Saturday, January 30, 2010

Bought 50 AT & T at 25.45/GDP 4th Quarter/INDIA/GIW/Chicago PMI

1. ADDED 50 AT & T at $25.45 (see Disclaimer): I thought that the earnings report from AT & T was good enough to add 50 shares to my position in the main taxable account on Friday. I intend to eventually sell the shares held in the Roth and to hold the common shares only in a taxable account. It just makes more sense to me to hold common stocks in the taxable account as long as the politicians keep the qualified dividend tax rate, and to hold bonds and other securities that do not pay qualified dividends such as REITs in the retirement account. It is important to the Old Geezer that AT & T raised its dividend last year and currently yields around 6.6% at a total cost of $25.5 per share: T Stock Quote - AT&T Inc Stock I have a more favorable opinion of the AT & T common stock than of Verizon's shares. This opinion is partly based on the fact that AT & T owns 100% of its wireless network, whereas Verizon owns 55% of Verizon Wireless in partnership with Vodafone. Both firms are suffering some from fears over increased competition in the wireless space.

2. Gross National Product: The first preliminary estimate for U.S. 4th quarter GDP was better than expected, with the Commerce Department estimating that GDP increased at a 5.7% annualized rate in the 4th quarter. News Release: Gross Domestic Product The number for the 3rd quarter after revisions was 2.2%. The market has other concerns now other than positive news about GDP growth or earnings. The biggest part of the increase was due to businesses shrinking inventory more slowly than the prior quarter. This contributed 3.39% to the increase: NYT Excluding changes in inventory, final sales increased at only a 2.2% annual rate.

3. India: The central bank in India tightened monetary policy on Friday by draining cash from the banking system. This was done by raising a cash reserve requirement a greater than expected three-quarters of a percent to 5.75%. This follows a similar move earlier in the month by China.

The weakness in the markets in January started with China's tightening, probably based on a belief that China's growth would slow as a result which would contribute to a slower than expected growth elsewhere. The news from India on Friday probably stoked those concerns. Asia is viewed as the growth engine coming out of the Near Depression, and rightfully so. Anything slowing that engine down will reverberate worldwide. The question is how much will growth slow in Asia and elsewhere in response to these tightening moves. This concern is heightened by the belief that consumers in both Europe and the U.S. are in no shape to support growth based on consumer spending, and the impact of governmental stimulus will start to wane in the second half of 2010.

I suspect that the impact of tightening by Asian central banks is being overestimated by institutions who went into their pre-March 2009 trades almost simultaneously with China's announcement. That trade was to buy the U.S. dollar and to sell other currencies, sell commodities and stocks, and buy U.S. treasuries. This will just have to run its course. Eventually, the lemmings will run out of stock that they want to sell. A catalyst may happen, such as a much better than expected jobs report, which will catch them leaning the wrong way, and they will rush back in to buy at higher prices, underperforming the dumb index at great cost to their clients. Although it is best to stay out of their way, I will use the weakness in a few blue chip stocks to pick up a small amount of shares here and there.

However, I am working from some of the same pages in my playbook. I am not concerned now about growth in the first half of 2010. I expect the job numbers to improve in the coming months. My concern is whether consumers in the developed nations will be in a position to pick up when the governments pullback on their massive stimulus efforts. I currently expect a return to small or negative GDP numbers in the U.S. after a withdrawal of the fiscal stimulus. That is one reason why I expect the rally off the March low to be more like the strong rally off the cyclical bear market low in October 1974, when the S & P hit 63. By July 1976 , with the S & P at 106, the rally had petered out, and the market returned to its dominant long term bear market trend until August 1982. In this analysis, the March 2009 lows would be the lows for the current long term bear market, just like the low in October 1974. The ensuing rallies off the catastrophic cycle lows in October 1974 and in March 2009 would not be the start of a long term bull market but merely the market repairing an overreaction when it hit its cyclical low:

