Wednesday, September 30, 2009

Sold LT Sunopta at $4.06/Bought 50 LT SNV at $3.73/Wolseley & Landec Earnings/Repeat of the 1970s Inflation?

1. Coca-Cola (owned): The buy of my remaining shares of KO was at $38.72. Buy of KO at 38.72/Newt Gingrich & GOP Ideology on Financial Regulations Yesterday, Citigroup initiated coverage of KO with a buy and $61 target.

2. KBC Belgium (nothing owned): KBC announced that 72% of the outstanding hybrids were repurchased in response to its tender offer, for a total of 834 million Euros. Forbes.com So, apparently the European Commission is okay with using state aid to repurchase the hybrids, even when it had previously asked KBC to defer paying the coupon on the hybrids. That is just beyond my comprehension. Item # 7: EC: Beyond My Comprehension It simply does not compute.

3. Wolseley (OWNED-LOTTERY TICKET): This LT was recently purchased knowing that patience and long term were the two operative words. The company reported better than expected operating profit before charges of 447 million pounds for the year ending in July 2009. More importantly from my perspective Wolseley reduced its debt to 959 million pounds from 2.47 billion pounds a year ago. www.otciq.com/otciq FinancialReport This firm trades on the Pink Sheet electronic exchange in the U.S. Wolseley plc - WOSCY At some point, I may splurge, go crazy, and buy another 50 shares of this one, to round up my odd lot to an even 100 big ones.

4. Sold 100 Sunopta (STKL)-Lottery Ticket (See Disclaimer): STKL was sold yesterday at $4.06, a good percentage gain from its purchase at $1.65 in 12/08. Buy of Sunopta: Highly Speculative This is just pure profit taking. STKL is selling at a high multiple of its estimated 2010 earnings of .24. STKL

5. Huntington Bank (HBAN) (owned Lottery Ticket): I really do not have much confidence in most of the bank lottery tickets purchased over the past few months. RB is responsible for this shotgun approach to picking up some of these regional bank stocks in the low single digits, and hoping that a few may return to prosperity 5 to 10 years down the road. This approach would have worked just fine in 1990-1991, the last time the banks blew themselves up with bad real estate loans. Huntington was upgraded by FBR yesterday to outperform with the price target raised to $5 from $4, apparently based on the recent capital raise of 400 million as being sufficient to weather the current downturn. I have no idea whether or not that is the case. All of these large capital raises at prices prevalent back in the early 1990s are just dilutive from my perspective to long term shareholders, but I am a shareholder of very recent origin buying well after the banks blew themselves up. I just bought 50 shares, which shows my overall lack of confidence, at $4.27: Proctor Upgrade/Bought 50 Huntington Bank as Lottery Ticket/Sold 50 ISF at $14.65 and Bought 50 AEF at $16.82/ Pared JZH by Selling 50 at $20.2

6. Bought 50 Synovus Financial at $3.73 (SNV)-Lottery Ticket (see Disclaimer): The RB is continuing its frolic in demolished regional banks. SNV has been smashed, and rightly so, ringing up gigantic losses in its real estate loans so far this year. The second quarter report was horrible. It is almost impossible to conceive of any group of people being able to rack up such losses even intentionally. Synovus Reports Results for Second Quarter 2009 The bank also recently diluted the heck out of long term shareholders by selling 150 million shares at $4, Synovus , a price prevalent back in the early 1990s SNV Stock Charts . In March 2007, SNV closed over $32. Synovus was downgraded yesterday by FBR based on expected losses yet to come in its real estate portfolio with a price target lowered from $3 to $2.5. Okay, I know that it is really bad already. But I did read a Reuters story that a few analysts were less negative than FBR: Reuters The second quarter loss was pretty bad though: Synovus On the positive side, and it is hard to find a positive here, I believe that this bank has a concentration of real estate loans in the Atlanta area and the Case Shiller index released yesterday shows an increase in home prices in Atlanta of 2.3% in July compared to June, and a 1.5% increase in June compared to May. standardandpoors.com /pdf/index/CSHomePrice S & P has a sell rating, two stars with a $3 target. The 52 week low was around $2.3 in early March. I do expect some failures in my LT purchases, and the bank LTs are certainly no exception.

The success that I have had this year with the LTs, not likely to be repeated, gives me some leeway to venture into disasters like Synovus, and to hold for the long term without even risking my profit realized from the Sunopta sell yesterday, even if SYN goes to zero. So, that is sort of how I look at it, investing the profit in Sunopta by buying 50 shares of Synovus.


7. Landec (owned-Lottery Ticket): While Landec's earnings for its first quarter of fiscal 2010 beat the consensus estimate by a penny, income fell to 8 cents, down from 11 cents in the year ago quarter, on a 15% fall in revenue year over year. The 2010 fiscal first quarter did have one less week however. The company ended the quarter with 69.5 million in cash and marketable securities and no debt. Market capitalization at the current price of $6.33 is around 167 million. Price to sales is hovering around .75 with a 5 year P.E.G. of less than 1 according to YF. LNDC: Key Statistics for Landec Corporation This is a hold for me. It is possible with some positive news, and/or a price handle below $6, that I will take Landec out of the LT category and round up the 50 share lot to 100 shares. Bought 50 LNDC at $6.2-Lottery Ticket/SLM/Impact of Any Payment to Dutch State in May

8. CIT: According to the WSJ.com, CIT is preparing to exchange up to 30 to 40% of its 30 billion in debt for new debt secured by assets along with most of the equity in the firm. A similar story is from Reuters this morning. Another story is at Bloomberg.com.

9. Philadelphia Federal Reserve President Charles Plosser: Plosser is concerned about a repeat of the 1970s inflation cycle that developed after the severe recession in 1973, due at least in part to easy Fed monetary policy, and further believes that economic slack may not be a good predictor of future inflation:


"While I see little risk of inflation in the near term, I do see greater risk of higher inflation in the intermediate to long term for several reasons. First, monetary policy is extremely accommodative. We have expanded the Fed's balance sheet to an unprecedented degree since last fall and have kept interest rates at historically low levels. Second, I put less weight than many other economists do on the idea that economic slack or low resource utilization is a reliable predictor of inflation....
It is particularly hard to measure slack near the turning points in business cycles, so making policy decisions based on measures of such slack becomes problematic....
Our current circumstances pose an eerily similar set of conditions to those in the mid-1970s. The nation had experienced a severe recession, in part due to a large oil-price shock. Many economists and Fed policymakers believed that a large amount of slack existed and it would help slow inflation and keep it low, even as the Fed undertook a rapid monetary expansion to spur economic growth and lower the unemployment rate.
Unfortunately, slack was poorly measured and turned out to be not as significant as first estimated. Thus, the Fed's monetary expansion led to rising inflation for the balance of the 1970s. One lesson learned during this episode is that inflation expectations can matter a great deal, and if they become unanchored — that is, if the public comes to believe that the Fed will not do what is necessary to preserve price stability — then inflation can rise quickly regardless of the amount of so-called slack in the economy. The price we paid to regain control of inflation and the Fed's credibility to do so came in the form of the 1981-82 recession and was a steep one."

