# Df & dfn



## jamesbe (May 8, 2010)

Does anyone know exactly how these work?

The dividends are awesome the value is fairly stable considering the history as well.

The odd thing is the statement that they plan to close the fund dec 1 2019 and pay back at least the initial offering price which is higher than it is today.


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## Eclectic12 (Oct 20, 2010)

Some links:

http://www.theglobeandmail.com/glob...-and-downs-of-doing-the-splits/article622696/
http://www.theglobeandmail.com/glob...he-confusion-over-split-shares/article623174/
http://www.tmxmoney.com/en/sector_profiles/structured_products/split_share.html
http://en.wikipedia.org/wiki/Split_share_corporation


I've used them in the past to when I though the capital would go up (first one I bought was for TransCanada Pipe ... in the same time the common stock went from $10 to $21, the capital share went from trading at $1 to $7). 

It was a way to make a focused bet on what was going to happen without needing a ton of cash and benefiting from the leverage if one was right (leverage the wrong direction wasn't so good! :rolleyes2. 

Now that most of them have the capital share paying distributions, they are a lot harder to figure out. 

For example, when DF's share price dropped below the target, the distribution stopped being paid from Dec 2008 and then resumed in June 2009.


As the windup date - most of the one's I've followed have been making money for the management team so they end up extending it for another five or ten years. Though there are some that windup the existing units to issue new ones and others that windup completely.

http://finance.yahoo.com/news/big-8-split-inc-announces-161100496.html


Cheers


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## jamesbe (May 8, 2010)

I bought a bunch of preferred a few months ago and love the 15% dividend and am up 6% as well. Lucky me, but I wonder if my analysis was correct here. I know they aren't fixed income but I put a portion of my fixed into them as it seemed fairly stable in that regard with a good upside.


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## Eclectic12 (Oct 20, 2010)

If you bought it for fixed income, then IMO you are off as it's a basket of 15 stocks that includes six banks, two maybe three insurance companies, two pipelines, electricity generation etc. So during the 2008/2009 crash it was affected.

I noticed that for DFN which I can get yahoo daily price data from, the capital shares went from $14 in Sept 2008 to $6 in Mar 2009 and then back to $12 by Dec 2010. The preferreds were $10 in Sept 2008, $8 in Mar 2009 and to $10 by Dec 2010.

So there is some protection but it's not the same as fixed as it does depend on stocks/dividends.


Cheers


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