On the bright side, I do not think it will take another 6 years for the next long term secular bull market to start which was the case in 1976, more like two or three. This is more of a guess than anything, based on the time it will take for U.S. consumers to repair their balance sheets and to allow for more growth in the middle class in emerging market countries. Item # 2 /Long Term Secular Bull and Bear Markets

For purposes of my asset allocation, I am still holding cash reserves at the same level as in late 2007. I am managing risk primarily by active trading, rather than buy and hold, and in the manner generally described in these posts: Item # 2 /Long Term Secular Bull and Bear Markets Long Term Stock Risks and Situational Risk/Managing Lost Opportunity Risk in a Long Term Secular Bull and Bear Markets/ Static v. Dynamic Asset Allocation

4. Wilber (GIW) (owned-Category 2 Regional Bank Strategy): Wilber reported a 26% increase in net income for the 4th quarter of 2009 compared to the year earlier quarter, earning $.19 a share. ex99-1. The bank also declared its regular 6 cent quarterly dividend. The net interest margin as of 12/31/09 was 4.01%.

5. Chicago PMI Index: The Chicago manufacturing PMI index rose to 61.5% in January from 58.7% in December. The new orders component rose to 63.5% from 62.8%. Readings over 50 indicate expansion.

Friday, January 29, 2010

Modification of Regional Bank Strategy: Sold 100 Wilmington Trust (WL) at $14.13

After reviewing the report for Wilmington Trust (WL) this morning, I realized that I needed to make a modification in my Regional Bank Stocks stratagem. Previously, the strategy called for keeping most of the purchases for at least five years and for no more than 10. The primary exception was that I would sell shares of a bank when I developed a rational concern that the bank was moving toward seizure by the FDIC. This is not the case with Wilmington. This is why I am going to add a second exception, and I will just refer to it as the "Wilmington Exception". This exception will be a bank that suffers what I view as a major and unexpected reversal in its business.

Wilmington Trust missed expectations by 27 cents and reported a 4th quarter loss of 23 cents. Analysts were expecting a four cent profit. Nonaccruing loans are going in the wrong direction, increasing 88.1 million sequentially to 455.6 million as of 12/31/2009. Net charge-offs also increased sequentially by 11.3 million to 33.1 million in the quarter. (See also: No Trust Investors fret)

I may have kept the shares if WL was paying a decent dividend. Like a lot of banks now, the bank is paying a 1 cent per quarter dividend. And, I also sold the shares at a profit, having bought the position in two lots: BOUGHT 30 WL=Lottery Ticket at 9.98 Added to WL 12.36

I will either substitute another bank for Wilmington or increase my exposure in one of the existing holdings.

I sold my 100 shares this morning at $14.13 after there was a brief rally off the earlier low. (see Disclaimer) Shares quickly sunk again and rightfully so in my opinion. Possibly, I may add WL back in the LT category if the price sinks significantly under $10.

Bought 50 AMAT at 12.48/Bought 100 ATP:TO at 11.97 CAD/ Bought 50 FFIC at 12.18/ AT & T SNV GBCI OKSB SUSQ

1. AT & T (own common and bonds): AT&T reported 4th quarter E.P.S. of 51 cents, in line with estimates, versus 41 cents in the year earlier period. The firm added 2.7 million wireless customers during the quarter and activated 3.1 million IPhones. One third of the IPhone activations were new customers.

2. Susquehanna Bancshares (own Category 1 Regional Bank Strategy): After reviewing the earnings report for SUSQ, I am keeping it for now in Category 1, though it is becoming a borderline Category 2. The bank did report a small profit in the 4th quarter of 4 cents per share, down from 21 cents in the 4th quarter of 2008. As of 12/31/09, the total risk based capital ratio was 13.42 and the Tier 1 capital ratios was 11.11%, both above the the well capitalized thresholds of 10% and 6% respectively. Book value was $19.53 per share, while tangible book was much less at $7.25. Net interest margin increased to 3.77%.

