Wednesday, January 28, 2009

Bought back 1/2 of JZV Position at 12.50/Buy 50 FVL in IRA

Rush Limbaugh has jumped to the defense of the 1.2 million dollar redecoration of Thain's Merrill office. (
 Thain was just compelled to spend the 1.2 million because Stan's office was so very different in decor from the surrounding offices. Los Angeles Times
This new PR version of the Thain's kingly aspirations does not sound convincing.  Now, if he wants to say that Stan was a bad decorator, I am okay with that claim. 

The WSJ reported that about 6.9% of prime jumbo loans, averaging $750,000, were delinquent by 90 days or more.

I bought back 50 shares of the TC JZV at 12.5, having recently sold 100 at 16.25 in early January. SOLD JZV WITH GTC LIMIT ORDER AT 16.25 I am sure that I am playing with the house's money on this one.  This TC contains a senior bond issue by CNA Financial, and I do not have a high opinion of this company. TRUST CERTIFICATE CNA BOND JZV
The underlying bond does mature in 2023.  Par is at $25 with a 7% coupon.  So a buy at 12.5, which is slightly less than my previous buy, would give me an effective current yield based on my cost of double the coupon or 14%.   
I have bought and sold this one many times.  The last sale generated over a$400  profit in less than 3 months, including both the profit on the 100 shares and the one semi-annual interest payment.  If I ever decide to hold it until maturity in November 2023, which is doubtful for this security because CNA makes me uneasy,  the return would be 100% on the shares provided CNA pays off the underlying bond at its par value, plus the 14% annual interest payments (i.e., 14% current interest based on a $12.5 cost +  an additional 6.66% annualized arrived at by amortizing the spread between par and cost to create an annualized return, both assuming payment in full at maturity and payment of all semi-annual interest payments, for a total return of 20.66% annualized with those assumptions)   So this is another addition to the long bond portfolio but this one is almost intermediate term with less than 15 years to maturity. 

The Fed is still predicting a second half recover.

I added 50 shares of FVL in my IRA at 9.14.  It is an ETF that contains the top 100 rated stocks in the Value Line rating system. First Trust - For an ETF, the expense ratio is high at .7%, and the VL momentum model has faired poorly during this bear market.  If it continues to slide, I will just include it in my next Roth conversion.  Some individual securities were recently sold in this account for a profit.  With the 100 of FVL added in the main account, my total exposure is 150 but I am only likely to trade the 50 in the IRA. 


  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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