Tuesday, February 7, 2012

Added 50 NYB at $12.79/Sold 1 USG 6.3% Senior Bond at 89/Bought 100 KFN at $9-Regular IRA/Sold 100 HTGC at $10.85/Sold 30 of the LT ZINC at $11.59

The closed end funds CSQ and CHW, both owned, raised their monthly dividends. CSQ's monthly dividend was increased to 7 cents per share from 5.25 cents. CHW raised its monthly dividend to 6.2 cents per share from 5 cents. Calamos Closed-End Funds It remains to be seen whether the foregoing increases will be supported by a return of capital. My last purchase of CSQ was last December. Added 50 of the Balanced CEF CSQ at $8.28 I am reinvesting the dividend. I also recently made a small purchase of CHW.  Bought 100 of CHW at $7.18


1. Added 50 NYB at $12.79 Last Wednesday (REGIONAL BANK BASKET STRATEGY) (see Disclaimer): Prior to this purchase, I owned 100 shares of New York Community Bancorp, bought in a taxable account. Those purchases were made in October 2009, and my total average cost per share is $11.31. Bought 50 NYB at $11.3 Added 50 NYB at $11

I have sold 100 shares in an IRA bought in two 50 shares lots. Bought 50 NYB at $10.9 Added 50 NYB at $10.57 The first lot was sold in 2009 at $21.48 profit and the second lot was sold in 2010 for a $331.03 profit: 

2010 NYB 50 Shares Realized Gain= +$331.03
Sold NYB in IRA at $17.51 (JULY 2010 Post). I would have been better off selling the remaining 100 shares at that price. I had not previously included the foregoing snapshot and gain in my tally of realized gains, which I corrected last week. I noticed that 200 shares had been included in my 2009 Gateway Post, Regional Bank Stocks, and conducted a search on what happened to the other 100 shares since the OG has trouble remembering those kind of details these days. 

The shares went ex dividend last Friday, 2/3/2012. New York Community Bancorp The dividend yield at a total cost of $12.79 is approximately 7.82%. The current quarterly dividend is 25 cents per share. While I have no reason to expect a dividend cut, no one should be surprised by one. GAAP net income is trending slightly above 25 cents. NYB reported 4th quarter net income of 27 cents per share. 

I discussed this bank's 4th quarter earnings report at Item # 3  NYB. (see SEC Filed Press Release)

Morningstar has a 4 star rating on NYB. I reviewed the most recent report, which was informative. That report is available only to subscribers. I also reviewed the Credit Suisse report available to Charles Schwab customers. CS has an outperform rating and a $17 price target. I view that target to be too high with a one year time frame even though I did sell 50 shares in 2010 at a higher price. 

NYB is discussed in a number of articles found at  Seeking Alpha.

The current consensus E.P.S. estimate is for $1.06 in 2012 and $1.12 in 2013. That low expectation E.P.S. growth is a problem. NYB Analyst Estimates 

Profile page at Reuters
Key Developments page at Reuters

New York Community Bancorp fell 22 cents in trading yesterday to close at $12.48. 

2. Sold 1 USG 6.3% Senior Bond Maturing 11/15/2016 at 89 Last Thursday (Junk Bond Ladder Strategy)(see Disclaimer): I have now bought and sold this bond twice. The last purchase was made last August at $80.98. Last March I sold this same bond at 94.25, having bought the bond at 89 a few weeks earlier. The latest profit on the bond came to just $48.23. 

After I sold this bond, the company reported a worse than expected loss for the 4th quarter. SEC Filed Press Release Reuters I am not likely to buy this one back anywhere near its current price.

3. Sold 30 ZINC at $11.59 Last Friday (Lottery Ticket Basket Strategy)(see Disclaimer): The Lottery Ticket strategy has been unusually successful over the past few weeks. One of the recent successes is the 30 shares of ZINC purchased at $7.9 last October. The percentage gain was excellent, so the RB harvested it without giving it too much thought.

2012 ZINC 30 Shares +$94.79
Horsehead Holding closed at $11.4 yesterday. 

4. Bought 100 of KFN at $9 in Regular IRA-Last Friday (see Disclaimer):  I noticed that Cramer was recommending this company which is not a reason to buy it. His recommendation did cause me to look at the company. The dividend yield at a $9 total cost is approximately 8%. KKR Financial Holdings  

Thornburg Investment Management filed last Friday a SEC Schedule 13G claiming a 8.85% ownership stake in KKR Financial Holdings. 

SEC Form 10-Q for Q/E 9/30/11 (E.P.S. of 18 cents up from 12 cents)
Link to FAQs about this LLC: FAQs

This company will send out K-1s which is just another headache when and if held in a taxable account.  K-1 & Tax Information

KKR Financial Holdings LLC closed at $9.1 yesterday. After the market close yesterday, KFN reported its 4th quarter earnings. Fourth Quarter and Full Year 2011 Net income for the quarter was reported at $77 million or 43 cents per share. Book value per share increased to $9.41 from $9.14 as of 9/30/11. The Board declared a 18 cents quarterly dividend and a special dividend of 8 cents per share.  

5. Sold 100 HTGC at $10.85 Last Friday (See Disclaimer): I just bought this Business Development Corporation (BDC) @ $9.7 (1/26/2012 Post). Last Friday, the shares popped over 10% based  on an upgrade to buy at Stifel Nicolaus (PT $11.5).

I would be content with any gain on the shares of a BDC after collecting a few dividends. The only reason for me to invest in any of them is for the income generation. A 10%+ gain in the shares is worth over 1 year of dividends, even for this high yielding security, and I realized that amount in a few days. That percentage gain is too much, too quick, for the OG to ignore for a BDC. 

Hercules Technology Growth Capital fell 32 cents in trading yesterday to close at $10.58.

                                    

2 comments:

Anonymous said...

fyi, the Thompson Creek bond descrip is on sedar:
http://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00012509

Nov 7, 2011 entry

Interim financial statements/report - English

then page 7. debt, it's senior & guaranteed by all their subsidiaries, seems ok for (3) to me.least # offered.

TENNINDEPENDENT said...

I am familiar with both this bond and Thompson Creek. I run searches at Fidelity everyday for junk bonds with the parameter of at least a 7% yield and the ask price at or below 100 and this bond shows up.

I have not bought it for several reasons. The current yield at a 97 price is 7.6% which is not yet appealing to me for a junk bond with a 2018 maturity, particularly when I have to buy at least 3 of them. I do not believe the bond has much appreciation potential compared to bonds with similar credit profiles and ratings which I have bought. That would include, for example, the two senior secured Exide bond bought at 81.375% with a 8.625% coupon or the 10.5% senior secured United Refining bond, both maturing in the same year as the TC unsecured senior bond. Lastly, I am just about tapped out buying junk bonds, and have been selling some that have similar current yields to the TC bond, especially when selling at or near par value.

If I could buy just 1 TC bond at below 95, I would probably do it now.

I am doing well in my stock portfolio now and also do not see a good reason to take more risks with junk bonds. I have come close to buying the TC common as a LT.