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  • Oct 22nd, 2019 1:39 am
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[OP]
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Feb 25, 2018
567 posts
215 upvotes

XMF.PR.B

What do you think about this manulife stock? Looks like easy, safe money.
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Deal Addict
Jun 28, 2018
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Toronto
It isn't Manulife. It's a Split Corp financial instrument by Quadravest that holds only Manulife common shares and writes covered call options on the Manulife shares. This derivative has maybe two to four obvious impacts, which also applies to other Split Corp shares:

1. Stock price movement of the underlying common stock
2. Underlying common stock dividends
3. Covered Call Writing premium
4. Covered Call assignment

Easy/Safe money? Dunno. As a derivative of Manulife, so goes Manulife, so goes XMF. Personally, I'd get the underlying security Manulife as you get the real thing and not wonder so much about what happens with xmf. Alternatively, there are ETFs that do essentially the same as xmf and do its covered call writing on holdings of broader base of companies than a single company.

You should read the prospectus to understand how movements and dividends of MFC will impact this Split Corp.

I'd recommend checking the quarterly report that's available to see what has happened over the last years.

https://www.quadravest.com/xmf-fund-features
The Distracted Investor

Dividends through quality companies 😃 Though I usually lose money with trades :facepalm:
[OP]
Sr. Member
User avatar
Feb 25, 2018
567 posts
215 upvotes
johnnychi wrote: It isn't Manulife. It's a Split Corp financial instrument by Quadravest that holds only Manulife common shares and writes covered call options on the Manulife shares. This derivative has maybe two to four obvious impacts, which also applies to other Split Corp shares:

1. Stock price movement of the underlying common stock
2. Underlying common stock dividends
3. Covered Call Writing premium
4. Covered Call assignment

Easy/Safe money? Dunno. As a derivative of Manulife, so goes Manulife, so goes XMF. Personally, I'd get the underlying security Manulife as you get the real thing and not wonder so much about what happens with xmf. Alternatively, there are ETFs that do essentially the same as xmf and do its covered call writing on holdings of broader base of companies than a single company.

You should read the prospectus to understand how movements and dividends of MFC will impact this Split Corp.

I'd recommend checking the quarterly report that's available to see what has happened over the last years.

https://www.quadravest.com/xmf-fund-features
I see a problem is that "on or about the termination date of December 1, 2024 (subject to further 5 year extensions thereafter), to pay the holders of the Class I Preferred Shares $5.00 per Class I Preferred Share"
I see a problem is that if you buy today and hold for 4 years, you will lose about 4% or 1% per year which i guess is not too bad. Become really 6.5%. Still looks like a very safe investment, incase of market crash. This stock did not budge in Dec. 2008.
If you look at manulife stock after 5 years is not so great. Had you bought in 2014 or 2015 you would be have been less thatn xmf.pr.b with only 4% dividend and 10% increase. If there is a major downturn manulife will lose plenty back down to 17.
Deal Addict
Jun 28, 2018
1017 posts
753 upvotes
Toronto
DaveVentura wrote: I see a problem is that "on or about the termination date of December 1, 2024 (subject to further 5 year extensions thereafter), to pay the holders of the Class I Preferred Shares $5.00 per Class I Preferred Share"
I see a problem is that if you buy today and hold for 4 years, you will lose about 4% or 1% per year which i guess is not too bad. Become really 6.5%. Still looks like a very safe investment, incase of market crash. This stock did not budge in Dec. 2008.
If you look at manulife stock after 5 years is not so great. Had you bought in 2014 or 2015 you would be have been less thatn xmf.pr.b with only 4% dividend and 10% increase. If there is a major downturn manulife will lose plenty back down to 17.
Hmm.... You could select any point in history to fit what you need to see.

Look at the price performance of XMF.PR.B since inception around 2009 https://web.tmxmoney.com/charting.php?q ... l=XMF.PR.B What I see is it dropped a lot back in 2008/2009 (that was during the time of the real market crash and great uncertainty) and for over 10 years it has never come close to its original price. Compare that to MFC and see what happened.

If that isn't enough, compare the distributions between XMF.PR.B https://www.quadravest.com/xmf-distributions and MFC https://www.manulife.com/en/investors/s ... rates.html and see what happened between 2007 and 2019.


The problem is XMF.PR.B is not MFC it is a financial instrument created by a company that decides its eventual fate, but on top of that you add the risk of whatever negative happens to MFC will happen to XMF.PR.B and there's no guarantee whatever good happens to MFC will occur with XMF.PR.B.

I will list one more thing about why I'd rather put my money on the actual company stock instead of a pseudo-mirror of a company stock: liquidity. MFC is a pretty blue chip name owned by many investors both retail and institutional. XMF.PR.B is different and ownership is likely less diverse and less investors are interested. With less investors if you ever needed to sell; you may not get the price you see online. Compare that to MFC, which can be impacted in a true crash situation, but you are much more likely to find a buyer if you sell.
The Distracted Investor

Dividends through quality companies 😃 Though I usually lose money with trades :facepalm:

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