Northern Rock prefs: Rock prefs vs ords

Shares in Northern Rock have rallied on hopes of a bid from Chris Flowers, the private equity financier. At 164p, they have risen 23% this week. It’s a different story for the preference shares, which have fallen 21% to less than 42p. That’s perverse. In fact, prefs may be the better bet. Take the best case scenario, that a well-capitalised bank buys Northern Rock. Given the uncertainties surrounding the bank, investors in the ords would be lucky to get much of a premium. But holders of the pre...