1. Santander (own common and preferred): Santander's Chairman, Emilio Botin, said in a speech to shareholders that he expects STD's profit to be "similar" to that earned in 2009. STD reported a net profit of USD 10.8 billion in 2009. Santander also expects to maintain its dividend at €60 cents in 2010. WSJ Bloomberg Santander Bets On Brazil He further claims that the market has blown Spain's problems way out of proportion. STD has gained market share in Spain recently, as you would expect given the difficulties of Spain's savings banks. Santander has added €30 billion of deposits in Spain alone and €75 at the group level. Botin added that the profits from its operations in Brazil will exceed those in Spain in 2010.
I would add that STD agreed to buy BAC's stake in the Mexican bank Grupo Financiero Santander for 2.5 billion last week, hardly the kind of move one would anticipate from a bank in trouble. MarketWatch As related in the article at Marketwatch, an analyst from Deutsche Bank estimates that this deal could add $375 million to STD's earnings by 2012. The BAC deal gives STD 99.99% of this Mexican bank.
Cramer said on Friday that a lot of people left him messages in his email box saying they did not believe STD. TheStreet It is conceivable that some of those individuals were not short STD and were expressing an unbiased opinion.
2. May Retail Sales: The stock market is in a manic depressive state caused by post traumatic stress disorder, just my diagnosis. On Thursday, it was euphoric that several economic reports virtually eliminated the near term possibility of a double dip recession. Then, on Friday, with the release of a mildly negative retail sales report for May, the market was in despair, postulating that a double dip recession was a foregone conclusion. The consensus estimate was for an increase of .2% and the Commerce Department reported a 1.2% decline. The April number was revised upward to a .6% gain from .4%. Total sales for March to May 2010 were up 8.1% from the year ago period. I would urge the Masters of Disaster to take some time to read the Commerce's Departments own statement about the reliability of these estimates.
Then the market found some traction after the consumer confidence survey by Reuters and the University of Michigan exceeded expectations. The preliminary consumer confidence index rose to 75.5 in June from a 73.6 reading in May, with the expectation at 74.5. Then after reflecting about the world, no doubt in depth, the market veered south again only to rally into the close.
Except for employment in the U.S. and a few other developed nations, the general thrust of all information is a gradual worldwide economic recovery.
3. Bought 50 AFE at 22.87 on Friday (See Disclaimer): AFE is a senior exchange traded bond issued by American Financial Group. This bond has a $25 par value and a 7.125% coupon, and it matures on 2/3/2034. This is a link to the prospectus: American Financial Group, Inc. 424(b)(5). Interest payments are made quarterly with the next ex date in July.
At a total cost of $22.87, the current yield is about 7.79%. Using the Morningstar Bond Calculator, the YTM at that total cost would be about 8.19%.
AFG, the issuer of this senior bond, is publicly traded. This is a link to its website: American Financial Group, Inc. - Investor Relations - Company Overview AFG is a holding company, primarily engaged in the sale of property and casualty insurance through its subsidiary Great American Insurance Group and in the sale of annuities and supplemental insurance via its Great American Financial Resources subsidiary.
The current consensus earnings estimate is for an E.P.S. of $3.73 in 2010: AFG: Analyst Estimates for American Financial Group, Inc. - Yahoo! Finance Both FINRA and QuantumOnline.com show that this bond is currently rated investment grade.
A related bond that I own is GFW, which also pays quarterly, but it is on a different quarterly schedule. Item # 2 Bought 50 GFW at 22.76 ; Item # 6Bought 50 GFW at 22.63. I elected to add AFE due in part to the different payment schedule as well as my ongoing effort to increase cash flow into the taxable accounts.
4. Bristol Myers (BMY)(owned): Before the opening bell on Friday, BMY and PFE announced that their experimental drug apixaban for the treatment of irregular heart rhythm was superior to aspirin. Based on the findings of an independent review committee that there was "clear evidence of a clinically important reduction in stroke and embolism", the trial was stopped so that the patients who were receiving aspirin could be given apixaban. WSJ.com Reuters Bristol-Myers Squibb: Press Releases The drug is also being tested for blood clots.
Citigroup upgraded BMY from hold to buy: WSJ
I was not familiar with the terms of the agreement between PFE and BMY on apixaban. The compound is owned by BMY with a patent expiration in 2023. The terms of the agreement are summarized in this article: Contract Pharma
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