3. Bought 50 Applied Materials Yesterday at $12.48 (see Disclaimer) : Even though the market is undergoing significant institutional selling pressure, and I previously said that I would just get out of the way, AMAT fell enough yesterday that I went ahead and bought another 50 shares, bringing my total to 100. This is not material. I watched the interview with Michael Splinter on CNBC yesterday morning. While he was cautious, Splinter did say that AMAT had started to hire again and that the "semiconductor sector had picked up quite a bit". CNBC Asia now accounts for 70% of AMAT's business.

4. Bought 50 Flushing Financial (FFIC) at $12.18 Yesterday (see Disclaimer): Flushing will be added to Category 2 of the Regional Bank Stocks' stratagem. I will quit adding stocks to that strategy when I hit 30 names. I am now close to that objective. I may add shares to some of the ones previously purchased from time to time, as I recently did with both Wilshire and Wilmington when I took those banks out of Category 1.

Flushing is a savings and loan operating in the NYC metropolitan area Locations - Queens - Brooklyn - Manhattan - Nassau
The dividend yield at my cost is close to 4.4%. The consensus estimate for 2010 is $1.09 per share and $1.2 in 2011. FFIC: Analyst Estimates for Flushing Financial Corporation Price to book is .91: FFIC: Key Statistics

The bank reported a 4th quarter E.P.S. of 15 cents, which was reduced by 5 cents for TARP preferred stock costs. Net income for 2009 was $.91 per share with the company paying out 52 cents in dividends. The net interest margin was 3.14%. form10-q.htm

Flushing did participate in TARP receiving 70 million: forms Flushing later sold 8,317,400 shares at $11.5 per share with net proceeds of approximately 90.5 million. The purchase of the over-allotment option raised the net proceeds to 101.6 million: The company used part of those proceeds to pay back the 70 million in TARP funds:

5. Problems Yesterday: S & P Report on U.K. Banks/Greece/ & Qualcomm/ Worldwide Budget Deficits: Part of the negativity yesterday was due to the S & P report arguing that U.K. banks were no longer among the world's "most stable". Instead, they were more on par with those in Portugal and Chile. That was a pretty good slam on the U.K. Another problem yesterday was that Qualcomm had a bad day after lowering its forecast for 2010 revenue and a below consensus E.P.S. prediction for the current quarter of 49 to 53 cents, versus prior expectations of 57 cents. Bloomberg CNBC Qualcomm did report earnings for its first fiscal quarter, ending 12/27/2009 of 62 cents per share, excluding items, that handily beat expectations for 56 cents. Morgan Keegan downgraded QCOM to market perform: Barrons

There were increasing concerns about Greece's debt. The cost to insure 10 million € in Greece's sovereign debt for five years rose to a record 397,000 €. Some reports claimed that Greece was trying to peddle 25 billion € in bonds to the Chinese. And there are rumblings from the usual suspects about the Euro being doomed due to the problems in Greece, Portugal, Spain and Italy. 'Doctor Doom' I have a small double short position in the Euro versus the U.S. Dollar (the EUO ETF bought at $17.17) The Dollar Index continues to move higher, having recently pierced its 200 day moving average to the upside. DXY Index Charts And concurrently with the dollar's strength, the DJ UBS Commodity Index has been declining (Java Chart). I recently sold out of my position in RJI on 1/20 based on the movement of the DXY. Sold 300 RJI at 7.6 The recent decline in the UBS commodity index also gives me some more breathing room on MKN: Bought 100 MKN at 9.85

The European Central Bank President commented yesterday that the budget deficits in the U.S. and Europe are not sustainable, and he expected only a modest economic recovery in Europe. Possibly, the politicians need to be informed about the sustainability of trillion plus dollar per year budget deficits in the U.S.