I too have been drawing parallels with the 1970s recently: 1974 or 1982: Start of Cyclical Bull in a Long Term Secular Bear Market or the Start of Secular Bull Market? More on 1982 or 1974 I previously mentioned a study by the staff of the San Francisco Fed that suggested the output gap in the U.S. economy may not be as large as many believe, Item # 3 What is the Output Gap/ If the output gap was as large as currently estimated, then core inflation should have fallen a lot more during the recession. And, some of what may be considered production capacity, which is currently idled, may be permanently mothballed capacity.
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Tuesday, September 29, 2009

Napco, First Industrial, Walgreens, Gannett? Case-Shiller Index Up More than Expected/Strategic Hotels

1. Iran On a Collision Course With Israel: The Iranians launched a long range missile capable of carrying a nuclear weapon to Israel yesterday. CNN.comThe Iranian Defense Minister said that Israel's days were numbered. CBS News Video It is hard to see how Israel will allow the Iranians to proceed and develop the capability of hitting Israel with a nuclear weapon. It would be hard to convince many sensible people that the leadership in Iran is rational.

2. Al Queda New Suicide Bombing Techniques: CBS News ran a story last night that an Al Queda operative hid a bomb inside a body cavity, and was able to activate it near the Saudi chief of intelligence without being detected by several screening techniques. He was able to get so close under the pretext of turning against Al Queda. Security

3. Case-Shiller Index: The Case-Shiller composite home price index for 20 metropolitan cities rose a greater than expected 1.6% in July. standardandpoors.com/pdf Minneapolis had the largest percentage gain at 4.6% from the June reading, while only two cities had modest declines in prices, Seattle at .1% and Las Vegas at 1.1%. A continued recovery in home prices will be the best tonic for sustainable economic recovery.

4. Strategic Hotels (own preferred stock-BEEPRA): BEE is a REIT that owns several luxury hotels. Strategic Hotels & Resorts I knew that I was skating on some thin ice when I bought 100 shares of BEEPRA at $7.55 in October 2008, one of Strategic's $25 par cumulative preferred stocks. BEEPRA: STRATEGIC HOTELS PREFERRED A I received one dividend before the REIT started to defer paying all of its cumulative preferred dividends, and has now deferred three payments in 2009. The coupon is 8.5%: Prospectus Supplement The price subsequently tanked to around $2 and has since recovered to over $9, closing at $9.65 yesterday. BEE-PA Prior to deferring the preferred dividends, Strategic eliminated the common dividend and the common was trading at around $1 in mid July 2009. It has been in a rally mode too since August, rising to $2.51 as of yesterday's close. I have not seen any news to account for the recent activity.

This is some of the relevant language from the BEEPRA prospectus about unpaid cumulative dividends:

"Notwithstanding the foregoing, dividends on the shares of Series A Preferred Stock will accrue regardless of whether: (i) we have earnings; (ii) there are funds legally available for the payment of such dividends; or (iii) such dividends are authorized by our board of directors. Accrued but unpaid distributions on the shares of Series A Preferred Stock will not bear interest, and holders of the shares of Series A Preferred Stock will not be entitled to any distributions in excess of full cumulative distributions as described above. All of our dividends on the shares of Series A Preferred Stock, will be credited to the previously accrued dividends on the shares of Series A Preferred Stock. We will credit any dividends made on the shares of Series A Preferred Stock first to the earliest accrued and unpaid dividend due. ....

We will not declare or pay any dividends, or set aside any funds for the payment of dividends, on shares of common stock or other shares that rank junior to the shares of Series A Preferred Stock, or redeem, purchase or otherwise acquire shares of common stock or other junior or parity shares, unless we also have declared and either paid or set aside for payment the full cumulative dividends on the shares of Series A Preferred Stock and all shares that rank on a parity with the shares of Series A Preferred Stock for all past dividend periods and the current dividend period, except by conversion into or exchange for other of our stock ranking junior to our Series A Preferred Stock as to dividends and upon liquidation.

So the dividends continue to accrue but without interest and have to be paid in full prior to the payment of a common dividend.

This is a link to the script used in the second quarter conference call: Script Used by the Spokesmen During the Second Quarter Earnings Conference Call

As of 6/30/2009, BEE listed over 1.3 billion in mortgage debt on its properties. (see page 19: Form 10-Q) The 10-q also goes into detail about some exchangeable notes in the initial principal amount of 180 million dollars that are senior to BEE's preferred stock (see pages 20-21). The debt maturity schedule is on page 24. I really do not see much of a positive nature in Strategic Hotels & Resorts report for the Second Quarter of 2009. This is a close call as to whether or not I want to keep my shares of BEEPRA, particularly after they have recovered from around a $500 unrealized loss to around a $200 unrealized profit. I already have a small tax headache with the accrued and unpaid dividends, and I may not want to continue that issue into 2010.

5. Walgreen (owned): I was too timid in buying Walgreens last October. I had developed a schedule to buy more on the way down, with my next target level being below 20. Since those targets were not hit, I ended up with only 50 shares.SARAH and the Cook Inlet Beluga Whales/WALGREENS AND REFINERS Late Friday Buys Walgreens reported earnings of 44 cents this morning, five cents better than the consensus estimate, on an 7.6% increase in revenues.

6. Gannett (owned): When Gannett was bought, a comment was made that it was one of the LB's value picks, and the RB called it a delusional value pick that only the LB could see and everyone else called it a value trap. The buys were at $7.75 and $10.68 with dividends reinvested to buy additional shares. LATE DAY TRADES: GCI, CBL, FR, SLG, NYT, NWSA OLD GAMER HATCHES A PLAN AROUND 1 P.M TODAY GCI announced upside guidance for earnings at 39 to 42 cents excluding charges. Gannett

7. First Industrial (own common and preferred-LT on common): FR announced its intention to sell 12.5 millions shares of common stock. This caused my small position in its cumulative preferred to rise and my LT in the common to fall. The preferred shares have been bought and sold several times profitably, and the shares currently held have just about doubled in price.

