1. Google (owned): Goldman raised its target on Google to $510 from $486, and raised its earnings forecast for both 2009 and 2010. The 2010 forecast is now at $24.62. Barclays also raised its target to $495 from $460. That firm also increased its earnings estimates for both 2009 and 2010, with the 2010 forecast now at $24.65. These analysts appear to be more satisfied with Google's report than investors who may be underwhelmed by the slow growth of revenues during the recession. Maybe the investing community needs to compare Google's revenue growth with that of GE. We are after all in a deep recession.
2. Bought another 100 GJL at $20.6: This trust certificate contains as its underlying bond an issue from Daimler Finance North America, as successor to DaimlerChrysler North America.Unassociated Document The bond is guaranteed by the parent company Daimler AG. The bond matures on November 15, 2013. This TC is a synthetic floater paying the greater of 3% or 1.25% over the 3 month treasury bill, which is abnormally low now. At the guaranteed rate, however, which is the applicable rate now, the yield at my cost is a tad over 3.6%, but there is a profit at maturity, a mere 4 years and four months or so, of 21.3% or about another 5% per year. If the 3 month t bill starts to rise again, and reaches say 3%, then the yield would be 4.125% which translates into a 5% yield. So, this one is enticing to me due to the yield to maturity assuming survival to pay me the $25 par on 11/15/2013.
Assuming that Daimler survives until 11/2013, which seems reasonable, the minimum annualized return is about 8.6%. (Calculation corrected 7/17) I suspect that it will end up being a tad higher since I expect a rise in the T BILL rate above 1.75% before maturity, which is also a reasonable prediction, and the T BILL float is triggered above 1.75% since that is when it would be greater than the guarantee.
The prospectus can be found at www.sec.gov .
Interest is paid monthly.
The underlying bond data at FINRA can be found by following this link: FINRA - Investor Information - Market Data - Bonds - Bond Detail
This page from FINRA does show that S & P and FITCH rate the underlying bond BBB+. Moody's has it rated A3.
The coupon for the underlying bond is 6.5%, which is only relevant to the owner of GJL in the event the swap agreement is terminated. In such event, as we have seen with JBK, the owner of the TC becomes entitled to receive the fixed coupon rate rather than the lower guaranteed rate under the float provision.
Also, the yield to maturity of the underlying bond is less than the coupon rate since the underlying bond is currently selling at above par value. This would make the TC a better buy than the underlying bond on a yield to maturity basis due to its discount to par value.
For comparison purposes, there is a synthetic floater tied to a GS bond, GJJ, that matures at about the same time as GJL, and GJJ's last trade was at $23 on 7/16/09. GJJ matures a month sooner, on October 15, 2013. GJJ has the same minimum of 3% as GJL, but a much lower float of .65% above the 3 month T Bill. I believe GJJ, which I do not own, is tied to a Goldman Senior bond, and those are rated higher by the rating agencies (A1 by Moody's and A by S & P). I already have my fill of Goldman debt. With 200 of GJL, I am full with Daimler debt too.
The last purchase of GJL was made in the Roth as an alternative to buying the 20 year TIP at auction later this month.
I suspect that the lack of interest in this issue is more due to its name, which includes the word Chrysler, rather than the merits of security.
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 NOT A RESEARCH SERVICE 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. 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. Everyone is responsible for their own investment decisions, and no one should ever make any decision unless they are willing to accept full personal responsibility for it.
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