1. Hertz: I still own shares in a Trust Certificate, DKR, which contains a Hertz senior bond maturing in 2012 as its underlying bond. The position has just about tripled from my purchase cost and I have received two semi-annual interest payments. At some point, I am likely to declare victory on that position. Still, I own it which requires me to follow news about Hertz. HTZ rose almost 16% yesterday after Hertz announced that profits for the second quarter would be in the 9 to 12 cent range, well above the consensus forecast for a 1 cent gain. Hertz also forecasted a profit for the year at 12 to 15 cents, again well above the consensus forecast of a 23 cent loss. The company also said that reservations in the U.S. had been up for 9 straight weeks, and the company was scrambling to add new cars to its fleet.
2. SLM (Sallie Mae): SLM rose almost 11% yesterday on an upgrade from J P Morgan to overweight, with a $12 year end price target. Morgan views the transition to being primarily a loan servicer will lower risks and improve visibility.StreetInsider Market I have no position in the common but I do own 200 shares of OSM, a floating rate bond issued by SLM maturing in in March 2017. (see, e.g. Item #3: Late Afternoon Buys and Sells 6 9 2009)
3. Dividends and Interest: The exchange traded senior bond of Phoenix Insurance Company (PFX), which has been on a really up and down roller coaster for months, will go ex interest on Monday. The floating rate senior bond from Prudential that I bought yesterday also goes ex interest for its monthly payment. With the fall in CPI in recent months, the penny rate has fallen to $.04208. I noticed from the WSJ dividend listing that the two recently added Vanguard stock ETFs, VV and VTI, went ex dividend on the 24th. I will reinvest the dividends for both of them. Campbell Soup, an owned position, also declared its regular dividend.
4. Sanofi: The decline yesterday and today in Sanofi (SNY) is due to health concerns about one of its main drugs, Lantus, for diabetes. Lantus is Sanofi's third best selling drug. As a result of those concerns, Morgan Stanley cut its recommendation to equal weight and reduced the price target to 48 euros from 58 euros. J P Morgan also cut its rating to neutral. The analysts are predicting that a large and long study, yet to be published, will show an increased cancer risk associated with Lantus. Bloomberg I own 50 shares, and this kind of event is a mini-Black Swan. I still have a profit in my shares however. Sanofi said that the drug is safe: MarketWatch
5. Jim Rogers & Agricultural Prices: I mentioned yesterday that Rogers had a positive view on agricultural prices increases over the long term. I have no views on the future outlook of agricultural prices. I am always interested in Rogers' opinions. I own 300 shares of RJI, recently purchased, which is an ETN for the Rogers International Commodity Index (RJI). BOUGHT RJI Morning Trades: Bought RJI This index does have some agricultural commodities in it. ELEMENTS ETN Products The weighting however would be overwhelmed by the movement in energy products and metals. If I wanted to go with Rogers on increasing the weight for agricultural commodities, I might consider adding a 100 shares of RJA, which is the index just for those products. ELEMENTS ETN Products That index has not done so well over the past year.
As of 6/25/09, it has fallen 39.29% and is down 3.55% over 5 years. Because this security owns futures contracts, it will of course be volatile and it will have difficulty tracking the spot prices. elements.pdf
Also, an investor needs to keep in mind the differences in ETNs and ETFs. An ETN is an unsecured debt instrument. In the case of this ETN, it is a debt issue of the Swedish Export Credit Corporation. SEK Historically since 1998, the agricultural index has substantially underperformed the total commodity index as shown in the chart in the above referenced PDF. I do not have a position in RJA, yet. I did recently add 200 shares of the metals ETN: Bought MSPRA RJZ & ADX/ COMMODITIES AS AN ASSET CLASS
As of 6/25/09, it has fallen 39.29% and is down 3.55% over 5 years. Because this security owns futures contracts, it will of course be volatile and it will have difficulty tracking the spot prices. elements.pdf
Also, an investor needs to keep in mind the differences in ETNs and ETFs. An ETN is an unsecured debt instrument. In the case of this ETN, it is a debt issue of the Swedish Export Credit Corporation. SEK Historically since 1998, the agricultural index has substantially underperformed the total commodity index as shown in the chart in the above referenced PDF. I do not have a position in RJA, yet. I did recently add 200 shares of the metals ETN: Bought MSPRA RJZ & ADX/ COMMODITIES AS AN ASSET CLASS
Another alternative for exposure to agriculture would by Powershares DB Agriculture Fund (DBA). That fund invests in the four main agricultural commodities. InvescoPowerShares.com - DB Agriculture Fund - DBA invescopowershares.com/pdf/P-DBA-PC-1.pdf
Powershares also has an ETF focused on global agricultural stocks: PAGG I do not own it, and it has been under some pressure lately due in part to the fall in Potash and Mosaic. PAGG started this year at $17.99 and closed yesterday at $20.86, down from its closing high on 6/11 of $24.11. This ETF would be a way for an investor to gain exposure to this sector since this ETF contains a variety of companies such as Monsanto, Potash, Archer Daniels, Mosaic and Potash. PAGG - Global Agriculture Portfolio Holdings I would probably buy this ETF before buying one of the individual securities contained in it, just to achieve diversity, which is always important to me. I am also not that familiar with any of the companies other than Monsanto and Potash.
6. Savings Rate: If consumers do not spend, then it will be hard to jump start the economy. Consumers are still in a savings mode, with the savings rate increasing to 6.9% in May, the highest rate in 15 years. On the bright side, consumers are slowly repairing their balance sheets by a variety of means, including saving more and spending less, as well as financing their mortgages at the currently low rates. I would like to me young again, and be able to finance my first home purchase at around 5+% for 30 years, after a sizable fall in prices, and with Uncle Sam kicking in a tax credit. There are many talking heads that believe this kind of savings rate will be the new normal, because it is like a trend for the past few months. I would be shocked if the American consumer stayed in such a savings mode for an extended period of time, and view it as a long term positive that they are starting to be more responsible.
7. Bought 100 PFK in main account: I am sitting on cash in my main account, earning close to nothing, less than nothing when you consider the real CPI and taxes, so I bought 100 of PFK at $18.466, which was falling today on light volume. Most likely, I will hold this one until maturity unless something really unexpected happens to Pru. This is a senior bond maturing in 2018 at $25 and pays monthly interest tied to a 2.4% spread over CPI. I bought 90 shares in an IRA yesterday at $18.94. Bought PFK in IRA/Bank of America/ Verizon & AT & T/Jim Rogers/Added 30 GE with cash flow
DISCLAIMER
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 readers of these posts 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. By way of example, it is unlikely that I will ever need the funds contained in my retirement accounts. 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. It is always important to follow the investment process. the investment process/links to further information on canadian energy or royalty trustsInvestment Process Part II: Bonds and Bond Like Investments NOT A RESEARCH SERVICE/Add of PWE Last Week 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. Opinions are subject to change and they certainly evolve over time as information is assessed and analyzed for compatibility with prior opinions, the only process for a serious investor, and a topic of frequent discussion in this post. Everyone is responsible for their own investment decisions, and no one should ever make any decision unless they are willing to accept full personal responsibility for it.
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