The S & P 500 closing high for 2010 was on 1/19 at 1,150.23. ^GSPC: Historical Prices for S&P 500 INDEX,RTH Yesterday's close was at 1084.53. It does feel worse than a 5.7% decline. The decline started with China attempting to reign in bank lending. NYT

6. Bought 100 ATP.TO at 11.97 Canadian (see disclaimer): I used the remainder of my Canadian dollars to buy Atlantic Power on the Toronto stock exchange. The shares are traded in the U.S. on the pink sheets, and no bid or ask information is displayed for this particular company. ATLIF This firm is similar to Macquarie, discussed above, and pays monthly dividends. It just went ex dividend earlier this week. The company says the distribution currently qualifies as a qualified dividend. Press Release At the current rate of .0912, which I assume to be Canadian, my yield is close to 9%. The Canadians will withhold 15% for a U.S. citizen to pay a tax, which is why I buy these securities in a taxable account rather than an IRA, since a foreign tax credit is lost in a retirement account.

While Atlantic is a Canadian company, it owns generating facilities in the U.S. and a list of them can be found at its web site: Atlantic Power Corporation This is a link to the management's discussion of the 3rd quarter results: PDF The company is discussed in this Seeking Alpha article.

7. OceanFirst (owned): There were some positive comments about OCFC in this article from the, referencing the opinions of the Sterne Agee analyst Matthew Kelly.

8. Synovus (owned-Category 1 Regional Bank Strategy): It might be better to place SNV in Category 1/4 with Regions. Synovus continued its losing ways by reporting a 4th quarter loss of 249.9 million or 54 cents per share. The expectation was for a greater loss at $.59 per share. "As of December 31, 2009, the tangible common equity to tangible assets ratio was 5.79%, Tier 1 Capital Ratio was 10.11%, Tier 1 common equity was 6.65%, and total risk-based capital ratio was 13.50%." The net interest margin was 3.25%. For 2009, SNV managed to lose 1.47 billion dollars. At best, SNV will be a very long turnaround situation. SNV still believes it will return to profitability in 2010: Reuters

9. Glacier Bancorp (GBCI)(owned Category 2 Regional Bank Strategy): Glacier Bancorp reported diluted earnings of 15 cents per share in the 4th quarter, down from 29 cents in the year ago quarter. The estimate was for 4 cents. However, the E.P.S. for the 4th quarter included a 3.5 million dollar gain in connection with the purchase of First National Bank & Trust. The number of shares outstanding was 61.62 million (rounded). So even if the analysts did not factor in that gain, it would still better than expected at 9 cents according to my calculation. Net interest margin was 4.64%. The allowance for loan losses was 3.46% of loans. The bank said it is seeing some signs of credit quality stabilizing but is uncertain whether the trend will continue.

10. Southwest Bancorp (OKSB)(owned Category 2-Regional Bank Strategy): Southwest Bancorp reported 4th quarter earnings of 17 cents per diluted share, nine cents better than the consensus estimate. "Southwest and its bank subsidiaries have maintained capital levels that significantly exceed the minimums for regulatory “well capitalized” status. At December 31, 2009, our total regulatory capital was $413.4 million for a total risk-based capital ratio of 14.55%, and Tier 1 capital was $377.4 million for a Tier 1 risk-based capital ratio of 13.28%." Allowance for loan losses increased by 57% in 2009 and represented 2.46% of noncovered portfolio loans. Nonperforming assets, excluding covered loans, increased in 2009 to 124.6 million or 4.87% of loans and other real estate owned, which is way too high in my view.

Importantly, Southwest entered into an agreement with the United States Controller of the Currency on 1/27/2010 that is summarized in its earnings release, near the bottom under "regulatory matters". Approval of Controller is necessary now for the payment of dividends. Apparently, this bank is going to have to monitor its commercial lending better and to reduce it. This is in part reflected in the general description of the agreement with the Controller. It is also expressly stated by the bank in the following language: " In 2010, we plan to reduce the percentage of commercial real estate and commercial real estate construction loans to total portfolio loans in view of current economic conditions. Our plan focus is on reductions in particular subcategories of commercial real estate loans that are identified in our regular real estate market reviews."

I had a low confidence in this one when I bought only 50 shares at 6.84. One way that I always control risk is by the amount invested in a security, and Southwest in my view merited less than a $350 risk, barely above the LT limit of $300. The amount invested is a sign of a lack of confidence and an analysis of the potential risk.