8. NAPCO Securities (owned Lottery Ticket): Napco was bought at $1.02. ROK/Balancing Risk & Reward on SNTA/Buy 100 NSSC at $1.02/Electronic Medical Records & the Stimulus Bill/M & DKQ It reported 2nd quarter sales this morning of 18.79 million. The company reported a loss of 13.382 million or 70 cents per share which included some non-cash impairment charge and an amortization expense related to acquisitions of 10.58 million. The company did generate positive cash flow from operations of 2.7 million in the quarter and is making some progress in paying down the debt incurred in its Marks acquisition. Since this was bought at just $1.02, I am going to give it some slack.
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Monday, September 28, 2009

HERTZ/More on Fidelity Investments & Online Bond Trading/Third Party Pricing of Bonds/Buy of 50 RCMT at $2.15 as Lottery Ticket

1. Hertz (own 50 shares of DKR only): I noticed today that Hertz filed suit against Audit Integrity for publishing what Hertz considered a defamatory report. The report claimed Hertz was one of 20 companies identified by Audit Integrity that was "most likely to go bankrupt or suffer severe financial distress" Reuters When I bought DKR at $6.45 during the dark days of 2008, I noted that the Morningstar analyst had then rated Hertz 50/50 on its ability to survive. HERTZ BONDS That assessment was from October 2008. This kind of opinion is well within the scope of the First Amendment and I really dislike companies using lawsuits to bludgeon people who express opinions viewed as unfavorable. I have noted several developments since that time which indicates the Hertz's chances have improved irrespective of whether one viewed the odds as 50/50 or 90/10 or 75/25 back in October:


As a result of these recent events, I am more comfortable holding DKR to maturity in 2012, but I am still concerned about the debt load and maturity schedule.

2. Bought 50 shares of RCM Technologies at $2.14 Today-Lottery Ticket (see Disclaimer): This stock has been on my monitor list of micro cap companies for a long time, for so long that I had forgotten about the nature of the firm's business or why it was on the monitor list. So I did not do a good job of monitoring it. I decided to take a look this morning.

When thumbing through its recent quarterly report, I first noticed that it had recovered 9.8 million in March 2009 from some lawyers that it had sued: Page 21 www.sec.gov That may not sound like much except to the lawyer of course, but this firm only has a market cap of around 27 million at its current price. RCMT: Summary for RCM Technologies, Inc. The company still had 9.625 million in cash and cash equivalents as of 6/27/09 (page 3 form10q ). I also noticed that it is acquisitive, buying several smaller private firms over the past few years. Looking at the Yahoo statistics page, I see why I put it on the monitor list. Prices to sales is listed at .14 and price to book is at .45. RCMT The last earnings report showed a profit of 2 cents per share down from 11 cents in the year earlier quarter ( page 4: www.sec.gov). So the recession hit the revenue and profits a good lick. Hopefully, we are moving out of the recession into better times again. While this stock has had a good recovery off the March lows, it is still selling way below its range of $4 to $6, with a spurt to $10, from 2004 to 2008: RCMT I also noted while looking at a longer term chart that it had a spike in 1998-1999, so maybe it had some involvement in technology.

Now after looking at the numbers, I turned to the nature of RCMT's business. Its website says RCMT is a single source provider of business and technology solutions: RCM Technologies I spent a few minutes reading its descriptions under the "services" category which provided me with more details. Ultimately, I just relied on the description at Reuters.com which looked interesting enough to risk just over $100 as a Lottery Ticket.

3. Third Party Pricing: I have noted recently that the third party pricing used by Fidelity is sometimes off by as much as 10 points from the actual trades. I referenced the new system that Fidelity has in place earlier today that prevented me from even entering a sell order in the range of actual trades occurring that day.Fidelity Investments Fidelity Brokerage & Online Bond Trading Those trades were $10 to $12 higher than the third party price shown even after the trades were made last Friday, and even now. Another one was off between 3 and 12 dollars with a large number of trades. And that range highlights another problem with Fidelity's new system. Bond prices can be volatile in any given day within a wide range. I would like to copy the message that I just got attempting to enter an order to sell a bond at below the last trade:
Error
Trade Message
(010422) The limit yield/price you have entered is too far away from the current price for this security. Your limit buy order cannot be more than 10 basis points (0.10%) above the current offered yield, or more than 1% below the current offered price. Your limit sell order cannot be more than 20 basis points (0.20%) below the current bid yield, or 2% above the current bid price or last estimated market close when a bid price is not available. If no current bid yield is available the order will be evaluated on the price parameters stated above. Please contact a Fidelity Fixed Income representative at 800-544-5372.

This renders online trading virtually impossible for the small individual investors, and actually impossible for the bonds that I have not yet sold in this account. Those who have been following this blog may remember that I sold a large number of bonds starting in February and used those funds to purchase stocks starting in early March 2009. It was advantageous to do what I did and I would add it took some nerve. That would not be possible now in my opinion, unless I wanted to bother going through a broker, first entering all my account numbers on the phone, and then being allowed only to enter a day order which might not be filled and then having to do the same process again and again until I was able to sell the bond. And, as you might have already guessed, I am not inclined to be hassled in that way. The bond that I just tried to sell last closed at around 73.5 and this message popped up when I entered an order at 73 just to prove a point. I knew before I did it that I would get this message. So even when I entered an order within the very narrow parameters I got nowhere. The order was not allowed to even be entered within 2% of the last trade.
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Bought 100 WMT at $49.55/Sold 100 XLI at $26.65/ Temptation of Long Bonds in a Low Interest Rate Environment

1. Bought 100 Wal Mart (WMT) at $49.55 Today (see Disclaimer): The purchase this morning of WMT can only be considered a flair up of whatever old geezer type disease that causes purchases of stocks of this nature. What can I expect for this 5 grand? Not much, though I feel safe with it. It is hard to visualize much downside risk at the current price of below $50, at least in terms of anything other than a short duration fall toward the 52 week low of around $46. The plan is relatively simple. I will hold to sell at $55 or higher, provided that price occurs sometime between now and a year or so from now. Otherwise, I will hold out for a $60 price. The dividend yield is okay for a retailer at a tad over 2%. S & P has it rated 5 stars with a $62 target. Barclays has it overweight also with a $62 target. WMT is selling around 12.78 times the fiscal year 2011 earnings, which ends in January 2011: WMT: Analyst Estimates I am not sure that my memory bank can recall when WMT sold for such a low multiple. The stock is not getting any love from investors since the market rally off the March lows. The stock closed at $49.75 on March 5, 2009: WMT: Historical Prices WMT is the only retailer in my portfolio.

2. Sold 100 XLI at $26.65 (see disclaimer): I bought two ETFs containing industrial stocks and decided to keep one and to sell the other. I am keeping VIS, the one from Vanguard that has a much larger sampling of industrial companies than XLI which is limited to the industrial companies in the S & P 500. I bought XLI on 5/29/09 at $22.16 and will receive one quarterly dividend for the current quarter. Sold out of IR and Bought XLI/ Bought 50 MWA as a Lottery Ticket/Dollar Crumbles with Dollar Index Now Below 80/More Recovery Signs The unrealized profit on VIS bought in late July is over $700 now.

