I am not keeping up with investing cash flow into new common stock positions. I keep receiving capital gain distributions by funds that have gone down a lot this year. I added a closed end fund this fall, as a contrarian play on the commodity sector, and it just went ex dividend today. GCS declared a dividend of close to $5 which went ex today, with close to half in short term capital gains.
I will keep the fund since it serves a purpose in my overall asset allocation as does the recently added Blackrock Real Asset (BCF). Both BCF and GCS are listed in closed end fund market date page at the WSJ under specialized funds. Closed-End Funds by Category - Markets Data Center - WSJ.com I have almost no stock positions in the commodity area and I am currently substituting these closed end funds for individual securities, since I am unwilling to start buying individual commodity companies with any gusto now. These funds give me some exposure and diversification, while selling at discounts to NAV.
My position in both of them is insignificant. If and when I become more comfortable with commodity related companies, like a RIO or SQM, I will just buy the stocks.
I will keep the fund since it serves a purpose in my overall asset allocation as does the recently added Blackrock Real Asset (BCF). Both BCF and GCS are listed in closed end fund market date page at the WSJ under specialized funds. Closed-End Funds by Category - Markets Data Center - WSJ.com I have almost no stock positions in the commodity area and I am currently substituting these closed end funds for individual securities, since I am unwilling to start buying individual commodity companies with any gusto now. These funds give me some exposure and diversification, while selling at discounts to NAV.
My position in both of them is insignificant. If and when I become more comfortable with commodity related companies, like a RIO or SQM, I will just buy the stocks.
Some funds manage these distributions better than others. As I have said in this post and in my emails sent prior to starting this post, I do not really mind when the fund is returning to me- as a long term capital gain distribution -part of my unrealized profit in the position.
I do not care much, however, for the ones that declare a large dividend, in a year when the fund suffers a substantial decline in value, and the dividend is mostly just a return of my capital and an undesired creation of a tax event. Never mind, it is just one reason why I was searching for something to buy this morning with the cash about to flow into the account from all of these dividends and interest payments.
I do not care much, however, for the ones that declare a large dividend, in a year when the fund suffers a substantial decline in value, and the dividend is mostly just a return of my capital and an undesired creation of a tax event. Never mind, it is just one reason why I was searching for something to buy this morning with the cash about to flow into the account from all of these dividends and interest payments.
My buy this afternoon was a small cap called U.S. Physical Therapy (USPH). I probably discussed this one in an email from last year.
I owned it briefly for a trade in the summer of 2007 selling at a profit at around 14.5+ in September 2007.
I just bought it back at 11.50, down close to 6% today.
It has fallen about a dime since my purchase. I have a lot of tolerance for price moves in my small cap positions. I may do a stop loss but it would be in the 20 to 25% range below my purchase price. I also realize that any disappointment in earnings will crater the stock price of a small company which means my stop loss will have to be a mental one, and a negative earnings report would likely result in an opening price far below the stop loss.
The market cap of this company is just 137 million. Consequently, it would not take many sellers to drive the price down.
I owned it briefly for a trade in the summer of 2007 selling at a profit at around 14.5+ in September 2007.
I just bought it back at 11.50, down close to 6% today.
It has fallen about a dime since my purchase. I have a lot of tolerance for price moves in my small cap positions. I may do a stop loss but it would be in the 20 to 25% range below my purchase price. I also realize that any disappointment in earnings will crater the stock price of a small company which means my stop loss will have to be a mental one, and a negative earnings report would likely result in an opening price far below the stop loss.
The market cap of this company is just 137 million. Consequently, it would not take many sellers to drive the price down.
USPH does have some positive characteristics at the current price. It is a small cap that is not that sensitive to the economic downturn.
I am limiting my small cap buys now to those companies whose earnings are not significantly correlated to the economy.
