Saturday, July 31, 2010

2nd Quarter GDP/Bought 50 of the TC PZB at 19.85/Sold 200 ATP:TO at 13.14/GIW/Sold 50 USBPRF at 23.94

The Claymore BulletShares Corporate Bond ETFs declared their monthly distributions on Friday. I own BSCE and BSCF in retirement accounts, and BSCH in a taxable account. Considering the product, my positions have increased in value far more than my very modest expectations since those recent purchases. Bought 100 BSCH at 20.13; Item # 4 Bought 100 BSCE at $20.16; Item # 7 Claymore Introduces Term Corporate Bond ETFs Bought BSCF at$20.18. While the yields are not much, I did notice an increase from the last dividend declaration for the 2017 term ETF, Claymore BulletShares Corporate Bond ETFs Declare Initial Distributions. The 2017, the longest term date, declared a 7 cent monthly distribution last Friday, up from an initial distribution of 4.6 cents. The 2014 increased from an initial 1.6 cents to 3 cents. LB dwells on the pennies. The OG could care less.

I would add a caveat to my prior discussions based on a review of this press release about the dividend. Several of these short term corporate bond ETFs are expanding the number of shares to accommodate new shareholders. The exceptions are the 2016 and 2017 term date ETFs. When the manager adds to existing positions during a corporate bond rally, such as the one being experienced now, the newer positions would be at a higher cost than the ones purchased when I made my purchases. Over time, any of those newly added positions, purchased at over par value, will lose value at maturity and could conceivably have a negative impact on original shareholders. This may even out over time, assuming a correction in the ongoing rally and a continuation of new money buying these ETFs.

1. Bought 50 of the TC PZB at $19.85 in the Roth Friday (see Disclaimer): PZB is a trust certificate containing a senior bond from the Limited (LTD) that I previously bought at $16.05 in a taxable account. This TC has a 6.7% coupon and a $25 par value, whereas the underlying bond has a 6.95% coupon. Yet, based on the respective prices last Friday, the TC had a higher yield than the underlying bond. The last trade for the bond was $89.187, which would produce a current yield of 7.79%. FINRA The TC has a current yield of around 8.44% at a total cost of $19.85. And, given the TC's greater discount to par value, it would have an even better yield to maturity which includes the yield realized by receiving par value at maturity. Using the Morningstar Bond Calculator, the YTM for the TC is 9.17% at a cost of $19.85. The underlying bond would have a YTM of 8.3% based on the $89.187 price.

The YTM for the PZB shares purchased at $16.05, which are still owned, is 11.53.%. For those unfamiliar with buying bonds in the bond market, the price for a $1,000 bond is quoted at 1/10 of the par value or "100". So if I placed a limit order to buy 5 LTD.GE (Cusip 532716AK3) at 89, and the order was filled at that price, then the cost would be $4,450. before commission ($890 per bond x. 5 bonds). Actually filling an order for such a small amount in the bond market would be far easier said than done.

I view this last purchase of PZB to be a trade, an alternative to earning zero on my cash in a money market account. It will go ex interest next month.PPlus Trust Series LTD 1, PZB (my 50 share purchase did not register in the volume displayed for Friday) If I can clip that interest payment and sell the shares for a small profit, I will likely do so. The shares bought at $16.05 with the 11.53% YTM will be held until I become rationally concerned about credit risk. Given the yield for the shares bought at $16.05, I am more concerned about credit risk than interest rate risk over the next 23 years. It is conceivable, with the advent of hyper inflation, that I would sell bonds with high yields including the PZB purchased at $16.05.

