Senator Bunning, a Republican from Kentucky, is utilizing a Senate rule to prevent the extension of unemployment benefits that will expire for many Americans this weekend. But, Senator Bunning let it be known to the bleeding hearts that he was sacrificing too, in that he had to miss a Kentucky basketball game to do his duty on the Senate floor. ESPN BusinessWeek
The republican governor of Nevada, Jim Gibbons, denied that he took his alleged mistress with him to the recent governor's conference in Washington, D.C. Unfortunately, a photo showed up of him, posing with her, and none other than the infamous republican governor from South Carolina, Mark Sanford, the one with the Argentine firecracker mistress ( YouTube Sanford's Latina Lover Press Conference) and one of the beacons of conservative family values. Politics Las Vegas Now Those liberal mainstream pinko commie, effeminate girlie men media folks can sure be annoying for the family value, Christian politicians. And those reporters can really go too far when one had the nerve to ask the Nevada governor whether the lady, not his wife, accompanied him to D.C. and he said no. And then pointed to her stepping out of the same plane and getting into a state owned SUV with him. No wonder the Nevada governor was pissed when he vehemently denied she was on the plane (see the unbelievable video embedded in Las Vegas) What ever happened to Senator Larry Craig? Sometimes, these clowns make Bill's testosterone levels look tame in comparison.
1. Greece: Greece has about 20 billion Euros of debt maturing in April and May. Altogether Greece has to refinance 53 billion Euros in maturing debt this year. The NYT states that Greece will try to sell 3 billion euros of 10 year bonds next week in Europe. It has postponed its offering to investors in the U.S. and Asia. WSJ.com It is not trying to raise that relatively small sum in an auction however, and that is in itself a bad sign. The Greek government is concerned that the auction might fail and that would be devastating for that nation. Instead, the Greek government representatives are meeting with institutional investors in an effort to arrange a private placement according the the NYT story. It is also interesting that the Times states as a matter of fact that Goldman Sachs helped Greece disguise it debt by "essentially" transforming "loans into currency trades that Greece did not have to disclose under European rules". There were some reports on Friday about Germany using one of its banks to buy Greece's bonds. If that proves accurate, I would consider it to be an emergency action to keep an implosion from happening before anything can be done to salvage the situation.
2. Existing Home Sales: The National Association of Realtors reported yesterday that new homes sales fell 7.2% seasonally adjusted in January. At the current sales pace, the inventory represents a 7.8 month supply. Distressed homes accounted for 38% of the homes sold last month. The expectation was for a slight increase: msnbc.com
3. GDP: The Commerce Department did revise its estimate on Friday for 4th quarter GDP to an annualized rate of 5.9% from 5.7%: News Release: Gross Domestic Product While this is a positive, it is nonetheless a historical number. The main question is what happens after the government's fiscal stimulus winds down and the inventory restocking cycle ends.
4. Porter Bancorp (owned- Regional Bank Stocks strategy): Porter Bancorp declared its regular 20 cent quarterly dividend. In a prior post, I mentioned that Porter had reported disappointing earnings for the 4th quarter after the market closed on a Friday. The bank was expected to earn 44 cents and reported a 3 loss instead. This was due in large part to a 58.6 million increase in nonperforming loans to 84.9 million. The bank explained that this "aggressive" action was due to a review of its loan portfolio in light of the prolonged weakness in the economy, its concentration on real estate loans, and the impact of the downturn on real estate values. Item # 6 PBIB This raised a suspicion in my mind that the bank had been sandbagging its loan loss reserve, but it is hard to know one way or the other. I decided to stay with PBIB as long as it maintained its dividend.
