Wednesday, November 5, 2008


My plan for adding to my starter position in MDT is  simple.  I will own no more than 100 shares and I will round the odd lot purchased yesterday by buying one more odd lot in the 35 to 37 range.   I will then hold for 3 to 5 years, selling sooner or even later depending on critical information that alters my long term outlook, as opposed to the noise of beating or missing estimates by a penny for example.  The first shares sold will be the higher cost shares.   

The WSJ ran an article yesterday claiming that the steepening of the yield curve is an indicator for a prolonged slump.  To see the current yield curve, go to this link at yahoo finance and click the treasury yield chartComposite Bond Rates: Bonds Center - Yahoo! Finance   After clicking the yield curve chart, this site also gives you information on the typical yields for Municipal and corporate bonds by rating.  It is not hard to get a steep yield curve, however, when the short treasury rates, for 3 and 6 month treasury bills, are currently .38% and .86% respectively.  So with the 10 year at 3.73%, a curved line drawn from .38% to 3.73% looks steep.   I have personally lost all interest in the Treasury market.  I am  consequently redeeming my treasury bills as they come due, having no desire to lend money to the U.S. government at a negative real rate of return before taxes (return adjusted by inflation), let alone after taxes which makes the real return even worse in a taxable account.   Historical bond rates can be found at the Feds web site: FRB: Federal Reserve Statistical Release H.15 - Historical Data

I will be looking tonight at the earnings release of Brandywine Realty (BDN) as a condition to deciding whether to invest in one of its cumulative preferred issues.  BDNPRC has a 7.5% coupon and is currently selling at about 1/2 of par value.  I read an article last night in Forbes where the author claimed that Brandywine and Highwoods (HIW), as owners of office buildings in suburbia, would suffer more than a REIT like SL Green that owned prime real estate in Manhattan  While that makes sense to me, it also looks like Brandywine has already been beaten to a pulp like HRPT Properties which announced earnings today.HRPT Properties Trust Announces Results for the Periods Ended September 30, 2008: Financial News - Yahoo! Finance  The author in Forbes also claimed that Brandywine had to pay 20% for cash in late October and I have not yet seen any independent verification of that claim.  So, I hope to learn more before making a decision on the preferred. 

No comments:

Post a Comment