Wednesday, February 11, 2009

Buy 50 KTV/CBG, GIVEN, PLD, BMY/ Senator Alexander: Spending does not Stimulate the economy/

C B Richard Ellis posted  better than expected earnings. Reuters The earnings came in at 37 cents before items versus expectations of 27 cents, but revenue came in below estimates, declining 30% from a year ago. CB Richard Ellis Group, Inc. Reports Full Year 2008 Revenue of $5.1 Billion and Earnings Per Share of $0.97: Financial News - Yahoo! Finance I recently bought 50 shares at $3.49, having bought and sold that stock profitably at much higher levels. CB Richard Ellis/Mortgage Rates/PFX/ SLM-OSM
The company, however, refused to give a forecast for 2009.  Reuters

Given Imaging, another recently added small cap, reported earnings of 9 cents for the 4th quarter before items.  The company ended the year with 90.3 million in cash , short term investments and marketable securities. Given Imaging Reports Fourth Quarter and Full-Year 2008 Results: Financial News - Yahoo! Finance  Revenues came it at 33.8 million.  The earnings appear to me to be better than expected according to the information at Yahoo Finance. GIVN: Analyst Estimates for Given Imaging Ltd. - Yahoo! Finance

Bristol-Myers (BMY), another position, had a successful IPO of its Mead Johnson division. Yahoo! Finance  Yahoo! FinanceMead Johnson will trade under the symbol MJN

An article at site suggests a portfolio built around Taleb's thesis that investors are ill-equipped to handle risk.

Although I did vote for the Republican Lamar Alexander, as a Senator and when he ran for governor, it was mostly a decision based on my usual criteria for casting a vote.  He was less objectionable to me than the other candidate.  I was not impressed with his factually indefensible statement quoted in the Tennessean this morning where he said "This is mostly a spending bill, not a stimulus bill" | The Tennessean   During the last quarter, federal spending added almost 2% to GDP.  I understand that Alexander does not want to spend money to build bridges, roads, and schools and considers money spent on renovating schools to be a far lower priority than a trillion spent in IRAQ.  Corker had a slightly more intelligent reason for casting his vote apparently recognizing that an increase in federal spending will have a stimulus impact.  I understand that the two Republicans would oppose an increase in unemployment and food stamp benefits as wasteful spending but it does put money in the pockets of people likely to spend it. 

U.S. exports declined 6% in December. Econoday Report: International Trade February 11, 2009

ProLogis, an industrial REIT, reduced its FFO guidance for 2009.   Yahoo! FinanceI have a small position in the common and preferred stocks of First Industrial.   Along with Duke Realty, all of these industrial property REITs have suffered a great deal due to the economic slowdown with no light yet visible at the end of the dark tunnel that they all find themselves.  I am not adverse to raising my position in FR to 100 shares but I want to see the next earnings report before making a decision.  The current price results in a price to book ratio of .21 and a price to sales at .36. FR: Key Statistics for FIRST IND RLTY INC - Yahoo! Finance
The current market cap is just 191 million but the stock has been in free fall since mid September 2008 when it traded at over 30.  Some of my prior discussions of FR can be found in these posts:  REITS: FIRST INDUSTRIAL AND COUSINS PROPERTIES

Sometimes, in these posts, I point out disparities in the pricing of similar or functionally equivalent securities. Functional Equivalence in Bond Trading/Hedge Funds & Independent Adminstration When I point out differences, I am not saying that either price is the correct one, or that I view either as a buy, but simply that there is no justification for the difference.  I have another example.  There are several Trust Preferred securities issued by Wells Fargo.  Of those, I have owned in the past WSF, Well Fargo Capital Trust IV.  It has a $25 par value, a 7% coupon, and matures on 9/1/2031. 
It has probably been a couple of years since I had a position but I have noted a few meltdowns in the price during the past six months, followed by a recovery.  I would view Wells Fargo along with J P Morgan to be the best of a bad lot now.   The current price of WSF is 22 and change which generates a yield of 7.85% which does not tempt me.  As we know, Wells Fargo just acquired Wachovia.  It is my understanding that it is liable for the Trust Preferred stocks issued by Wachovia just like its own.   Wachovia had acquired many years ago another North Carolina bank called First Union.  While I am not 100% positive, I believe that Wells Fargo would have the same obligation to pay dividends on a Trust Preferred issue of First Union as it would for one of its own issues.  Now, taking all of that into account, there is a TC which has a Trust Preferred issue of First Union as its underlying bond.  Remember I am using Trust Preferred to mean a junior debt issue to be distinguished from an equity preferred security.   I went ahead and bought 50 of this security, symbol KTV, at  20.50.   It has a 8.2% coupon, a $25 par value and matures on 12/1/2026.  The yield at my cost is about 10%, so the yield is over 2% better than WSF with a shorter maturity and for a functionally equivalent security.  Unlike other Trust Preferred securities including WSF, which pay dividends quarterly, this one pays every six months in December and June. 
This is a link to the prospectus:
The prospectus for I believe is the underlying security is as follows:
This looks like a typical bank trust preferred indenture in its main provisions.  Interest can be deferred for up to five years.  Any deferrals will accumulate which means cumulative.  The common limitations on paying dividends on junior securities are present.   I also believe, but I am not 100% certain, that these trust preferred issues are senior to the government's equity preferred which means the bank has to pay the dividend if it pays the government its preferred dividend.   I mentioned earlier that I might speculate in some of these trust preferred securities where it made some sense to me. If anyone finds an executed agreement between a bank and the government on the issuance of preferred stock to the FEDS please let me know
I still have no interest in speculating in trust preferred issues from Bank of America or Citigroup.  I view those as far more speculative than the ones from J P Morgan and Wells Fargo.  
The FINRA information on the underlying bond: 
The underlying bond has a lower coupon at 8.04% than the TC at 8.2% 

The underlying bond appears to be thinly traded.  But at its last reported price at the FINRA site, it would have a higher yield.  The problem is finding a seller at that price which is magnified by the fact that I would want no more than 1 $1000 bond which would make it just about impossible to get a fill.  Most of the time I can not get a fill with a $5,000 order to buy above the market price or a sell below it when trading in the bond market.  So, I will go with the  TC  rather than trying to buy the bond under those circumstances. 


  I am not a financial advisor but an individual investor trying to navigate my way through a difficult market. I have never worked for a financial institution and never will.  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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