The ^VIX has traded below 20 for 12 consecutive days.
1. Bought 50 HFFC at $10.12 Yesterday (Regional Bank Stocks' Strategy-category 2)(see Disclaimer): This was one of the trades made yesterday that I did not discuss in the prior post. The purchase of HF Financial is a continuation of the regional bank stock basket strategy. This particular bank is primarily based in South Dakota but seems to be expanding some into western Minnesota, at least with ATM machines and a location in Marshall, MN., based on this map at its web site: Locations - Home Federal Bank HF Financial is a holding company for Home Federal Bank. The bank has 33 offices in 19 communities. The bank earned 38 cents in the Q/E 12/31/2009 and is paying out an eleven cent quarterly dividend: Page 2 www.sec.gov Tier 1 regulatory capital was at 8.86%, and total risk based capital was at 11.84%, both as of 12/31/09. The net interest margin was 3.25%, and the ratio loan losses to total loans was 1.01%. (page 32). The one analyst that covers the bank has estimated earnings of $1.2 for the F/Y ending in June 2010 and $1.36 for the 2011 F/Y. The current dividend yield at a total cost of $10.12 is about 4.34%.
2. LIONS GATE (LGF)(owned LOTTERY TICKET Category): LGF has not done much since my purchase of 50 shares as a Lottery Ticket at $5.25 last November. I did notice on Monday that Wonderlich upgraded LGF to buy from neutral, and raised its price target to $8.5 from $6.
3. Glacier Bancorp (GBCI) (owned): After the close yesterday GBCI announced that it intended to offer 110 million of its stock, with a 15% over-allotment option. GBCI did not participate in TARP, so these funds have another purpose other than to pay back the government. A preliminary prospectus was filed with the SEC. e424b3
I would put the banks in three classes who are selling stock. In what I would call the least desirable class, there are banks that have issued a lot of stock at prices prevalent almost two decades ago and did not use the proceeds to redeem the preferred stock issued to the government. For these banks, there is certainly a possibility of another dilutive stock offering down the road and I would not put any of those banks in my category 2 of the Regional Bank Strategy. I have a few in Category 1. The second class consists of a group of banks issuing stock to repay the government, and possibly to raise some additional capital at the same time. Under the circumstances, this is to be expected and hopefully will only have a temporary adverse impact on the stock price. The third class consists of banks that have already paid back TARP, or never participated in it, and are raising new capital, possibly to take advantage of opportunities in the marketplace. Glacier is in that last class, and I do not have a problem with them selling stock now to take advantage of opportunities which may exist, provided of course that the bank does not overpay for any acquisitions which goes without saying. GBCI rose slightly this morning even after the announcement of this stock offering, indicating to me that the market is drawing the same distinctions.
4. Sold 100 EHL at 25.70 (See Disclaimer): I placed a limit order to sell my 100 shares at 25.62 before the market opened today, and it was filled at a higher price. I really do not want to find something now to replace EHL. Why? After the two year Jihad by the Fed against us sap savers, the pickings are really slim now. Maybe non-existent would be a more apt description. But, I have no choice. As I mentioned in a post from last night, Entergy Louisiana just floated a 6% First Mortgage bond and intends to use the proceeds to redeem EHL at its $25 par value plus accrued interest. EHL Redemption/ EHL matures several years sooner than the new bond and has a 7.6% coupon. I did fine with EHL having bought 100 shares at $22.75 in October 2008.
5. Sold 100 EMO at $25.8 (see Disclaimer): I sold the first mortgage bond from Entergy Mississippi-again. This one has not been called but I checked the prospectus last night. It can be called now at any time. I just bought this shares at at 25.21, and I did receive one interest payment. These shares were held in the Roth. I wish that I could send a bill for all of my effort to one of the Masters of Disaster, maybe one of the wizards at AIG's Financial Products unit will compensate me for my time trying to navigate the destruction left in their wake. RB just said that it takes a wizard's wizard to turn 7 billion into ashes in only a few months.
6. Sterling (STL): Sterling Bancorp priced 7.5 million shares at $8. This was 47% more than it announced on Monday. The over-allotment option could increase this offering up to 1.125 million more shares. I have had some very modest success trading Sterling's $10 par value Trust Preferred issue, STLPRA, and currently own just 50 shares of STLPRA bought at $8.99 in my regular IRA and 50 shares of the common purchased at at 6.58. (see also /Added 50 STLPRA at 8.69 Bought 100 STLPRA at 8.87 Sold 50 STLPRA at $9.4 after ex interest date Sold 100 of the TP STLPRA at 10.25) Sterling has not yet paid back the 42 million in TARP funds received by it. This stock offering will provide more than enough funds to do so.
7. Dividends and Interest (Dividends - Markets Data Center - WSJ.com): Fauquier (FBSS) goes ex dividend tomorrow. The two CEF bond funds with term dates, IGI and GDO, also go ex dividend on the 3/17.
I noted the following dividend and interest declarations. IDG, an ING hybrid, declared its regular quarterly dividend with an ex date of 3/30. PJS, a TC with a senior bond from First American, will go ex interest with its semi-annual distribution on 3/29. DKF, a TC with a senior Goodrich bond, will go ex interest on 3/30. PVX, a Canadian energy trust, declared its monthly dividend, as did the CEF IGD. PLP, a senior bond issued by Protective Life, declared its quarterly interest payment with a 3/30 ex date.
Apollo Investment (AINV), a BDC, is ex dividend today.
8. Housing Starts: Privately owned housing starts fell a seasonally adjusted 5.9% below the revised January estimate:www.census.gov/.pdf
9. Kimberly Clark (KMB)(owned): Goldman Sachs placed KMB on its conviction sell list. The GS analyst believes that the rise in pulp prices will place the earnings forecast at risk. Personally, maybe it is just me, I would not pay any attention to an analyst who bases a recommendation on a spike in a commodity price due to the Chilean earthquake and a Finnish dock strike, and view that kind of approach to investing as ludicrous.
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