I did some shuffling late in the day.
1. Sold Discovery Communications: I do not think that I have discussed DISCA which I bought with cash flow a few days before starting this blog. The stock has had a good run since October increasing from around $15 to $25. I certainly did better with DISCA than I would have done with the other one which I considered buying back in those dark days. I decided to sell my shares at around $23.5 to help pay for the 100 shares of VTI that I bought today.
2. Sold FRPRK in Taxable Account: I bought this position in my taxable account last October at $11.1 and sold it today at $14 with a limit order that was hit when FRPRK went over $14 intraday. In a prior post I mentioned that I would transfer the risk of holding the First Industrial cumulative preferred issues to my regular IRA. /Sold FRPRJ: Transfer of Risk to IRA/ This process has now been completed in the way that I really like to do it. I now own both FRPRJ and FRPRK in my traditional IRA account with the FRPRJ position bought at $10.4 just a few days ago. added 50 FRPRJ as a gamble The FRPRK shares were bought in that account earlier at $8.4, Buy FRPRK It was that preferred issue that I sold today for $14. If there is a deferral of the dividend later on, and FR is not out of the woods yet, I would prefer to have these two preferred stocks in a retirement account, when and if that happens. With no common dividend being paid now, there is always a danger of deferral. FR did declare its preferred dividends recently and both of these issues will soon go ex dividend. Also, dividends from REIT cumulative preferred issues do not have the same tax advantages as other equity preferred stocks. Lastly, if the preferred shares do fall in value significantly below my purchase price, I can include them in my next Roth conversion.
3. Sold KEY in Regular IRA and Bought 50 OSM: I mentioned in a prior post that I wanted to add another 50 of OSM in my regular retirement account but did not have sufficient funds. I bought 50 of OSM today at $11.8 after selling 50 KEY at $5.6 that I just bought $4.6. Along with the few bucks already in the account plus the proceeds from SBGI, sold yesterday, I barely had enough to buy 50 OSM in that account. OSM is a floater that pays monthly interest tied to a 2% spread over CPI, as calculated by the obtuse provisions contained in the prospectus. It matures in 2017. www.sec.gov If Cramer is right about Sallie Mae CNBC.com, then SLM is likely to survive for another 8 years and this security will double in price assuming payment at maturity plus the monthly interest payment. The current yield will be juiced by buying it at less than 1/2 par value.
Assume, by way of example only, that CPI averages 2.5% over the remaining life of this security, which is not unreasonable even though it is lower now. Add the 2% spread to that number, multiply .045% times the $25 par value, then the interest payable under those assumptions would average $1.125 per year for 1 share. Since I bought shares not at the $25 par value but at $11.8 today, my yield with those assumptions about the future which may or may not turn out to be close would be 9.53% ($1.125 divided by $11.8 cost=9.53%) I believe that it goes ex interest tomorrow. I now own just 200 shares and will not buy more, since I am more concerned about SLM than Cramer.
Assume, by way of example only, that CPI averages 2.5% over the remaining life of this security, which is not unreasonable even though it is lower now. Add the 2% spread to that number, multiply .045% times the $25 par value, then the interest payable under those assumptions would average $1.125 per year for 1 share. Since I bought shares not at the $25 par value but at $11.8 today, my yield with those assumptions about the future which may or may not turn out to be close would be 9.53% ($1.125 divided by $11.8 cost=9.53%) I believe that it goes ex interest tomorrow. I now own just 200 shares and will not buy more, since I am more concerned about SLM than Cramer.
As a general consideration, I prefer having a security that pays interest in an IRA and a stock that pays a qualified dividend in a taxable account.
I previously discussed this floater tied to the CPI in a number of prior posts starting in the 4th quarter of 2008. The most recent ones were generated after Cramer selected SLM as his speculative stock of the year. I simply prefer to own this bond rather than the common.
Cramer & Sallie Mae:
Cramer & Sallie Mae:
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. Anyone interested in a topic may want to review all discussions contained in the blog about it by using a relevant search term in the box at the top. 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.
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