Wednesday, January 12, 2011

Sold 50 CWB at 41.30/Sold 50 FBNC at 16.27/SVU EARNINGS/Sears/Bought 50 of the ETF HAP at $39.22/Call Warrant Exercise for XFJ

Tom DeLay, a former pest exterminator and a born again Christian, was sentenced to three years in prison after a jury convicted him of money laundering and conspiracy to launder money.   DeLay was the Republican Majority Leader in the U.S. House of Representatives between 2003 to 2005.  It was the government's ban on the use of Mirex, a pesticide for use on fire ants and Democrats, that led DeLay to run for Congress as a Republican, referring then to  the Environmental Protection Agency as "the Gestapo".  His anti-government fervor was stoked by the IRS filing three liens against him just for failing to pay payroll taxes associated with his former business.     His road to becoming born again was similar to the one traveled by his fellow Texan George Jr..  Tom was also a booze hound before being born again and was known as "Hot Tub Tom".  Biography

Glimcher Realty (GRT) sold 14,882,620 common shares at $8.3, raising net proceeds of approximately $117,491,497: Glimcher Realty Trust Completes Common Share Offering  glimcher_8k I bought both the common and preferred shares as LOTTERY TICKETS during the Near Depression period.  I still own those shares.   Bought GRT at $1.61 Bought 50 GRT at 2.79  GRT common closed yesterday at  $8.34, up 9 cents.  The GRTPRF, my best LT of all time, closed at $25.4 yesterday ($25 par value) and has never missed a quarterly dividend payment, a whopping 75% annually at the $2.9 price tag. GRTPRF: A WALK ON THE WILD SIDE-Bought at $2.9

1. SOLD 50 of the ETF CWB at $41.30 on Monday (See Disclaimer):    Until I have a better feel about the strength of the economic recovery, and the potential worsening of sovereign debt crisis, I am content for now to just increase my cash flow into my taxable accounts which can then be used to purchase securities later in 2011.  On Monday I discussed yesterday buying 2 OfficeMax senior bonds that will give me close to a 7.5% current yield.  I financed that purchase by selling 50 CWB, an ETF containing convertible bonds, that yields about 4.25%. 

While CWB has more appreciation potential, an increase in its value is largely dependent on a continued rally in stocks.  The OMX bonds certainly have credit risk attached to them.  I am reasonably comfortable that OMX will survive to pay the principal amount on 2/1/2016, barring the onset of another Great Depression prior to the maturity date of that bond.

CWB does pay monthly dividends, which is always viewed positively, and I did stick around long enough to receive two or three dividends.  The shares were bought in early October at $39.41.  Item # 4 Bought 50 CWB @ 39.31

2. SOLD 50 FBNC at $16.27 on Monday(Regional Bank Stocks' basket strategy)(see disclaimer):  First Bancorp (FNLC) has a dividend yield of below 2% at its current price, which made it the third lowest yield in the basket. The lowest yields include my best gainer WBS at +334% and my worst loser Porter Bancorp at -27.

 I sold my small position on Monday for several reasons:  the low dividend yield compared to the other stocks in the regional bank basket, the uninspiring recent earnings reports and the profit realized on the transaction.  The shares were bought at $12.01.  The dividend yield at the current price is less than 2%.   I discussed the last earnings report, which missed analyst expectations in Item # 1 at FBNC .  I had previously sold my higher cost shares bought at12.58.

I intend to invest the proceeds into a higher yielding regional bank stock, but I am not eager to buy anything at the moment.

I am tracking my realized gains from the regional bank strategy at Item # 3  Realized Gains Regional Banks.  The total currently stands at $3,673.50 from long and short term realized capital gains.  I am not keeping track of the dividends.  The unrealized gains stood at close to $7,000 as of yesterday's close. 

3. SUPERVALU (SVU)(OWN 3 SENIOR BONDS ONLY):  A discussion of SVU's earnings report can be found at Reuters and at MarketWatch.

Excluding a variety of charges, SVU earned only 24 cents, missing the consensus estimate of 32 cents, and significantly below the 51 cents earned in the year ago period.  Same store sales fell 4.9%.  SVU reduced its 2011 F/Y estimate to $1.25 to $1.35 from the prior range of $1.4 to $1.6, with both estimates excluding items.  The earnings release can be accessed at MarketWatch.  The extraordinary items in the quarter included a 99 cent per share non-cash charge for writing down goodwill and intangible assets; 14 cents per share for store closures; and 6 cents for employee severance and buyout costs.  

