The third page of PrefLetter is commentary on the issues highlighted in the table on page 2. Each paragraph consists of (at least!) three parts: - Ticker Symbol: : This is the ticker symbol currently used on the Toronto Stock Exchange to denote the stock.
- Embedded Options: The options embedded within the recommended issues are listed here. Given the wide variety of options and the need for extensive explanation of some of them, it was not aesthetically pleasing to incorporate this information in the summary table ... but the information is important enough that it should be readily accessible to subscribers. The compromise was to include the information in the commentary.
- Description & Rationale for Recommendation: This is, obviously, a highly variable area of the letter. Sometimes the issuer itself will need an introduction (e.g., Split Share Corporations will generally have their underlying portfolios and coverage ratios reported); at other times I will be content simply to state the name of the issuer (e.g., I will not normally explain the business of a major Canadian bank). In this section the investment characteristics of the issue will be explained and, generally, a comparison of these characteristics to other issues which may be considered similar.
One page is not a lot of space for all this explanation, so the detailed look at the monthly recommendations continues on page 4.
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