On October 4th, Bank of America (BAC) announced the redemption of BAC Capital Trust IV will occur on November 5th. The announcement can be found here. I had previously written about this security in September 2011, when I had initiated a position.
In the post I suspected that Bank of America would redeem these shares before 2015, when trust preferred securities would be completely phased out and no longer count towards tier 1 capital. This redemption occurred sooner than I would have desired, due to the sizable quarterly dividend (5.79% per annum) the security provided to the portfolio.
Although I will be on the lookout to replace this position with another undervalued security, I do not want to rush into a position at the expense of preserving capital, the main goal of this portfolio. The Long Term Core Holding Portfolio holds approximately seven and a half percent of its assets in BAC Capital Trust IV.
The investments discussed are held in client accounts as of September 30, 2012. These investments may or may not be currently held in client accounts.The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or that investment decisions we make in the future will be profitable.
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