1. Bought 50 GLL at $9.79 (See Disclaimer): I have thought about selling some gold, but I am in a state of total inertia on that subject. If gold falls from its current perch at around $1135 per ounce (24-hour Spot Chart) by a few hundred bucks, I will feel stupid for my unwillingness to sell any of it. To make myself feel better in that eventuality, I decide to buy the double short ETF for gold, GLL, which as you would expect has not done well this year. Chart In fact, this one has gone done a lot since it was brought public by its sponsor Proshares in early December 2008, closing its first day of trading at $26. This is a link to the Proshares' page on this ETF: GLL If this one goes down to below $7, I will cut my losses and sell it. I have plenty of short term gains booked this year so I have an existing realized booty that can be used to offset this kind of loss. This is a hedge for my physical bullion located in a bank lock box, and not likely to be touched anytime soon. Maybe booty is not the appropriate word for the short term gains earned this year.
2. Bought 50 of UBSI at $16.56 (see Disclaimer): United Bankshares (UBSI) is one of the banks that refused to accept TARP funds, though it was approved to receive to 197.3 million. WSJ.com UBSI has not cut its dividend and has remained solidly profitable during the recession. The bank operates in West Virginia and the metropolitan D.C. area. Notwithstanding its continued profitability, the shares have fallen from over $30 per share in 2008 to the mid $16 price paid by me today. The share price has basically returned to 1997 levels: UBSI Stock Charts At my cost, the dividend yield is close to 7%: UBSI Stock Quote Morningstar has it rated five stars. I was not aware of this bank until I read an article discussing it and my recently bought NYB. (see page 3 Street).
The consensus estimate is for $1.53 in earnings for 2009: UBSI: Analyst Estimates Price to book is listed at .94 UBSI: Key Statistics for United Bankshares, Inc. United Bankshares earned 40 cents in the 3rd quarter. In its release the bank made the following statement about its capital ratios:
"United continues to be well-capitalized based upon regulatory guidelines. United’s estimated risk-based capital ratio is 12.1% at September 30, 2009 while its Tier I capital and leverage ratios are 10.8% and 9.0%, respectively. The regulatory requirements for a well-capitalized financial institution are a risk-based capital ratio of 10%, a Tier I capital ratio of 6% and a leverage ratio of 5%."
This is not a lottery ticket purchase. I have been buying a basket of better quality regional bank stocks, spending small amounts to purchase each position. This is in addition to the bank LT strategy, where the amounts invested are less than $300. LOTTERY TICKET PURCHASES: LINKS IN ONE POST I do not view Huntington and Synovus to be among the better quality names, so they were put in the LT category. I recently took Wilmington Trust out of the LT category which just means that I am now willing to increase my investment at the appropriate time and price. Today I am taking East West Bank (EWBC) out of the LT category based on recent developments. EWBC This one has almost tripled since I bought 50 shares as an LT at $5.7: Buy of 50 EWBC as Lottery Ticket I am aware of some regional banks that Cramer is recommending but have not bought any of them, though one of them is way down on my list for a possible purchase. CNBC.com
3. Industrial Production: The FED reported that industrial production increased by just .1% in October, less than the forecast of a .4% gain. Industrial Production and Capacity Utilization Capacity utilization moved up .2% to 70.7, which is 10.2 percentage points below the average for 1972 through 2008.
4. Target & Home Depot (neither owned): TGT reported earnings of 58 cents, well above the consensus forecast of 50 cents and the 49 cents earned a year ago. Target increased sales only by 1.4%, however, over the same period a year ago. In the release, Target stated that it remained cautious about the 4th quarter.
The Home Depot reported earnings of 41 cents, beating the consensus forecast by five cents. This represented a decline of slightly over 8% from the 45 cents earned in the the 2008 3rd quarter. Same store sales declined in the U.S. by 7.1%. HD raised it guidance for its fiscal year to $1.55 excluding items. The company is seeing signs of stabilization but noted that a great deal of pressure still exists in the housing and home improvement markets.
5. Meredith Whitney: Whitney gave a bearish view of the market in this interview on CNBC. She has not been so bearish in a year, claiming there is no fundamental reason for the rally, particularly in the consumer space. She claims the credit contraction is greater than in the Great Depression, and the credit contraction is accelerating. I did have a few questions for her. Did she adjust her numbers on credit availability over time by inflation? By emphasizing the amount of credit availability withdrawn during this last crisis, does she place too much emphasis on the amount of credit withdrawn compared to the amount still available? Since credit availability was clearly excessive, focusing on the total dollars of withdrawn credit will create a distorted picture. I would not view the withdrawal of excessive credit availability as a negative. I also thought that she needs to breathe into a paper bag some.
American consumers do need time to repair their balance sheets, to deleverage their balance sheets, and to save more of their income. So, I would agree with those who maintain that the world needs an alternative engine for future growth other than the American consumer buying an ever increasing amount of products with borrowed money.
6. Tidbits:
Coca Cola is targeting system revenue (coca cola and its bottlers) of 200 billion by 2020 Reuters This would mean close to a double in system revenue.
