Friday, February 20, 2009

Hartford Bond Sold/ Modoff: No Evidence of Trading/bought 50 INZ at 6.52/

For a few tense moments this afternoon, I thought there was a realistic possibility of a meltdown below 7,000 in the DJIA.  The White House allayed fears -somewhat- about bank nationalization by saying that it preferred for banks to stay in private hands.

The administration's statement is not the same as saying nationalization of a Bank of America or Citigroup is off the table.  The low hit today in BAC common was last seen in 1984.     

I am curious why anyone would vote for the current board of directors and why does Lewis still have his job?  Do we give a reward to Ken and the boys for destroying all of BAC's value since the start of the great bull market in the early 1980s, which seems like the kind of result that receives a large reward these days? 

I was discussing the market with my dad's accountant today. I gave him a prediction on where the Dow would bottom and the number was 6400. I would change my estimate of how long it will take to recover back to the October 2007 levels from 5 years to 7 to 10. The DJIA declined 6.2% this past week. 

So Bernie was not even an investor let alone a sage and wise one. The Trustee reported that there is no evidence Bernie even made an attempt to make an investment in at least 13 years.  But it has taken the worst bear market since the big GD to shine some light on the rodents, vermin and assorted cockroaches that have infested the entire world. 

There is not an ounce of confidence left in most of the formerly large banking institutions. The market has legitimate concerns whether there is any equity left in the banks' businesses. I heard Doug Kass say yesterday that he thought Citigroup and Bank of America were insolvent. Karen Finerman had been buying Bank of America preferred issues. 'Fast Money' Recap: Fast Money Recap News |  Karen's trade is a paired one apparently, shorting the common stock and going long the preferred. This is not an  outlandish recommendation since the government has tens of billions invested in the preferred stock of both of those institutions and it would not be politically advantageous for anyone to say that the emperor Lewis has no clothes.   

Would the government want to say that its huge investments, just made, are in fact worthless? It might just be better to close one's eyes and wish it will just go away,  ignoring the problems at BAC and C may be the government's best policy.  Some of the other large regionals are just going to have to be seized by the FDIC at some point within the next year or two.    

I did average down early Friday afternoon by buying 50 of INZ in my main account at 6.52.  If I get another pop in the shares as before, I will sell the 50 bought in the 7 and change range using FIFO accounting, and the first shares bought would be the higher cost shares. The yield is around 27.6% at that level.  I also made a low ball offers on AEF and IGK in a retirement account which were not filled.  Several other bond orders were not filled.  The Aegon preferred stocks were extremely volatile today with AEF trading down at one point to yield 25%.   My order was almost filled at 6.50 placed after it fell to an intra-day low of 6.48. 

For my piece of mind, I unloaded my Hartford bond for a small loss at the price of 91.84, getting most of my money back, and this loss nets with  gains that I already booked earlier in the year on sale the sales of JZV and a Cousins Preferred. While I suspect HIG will survive, I am starting to have some doubts about it which do not appear to me now to be irrational. In the final analysis, I just wanted to quit thinking about it since there is no need for me even to take a chance on it at 10% below par value. I was wrong about the maturity date.  The HIG bond matured in 2012 not 2011, another reason to sale it.    

The intra-day fall in GE was worrisome, with the shares hitting 8.98 during the day. 

  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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