1. Pared Stock CEF Trade: Added 200 shares of Adams Express at 9.99 & Sold 200 NIE at $17.19 Last Friday (see Disclaimer): ADX is selling at a much larger discount to net asset value than NIE. I also just received the quarterly dividend paid on my 200 NIE shares purchased at 16.61. I am keeping the 90 shares of NIE bought in the Roth IRA at 16.62 for now.
This is a link to ADX's web site: Adams Express As of Friday's close, ADX was selling at a 15.6% discount to its net asset value of $11.83. Yesterday it closed at a 15.54% discount.
This is a link to the last ADX shareholder report, for the period ending in June 2010: ADAMS EXPRESS COMPANY - FORM N-CSRS - JUNE 30, 2010 ADX is a stock CEF, primarily investing in large American companies. ADX also has a significant stake in Petroleum & Resources Corp (PEO), another CEF, with both CEFs sharing office space and personnel. ADX had a 4.7% of assets invested in PEO as of 6/30 worth $43,669,877. I also own shares in PEO. This is a link to PEO's last filed semi-annual report: PETROLEUM & RESOURCES CORPORATION - FORM N-CSRS - JUNE 30, 2010
The only information that I had about NIE's net asset value when I sold my shares was from the close on 9/30, last Thursday. At that time, based on a closing market price of $17.14 and a NAV of $18.03, the discount to NAV was just 4.93%.
2. Sold 100 APF in the Roth IRA at 15.83 Last Friday (see Disclaimer): This reduces my overall exposure to the Morgan Stanley Asia-Pacific Fund (APF) to 200 shares. I basically replaced APF in the ROTH with GGN which produces monthly income. The APF shares were bought in the Roth at $15.
3. Pared Trade: Sold 50 OFGPRA at 23.4 and Bought 50 of TDA at $25.14 (see Disclaimer): I am now at my maximum comfort level for this senior bond from Telephone & Data Systems.. The purchase on Friday was made in the regular IRA and that brings me to 200 shares altogether, with 150 of that amount in taxable accounts.
ORGPRA is a non-cumulative equity preferred stock issued by Oriental Financial Group, a bank based in Puerto Rico. My shares were bought at 19.55 in February. At the $23.4 price, the yield is 7.6%. The TDA yield is about 7.56% at the $25.13 price. Telephone and Data Systems Inc, TDA So, I basically substituted a senior investment grade bond for a non-cumulative equity preferred stock without sacrificing any yield, while booking a profit on the ORGPRA shares.
TDA pays interest and it was purchased in a retirement account. ORGPRA pays qualified dividends, and it was owned in a taxable account.
4. Bought 50 STIPRA at 19.75 Last Friday (see Disclaimer): STIPRA is a non-cumulative floating rate preferred stock with a guarantee issued by SunTrust Banks (STI). This security pays the greater of 4% or .53% over the 3 month LIBOR. Final Prospectus Supplement Distributions are classified as qualified dividends.
I previously sold this security at $20.90 after collecting some dividends. Those shares were purchased at $17.2 in September 2009.
5. Sold 50 MI at 7.14 and Bought 50 SBSI at 18.73 (Regional Bank Stocks' basket strategy)(see Disclaimer): Marshall & Ilsley (MI) has recovery potential, but I suspect that it will be a slow slog given the mistakes made by this bank's management during the real estate bubble years. MI has not paid the government back, and owes 1.715 billion in TARP funds (p. 120 Form 10-K). The government's preferred stock is still shown on the balance sheet as of 6/30/2010 (p. 2 10q). This article at TheStreet focuses on ten regional banks that have not repaid the government, and MI is one of them One way for MI to pay back TARP funds is to sell common stock to raise funds, which will have a further dilutive impact on existing shareholders.
MI sold 100 million shares at $5.75 back in June 2009. The bank then sold another 156.4 million shares at $5.75 in October 2009. (p.120 Form 10-K) The bank did not use any of those funds to pay back TARP. I do not expect MI to raise the dividend until the government is paid back. Even after the government's preferred stock is redeemed, I would expect slow and modest increases for years to come, partly due to the substantially increased share base.
I bought those 50 shares at 5.84. Another reason for selling MI is just to cut down on the workload in following so many regional banks.
I added 50 shares at $18.73 to my position in Southside Bancshares, a bank based in Tyler, Texas. While Marshall & Ilsley may have more upside potential over the long term, SBSI does not have the MI's issues. For one, as I previously discussed when I purchased 50 shares of SBSI at 19.49, Southside did not accept TARP funds and has excellent capital ratios without government money. SBSI is also paying its shareholders a decent dividend and has not diluted their ownership by issuing stock at depressed levels to raise capital. The current dividend yield is about 3.6% at a total cost of $18.73. Southside Bancshares Inc, SBSI Stock Quote
Since I was busy yesterday, I did not conduct anymore trades which has allowed me to catch up.
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