The forgoing table contains the latest version of the stocks in my Regional Bank Stocks's basket strategy, including those purchases discussed in today's blog. The realized gains so far in 2010 are summarized in Item # 3 2010 Realized Gains Regional Bank Stock.
Where I purchase the security in more than one lot, I am using my average cost. The dividend yield is at yesterday's closing price. In many cases, my dividend yield is much higher based on my cost. I have given this basket a small makeover, dumping some more speculative names and emphasizing current dividend yield more.
Another one of my income securities has been called by its issuer. RenaissanceRe has called for full redemption RNRPRB at its $25 par value plus accrued and unpaid dividends to the redemption date of 12/20/10. My last purchase of this security was bought solely for its after tax income generation. Bought 50 RNRPRB at 24.24
Prior to that purchase, I had been buying and selling RenaissanceRe equity preferred stocks based on my assessment of their total return potential compared to each other. Sold 50 RNRPRD at 22.05 & Bought 50 REPRB AT 20.78 Bought 50 RNRPRD AT 19.58 Needless to say, the pickings are for all practical purposes non-existent in bond land. So finding replacement securities for those being redeemed requires me to lower my standards more than I care to do. The replacement for RNRPRB is discussed below in Item # 5.
1. Bought 100 CBLPRC at $24.36 (see disclaimer): In a prior post, I mentioned that I would consider buying back CBLPRC after selling my 170 shares of the common stock, when the opportunity arose. Sold: 170 CBL @ 18.04 The opportunity that I envisioned then was at a much lower price than $24.36. But, due to my high cash levels now, I am looking for yield again. CBLPRC, with its $25 par value and 7.75% coupon, has a yield of around 7.95% at a total cost of $24.36.
I have discussed this REIT cumulative equity preferred stock in the past, as I have bought and sold it at lower levels. One of the sells was triggered by a decision to add to the common shares as a lottery ticket. When I first started to buy this security, it was trading near $10 during the Dark Period. Buy CBLPRC
RB wants to know why HK no longer owns those shares, adding as a hypothetical question, is it better to buy CBLPRC at $10 or at $24.36? And, as always, if anyone flunks one of RB's pop quizzes, then for sure a conservator needs to be appointed to manage their assets.
2. Bought 50 Citizens Holding Company (CIZN) at $18.7 on Wednesday (Regional Bank Stocks' basket strategy) (see Disclaimer) This bank is headquartered in Philadelphia, Mississippi, a name well known to historians of the Civil Rights struggles in the South. It has 23 full service banking centers in 10 counties in eastern Mississippi, and has recently opened one in Hattiesburg. This is a link to the map of those banking centers: LocationsMap .pdf This bank was added primarily for its dividend yield, its ability to remain profitable during the Near Depression, and its generally strong capital ratios. CIZN has not yet jump started earnings growth over 2009 levels however, and that is its most important drawback. The bank earned 37 cents in the 3rd quarter of 2010, up from 36 cents in the comparable quarter in 2009. For the first nine months in 2010, the E.P.S. number is $1.12 on a diluted share basis, up 1 cent from the first nine months of 2009. (page 2: Form 10-Q Looking at that in a positive light, at least the bank was earning money in 2008 and 2009 (2009 Annual Report to Shareholders at p. 5), an achievement compared to many of their compatriots in the industry. The current dividend rate is 21 cents per share, up from 20 cents in 2009, and the current rate of 84 cents annually would result in a yield of 4.49% at a total cost of $18.7.
As of 9/30/2010, its capital levels, found at page 19 of the Form 10-Q, were well in excess of levels considered well capitalized, with the total capital ratio at 15.88%; the Tier 1 Capital to risk-weighted assets at 14.64%; and Tier 1 capital to average assets at 8.84%. The net interest margin was then at 3.96%. The efficiency ratio was at 68.3%. And those numbers are without any government preferred stock on the balance sheet. The bank did not participate in TARP, which is viewed positively. Press Release I did not see either any trust preferred securities being used as equity capital, and those TPs are viewed as bonds here at HQ rather than equity capital.
This stock usually has a wide bid/ask spread and is thinly traded. The total market cap is around 92 million at the current price.