The following snapshot includes XLK which was sold on 10/2/2009:

XLI 100 Shares +$432.16/XLK 100 Shares +$195.17w


A few of my higher yielding stocks/bonds went ex distribution today. PJS, a TC containing a senior bond from First American is ex interest today with its 6 month semi-annual payment, which will be paid on 10/1. This one has been a stellar performer since it was bought during a meltdown at the $7 and change level. Winstream, another add this year, will not have much earnings growth but the generous dividend went ex today also. The best Lottery Ticket over a one year period ever, at least so far, GRTPRF went ex dividend, a yield of 75% based on my $2.9 cost. Another one was the floating rate equity preferred stock from Morgan Stanley, MSPRA.


I am currently trying to resist the urge to buy back some exchange traded bonds that I sold near par value. The urge to find yield when money market rates are yielding near zero is powerful, but I have to remind myself that buying long bonds with fixed coupons, at or near par value, with yields in the 7 to 8% range, involves more risk than I am generally willing to assume. No one knows the future, but I am concerned that we are nearing the end of a long term secular bull market in bonds. I know it is hard to believe, based on experience with bonds since 1982, but there are long historical periods when bonds fail as an asset class. That would have been true for about 20 or so years prior to 1982, with the worst phase of that long term secular bear market in bonds being in the 1970s, to around 1982.

Bond trading is an important part of my asset allocation, and I want to have alternatives other than those available on the stock exchanges in such instruments as Trust Certificates, Trust Preferred and and baby bonds. The following are some links to what I call Gateway Posts on the subject of exchange traded bonds:
Advantages and Disadvantages of Equity Preferred Floating Rate Securities This last category contains stocks that would be listed on a balance sheet as equity, but I view their bond characteristics as predominant over their equity characteristics.

I would not be concerned about the new strictures placed by Fidelity on bond trading two years ago, since I was a Stock Stud back then when I was a young man. Now, being an Old Geezer, I like the stability of bonds and will now have to start using another online broker for my bond trades. As I have become older, my tolerance for being aggravated needlessly has decreased. If anyone has an idea on who to use, please leave a comment or send me an email. The Email address can be accessed by clicking the profile section under my picture to the right of this blog.

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Fidelity Investments/ Parity with Government's Preferred Stock

A momentous event occurred on Saturday. I shaved my mustache that I grew in the final weeks of my senior year in high school in 1969, an act of defiance back then for the sake of being defiant. Though, when a girl said she liked it, I decided to keep it, since I was then both defiant and cool. It probably helped in the defiant department, as to avoiding some kind of discipline back then, that I was attending what would be considered a liberal private school-for the south. But, still, I was the first to bend the rules. The grey hair did not look so cool at 58, some 41 years later, so the profile picture-if taken today, would be without the mustache.

Virtually everyone who reads this blog will find my discussion from yesterday about the priority of the Bank of America equity preferred stock to be boring. I would agree that it is boring. Bank of America's Agreement with U.S.-Parity of Government's Preferred With Publicly Traded Preferred Shares The parity of the government's preferred shares in BAC and the publicly traded equity preferred shares is simply viewed as important by me, though only one factor among many in the decision making process to buy a BAC preferred issue. The point of the analysis is simply to show that I sit at the same parity level as the government when buying BMLPRH. This gives me a measure of comfort in buying what I consider to be a disfavored security, a non-cumulative perpetual equity preferred security.

I also discussed last night the strictures that Fidelity Investments places on the mere submission of an order to sell bonds. It has to be within a certain percentage of the bid price just for Fidelity to allow the order to be submitted. Fidelity Brokerage & Online Bond Trading This has made online bond trading impossible for me, and I do not care to talk to a broker. It is not just the percentage limitation. It is the failure to follow even that restriction. The bond that I tried to sell last week was trading at between 71 to 75 last Friday, and I could not enter an order to sell what I owned anywhere in that range. In fact, after about 10 attempts over the past two weeks, I am not even going to try again since it is far too aggravating to even tolerate one more time. This is just about the most outrageous approach that I have encountered from an online broker since I started using Schwab in 1982.











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Sunday, September 27, 2009

Fidelity Brokerage & Online Bond Trading/ Bank of America's Agreement with U.S.-Parity of Government's Preferred With Publicly Traded Preferred Shares

1. Bank of America Preferred Stock-Parity with Government's Preferred Stock: I did find a document that clearly states that only the common stock of Bank of America and any other BAC security that expressly states it is junior to the government's preferred are junior securities to the government's preferred shares. This SEC filing references the government's Series R Preferred Stock:

"Junior Stock" means the Common Stock and any other class or series of stock of the Registrant the terms of which expressly provide that it ranks junior to the Series R Preferred Stock as to dividend rights and/or rights on liquidation, dissolution or winding up of the Registrant. "Parity Stock" means any class or series of stock of the Registrant the terms of which do not expressly provide that such class or series will rank senior or junior to the Series R Preferred Stock as to dividend rights and/or rights on liquidation, dissolution or winding up of the Registrant (in each case without regard to whether dividends accrue cumulatively or non-cumulatively)."Form 8-K

(See also Part 3 (c) (xiv) where Parity stock is defined to specifically include the "Floating Rate Non-Cumulative Preferred Stock, Series 2" Certificate of Designations for the Series R Preferred Stock)

The publicly traded preferred stock issued prior to the government's preferred shares would not provide "expressly" that they rank junior to the government's preferred and would therefore be "parity" stock. Generally, and I have not yet seen an exception in a prospectus to what I am about to say, a company can not pay a distribution on one parity security and refuse to pay on other parity securities. If a company pays on one Parity security, it has to pay on all of them. This is a typical provision, which is contained in one of BAC's prospectuses for its preferred stock, BACPRE:

"Except as provided below, for so long as any share of Preferred Stock remains outstanding, we will not declare, pay, or set aside for payment, dividends on any parity stock unless we have paid in full, or set aside payment in full, all dividends for the then-current dividend period for outstanding shares of Preferred Stock. To the extent that we declare dividends on the Preferred Stock and on any parity stock but cannot make full payment of those declared dividends, we will allocate the dividend payments on a pro rata basis among the holders of shares of Preferred Stock and the holders of any parity stock. For purposes of calculating the pro rata allocation of partial dividend payments, we will allocate dividend payments based on the ratio between the then-current dividend payments due on shares of Preferred Stock and the aggregate of the current and accrued dividends due on any parity stock." (PAGE S-5: Bank of America Corporation)

Similar type provisions can be found in the general prospectus for Merrill Lynch preferred stocks at pages S-27 to S-28: General Prospectus Supplement


It is possible to have different terms with securities deemed to be in parity with one another. An obvious example would be Junior Bonds with different maturity dates, or a difference in equity preferred issues on whether the distribution is cumulative or non-cumulative. But those differences do not change the fundamental principles, that parity stocks have to be paid together or not paid together.

