Preferred securities, although often volatile, can offer intriguing risk/reward characteristics within the context of financially distressed firms. Nowhere in the capital structure is it more important to have an accurate view of valuation because, in the worst-case bankruptcy scenario, the recovery on such securities can be minimal. Imperial Capital's research expertise in the areas of valuation and bankruptcy process offers particular value in helping investors identify opportunities and manage risk.
Even if a preferred stock opportunity is identified, the lack-of liquidity in these issues can often make it difficult to participate. Here again, Imperial Capital's extensive coverage of the institutional market place, including private equity funds, gives us access to the key participants and allows us to source securities of interest to our clients. Conversely, we are also very adept at assisting holders with concentrated positions to diversify their risk.