Saturday, November 22, 2014

Bought 100 MCQPF at $3.632-Lottery Ticket Basket/Sold 100 PWCDF at $28.07/Bought 40 BDCL at $23.53-Flyer's Basket

Big Picture: No change

Stable Vix Pattern (Bullish):
Trading Strategy Vix Asset Allocation Model Part 2: Hedging In An Unstable Vix Pattern - South Gent | Seeking Alpha

Recent Developments: 

The WSJ reporter who covered China since 2011 wrote a negative article about that nation's future prospects. WSJ He refers to the ghost cities dotting the landscape and the downturn in real estate development that had been a driver for GDP growth. He concludes that "we are witnessing the end of the Chinese miracle", and we "are seeing just how much of China's success depended on a debt-powered housing bubble and corruption-laced spending".

I am more concerned about a hard landing in China than the stagnation in Europe and Japan. I have never expected Japan and Europe to be significant contributors to worldwide GDP growth. The question is usually whether or not those countries are deadweights or minor contributors. Worldwide GDP growth is dependent on continued acceleration in developing countries and 2%-3% real GDP growth in the U.S.  It would certainly be helpful for the Northern European countries, Canada and Australia to grow at about the same rate as the U.S.

Jack Hough wrote an article in Barron's arguing that Intel has 30% more upside. My small position in Intel, with an average cost of $15.52 per share, has become bond like for me. After harvesting profits, I am simply interested now in Intel increasing the dividend which increases my "bond" coupon based on that constant cost number.


1. Bought Back 100 MCQPF at $3.632 (Lottery Ticket Basket Strategy)(see Disclaimer): I was allowed to exceed the $300 limit by up to $126.25 due to a prior realized gain.

Snapshot of Trade: 

2014 Bought 100 MCQPF at $3.63
I bought the ordinary shares traded on the U.S. pink sheet exchange using USDs.

CAD Priced Shares:
Closing Price 11/21/14: CSE.TO: C$4.15 +0.04 (+0.97%)

Prior Trade: I bought this stock when it was known as Macquarie Power and Infrastructure:

2010 MCQPF 100 Shares +$126.25

This prior purchase was not a Lottery Ticket. The stock has been demoted to the LT category. The price decline explains why without knowing what caused this stock to go from $7.18 to $3.63 in a strong bull market.

Company Description: Capstone Infrastructure (MCQPF) is a Canadian company that has investments in gas co-generation, wind, hydro, biomass and solar power generating facilities as well as interests in a U.K. water utility (Bristol Water) and a district heating business in Sweden.

The Canadian generation has a capacity of 449 megawatts and Capstone is developing another 79MW of wind generation in Ontario and Quebec. Capstone The largest is the Cardinal Power  plant with a nameplate capacity of 149MW that uses gas turbines. The most recently completed facility is the Skyway 9.48MW wind farm.

A list of those facilities by category can be found at Capstone

Company Website: Home

Capstone has a 50% interest in Bristol Water, a regulated U.K. water utility operating in the Bristol region and serving a population of more than 1.1M people.

The company owns a 33.3% equity interest in a district heating business operating in Sweden and providing power to residential customers in 10 communities. 

The company is currently paying a quarterly dividend of C$.075. 

Chart: The long term chart provides no comfort to investors going long: CSE.TO Interactive Stock Chart

On the positive side, the CAD priced shares stopped cascading down in December 2011, stabilizing just north of C$4.

Over the past two years through 11/21/14, the USD priced shares have significantly underperformed the ordinary shares priced in CADs due to the decline in the CAD's value versus the USD.  That differential highlights the currency risk issue for a U.S. investor using USDs to buy the ordinary shares or converting their USDs to CADs in order to buy shares on the Toronto exchange.  

CAD/USD Interactive Stock Chart

Capstone Infrastructure’s 2013 Annual Report

Dividends: The company is currently paying a quarterly dividend of C$.075 per share. Assuming a continuation of that rate, which is in no way assured, the dividend yield based on a C$4.15 price would be about 7.23%. The dividend is subject to a 15% Canadian withholding tax when paid into a taxable account. If a U.S. investor uses CADs to buy on the Toronto exchange, the dividend will be paid in CADs after the applicable withholding tax. Some brokers will not file the necessary paperwork with the Canadian authorities and consequently Canada may withhold 25%. Thomson Reuters Tax & Accounting

For a U.S. investor who buys the USD priced MCQPF, the dividends will be paid in USDs after conversion from CADs and after the applicable withholding tax. 

Last Earnings Report: All amounts are in Canadian Dollars. The third quarter is seasonally weak for Capstone "because of seasonality factors in the power segment". Revenues did increase 13.9% Y-O-Y. For the first nine months, CSE's dividend payout ratio, as shown in the following table, was at 58% year to date. The goal is to achieve an average payout ratio of between 75% to 80%. CSE Q3_2014.pdf

The company calculates AFFO in the following manner:

This is a summary of the AFFO calculations by power category:

The company reiterated its 2014 estimate adjusted EBITDA target of between $150M to $160M.

Long term debt as of 9/3014 was $887M which included debt owed by Capstone and its proportionate share of debt owed by Bristol Water and power assets.

Q3 2014 Results -- Earnings Call Transcript | Seeking Alpha

Rationale and Risks: The primary reason for owning this security is to harvest the dividend and hopefully exit the position with a profit on the shares.

A long term chart will frequently highlight the risk, which is the case for this stock.

Another similar company has already run into trouble, Atlantic Power (AT), and is currently attempting to sell of some assets. Atlantic Power Corporation Releases Third Quarter 2014 Results I have an unrealized loss for a LT purchase in AT, having gone to the well one too many times. Bought 50 AT at $4.08 (9/30/13 Post) Atlantic Power slashed its monthly dividend last year. AT Dividend History A few weeks ago, AT went from a monthly dividend of $.0333 per share to a quarterly dividend of $.03: Atlantic Power Corporation So one risk is that Capstone will end up following the same path.

The company discusses risks and uncertainties starting at page 74 of its last Annual Report. CSE Fiscal 2013 Annual Report 

Closing Price Last Friday: MCQPF: $3.6752 +0.0432 (+1.19%) 

2. Sold 100 PWCDF at $23.53 (see Disclaimer):

Snapshot of Trade: 

Snapshot of Profit: 

2014 PWCDF 100 Shares $210.03

Prior Trade: The prior trade which resulted in a $138.71 profit, is reflected in the preceding snapshot.  