2. Fidelity Renders it Next to Impossible to Trade Bonds Online: About two weeks ago, Fidelity started unreasonable requirements that have effectively prevented me from even entering an order online to sell bonds. Last Friday, I made about my tenth attempt to sell a bond since these strictures were put in place, and the system would not even allow me to enter an order to sell what I already owned, even at a price below where the market was then trading or below the third party price which was then well below the market price. If anyone uses a broker that is more friendly toward individuals trying to manage their portfolio, please leave a comment or send me an email. Has anyone had any experience trading bonds with Zions Direct?

I would say that over half of my bond trading has been buying and selling in the bond market, with the remainder being trading exchange traded bonds. Exchange Traded Bonds: I will need to find a new broker for bond trading.
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Saturday, September 26, 2009

Ing and Aegon News/Sunopta LT/PG/Comparing Floaters/Fixed Coupon Corporates Uninteresting

1. ING (own hybrids only): ING announced an agreement to sell for 1.6 billion dollars its 51% stake in ING New Zealand and ING Australia, wealth management and insurance operations, to its joint venture partner Australia and New Zealand Banking Group. ING will keep INGDIRECT and ING Investment Management in Australia. ING will free up about 900 million EUROs in capital and will book around a 300 million Euro profit on the sale. Forbes.com

2. Proctor & Gamble (owned): PG was initiated by Jeffries yesterday at a buy with a $70 target.

3. SunOpta (owned-Lottery Ticket): STKL agreed to settle a class action suit for 11.3 million, which will be fully funded by its insurance. This was one of my concerns when I purchased this LT: Buy of Sunopta: Highly Speculative

4. Aegon (own hybrids only): Aegon's CEO said that AEG did not need the 3 billion Euros in state aid to survive the financial crisis. Aegon intends to pay back 1 billion Euros this year, and the other 2 billion "as soon as possible" within the 3 year time frame contemplated by the agreement. My discussion about the repayment of the 1 billion Euros later this year have focused on how any such payment would trigger four mandatory payment events on Aegon's hybrids after Aegon repurchases Junior Securities issued to its majority shareholder who then pays back the Dutch government's loan: Summary of Arguments To Stop EC from Causing Deferral of Payments on the Aegon Hybrids Impact of Any Payment to Dutch State in May

5. Merrill Lynch Preferred Stock: I am making a note to myself. The Merrill Lynch preferred stocks outstanding at the time of its acquisition, including preferred shares issued by Merrill to the government, are described on pages 51 to 52 of BAC's first quarterly report filed with the SEC in 2009: Form 10-Q The preferred stock issued by BAC, including the preferred stock issued to the government, is described in note 14 of BAC's 2008 annual report filed with the SEC at pages 156-157: Bank of America Corporation Form 10-K My current understanding is that the Merrill Lynch equity preferred issues which are now BAC obligations such as BMLPRH, stand at the same level of priority as the government's preferred stock, except the government's shares are cumulative and any unpaid dividend has to be paid on those cumulative shares prior to paying a dividend on any common or other preferred shares. If the non-cumulative preferred dividends and common dividends are both eliminated, then the government's dividend would have to be deferred. Once deferred it has to be paid in full prior to a resuming payment on the common or publicly traded preferred shares.

This is based in part on my analysis of the ranking of securities classified as equity preferred generally, and in part on this language from the prospectus for what is now BMLPRH:

"The Series 2 Preferred Stock will rank on a parity as to payment of dividends and distribution of assets upon dissolution, liquidation or winding up of ML&Co. with each other outstanding series of preferred stock of ML&Co." (Page S-5)


"We may not declare or pay dividends on, make distributions with respect to, or redeem, purchase or acquire (except for purchases by us or our affiliates in connection with transactions effected by or for the account of customers of ML&Co. or customers of any of our subsidiaries or in connection with distribution or trading of such stock), or make a liquidation payment with respect to, any of our preferred stock or any other of our stock ranking as to dividends or distribution of assets equal with the Series 2 Preferred Stock, unless, for such Dividend Period, full or pro rata dividends on all outstanding shares of Series 2 Preferred Stock have been declared, paid or set aside for payment." (Page S -4) Final Prospectus Supplement

It is my understanding that the government's preferred shares rank equal with these preferred shares. I would need to find the agreement with the government to confirm. To date, I have only found the agreement between Zions and the U.S. which confirmed my analysis with a plain statement that the government's preferred shares ranked pari passu with the publicly traded equity preferred series A and C issues: Item # 7 Sold 100 FBFPRN at $17.38/Bought 50 ZBPRB in Roth at $19.9

As a practical matter, I would generally expect that any bank will have to be in dire straits to defer paying the government its preferred dividend. Citigroup recently converted equity preferred shares into common shares, including all of the government's shares, and ceased paying dividends on its equity preferred shares which it could do since it also eliminated the common dividend. To my knowledge, the only publicly traded bank that has deferred paying the government its cumulative equity preferred dividend, and has not been seized yet, is UCBH and it also deferred paying interest on its junior bonds at the same time. UCBH Holdings The only way to defer paying interest on junior bonds is to eliminate the common and equity preferred dividends and to defer paying the government's its cumulative equity preferred dividend first.

So it can happen. But it would be a momentous step for any bank to defer paying the government its dividend.


6. TWM Hedge: On Friday, TWM rose 1.15% while the Russell 2000 fell .47%, a small tracking error in my favor. While a double short is in place as a hedge, I will monitor daily the tracking of the the double short ETF with the index.

7. Comparing Floaters: When deciding which floating rate security to buy, there are a number of moving parts to consider. And, it is important to keep in mind why I am buying them in the first place. I am buying them to achieve, as much as I can, a measure of protection in both inflationary and deflationary (or low inflation) periods in the same security. During the meltdowns, buying an AEB at $5 or a METPRA at $7 did not require much thought except on the issue of credit risk. The tremendous discounts to par value juiced both their guarantees and the value of their respective floating rate provisions. With the rise in prices for all of these securities over the past several months, the analysis has to become more discriminating.

