Thursday, February 19, 2009

ING Loss/New York Post Cartoon Sets a New Bar for the Tennessee GOP/CR, GRT, VRNM/ Bank Preferred Issues

Added 6/3/2009: There is a later Gateway Post that contains links to my posts on the ING Preferred stocks: ING Preferred Stocks: Links in one Post 

The free site, registration required, QuantumOnline has the ING preferred stocks grouped under the category with other preferred stocks that pay a qualified dividend: Preferreds eligible for the 15% Tax Rate Table - QuantumOnline.com 

**************original Post:


1.  ING Reports Loss & ING Preferred Stocks: ING did report a huge loss yesterday for the 4th quarter.WSJ.com

The loss was due to write-downs in its investments and totaled 4.68 billion. WSJ.com 

While large, it is less than the company estimated in January MarketWatch, so this was old news but the market reacted negatively primarily in the price of ING's preferred stock issues rather than the common stock. The Company said it was too early to decide whether a commons stock dividend will be paid in 2009. In a prior post, I talked about the latest deal ING struck with the Dutch government for the state to assume most of the risk of ING's U.S. mortgage portfolio.  

My investments in INZ and IND are viewed as speculative by me, and I will trade them to reduce risk and to take advantage of their extreme volatility up and down.  While acknowledging their risk, the equity preferred issues, unlike the common shares, are still paying a dividend and both IND and INZ will go ex dividend in a few days. 
At the closing price yesterday, the dividend yield for both of them is over 22%.

This is a link to the INZ prospectus: www.sec.gov 
A more recent ING preferred issue has a 8.5% coupon, IGK.  The prospectus can be found at the SEC

I was not familiar with IGK until late yesterday. Interest which is deferred at ING's option will bear interest at 8.5%. Interest would not be paid on a deferred dividend classified as a mandatory deferral.  I just glanced at this prospectus, focusing on its deferral provisions which is the most important part of a prospectus for a security like IGK now, in my opinion.  

2.  Tennessee GOP-Chip Saltsman: Tennessee republican and former chairman of the state GOP, Chip Saltsman, distributed a campaign song called "Barack The Magic Negro" to aid his chances recently to become the national RNC chair. Conservative ideologues: Blame it all on minorities Chip Saltsman Withdraws From RNC Race After 'Magic Negro,' 'Star Spanglish Banner' Stirs 


The RNC ran an advertisement against the black congressman Harold Ford featuring a white woman- suggestively dressed- pretending to call Harold for a good time, when Ford was running ahead of Bob Corker in the senate race which Corker ultimately won. NYT I hear from relatives up north asking about such things but hey New York and Tennessee do have some things in common.  The New York Post may have set a new bar for the Tennessee GOP to surpass with a cartoon featuring a policeman shooting a chimpanzee and saying that they will have to find someone else to write the next stimulus bill.  NYT We all know about how blacks have derisively been labeled as chimps by racists in our society, and the chimp being shot several times by the police in the New York Post cartoon can only be President Obama.  Kevin Phillips' strategy for turning the south red was a sure thing. What is the Appropriate Political Label

3 Crane:  I did not realize Crane (CR) was selling at 17 and change and has been reduced to small cap status.  CR expects a weak 2009 but reaffirmed its outlook for a profit between $2.1 and $2.4. I will place it on my small cap monitor list.   

4. Sanford:  R. Allen Sanford reminds me of Robert Vesco.  He even looks a little like him with that mustache.  Sanford reportedly used a tiny accounting firm, with an office above a hair salon, to audit results. MarketWatch

I view the following WSJ article as highlighting the extreme incompetence of the SEC.  WSJ.com

The SEC opened its investigation of Sanford in 2006 after a lawsuit was filed by a former executive at Sanford's firm alleging a Ponzi scheme. The SEC kicked the investigation into second gear about two years later after Bernie "allegedly" confessed.  