11. Dividends and Interest: Over the past couple of days, I noticed the following dividend declarations of interest to me. Pepco (POM) declared its regular quarterly dividend of 27 cents. I have not been pleased with the recent earnings reports, and previously mentioned that I would sell my stock if and when that dividend was ever reduced to any degree. So, at least for another quarter, I am staying with POM. New York Community Bank (NYB) declared its regular dividend of 25 cents. My yield on the NYB shares is close to 9% with a good unrealized gain in the shares. JBI declared its semi-annual interest payment, going ex interest in February. This is a TC with a senior Duke Capital bond, now part of Spectra Energy (SE).

12. Net Interest Margin: I refer to net interest margin frequently when talking about banks. I view it as one of the important metrics, which is now being influenced to a large extent by the FED's near zero short term interest rate policy. That policy is keeping the rates paid to savers at very low levels, thus improving the margin between the cost of funds and the amount received by the bank from its borrowers. The net difference between the interest paid for funds by the bank and the interest it earns is a key measure of its profitability.

Thursday, January 28, 2010

Sold VLO at 18.85/Bought 100 GIW at 7.03/Bought 50 DFY at 24.36/SO UBSI WSBC NHTB DSPG/ VZ & T

1. Federal Reserve: The Fed was more upbeat in its assessment of the economy in its first 2010 monetary policy release. FRB This is worth quoting:

"Information received since the Federal Open Market Committee met in December suggests that economic activity has continued to strengthen and that the deterioration in the labor market is abating. Household spending is expanding at a moderate rate but remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software appears to be picking up, but investment in structures is still contracting and employers remain reluctant to add to payrolls. Firms have brought inventory stocks into better alignment with sales. While bank lending continues to contract, financial market conditions remain supportive of economic growth. Although the pace of economic recovery is likely to be moderate for a time, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability."

The Kansas City Fed President, Thomas Hoenig, dissented, saying that he believed the Fed needed to eliminate the language about keeping rates low for an "extended period": "Voting against the policy action was Thomas M. Hoenig, who believed that economic and financial conditions had changed sufficiently that the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted."

The previous statement said that "economic activity is likely to remain weak for a time". The FED dropped its sentence about housing being weak from the December statement, and made a positive statement yesterday about business spending.

2. SOLD 50 VALERO at 18.85 (See Disclaimer): One reason for buying VLO was the dividend. VLO cut the dividend yesterday from 15 cents to 5, and reported another quarterly loss. Valero Energy Corporation reported a 4th quarter loss, excluding items of 155 million, which compared favorably only to a bigger loss of 795 million in the 4th quarter of 2008. The GAAP loss in the 4th quarter was 182 million or 32 cents. I am not a fan of the refining industry and will be content to take small profits in very small positions. I bought the 50 shares sold yesterday at at 16.3 last December.

I am not in the mood to tolerate dividend cuts. I tolerated the recent reduction by Oceanfirst (OCFC) only because that holding is part of the regional bank strategy, which is by the far the most forward looking, long term strategy currently being implemented during this long term secular bear market. In 2008, as a novice bond investor, I did stumble into a long term strategy for bonds with a eureka kind of moment, when I realized that I was locking in over 10% annualized current yields on long term investment grade bonds, with some over 15% or even 20% for 20 or more years. All of those buys were in TC form, which was where the real bargains were during the meltdown. Trust Certificates Links in One Post

3. DSP Group (DSPG) (Lottery Ticket Category): DSP Group, Inc. reported non-GAAP net income of 12 cents per share for the 4th quarter, seven cents better than expected, but down 20% from the 4th quarter of 2008. More importantly, the company expects 10% revenue growth in 2010 and a "sharp" recovery in 1st quarter. The GAAP number for the 4th quarter was $(.13). DSP ended the quarter with 57.533 million in cash and marketable securities, plus 65.392 million in long term investments. The total cash was 123 million as of 12/31/09. (the company spent 20 million repurchasing stock in the 1st quarter of 2009 from NXP) I recently added this LT at 5.62. The shares rose 12.38% yesterday to close at $7.26: DSPG Even after that rise, the market cap is about 166 million. I still do not have a target on DSPG. This is a link to the earnings call transcript: Seeking Alpha

