Arch Coal filed for bankruptcy back in January seeking relief from more than $5 billion in total debt. The metallurgical coal producer started trading again earlier this month after emerging from reorganization. George Schultze, founder of Schultze Asset Management, is fired up about the stock, saying a leaner Arch is benefiting from higher coal prices and a low valuation. "The company trades at less than four times cash flow," said Schultze. "And the cash flow is growing rapidly due to rising coal prices." Schultze added that even though there may be a continuing negative political environment for coal producers depending on the outcome of the election, it is "impossible to make steel any other way than using met coal and this is the largest producer." Staying in the commodities arena, Schultze is long Energy XXI bonds. Energy XXI, one of largest E&P players in the Gulf of Mexico, is currently in reorganization proceedings, but will emerge by year-end. Today's bonds create the new company at under 2.5 times its cash flow, which Schultze called a bargain. Schultze is also bullish on Fiat Chrysler , even though the automaker's stock has had a rough ride this year, falling 32%. Last week, Fiat Chrysler reached a tentative deal with unionized workers in Canada by agreeing to make more than $301 million in investments in local operations. "Fiat Chrysler successfully spun off Ferrari and it could spin off other assets like Maserati so it's worth sticking with this stock through this rough patch, especially at these very cheap levels," said Schultze. Finally, Schultze is short shares of Caesars Acquisition Co. , up 86% year-to-date. CACQ stockholders are due to be diluted to 24% ownership of a combined Caesars entity when the company emerges from reorganization in 2017. The combined business will have $9 billion in revenues and operating cash flow of $2 billion, according to Schultze's forecast, putting the current valuation for the combined company far too high. "This is one of the most complex and litigious bankruptcy cases in history," said Schultze. "Perhaps the hyperbole is pushing up the value of the combined company to a level which we think is too high."
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Although foreigners may now invest in A-shares, there is a monthly 20 percent limit on repatriation of funds to foreign countries.
Performance of A-shares.
Since its inception in 1990, including a major reform in 2002, the index has seen great fluctuations. Overall, however, it has grown along with the Chinese economy. The years 2015 to 2016 were a particularly difficult period, with a 52-week performance of -21.55 percent as of July 20, 2016.
As China grows from an emerging market to an advanced economy, there is substantial demand for Chinese equity. Stock exchange regulators continue efforts to make A-shares more broadly available to foreign investors and have them recognized by the global investing community.
In June 2017, the MSCI Emerging Markets Index announced a long-awaited decision it would add stocks to its index. According to CNBC, MSCI will add 222 China A Large Cap stocks to its benchmark emerging markets index gradually beginning in 2018. The MSCI website reveals the stocks it will list include the Bank of China, China Merchants Bank, Guotai Junan, Ping An Insurance, according to a document on Tsingtao Brewery, SAIC Motor, Suning Commerce and Spring Airlines.
Current Dividend Preference.
Participating Preferred Stock.
Convertible Preferred Stock.
Cumulative preferred stock includes a provision that requires the company to pay preferred shareholders all dividends, including those that were omitted in the past, before the common shareholders are able to receive their dividend payments.
Non-cumulative preferred stock does not issue any omitted or unpaid dividends. If the company chooses not to pay dividends in any given year, the shareholders of the non-cumulative preferred stock have no right or power to claim such forgone dividends at any time in the future.
Participating preferred stock provides its shareholders with the right to be paid dividends in an amount equal to the generally specified rate of preferred dividends, plus an additional dividend based on a predetermined condition. This additional dividend is typically designed to be paid out only if the amount of dividends received by common shareholders is greater than a predetermined per-share amount. If the company is liquidated, participating preferred shareholders may also have the right to be paid back the purchasing price of the stock as well as a pro-rata share of remaining proceeds received by common shareholders.
Significance to Investors.