Tuesday, December 30, 2008

Completed Additions Long Bond with minor GTC limit orders in place/LOOMIS SAYLES/SNTA

I am just about finished adding positions to my bond portfolio.  I thought that bonds presented a good buying opportunity in the September to December time frame and acted on my opinions. I am currently over-weighted in long corporate bond positions and have started to hedge that position by buying the double short ETF for the long U.S. treasury.   While I hope to hold onto most if not all of my investment grade corporate bonds until maturity or early call, I will trade the preferred stocks that I lump with the long bonds in my asset allocation.  I will constantly trade the REIT cumulative preferred issues, maintaining a relatively constant dollar amount in the issues while moving it around to realize gains and to stop losses as well as finding higher yielding ones than existing ones with a similar credit profile.  I am most likely to hold onto my floaters which were bought at opportunistic prices except for GSPRA where I paid too much.    I am not likely to add to any of them due to my assessment of their risk/reward profile, unless of course there is another significant break to the downside.  I would also seriously considering selling for a long term capital gain with a price move toward 20 or in that general neighborhood.  Most likely, I will be holding most of them for some time.

I do have some GTC limit orders for some TCs significantly below the current bid/ask.  I am sometimes successful in catching a major downdraft with one of these limit orders.  I have a GTC limit order at below 18 for the TC PYV which contains the J P Morgan junior debenture maturing in 2014 for example.  I try to remain alert about mispricings for the same bond contained in different TCs which might afford an opportunity to lower my cost basis, increase my yield and reduce my risk. (see, e.g.Managing Risk in an IRA: KTN and KVW)
Fifty shares is my average weight for the Aon junior debenture that matures in 2027 in an IRA. I currently own 50 in that account of KTN with a coupon of 8.205% bought at less than 14.  If the opportunity rises, where another TC containing this bond provides me with a higher yield with less money in the position, then I would consider adding it and then wait for an opportunity to sell KTN, assuming there was no material change in Aon's credit status significant enough to cause a reconsideration of owning any bond issued by it.

Some of the TCs that I sold this year have not been discussed in this blog.  The reason is simple. The bond can be purchased directly at a materially lower price than it can be acquired through the TC form of ownership.   This would be a mispricing in favor of direct ownership of the bond.

I am now moving on into other areas.  It is important to know enough to take advantage of the best opportunities available at any given time with the limited amount of capital than any person has available to invest.  Everyone has a limited amount of capital-no matter how much money you have to invest.   I decided this morning to sell the first shares purchased in both Loomis Sayles bond funds that I own, LSGLX and LSBRX, use FIFO accounting, and the losses from those sales will offset the remaining hard earned gains in my taxable accounts.  Given their pathetic performance over the course of the past year or so, the first shares purchased were the highest cost, then the second round of purchases would be the next highest cost shares, and so on.

There is certainly no good news this morning.  U.S. consumer confidence fell to the lowest level on record.  MarketWatch
The Case-Schiller index of housing prices in 20 large markets continues to show a fall in prices returning home prices to 2004 levelsYahoo! Finance

I have two buys on my plate for this morning.  The first was placed a few moments ago when I took my position in Synta Pharmaceuticals (SNTA) up to 100 shares by buying another 50 at the market, which was filled at $5.5.  I am playing with the house's money on this one as explained in two earlier posts. OLD GAMER HATCHES A PLAN AROUND 1 P.M TODAY Jobs /DD/ TCs with AT & T BONDS
This is a small and speculative biotech play with a market cap of around 188 million at the current price. SNTA: Summary for Synta Pharmaceuticals Corp. - Yahoo! Finance
I discussed in the earlier post its main drug candidate -elesclomol- for the treatment of metastic melanoma.Yahoo! Finance  I mentioned that a late stage failure of this drug would be near catastrophic for this company which is what made it so risky, particularly since so many drugs designed to treat this disease ultimately failed.  My reason for adding another 50 this morning had to with the announcement this morning of a drug development deal with Roche for inflammatory diseases. Yahoo! Finance   I did read the details of this deal with Roche that was filed with the SEC.  While this is certainly a positive for Synta, I would not get too excited about it.  For me, it means that there may be a back up in the event its main drug fails.  I was concerned about having all of the potential value, or the lack thereof, tied up in just one drug candidate, no matter how promising it seemed to many experts.  Again, I am simply investing excess cash flow.  I am now concentrating on small and mid cap companies whose prospects are not highly or directly correlated with the health of the economy.  Synta certainly qualifies under that criteria. 


  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. 

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