This is a link to the prospectus:

Before I would buy any bond, I would conduct the same research that I would normally do for a stock purchase. The focus and purpose of the inquiry is ultimately to assess credit risk. I want to know about the amount of debt on the balance sheet and particularly the amount of debt at the same and higher priority. For senior debt, I would be concerned about a lot of secured debt and less concerned about junior subordinated debt. I want to know about the earnings history and recent earnings reports. I am also very interested in the firm's cash position. Limited is showing a lot of cash on its balance. This data can be found at LTD: Balance Sheet for Limited Brands or by looking at the last quarterly report filed with the SEC, which I would always do before buying a bond. LTD Quarterly Report for the Q/E 5/2010 This shows 1.188 billion in cash on the balance sheet as of 5/31/2010. The long term debt is shown at 2.523 billion. I would then go and look at the types of debt and the maturity schedules. The long term debt is set out in Item # 9 in these quarterly reports (page 11). I see that almost all of the long term debt is senior debt with the next maturity due in November 2014. Another 350 comes due in 2033 and, which is the bond that is the underlying security in PZB, and a smaller chunk of 300 million in 2037. I also see that the company successfully sold 500 million of 8.5% notes in June 2009 due in 2019. I then checked the last trade of that bond at FINRA, and it was trading on Friday at a 11% premium to its par value suggesting that LTD could refinance now at a slightly lower rate.

2. Sold 200 ATP:TO at $13.14 Friday (see disclaimer): I viewed my shares of Atlantic Power to be a temporary placeholder for some of my Canadian dollars. The stock just went ex dividend, and I was able to sell the shares at a profit. Bought 100 ATP:TO at 11.97 CAD Sold 100 MCQPF at $7.18 and Bought 100 ATP:TO at 13.01 CAD If I buy the shares back at some point, I will buy them on the NYSE and use my CADs to buy another dividend paying Canadian ETF.

Atlantic recently listed the shares on the NYSE under the "AT" symbol. The dividend yield is almost 8.5% at the closing price ($12.95 USD) of the NYSE listed shares on Friday. Atlantic Power Corp, AT Dividends are paid monthly, and an earnings report is due in early August. This stock has been volatile in a 11 to 13 CAD range. ATP.TO: Historical Prices I would hope to pick up the NYSE listed shares at below $12.

Given the rise in the Canadian dollar against the USD on Friday, the NYSE listed shares were up 2.98% when I sold my Toronto listed shares which were then up 1.54%. The Canadian shares ended the day up 3.32% and the NYSE listed shares closed up 3.98%. The CAD rose almost .8% against the USD on Friday. If I took the closing price on the Toronto exchange, which will ultimately govern the ADR price adjusted for the current exchange rate, the price on the NYSE should have been about $13. USD rather than $12.95. Currency Converter

This is an example of how currency conversion will impact the ADR price. It works both ways. At the YF currency converter I went back to March 6, 2009, a recent low point in the CAD's value against the USD. I then converted the ATP:TO closing price from last Friday, 13.39 CAD into USD. This would equal a price of 10.39 U.S.D., a 19.76% decline from the NYSE closing price on Friday at $12.95. Atlantic did trade at that time on the pink sheets. So if the CAD had closed 7/30/2010 at the same value as 5/6/2009, AT's price would not be $12.95 but $10.39. So, there is both an enhanced opportunity and risk associated just with the currency issue. It worked in favor of the U.S. buyer of Atlantic Power on the Pink Sheet exchange back in March 2009, but may go the other way too.

Before buying any ADR of a foreign company, an investor needs to become thoroughly conversant with how currency fluctuations impact ADR share prices. I discuss some of these issues in the following posts: International Trading and Currency Risks ; Bought 100 AXAHY at 14.69 (EURO) ADDED 50 NABZY AT 19.51 (National Australia Bank (AUSTRALIAN DOLLAR); Added 70 RHHBY at 34.07-Completing Round Lot/ Swiss Franc-Euro (SWISS FRANC-subsequently sold the Roche shares Sold 100 RHHBY at $36.2 ); Bought 100 NVS at 49.08 (SWISS FRANC); see also, Strong U.S. Dollar + Weak Market=Time to Start Looking Overseas).

Headknocker was not please with this transaction, noting that ATP.TO closed at 13.39 CAD on Friday, leaving $50 CAD on the table. HK wanted to know whether the OG got the shakes again, which caused this fifty Canadian dollar depletion in HK's capital position. The OG said that he "did not care about $50, or 500 dollars for that matter, and could not remember what happened ten minutes ago, let alone from Friday mid-day."

LB, the author of this minutes of HQ's storied trading operation, wants all readers to know that it views OG's statement about not caring about "50, or 500 dollars" to be SACRILEGE, reconvene the Spanish Inquisition and burn the OLD GOAT at the stake. LB views $1 to be the same as 5 million dollars, every $1 counts. LB wants Headknocker to know that it really, really and truly, cares about every dollar in HK's capital position.

