Thursday, November 12, 2009

Bought 50 of the TC KRH at $19/AMAT/Vietnam/WMT/Bought ADRD Again-This Time in the Right Account

1. Bought 50 of the TC KRH at $19 Yesterday (see disclaimer): After Old Geezer was relieved at the trading desk, the LB had to gear up fast to clean up the messes the OG left behind. What exactly was the OG planning to do with all of that cash raised in the past two weeks, from selling Proctor, Wal-Mart, BCE, the TIP, BWX, Verizon, SYK, and so on, now earning nothing in a money market account. So the LB has to find alternatives to more cash earning close to zero.

Yesterday, in a trade that did not publicly register, I bought 50 shares of KRH, adding to my existing holding of this TC containing a Trust Preferred security guaranteed by the Hanover Insurance (THG) company. The same underlying bond is contained in another TC, PKM, and this brings my total to 250 shares, which is the maximum allocation for a junk rated security. I am only willing to go this high since I have more confidence in the financial viability of Hanover than my other junk rate credits, where I have limited my exposure to less capital. The only other junk credit, with a similar amount of capital devoted to it, is 200 of PKK, a TC containing a senior bond of Liberty Media.

I have a decent profit in the shares of PKM, and it is possible that I may pare it some by selling 50 shares. Bought 150 TC PKM And, I have already received one semi-annual interest payment on my existing holdings in KRH and PKM. Yesterday, comparing these functionally equivalent securities, KRH which has a lower coupon by .25% had the better yield at the price paid by me. My previous buy of KRH was in the Roth and I am close to break-even with one interest payment received to date. /Bought 50 KRH in IRA/

The current yield at a total cost of $19 is slightly over 10%. And it is becoming harder to find that kind of yield where I at least have a measure of confidence in the viability of the debtor.

My previous discussions linked above contain an adequate description of this security. This is a link to the prospectus: The underlying security is a typical Trust Preferred with a higher coupon than KRH. The underlying TP is infrequently traded but Finra information is available: FINRA - Investor Information - Market Data - Bonds - Bond Detail S & P according to FINRA has it rated BB- which is junk.

2. Applied Materials (AMAT) (own common): Applied Materials reported fourth quarter profit of 10 cents per share on net sales of 1.53 billion. The consensus estimate was for 1.32 billion in revenue, down from the 2.04 billion received in the 4th quarter of the previous fiscal year. Its fiscal year ended October 25th. The non-GAAP results were 13 cents per share. Over the next 18 months, Applied intends to reduce its workforce by 1300 to 1500 positions, which would be anywhere from 10 to 12 percent of its workforce. About 1/2 of the job cuts will be in the U.S. AMAT expects net sales to grow 30% in its fiscal 2010. The CEO said during the conference call that the semiconductor industry was in the early stages of recovery. He also said that AMAT saw improvement in the solar photovoltaic market. The company sees the 1st quarter sales up 10% to 25% which would imply a minimum of 1.61 billion and a maximum of 1.91 billion, and the minimum would consequently be well above the current consensus of 1.4 billion. EPS before charges is estimated at 10 to 14 cents, above the consensus forecast of 5 cents. AMAT was a minor recent purchase at $13. Added to Medtronic/Sold LT Opnext/Bought 50 AMAT at $13

3. Goldman Sachs (own bonds in TC form): In case you missed it Goldman Sachs commandeered 200 doses of swine flu vaccine. After all, as stated by their CEO Blankfein, the GS bankers are "doing God's work" . NYT | Blogs | Blankfein Just Doing ‘God’s Work’ NYT This is a link to the Saturday Night Live skit on the vaccine issue: Video -

4. Bought ADRD in Right Account at $21.94. (see Disclaimer): One of the mistakes made by the Old Geezer while acting as Head Trader here at HQ was buying ADRD in the wrong account. ADDED to ADRD What do you expect? The OG can barely keep his eyes open, and his mind wonders unlike the LB who is a focus machine. The OG was supposed to add the ADRD in the Roth, rounding the shares up to around 100, but initiated a new position in ADRD in the taxable account. This ETF contains 100 ADRs from large foreign companies from developed countries, and has an expense ratio of .3%. BLDRS Developed Markets 100 ADR Index Fund - ADRD LB will sell the shares mistakingly added by the OG in the taxable account. It was rumored that the OG was reading Martin Buber's " I and Thou", hardly a reference book on how to advance the Headknocker's capital base shortly before entering that order.