Total Trading 2014 Trading Profit: $348.74

Company Description:  Power Corp. of Canada  (PWCDF:OTC) is a Canadian holding company that has interests, directly and indirectly, in financial services, communications and other business sectors. Power Corporation of Canada | Home

Profile Page at Reuters

I am trading the ordinary shares traded on the U.S. pink sheet exchange using USDs.

Power Corporation of Canada has a 65.8% interest in Power Financial. Power Financial 2014 1st Quarter Earnings Report (net earnings of C$467M, up from C$394M in the 2013 first quarter).

Power Financial owned 67% of Great West Lifeco's common shares and 58.6% of IGM Financial's common shares. IGM also owned 4% of Great West Lifeco's common shares; and Great-West Lifeco owned 3.6% of the IGM's common shares.

So Power Corporation of Canada directly controls Power Financial and consequently has an indirect controlling interest in Great-West Lifeco and IGM Financial.

Great West Lifeco which operates through a number of companies worldwide including Great-West Life, London Life, Canada Life, Great-West Financial and Putnam Investments. Great-West LifecoGWO 2014 First Quarter Earnings Report (net earnings of C$587M, up from C$417M in the 2013 first quarter)

IGM Financial is a financial management company.

An organization chart can be found at the firm's website: Organization Chart

Power Corporation of Canada is profiled in a recent Motley Fool Article.

The company is currently paying a quarterly dividend of C$.29 per share. Power Corporation of Canada | Dividends

Power's senior debt is rated "A" by S & P: Credit Ratings

2013 Annual Report .pdf (net earnings of C$2.12, up from C$1.78 in 2012)

Rationale: I mentioned when buying these shares that this would be a trade. Eventually, I may buy the ordinary shares on the Toronto exchange and hold for a longer period. 

There is not much that excites me looking at a five year chart. POW.TO Interactive Stock Chart 

Closing Price Last Friday: PWCDF: $28.07 +0.57 (+2.07%) 

3. Bought 40 BDCL at $23.53 ($500 to $1,000 Flyer's Basket Strategy With Snapshots of Round Trip Trades)(see Disclaimer): I am surprised that I even nibbled on this security. BDCL combines several items that I do not like in one security: an ETN that uses leverage to track an index of BDCs. My stomach just became queasy just writing those words all at once. 

Snapshot of Trade: 

2014 Bought 40 BDCL at $23.53
Closing Price Last Friday:  BDCL: $23.52 -0.19 (-0.80%) 

This is a trade. I bought near the close using a limit order. 

Prior Trades: None

Security Description: The 2xLeveraged Linked to Wells Fargo BDC Index ETN (BDCL) is an unsecured debt obligation issued by UBS that provides a monthly compounded two times leveraged long exposure to the Wells Fargo BDC Index. That index is a float adjusted, capitalization-weighted index of all NYSE and Nasdaq listed BDCs that have a market capitalization of at least $100 million at the time of inclusion in the index.

Wells Fargo Business Development Company Index Index Price (WFBDC:NAR) 

This security is an exchange traded senior and unsecured note, otherwise known as an ETN. The owner is exposed to the credit risk of UBS: UBS AG Stock Price; Last SEC Filed UBS Annual Report 20-F.  UBS senior unsecured debt is currently rated A2 by Moody's and A by Fitch according to FINRA

On the day of my purchase, I took a snapshot of the index components that had a greater than 1% weighting in this index: 

I have relatively small positions in PSEC, ARCC, AINV, FSC, PNNT, BKCC, TICC and KCAP. I will trade those positions under clearly defined rules, where I will at least make an effort to realize a total return greater than the dividend yield at my total cost per share. That goal is far easier said than done. The general rules applicable to externally managed BDCs are to consider buying when the market price falls below the net asset value per share and to consider selling when the market price exceeds NAV per share by 5%. 

I will make exceptions to those general guidelines. 

I will now consider selling PSEC shares when and if the market price approaches NAV per share.  I require now a greater than 10% discount before I will even consider buying more PSEC or TICC shares. And, I am at my limit with 100 shares of KCAP. Bought 100 KCAP at $7.54 (11/1/14 Post)

This ETN is discussed in a Seeking Alpha published last September. 

Dividends: This ETN has been paying a variable quarterly distribution. BDCL Dividend The four quarterly dividends paid in 2014 total $4.1373 per share. At that rate, the dividend yield would be about 17.58% at a total cost of $23.53 per share.

The 2013 and 2012 dividend payments amounted to $4.0659 and $3.3596 per share respectively. ETRACS 

Rationale and Risks: The main reason for buying this type of security is to harvest one or more dividends and then escape with a profit. If BDCs do improve in price over the coming weeks or months, then I have a cushion to hold onto BDCL longer and to harvest more than one dividend. The best possible outcome from my perspective, as a conservative investor, would be to harvest 4 dividends and to escape with a profit selling the shares.

This is a trade, not a long term investment for me.

This trade is partly based on the fact that the share prices of several BDCs have declined significantly this year, creating larger than normal discounts to net asset values per share for several externally managed ones.

The price downtrend has occurred with interest rates declining, which makes the BDC yields more attractive compared to alternative income investments particularly junk bonds.

The following list is a sample of the current discounts to net asset value per share, based on last Friday's closing price and the last reported net asset value per share made in a 10-Q or 10-K filing:

Closing Market Price 11/21/14/Net Asset Value Per Share as of 9/30/14 (Except for FSC which is as of 6/30/14)/Discount (rounded)

PSEC: $9.60     NAV$10.47    10-Q Discount - 8.31%
FSC: $8.80       NAV  $9.71   10-Q Discount -  9.37%
TICC: $8.68     NAV  $9.4     10-Q Discount -  7.55%
AINV: $8.22    NAV  $8.72   10-Q Discount -  5.73%
BKCC:$8.93    NAV  $9.97   10-Q Discount -10.43
ARCC: $16.18 NAV $16.71 10-Q Discount -  3.17%
PNNT: $10.85  NAV $11.03 10-K Discount -  1.63%
SLRC: $18.47  NAV$22.34 10-Q  Discount - 17.32%

All of the foregoing BDCs are externally managed.

BDCs, particularly the externally managed ones, have been beaten up this year. One reason may be related to being kicked out of the S & P and Russell indexes earlier in the year.

Investors may have also soured on several of them due to persistent share offerings. Persistent weakness in share price can be self-sustaining even when it makes no sense at a certain price level.