HK was inclined to agree with LB's sacrilege accusation against the Old Geezer but thought that burning the OG at the stake might be viewed as cruel and inhuman punishment for such an offense in this modern age populated by a bunch of liberal pansies.

All of this squabbling about 50 Canadian dollars made the RB wonder whether HQ will ever be in a position to acquire Canada, all of it. If any of the loonies up there read these minutes, it might put them at ease, no need to worry about HQ acquiring their country and renaming it "Greater Tennessee", thinking no doubt that HQ's staff is disorganized and out of kilter, and then RB can spring its trap. Maybe, RB mused, it would be better to work with LB than the Old Goat.

3. Sold 50 of the TP USBPRF at $23.94 Friday (see disclaimer): This TP goes ex interest on August 11, and I bought my 50 shares a few days ago at 22.54. At the $23.94, this TP would have a current yield of around 6.13% with a maturity in 2035. After thinking about that some, I decided that this kind of yield for a TP maturing in 2035 was not worth the risk.

I am wary of these long term bonds yielding in the 5% to 7% range. I discussed my longer term forecast in an email to a reader on Friday:

"I would view the data about Baa bond prices ( to indicate that yields for those bonds are at or near their lowest yield, with some potential upside potential in the near term.

If inflation remains low for several years, or the feared disinflation or deflation scenario comes to fruition, then there would be substantial upside possible, particularly as investors continue to pay up to receive some kind of yield, which has been occurring for some time now. I do not view that as a likely scenario.

I would view some further near term appreciation in BAA debt to be likely, as in more probable than not, but the outlook for two to five years is tilted toward a major correction in bond prices in my view. I suspect that the long term secular bull market in bonds, which I date back to 1982, will continue for a awhile longer, maybe for as long as a year or two, and will take prices to levels that will be as absurd for bond prices as stock prices were in 1999. It is from that level that I suspect the start of a long term secular bear market in bonds, that will crush and annihilate their values over time. This change in the long term trend will develop gradually at first, as yields start to creep higher as prices fall. Many new bond investors will stay the course, wondering why their bonds are losing value, and ultimately the losses will accelerate. So I am thinking longer term with my views. I still own most of my long term bonds. I do not believe that new investments in them are warranted given my longer term views, and my inability to time the change in trend with any preciseness.

The 10 year treasury is currently below 3%. A rise to 4% would cause a serious price adjustment in that 3% paper. (see T.RowePrice discussion of impact of a rise in rates on price starting at page 8:"

4. GDP Report-Consistent with an Economic Recovery: I would add that the recent GDP report and the 1% upward revision to the 1st quarter GDP does not justify a bond rally or the kind of complacency that currently exists among bond bulls. How many revisions did the government make in the initial estimate of 1st quarter GDP before revising it again by 1% last Friday, raising the growth rate from 2.7% to 3.7%? News Release: Gross Domestic Product The first estimate for the 1st quarter was released in April and the government pegged the number at 3.2% then. In June, the estimate was revised down to 2.7%. The first estimate of 2.4% for the 2nd quarter was close to the 2.5% predicted by the economists. Final sales rose at a 1.3% rate, faster than the 1st quarter rate of 1.1%. Business investment rose at a 17% rate. Real disposable income rose 4.4%. Imports grew much faster than exports, and imports had a record negative impact on the GDP number. In-Depth: 2nd Quarter GDP Growth - There was a 29% increase in imports. Imports are a subtraction from GDP in the government's math, even though those goods are going to be sold and used in the U.S. They do not just disappear.

In a year or so from now, looking back to the present, I would expect many of those now predicting a continued bull market in 10 year treasuries to be doing a flip-flop that would make a politician blush. The current extreme bullish consensus on bonds will shift to a criticism of the Fed for keeping its foot on the gas for too long. The 10 year treasury will rise to over 4% and inflation will have already started to accelerate. And the Federal Reserve, still fearful of a slide reminiscent of what happened after 1936, more worried about deflation than incipient inflation, will still be holding the Federal Funds rate at or near zero. I suspect that this will be how the long term secular bull market in bonds (born in 1982) will end. The end will be the result of a number of factors coalescing including a fundamental miscalculation by economists on the strength of the rebound from the recession, coupled with record low yields across the spectrum in bonds as well as the extraordinary amount of fiscal and monetary stimulus (including money creation), with the monetary stimulus remaining in effect for far too long a period.

