Summary
FTR's preferred stock appears to be mispriced relative to its common stock.
Investors may purchase the preferred and hedge it using puts on FTR common to earn very attractive profits.
Position results in ~13% annualized return with risks that are comparable to or less than investing in the company's bonds.
Arbitrage Opportunity: FTRPR (FTRPR) / FTR (FTR) 11? 6/29/18 Preferred (the “Preferred”)
Introduction
Regardless your view on the beleaguered Frontier Communications Corporation (“Frontier” or the “Company”), there appears to be a capital structure arbitrage opportunity / mispricing currently available to take advantage of between the Preferred and Frontier’s common stock.