3. Added 50 to ASTORIA FINANCIAL (AF) at $12.08 on Wednesday (Regional Bank Stocks' basket strategy)(see disclaimer): This was a quick average down, and the LB was severely admonished by Headknocker for violating his cardinal rule of trading, i.e., buy only stocks that go up after the purchase. I just bought 100 shares of AF at 13.08. While the bank went ex dividend for its quarterly payment after that purchase (13 cents), the decline over the past few days was about 6.72% at the average down price of $12.08. RB wanted to buy a 1000 but LB is too cautious to buy more after such a sharp decline on no news. The dividend yield does improve to around 4.25% at a total cost of $12.08.
4. Bought Back 50 Cisco (CSCO) at $19.55 on Wednesday (see disclaimer): Fortunately, the LB- sensing trouble-unloaded the 50 shares of Cisco at 24.42 on 11/08, before the disastrous earnings and revenue forecasts for the current quarter and fiscal year were hurled at unsuspecting investors by John Chambers. I have had a series of fairly successful small odd lot trades on Cisco, usually holding the shares only for a short period of time. The shares sold at $24.42 were bought, for example, at 20.39 in early September 2010.
Of course, the LB is a Scaredy Cat, a wimpish girlie man, RB interjected, who frequently acts out of the belief that the Masters of Disaster and assorted other evildoers are ought to get it. LB responded that this constant movement in and out of positions makes HQ harder to hit, as Cassius Clay a/k/a Muhammad Ali once said, float like a butterfly and sting like a bee.
Cisco has been punished enough, though I would not expect any significant spurts in price for the remainder of 2010. The forward P/E based on the current price and the consensus estimate for FY ending 7/12 is just 10.66. Total cash per share is close to $7. The book value is around $8 per share. Chambers apologized to shareholders on Thursday for surprising them, and named Huawei as Cisco's biggest competitor. Reuters
5. Bought 50 NXYPRB at $25.15 (see Disclaimer): My main problem with NXYPRB is that I did not want to pay a penny over a par value, and would feel more comfortable buying shares at below $23. I also had previously resisted buying any bond with a maturity after 2039, due to my age. But, given the JIHAD by the Federal Reserve against savers, now well into its third year, all that I can say is "beggars cannot be choosy".
NXYPRB is an exchange traded junior bond issued by Nexen (NXY), a Canadian energy company. The coupon is 7.35% on a $25 par value. The bond matures in 2043, and I have problems with such a long maturity. On the positive side, interest payments are made quarterly in U.S. dollars.
This is a link to the prospectus: Prospectus Supplement
I do not own Nexen's common shares but I am familiar with the company. The current consensus estimate made by 9 analysts is for earnings of $1.6 in 2010 and $2.14 in 2011. The 2011 revenue estimate is 7.29B. NXY Analyst Estimates | Nexen, Inc
Nexen does file reports with the SEC and this is a link to its last filed form10q.
I do not plan to buy more of NXYPRB unless there is a substantial fall in price unaccompanied by negative news.
6. Bought 50 PSEC @ 9.97 in regular IRA (see Disclaimer): Prospect Capital Corporation is a business development corporation. Those corporations, like REITs, have to pay out at least 90% of their income to shareholders. These companies will generally lend money to private companies, and may take an equity stake in those companies.
As with REITs, the requirement to distribute such a large amount of taxable income can create a high level of dividend income. The downside is that the private companies frequently come to these business development companies for capital because they are new companies lacking a satisfactory track record for significant loans from banks or have run into some operational difficulties.
A number of the loans will have to be written off, and I view these companies as more risky than REITs. And, during the Near Depression period and for months thereafter, several of these BDCs include Prospect cut their dividends and raised capital by selling stock at historically depressed levels.
I previously bought 50 PSEC in the regular IRA account at $10.48 and thereafter sold those shares at $12.16 in March 2010. My last purchase in a taxable account was in July at 9.5.
I have also discussed this company in several prior posts. (see e.g., Item # 5 PSEC; Item # 3 Federal Reserve)
PSEC switched from paying quarterly dividends to monthly dividends when it reduced its dividend level. The monthly penny rate has been increasing slightly since that cut. The upcoming dividend payments for the months of November, December and January will be $.100875, $.101, and $.101125 respectively. Prospect Capital Declares the 28th, 29th and 30th Consecutive Cash Distributions of the Company I guess that you call that dividend raises with almost a straight face. For ease of calculating a yield I will just call it 10 cents a month which gives me a 12% yield at a total cost of $9.97, slightly more with you add up the fractional cents and assume a continuation of those kind of monthly dividend raises.
