If you are thinking about buying common stock in a company and the company has preferred stock outstanding, what do you want to know about that preferred stock? And where will you find that information?
When considering buying common stock in a company, it is important to gather information about the preferred stock outstanding. Here are some key details to know and where you can find that information:
1. Dividend Rights: Preferred stockholders usually have priority in receiving dividends over common stockholders. Find out the dividend rate, frequency, and any special rights or preferences related to dividends.
2. Liquidation Preference: Preferred stockholders may have different rights in the event of a company liquidation or bankruptcy. Determine the liquidation preference, which represents the priority of payment in such circumstances.
3. Conversion Rights: Some preferred stock can be converted into common stock at a certain price or upon certain conditions. Know if the preferred stock you're researching has conversion rights and its terms.
4. Voting Rights: While common stockholders generally hold voting rights, preferred stockholders may have limited or no voting rights. Check if the preferred stock carries any voting power.
5. Redemption Provisions: Some preferred stock can be redeemed by the company after a specified period. Understand any redemption provisions and their impact on your investment.
To find this information, you can refer to the following sources:
1. Company's Prospectus: The prospectus contains detailed information about the securities issued by a company, including preferred stock. It can be obtained from the company directly or through the Securities and Exchange Commission (SEC) website.
2. Company's Financial Reports: Review the company's annual reports, including the 10-K filing, where preferred stock details may be disclosed in the financial statements or footnotes.
3. Investor Relations: Contact the company's investor relations department to inquire about the preferred stock and request any relevant documents or disclosures.
4. Stock Exchanges: If the company is publicly traded, you can search for its listing on a stock exchange website. The preferred stock details, if any, might be available in the company's listing information.
By obtaining and analyzing this information, you can make more informed decisions regarding the common stock investment in relation to the preferred stock outstanding.