Intel (owned) raised its dividend by 12.5% to $.1575 per quarter. According to S & P, the dividends for the S & P 500 companies are about 53 billion lower this year, as many firms have reduced or eliminated their dividends particularly in the financial industry. WSJ.com I am reinvesting the Intel dividends to buy additional shares, but many stop doing that if the price approaches $25.
The reduction to .5% by the Bank of England is its lowest rate since its founding in 1694. The OG, being a student of history, was impressed by that factoid courtesy of the semi-annual report for the CEF IAE (owned). (see page 3-nvcsrs).
This CEF, ING Asia Pacific High Dividend, is discussed in a prior post. /bought 50 of the cef iae at $15.28 That was my last purchase. It invests in high dividend paying common stocks in the Asia Pacific region and attempts to enhance income by selling call options. ING Asia Pacific High Dividend Equity Income Fund - Overview This is the kind of income generating stock based fund that I will buy in a retirement account, though I just have 50 shares in the Roth with a $10.39 cost basis. This one was included in a Roth conversion effective 10/27/2008. I also own 100 shares in a taxable account. I am not reinvesting the dividend primarily due to IAE selling at a negligible discount to NAV until recently when it rose to a premium to a NAV, which makes it undesirable to me for a purchase even with the dividends. My dividend yield at my cost is currently well over 10%. I have a good unrealized profit in the shares, but would consider myself well ahead by reaping several years of dividends and selling the shares for any kind of profit.
While Lowe's reported a 30% fall in earnings yesterday, it did note some improvement in the hardest hit markets that were the epicenter of the parabolic home price increases and the subsequent collapse.
The head of the International Monetary fund continues to talk about a new global reserve currency growing out of the IMF's "Special Drawing Right" and repeated his concerns about the need for China to allow the Yuan to appreciate in value.
LB flipped the magic coin yesterday on a possible add of 50 shares of Synovus below $2 and the coin said no.
7. SARAH PALIN: CBS news had a story last night that raised some issues about Sarah Palin's version of certain events discussed in her book involving senior McCain campaign staffers. CBS News Nicole Wallace for example says that the conversations Palin quotes in her book involving her did not even take place. Steve Schmidt refers to Palin's accounts as fiction. A Fox news reporter that covered the Palin campaign refers to her version of events as not "squaring with reality".
It is a standard M.O. for a True Believer to create their own reality, which is find, unless they are in a position of responsibility and/or power. Some may say Sarah is just lying about certain events. I have no idea, maybe she is, but you really can never be sure with a TB. With a TB, reality creation is an art form, frequently detailed and elaborate, always impossible for the LB to even fathom in its ludicrousness, and finally reaching a crescendo when the TB can no longer distinguish fiction from fact. The fiction becomes the fact and is earnestly believed. I just thought of her as goofy and uninformed after watching her interviews with Katie (CBS Exclusive: Sarah Palin - CBS News Video). I do believe that she is easily the most thoroughly TB person to ever run for any high public office in the U.S. during modern times (i.e. since my birth). It is a bit frightening that so many think that she is qualified to be President, and even more so since they believe she is one of the most qualified people in the country to be President. The TBs are propagating like bunny rabbits, maybe they need to practice what they preach-more abstinence.
She is at least turning her notoriety into big bucks, which explains her resignation as Alaska's governor half way into the term. It is far better to earn money from the book, touring and promoting it, and giving speeches for lots of money in places like Asia, then to continue as Alaska's governor for two more years.
A TB can become famous and a leader of the pack by simply mouthing the cliches and truisms that form the core beliefs of the group. Knowledge and learning are actually hindrances into being accepted by other TBs. When asked by Katie what papers Sarah reads, she could not identify one, a trick question for Sarah which shows Katie's bias and desire to frame her in a "gotcha" moment. Now, Sarah told Oprah yesterday that she did not answer that simple question because she was annoyed. USATODAY Oprah.com Of course, she could have just rattled off the names of the papers, other than the Frontiersman, that she actually read and she would not have exposed herself. So, another characteristic is to blame others for your own shortcomings, the liberal "mainstream" media is always a convenient whipping boy for the TBs.
Looks like UBSI upped their dividend in the 4th qtr to .30 which appears to be a positive sign as the shares were up 3.77% on above average volume today. Cheers.
ReplyDeleteLUTHER: I am starting to focus some attention on the banks that refused TARP funds, and who are still paying good dividends and earning enough to cover the dividend pay out. I thought that it was important that UBSI has maintained its dividend throughout this banking debacle, and a raise is even more encouraging. I noted in its press release that the dividend has increased from 6 cents per year to $1.17 over its 36 year history, and this represents a 9% compound growth rate. While there is no certainty of course that this pace can continue, a 9% growth rate would result in a doubling of the dividend in 8.04 years, and that kind of historical rate of dividend growth is an important factor in deciding how long to hold the stock. When I start with a base of a 7% yield at my cost, I am even more likely to hold with any kind of growth in the dividend, let alone a 9% growth.
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