Prospect has filed a Form 10-Q for the Q/E 9/2010. Starting on page 7 of that filing it lists its investments in those private companies, and they are not exactly household names. I recognize a few companies. The net asset value of those investments is listed at $10.24. The hope is that these companies will become better investments as the economy improves, so that I have a chance for capital appreciation in the shares along with collecting dividend payments.
I own 200 shares in a taxable account and have not traded those shares. Instead, I have opted to add to the position periodically in small increments. I will trade the 50 shares purchased yesterday in the regular IRA since I view PSEC as being too risky for a long term hold in my retirement accounts. So for those shares, I would be pleased to make a $100 on the shares plus a few dividends.
I added to a LT as my only other trade on Thursday, and I may discuss it in the next post.
5. Bought 50 NXYPRB at $25.15 (see Disclaimer): My main problem with NXYPRB is that I did not want to pay a penny over a par value, and would feel more comfortable buying shares at below $23. I also had previously resisted buying any bond with a maturity after 2039, due to my age. But, given the JIHAD by the Federal Reserve against savers, now well into its third year, all that I can say is "beggars cannot be choosy".
NXYPRB is an exchange traded junior bond issued by Nexen (NXY), a Canadian energy company. The coupon is 7.35% on a $25 par value. The bond matures in 2043, and I have problems with such a long maturity. On the positive side, interest payments are made quarterly in U.S. dollars.
This is a link to the prospectus: Prospectus Supplement
I do not own Nexen's common shares but I am familiar with the company. The current consensus estimate made by 9 analysts is for earnings of $1.6 in 2010 and $2.14 in 2011. The 2011 revenue estimate is 7.29B. NXY Analyst Estimates | Nexen, Inc
Nexen does file reports with the SEC and this is a link to its last filed form10q.
I do not plan to buy more of NXYPRB unless there is a substantial fall in price unaccompanied by negative news.
6. Bought 50 PSEC @ 9.97 in regular IRA (see Disclaimer): Prospect Capital Corporation is a business development corporation. Those corporations, like REITs, have to pay out at least 90% of their income to shareholders. These companies will generally lend money to private companies, and may take an equity stake in those companies.
As with REITs, the requirement to distribute such a large amount of taxable income can create a high level of dividend income. The downside is that the private companies frequently come to these business development companies for capital because they are new companies lacking a satisfactory track record for significant loans from banks or have run into some operational difficulties.
A number of the loans will have to be written off, and I view these companies as more risky than REITs. And, during the Near Depression period and for months thereafter, several of these BDCs include Prospect cut their dividends and raised capital by selling stock at historically depressed levels.
I previously bought 50 PSEC in the regular IRA account at $10.48 and thereafter sold those shares at $12.16 in March 2010. My last purchase in a taxable account was in July at 9.5.
I have also discussed this company in several prior posts. (see e.g., Item # 5 PSEC; Item # 3 Federal Reserve)
PSEC switched from paying quarterly dividends to monthly dividends when it reduced its dividend level. The monthly penny rate has been increasing slightly since that cut. The upcoming dividend payments for the months of November, December and January will be $.100875, $.101, and $.101125 respectively. Prospect Capital Declares the 28th, 29th and 30th Consecutive Cash Distributions of the Company I guess that you call that dividend raises with almost a straight face. For ease of calculating a yield I will just call it 10 cents a month which gives me a 12% yield at a total cost of $9.97, slightly more with you add up the fractional cents and assume a continuation of those kind of monthly dividend raises.
Prospect has filed a Form 10-Q for the Q/E 9/2010. Starting on page 7 of that filing it lists its investments in those private companies, and they are not exactly household names. I recognize a few companies. The net asset value of those investments is listed at $10.24. The hope is that these companies will become better investments as the economy improves, so that I have a chance for capital appreciation in the shares along with collecting dividend payments.
I own 200 shares in a taxable account and have not traded those shares. Instead, I have opted to add to the position periodically in small increments. I will trade the 50 shares purchased yesterday in the regular IRA since I view PSEC as being too risky for a long term hold in my retirement accounts. So for those shares, I would be pleased to make a $100 on the shares plus a few dividends.
I added to a LT as my only other trade on Thursday, and I may discuss it in the next post.
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