This is the latest table of the stocks in the regional bank basket strategy. I last posted the table on 5/14 after buying 50 WAIN at 8.72. I added yesterday 50 shares to EBTC. Since 5/14, my unrealized profit has just about been cut in half, one of the problems with any long term strategy. I will hold most of these positions for 5 to 10 years, unless I sense another period in the offing where the banks are doing their best to destroy shareholder value. So far, I have realized about $1275 in gains. The most problematic of the unrealized gains is the one for WBS. I took the LT gain in the other problematic one, EWBC: SOLD 50 EWBC at $19.04 Buy of 50 EWBC AT 5.7 Where I have bought shares on more than one occasion, I use the average weighted cost and the last purchase date as the trade date. The dividend yield is provided by YF at the last trade, not at my purchase cost. I am not including the shares of NYB bought in the regular IRA, but only shares held in taxable accounts. In this basket strategy, I am playing a long term theme and do not expect all of the names in the basket to work out. My maximum exposure for any bank is $2000 with some at $300. Item # 2 Regional Bank Stocks
1. Las Vegas Has Finally Found Jesus: Maybe Las Vegas has changed since my last visit. Reno must have found religion too. I have no other explanation for what happened in the GOP race for the U.S. Senate seat held by Mr. Excitement himself, the very OG Harry Reid. I can not understand why those new converts turned their back on the chicken lady, Sue Lowden, who came up with an ingenious plan as an alternative to the Democrats expensive welfare for health insurance bill, just barter with those doctors by offering them a chicken in lieu of cash. Now, that lady has a head of something on her shoulders. A nice head of hair, the RB added. Sue Lowden Stands by Chicken Health Plan (see embedded youtube video) I liked the chicken lady and hoped to hear more from her as one of the national GOP leaders.
Instead, and this is what I fail to understand, the tea party and their GOP allies nominated Sharron Angle. I understand her many qualifications. She likes to shoot a .44 magnum and to lift weights. Sort of an elderly version of Sarah. But then, I hear that she wants to abolish social security and medicare. Isn't there a lot of old people in Nevada? More importantly, she is opposed to booze. Maybe Los Vegas has gone dry since I was last there, must have been one heck of a revival meeting.
Her main legislative achievement in the Nevada state legislature, other than voting no on every piece of legislation, was to offer a bill requiring the dissemination of information about the link between abortions and breast cancer (or what she views as a link). One of her many new ideas is to offer massages to prison inmates in some form of Scientology ritual. NYT YouTube - Sharron Angle: Spa TV Ad Some may ridicule that fresh idea, but you never know, it might work.
And, she wants to abolish the income tax by repealing the 16th Amendment. As I understand her economic theory, we need to borrow all of China's money to meet our needs. Then, when China wants to be paid back, we offer them chickens, or maybe I am confusing the massage lady with the chicken lady. I hear so much about the need for fresh ideas and change in political commercials, and that is clearly the route chosen by the GOP by nominating Sharron, the candidate promoted by the fair and balanced network. I am not going to say that the GOP has finally gone off the deep end.
Maybe the Democratic nominee for the South Carolina senate, a 32 year old unemployed man, apparently recently arrested for showing an obscene picture, FOXNews.com, can team up with Sharron when they arrive in Washington and come up with a bunch of new and fresh ideas. Maybe I will buy some more Canadian dollars this morning.
2. Added 100 AMSWA at $5.5 (see Disclaimer): This small software company has declined since I purchased 50 share lots at 5.81 and at 6.02. I took my position up to 200 shares and changed my dividend distribution option to reinvestment in additional shares. AMSWA is currently paying a 9 cent per quarter dividend which results in about a 6.53% yield at a total cost of $5.5. American Software Inc, AMSWA Stock Quote This is a link to the Reuters profile page for AMSWA. The company is in the supply chain management and enterprise resource planning software business.
The company reported an E.P.S. of seven cents for its third fiscal quarter ending 1/31/2010 and had 39.571 million in cash and investments at that time. There is no long term debt. Total revenues for that quarter were 19.83 million, a decline from 20.04 million in the year ago quarter. Form 10-Q Home Depot accounted for 14% of its revenue during the Q/E 1/10.
AMSWA's fiscal year ends in April. For its 2010 fiscal year, the current consensus estimate of 2 analysts is 27 cents and 34 cents for 2011. AMSWA: Analyst Estimates for American Software The revenue forecast for fiscal 2011 is currently 83.72 million.
3. China's Exports: The market received a lift yesterday after China disclosed that its exports rose 48.5% in May, year-over-year, compared to the expectation of a 32% increase.
4. Australia Unemployment Rate: The unemployment rate fell in Australia to a seasonally adjusted 5.2% in May. Labour Force, Australia, May 2010
5. Portugal & Spain: Portugal passed modest tax increases on income. It is attempting to reduce its budget deficit as a percentage of its GDP to 7.3% from 9.4% in 2009. WSJ Portugal recently sold 2.04 billion dollars in bonds. The ten year went for a 5.225% yield, up from 4.523% in May. Portgual reported that its 1st quarter GDP expanded by 1.1% from the 4th quarter of 2009. WSJ
Spain sold €3.9 billion of 3 year notes, near the top end of the expected range, at a 2.5% coupon. Reuters Why is everyone hyperventilating about Spain's debt?