Last Friday, for example, the price of TCPC was knocked down 4.12% after that BDC launched a share offering, Pricing Sheet. That BDC has an ATM offering prospectus outstanding for up to $100M, Prospectus TCPC had another large offering back in July 2014, Prospectus, priced to the public at $17.3. Yet another offering was made in December 2013, Prospectus. At least the public offering price in those sales was above TCPC's net asset value per share.

Tax loss selling may also be coming into play just looking at some one year charts:

PSEC Interactive Stock Chart

ARCC Interactive Stock Chart 

FSC Interactive Stock Chart

TICC Interactive Stock Chart

I am hoping that these stock will receive a bounce during the 2015 first quarter, as some of the selling pressure subsides. For externally managed BDCs, it would be most helpful simply for their market prices to converge to their respective net asset values per share. Maybe some of the worst offenders could actually increase their net asset value per share for a few quarters.

The discounts to net asset values has expanded significantly for several of them, including FSC, PSEC, and TICC.

Sponsor Summary of Risks is Very Long: 

The prospectus can be downloaded from the sponsor's website. A summary of the risks starts at page S-20 and ends at page S-31. The sponsor also summarizes risks at its website under the "key considerations" tab.

I view this security as extremely risky which explains why I place it under the restrictions of the Flyer's Basket Strategy.

Leverage Risks: 

BDCL does incur short term borrowing cost. A rise in the 3 month Libor rate, which will happen when the FED starts to raise the federal funds rate, will increase the borrowing costs and negatively impact the total return.

Leverage works both ways. If BDCL successfully goes up twice the value of the index after fees and expenses, it will also go down twice the value of the index's decline.

The decline in the BDC sector has caused BDCL to post poor total returns numbers YTD and over the past year, which include reinvestment of the dividends. Morningstar calculates the YTD and 1 year total  returns through 11/21/14 to be -7.61% and -6.96% respectively. The total annualized return over 3 years is +30.18%.

Based solely on tax considerations, it would make more sense to own this security in an IRA. I did not see any tax information at the sponsor's website, but I am assuming that all of the dividends would be taxed at ordinary income rates rather than at the qualified dividend rate. However, I view BDCL to be too risky for a retirement account and consequently bought the shares in a taxable account.

Net Asset Value Destruction by Several BDCs:

Several externally managed BDCs have a history of destroying the net asset value per share number. This is particularly important for a long term investor since the market price tends to hug the NAV per share number within a few percent above or below.

I have noted that less than stellar management performance in connection with AINV, PSEC and TICC. It applies to others as well.

AINV 10-Q Filings
6/30/07: $19.09 NAV Per Share
9/30/14: $ 8.72  NAV Per Share

PSEC 10-Q Filings
6/30/06: $15.31  NAV Per Share
9/30/14: $10.47  NAV Per Share

TICC 10-Q Filings
6/30/06: $13.81   NAV Per Share
9/30/14: $  9.40   NAV Per Share

BKCC 10-Q Filings
6/30/06: $15.04   NAV Per Share
9/30/14: $  9.97   NAV Per Share

KCAP 10-Q Filings
3/31/07:  $14.78  NAV Per Share
9/30/14:  $ 7.67   NAV Per Share

FSC 10-Q Filings
6/30/08:  $13.3    NAV Per Share
6/30/08:  $  9.71  NAV Per Share

Incentive Fees, for what? Possibly, the decline in market prices for several BDCs this year is based on a growing recognition that the preceding record is far from admirable and certainly not worth the compensation being paid to the managers of those firms.

Some of the internally managed BDCs have a history of increasing their net asset values:

MAIN 10-Q Filings
6/30/08:  $13.08
9/30/14:  $21.08

TCAP 10-Q Filings
6/30/07:  $13.75
9/30/14:  $16.64

Friday, November 21, 2014

Bought 300 WFREF at $2.6932/INTC, IRT, FISI

Big Picture: No change

Stable Vix Pattern (Bullish):

Recent Developments:

CPI was unchanged on a seasonally adjusted basis in October. Core CPI rose .2%. Over the past year, CPI has increased 1.7% on a non-seasonally adjusted basis. Consumer Price Index Summary

The Philadelphia FED reported that manufacturing "general activity" index exploded upward from 20.7 in October to 40.8 this month. The new orders index increased by 18 points to 35.7. November Manufacturing Business Outlook Survey

China's central bank lowered interest rates that sent stocks up worldwide. MarketWatch

The European Central Bank promised to do what it takes to create inflation. MarketWatch

I thought that the later two developments might help oil stock to move up, so I added a junior E & P in my Flyer's Basket as discussed below. 

Independence Realty (IRT)(own)

Independence Realty Trust sold 6M common shares at $9.6, with an over allotment option granted to the underwriters for another 900,000 shares. Prospectus I currently own 150 shares as part of my REIT Basket Strategy. Bought 50 IRT at $8.17-Roth IRA/Bought: 100 IRT at $8.87 (1/28/14 Post). The price difference in those two purchases was caused by a public offering occurring after the 100 lot purchase.

I realized last Thursday that I owned 200 shares of IRT rather than 150. This is becoming a more frequent occurrence. The snapshots in the preceding link are from my Fidelity Roth IRA (1/24/14) and main taxable accounts (1/17/14). I has completely forgotten that I had bought 50 IRT in a Vanguard Roth IRA on 1/23/14.

Vanguard Roth IRA History for IRT

So, I have corrected the information contained in the REIT Basket table to reflect 200 IRT shares.

The market did not care for this stock offering.

Closing Price 11/20/14: IRT: 9.40 -0.49 (-4.95%)

Financial Institutions (FISI)(own):

Financial Institutions (FISI) increased its quarterly dividend to $.20 per share from $.19. I own 100 shares as part of my Regional Bank Basket Strategy. Item # 2 Bought 50 FISI at $15.55 (4/17/12 Post); Added 50 FISI at $18.8 9/30/13 Post

I flipped a 50 FISI share lot and then bought back the 50 shares at lower price ($18.8 noted above vs. $19.8 noted below-small ball): Item # 5 Sold 50 of 150+ FISI at $21.26 (11/11/13 Post)(profit snapshot=$59.15)-Added 50 FISI at $19.8 (8/26/13) 

The dividend yield at a total cost of $17.15 (the average of the two purchases) is about 4.66% after this increase.