For the floaters, I want to examine more closely now the alternative scenarios, keeping in mind the dual purpose of the security. That was the reason for the recent detailed analysis of two floaters where Bank of America is currently obligated to make payments: BMLPRH vs. BMLPRJ In that analysis, BMLPRJ had initially the appearance of being the better buy even though it cost $2.76 more per share at the time the analysis was made. In that post, I introduced the concept of comparing the floaters by buying equal dollar amounts of the two securities, and then comparing them under alternate scenarios. Since BMLPRH was cheaper, I was able to buy 121 shares for every 100 of BMLPRJ. I then demonstrated how that narrowed the initial advantage of BMLPRJ and then accelerated the advantage of BMLPRH as the 3 month Libor rate started to increase. One of my readers calculated that the cross over point would occur at less than 3% on the 3 month LIBOR (2.66%). At that point, the advantage to BMLPRH starts to accelerate. Why? The lower price has a pronounced impact on the benefit of the LIBOR component of the float and the lower guarantee for BMLPRH means that the LIBOR will kick in sooner.

To see the dramatic effect of the lower share price on the LIBOR float provision, I have calculated in a number of posts how cost differentials in the share impacts the yield once Libor starts to increase to produce a greater rate than the guarantee. Take METPRA which you could have bought at $7 a share not that long ago. Let's assume a buy at $7, $10, and $20, and calculate the yield at 5%, 7% and 10% 3 month Libor rates. This security pays the greater of 4% or 1% over 3 month LIBOR (so add 1% to the applicable Libor rate):

$7: 21.43% at 5% Libor 28.57% at 7% Libor 39.29% at 10% Libor

$10: 15% at 5% 20% at 7% 27.5% at 10%

$20: 7.5% at 5% 10% at 7% 13.75% at 10%

At the 4% guarantee:

$7 14.28%

$10 10%

$20 5%

I would highlight in this discussion the comments by Fed Governor Kevin Warsh: FRB: Speech--Warsh, Longer Days, Fewer Weekends--September 25, 2009:

"Ultimately, when the decision is made to remove policy accommodation further, prudent risk management may prescribe that it be accomplished with greater swiftness than is modern central bank custom. The Federal Reserve acted preemptively in providing monetary stimulus, especially in early 2008 when the economy appeared on an uneven, uncertain trajectory. If the economy were to turn up smartly and durably, policy might need to be unwound with the resolve equal to that in the accommodation phase. That is, the speed and force of the action ahead may bear some corresponding symmetry to the path that preceded it."

I do not know if he is expressing the view of the majority of the Fed. But I would not expect the Fed to start increasing the Federal Funds by the Greenspan baby steps of a quarter point when the Fed decides to end its accommodative policy. I would expect a "swift" move to 2% , perhaps in about 3 consecutive Fed meetings.

I would agree with Randall Forsyth that few values remain in corporate bonds, Barrons.com. One of the formative experiences for me as an investor was actually living in the great bear market for bonds that culminated with the inflation of the 1970s and early 1980s. Inflation and its impact on fixed rate coupon bonds is just something imprinted on my brain forever. So, I want a nice cushion when buying fixed rate coupon bonds. I found that cushion starting last October when the corporate bond prices were shellacked, not due to inflation concerns, but out of credit fears which ultimately proved unfounded for the investment grade and even most of the better quality junk issues .

The time to buy corporates was during that earlier period during the credit crisis when fear was rampant, now passed, particularly during the Fall of last year, when there were historic spreads between corporate bonds and treasuries, when many investment grade bonds were priced to yield well into the double digits. Now, as a result of the tremendous price rise in corporate bonds, I have revisited some floaters that I ordinarily would not want to buy at their current prices, such as the recent purchases over the past week of BMLPRH, STIPRA USBPRH and STDPRB. At least I have some modest degree of inflation protection in their respective 3 month Libor floats, and the guarantees are not awful. And, now, maybe I am almost done buying floaters. Possibly, if the price is right, I may revisit one or two that I previously sold that do not have have guarantees.

8. Solar Stocks: The article Barrons.com about a supply glut will be enough to keep me on the sidelines for now, postponing any increase in my meager 30 share lot of TAN. I will eventually round that up to 100 shares but I have to remind myself that I know next to nothing about this industry so caution is the operative word.
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Friday, September 25, 2009

Bought 100 STDPRB at $15.3/Sold FCE/A LT at $13.23/Durable Goods & New Home Sales/Interactive Map of Public Debt by Country as Percentage of GDP

1. Interactive World Map of Public Debt as a Percentage of GDP: I thought that this was an interesting map that shows the public debt of each country in the world, and the percentage that debt to GDP.

2. New Homes Sales: The Commerce Department reported that new home sales increased at a seasonally adjusted annual rate of .07% above the revised July rate. http://www.census.gov/const/newressales.pdf

3. Durable Goods Orders Below Expectations: The Commerce Department also reported that new orders for durable goods decreased 2.4% in August, mostly due to aircraft sales which fluctuate wildly from month to month. http://www.census.gov/indicator/www/m3/adv/pdf/durgd.pdf Excluding aircraft, the expectation was for a .5% increase. Inventories for durable goods decreased for the 8th consecutive month, falling 1.3% to 308.9 billion.

4. Bought 100 STDPRB at $15.30 (see Disclaimer): STDPRB is a non-cumulative floating rate equity preferred issued by Banco Santander (STD), one of the largest banks in the world headquartered in Spain with a large presence in South America. Santander recently announced that it hoped to raise as much as 7.25 billion by selling just over 15% of its stake in Santander Brazil. WSJ.com

This floating rate security pays the greater of 4% or .52% over the 3 month Libor rate.

This is a link to the prospectus: www.sec.gov The terms are described starting at page 36. Actually, the issue is from Santander Finance and guaranteed by Santander. Quantum has this security classified as paying qualified dividends with the usual caveats: Preferreds eligible for the 15% Tax Rate Table - QuantumOnline.com Since I will receive one dividend payment in 2009, I will be in a position to confirm that when I receive my 1099 form early next year.

At my cost, the yield is currently around 6.5%, more when the Libor float is triggered.

I discuss the advantages and disadvantages of the floating rate equity preferred securities in more detail in this post: Advantages and Disadvantages of Equity Preferred Floating Rate Securities

5. Sold Lottery Ticket FCE/A at $13.23 (see Disclaimer): I bought 50 shares of the Forest City common with the profits realized on 50 shares of its exchange traded bond. The common shares were bought in May at $6.3 so I realized over a 100% gain in this LT. LOTTERY TICKET PURCHASE: 50 SHARES OF FCEA-FOREST CITY COMMON/ADDED: SOLD FCY When managing the LT category which is about equal in value to my 100 shares of Proctor and Gamble, though there are over 30 positions, I need to do four things fairly well given the heightened risk of the securities being purchased as LTs.