5. Newsweek's Cover Article Written About How the U.S. Could Have Won the Vietnam War: Over the past few weeks, there have been some visitors to my blog from Ho Chi Minh City. Do you know that Vietnam has a stock exchange? Ho Chi Minh city Stock Exchange - Wikipedia The economy of Vietnam is in a transition to a market oriented economy. Economy of Vietnam I heard Carol Bartz of Yahoo say that she wanted to expand into the growing emerging markets including Vietnam. BusinessWeek I have several articles of clothing with a Made in Vietnam tag.

So, what was the Vietnam War all about and how was the U.S. national security furthered by our involvement that cost 58,193 American lives, with over 150,000 wounded with 21 thousand permanently disabled, not to mention the millions of civilians and other combatants who lost their lives in the conflict. In the Newsweek article written by Evan Thomas and John Barry, a recent phone call is referenced between General McChrystal and Stanley Karnow who wrote " Vietnam: A History". McChrystal, commander of our forces in Afghanistan, asked Karnow what he had learned about the Vietnam war which might be useful to the General now. Karnow replied that he had learned the U.S. had no business getting involved in the first place. You would think that would be the lesson, but it is not the one that all True Believers and so many others learned from the conflict. Instead, there are those who want to argue that a different strategy would have won the war, and for what purpose? The fact that a continuation of the conflict would have cost more lives and maimed more young soldiers for life is just a mere trifle to the ones who wanted the conflict to continue, particularly for the chicken hawks who avoided service (as in six deferments because the Dark Force had better things to do-Cheney) and were always so willing and eager to sacrifices others for personal political ambition and misguided opinions about national security. And how is our national security interest impacted by the current situation in Vietnam?

Now there are military lessons to be learned from the Vietnam conflict. And some of the more cogent lessons may have some applicability to the current Afghanistan conflict, such as the need to protect the civilian population from the insurgents and the importance of avoiding unintentional damage on civilian targets from air strikes. But, the political lesson has been lost on countless millions which is how history will repeat itself, and some would maintain that W's foray into Iraq was what you would expect from a confirmed TB unable and unwilling to learn from the past or to assess in an intelligent manner the complexities of the present.

6. Strong Dollar Policy?: Treasury Secretary Timothy Geithner said yesterday that maintaining a strong dollar policy is very important. Words and actions have a way of separating from one another. It is simply impossible to find any policy of the U.S. government that is consistent with a strong dollar policy in any material way.

7. Australian Dollar: The OG sold the position in Australian dollars and bought Norwegian Krone. Australia's central bank has raised its benchmark rate by a quarter of a point at its last two meetings. I suspect that this move was widely anticipated and is one reason for the rise in Aussie currency against the dollar over the past few months. In October, the Australian economy created 24,500 jobs and the unemployment rate is 5.8%. The Aussie Dollar started to rise against the dollar in early March, precisely timed to a recovery in the world's stock and commodity markets along with a willingness to take on more risk. The currency ETF for the Australian dollar, FXA, which was owned (Sold FXA at 91.62), rose from about 63 in early March to over 93 now. CRRNCYSHR AUS DLR TR ETF Chart

8. Walmart (sold recently by the OG): WMT reported 84 cents per share for the 3rd quarter, ahead of the 81 cent consensus forecast, but sales of 98.67 fell below the expected 99.88 billion. WMT also said it was encouraged by recent store traffic gains. It anticipates 4th quarter EPS of $1.08 to $1.12.

9. Eurozone Industrial Output: Industrial output in the Eurozone increased .3% in September, below the forecast of .5%. For anyone interested in Eurozone economic statistics, this is a link to the Eurostat web site: Eurostat Home

10. Jobless Claims Fall: The LB is constantly looking at statistics to try and gauge what is happening outside the SUV Capital of the World, recognizing that the view of the trees from the window here at HQ is not sufficient to manage the Headknocker's capital. The Labor department reported that jobless claims fell to 502,000, marking the second consecutive week of declines in claims.ETA Press Release: Unemployment Insurance Weekly Claims Report The forecast was for a drop of 510,000.

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