The regional banks will generally have a large book of real estate loans. For loans on commercial real estate, where the owner leases to tenants, it would be fairly typical to have a loan term of 3 or 4 years. So, loans made before the real estate bust would need to rollover for many borrowers this year. Some of those borrowers have lost tenants and/or have had to reduce rents to keep an existing tenant. While the borrower may still be current on the bank loan, the property now has negative equity and it is hard to keep up with the payments. The result is that many current loans for these small banks may soon go into default, and the bank would be unlikely to recover the full balance of its loan after foreclosure. And for residential real estate, losses on foreclosure have been commonplace.
5. Unum (own senior bonds only in TC form): I switched from owning the TC with a senior bond issue from one that contained a junior bond after noting a pricing discrepancy. bought 50 pjr at 16.72 ADDED TO PJR at $20.70 The senior bond, which matures about a decade sooner in 2028, was then yielding more than the TC with the junior bond. After Unum Group reported its 4th quarter results, Fitch upgraded its rating on the senior bonds to BBB from BBB- Unum Group While I have no interest in buying more of Unum's debt, I checked Friday and noticed that PJR, the TC with a senior bond, was yielding about the same at the then current prices as the TCs with the junior bond. (Compare: PJR Stock Quote - Preferred Plus Tr UPC-1 7.4% with KSA Stock Quote - Corts Tr Provident Fing Tr I CORTS 8.50% Stock Quote)
6. Deficit Commission: The Senate failed to pass a bill that would authorize a Commission to examine ways to reduce the deficit. The republicans voted against it. Mitch McConnell, the GOP Senate leader, was for the commission until the Beanpole said he supported it. Newsweek.com (" Senate Minority Leader Mitch McConnell turned against a GOP-inspired plan for a deficit commission once Obama endorsed the idea." ) No republican can be seen supporting anything favored by Obama so Mitch decided to oppose the formation of the deficit commission. So, Obama formed one on his own by executive order and the nominees to the panel have now been named. WSJ The objective is to find ways to reduce the budget deficit to 3% of GDP by 2015. Sitting members of Congress will make up 12 of the 18 members of the panel, and the politicians know what has to be done. The problem is a lack of political will to make the tough decisions and a desire by both tribes to basically give everyone most of what they want without paying for it. The formation of a commission is just another Washington trick to punt the hard choices and kick the can down the road, postponing the day a little further when there will be no choice but to make the hard choices.
7. Powershares ETF for Closed End Funds: I do not own this new ETF. This ETF has around 70 closed end funds as its holdings. PCEF - CEF Income Composite Portfolio Holdings So, it has the expenses of the acquired funds of 1.31% and a management fee for Powershares which together would equal close to 1.81% based on the current configuration. InvescoPowerShares.com - CEF Income Composite Portfolio - PCEF I have my own portfolio of closed end funds which I have selected with 31 holdings, sort of a portfolio within a portfolio. And, I do not have to pay a management fee to myself. I also pay a lot of attention to selecting CEFs with lower expense ratios so my average expense ratio would be less than 1%. I did look at the portfolio and saw about 8 names that overlapped with my own. I did see a fund in the list of holdings that was new to me. I looked into it and bought 100 shares of NFJ on Friday, bringing my total number of CEFs now to 32.
8. Bought 100 NFJ at $15.15 (see Disclaimer): The CEFs have to file their reports with the SEC. I looked at the last filed report by the sponsor of this CEF, which was for the period ending on 10/31/2009, and liked its conservative equity focus. -- (NFJ) Dividend, Interest & Premium Strategy Fund As of that report, 71.7% of the portfolio was in common stocks, 13.9% in convertible bonds and notes, and 12.1% in convertible preferred stock plus 1.9% in cash. The fund does do some index option writing. I found the expense ratio in its annual report filed with the SEC at page 26: .97%: www.sec.gov I did not see any leverage. The current yield at my cost is close to 4% paid quarterly. I also checked the latest information on its discount to NAV. I found that information at the sponsors web site, NFJ Investment Group, part of Allianz. Allianz Global Investors: Closed End Funds | Performance As of 2/25/2010, NFJ was selling at a 14.7 discount to NAV.