4. New Hampshire Thrift (NHTB)(owned Category 2-Regional Bank Strategy): New Hampshire Thrift Bancshares, Inc. reported 4th quarter earnings of 28 cents per share, down from 32 cents. The results for 2009 were $1.06 versus $1.00 in 2008. How many banks can say that earnings were positive in both 2008 and 2009, and increased in 2009 compared to 2008? The interest rate margin was 3.46% at the end of the quarter. Non-performing loans amounted to just .99% of total loans, down from 1.1% as of 12/31/2008. NHTB fell 7 cents yesterday to close at $10.4 in very light trading.

5. WestBanco (WSBC)(Owned Category 2-Regional Bank Strategy): WesBanco reported earnings of 27 cents per share, up from 21 cents in the 4th quarter of 2008 . The net interest margin increased slightly to 3.46%. The provision for credit losses decreased 1.8 million from the 3rd quarter. Tangible common equity to tangible assets was 5.88%. Tangible book value was $11.31 per share. The capital ratios look good to me, as of 12/31/2009:

Tier 1 leverage capital: 7.86%
Tier 1 Risk Based capital: 11.12%
Total Risk Based Capital: 12.37%

The consensus forecast for WSBC is for E.P.S. of $1.10 in 2010, and $1.44 in 2011. WSBC: Analyst Estimates for WesBanco If the bank achieved that kind of earnings acceleration, I would be content. Net income for 2009 was 70 cents.

WesBanco was a new addition this year: Bought 50 WSBC at 13.3/ The shares popped yesterday $1.5 to close at $14.72.WSBC

6. United Bankshares (UBSI) (owed-Regional Bank Strategy): United Bankshares, Inc. reported earnings of 40 cents per share in the 4th quarter, up from 38 cents in the year ago quarter. The beat the 37 cent estimate. The consensus forecast before this report was for $1.6 in 2010: UBSI: Analyst Estimates for United Bankshares, Inc. - Book value per share was $17.53. Tangible book value was $10.24. Net interest margin was 3.55%. My purchase of UBSI was in last November: Bought 50 of UBSI at $16.56/ The shares of UBSI rose $2.09 (9.57%) yesterday to close at $23.93: UBSI

The WSJ had a story yesterday about how the regional banks have outperformed the S & P 500 this year as well as their larger brethren. The SPDR Regional Bank Index was up about 8.6% so far this year compared to a decline in the S & P 500 of close to 2%.

7. Southern (SO)(owned): Southern is ex dividend today. Southern Company reported 4th quarter E.P.S. of 31 cents, one cent better than expected, compared to 24 cents in the year ago quarter. Revenues for 2009 fell by 8.1% to 15.74 billion. For those unfamiliar with Southern, it is the largest electric utility in the South, serving 4.4 million homes and businesses in four southern states. Industrial sales have been hurt by the recession. The CEO said that it will take a couple of years or so for industrial sales to return to pre-recession levels. Southern was a recent addition to my electric utility holdings: Sold 100 XLU at 31.25/Bought 100 SO at 33.27/Bought 100 of the TC GJX at 25.17 and Sold PYI at 21.28 It was substituted for XLU, the ETF containing the utility companies in the S & P 500. This turned out okay, with Southern holding its value and XLU has declined to below $30 in recent trading.

8. New Alliance (NAL)(Category 2-Regional Bank Strategy): NewAlliance reported 4th quarter E.P.S. of 12 cents compared to 10 cents a year ago. I am not impressed. This was one of Cramer's picks in his regional bank strategy. I did go along with his picks of NAL and GBCI, but I have been doing far better with my own since I started to implement this strategy last March. NAL shares fell 29 cents in trading yesterday to close below my purchase price.