Then again, there is risk, which I recognize and try to plan for, that I will be proven wrong.

5. Wilber (own- Regional Bank Stocks basket strategy): Wilber, a micro-cap bank in upstate NY, reported earnings of 10 cents per share for the quarter, down from 15 cents in the year earlier period. The decrease was "largely" driven by loan loss provisions. The bank transferred 9.06 million in loans to five commercial borrowers to nonaccrual status. It is conceivable that more is to come based on this comment in the press release: "Although the level of impaired loans increased to $22.148 million at June 30, 2010, we have only been able to specifically identify $1.142 million of potential losses against these loans based on our estimates of collateral value or anticipated payments from the borrower. This represents approximately 11% of the total allowance for loan losses at June 30, 2010. By comparison, impaired loans totaled $12.957 million at December 31, 2009, with specifically identified reserves of $721 thousand. This represents a $9.191 million increase in impaired loans, but only a $421 thousand increase in specifically identified reserves for the allowance for loan losses. Our analysis has shown that there appears to be relatively strong value in the underlying collateral held against these loans."

The one analyst following this bank estimated earnings at 11 cents.

GIW has been one of the losers in the regional bank basket. I do not intend to add anymore shares, nor sell what I now own until I see further serious problems.

Friday, July 30, 2010

Bought 50 VLO at 17.12/Bought 50 AMAT at 11.95/Husky Energy SUSQ FBSS STD

The leading light of the Tennessee GOP, Basil Marceaux, is running for governor of Tennessee. Basil's new ideas, rivaling those of Sharron Angle in their ingenuity, have caused him to become an international celebrity. One of his ideas is to remove stop signs throughout the state. Another is to plant grass on vacant lots and then "sell it for gas." Basil recently expressed his view on Channel 4, a local TV station, and this video has become an international sensation on YouTube - Basil Marceaux : The Next Governor of Tennessee.

The market was spooked yesterday morning by the St. Louis Federal Reserve President James Bullard talking about deflation and the possibilities that the U.S could "become enmeshed in a Japanese-style, deflationary" scenario. (see also, Bullard - WSJ)

Some pressure to the downside was added by tepid earnings reports and/or forecasts from the likes of Colgate, Kellogg, Symantec and some smaller tech names, notably Akamai Technologies. Colgate fell 6.84% yesterday after revenues rose only 2% in the quarter to 3.81 billion, with the consensus estimate at 3.94 billion. Kellogg missed the revenue and earnings forecasts and lowered its earnings forecast. Part of Kellogg's problem was due to a large recall, however. I do not own any of these stocks. Symantec is mildly interesting to me in the $12 range. SYMC fell 11.18% yesterday to close at $13.03. Akami fell 12.9% to $38.35.

I previously discussed a pop of around 100% in my shares of Wainwright (WAIN), a Massachusetts bank, after it agree to be acquired for cash. Sold 50 Wain at $18.7-Being Acquired I noted in some research conducted yesterday that another small bank located in Massachusetts, LSB Corporation (LSBX), agreed to be acquired by People's United for $21 in cash, which caused a pop from a close of $14.12 on 7/15/2010. LSBX: Historical Prices for LSB Corporation I recently added 50 of Century Bancorp at 20.53, another small bank in Massachusetts which was selling then at a substantial discount to its tangible book value of $25.25. Century has two classes of stock, as noted in the comment section to the previous linked post, and would require the consent of the insiders for a merger. ("Since the vote of a majority of the shares of the Company’s Class B Common Stock, voting as a separate class, is required to approve certain extraordinary corporate transactions, the holders of Class B Common Stock have the power to prevent any takeover of the Company not approved by them." page 8 e10vk)