The company reported positive earnings growth for the 3rd quarter. Seeking Alpha Net income grew to $.21 from $.18 a year earlier. It ended the quarter with 364 clinics. (from recent 10-q filing: e10vq)
While I do not have a figure, I would suspect that most visits are not discretionary and are related to job injuries paid by workmen's compensation insurance or other types of accidents causing a need for physical therapy, which might be reimbursed by medicare or other forms of insurance.
The provision for doubtful accounts was 1.6% of total net patient revenues during the 1st 9 months ( p.19 of 3rd q 10-q) The provision for bad debts was higher at 7.3% of accounts receivable but that was down from 7.9% as of 12/31/2007.
I am limiting my small cap buys now to those companies whose earnings are not significantly correlated to the economy.
The company reported positive earnings growth for the 3rd quarter. Seeking Alpha Net income grew to $.21 from $.18 a year earlier. It ended the quarter with 364 clinics. (from recent 10-q filing: e10vq)
While I do not have a figure, I would suspect that most visits are not discretionary and are related to job injuries paid by workmen's compensation insurance or other types of accidents causing a need for physical therapy, which might be reimbursed by medicare or other forms of insurance.
The provision for doubtful accounts was 1.6% of total net patient revenues during the 1st 9 months ( p.19 of 3rd q 10-q) The provision for bad debts was higher at 7.3% of accounts receivable but that was down from 7.9% as of 12/31/2007.
USPH has a decent balance sheet with 9 million in cash and 9.6 million in long term debt.
I do not have access to a decent analyst report. The average earnings estimate is shown at $.85 for 2008 and $1 for 2009.
If their predictions come true for next year, the P.E.G. ratio would be less than 1, the P/E at about 11 using next year's earnings, and a price to sales also less than 1. This would be part of my overall stock trading portfolio for next year. I would sell it somewhere in the 13 to 16 range as I try to build up some profits within the first few months of 2009.
If their predictions come true for next year, the P.E.G. ratio would be less than 1, the P/E at about 11 using next year's earnings, and a price to sales also less than 1. This would be part of my overall stock trading portfolio for next year. I would sell it somewhere in the 13 to 16 range as I try to build up some profits within the first few months of 2009.
For reasons that I will not attempt to explain, for I am too old to make an effort anymore to understand irrational behavior, some individual investors will buy a TC like KVW the day before the ex interest day, which was today, thereby creating a tax event for themselves, and then others will sell it that day unwilling to wait 6 months for another payment.
REVISED POST AT 2:22 P.M WITH THIS MISSIVE:
After posting this comment about irrational behavior, I need to modify it some, to say it is rational to sell in an IRA a speculative bond position bought just before the ex interest date when the security rises by an amount equal to or greater than the dividend on the ex dividend day. THIS IS NOT A TAX EVENT IN AN IRA.
This happened today with the 100 of PFX just bought a few days ago in an IRA at 6.06, CB Richard Ellis/Mortgage Rates/PFX/ SLM-OSM and it went ex interest today. The transaction netted about $50 on the shares plus the dividend. While this may not make a great deal of sense, I am just attempting to manage risk in a retirement account where I try to avoid too many losses. So this round trip on PFX in the IRA will come to an annualized gain of close to 15% realized with a holding period of less than 3 weeks, adding the dividend to the stock gain. I am keeping the other 100 bought in a taxable account for the dividend and long term potential return.
This happened today with the 100 of PFX just bought a few days ago in an IRA at 6.06, CB Richard Ellis/Mortgage Rates/PFX/ SLM-OSM and it went ex interest today. The transaction netted about $50 on the shares plus the dividend. While this may not make a great deal of sense, I am just attempting to manage risk in a retirement account where I try to avoid too many losses. So this round trip on PFX in the IRA will come to an annualized gain of close to 15% realized with a holding period of less than 3 weeks, adding the dividend to the stock gain. I am keeping the other 100 bought in a taxable account for the dividend and long term potential return.
DISCLAIMER:
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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