First, I need to choose the selections carefully even though no more than $300 is devoted to each one. By definition, these companies have been deservedly- in virtually every case-beaten to a pulp for good reasons. Even with careful selection, failures will be inevitable. The objective is to go through the rubble and/or garbage after all and attempt to make a reasonable judgement on whether there is recovery potential. Far more stocks are discarded than chosen, at least 20 are rejected for one reason or another for each one chosen. One of the main reasons for rejection is excessive debt. Forest has way too much debt in my opinion but survived the selection process based on my evaluation of its turnaround potential and the risk/ reward based on my cost of $6.3 per share.

Second, some need to be jettisoned before the loss becomes a total loss or close to it. So, I like to try to keep my losses to $50 to $100.

Third, I need to allow some of the positions to run, hopefully turning into ten baggers. I have several that have gained far more than Forest City that I have not sold. GRTPRF bought at $2.9 is example up over 500%, as is C B Richard Ellis. LOTTERY TICKET PURCHASES: LINKS IN ONE POST Some are borderline, like the 100 shares of Sunopta currently trading near $4 bought at $1.65 last December. Buy of Sunopta: Highly Speculative I can not make up my mind what to do with it.

Lastly, some gains just need to be harvested since I do not want to risk losing them which was the case with Forest today. It was also true with several others, many of which continued to run after I sold the shares. But that is not relevant. The only relevant criteria is how all of the stocks in this category perform as a class, as if they were just one security rather than 33 or so, after taking into account the realized and unrealized gains and losses. I will do a detailed evaluation of this category once or twice a year, with the last one summarized in this post from earlier this month: Evaluation of Lottery Tickets so far in 2009
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Re-dating Some earlier Gateway Posts

I am going to re-date a few Gateway posts that I constantly update, such as the ones about Floaters, Trust Certificates and Lottery Tickets, so that I will not have to find them from their original dates back in May and June. This will bring about 11 gateway type posts together in one place.
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Floaters: Links in One Post


I am spending about an hour today grouping together links to posts on a particular subject. I have previously done what I call gateway posts for Dynamic v. Static Asset Allocation theory and the VIX Asset Allocation Model. This is a gateway post for floating rate securities. The purpose of this post and other gateway posts is not to explain the topic in any detail but simply to group links to the prior posts in one post for anyone interested in that particular topic.

The floating rate securities are a frequent topic in this blog. There might be over a 100 pages of discussion devoted to them, and I view them as important in my asset allocation scheme. They can be divided into the following general categories:

1. EQUITY (Traditional) Floating Rate Preferred Stocks (qualified dividends) and Synthetic Floaters (taxed as interest)

2. Floaters with minimum guarantees and those with no guarantee

3. Floaters tied to the CPI with no guarantee

THERE ARE MORE DISTINCTIONS INCLUDING CUMULATIVE V. NON-CUMULATIVE, MATURITY DATE OR NO MATURITY DATE, ETC, BUT I AM JUST KEEPING IT SIMPLE IN THOSE GENERAL CATEGORIES

All of these securities can be found at the QuantumOnline site, QuantumOnline Credit Ratings - QuantumOnline.comwhich contains links to the prospectuses and is free but requires registration:

[AS OF 12/18/2009: I own the following equity preferred floating rate securities that pay the greater of a guarantee or a percentage above a short term rate such as the 3 month T Bill or Libor: METPRA, MSPRA, ZBPRA, STIPRA, STDPRB, USBPRH, HBAPRD & BMLPRH. I have sold my positions in the following equity preferred stocks which also have guarantees and floats: GSPRA, BACPRE, HBAPRF & BMLPRG. I own the following equity preferred stocks that have a float provision but no guarantee: ORHPRA and SCEDN. I own the CPI floaters OSM and PFK, and have sold ISM. I still own all of the shares of the Aegon hybrid floater AEB that I have bought. For the synthetics floaters that have a guarantee, I currently own: GJN, GJP, GYB, GYC, PYT, & GJL. I have sold GJK & PYV as they approached par value. Of the synthetic floaters that do not have a guarantee, I have sold my positions in GJS, GJO and GJR, and have pared a position in GJT though I currently own 50 shares of GJT. I have bought and sold GJS several times, based on the kind of analysis that I do comparing floating rate securities from a single issuer. An example of that kind of analysis can be found at Analysis of Prior Question about Goldman Sach's Floaters.


The following are links to examples of how I evaluate equity preferred floaters from the same issuer, or compare synthetic floaters to equity preferred floaters involving securities from the same issuer: Analysis of Prior Question about Goldman Sach's Floaters BMLPRH vs. BMLPRJ /GJS VS. PYT As of 10/8/09 Analysis of Prior Question: ZBPRA vs. ZBPRC OR ZBPRB


Two posts explaining why I view these securities to be important now:

Some of the links to my posts on the equity preferred floaters:



METPRA: 4% or 1% over 3 month LIBOR METLIFE INC
AEB: 4% or 7/8% over 3 month LIBOR www.sec.gov
ZBPRA: 4% or .52% over 3 month LIBOR www.sec.gov
BMLPRG 3% or .75% over 3 month LIBOR Prospectus Supplement
BMLPRJ 4% or .75% over 3 month LIBOR Final Prospectus Supplement
BMLPRH 3% or .65% over 3 month LIBOR Final Prospectus Supplement
BMLPRL 4% or .50% over 3 month LIBOR Term Sheet
BACPRE 4% or .35% over 3 month LIBOR Bank of America Corporation
GSPRA 3.75% or .75% over 3 month LIBOR 424(B)(2)
GSPRC 4% or .75% over 3 month LIBOR 424B2
GSPRD 4% or .67% over 3 month LIBOR 424B2
HBAPRF 3.5% or .75% over 3 month LIBOR Form 424(b)(5)
HBAPRD 4.5% (with a 10 1/2% cap) or .81% of the highest of T Bill, 10 Year Constant Maturity Treasury Rate or 30 Year Constant Treasury Ratewww.sec.gov
HBAPRG 4% or .75% over 3 month LIBOR www.sec.gov
UBSPRD 1% over 1 month LIBOR (no guarantee) www.sec.gov
MSPRA 4% or .7% over 3 month LIBOR www.sec.gov
USBPRH 3.5% or .6% over 3 month LIBOR e424b2
STIPRA 4% or .53% over 3 month LIBOR Final Prospectus Supplement
SANPRB 4% or .52% over 3 month LIBOR www.sec.gov
ORHPRB 3.25% over 3 month Libor) e424b5     CALLED  Oct 2010
SCEDN (floating rate, effective 4/30/2010) 1.45% over the highest of 3 Month LIBOR; 10 year or 30 U.S. Treasury CMT Prospectus Supplement

SYMBOL FOR SANPRB CHANGED FROM STDPRB-2012

Buy of 50 AEB at 4.8 (February 2009) Added to AEB at $5.5 (Oct. 2008)


















