# Big 8 Split Inc - BIG.A



## Hawkdog (Oct 26, 2012)

What are people's thoughts on this stock? Better to just buy each bank stock?
I assume others have received an invitation from their broker to buy at 22.50?

Big 8 Split Inc.
Big 8 Split Inc. is a “split share company” created on June 26, 2003 to invest in a portfolio of publicly listed common shares of Bank of Montreal, The Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada, The Toronto-Dominion Bank, Great West Lifeco Inc., Manulife Financial Corporation and Sun Life Financial Inc. (the “Portfolio Shares”).

The Preferred Shares entitle the holders to receive quarterly fixed cumulative preferential distributions equal to $0.210 per Class B Preferred Share and $0.1725 per Class C Preferred Share. The Capital Shares enable holders to participate in any capital appreciation in the Portfolio Shares and to benefit from any increase in the dividends paid on the Portfolio Shares.

Both the Preferred Shares and Capital Shares are listed and publicly traded on the Toronto Stock Exchange (TSX).


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## Eclectic12 (Oct 20, 2010)

IMO, the trick to these types of setups is to make sure the cash distributions are not being paid by selling more shares.

This one looks more difficult than usual to figure out as there seem to be two classes of preferred shares plus the capital shares. More commonly, it's one preferred and one capital share to equal whatever portion of the basket that is held by the split corporation.

It appears that the second set of preferred shares were introduced in 2010.


I'm also puzzled by the 2013 tax elections that have to be filed with the company ... though this might be changes CRA brought in.


Note that if you are planing to buy both capital and preferred shares - then it would be cheaper to buy the bank stock so that there is nothing being taken by a management company plus full dividend/capital gain participation.

If the preferred shares allow you get to receive a higher yield while tying up less money - that might be worth it.


I've used capital shares in the past to tie up less money & end up with a larger gain (ex. buy for a fraction of the common shares and end up with a larger gain than the common shares) but don't see anything in the current environment that would suggest putting a portion into the capital shares would payoff anytime soon.


Cheers


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## andrewf (Mar 1, 2010)

Sounds like an arbitrage opportunity. Sell a given amount of shares today at 26.65 and close the position when you get the shares at the offered price of 22.50. I have no idea why the offering price is so low. Seems like an FU to existing unitholders.


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