Frontier Communications (FTR) is perhaps the most-hated stock in Wall Street's most-hated group -- incumbent local exchange carriers, which are basically old-line local phone companies. So when a stock like that finally puts out good earnings numbers -- as FTR did on Tuesday after the bell -- the short-sellers get clobbered.
Frontier stock popped some 27% Wednesday and is up a total of roughly 41% as I write this vs. where the name was before earnings came out. The latest available data showed that investors had shorted an almost incomprehensible 40% of FTR's common stock. That's fuel for a turnaround -- and, man, this has been a good week for me and my clients!
I own Frontier's Mandatorily Convertible Preferred Shares (FTRPR) , which have risen some 35% since the company released results. Note that the listing for this pick of mine in Real Money's "Best Ideas" section is misleading because it only looks at price gains and excludes dividends.
The day I recommended Frontier's preferred shares, they were yielding 34.8%(!), and that number only increased as FTRPR followed Frontier common stock down into the depths of dog-stock territory in late 2017. But I hung in there, and that yield kept me off the ledge.
If you bought FTRPR on the day that I made it one of my Best Ideas last June 16, you would have already received back $8.34 -- or 26% of your initial investment -- in the form of dividends. If you continue to hold it. you'll get one more $2.78 quarterly dividend on June 29, then you'll receive 1.33 shares of FTR common stock for each FTRPR shares that you own.
That mandatory-conversion feature seemed like a death sentence when FTR shares were plummeting, but after Tuesday's earnings call, it's actually something to anticipate with excitement!
R.I.P. Dick Jenrette
I've often mentioned in columns that I "grew up" on Wall Street at Donaldson, Lufkin & Jenrette.
DLJ was special place back then -- the "House That Research Built" - so it was with great sadness that I read that company co-founder Richard "Mr. J" Jenrette passed away on April 22. The investment world lost a titan, but his legacy looms large, and the sale of DLJ to Credit Suisse in 2000 didn't diminish that one bit.
Jenrette was the driving force behind DLJ's 1970 initial public offering, a revolutionary move at the time (and one not done with the New York Stock Exchange's blessing). After that, he drove DLJ to great heights while partnering with The Equitable and later French insurance giant Axa.
Jenrette and fellow co-founder Bill Donaldson imbued DLJ with a unique corporate culture. The first day I walked into the firm's old offices at 140 Broadway, I was handed a list of the company's values. The last bullet point read simply: "Have fun."
Have fun? On Wall Street? Indeed, we did.
Sometimes investing (and writing about investing) can be less than fun. Anyone who buys and sells stocks has both winners and losers, but only those brave enough to suffer the slings and arrows of outrageous commenters will actually list their picks on a well-read Web site like this one.
Jenrette left a handwritten list before he died of 24 tips on how to succeed in investing and life. Entitled What I Learned (How to Succeed) (and have a Long and Happy Life), the last point was: "Look for the big picture, but don't forget the small details."
I took that advice while waiting patiently (and at times impatiently) for Frontier's preferred stock to work -- which it eventually did. You should always keep his advice in mind when reflecting on your own investments.