9. Sold 50 of the 150 IAE at 18.04 (see Disclaimer): IAE is a CEF that focuses on higher yielding Asian stocks. The shares sold on Friday were in the Roth and were up about 80% since the acquisition in that account in the Fall of 2008. While this CEF pays a generous dividend, my overall appreciation with the dividend would be close to 90% in less than 1 1/2 years which is a reason, at least for me, to trim. Another reason is that the CEF was bought at a good discount to net asset value and is currently selling at a premium to its NAV. ING Asia Pacific High Dividend Equity Income Fund - Overview I am not going to change the way I manage my CEF portfolio which is to sell positions when there is either a substantially narrowing of the discount to NAV or a transition from a discount to a premium. Lastly, I have been transitioning the retirement accounts to fixed coupon and synthetic floating rate bonds with guarantees, along with REIT common and preferred, and a few non-synthetic floaters like AEB, PFK and METPRA primarily for the inflation hedge of those securities. While I am now up over 30% in the retirement accounts since October 2007, adjusted for subsequent contributions by substracting those contributions from the existing balances, I did not care for the effort that had to be made to get myself back to even which took a lot of time and effort over about 18 months. I do not want to do that again. Where can I send my bill at a reasonable hourly rate to the Masters of Disaster?
10. Hedged Remaining Stock Positions in Retirement Accounts: Late Friday I created a short term hedge by using a double short ETF for the remaining stock positions in my retirement accounts. I do not want to sell the any of the remaining positions except for AT & T in the Roth at some point. An example would be a position in DuPont bought at $16 and change during the meltdown and yielding almost 10% at my cost. I would have to say that I am becoming increasingly concerned about the lack of net new jobs and the recent information about housing. The tightening of credit in China and the apparent slowdown already underway in Europe add to those concerns.
11. Sold 100 of the 150 shares of STLPRA at $10.25 (See Disclaimer): This trust preferred issue was sold after it popped on Friday above its $10 par value. This is the second time this security has been sold on a pop. The shares were recently purchased in mid January at 8.87.
12. Dividends and Interest: I noted the following dividend and interest declarations at the WSJ dividend page for securities that I own. The TC XKK with a Goodyear Tire senior bond goes ex interest with its semi-annual interest payment on 3/10. MJH, a TC with a Bank of America TP as the underlying security, goes ex interest for its quarterly payment. MJH was a good buy at a price to yield close to 25% per year until the bond matures. The yield would be at my cost of $7.51, the security closed Friday at $23.05. MJH Enerplus (ERF), a Canadian energy trust, goes ex dividend on 3/8 with its monthly dividend. I hold my shares in Canadian dollars and receive the dividend in Canadian currency without converting it to dollars. GDV, a CEF, declared its monthly dividend distribution dates for April-June. VNOD, a senior bond from Vornado and a recent buy, goes ex interest for its quarterly payment on 3/11. Added 50 VNOD at 24.65 in the Roth UZV, a senior bond from U.S. Cellular and another recent buy, goes ex interest for its quarterly payment on 3/10. Bought 100 UZV at $24.42 JWF, a good buy on a meltdown, is a Wells Fargo TP that will pay me based on my cost of $9.15 close to a 15% annualized yield until it matures in 2034. Buys of JWF KSA DIS and NYX/ Just a Day of Ignoring My Own Rules It goes ex interest for its quarterly payment on 3/15. GFW will go ex interest on its quarterly payment on 3/11. The ASBC TP, ABWPRA, goes ex on 3/10 with its quarterly interest payment. /Added 50 ABWPRA at $19.42 Other securities making dividend declarations include the aforementioned Porter Bancorp, STLPRA (still own 50 shares), WSBC and WIBC. I also noticed that Waste Management increased its dividend from 29 cents to $.315. Piedmont Natural Gas, another security that is frequently owned for brief periods here at HQ, also increased its dividend by a penny to 28 cents.