1. C B Richard Ellis (CBG): CBG, a recent lottery ticket purchase Bought Lottery Ticket in CBG at 2.39, announced this morning that it would be selling 13.4 million shares to the Paulson & Company for gross proceeds of approximately 100 million. CBG intends to sell another 50 million in its common shares pursuant to an at-the-market offering program. Y Fin
CBG sold 57.5 million shares in November 2008 to raise 206.7 million, with an offering price of $3.77 L A (page 47: www.sec.gov ) CBG also gave very tentative guidance for the 2nd quarter of between breakeven to a $.07 profit. Y Fin The current forecast is 7 cents, so I would view this announcement as an earnings warning. CBG also plans to sell 400 million in ten year notes. This is just another company that entered the current recession with no game plan and way too much leverage. I read several reports that Paulson & Company made billions by correctly anticipating the housing market meltdown. CBG has been cutting expenses in an effort to reduce 500 million in annual operating costs, WSJ.com, which will hopefully improve profitability during the next up cycle in commercial real estate.
The stock responded positively to this news in early trading rising over 10%.
2. 30 Year Mortgage Rate at 5.57%: The window of opportunity for consumers to repair or to improve their balance sheets by refinancing at less than 5% has most likely past into history. The average rate for the week ending June 5th rose to 5.57%, about a point higher than the low reached back in March 2008. m This rise in rates has already caused a 11.8% decline in refinancing applications this week. Reuters Based on my perspective, the current rate is historically a low one. But the rate prevalent in March coupled with the decline in home prices presented a rare opportunity for new home buyers particularly with the new federal tax credit. Federal Housing Tax Credit for First-Time Home Buyers: Home That $8,000 credit for new home buyers is set to expire at the end of this year. Federal Housing Tax Credit for First-Time Home Buyers: Frequently Asked Questions
3. CB & L Properties: CBL, another lottery ticket that entered the current downturn with far too much leverage, priced its offering of 58.35 million shares at $6, with an option for the underwriters to purchase an additional 8,752,000. Y Fin
4. Sold Remaining Bank of America Bonds: I had 5 short term bonds left and I sold them this morning to raise about 5 thousand to put back into my stock purchase kitty. The short term bonds were bought prior to 2008 as I shifted my asset allocation out of stocks. Starting in February of this year, I have been selling those bonds at or near par value to raise cash to buy stocks with the first 30 grand re-allocated in March. I have kept my cash allocation steady, having decided to fund the stock purchases with proceeds realized from the short term bond sales. Some of these buys in March are summarized in ITEM #8 Potpourri This Evening May 18th/Bought More AT & T There is a tension between my more standard techniques used to assess whether stocks present a good buying opportunity and my newer VIX Asset Allocation Model, which tension is being relieved some by this asset allocation shift: More Of Less Safe After Averages Fall-Tension with Vix Model Modification of Trading Rule in Unstable Vix Pattern: Dynamic Asset Allocation/
The Vix Model was extremely valuable in 2007. VIX Chart from 2007: Alerts and Triggers Major Disruption of Cyclical Stable Bull VIX Pattern However, it was impossible to reign RB in when the DJIA was approaching 6500.
5. Microsoft: S & P raised Microsoft to a buy and increased its price target to $26 from $22, based on the recent launch of BING and the upcoming introduction of Microsoft's new operating system, Windows 7. I have previously mentioned that the timing of the new operating system may be at an opportune time, with a recovery in the economy starting to gain traction ahead of the Christmas buying season. It is hard for me to become too excited about Microsoft, but I see no reason to part with the mere 50 shares that I bought at $17.79(Bought 50 MSFT at $17.79) south of $30, which is my 1 year price target on MSFT.
6. Floaters: Most of the floaters that I own have enjoyed a good rally over the past few weeks. I am not interested in adding to them at current levels. I tried to be an opportunistic buyer of those securities, both the equity preferred and synthetic floaters, and I did okay in achieving that objective. It is time to move on however. Floaters: Links in One Post
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