CIT Group Preferred Shares
CIT Group (NYSE: CIT) is such an interesting stock. It nearly went bankrupt less than a month ago and though, it’s not out of the woods yet, it offers an interesting opportunity.
Yesterday, I bought CIT Preferred A shares around $2.30. I would much rather buy the preferred shares than the common stock because if the company does go under, there’s a much better chance that I’ll get something from the preferred shares than the common stock. Here’s a synopsis on the different preferred shares that CIT offers:
CIT GROUP INC PREFERRED SERIES A (CIT-PA) is the 6.350% NON-CUMULATIVE PREFERRED STOCK, SERIES A has a Par value of $25.00. This was $350 million issued, or 14 million shares.
CIT GROUP PREFERRED SERIES C (CIT-PC) are down 80% at $2.41 and have traded 1.2 million shares. This is the 8.75% non-cumulative perpetual preferred shares that have a Par value of $50.00 and were a $575 million issue.
CIT GROUP INC EQUITY UNITS (CIT-PZ) are UP 48% at $9.00 on 2.5 million ‘units.’ This was a $1.38 billion issue and are Equity Units with a $25 Par value and and came originally with a 1/40, or 2.5%, undivided beneficial ownership interest in a $1,000 principal amount senior note due November 15, 2015 issued by CIT.
In any case, the upside on the CIT Preferred stock is pretty tremendous. If CIT survives, either by selling off their assets or getting some help from the government or private equity, the yield (6.35% on $25 par) on these CIT-PA shares at $2.30 is pretty amazing! It’s a high-risk, high-reward investment…but I felt it was worth the risk.
