Preferreds inch higher as volume lightens ahead of holiday; American Realty firms

By Stephanie N. Rotondo

Phoenix, Dec. 22 – Preferred stocks were higher in Monday trading, but a market source noted that the space was already preparing for the Christmas holiday.

“There’s not much going on,” he said. “I’m already getting messages from people, ‘hey, taking off for Christmas.’ So we’re probably done for the year.”

Another source said the day saw “light volume.”

The Wells Fargo Hybrid and Preferred Securities index closed up 11 basis points.

American Realty Capital Properties Inc.’s 6.7% series F cumulative redeemable preferreds (Nasdaq: ARCPP) were firming up after spending most of the previous week on the decline.

The preferreds ended the day at $21.30, up 15 cents from Friday levels. The preferreds were up 24 cents, or 1.13%, in early trading at $21.39.

In a lawsuit filed on Thursday, Lisa P. McAlister – formerly the chief accounting officer and one of two executives that lost their jobs in the wake of an accounting irregularity that surfaced in October – alleged that it was Nicholas Schorsch, co-founder and former chief executive officer, who ordered her and Brian Block, former chief financial officer, to alter second-quarter results in order to cover up an error made in the first quarter.

McAlister claims she had concerns about following through with the orders but that those concerns were ignored.

The company first announced the issue in late October and said that McAlister and Block had resigned.

McAlister is seeking $50 million in damages in her defamation suit, which was brought against Schorsch, CEO David Kay and the company itself.

On Dec. 15, the New York-based real estate investment trust said that Schorsch, Kay and Lisa Beeson, chief operating officer, were resigning their positions with the company. The announcement did not give a specific reason for the departures.

Goodrich goes down

A market source said Goodrich Petroleum Corp.’s 9.75% series D cumulative preferreds (NYSE: GDPPD) were “trading really badly now.”

“People are anticipating that they will go under,” he said, noting that the company is still paying its dividends.

The issue finished the session at $9.05, off 75 cents, or 7.65%.

Meanwhile, a bond trader saw the company’s 8 7/8% notes due 2019 rising a point – albeit in a single trade – to 50˝.

Goodrich is one of many oil and gas exploration and production companies that have hit hard times as oil prices have declined. Earlier this month, the company said it was looking to unload its South Texas shale assets. In that same announcement, capital expenditures for the new year were trimmed to $150 million to $200 million, down from the $325 million to $375 million projected for 2014.

The price of oil remained weak on Monday.

West Texas Intermediate crude fell $1.75, or 3.06%, to $55.38 per barrel. Brent crude dropped $1.30, or 2.12%, to $60.08 per barrel.

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