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 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. Information contained in my posts has been obtained from sources believed to be reliable but cannot be guaranteed. These posts by me do not constitute investment advice, nor shall they be construed as a guarantee of future results, or as an offer of any transaction in securities. All content in these posts is provided for informational and entertainment purposes only, and it is a form of entertainment for me.
Tuesday, December 30, 2008
Buy of CUZPRA
I heard on the news tonight that 2008 will be the worst year in the stock market since 1931. I may be old but I am still young enough to say that this has been the worst year since my birth.
Near the close yesterday, I bought 50 shares of a cumulative preferred stock issued by Cousins Properties. This time I bought CUZPRA which has a 7.75% coupon and a $25 par value. I think that this is the fifth time in 2008 that I have bought one or the other of Cousins preferred stocks. I am now playing with the house's money. The other Cousins preferred has a 7.5% coupon. I choose which one to buy solely based on best yield at my cost and the series A preferred was slightly better than the series B today. At my cost of $11.5 the yield is 16.8%. There is no maturity date. I am not aware of a single REIT preferred stock that has a maturity date, and would be interested to know if there is one. This is the link to the prospectus for CUZPRA: http://www.sec.gov/Archives/edgar/data/25232/000095014403008719/g83473b2e424b2.txt
I have discussed this REIT in prior posts and will not repeat what I previously wrote about it.
Subsequent to my last discussion, Cousins, like many REITS, cut its commons stock dividend by 32%, reducing it from $.37 to $.25. Yahoo! Finance It also announced that it might repurchase up 20 million dollars of its preferred stock, series A and B. Yahoo! Finance This announcement caused a 30% temporary spike in my Series B shares that had just been purchased so I sold them at near 15.5 after buying at around 11. COUSINS PREFERRED B (CUZPRB) (those prices are from memory and are close) The price has now come back close to my original purchase price and I bought the shares back choosing the A series this time. As I have said, I am not concerned about Cousins cutting the common share dividend. This just means that the pool of money available to pay the preferred shareholder, who has preference rights over the common anyway, is that much larger. The preferred shareholder is not looking down at the common but up to the senior and secured debt. I am just worried as a preferred shareholder that those folks who own the senior and secured debt are getting paid. If they don't, I hope that there will be a few bricks left for me after they feast on the remains in bankruptcy court. I could care less about the common shareholder (in a business sense of course-I have all the love for them as fellow human beings) In fact, I would like to see them receive at least a penny a year in cash dividends (divided into 4 quarterly payments). Why? As long as that penny is paid in dividends to the common shareholder, the preferred dividend has to be paid in full. Some would say that the common dividend cut indicates a firm under stress and- thanks- I already knew that REITS are under some duress now.
I did read the most recent transcript of the earnings call and the latest 10-Q. I always look at the debt maturities which can be found on page 9 of the 10-Q FORM 10-Q I do not see anything significant in 2009 which is good. A couple are coming due in 2010 at around 100 million but this appears to be manageable at least for now. The 3rd quarter earnings showed improvement over the same quarter from last year using the standard criteria for evaluating REITs which is Funds From Operations (FFO). Seeking Alpha
Cousins Properties Reports Results for Quarter Ended September 30, 2008: Financial News - Yahoo! Finance
Cousins has a heavy concentration in Atlanta and Dallas with about 67% of its rentable space in Georgia. The development pipeline, either company owned or as part of joint ventures, was close to a billion. The report from Zachs says the company is well capitalized. At year end 2007, debt was about 52% of gross property assets. There is always risk in these issues but I will still do my nibble in Cousins preferred stocks at the 11 to 12 range which gives me a 16+% yield. But I still keep my exposure small at given point in time and just manage it. When I started investing in these two securities, the goal was to manage my position in the Cousin preferred issues until I reached the gambler's paradise, which I have now arrived at for this security. The way that I look at it, I have none of my money invested in CUZPRA now even though 50 shares appears in my account.