I did not notice until yesterday that PMA Capital (PMACA) agreed to be acquired by Old Republic (ORI). Old Republic and PMA Capital Announce $365 Million Merger Agreement I do not own the common stock of either firm, but I do have a position in a senior exchange traded senior bond (PMK) of PMA Capital which is currently selling at a few cents above its $10 par value. I further noted that A.M. Best placed PMA Capital's debt under review with positive implications since Old Republic is rated higher than PMA. I do not intend to do anything with my position in PMK unless and until it sells at a larger premium to its par value. Bought 100 PMK at 9.71 Added 50 PMK at $8.21 Bought 100 PMK at $8.35 Sold 100 PMK at 9.2

Several Canadian life insurance companies popped in trading yesterday, including a 4.77% gain in my recently acquired Manulife ( Bought 100 MFC at $15.05), after the Canadian financial services regulator announced that new regulations governing segregated fund guarantees will apply only to new accounts. Reuters A Canadian insurance company also announced yesterday earnings of 68 Canadian cents yesterday, one cent better than the consensus estimate. Industrial Alliance Insurance ( IAG.TO)

Last night, Samsung reported a record 3.6 billion dollar quarterly profit. Bloomberg

1. Bought 50 Valero (VLO) at $17.12 on Wednesday (see Disclaimer): I am playing with the house's money on refiners. The main reason for that result is that I have not held any of them for a long period. I view this industry sector to be a trade, and I have a negative view of refiners as a business. It is a feast and famine business with large capital costs. The input costs of crude can vary widely and have a profound impact on the profitability of the business. Weakness in demand for the refined products can squeeze margins. The impact of those variables led Valero to cut its dividend recently and to report losses. The recently released second quarter report had a greater than expected profit. Valero Energy reported an E.P.S. of 93 cents compared to a 36 loss for the 2nd quarter of 2009. The consensus estimate was for earnings of 71 cents per share. Reuters The profit was due to better margins on refined products and lower costs. Operating expenses fell to $3.55 per barrel from $4.41 in the 1st quarter. The throughput margin per barrel rose to $9.39 from $5.79 in the 1st quarter. The CEO said that margins and costs remained at relatively good levels so far in the 3rd quarter.

Valero had around 2 billion in cash in the quarter and successfully sold its refinery in Delaware for 220 million. VLO is in better shape now than the last time that I bought some shares at close to the same price. Bought 50 VLO at 16.3 Sold VLO at 18.85 Sold Valero at 21.14-Bought at LessSusquehanna Bancshares, Inc. Announces Second Quarter 2010 Results - Yahoo! Finance than $17 Refiners: ALJ and VLO Bought 50 DK at 5.75 Sold Delek Sold Alon (ALJ)

Price to sales is .13 and price to book is .67: VLO: Key Statistics for Valero Energy Corporation The consensus estimates are currently for $1.22 in 2010 and $2.23 in 2011, but I would put no reliance on those numbers given the large swings in margins due to costs and demand factors. Improving demand will be a plus for VLO. The five year chart shows the impact of the recession and/or high crude prices in dramatic fashion: Valero Energy Corporation Commo Share Price Chart | VLO In the early stages of the recession, oil prices started to surge before peaking at close to $140 per barrel (WTI Spot Price) as demand for refined products started to fall. In July 2007, Valero was trading over $77 per share. By October 2008, the share price hit $16.

2. EXXON (own): Exxon Mobil reported net income for the 2nd quarter of 7.56 billion or $1.61 cents per share, up from 81 cents in the 2nd quarter of 2009. The consensus estimate was for $1.46. Revenues increased 24%. Refining and marketing earnings more than doubled on better margins. Cash flow from operations was 9.6 billion. Share repurchases in the quarter exceed 1 billion dollars. Oil equivalent production increased 8%.

3. Susquehanna Bancshares (SUSQ)(own-category 1 Regional Bank Stocks basket strategy/also own TP SUSPRA): Susquehanna Bancshares reported another blah quarter that will keep its common shares relegated to category 1. The bank had a 1 cent loss but that was due to a 4.8 million dollar charge connected with redeeming 200 out of the 300 million dollars of the government's preferred stock. No matter, barely making a profit or loss is viewed as the same for SUSQ. The capital ratios are good, with the tangible equity ratio at 7.64% and the total risk-based capital ratio at 15.5%. The allowances for loan losses as a percentage of nonaccrual loans was 78.27%. The NPAs to total loans was at 2.60%. SUSQ remains a borderline category 1 to category 2 holding, on the cusp of a promotion but not there yet.