Intel (INTC)(own):

I am not too happy now with my pares earlier this year which did net me a nice profit. Item # 7 Pared Intel Again: Sold 40 at $24.61 (March 2014); SOLD: 41 INTC at $26.73 (January 2014)Pared Intel: Sold 42 at $23.64 and 45 at $25-Highest Cost Shares The total profit was $889.82.

I left more than that profit on the table by losing my patience.

Last Thursday, Intel increased its dividend by 6.7% and gave upbeat guidance. Intel Announces Increase in Quarterly Cash Dividend, 2015 Business Outlook at Annual Investor MeetingReuters;

The shares responded with a new 52 week high and the highest close since 2001. Bloomberg

Closing Price 11/20/14: INTC: $35.95 +$1.60 (+4.66%) 

My total average cost per share is down to $15.52:

Intel Position as of 11/20/14 Close
The new quarterly rate is $.24. At that rate, my dividend yield becomes 6.19% at my total average and constant cost number.


1. Bought 300 WFREF at $2.6932 ("The $500 to $1,000 Flyers Basket Strategy)(see Disclaimer): After doing my due diligence, I classified this stock as part of my Flyer's Basket Strategy that limited my purchase to no more than $1,000.

I have not yet decided whether to build a basket containing energy E & P companies. To qualify as a sector basket strategy, I have to own more than 10 stocks, and I will generally cap my exposure at $5,000 for each component. I am over that amount with my current position in COP. Bought:  50 COP AT $63.68 /Sold 100 HUSKF at $29.39 (2/10/14 Post); Bought 50 COP at $68.87 (1/13/14 Post)

One of my sector baskets will generally have anywhere from 20 to 40 stocks:

Stocks, Bonds & Politics: Update for Regional Bank Basket Strategy/FNFG: A Case Study In Value Destruction/Added 50 ONB at $12.45/Sold 100 TRMK at $24.45

Stocks, Bonds & Politics: Update for Equity REIT Common and Preferred Stock Basket Strategy/OHI Earnings Report and Dividend Increase

Snapshot of Trade: 

2014 Bought 300 WFREF at USD$2.6932
Company Description: Long Run Exploration Ltd (WFREF) is a small Canadian energy E & P company.

I bought the ordinary shares traded on the pink sheet exchange using USDs. I have built up my CAD stash by selling several Canadian securities on the Toronto exchange. I will generally refrain from buying small positions on the Toronto exchange since my commission rate is C$19 compared to USD$7.95 when buying on the U.S. pink sheet exchange.

Quote Ordinary Shares Price In USDs: WFREF (the last letter in that symbol indicates that the investor is buying the ordinary shares rather than an ADR)

Quote Ordinary Shares Priced in CADs: LRE.TO

Currency Conversion Table:

This company appears to me to have more exposure to oil and natural gas liquids than Birchcliff, which I discussed yesterday. Natural Gas Super Cycle: Bought 100 Birchcliff Energy Ltd. At $9.7547 -Birchcliff Energy Ltd. (OTCMKTS:BIREF) | Seeking Alpha

Home - Long Run Exploration

The company has been on an acquisition binge lately.

In August, Long Run Exploration completed the acquisition of Crocotta for C$346.9M in stock.

In May 2014. the "Deep Basin Acquisition" was completed for C$228.8M that provides "a key entry point into an additional core area in the Deep Basin and Pine Creek areas of Alberta". The "acquisition properties are currently producing approximately 6,600 BOE/d (25% oil and NGLs)". Press Release

Long Run has a "dominant land position of 600,000 net acres in the Peace River Area. This is the highest producing area with approximately 10,000 BOE/d consisting of 4,000 bbl/d oil, 200 bbl/d NGLs and 35 MMcf/d of natural gas.

The Edmonton Area properties in central Alberta "include high-netback, light-oil". The primary target area is now producing 6,243 BOE/D, consisting of 5,410 bbl/d oil + NGLs (natural gas liquids) and 5MMcf/D of natural gas. The company has plans for 150+ future development wells which it claims will yield a "98% rate of return, 1.1 year payout, 2,9x recycle ratio with a low on-stream capital cost of 1 million".  

The Northern Gas play is a 710,000 net acres asset that has "an immediate inventory of over 1,000 locations complemented by excellent infrastructure with spare capacity" Long Run notes, however, that this area's production "has an 8% decline", but "Long Run run has managed to maintain a flat production rate of approximately 20MMcf/d since acquiring the property in November 2011".

Bloomberg has the estimated P/E, based on projected 2014 earnings, at 6.68 based on a C$3.08 price. The estimated CAD E.P.S. is shown at $.461.

Dividend: The company is currently paying a monthly dividend of C$.035 per share, raised from C$.0335 effective for the June ex dividend date. Dividend Information - Long Run Exploration The next ex dividend date is 11/26/14. Press Release

Using a C$3.04 total cost per share, the dividend yield would be about 13.82%. As a general rule, I would never assume a continuation of a dividend producing that kind of yield.

Chart: The long term chart is one reason for classifying this stock as part of the Flyer's Basket and consequently limiting my exposure to less than $1,000.

On the one hand, there is nothing in that chart that provides solace.

On the other, the stock has not been cheaper after being smashed by the market during the recent energy rout, and the company has recently started paying a dividend.

Last Earnings Report: All amounts are expressed in Canadian Dollars. For the 2014 third quarter, Long Run reported diluted E.P.S. of $.23 up from $.15 in the second quarter. Fund flows from operations increased  29% Y-O-Y to $80.2M. The company averaged 34,795 Boe/d in production, a 38% increase from the 2013 third quarter.  2014 Q3 MDA Nov 5 Final.pdf

Rationale and Risks: The usual risks apply here. Long Run is a small E & P company that has increased its size dramatically this year. It remains to be seen whether the two acquisitions noted above will be justified by their cost. The chart suggests at a minimum a lack of enthusiasm for this stock and probably expresses other concerns as well. Those concerns, whatever they may be, may be mostly irrational or rational, only time will tell.

The company is rapidly accelerating its production and the valuation is reasonable based on estimated 2014 and 2015 earnings. The recently inaugurated dividend is welcomed by any investor who focuses on income generation, and I certainly fall into that category.

The price of the USD priced shares will be negatively impacted by a continued decline in the CAD/USD exchange rate. The CAD is rising some today:

CADUSD Interactive Stock Chart

The decline in the CAD since it topped out back in July 2011 (around USD1.06 for C$1) would cause the USD priced WFREF to significantly underperform on a price basis the ordinary shares priced in CADs. The reverse can also happen. A rise in the CAD vs. the USD after my purchase will cause the USD priced ordinary shares to outperform the ordinary shares priced in CADs.

