1. Goldman Sachs Rating and Target Changes on Electric Utilities: I thought that it was interesting that Goldman Sachs has become more positive on electric utility stocks based on its forecast for the 10 year treasury at 2.8% to 3.%. Reuters While I have no training whatsoever in economic forecasting or in economics, I would expect 5% on the 10 year treasury before we see a 3% yield again. I own several of the utilities discussed in the GS report including Great Plains, Consolidated Edison, Westar and Duke. GS maintained its neutral rating on Duke but lowered its price target to $14 from $15. The target on Westar was raised from $20 to $21 while maintaining a neutral rating. TSt.com Great Plains was upgraded to Buy with a $19 target, and ED is a conviction sell according to the Reuters story.
2. Upgrades for Bank of America: Morgan Stanley has an overweight rating and a $32 target on BAC, and Keefe, Bruyette & Woods raised BAC to outperform with a $16.5 target. TSt.com St.com Div Y FinanceI own over 200 shares of BAC and do not intend to buy more. I will make a decision on what to do with those shares in the middle of 2010, when I hope to have more clarity about BAC's recovery potential.
3. Thirty Year Treasury Bond Auction: Demand was strong for the 30 year treasury bond auction today, with the average yield at 4.72%. WSJ.com After the auction there was a spirited rally in the long treasury, causing the TLT ETF to rise over 1%. The TIP was lagging behind with a .1% gain.
4. SOLD 50 OF THE 150 OF FJA/SOLD 50 SPECTRA ENEGRY/ BOUGHT 100 MJT AT $22.57: I bought shares in the Trust Certificate containing an Embarq bond in two lots, with the first 100 shares bought at $15.35. BOUGHT 100 of the TC FJA Another 50 shares were bought shortly thereafter on a downdraft at $14.2. Bought another 50 FJA I decided to limit myself to just 100 shares of this bond maturing in June 2036. To bring myself down to 100 shares, I sold 50 shares today at $16.60. Since I use FIFO accounting, this sale will lower my overall cost basis, while realizing a small profit on the shares. In addition, this TC just went ex interest on its semi annual interest payment. So, for this security, I was just more comfortable keeping the 50 shares bought on an average down and selling 50 of the higher cost shares, rather than taking my position to 200 shares.
Instead, I substituted a junior bond from DPL, an electric utility serving Dayton, Ohio, by buying 100 shares of the TC MJT at $22.57 which has as its underlying security a junior bond from DPL maturing in 2031. Information about this one can be found on the first page of the Third Party Trust Preferred section at QuantumOnline: QuantOn This is a link to the prospectus: www.sec.gov
Par value is $25 and the coupon is 7.875%. I would label the underlying security as a Trust Preferred. This was a marginal buy. My primary reason for buying it was to further diversify my bond holdings with an electric utility bond. The yield was acceptable but I am not enthusiastic about it. The yield at my cost is around 8.72%. Interest is paid semi-annually with the ex dates in February and August.
THE FINRA INFORMATION ON THE UNDERLYING BOND: FINRA - Investor Information - Market Data - Bonds - Bond Detail
This is a link to the web site for DP & L. DAYTON POWER & LIGHT
This utility serves 514,000 customers in West Central Ohio with 10 power plants with a capacity of 3,700 megawatts. DPL Inc.
I did read the S & P report on DPL prior to buying the bond. S & P had it rated 5 stars. I also reviewed the Morningstar report which points out the problems of a cap and trade emissions program for this coal burning utility.
I also sold today the 50 shares of Spectra Energy (SE). Added to Spectra Energy /
5. Sold American General Finance Bonds Maturing in 2009 and Bought More of the TIP: I was surprised some today when I entered a limit order to sell some American General Finance bonds maturing later this year at the limit price of 88. That was the third party price shown for the bonds. The order was soon filled at $92.6. I used the proceeds to buy just 30 shares of the TIP ETF at $100.36. I really have reached the point where I just do not want to think about American General bonds. I know one thing for certain. That company will never receive another loan from me.
DISCLAIMER
I am not a financial advisor but an individual investor trying to navigate my way through a difficult market. I have never worked for a financial institution and never will. In these posts, I am acting as an unpaid financial journalist and an occasional political commentator. I am also aggregating financial news stories that I view as important and providing readers of these posts with links to those articles, sort of a filtered, somewhat intelligent, free search engine. Any discussion made by me of particular securities is not a recommendation to buy or to sell. Trade at your own risk. Consult with your financial advisor prior to making any purchase or sale. I will try to identify my sales too but it may take a few minutes after I implement them to create a post explaining my reasons. The sale may before or after the post. Before buying or selling any stock, even one recommended by a trusted financial advisor, please research it and make up your own mind which is what I always try to do. Research would include reading reports, reviewing financial records, earnings estimates, sec filings and prior earnings releases and news. In this post, and all others by me, I am merely describing my reasons for purchasing or selling securities, and the potential pitfalls that I identified prior to purchase or the reasons for a sale. The securities mentioned in this and all posts written by me may not be suitable for others based on their unique financial position and risk profile. By way of example, it is unlikely that I will ever need the funds contained in my retirement accounts. Always read the prospectus before buying a Trust Certificate, bond, preferred stock or other bond or bond like investments. Information contained in my posts has been obtained from sources believed to be reliable but cannot be guaranteed. It is always important to follow the investment process. the investment process/links to further information on canadian energy or royalty trustsInvestment Process Part II: Bonds and Bond Like Investments NOT A RESEARCH SERVICE/Add of PWE Last Week These posts by me do not constitute investment advice, nor shall they be construed as a guarantee of future results, or as an offer of any transaction in securities. All content in these posts is provided for informational and entertainment purposes only, and it is a form of entertainment for me. Anyone interested in a topic may want to review all discussions contained in the blog about it by using a relevant search term in the box at the top. Opinions are subject to change and they certainly evolve over time as information is assessed and analyzed for compatibility with prior opinions, the only process for a serious investor, and a topic of frequent discussion in this post.
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