I am not a financial advisor but an individual investor trying to navigate my way through a difficult market. In these posts, I am acting as an unpaid financial journalist and an occasional ornery political commentator. I am also aggregating financial news stories that I view as important and providing any reader of these posts, assuming there are more than a couple, with links to those articles, sort of a filtered, somewhat intelligent, free search engine. Any discussion made by me of particular securities is not a recommendation to buy or to sell. Trade at your own risk. Consult with your financial advisor prior to making any purchase or sale. I will try to identify my sales too but it may take a few minutes after I implement them to create a post explaining my reasons. The sale may before or after the post. Before buying or selling any stock, even one recommended by a trusted financial advisor, please research it and make up your own mind which is what I always try to do. Research would include reading reports, reviewing financial records, earnings estimates, sec filings and prior earnings releases and news. In this post, and all others by me, I am merely describing my reasons for purchasing or selling securities, and the potential pitfalls that I identified prior to purchase or the reasons for a sale. The securities mentioned in this and all posts written by me may not be suitable for others based on their unique financial position and risk profile. Always read the prospectus before buying a Trust Certificate, bond, preferred stock or other bond or bond like investments.
Tuesday, November 25, 2008
Industrial REITS; WB, TARP & LNC/PNX SENIOR BOND (PFX)
Wachovia downgraded several industrial REITs from market perform to underperform. Most of these REITs have already been decimated, including ProLogis (PLD) and Liberty Property (LRY). The firm reduced Duke Realty (DRE) to market perform from outperform. My only position in this area is First Industrial which is apparently not in this analyst's coverage universe. Reuters I would think that all of the points made in this report are already well known. It would not surprise me to see someone with a lot of spare money swooping in to buy one of them within the next year or so given the already depressed prices.
Speaking of Wachovia, that failed bank is continuing the great American tradition of rewarding top executives with tens of millions of dollars, possibly as much as 98 million. Yahoo! Finance Wells Fargo has predicted it will take 74 billion in losses on the Wachovia assets after the mergerDeal Journal - WSJ.com :
As I understand it, this would be on top of the tens of billions already lost by Wachovia. MarketWatchI wish someone would reward me every time that I err and let me keep all of the benefits from my correct decisions while assuming most if not all of my losses. Sounds like a good deal for me.
The sharp rise in Lincoln National today was due to Paulson saying he had not ruled out giving life insurance companies TARP funds and he acknowledged that several had qualified to receive those funds by becoming bank holding companies. TheStreet.comOne of the reasons for the substantial decline in life insurance stocks was the fear of earnings dilution from having to sell stock to recapitalize after suffering significant investment losses. This fear recedes some in the event TARP funds are received which is not yet a done deal. One thing is for certain. The prices for life insurance companies stocks, as well as their senior bonds, have plummeted in recent weeks, including such well known names as Lincoln, Prudential (PRU), Hartford (HIG) and MET Life (MET) as well as lesser known companies such as Sun Life (SLF) and Phoenix (PNX).
I will just briefly mention that I have bought a senior bond from Phoenix (PNX common stock symbol), with a 7.45% coupon and a $25 par value that is now trading at around 7, for an effective yield of almost 26%. The symbol for the bond is PFX. Dividends are paid quarterly and maturity is in 2032. PFX Stock Quote - Phoenix Cos Inc New Stock Quote - PFX Quote - PFX Stock Price I view this as higher risk than the Pru bond bought yesterday but not as risky as some of these REIT preferred shares that I have been buying lately, like GRTPRF, or some of the junk bonds like PIS and DKR. The prospectus can be found at this link:
The price of this security floats up and down a great deal, having traded between $4.5 and $24.25 within the past 52 weeks and was near 16 on 11/10/08. This company is into selling variable annuities which is the source of the concern. PYahoo! Finance
SEE A M BEST RATING OF THIS SENIOR BOND: Yahoo! Finance