I would just note that there are also some tax peculiarities when I buy and sell foreign securities using owned foreign currency. I just highlight one of those issues when I recently sold two Canadian REITs. SOLD: 300 HLP-UN:CA at C$14.17 and 300 AX-UN:CA at C$15.71 (9/26/14 Post)

Wednesday, November 19, 2014

SYY, CORR/FHN & RF Recommended as "Value" Plays/Bought 100 BIREF at $9.7547

Big Picture: No change

Stable Vix Pattern (Bullish):

Recent Developments: 

JUNK Bonds: 

According to, the chief fixed income strategist for Wells Fargo Advisors is advising its retail customers to lightened up on junk bonds, arguing that the potential returns do not justify the risks. 

I would generally agree with that opinion, and have stated as much many times here and in comments at SA. However, I am not as confident that a slow and measured rise starting late next year in the federal funds rate will negatively impact junk bonds much, as suggested by that strategist. If inflation remains subdued as economic growth accelerates some, then that combination will improve the credit profile of junk bonds generally while not causing much repricing of interest rate risk. The key factor to watch will not be the slow and measured rise in the FF rate but inflation and inflation expectations in my opinion. Still, even if a rosy scenario unfolds next year, a higher yield is necessary to compensate for the default risk inherent in junk credits, particularly those rated below "BB" and especially the "CCC" or below rated bonds where default risk can become acute fairly quickly as noted by David Stockman recently: David Stockman's Contra Corner Since I included a number of "CCC" rated securities when I constructed a junk bond ladder back in 2011, I am familiar with their default risks but the yield in that portfolio was over 12% with mostly higher rated junk bonds. 

Sysco (SYY) increased its quarterly dividend to $.3 from $.29 per share. The company has paid a quarterly cash "every quarter since its founding as a public company in 1970 and has increased its dividend 46 times in that period". SYY is a member of the S & P 500 Dividend Aristocrats, a list that includes companies that have raised their dividends for 25 consecutive years. 

Since I bought shares at $19.46 (3/2009), the dividend growth for SYY has slowed down considerably in line with a slowdown in E.P.S growth. I discussed that historic growth rate in this post: Item # 4 Sysco The annual rate was $.23 per share in 1999 and $.60 in 2005. (SYY) Dividend History - Starting in 2009, however, the quarterly dividend was increased by one cent per share, and the annual rate for 2015 will be $1.2, a doubling in 10 years, whereas the company more than doubled the rate  between 1999-2005. 

Over 25 years, the annualized dividend growth rate was 18.56% whereas that rate has slowed to just 4.71% over the past five years. Calculator The problem can be seen by simply looking at the historical E.P.S. numbers that can be found at page 19, Form 10-K. I would not buy SYY at its current price. 

I am content to hold what I own since this stock has made the transition to a bond like investment for me that increases my coupon every year.  

At a total cost of $19.46 per share, the dividend yield at the new quarterly rate is about 6.17%.  Even if the future dividend growth rate results in a doubling in ten years, that would bring the yield up to over 12%.  

Regional bank stocks have bobbed up and down in price during 2014 and have gone nowhere as a group. Many investors view regional banks as an industry that will benefit from rising rates, which I view as an over simplification.  Nonetheless, the SPDR S&P Regional Banking ETF (KRE) had a total return last year of 47.34% as interest rates rose from abnormally low levels to less abnormally low levels. Interest rates have drifted down in 2014 and KRE has gone nowhere.

Stephen's banking analyst, Matt Olney, was recently interviewed by Barron's. He was arguing that now was the time to start buying regional bank stocks, based on the theory that a "big part" of the benefits resulting from an increase in rates will be priced into the stocks before the increases happen. His two value picks are First Horizon (FHN) and Regions Financial (RF) and both of those stocks are owned in my Lottery Ticket Basket rather than my Regional Bank Basket. I recently added RF again to that basket.  Stocks, Bonds & Politics: Lottery Ticket Basket Strategy Update as of 10/31/14/Sold 70 AWCMY +52% Gain/Bought as Lottos: 35 CORR at $ 7, 35 IRET at $7.91, 30 RF at $9.33   

The preceding link also mentions the purchase of CORR as a LT, which I discussed in a SA Instablog. Lottery Ticket Basket Strategy-Bought 40 CORR At $7-South Gent | Seeking Alpha I gave several reasons in that post justifying the lowly risk classification for this stock, including this REIT's need to sell a lot of stock whenever it decided to acquire another "infrastructure" asset. 

Without going into any detail, CORR announced earlier this week a large acquisition for it: CorEnergy to Acquire MoGas Pipeline for $125 Million

This deal is discussed in an article published at Benzinga.

To finance that purchase in part, the company sold 13M shares at $6.8, with an over allotment option for up to another 1.95M. CorEnergy Prices Offering of Common StockProspectus 

That offering did knock the stock price down from a $7.23 close on 11/17: CORR Historical Prices 

The stock did go ex dividend for its quarterly $.13 per share distribution shortly after I purchased that odd lot at $7. CORR did raise the quarterly dividend to $.135 per share when announcing this latest acquisition. At a total cost of $7 per share, the new quarterly rate will raise the dividend yield to about 7.71%. 

1. Bought 100 BIREF at $9.7547 (The $500 to $1,000 Flyer's Basket Strategy)(see Disclaimer): After researching this company, I classified a possible purchase as part of the Flyer's Basket. This categorization is a judgment call based on a potential risk/reward analysis. Among the relevant risks are the lack of dividend support, the currency conversion risk inherent in buying foreign stocks, the relative short operating history of this company, the debt load and ongoing need for capital expenditures given its size and financial resources, and its operations involving the exploration and sell of natural gas and crude oil. The Flyer's Basket has a $1,000 limit on a purchase.

I may start adding other small natural gas producers to both the Lottery Ticket and Flyer's Basket Strategies. 

Snapshot of Trade: 

2014 Bought 100 BIREF at $9.75
Closing Price Day of Trade: BIREF: $9.82 -0.18 (-1.82%) 

Company Description: Birchcliff Energy (BIREF), founded in 2004, is an E & P company based in Calgary, Canada.