4. Husky Energy ( own ): Most likely, I would not have re-purchased Husky shares if I had waited until after the release of the second earnings report, Bought 100 HSE:TO at 26.25 CAD. Husky missed the consensus forcast by 11 Canadian cents, and lower its production guidance. Reuters The earnings report can be found at Husky Energy. Husky blamed a rapid decline in production from its White Rose field and a slow ramp up at a field off Newfoundland's coast. This is a quote from the earnings release: "Husky is adjusting its 2010 total production guidance to 285,000-295,000 barrels of oil equivalent per day from 306,000-330,000 barrels of oil equivalent per day. The primary reasons for this adjustment are: the delay and slower than forecasted ramp up of oil production at North Amethyst combined with the higher than forecasted decline within the main White Rose field which has stabilized after strong performance over the past four years, and weather-related issues in the heavy oil operations."

An analyst, quoted in the Reuters article, noted that 2010 was the sixth consecutive year that Husky management had failed to meet the year's initial production guidance. On the bright side, Husky did not cut the dividend again, declaring its regular quarterly dividend of 30 cents Canadian.

5. Fauquier Bankshares (FBSS) & United Bancorp (UBCP) (Own- Regional Bank Stocks): Fauquier Bankshares reported net income of 1.01 million or 28 cents per share, up from 20 cents in the second quarter of 2009. As of 6/30/2010, NPAs as a percentage of total assets was 1.12%; net interest margin was 4.1%; the allowance for loans losses as a percentage of NPLs was a very good 217.71%; the tangible equity to tangible assets ratio was 7.44%; and the total risk-based capital ratio was 12.49%. Bought 50 FBSS at 14.08

United Bancorp reported 15 cents in earnings for the 2nd quarter, unchanged from a year ago. The quarterly dividend is at 14 cents per share. The allowance for loan losses to nonaccrual loans was 50.54%. NPLs to total loans was 2.01%.

6. Santander (own Common STD and Floating Rate Preferred STDPRB): STD reported 2nd quarter earnings at €.26, down from €.28 in the year ago quarter. The consensus estimate was for €.27. Net income was €2.23 billion. PDF. Reserves for loan losses covered 73% of non-performing loans (NPLs). The non-performing loan to total loan ratio was 3.37%. Continental Europe accounted for 43% of STD's profit (22% Spain); Latin America 37% (Brazil 22%), the U.K at 17% and the U.S. at 3%.

7. Bought 50 Applied Materials at $11.95 (2010 Speculative Strategy)(see Disclaimer): I am not exactly sure why I keep buying AMAT. I just sold my small positions for even smaller profits at $12.94 and at 13.54. Whatever the reason, probably something to do with an appealing valuation for a long term hold, I am not going to take much of a chance with this company. The dividend yield at my cost is over 2%, and AMAT has 2.334 billion of cash on the balance sheet or around $1.74 per share. The current consensus estimate is for $1.19 per share in earnings for the fiscal year ending in October 2011, which gives me about a 10 P/E based on that forward estimate. In mid-July, Reuters reported that AMAT's CEO was forecasting 140% revenue growth in 2010 from AMAT's silicon systems group.

As a stock investor, the OG is naturally inclined toward value investing and dividend stocks. Tech stocks make him nervous, usually requiring a heavy ingestion of Maalox and a bottle of chill pills before hitting the buy button. I at least recognize some of the inherent problems. Their products become obsolete quickly. Valuations are frequently beyond absurd, particularly given the cyclical nature of their business, short product life cycle, and competition. For extended periods, investor dismiss those obvious issues and value tech stocks as if 20% compounded earnings growth will continue just about forever. So, I missed the bubble in 1999 entirely. I was not there on the way up or on the way down.

