I am doing pretty good this year for an old geezer tortoise, maybe I am a Bond Stud now, up about 15% this year as of the close today. Just for the benefit of all the Young Turks out there, a good portion of my gains this year have come from the bond side of the ledger which includes Trust Certificates, Trust Preferred, and other exchange traded bonds, along with equity preferred issues which I lump with bonds just for the purposes of my asset allocation. My stocks have done extremely well, so far. I always want to say "so far" because the bogeyman is always waiting just around the corner to take it all away from me.
I have added a new book to my profile, received today, called "Managing the Art of Asset Allocation" by David Darst. I just glanced at this book, and would estimate that I will finish it sometime in 2011. The others listed on the profile page are ones that I am reading now, at the rate of maybe 10 pages a week. I hope to finish Taleb's two books by Christmas.
1. ZBPRA: A few days ago I purchased a floating rate preferred issue from Zion's bank, ZBPRA, which went ex dividend today and nonetheless rose almost 18% to $10.95 on heavy volume for this security of over 178 thousand shares. NYSE I bought it at $7.8 on 5/7. Bought 100 ZBPRA at $7.8/Corrections Corporation Earnings Although I am reluctant to diagnose the mental state of my fellow investors, I suspect that the sudden interest in this equity preferred security is related to the announcement today by Bank of America of its offer to exchange equity preferred stock for common stock. This caused my two positions in BAC equity preferred securities to spike almost 50% today. Both were sold. I have no idea whether Zions will do the same. It is possible. This is a link to an article that summarizes the opinion of Keefe, Bruyette & Woods that Zion's bank might need to raise 1.3 billion in equity capital. MSN Money Zions was not included in the first round of stress tests which involved just the 19 largest financial institutions.
Morgan Stanley recently raised Zions to overweight while cutting its price target on the common stock to $24 from $28.
I did not buy the equity preferred in hope of a pop caused by a conversion, and would simply view another one of those to be a pleasant unexpected bonus. I just thought that this floating rate equity preferred was attractively priced at the $7.8 per share, particularly when Zions was still paying a common dividend, always a relevant consideration for the preferred shareholder.
2. Foreclosures: The Mortgage Bankers Association reported today that a record 12% of the mortgages were delinquent. Forty six per cent of the new foreclosures were just in four states-California, Nevada, Florida and Arizona. Mortgage rates are starting to rise too, recently hitting the highest level in about 3 months. WSJ.com
3. Dell: I do not own shares in Dell. I was interested in Dell's comments that it was preparing for a powerful replacement cycle when customers start to buy computers to run the new Window's operating system. NYTimes.com
4. Treasury Auction: The market seemed relieved today when the Treasury was able to sell 26 billion in 7 year notes without a problem. This was the final auction in a week that the Fed was able to sell 101 billion of debt. The 10 year treasury is currently yielding about 3.61%.
5. Heinz: HNZ increased its quarterly dividend slightly to $.42. This was a recently acquired position. Buy of HNZ at 31.67/Tax Advantages of Equity Preferred Dividends/Foreclosure Acceleration/Disney Downgrade by Pali/Cap & Trade/NADX
HNZ also reported earnings of 55 cents, a penny ahead of expectations, but down from 61 cents in the year ago quarter. The company forecasted earnings for fiscal 2010 in the range of $2.6 to $2.7. Heinz Reports Record Fiscal 2009 Sales and Profit - Yahoo! Finance
6. MJH: This is a TC containing a TP issue from Bank of America. I would have no interest in buying this security at the current price. I am likely to keep it just because it will be paying me about 24% in interest based on my cost until maturity in 2026 or early redemption. It declared its regular quarterly interest payment which goes ex in early June. This security was also added during the early March 2009 panic: Buy of 50 MJH at $7.51/ Pop in My Animal Spirits Balloon/Japan/ Zulauf/CNBC/Meet the Press I am almost a little shocked that I mustered the nerve to do so much buying in early March. As RB is fond of saying, LB was hiding under the covers calling for its mama when the DJIA approached 6500. RB Touts His Horn as HQ Closes for the Evening
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