6. DIVIDENDS AND INTEREST: The securities owned which are ex dividend or interest today include the following: 1. VNOD, the senior bond issued by Vornado (Added 50 VNOD at 24.65 in the Roth); 2. GFW, a senior bond from AAG Holding, Bought 50 GFW at 22.76 Bought 50 GFW at 22.63; 3. AHLPRA, an equity preferred stock from Aspen Insurance: Bought 50 AHLPRA at $19.75; 4. BTZ, BCF, BDV, BDJ, BDT, and PSY, CEFs from Blackrock; 5. Coca Cola (KO); 6. REPRB, a TP from Everest Re: Bought 50 REPRB AT 20.78; 6. EBI and ERC, CEFs from Evergreen; 7. FRRPK, an equity preferred stock from First Industrial; 7. HBAPRD, a HSBC USA floating rate preferred stock with a guarantee: Added 50 HBAPRD at $20.85; 8. JDD, JTD, JGT, JQC, JSN , CEFs from Nuveen; 9. WIW, a CEF from Western Asset; 10. STL and STLPRA, common and preferred stocks from Sterling Bancorp Bought 50 STL at 6.58/Added 50 STLPRA at 8.69; 11. PBIB Bought 50PBIB at $14.1 Bought 50 PBIB at 13.27; 12. OFGPRA, a equity preferred from Oriental Financial Bought 50 OFGPRA at 19.55; AND 13. MJH, a TC containing a BAC TP: Buy of 50 MJH at $7.51.
Of the ones listed above, EBI, ERC, PSY, BTZ and OFGPRA paid monthly dividends.
7. Added 50 IGR at $ 6.48 (See Disclaimer): I have been reinvesting the monthly dividends to buy additional shares in IGR. Before adding to my position, I checked the sponsor's web site and saw that the discount to IGR's net asset value was 12.3% as of 6/9/2010 with a distribution yield at the then market price of $6.3 at 8.6%. ING Clarion Real Estate Securities Dividends are paid monthly. This CEF invests in real estate companies worldwide. This CEF uses leverage. I notice when examining my transactions on IGR that dividends were reinvested at $2.99, $2.86, $2.99 and $3.24 during the Near Depression period. My last purchase in the open market was at $6.05 on 12/4/2009. Added to CEFs IGR & SWZ
This is a link to the last filed SEC quarterly report: nvq The annual report for 2009 can be found at the SEC's web site.
8. SOLD 101+ VTI AT 55.21 AND ADDED 100 OEF AT 49.11 (Large Cap Valuation Strategy)(SEE DISCLAIMER): The reasons for this exchange are the same as when I sold 102+ VV to buy 100 OEF: Item # 4 Bought 100 OEF at 49.61 & Sold 102 VV at 49.43 First, I realized a long term capital gain on the VTI shares having bought 100 shares at $47.57 on 6/9/09. Second, I view the valuation advantage as tilting toward the mega cap U.S. stocks and OEF is one of the better ways to play that opinion. I also netted about $600 which can be used, along with cash flow, to buy income generating securities such as the IGR buy mentioned above.
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| VTI 101+ SHARES +$750.12 |
9. Added 50 EBTC at 10.33 (Regional Bank Stocks strategy)(see Disclaimer): I mentioned in an earlier post that I planned to invest about $1000 to buy additional shares of existing positions in the regional bank strategy. This purchase of Enterprise Bancorp was an average down from a previous purchase at $11.75. Bought 50 EBTC at 11.75 As far as I can tell, the decline from $12.75 on 5/3 is based on no publicly available news. The chart does not look good, with the stock now selling below its 200 day and 50 day moving average lines. Enterprise Bancorp Inc Share Price Chart Volume has been about average during that decline: EBTC: Historical Prices for Enterprise Bancorp Inc I have nothing to add to my previous discussion linked above.
All I am doing now on the regional bank strategy is rounding 50 shares odd lots to 100 share round lots by averaging down on some positions that turned from unrealized profits to unrealized losses during the latest market swoon.
10. Added 50 of the TC PYS at 19.59 (See Disclaimer): This is a typical bunt for a hoped for single investment. I bought 50 shares of PYS at 20.01 in March 2010, and received so far one semi-annual interest payment. As explained in the post summarizing this first odd lot purchase, PYS is a trust certificate containing a senior bond from R.R. Donnelley (RRD). The TC and the bond mature on 4/15/2029. The underlying bond data can be found at the FINRA site. The bond has a 6.625% coupon which gives it at 7.2% current yield at its 92 closing price on 6/10/10. The FINRA page shows that the underlying bond in this TC is rated investment grade.
The TC has a lower coupon at 6.3%, but the current yield at a total cost of $19.59 is higher at 8.04%. Par value of the TC is $25: www.sec.gov Using the Morningstar Bond Calculator, I come up with a 8.77% YTM at a total cost of $19.59.
My main concerns with PYS include the usual interest rate risk with a long term bond and credit risk due to RRD's heavy debt load.
I will be in an infrequent trading mode on PYS. I will not exceed 150 shares. If I buy another 50, it will have to be below $18.5. Since my first lot would be the highest cost, and I use FIFO accounting, I would most likely sell that 50 share lot at some point and keep the lower cost shares. This would mean a possible sell of 50 shares at over $20.5, and another buy at below $18.5.
11. DFY (owned): Delphi Financial has partially called for 7/14/2010 a small part of its 8% senior notes at their $25 par value plus accrued interest. Delphi Financial Announces Partial Redemption of 8.00% Senior Notes This call impacts 14 shares out of a 100.
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