The company claims to have a "vast inventory of highly economic projects" with "operatorship and essentially 100% working interest" that enables it to "control our pace of activity". (page 1, Q3Report2014.pdf)

In the last earnings release, the company provided a table summarizing its 5 year plan:

(Page 4)

The company asserts that this plan is not dependent on wildcatting. Instead, Birchcliff believes that it has a "massive inventory of long life natural gas resources in the Montney/Doig Natural Gas Resource Play fairway". Based on its technical expertise in this area and the existing base facilities and infrastructure, the company asserts that it can "grow economically at very low natural gas prices". (page 5, third quarter earnings release)

I bought the ordinary shares priced in USDs that are traded on the U.S. Pink Sheet Exchange: Birchcliff Energy Ltd. (BIREF)

Toronto Listed Ordinary Shares Priced in CADs:

Closing Price Day of Trade: BIR.TO: C$11.06 +0.02 (+0.18%)

When I placed my limit order, the ask price for the ordinary shares traded in Toronto was C$11.07. I consequently placed a AON limit order at USD$9.76 for the ordinary shares traded on the U.S. pink sheet exchange:  

Company Website: Birchcliff Energy Ltd.

Prior Trades: None

Dividends: The company does not pay a dividend which is one reason for the Flyer's Basket categorization.

The company does have some preferred shares that pay dividends: Birchcliff (Series A at C$.50 per share, Series "C" at C$.4375).

Birchcliff Energy Ltd. Cumulative Redeemable Preferred Series A (BIR.PR.A:TOR)

Birchcliff Energy Ltd. 7% Cumulative  Convertible Redeemable Preferred Non-Voting Series C   (BIR.PR.C:TOR)

I have not looked into those preferred shares yet, but plan to do so soon. 

Chart: I included the share prices for both BIR.TO priced in CADs and BIREF priced in USDs in this Chart. It has been a wild ride for shareholders over the past year.   

Notwithstanding the recent slide in price, the Toronto listed shares were up almost 50% over the past year through 11/1914, while the USD priced shares were up about 40%. The U.S.D. priced shares have been hurt by the weakness in the CAD/USD exchange rate over that period of time which flows through into the BIREF price.

USD/CAD Interactive Stock Chart

For this particular investment, I would now like to see the CAD rise against the USD. The worst possible outcome is the double whammy: a further decline in the CAD's value coupled with a simultaneous decline in the ordinary shares priced in CADs. 

Recent Earnings Report: The company reported record production during the third quarter, averaging 34,235 boe per day. Production has increased at a 40% annualized growth rate since the third quarter of 2010 through the 2014 third quarter. Production per share has increased 105 boe per day to 228.9 boe per day over that time period (page 6)

"Funds flow" increased 74% in the 2014 third quarter (or $.48 per diluted share), compared to the year ago quarter, largely as a result of an increase in production and the rise in the average AECO natural gas price to $4.02 per Mcf from $2.44. (page 6) "Birchcliff receives premium pricing for its natural gas production due to its high heat content. (page 16)

AECO refers to the Alberta Natural Gas Price: GASAlberta Energy: Natural Gas Prices

For the third quarter, E.P.S. was reported at $.19, up from $.06. Through the first three quarters, the company has reported an E.P.S. of $.62 per diluted share. 

Page 2 Q3Report2014.pdf

Bloomberg has a C$.824 E.P.S. estimate for 2014 with a price to book at 1.6085 at the closing price of C$11.06.

Rationale: This stock was brought to my attention by the Canadian Robert Duvall at SA who is a trader. After looking into it, I was impressed with the production growth in conjunction with the low risk drilling profile. Still, this investment's success will depend on energy prices, primarily natural gas, and the frequently fickle pricing decisions made by traders and investors to a lesser extent.

Birchcliff also fits into my long term super cycle forecast for natural gas. The Natural Gas Super Cycle: Bought Back First Trust ISE-Revere Natural Gas Index Fund | Seeking Alpha That forecast is dependent primarily on a continued acceleration by utilities to replace coal fired generating stations with combined cycle plants that use gas and steam turbines. That trend is a potentially huge change in the historical consumption patterns for natural gas.

The combined cycle plants are large and are designed to provide energy to meet baseload and intermediate power requirements rather than the traditional role for gas turbine use as peaking units. In other words, the gas turbines will be devouring natural gas 24/7 when used as baseload. This trend is underway and accelerating, as I noted in the preceding article published at SA. A large number of these combined cycle plants are under construction now or in the planning stages in the U.S. and worldwide.

Half of power plant capacity additions in 2013 came from natural gas-U.S. Energy Information Administration (EIA)

A Report on Combined Cycle Projects in North America - Power Engineering

Risks: The price chart highlights the risks. I get a little seasick just looking at it:

I discuss other risks earlier in this post. I am taking a very insignificant risk with a 100 share buy.

I would add a caveat. My recent history is picking small cap energy names is at best spotty. I was on a roll a decade or so ago, spotting the potential in DNR (which went from $1.5 in 2002 to $36.6 in 2006 and in XEC. I have a busted Lotto Ticket now in KWK and my more recent successes originate in relatively small trading gains in GST and SYRG in my Lottery Ticket Basket. I am more comfortable owning large energy companies, and currently have positions in CNQ and COP. I have sold out of SU, Royal Dutch and Husky earlier this year.

There is certainly nothing in my background that involves or relates to evaluating energy producers. As an investor, I am a generalist and will buy securities in every industry group worldwide. I would add that my attention is spread out really wide, with over 400 positions, and consequently I do not have much time to monitor or evaluate everything relevant to those investments. And, I would not consider myself an expert on anything in particular (i.e. knowledge is a mile wide and an inch deep). Consequently, I spend a lot of time focusing on Big Picture issues and long term trends and then drill down, more of a philosopher than a financial analyst.

Tuesday, November 18, 2014

ADX/Bought Back 50 FCG at $14.68/Bought 50 AIRR at $18.65/Gateway Post $500 to $1,000 Flyer's Basket Strategy With Snapshots of Round Trip Trades

Big Picture: No change

Stable Vix Pattern (Bullish):

Recent Developments: 

Adams Express (ADX) declared a year end dividend of $1.03 per share, consisting of the following:

$.9 per share in long term capital gains
$.05 per share in short term capital gains
$.08 per share from ordinary income

After several pares earlier this year, I am down to 467+ shares at an average cost of $9.75 per share. I have quit reinvesting the dividend. The current position snapshot can be found in Item # 4 Pared ADX Again-Sold 143 Shares at $13.97 (8/9/14 Post).