While this report was disappointing to owners of the common stock, it does not change my outlook for being repaid on the short term SVU senior bonds.  It does increase my concern about my one long bond.  The report suggests that SVU has not yet turned around sufficiently to make it as a long term survivor in the highly competitive grocery business.

SVU's common fell 11.64% to close at $7.59.  

4. Bought 50 of the ETF HAP at 39.22 on Tuesday (see Disclaimer):  This ETF is called the Market Vectors Hard Assets Producers.   This ETF owns companies worldwide that produce hard assets, and currently owns over 300 stocks.    

This is a link to the sponsor's web page:  Van Eck Global

This is a link to the last  SEC filed schedule of holdings as of 9/30/2010.  This Form N-Q filing includes other stock ETFs from Van Eck Global, including two gold miner ETFs and the Agribusiness ETF.  The last filed semi-annual report for the period ending in June 2010 can be accessed at

As shown on that page, the net expense ratio is high at .65%, but that is after an expense waiver.  The gross expense ratio is shown at an even higher .98%.   Unless there is a change of heart by the fund sponsor, the cap on expenses at .65% is set to expire on 5/1/2011.

This was the allocation by sector as of 9/30/2010:   

As of September 30, 2010
Industrial Metals13.1%
Precious Metals7.1%
Paper & Forest Products4.0%

This fund gives me a broad, worldwide exposure to hard asset companies, without breaking them into separate ETFs for energy, agriculture, precious and base metals, forest products and industrial metals.  The problem with other ETFs is that their focus in the hard asset companies is narrower:  iShares S&P North American Natural Resources Sector Index Fund (IGE)    iShares S&P Global Materials Sector Index Fund (MXI)  iShares MSCI ACWI ex US Materials Sector Index Fund (AXMT)  iShares S&P Global Energy Sector Index Fund (IXC) iShares S&P Global Timber & Forestry Index Fund (WOOD)  SPDR S&P International Materials Sector ETF  SPDR S&P Metals and Mining ETF

The  SPDR S&P Global Natural Resources ETF may be the closest to the broad theme, but it owns far fewer companies than HAP.  As of 9/30/2010, the fact sheet available at the sponsor's web site states that HAP has 318 holdings.  For those familiar with my investment philosophy, or as some would say idiosyncrasies, I find more comfort in large numbers. 

5. Sears (own senior bond from Sears Acceptance-SSRAP only):   I recently purchased a long term bond, traded on the Grey Market, issued by Sears Acceptance: Bought 100 SSRAP at $17.25 (TC-Underlying Bond from Sears Acceptance):  The commons stock,  SHLD, rose yesterday after Sears Holdings estimated 4th quarter earnings in the range of $3.39 to $4.12 per share.  The consensus estimate was at $3.09.  However, a lower tax rate appeared to be the primary reason for the better forecast.  Same stores sales at the U.S. Sears stores fell 6%, while KMart had a 2.3% increase.  

6. Call Warrant Exercise for the Trust Certificate XFJ (owned):   The owner of the call warrant for the trust certificate XFJ, containing a senior Motorola bond, has exercised it right to redeem the TCs.  Conditional Full Redemption of Corporate Backed Trust Certificates, Motorola Debenture-Backed Series 2002-14 Trust  The redemption date is 1/14/2011.  The warrant owner has to pay into the trust an amount necessary to pay the TC owners the $25 par value plus accrued interest of $.343142357.  While that owner failed to deposit funds in 2010 after a call warrant exercise, which caused that exercise to lapse, I think that the call warrant owner means to complete the transaction this time, given the short time frame until redemption, which suggests a buyer for the bonds currently owned by the trust has already committed to purchasing them from the warrant owner.  I am somewhat surprised by this call since the underlying bond is trading only at a small premium to its par value,  FINRA.  Possibly, one or more institutional buyers of the brokerage company owning the call warrant want the ease of buying in bulk.  

Since I recently purchases shares in this TC, I will take a small capital loss on the shares, but will be near break-even after receiving the interest payment. Bought 50 XFJ at 25.38 Added 50 XFJ in Roth at 25.3 Bought: 50 XFJ @ 25.15

This is a snapshot of my GRT buys, mentioned above, and there may be some minor downward adjustment in my cost basis due to part of the dividend being classified as a return of capital:

1 comment:

  1. I like HAP, since the Fed is allowing speculation to cause another global food crisis.

    I plotted these on a chart, my only concern is they are all overbought and extended. Also, HAP went to .01 in flash-crash due to thin trade, but I know, can only go down 10% now.I put DBA in too.