Sold 50 BMLPRJ at $21.14 (3/5/15 Post)-Item # 2 Bought 50 BMLPRJ at $20.25 (1/19/2015 Post); Sold 50 BMLPRJ at $21.05 April 2014-Bought: 50 BMLPRJ at $19.93 (October 2012); Sold 100 BMLPRJ at $19.55 (February 2012)(no snapshot since the gain was less than $30; Profit =)- Item # 4 Bought 100 BMLPRJ @ 19.32 (February 2011); Item # 5 Sold 50 BMLPRJ @ 18.73 (October 2010)-Item # 4 Added 50 BMLPRJ at $17.74 (August 2010); Item # 2 Sold 50 BMLPRJ at $19.25 (September 2010)-Item # 7 Bought 50 BMLPRJ at 18.50 (August 2010); Item # 1 Sold 50 BMLPRJ at $18.9 (February 2012)- Added 50 BMLPRJ at $16.8 (February 2012)


Item # 5 BOUGHT 50 USBPRH at 17.47 Sold USHPRH at 20.35 Bought:  USBPRH at 18.12  SOLD 30 USBPRH AT 21.84 Bought 50 USBPRH at $18.83

Item # 1 Sold 100 STDPRB at $18.11 (8/26/2010)(profit snapshot=$265.01)-Item # 4 Bought 100 STDPRB at $15.3 (9/25/2009); Item # 3 Sold 50 STDPRB at 19.64 in the Roth IRA (2/28/11 Post)-Item # 8 Added to STDPRB at 18.6 (3/10/2010 Post); Item # 2 Sold 50 STDPRB at $20.2 (3/14/11 Post)-Fidelity Corrects Odd Lot Trade on STDPRB to $18.5 from $18.85 (April 1/2010 Post); Item # 2 Sold 50 STDPRD at $20.34 (5/24/11 Post)(snapshot of profit includes previous trade= $143.16)-Item # 1 Added 50 STDPRD at $18.54 (3/9/2010 Post); Item # 4 Sold 50 of 230 SANPRB at $20.77 (1/13/13 Post)(snapshot of profit=$124.58)-(no write up on the buy); Item # 7 Sold 50 SANPRA at $21.72-ROTH IRA (4/23/13 Post)(profit snapshot=$225.47)-Item # 2 Bought 50 SANPRB at $16.93-Roth IRA (10/41/12); Item # 1 Sold 50 SANPRB at $19.8 (1/28/14 Post)-Item # 6 Bought Roth IRA: 50 SANPRB at $19.35 (7/20/13 Post); Item # 4 Sold Roth IRA: 50 SANPRB at $20.41 (4/18/14 Post)(snapshot of profit=$105.01)-Item # 4 Added 50 SANPRB at $18.24  (9/14/13 Post)





SYNTHETIC FLOATERS:  All in Trust Certificate Form
The floating rate is created by a swap agreement

Symbols for Floaters and the Name of the Company Issuing the Linked Bond
GYB GJJ JBK & GJS=Goldman Sachs
GYR=Proctor & Gamble
GJK PYV & GJN= J P Morgan
GJO=Wal Mart
GJP=Dominion Resources
GJT= Allstate
GYC= SBC Communications (now AT & T)

Synthetic Floaters: Gateway Post


Dominion Resources: GJP Min 3 % Max 8% or 1.15% over 3 month Treasury (mat: 6/15/2035) www.sec.gov

Goldman Sachs: GJJ Min 3% or .65% over 3 month Treasury Max 6.5% (MAT: 10/15/2013) www.sec.gov

Goldman Sachs: PYT Min 3% or .85 over 3 month Libor Max 8% (MAT: 2/15/2034) www.sec.gov

Goldman Sachs: GYB Min 3.25% or .85% over 3 month Libor Max 8.25% (Mat: 2/15/2034) www.sec.gov

SBC (now AT & T) GYC Min 3.25% or .65% over 3 month Libor Max 8% (Mat: 6/15/2034) www.sec.gov

IBM : GJI Min 3% or .5% over 3 month Treasury Bill Max 6% (Mat: 11/29/2012) www.sec.gov

J P Morgan GJK Min 3% or .7% over 3 month Treasury Max 6.75% (Mat: 3/15/2014) www.sec.gov

J P Morgan PYV Min 3.25% or .83% of 10 year treasury (cmt) MAX 9.25% (mat:3/15/2014) www.sec.gov

J P Morgan GJN Min 3% or 1% over 3 month Treasury Max 8% (Mat: 8/1/2035) www.sec.gov

Daimler North America (guaranteed by Daimler AG) GJL Min 3 or 1.25% over 3 month Treasury (Maturity 11/15/2013) www.sec.gov

No Minimum Guarantee but with a Maximum:

Proctor & Gamble GJR .7% over 3 month treasury bill MAX 7.5% (mat: 8/15/2034) www.sec.gov

Allstate: GJT .8% over 3 month treasury bill Max 8% (Mat: 4/1/2036www.sec.gov

Goldman Sachs GJS .9% over 3 month treasury bill MAX 7.5% ( Mat: 2/15/2033) www.sec.gov

Wal Mart GJO .5% over 3 month Libor MAX 7.5% (Mat: 2/15/2030)www.sec.gov


   

























CPI Floaters:

Recent discussions on how to compute the monthly interest rate payments of the Prudential (PFK) and Sallie Mae (OSM, ISM) CPI FLOATERS can be found in a post from December 2010 at Item # 1.  Stocks & Politics: OSM  and Item # 3 PFK 



*************************






Item # 4 Bought 50 ISM in IRA at $11.85 (August 2009)- Sold 50 ISM at $12.25 (October 2009); Item # 4 Bought 50 of the CPI Floater ISM at $20.62-Item # 1 Sold 50 ISM at $23.4 (9/27/12 Post); Item # 1 Bought 50 ISM at $19.5 (October 2011)- Item # 1 Sold 50 ISM at $23.84 (11/2/12 Post);  Bought 100 ISM at $22.8 (9/7/13)



Item # 4 Bought 100 OSM at 15.75-Regular IRA (June 2010)- Item # 4 Sold 100 OSM at $16.87 (July 2010); Item # 3 Bought 50 OSM at $11.8 (June 2009)- Item # 3 Sold 50  OSM at $16.01 (January 2010)

Another 100 shares were bought on 7/31/2008, prior to the commencement of this blog, and were sold 10/22/2010: SOLD 100 of 200 OSM at $18.18

Item # 1 Sold 50 OSM at $21.06 (March 2011)-Added to OSM at $18.47 (December 2010)

Bought 100 OSM at $23.12-Roth IRA (August 2013)


See Disclaimer
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