Five million people are receiving unemployment benefits, with new claims above 600,000.  

5. Glimcher Realty:  Glimcher Realty reported its results for the 4th quarter. Glimcher Reports 2008 Results and Provides 2009 Earnings Guidance: Financial News - Yahoo! Finance I have small position in the common and preferred issues, viewing those positions as highly speculative.  I labelled the recent purchase of common shares to be the equivalent of a lottery ticket.  The company reported a 94% occupancy at its core malls and that it had addressed 119 million of it 2009 debt maturities, always an important consideration now with REITs.  FFO for the 4th quarter was 59 cents a share.  GRT estimates FFO for 2009 at between $1.85 to $1.95.  The 4th quarter results appear to higher than expected with the 2009 forecast in line. GRT: Analyst Estimates for GLIMCHER REALTY TRST - Yahoo! Finance  I did not see anything in the release about the dividends. The stock is just trading above a buck as of yesterday and is up over 30% this morning. I already own all of the GRT lottery tickets that I am willing to buy. 

6. METPRA: One of the floating rate preferred stocks that I own, METPRA, declared its quarterly dividend, with an ex date on 2/25.  Due to the fall in 3 month LIBOR, the 4% guarantee continues to be the applicable rate.    

7. OSM-CPI Floater Issued by Sallie Mae: A  floater tied to the CPI, OSM, declared its monthly dividend, which was lower as anticipated, due to the fall in CPI.  This one floats 2% over CPI  and several months of  CPI monthly numbers are used to calculate the dividend. As the CPI higher numbers from several months ago are replaced with the current low numbers, the dividend yield will go down as explained in my earlier posts.  This one matures in 2017.  

8.  Bank of America & Citigroup: There are not too many more points left in BAC until it hits zero.  Citigroup is running ahead of BAC in that race.  The only conclusion to be drawn from the current pricing of the common and preferred shares of both BAC and C is that the market has little faith in their survivability.   The Citigroup common is trading at $2.7 this morning, and one of its Trust Preferred issues, CPRS, is trading at less than 1/4th of its par value to yield almost 25%. CPRS Stock Quote

If the market is wrong and these banks survive, paying their trust preferred dividends without any deferrals, then a contrarian investor would profit handsomely by buying one of their trust preferred debt securities now.

I am just not that adventuresome, and I would not touch Citigroup's preferred stocks even with a nibble. The only question is whether I am willing to gamble $500 on a BAC trust preferred. BAC's non-cumulative equity preferred issues are trading as if an elimination of the dividend is a foregone conclusion BAC-PE 

California lawmakers finally agreed to a budget. NYT 
    
9. Cost of Credit Crisis to U.S. Government: The following linked article has the tally of U.S. government interventions in the credit crisis at over 10 trillion and counting.  $8.6 Trillion Was a Drop in the Bucket On the bright side, a lot of this money is not actually spent.  

10. VRNM: Verenium (VRNM), one of my micro micro caps with a 100 share position, announced an agreement with BP to build a commercial scale cellulosic ethanol plant. MarketWatch
I did not previously discuss this add.  VRNM is trading just above a buck.  This is another one of my lottery tickets.  I will win more with these lottery tickets than I will playing the real Tennessee power ball lottery where I feel fortunate to hit two numbers out of six which is still a total loss unless one is the powerball number. 

11. Predicting a Bottom?: No one really knows where the market will bottom.  I certainly do not know.  I was just looking at a long term S & P 500 chart.  We have already returned to 1997 levels in that index.  A fall to around 450 would just take us back to 1994.  On a percentage basis that would be a huge fall from current levels.  I would not be surprised by a powerful counter trend rally starting at any time but I would just be impossible for me to view, at the current time, any such a rally as anything other than another bear market rally off over sold conditions.  
12. KO Dividend Raise: Coca Cola is being good to its shareholders by raising the dividend to 41 cents from 38 cents.  Yahoo! Finance

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