1. Fat Tax/Soda Tax/Cancer Stick Tax Increase: Every great idea starts out with a kernel of inspiration, and my modest proposal for a new Fat Tax is certainly no exception. A Modest Proposal to the Democratic Party: Forget About the Surtax and Try a Tax on Fat/Charlie Rangel-A Pillar of Tax Morality?/CPB/ 3 mo LiborThe groundswell of public opinion is already starting to fan out across the land. I have not worked out all of the details yet. And, Charlie Rangel would be hard pressed to avoid paying his full share. National Legal and Policy Center I am confident that revenues from the Fat Tax will grow faster than the rise in medical costs however, just based on my personal observations and the kind of data discussed in the papers today. And that is the beauty of the Fat Tax. The Democrat plan does nothing to contain costs. So we need to find a source of revenue to pay for medical costs that will undoubtedly continue to rise at a rate greater than inflation. If there was in fact a plan to contain costs, while providing insurance coverage to 50 million uninsured people, I would have hoped all of those plans would have already been implemented to slow down the rise in medicare costs prior to now, since the medicare fund is currently running out of dough fast.
The liberals need to get on board with the Fat Tax. Many of them are already proposing a tax on carbonated beverages with calories, CBS News, so we are not that far apart in building a coalition to bring this concept to fruition. And, we are thinking along the same lines. The Soda Tax would raise 140 billion over 10 years, according to CBS, and the Soda Tax could be combined with the new Fat Tax assessed progressively based on the amount deemed excessive under the BMI Chart. Then, on top of that, I would recommend adding more to the Cancer Stick Tax. So, there, I have solved the problem, and it really did not require much time. Now, back to increasing the Headknocker's capital base.
2. Sold 100 SLGPRD at $17.95 (see disclaimer): I bought the shares in this cumulative preferred stock of S L Green prior to the commencement of this blog last October, and I sold those shares this morning at a profit, having also received several quarterly dividends payments. I mentioned in an earlier post that I was going to transfer the risk of holding SLG preferred stock to an IRA, which I have already done by buying shares in SLGPRC at $10.5 and $11.89. Bought SLGPRC: Anticipated Risk Reduction and Transfer Buys of GPOR and SLGPRC
3. SL Green (SLG) (Owned): I still own the common shares of S L Green realty and 80 shares of SLGPRC. UBS initiated coverage on SLG with a sell last Tuesday. The earnings report this morning of $1.20 FFO met the street expectations. I just quickly reviewed the report and saw that the Manhattan occupancy rate was 96.2%. I intend to hold what I now own. I am however taking what can charitably be called wimpish baby steps with my last purchase being just 25 shares at around $15. Add 25 SLG But, that is okay since I am surrounded by critics and under siege from them. I am hopeful that eventually I will acquire enough shares to own, indirectly of course, one Manhattan brick, and I hear that those bricks are a lot more expensive than Tennessee bricks.
4. Case-Shiller Index: I mentioned earlier that I thought it would be important for this index to show a sequential rise in May (see item #2: LINKS TO FED INFORMATION ON REAL AND NOMINAL YIELDS/NEW HOME SALES/ 20 YEAR TIP AUCTION) The index was released this morning and showed a .5% sequential month-to-month increase, the first since July 2006. I view that as positive. The index results can be downloaded at this web page from S&P .
5. Bought 50 AZM and Sold Highest Cost KTV shares (see Disclaimer): Maybe I do too much trading. But, in my defense, there is something to be said about continuous movement, like Muhammad Ali in the boxing ring, to make it harder for the bogeyman and those Black Swans to land a solid punch.
I sold 1/2 of my position in KTV this morning at $24.5. These would be the highest cost shares bought first at $20.50 in February. Buy 50 KTV I then averaged down with another 50 south of $18 shortly thereafter. Rounded KTV to 100 Shares I will keep those 50 shares, which will generate a higher yield than the shares sold today. Those shares will have a current yield a tad over 11.3% based on the purchase cost, whereas the combined 100 shares had a yield of around 10.67%. So, I realized a gain of close to $200 on the shares, plus a dividend, and lowered my cost basis and increased my yield on the remaining shares. That is how I like to manage these higher risk bank TPs.
In its place, I added 50 shares of AZM, a strange creature from Allianz (AZ), the German insurance giant that also owns PIMCO in the U.S. This has one bad feature to it which I will mention first. It is a perpetual debt issue and that explains more than anything else why I just bought 50 shares. AZM is junior subordinated debt as explained in the prospectus and at the AZ web site. Allianz - Bonds and Participation Certificate The 2008 annual report refers to the issue as debt at p.85: http://annualreport2008.allianz.com
The coupon is 8.375% and the Quantumonline site claims that it is rated A3 by Moody's and A+ by S & P.AZM Search Results - QuantumOnline.com I did not verify that claim. I do not subscribe to any of the rating services.
Par value is $25 but that will probably not matter much for this perpetual security except as part of the current yield calculation at a purchase price of less than $25.
I calculated my yield at a purchase price of $23.78 to be around 8.8%.
This is a link to the prospectus: 424B5
Interest is paid quarterly. Now to the weird part. This is a bond, not an equity preferred stock.
Quantum claims that the payments for this bond qualify for the 15% qualified tax rate currently: (see first page: 15% Tax Rate Table
I then checked the prospectus and found at p. S-57 a claim by Allianz that the payments do qualify as qualified dividends. This may change however, and somewhere in that prospectus I read a passage saying bills had been introduced in Congress to exclude this kind of dividend payments from the qualified dividend category when paid by a foreign institution. I would call that issue one that is in flux, and anything could happen. So, for me, I would not count on that 15% max rate for much longer as the Democrats search for new taxes or to reinstate old ones.
My primary reason for adding this security was for diversity. I take diversity to far beyond the extreme level.
I am already familiar with this firm. I did however read the Morningstar and S & P reports on AZ before buying the bond. S & P currently has it rated 4 stars.
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