Nonperforming loans to total loans is just 1.06. This is a quote from the earnings release on capital ratios: "The tangible common equity ratio and Tier 1 risk-based capital ratio were 11.08% and 19.92%, respectively, and total shareholders’ equity was $1.43 billion at December 31, 2009. The Company’s Tier 1 leverage capital ratio was 11.05% and is more than double the 5% regulatory benchmark that is considered ‘well-capitalized’ for banks. The Bank also has $1.48 billion of unused borrowing capacity."

9. Tidbits:

Dividends and Interest: As previously mentioned, I will check the WSJ dividend page every night to check on dividend declarations. I sometimes see a security with a good yield that is unfamiliar to me, which I will later investigate and possibly buy. I am also interested in dividend boosts and of course dividend reductions. Since the core of my investment strategy is to buy income generating securities and to reinvest all of the cash flow, I also monitor the ex dividend information. Today, the following securities owned by me go ex dividend or ex interest: OCFC, PFK, HRPN, PNW, SO, BAM, DFY & DFP. (DFY was bought again yesterday)

Washington Trust (WASH)(owned): I thought the earnings from WASH were good and was surprised to see the stock fall some in early trading yesterday. If I did not already own 100 shares, near my $2000 limit for Category 2 banks, I would have bought a 100. The shares ultimately kicked into gear some and rose 4.74% to close at $15.92. /Bought 100 WASH at $15.26

Physician Carelessness-Radiation Treatments for Cancer: I am a firm believer in being informed about anything that may impact my health.

I referenced the other day a NYT article about carelessness in the administration of radiation therapy that had disastrous consequences for the patient. Conspiracy of Silence The NYT published another article shedding light on this problem on 1/26, written by Walt Bogdanich. While mistakes will inevitably happen, even when the catastrophic consequences resulting from carelessness are known, my take away from this series of articles is that patients know nothing about the mistakes made at particular hospitals which could influence their decision to seek radiation treatment somewhere else, or to pursue an alternative course of treatment. And, there is almost no regulation over these devices or the training of personnel who perform the application. Another article points out the lack of rigor in checking the qualifications of radiation technicians: NYT

East West Bancorp (EWBC): East West stock rose 4.77% to $18 yesterday, and I am tempted to sell those shares bought at $5.7 last April Buy of 50 EWBC as Lottery Ticket I was not impressed with the 4th quarter results. Webster Financial (WBS) is becoming tempting too, rising yesterday 6.07% to $16.08, after being purchased last March at $4.58. Buy of 50 WBS: Lottery Ticket/The Long Tail Contract This is very difficult for the Old Geezer to hang onto a strategy when faced with these kind of gains. The strategy is the Regional Bank Stocks stratagem, which now has 26 stocks in it. (see also More on Regional Bank Strategy)

Obama did not get much love from the GOP tribe members of Congress last night, even when talking about tax cuts. No member of the opposition tribe is aware apparently the Obama has already cut taxes for 95% of Americans: WP Live blog 9:28 P.M. Note by Alex MacGillis Possibly, they fear a clap for the Beanpole would be viewed as treasonous by the tea party True Believers, and those who believe Adam and Eve walked with the dinosaurs. Kentucky's Creation Museum | has a good discussion of the whoppers told in 2009.

Rule 11 Sanction on a Birther Attorney: I was glad to see that one of the Birther attorneys was fined 20 thousand by a Federal Judge in Texas for bringing a frivolous suit under Rule 11: /gov.uscourts .77605.28.0.pdf Barack Obama citizenship conspiracy theories I believe that a fine of this magnitude needed to be levied also against the plaintiffs in all of those suits.

10. Bought 100 GIW AT 7.03 (Category 2-Regional Bank Strategy) (See Disclaimer): This is another small regional bank which operates in the Catskill region in New York. First, let me say that the bank refused to participate in TARP: form8k This is some indication of a lack of need for those government funds which I view positively. The bank earned 26 cents per share for the Q/E 9/30/09, up from 13 cents in the 3rd quarter of 2008: form10q This is a quote from that last 10-Q on its capital ratios:

" In addition, the Bank’s Board of Directors has established a minimum capital policy that exceeds “well capitalized” regulatory standards to ensure the safety and soundness of the Company’s banking subsidiary. The Company’s Tier 1 capital to average assets ratio, Tier 1 capital to risk-weighted assets ratio and total capital to risk-weighted assets ratio at September 30, 2009 were 7.35%, 11.11% and 12.37%, respectively. This compares to 7.33%, 10.26% and 11.46%, respectively, at December 31, 2008." Page 40.

