For the second time since last Thursday, I was not able to access my Fidelity account when I needed access. Apparently, Fidelity is not prepared for exceptional traffic to its online brokerage site. I did see some anomalies early in trading today that I could have captured provided I could have gained access to this account. I attempted to gain access every five minutes during the morning until I just gave up around 9:15 a.m. C.S.T. The same thing happened last Thursday when I was denied the ability to buy some bonds that had fallen a lot in value. This is aggravating, and reminds me of the earliest days when online trading was in its infancy. Unfortunately, most of my investable cash is at Fidelity, and I only have cash accounts. None of the other accounts had sufficient cash to do what I wanted to do either last Thursday or this morning. When I tried to access the Fidelity account at around 10 a.m. C.S.T., I was allowed into it, but the opportunity that I had seen earlier in the morning had already vanished.
After this latest incident, I decided to open a new brokerage account at Vanguard and to transfer some funds from Fidelity to that new account.
I was somewhat surprised the EURO did not gain more strength today. FXE closed up only .4%. The double short for the European stock index, EPV, declined 15.32% to close at $23.98. I did unload both EPV and EUO late last week. /SOLD EPV at 26.32/Sold EUO at 23.4
The ^VIX moved down almost 30% today. This is still way too volatile for the Old Geezer, who does not find this kind of up and down movements reassuring. Was Santander (STD), one of the largest banks in the world, worth $9.83 last Friday and $12.09 today, a 23% difference? (see article at MarketBeat - WSJ) (OWN STD and STDPRB)
1. Bought 50 First Interstate BancSystems at 15.64 (FIBK) ( Regional Bank Stocks strategy) (see Disclaimer): I had no trouble in accessing a satellite brokerage account, after being denied access to the Fidelity account, which enabled me to purchase early this morning 50 shares of FIBK, which represents my 4th regional bank purchase recommended by Cramer. The other three were those recommended by him in his book "Getting Back to Even". Those purchases were Glacier (GBCI), New Alliance (NAL), and First Niagara (FNFG): Bought 50 GBCI at 13; Bought 50 FNFG at 13.7; Bought NAL at $11.76. Of those recommendations, I would view only GBCI to be successful so far, particularly compared to some of my own picks in this basket.
The discussion by Cramer which perked my interest can be found at CNBC's summary of a Mad Money show from last March. After researching FIBK then, and reading its latest earnings report, I decided to buy it when it had a dip below $16, which oddly occurred today during the market's rally. This is the replacement for EWBC, which was recently sold at over a 200% profit. SOLD 50 EWBC at $19.04
First Interstate's dividend yield at the current 45 cent annual penny rate per share would be around 2.9% at a total cost of $15.64.
The current consensus estimate is for an E.P.S. of $1.05 in 2010 and $1.25 in 2011: FIBK: Analyst Estimates for First Interstate BancSystem As of 3/31/2010, the net interest margin was 4%. "As of March 31, 2010, we had consolidated leverage, tier 1 and total risk-based capital ratios of 9.58%, 13.04% and 15.00%, respectively, as compared to 7.30%, 9.74% and 11.68%, respectively, as of December 31, 2009." (page 32: e10vq)
For its first quarter of 2010 the bank earned 32 cents per diluted share. e10vq The bank raised net proceeds of 153 million in late March with its IPO (see page 22 e10vq)
FIBK is headquartered in Billings, Montana. As of 3/31/2010, it had 72 offices in Montana, South Dakota and Wyoming.
2. SOLD 100 GJL at $23.85 in the ROTH Today (See Disclaimer): GJL is a synthetic floater that was bought at $20.6 back in July 2009. Since par value is $25, and the interest paid by GJL was expected to be on the low side, this was a low expectation buy. Interest was paid monthly. The security pays the greater of 3% or 1.25% over the 3 month treasury bill, which is still hugging zero. The underlying bond, a senior security from Daimler Finance North America, matures on 11/15/2013. Bought Another 100 of GJL I am satisfied with the monthly interest payments received to date and the $300 or so profit on the security. I intend to invest the proceeds in another bond that has a higher current yield.