Valuations today are a different matter. Many of the larger names (IBM, HPQ, MSFT, INTC, CISCO, etc) are selling in the 10 to 12 times estimated forward earnings range. Many of these larger firms have enviable financial positions, loads of cash on the balance sheet, the ability to innovate, and products that are as essential (or more so) as any sold by a consumer products company. And their margins are better than consumer product companies, with the capability to generate boatloads of cash, at a much faster rate, during good times.

So, even though the current times are without question uncertain, and many have concerns about a double dip or a peaking in the demand cycle, it is just impossible for a value investor to overlook these companies at current prices.

Possibly, the best way for a non-tech investor to play this valuation theme is to buy the ETF XLK, and I did buy 100 shares. Bought 100 XLK at 21.89 That ETF contains the technology stocks in the S & P 500, and a low expense ratio of just .21%. Technology Select Sector SPDR Fund I may add to that position which has not done much since I bought those shares back in February. The top ten of this ETFs 87 positions are as follows:

As of07/28/2010
NameWeightShares Held
Apple Inc10.74%1,796,139
Microsoft Corp8.95%15,049,477
International Business Mach7.45%2,531,182
At&T Inc7.00%11,663,343
Cisco Sys Inc6.04%11,272,794
Google Inc5.30%477,782
Intel Corp4.58%9,365,095
Oracle Corp4.32%7,770,520
Hewlett Packard Co4.13%3,824,799
Verizon Communications Inc3.72%5,609,353

I have sometimes bought SMH, but will not buy it as long as I own Intel. A broader U.S. technology ETF fund, with an expense ratio of .48, is iShares Dow Jones U.S. Technology Sector Index Fund (IYW).

8. Dividends and Interest: I noted at the WSJ dividend page last night that several exchange traded bonds declared their regular interest payments. For the most part, it is a daily struggle just to refrain from selling many of these holdings given their current prices. MJV, a TP from the electric utility DPL, goes ex interest for its semi-annual payment on 8/11. Bought 100 MJV at $24.8 A trust certificate containing a Qwest bond as the underlying security, PJA, goes ex interest on 8/11 for its semi-annual payment. Bought 50 PJA at 19.45 A trust certificate containing a senior Goldman Sachs bond, PJI, goes ex interest on 8/11. Added 50 PJI at 20.17 A trust certificate containing a senior bond from Spectra Capital, JBI, goes ex interest for its semi-annual payment on 8/11 (Spectra was spun out of Duke Energy and JBI was originally an obligation of Duke Capital). TRUST CERTIFICATES JBI DUKE Bought 100 of the TC JBI at $25.1 Bought 50 JBI at 24.81 The trust certificate containing a TP from AFC Capital, a trust controlled by Hanover Insurance (THG)(in effect a junior Hanover bond) goes ex interest on 8/11 with its semi-annual interest payment. Bought 50 KRH in IRA at $18.62 Bought 50 of the TC KRH at $19 Another trust certificate, PKM, containing the same TP as KRH, also goes ex interest on 8/11. Preferredplus Trust Series All-1, PKM Stock Quote I also own PKM, which is functionally equivalent to KRH. Bought 150 TC PKM Although I recently sold 50 of the Ameriprise senior bond, AMPPRA, I still own 50 and it goes ex interest for its quarterly payment on 8/27. 100 AMPPRA at $24.75 PARED AMPPRA-Coping With the Fed's Jihad Against Savers A TP from US Bank, USB Capital VII, USBPRF , also goes ex interest on 8/11. JBK, formerly a synthetic floater now paying the coupon rate of the underlying Goldman Sachs Capital TP, also go ex interest on 8/11 for its semi-annual payment of $.7931. When this security was a synthetic floater, it paid on a quarterly basis. All quote services are calculating the yield based on the semi-annual payment of $.7931 being a quarterly payment and consequently arrive at an incorrect yield for this security. new information about jbk bought 100 jbk at $16.15 More on JBK PYT and GYB, two synthetic floaters tied to the same GS TP as JBK, also go ex interest on 8/11.

The CEF IGD goes ex dividend for its monthly distribution on 8/2. First Niagara (FNFG) declared its regular quarterly dividend of 14 cents with a 8/6 ex date.PPLUS TRUST SERIES GSC-2, PYT Corporate Asset Backed Corp, GYB Stock Quote

All dividends and interest distributions are used to finance additional security purchases.