would be crazy enough to bid it any higher. Still don't get why people paid over 26 to take the risk of a highly probable 4% absolute (i.e. not annualised) loss just for the prospect of getting an 8% annual yield.

 

Another nail in the coffin of Efficient Markets, I guess."

 

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