After two whole trading sessions the market seems to finally, finally, gets it. PACW is selling assets at discount to generate liquidity. Two deals this week which fully signals that this is the strategy going forward. What's the implication? The liquidity reduces the risk of going under. The discount means that it destroys fundamental value. It's now selling at $7 which is a 70% drop from pre- banking crisis, so I'd say it's a net gain. But it's just a guess. Who knows. What's absolutely certain though, is that the liquidity greatly enhances the appeal of the preferred, and the discount minimally affects it. Yesterday, the common rose much more than the preferred, while earlies today it displays the same pattern. That's totally unreasonable. But it is beginning to correct. As of now the preferred is up almost 1% while the common is down 4%.
Comments