In an effort to protect myself from bad fills in my Fidelity account, I have been placing some "All or None" limit orders. I wanted to mention what happened yesterday on one of them. I entered a AON limit order on a trust certificate at $23.50. The order was routed to Knight. I noticed in the morning several trades had been filled at over $23.5. Some were filled as high as $23.75. All of the orders in question were round lots. I seriously doubt that the buyer of shares at $23.75 was even aware of shares available at $23.50. My AON order was not even been displayed even when it was the best offer in the thinly traded market. In disgust, I just cancelled the order.
I checked last night, as a matter of curiosity, the ten year annualized returns of some well known mutual funds. I noted that the once vaunted Fidelity Magellan (FMAGX) is shown to have a -1.68 annualized return over 10 years at MSN Money. Amateurs could have done better.
In 1995, Headknocker was taking his almost new 1994 Saturn SL through a BP car wash in the SUV Capital. Somehow, someway, the car wash tore off the spoiler attached to the top of the trunk, just snapped it. HK thought that he had a slam dunk case against BP particularly since there was no disclaimer about damages to the vehicle on display. He goes inside the station, shows the attendant the damage, which could not conceivably have been caused by anything other than the car wash, unless the Incredible Hulk had mischievously and surreptitiously appeared, angry about some offense done to him by the Saturn, and tore off the spoiler in a fit of rage. That was the only other explanation. BP thereafter took the position that its car wash could not have caused the damage, and refused to pay for the damages. The matter went to an arbiter selected by the insurance companies, and I lost. Now, HK is not one to hold a grudge, but there has not been a single car under my control that has been to a BP gas station since the Hulk attacked my Saturn. Why? You never know when the Hulk might appear again.
HK is a rational person, and not one to hold a grudge, as I just said. The HK would fill up a car at a BP station if one of his vehicles ran out of gas in front of one, and there was no alternative available within several miles distance. Now, after reading about this oil spill, and everything that has led up to it, and viewing the latest footage of the oil gusher (New Oil Leak Video) and seeing the damages that has already been done to the people of Louisiana and Florida by gross negligence (CBS Evening News), HK would abandon that out of gas vehicle rather than fill it up at a BP station. I wonder why anyone would trade at a BP now.
1. Added 50 PJI at $20.17 Yesterday (see Disclaimer): PJI is a Trust Certificate containing a senior bond from Goldman Sachs. The TC has a 6% coupon and a $25 par value. The underlying bond and the TC mature at the same time-2/15/2033. At a total cost of $20.17, the current yield is around 7.44%. The YTM is approximately 8.01%: Morningstar Bond Calculator: Yield to Maturity This is an average down from my prior purchase of 50 shares at 20.85.
The underlying bond has a 6.125% coupon and is selling in the 94-96 range yesterday. At yesterday's closing price of 95.23, the current yield of the underlying bond was 6.43%. So I checked this data at FINRA before placing my trade. I also calculated the YTM of the underlying bond at a 95.23 price and came up with 6.67%. The TC was clearly a better value yesterday.
As previously discussed, there are six Trust Certificates that have the same GS senior bond as their underlying security. Trust Certificates Containing a Senior Goldman Sachs' Bond Maturing in 2033/Goldman's Defense and Possible Penalties in the SEC Case/ The current yields at yesterday's prices were very close, so I just stayed with PJI in order to round my position to a 100 share round lot.
The PJI prospectus can be found at www.sec.gov.
The prospectus for the underlying bond can be found at www.sec.gov.
There is certainly headline risk with Goldman Sachs. Any story about a prosecutor even doing an investigation will likely cause a downdraft in the exchange traded trust certificates, even if the underlying bonds hold steady. I personally do not see any reason to be concerned about credit risk, however, and I am satisfied with PJI's fixed coupon yield at my cost.
I have been attempting for several weeks now to reduce my risk and to increase my income stream. I am not yet ready to use cash flow to purchase stocks. I have several stocks under consideration for possible purchase, including adds to my positions in JNJ and XOM, and possible new positions in MRK and BMY.
2. Berkshire Hathaway (sold): I am always looking for a re-entry point to buy BRK-B. The baby Berkshire shares rose from $69.52 on the day before the 50 to 1 split to a high of $83.36 on 3/5: BRK-B: Historical Prices for Berkshire Hathaway Inc. The shares closed yesterday at $75.47. Under the trading rules now in effect, however, I would have to sell another stock to buy back the shares previously sold.
This site compiles a list of Berkshire's publicly traded stock holdings, and notes changes in the holdings reflected in the latest 13F filing. The site, called DATAROMA, also compiles lists of other famous, value investor portfolios and computes the latest quarterly percentage changes.
3. CPI: The Labor Department reported that the CPI for April fell .1% on a seasonally adjusted basis. The core rate was unchanged. The CPI index is up 2.2% over the past year before seasonal adjustment. Consumer Price Index Summary On a non-seasonally adjusted basis, CPI rose .2% in April. The number used in the interest calculation for both OSM and PFK (both owned) is the non-seasonally adjusted number. The numbers used in those calculations can be found at research.stlouisfed.org. My latest discussion of the calculation method for PFK and OSM can be found at ITEM # 3 CPI. The calculation for OSM's for August 2010 would use the non-seasonal CPI number for April of 218.009. The April 2009 number was 213.240.
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