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9 Year CD That Pays 6.5%+ (stock investment discussion)

RJM
  |     |   499 posts since 2011

Ok, its not a CD, its a stock that will very quickly become an NYSE listed preferred stock.

It trades at roughly a 9% discount to its $17.80 value at closing...on Feb 6th.

Its a 9 year note that pays 6%. But ,up to 20% will be redeemed within 3 years for cash.

You never lose liquidity because it will be NYSE traded.

The parent company is highly diversified and has a market cap of nearly a half billion. So its probably not going belly up.

SXCL is the stock....thru Feb 6th or around there. Then, it will be SPLPP I guess. SPLP is the parent.

I just came across this because I own SXCL from a prior investment that did not work out well.

I plan on holding mine for at least 3 years and I will probably tender then for at least some of it.

However, my broker does not charge me for tender offers (grandfathered in) while many do.

I have not bought any additional although its probably worth considering.

If you buy SXCL try to buy a lot divisible by 0.712 because I'm not sure what happens to fractional shares. I have a 300 page book but I haven't read it. Just the press release.

The parent has a ton of debt, but a ton of cash too. And they tend to buy stuff with NOLs.

Normally, I wouldn't consider a 9 year anything but in this case, it seems like a good risk/reward. Compared to whatever 8-10 year CDs pay.

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RJM
  |     |   499 posts since 2011
Another risk is they have the option to pay dividends in SPLP common shares. But, SPLP shares have always traded at a discount to book value so I'm guessing they would rather pay cash. The 20% within 3 years is PRO-RATA, which, I think, means we can ONLY sell up to 20%. I have a CEF that did a 15% and a 5% tender and I was able to sell about 30% and 12% because it wasn't pro-rata. So I think the pro-rata is a limiting thing.
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Ricochet
  |     |   522 posts since 2010
Do you see any headings list on DA for stocks ???

You start out your post with a lie.
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h_meister
  |     |   32 posts since 2014
Agree with Ricochet.  This is stock, not a CD. The pitch for the stock doesn't being on Deposit Accounts. The header could definitely called an "alternative fact".
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lou
  |     |   1,004 posts since 2010
It's actually a preferred stock, which has many characteristics of a fixed income investment. Although the heading is wrong, not sure why we should censor any forum message if it's related to high dividend investment alternatives. However, I do think RJM should correct the title of this post.
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Anon456
  |     |   249 posts since 2011
LOU - my two cents. Unless DepositAccounts wants to set up another section on alternative investments, I for one do not want to wade through posting of hot stock picks. There are other sites for that. I hope that DepositAccounts stays focused on FDIC and NCUA products and offerings from banks and credit unions. IOUs from someone's brother-in-law, which might be an alternative to CDs, will be next if you open up this site to just anything. - thank you, but NO from my perspective.

I do own some preferred stock, but I get that research elsewhere.  I hope KEN does not muddy up this site to financial opinions of alternatives unless it is in another section that I can avoid when researching fixed income bank and credit union products.  For that matter, even bonds, if allowed, should have their own section.  else, I believe, it would weaken the HUGE benefit this site brings to all of us.
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RJM
  |     |   499 posts since 2011
I should be banned from posting here because all I do is post penny stocks. 

And you REALLY thought there was a 6%+ CD ?
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Ricochet
  |     |   522 posts since 2010
Of course not,
Apology for the liar part of comment.
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RJM
  |     |   499 posts since 2011
The deal was done and the new share are SPLPPRA and the last trade was $22.55.

Using 6% and a 9 year term, its a 7.15% annualized rate of return.

However, we can cash out of 20% in 3 years at $25.
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RJM
  |     |   499 posts since 2011
And I was mistaken regarding the dividends or interest, they can pay them in cash or more preferred shares. (Its their option)

And at the end of 9 years they can pay in SPLP common shares or cash, its their option.
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RJM
  |     |   499 posts since 2011
I got my first dividend here. A pro-rated 15 cent dividend. I guess the usual will be .375 cents per quarter. At the current price of $22.41, the yield is 6.69%. I think.
With the opportunity to cash out of 20% within 3 years.

Its not something I would have bought on my own but it seems to be a reasonable deal compared to a CD or savings account.

The symbol is SPLPPRA.
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Kaight
  |     |   1,192 posts since 2011
This sort of "investment" does not belong here on DA.com. Period.

I am disappointed Ken has allowed such as this. He routinely is cautious and circumspect when it comes to protection of his readers' best interests. This is clearly an exception to that excellent policy.

A relationship of trust takes years to establish, but only a very short time to destroy.
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alan1
  |     |   880 posts since 2015
While I have zero interest in this investment, and strongly dislike the deceptive subject heading, it seems to fall within the purview of this site. Ken regularly provides information on investments such as Duke Energy Premier Notes, Ford Interest Advantage Notes, etc. I have no interest in those products either. But they've been part of the discussion on this site.
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Kaight
  |     |   1,192 posts since 2011
When Ken personally posts information regarding an investment opportunity, at least up until now, that is (was) indication of the item having been checked out and approved by Ken. And Ken's imprimatur is (was) meaningful.

When Ken allows a headline saying "9 Year CD That Pays 6.5%+" it is not just misleading, it is a lie which detracts from the integrity of this website, and erodes trust here.  This is unfortunate, and we all lose.  "All" in this instance includes both Ken and his readers.

Hucksterism has never, ever, been a hallmark of this website;  not by Ken and not by others, either.  It is dismaying to witness it creeping in.
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RJM
  |     |   499 posts since 2011
Kaight & Alan, grown ups really thought a 9 year CD paid 6.5% ?

LOL
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RJM_Willy12
  |     |   149 posts since 2016
RJM, you got several basic facts wrong in your original comment, and acknowledged you never bothered to read the prospectus, only the press release.

People have varying degrees of intelligence and skill. Misinformation and misunderstanding isn't funny.
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RJM
  |     |   499 posts since 2011
So don't buy it.
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RJM_Willy12
  |     |   149 posts since 2016
Alas, my friend, the fact that I wouldn't buy it does not prevent you from posting wrong information.
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