Mandatory Convertible Preferred Stock

BMK

BMK

Ran across these in a newsletter that I follow...

Gotta be among the most kinky and esoteric securities I have seen.

Can anyone explain how these work in plain English, in one or two paragraphs?

You're holding preferred stock that has a mandatory purchase contract that converts it into common shares a specified price, but there also seems to be a debt instrument involved somehow, and I can't figure it out LOL

The symbols are NEE/PRR and UGIC

https://quantumonline.com/search.cfm?tickersymbol=NEE-R&sopt=symbol

https://quantumonline.com/search.cfm?tickersymbol=UGIC&sopt=symbol
 

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It’s like a partial covered call on a long stock. You own the stock, more or less, but you’re not quite sure how much. Less if the price rises, more if it falls. They’re dumb securities with a fake yield, priced in already, to trick retail.

Hard pass.
 
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