3. Bought 50 JBI at 24.81 in the Roth Today (see Disclaimer): JBI is a Trust Certificate containing a senior bond from Duke Capital, now called Spectra Energy Capital, a wholly owned subsidiary of Spectra Energy (SE). When the underlying bond was issued, Duke Capital was part of Duke Energy (DUK). Spectra was later spun out to Duke shareholders and Duke Capital went with SE as I understand the history of this bond. This history is discussed at page 9 of this 10-q filed by Spectra Energy Capital. SE guarantees the obligations of Spectra Energy Capital. Form 10-Q A profile description of Spectra can be found at Reuters.com.
The TC has a higher coupon than the underlying bond. The TC's coupon is 7.875% and has a $25 par value. The underlying bond has a 6.75% coupon. (see prospectus: www.sec.gov). The underling bond and the TC mature on the same day, 2/15/2032. Interest is paid semi-annually in February and August. The last trades for the underlying bond were in excess of its par value: FINRA The FINRA site shows that the bond is rated BBB by S & P and Baa2 by Moody's.
I started talking about this TC when it was selling for around $17 in October 2008. TRUST CERTIFICATES JBI DUKE I also discussed it when I purchased a 100 shares last October at $25.1: Bought 100 of the TC JBI at $25.1 With the commission, my yield at today's purchase price is close to the coupon of 7.875% which is an improvement over what I could reasonably expect to receive at any time during GJL's remaining life.
4. Government Malfeasance in the BP Oil Spill: I read over the weekend that the U.S. is going to investigate the events leading to the massive oil spill in the Gulf to determine whether there was misfeasance or malfeasance. WSJ I can answer that question. Yes, of course, there was misfeasance and malfeasance by the U.S. government. A number of stories written over the past two weeks have substantiated that blowout preventers (BOPs) have failed to work in the past, and most of the world required a back up system to shut off the well.
As I understand it, there are several backups available. One device activates the BOP by radio controlled switches. The Deepwater Horizon did not have that backup. Once the blowout preventer manufactured by Cameron failed, there was no viable option left. It is obvious that there were no viable alternatives left to prevent a massive oil spill along the Gulf Coast.
For years, the staff of the Mineral Management Service has recommended that a backup system be mandatory. www.gomr.mms.gov This was what responsible nations around the world required for offshore drilling. Those recommendations were not followed for the usual reasons. Instead, the political hacks bowed to the pressure of the oil companies, interested in saving money, that such a system was not necessary. During the Bush administration, as Paul Krugman pointed out, the management of the Mineral Management Service was turned over to an industry lobbyist. NYT It was substantiated in 2008 that the rot in the Mineral Management Service was widespread, as the oil industry had corrupted government employees with cocaine, prostitutes, and money. NYT The efforts of the oil industry to combat effective environmental regulations is summarized in this NYT story.
It can not be said for certain that a backup to the blowout preventer would have plugged the hole. If one had been installed, at least the government and BP could say that everything had been done to stop a spill once there was a blowout.
So, if the government wants to find BP guilty of misfeasance, then it also needs to convict itself as an equally culpable co-defendant.
5. Bought 300 of the CEF IMF at $16.5063 (See Disclaimer): This is an LB trade that had no support from other staff members here at HQ. The Old Geezer, in a moment of lucidity which quickly passed, "Doesn't Headknocker already own a similar fund WIW". RB said that the NERD is way too cautious, and the IMF buy is just another confirmation of that indisputable fact.
IMF invests mostly in U.S. inflation protected bonds. As of the last SEC filed report, the fund had about 86% in TIPs and 5.3% in non-U.S. inflation protected securities. The remainder was invested primiarily in corporate bonds at 5%: www.sec.gov
As of 5/7, IMF's discount to its net asset value was 8.24%, more than the similar fund WIW. LB wanted the option to sell one or the other, depending on any narrowing of their respective discounts. If that did not happen, LB was content to buy TIPs at a discount to their market value, and to collect monthly dividends while it waits for its plan to work. The current dividend is 5 cents per month for IMF, and monthly distributions are always welcome here at HQ.
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