Wednesday, February 18, 2009

Buy of 50 INZ at 7.82/CBS, HPQ & GREENSPAN

Today, I have inserted the earliest known photograph of me reading the stock tables or that is how I choose to remember it.  An older brother is likewise pictured reading a children's book of poems. The picture was taken in 1955. 

I have previously traded ING equity preferred issues successfully.  The key is too catch these issues during a major downdraft and then lighten up when and if they recover.  The "if" part of that sentence may need more emphasis than the "when".   

Generally and hopefully, they will recover, provided the company keeps paying the preferred dividend, avoids bankruptcy, and investors' mood improves. An issue like INZ falls to its current level when the fate of ING Group ( ING) becomes more uncertain which is currently the case. Late today, I bought 50 shares of INZ, at $7.82, and placed it in my traditional IRA for the usual reasons. 

 In case ING defers a dividend on INZ, I do not want to pay taxes on a dividend that is not received  and that is one reason to place it in a retirement account.  And, my purchase was in a traditional IRA in case the security continues to fall in price, in which case it will be included in my next Roth conversion and I will have to pay less tax on it. One benefit of the crash is that I am able to move assets out of a traditional IRA and into a Roth with significantly less tax liability. 

I am playing with the house's money on INZ.  It will soon go ex dividend and my last purchase was in the main account at close to the same price.  Some Nibbles Got Filled: JZE, PJS, INZ and FAX

The coupon is 7.2%, a par value of $25 and no maturity date which is always a negative. My last sale, which was a quickie, was done at 14.49 in October 2008. Partial sell on INZ COMPLETED ING Receives 13 Billion from Dutch Government

At a minimum, the future looked as bad then as it does now.  The dividend yield at my price is about 22.5%.   

As I have noted, both ING and Aegon preferred issues are dangerous now, since the only limitation on deferral of the preferred dividend has been removed with the elimination of the common stock dividend plus the companies financial condition is worse than it was six months ago, as evidenced by their respective last earnings reports.  I noted this later issue in a recent post about Aegon.  

INZ fell almost 20% in price today, a crash of sorts INZ 

Tomorrow, I may take a harder look at some other equity preferred issues.  

It will not be easy to buy any bank Trust Preferred issue now.  However, if the bank survives, they will end up being extremely lucrative investments.  I am more comfortable in buying one from J P Morgan than from Bank of America.  But I just did a calculation and found that a 20% yield will cause my money to double before tax in 3.8 years and that is the temptation. The Rule of 72 (with calculator) - Estimate Compound Interest  I noticed one BAC trust preferred security was trading today at a price to yield 24%, but I had a deer in the headlights look when trying to make a decision on it.  I passed for now. 

Hewlett Packard earnings were relatively okay considering the awful economic environment in the 4th quarter.  GAAP earnings came in at 75 cents down from 80 cents in the year ago quarter. Revenues rose just 1%.  Non-GAAP came in at 93 cents up from 86 cents. I do not own it but it is on my monitor list. The company did guide down the forecast for the next quarter below consensus estimates.  None of this should surprise anyone. 

As expected CBS reduced its dividend to five cents from 27 cents. Reuters  I am not interested in it and the cut in the dividend makes me even less interested. 

In case anyone cares about Greenspan's opinions on any subject, he did say that the current recession will "surely" be the "longest" and "deepest" since the Great Depression. Recession will be worst since 1930s: Greenspan | U.S. | ReutersThanks, I already knew about it. 

  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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