Hyflux

[D123]

would it be better to invest in its common stock rather than preferred stock to enjoy the benefit more?

Yes, I would agree with that. In such a situation, and both common stock and preferred stock are available at book value, it is most likely that the common stock holders would benefit more.

But since common stock and preferred stock are separate securities, their relative attractiveness would depend on their prices. If the conditions are met such that the preferred shares' principal and interest are secure, they could be a better investment prospect at par than the common stock if, for example, the common stock was selling at a P/E of 50. Hmm, or maybe I should say less worse.

I think at the end of the day, one approach is to look at the company's current and historical performance, try and forecast its future performance, and then try to see how we can participate in that through its debt, preferred shares and common stock. It could be that even though the company is an attractive one, its various securities (debt, preferred, common) have varying degrees of attractiveness.