Listed bonds and preferred shares are liabilities
Credit to Author: Emeterio SD. Perez| Date: Tue, 03 Dec 2019 16:20:04 +0000
Manila Water. Esmeralda Ragpa Quines is group director for East Zone Business Operations of Manila Water Co. (MWC). Before selling 50,000 MWC common shares at P19 each on Nov. 20, 2019, she owned 757,590 MWC common shares, or 0.04 percent. The sale reduced her ownership to 707,590 MWC common shares, or 0.03 percent, which she held by availing herself of the company’s stock ownership plan.
On Nov. 20, 2019 when Quines sold 50,000 MWC common shares, the stock opened the day’s session at P19.02, hit a high of P19.02, fell to a low of P18.50, and closed at P18.94.
On Nov. 29, 2019, based on the available trading session on the website of the Philippine Stock Exchange (PSE), MWC common shares opened trading at P18.70, peaked at P19.38, dropped to a low of P18.50, and closed the day’s session at P18.70. The stock hit a 30-day high and 30-day low of P20.25 and P17.84, respectively.
AEV. Robert McGregor, executive director and chief investment officer of Aboitiz Equity Ventures Inc. (AEV), sold 49,000 AEV common shares at P51.30 each on Nov. 19, 2019.
The sale reduced the number of AEV common shares he owned, which are lodged with PCD Nominee Corp., to 221,400 AEV common shares.
In a filing, McGregor disclosed directly owning 211,141 AEV common shares, or 0.004 percent. He also indirectly held 59,259 AEV common shares, or 0.001 percent, and 270,400 AEV common shares, or 0.005 percent.
On Nov. 19. 2019, AEV common shares opened trading at P51.25, peaked at P52.25, fell to a low of P51.20, and closed the session at P51.20. On Nov. 29, 2019, the stock opened trading at P48.25, hit a high of P49.50, dropped to a low of P48.25, and closed at P48.95. The PSE website also showed AEV common shares hit a 30-day and 30-day low of P56.95 and P48.05, respectively.
PIZZA. Vicente Gregorio, president and chief executive officer of Shakey’s Pizza Ventures Inc. (PIZZA), used to directly own 838,889 PIZZA common shares. He increased his ownership to 848,889 PIZZA common shares after buying 10,000 PIZZA common shares – 400 common shares at P10.80 each and 9,600 common shares at P10.90 each.
On Nov. 19, 2019, PIZZA common shares opened trading at P11.52, which was also their high, fell to a low of P11.46, and closed the session at P11.48. On Nov. 29, 2019, they opened trading at P10.90, the stock’s high, fell to a low of P10.64, and closed at P10.78.
The stock peaked at 30-day high and 30-day low of P12.28 and P10.64, respectively.
Due diligencer’s take
A company may have either partially or have only some of its common shares listed on the PSE. At the same time, it may also have preferred shares that are either voting or non-voting publicly traded. As a precautionary measure, the public investors who buy and sell the latter class of shares should be warned that they are treading on dangerous grounds when they own preferred shares.
The public investors may and should also know that preferred shares are liabilities and they should have been warned when they are issued that holding them would be risky. As securities regulatory agency, the Securities and Exchange Commission (SEC) should require such warning when listed and publicly traded stocks issue preferred shares.
In the past, if Duediligencer has not warned the public, so the SEC should. That preferred shares are liabilities are the five-person commission’s responsibility to caution the public on their issuances. After all, they, the public make listed companies publicly traded.
The same may be true with bonds, which some listed companies may issue either directly or indirectly through their subsidiaries. Remember, it is the public that may be unnecessarily hurt when the prices of said bonds fall, as when their interest rates decline.
The SEC may also want to warn the public against focusing their investments on listed bonds. It may also want to include listed preferred shares in its warnings.
The task of disciplining listed companies may also lie with PSE, which is tasked mainly to protect the public against the issuances of both bonds and preferred shares. Being a publicly traded stock, however, the exchange does not possess the moral responsibility to correct the shortcomings of any of the listed companies. This task of policing the ranks of listed companies remains with the SEC.
Aren’t the public entitled to SEC protection? Just asking.
esdperez@gmail.com