I post this table whenever I make an addition to it. As the readers of this post know, I build these baskets with odd lots. For the reasons discussed in the post, I can no longer use Fidelity to build these baskets with either odd lot limit or market orders. Most, though not all of this regional bank basket is held at Fidelity. I do use other brokers without having a problem.
1. ST JOE (owned): In an interview with Bruce Berkowitz in this week's Barron's, he references St Joe (JOE) as a deep value play. One possible catalyst long term is the May opening of a new international airport near Panama City. About 75,000 of those acres are located around Panama City. See Item 1 JOE St Joe owns close to 580,000 acres in northwest Florida and 405,000 of those acres are within 15 miles of the Gulf of Mexico. www.sec.gov
Still, this is a long term story since the real estate market in Florida will take some time to fully recover from the meltdown. My shares were purchased at $15.69 in March 2009. At that time, I mentioned the airport as a potential catalyst and made a ballpark valuation of its land holdings. The shares have turned recently into an unrealized long term capital gain, more than doubling in price. JOE does not pay a dividend which is important to the OG. I have decided to let this one run, and to take another look at it when and if it starts to trade over $35. Other posts discussing JOE include the following: Forbes Article on Land Rich Companies:FCE/A JOE and TRC & Item # JOE
2. Bought 50 Northrim BanCorp at $16.66 (NRIM) (Category 2- Regional Bank Stocks)(See Disclaimer): Northrim is based in Alaska with 11 branches. Locations Northrim Bank Yes, there is even a branch in Sarah's hometown of Wasilla.
S & P does have an analyst report on NRIM but does not give the stock a rating or make earnings projections. According to YF, only 2 analysts cover this bank. Their current consensus estimate is for an E.P.S. of $1.25 in 2010 and $1.43 in 2011. NRIM: Analyst Estimates for Northrim BanCorp
The recently filed annual report shows a net interest margin of 5.3% as of 12/31/2009 ( page 21: e10vk)
The bank remained profitable during the Near Depression earning 95 cents in 2008 and $1.20 in 2009, per diluted share (page 46 e10vk)
The capital ratios increased in 2009 compared to 2008 and are in excess of ratios for well capitalized banks. As of 12/31/2009, for the bank on a consolidated basis, the Tier 1 capital to risk-weighted assets was 13.98 and 6% is considered well capitalized by the FDIC. Tier 1 capital to average assets was 12.13%, well above the 5% number for well capitalized. (see page 72). The numbers are slightly lower for just Northrim Bank. (13.05% and 11.33% as of 12/31/2009 respectively).
Book value was $17.42, with tangible book at 16.01. Allowance for loan losses was at 2% of gross loans. EX-99.1
The bank is currently paying a 10 cent per quarter cash dividend. This translates into a 2.4% yield at a total cost of $16.66. The dividend was raised every year from 2001, when it was at a 16 cent annual rate, to 66 cents in 2008. At some point the bank cut the dividend back to a 40 cents annual rate.
Prior to the onset of the Near Depression, the stock was trading in a narrow channel between $25 to $28: Northrim BanCorp Inc Share Price Chart The stock had enjoyed a good run from around $6 in June 2000 to $28 in June 2007, and it was downhill from that point until a bottom was hit at $6.86 on 3/9/2009: NRIM: Historical Prices
Northrim refused to participate in TARP, saying that it did not need any assistance from the federal government. EX-99.1
I entered a limit order on NRIM which was not sent to Knight Trading and was properly filled. I had not received Fidelity's response, discussed below, prior to entering this order. Otherwise, I would have used a different broker.
3. Husky Energy (HSE.TO)(owned-commodity strategy): UBS upgraded Husky to buy today, causing a 3%+ rise in the price. According to Reuters, the analyst noted that Husky had underperforming other Canadian energy companies and "could" play "catch-up" over the short term.
4. FIDELITY FILLS OF ODD LOT ORDERS: Last Friday, I placed an odd lot order to buy 50 shares of STDPRB which was then trading at below $18.50. It did not trade above $18.5 after I placed the order, except for my 50 share market order which was filled at $18.85 by Knight Trading. It did not trade above $18.54 on Monday. STD-PB: Summary for Santander Finance Preferred SA While the amount of money is insignificant, I have had several issues with Fidelity and Knight on these type of fills which have never been experienced by me since I started using discount brokers in 1982. I have only raised the issue with Fidelity when the fill was well outside any reasonable bounds, with no success. I use other brokerage firms now, and in the past, and have never had a single bad fill from them on odd lot orders. I know that at least one of my readers has had a bad experience with another broker which I have not used.
This is Fidelity's response to my request to look into the fill on STDPRB: "I have received confirmation from our order room that your order received a valid fill at $18.85 per share. No adjustments will be made to the order. It is important to remember that the inside Bid/Ask that is reported is only for round lots. The next best offer for an odd lot was $18.85. " COMPARE TO RULE 124 (C) OF THE NYSE RULES.
This is always their response so I am wasting my time even bringing the matter up to Fidelity. Their explanation is that the $18.85 price, then 36 cents above the market price, was the best odd lot match for my 50 share odd lot. Everyone needs to think about that one for a second. If the best match had been say $459 or $21.40, then that would be okay even though there is active trading in a narrow spread between $18.45 and $18.50.
I have been trading for 40 years so I really appreciated the advice that Fidelity gave me. Their representative pointed me to their information on how to enter a limit order. What can I say? I did enter some odd lot limit orders, and I received a fill from Knight of 1 share out of fifty on a $24 stock. I wonder who unloaded that one share on me?
The bottom line is that I can not use Fidelity to enter odd lot orders. I know that many of my readers consider an odd lot for them to be 1,000 or 2,000 shares. I am not quite to that point yet, and prefer to build positions in 50 and 100 share lots. I simply can no longer do that with Fidelity.
Another question is what happens on these larger positions such as a General Electric where I have an oddball number of shares. If I enter a market order on 461 shares, for example, can I have any confidence whatsoever in the fill of a stock trading with a one cent spread and several million shares a day? I do not know.
I am going to sell tomorrow one position in one of my two Fidelity IRAs, before I transfer it to another brokerage, which is a odd lot with some fractional shares attached to it, just to see how it is routed, and what happens. That will most likely be my last odd lot sale made via Fidelity. As seen from the chart attached above, I build baskets with odd lot orders. Fidelity will lose about five thousand a year just in commissions when I finally move all of my accounts, though I will keep some round lots positions where trading will be practically non-existent and where I can use "all or none" orders to protect myself.
Prior to opening a brokerage account at Fidelity, I never did experience on one single occasion anything remotely resembling these kind of fills on odd lot orders. In every case where there has been a problem, it has been Knight Trading doing the fill. I would emphasize however that most of my odd lot orders have no problem, including several sent to Knight. In fact, I never had a problem with Madoff Securities acting as a market maker for my odd lot trades.
This is a link to rule 124 (C) of the NYSE rules: NYSE Rules: "Marketable odd-lot orders will be executed in time priority of receipt by the System at the price of the next round-lot transaction on the Exchange"
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