Closing Price Today: ADX: $14.81 +0.18 (+1.23%) 

Gateway Post for the $500 to $1,000 Flyer's Basket Strategy 

This post will also serve as a Gateway Post for one of my basket strategies which has not received much attention in my blog.

I simply call it the "$500 to $1,000 Flyer's Basket Strategy".

In my risk management system, this basket sits above the Lottery Ticket basket strategy that currently limits my "investment", more accurately described perhaps as a bet, to $300 per security plus any prior realized net gains for that security. Stocks, Bonds & Politics: Lottery Ticket Strategy: New Gateway Post

Like the Lottery Ticket strategy, the Flyer's basket strategy controls risk by limiting the amount of the investment to an insignificant amount for me. I view both of those strategies as an alternative to a casino visit.

Since I have an emphasis on preservation of capital, I will attempt to control risks through a variety of techniques.

The Flyer's strategy includes both ETFs and individual security selections. The ETFs will be narrowly focused ones like the two discussed in this post (FCG and AIRR in Items 1 and 2 below). I will tend to select sectors that are out of favor such as the natural gas ETF FCG where nothing positive can be seen short term unless the investor is hallucinating.

The individual security selections will generally be higher quality names than those selected for the Lottery Ticket strategy. However, as with LT selections, some of those selections will justifiably look like I am trying to catch a razor sharp falling knife.

I will also be buying some foreign stocks that I would not ordinarily buy in a meaningful amount. Many of those securities will be ADRs traded on the pink sheet exchange. Four examples to date include NRBAY, ORKLY, PRDSY, and WARFY.

I am going to devote more cash to this basket since I am not willing at the current market levels to invest much cash in stocks.

While some of the securities sold to date are at higher prices, several others referenced below are substantially below my sale's price.

Quotes for Securities Referenced Below:

Corning (GLW)
First Trust ETF NASDAQ Technology Dividend Index Fund (TDIV)
First Trust Value Line 100 Fund (FVL)
Global X Fertilizers/Potash ETF Fund  (SOIL)
Iridium Communications (IRDM)
iShares MSCI Hong Kong ETF (EWH)
LeapFrog Enterprises (LF)
Morgan Stanley (MS)
Nordea Bank AB ADS (NRBAY)
PowerShares DWA Emerging Markets Momentum Portfolio Fund (PIE)
Prada S.p.A. ADS (PRDSY)
Titan Machinery (TITN)
Vale S.A. ADS (VALE)
Wharf (Holdings) Ltd. ADS (WARFY)
Xerox (XRX)
Yamana Gold Inc. (AUY) 

1. Snapshots of Round Trip Trades: Flyer's Basket Strategy: (see Disclaimer) This post will be updated as I sell securities bought pursuant to this basket strategy. Like the LT basket strategy, this one is small ball.

Sold: 100 TDIV at $25.63 (10/17/14 Post)-Item # 1 Bought 50 TDIV at $19.95 (8/28/12)(later added 50 shares-count only 50 shares in this basket)

2014 TDIV 50 Shares +$272.05

Item # 4 Sold 100 ORKLY at $9 (9/6/14 Post)-Item # 2 Bought 100 ORKLY at $7.61 (1/13/14 Post)

2014 ORKLY 50 Shares +$122.48

2013 Sold 100 IRDM $34.89
IRDM was later demoted to the Lottery Ticket Basket Strategy with a 40 share purchase: Bought 40 IRDM at $6.82 (9/30/13 Post)

Sold 6/6/14 at a Loss-Item # 5 Bought 50 AUY at $14.25 (3/12/13 Post)

2014 AUY 50 Shares -$360.91

Item # 3 Sold: 50 PRDSY at $16.2 (5/3/14 Post)-Item # 3 Bought: 50 PRDSY at $15 (3/17/14 Post)

2014 PRDSY 50 Shares +$43.33

2012 MS 50 Shares +$105.1
Net Gain as of 11/17/14: $1,741.76 

2. Bought Back 50 FCG at $14.68 (The $500 to $1,000 Flyer's Basket Strategy)(see Disclaimer): 

Snapshot of Trade:

2014 Bought Back 50 FCG at $14.68
Closing Price Day of Trade: FCG: $14.63 -0.39 (-2.60%) 

Security Description: First Trust ISE-Revere Natural Gas Index Fund (FCG) is an ETF that owns natural gas energy producers. This energy sector is certainly out of favor at the moment.

This ETF has declined from about $24 last June to the current level. First Trust ISE-Revere Natural ETF Chart In June 2008, this ETF traded over $31 per share.

Natural gas producers pay almost nothing in dividends. The dividend yield will not contribute to total return potential as shown by this fund's distribution history. Dividends

The net expense ratio is currently .6%

Sponsor's web page: First Trust ISE-Revere Natural Gas Index Fund (FCG)

FCG Holdings

Prior Trade: I have one prior trade:
Rationale(1) Super Cycle for Gas Demand Emerging: When playing super cycles, I could care less what happens to a stock next year or the year after. Instead I am looking way out into the future. No one will be able to time when, or even whether, natural gas demand will cause a substantial non-temporary rise in price. I do not know, nor does anyone else who is not a divine being. I am going to admit up front that the Lord has not given me any guidance on this one, possibly draining the well of divine stock advice after sending me a sign about reinvesting the GE dividends. Stocks, Bonds & Politics: GE (introductory section near snapshot of GE buys)

Possibly the main long term trend that will soak up the natural gas supply is the increasing use of gas turbines for base load generation. For a long time, gas turbine power generation was limited to peak periods of electrical usage. During the hottest part of a summer day, an electric utility would turn them on to meet peak demand and then shut them down.

Power produced by large coal and nuclear units was much cheaper in the past, due to economies of scale, and those units were used to provide what is known as the base load requirements. Base Load and Peaking PowerSmartPlanet Those units would be running 24/7 except when shutdown for periodic maintenance. For the last several decades, base load generation consisted of coal fired generation and nuclear power plants. That is now changing-fast.

Coal plants are being retired and mothballed since their generation is no longer cost effective given the additional costs required for compliance with EPA's increasingly stringent emission requirements. Nuclear plants are simply not being built in the U.S.

That leaves a newly designed power generation station that is called combined cycle generation. A typical combined cycle plant would use both steam turbines and gas fired turbines.