The current dividend rate is 6 cents per quarter, which will give me about a 3.4% yield: GIW Stock Quote - Wilber Corp

11. Bought 50 DFY at 24.38 in Roth (see Disclaimer): Income investors know how hard it is to find yield now. After the FED repeated its statement yesterday about keeping rates at zero for an "extended period", a 8+% senior bond from Delphi Financial started to look better than it did a few weeks ago. I did not think that my limit order at $24.38 would fill yesterday, the volume was extremely light and the bid/ask spread was around 30 cents. I just put my 50 share limit with another 200 shares from someone else at the 24.38 number. This security pays interest quarterly and is ex interest today.

I bought and sold this issue in the same account recently: Bought 50 DFP & Sold 50 DFY in Roth In that post I explained that I bought the junior bond from Delphi (DFP) at 17.1, which was then yielding 10.78% at that price, and sold DFY, the senior bond, at 24.45. I viewed the yield differential between those two bonds as too large, so I basically substituted in the Roth the junior bond for the senior one. Since that post on 12/18, the junior bond has risen to $19.5 (DFP), or $2.4 from my purchase, while the senior bond has fallen in price by a few cents. I also trimmed my holding in the junior bond in the main taxable account by selling 50 of my 150 shares: Sold 50 of the 150 DFP Those shares were also bought at $17.1 and were sold at $18.9 after collecting an interest payment. The senior bond which was sold earlier at $24.45 was bought at 22.48. So I have booked some profits, and have recently reduced my exposure to the junior bond. I was therefore in a position to add back the more secure senior bond yesterday by buying back the 50 shares previously sold.

DFY prospectus: e424b5 This senior bond has a $25 par value and a 8% coupon, with a maturity in 2033.

The issuer is Delphi Financial ( DFG). QuantumOnline shows a BBB+ investment grade rating from S & P and Baa3 from Moody's for this bond. This may not be up to date. I checked FINRA which has only one senior bond traded in the bond market, a senior bond maturing in 2020 with a 7.875% coupon, selling at a slight premium to its par value. FINRA - Investor Information - Market Data - Bonds - Bond Detail The S & P rating is shown at FINRA for this bond as BBB. This was a recent issuance: Delphi Financial Prices Public Offering of $250 Million of 7.875% Senior Notes due 2020 A.M. Best assigned a BBB rating to it: A.M. Best Assigns Debt Rating to Delphi Financial Group, Inc.'s New Senior Notes

This is a link to Delphi's last 10-Q for the Q/E 9/30/09: e10vq The firm did earn 39 cents per share for the quarter and $1.63 for the first nine months of 2009. The issue discussed by A.M. Best about the firms investment losses is discussed at page 26 of the 10-q filing and is worth monitoring. It will be something that I will need to monitor in future reports.

12. Verizon (own senior bonds only in TC Form-PJL and XFL): Apple does not appear to want to play ball with Verizon. Before yesterday, the rumor reported in the press was that Verizon would be the wireless carrier for Apple's new tablet. That turned out to be erroneous. AT & T will be the carrier for the device, offering a $29.99 monthly data plan for this new tablet, which looks nifty to me, but I have no use for it personally. And, since no contract has to be signed by the user with AT & T, it is unlikely that AT & T is subsidizing the new device. An article in Forbes attempts to explain why Apple is staying with AT & T. I own AT & T common as well as one of its long bonds in TC form (JZE and JZJ). Verizon slid some on the news closing yesterday at below $30 a share. But, VZ has been falling every day since releasing its lackluster results for the 4th quarter on 1/26: Verizon Reports