January 4, 2021

On Monday, the first day of trading for 2021,  U.S.  markets were down, although not as low as they had been earlier in the day.  The S&P 500 was down 1.5% but Toronto was up 0.5%. Alcanna (Alberta liquor store chain owner) was up 7.1%.  Melcor Developments was down 7.1% giving back some of its recent gains and remaining , I think. quite under-valued.

Today, Brookfield Asset Management made a proposal to buy out the publicly trading units of one of its subsidiaries which was Brookfield Property Partners.  Brookfield Asset Management offered to pay $16.50 per unit but the units closed at $17.49. It would seem that the market expects Brookfield to sweeten its offer.

I am interested because I own a modest amount of two different rate reset preferred shares issued by Brookfield Office Properties. These two had been trading way below $25 for a long time. These two were never on our list but I did mention in the daily comments when I bought them in 2014.

Neither of these are proposed to be redeemed so there really should have been no increase in their prices today on that basis. But one was up 16% to $17.00 and the other was up almost 18% to $19.24. And they both increased through the day rather than in a step fashion. It appears that the market is expecting something to happen with these shares. Or possibly it is expected that their credit ratings will improve.

In any case I will hang onto my preferred shares unless the price goes back closer to $25. There may be no reason to expect they will move much towards $25 but if they don’t I will simply hold for the dividend.

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