An Overview of Combined Cycle Power Plant | EEP

These new generation plants are being built throughout the world now and many are already in service. Half of power plant capacity additions in 2013 came from natural gas - Today in Energy - U.S. Energy Information Administration (EIA)(April 2014 publication); "A Report on Combined Cycle Projects in North America-Power Engineering" (February 2014); Energy Business ReviewPlatts News ArticleProposed New Combined-Cycle Natural Gas Plant in Citrus County, Fla.- Residential-Duke EnergyBechtel Breaks Ground on 758MW Combined-Cycle Power Plant - Bechtel CorporationAstoria 500MW combined-cycle power plant - Power Technology

In an article published in a U.K. trade journal,  the main guy at GE Power was predicting a 25 year natural gas super cycle. I am always interested in super cycles, such as the one previously discussed in connection with the parabolic rise of middle class consumers in emerging markets or the super cycles supporting the 18 year long term bull market starting in 1982 or the strong secular forces supporting the current one.

Another article published in the same U.K. trade journal had a Siemens' representative saying that the competitive advantage of large coal fired plants was being eroded by the economics of low cost gas generation.

So will the natural gas fired units be the new base load, running 24/7, burning up all of that natural gas to produce energy instead of coal? That is the trend.

It just appears to me that there may be no other choice. Nuclear plants take an incredibly long time to build, and utilities are not exactly beating down the door to build new ones in the U.S.

Yet, the Obama administration has clearly embarked on an environmental policy to shut down a significant number of coal generating stations by making it uneconomical to retrofit those plants with pollution devices to meet new clean air standards promulgated by the EPA.

I am not going to repeat my discussion about those EPA rules, contained in the comment section of this SeekingAlpha article: Seeking Alpha The author of that article was recommending an Illinois Basin coal producer, so I took issue with that recommendation based on what was happening with the EPA.

In my capacity as an investor, it is irrelevant whether I agree or disagree with the EPA policy. The relevant consideration starts with a very simple question that trial lawyers and police officers like the TV character played by Jack Webb want to know: "what are the facts". Once an investor has a grip on the relevant facts, the issue then is simply how to respond. Knowing about the direction and potential impacts of EPA's new emissions rules, which have already resulted in plant shutdowns, I would not be in the market for a coal stock. The product is in abundance and the demand is falling and about to fall more in the U.S.

I suspect that the estimate made by a consultant group will be close to what will happen. America is in the process of losing about 20% of its coal fired generation. (Reuters Article Containing Consultant Estimate of 20% Closure Rate: Reuters)

I have discussed long term super cycles, impacting both natural gas and coal, in the comment section to this Seeking Alpha article.

Interview with Obama in 2008 relating to his views about coal: YouTube

Another way to play this theme would be with natural gas infrastructure plays (pipelines, storage and processing). Most of those firms are MLPs but there are several ETNs that incorporate those type of companies.

Risks: The normal risks for stocks in a sector, particularly one such as natural gas producers where current prices do not reflect optimism about the future or a foreseeable rebalancing of supply/demand in favor of demand and higher prices.

Many of the natural gas producers are highly leveraged and may have trouble servicing their debt load during a protracted decline in energy prices.

The problem with natural gas producers is that it will take a long time for those new demand uses to soak up the abundant supply, creating a non-temporary higher plateau in prices.

I have no idea when that may happen!!

A bell is not likely to ring notifying investors that the pricing power has shifted from users to suppliers.

At the moment, I can not look at a long term natural gas spot price chart and see that transition point arriving soon.

Henry Hub Natural Gas Spot Price (Dollars per Million Btu)

Natural gas production is exploding in the U.S. (and Canada):

Future Buys/Sells: With a starter position, I have seen something to perk my interest and simply want to monitor more closely what is happening in the months and years ahead. I will likely average down on up to 150 more shares. With more proof of the super cycle leading to higher prices, I would likely become more aggressive and branch out into other securities.

Until I see evidence of a more long term favorable pricing trend for natural gas producers, I may just continue to buy and flip this ETF for small gains. Buying in early winter and selling during the spring worked in my prior round trip.

Closing Price Today: FCG: $14.70 +0.07 (+0.48%)

3. Bought 50 AIRR at $18.65 (The $500 to $1,000 Flyer's Basket Strategy)(see Disclaimer):

Snapshot of Trade:

Closing Price Day of Trade: AIRR: $18.58 -0.24 (-1.27%)

Security Description: The First Trust RBA American Industrial Renaissance ETF Fund (AIRR) is a new ETF that attempts to track generally Richard Bernstein's American Industrial Renaissance index consisting of small and mid cap industrial companies and banks located in industrial hubs. 

Sponsor's Webpage: First Trust 

The fund currently has 41 holdings: AIRR Holdings

I own several of the banks but none of the industrial companies. I tend to go large cap when buying individual industrial stocks while I am mostly a buyer of small cap regional banks. 

Prior Trades: None

Rationale and Risks: One reason for a potential U.S. manufacturing renaissance is the abundant and relatively low cost natural gas supply. So, with this ETF selection, I am playing the same theme as with FCG, though with a different kind of ETF. 

I discussed the long term secular forces favoring American manufacturing in an earlier post that summarized a Barrons' article as follows: 

Here are some factoids from that article:

(1) U.S. production of petroleum and natural gas jumped to a twenty year high at 15 million barrels of oil-equivalent per day, while imports declined to 8 million barrels which was a 25 year low.

(2) By 2025, U.S. will be a net energy exporter. The U.S. is anticipated to become the largest energy producer by 2020. 

(3) The range of natural gas costs in the U.S. has been between $3 to $5 per million BTUs for several years now. The cost is expected to remain in that range due to increased production. Natural gas costs almost $12 per BTU in Europe and $16 in Japan.  

(4) To buy land for a new factory in Tennessee, the average square foot cost would range between $1.3 to $4.65. The average cost in China is $10.22, and considerably more in the coastal cities. 

(5) Labor costs are rising 15% to 20% per year in China. 

(6) And this fact was very interesting. A graduate of the South Dakota School of Mines and Technology has a 16% higher starting salary than a graduate from Yale.

Similar articles were published in the WSJ and at CNBC.

The sponsor describes risks at its main webpage for this fund and in a Prospectus. A risk that is in the forefront of my mind is simply the huge rise in the stock market since March 2009 and particularly the rise without a correction since the 2011 summer.

Those current market conditions make me nervous and cautious with new buys, so I am just nibbling here and there and have a hair trigger on most new buys.

Closing Price Today AIRR: AIRR: $18.75 +0.17 (+0.91%)