Tuesday, February 22, 2011

Bought 1 Wendy's Int Senior Bond Maturing 2025 at 87.5-Sold 1 Regions Junior Bond at 105.5/Sold 50 NWBI @ 12.5/Sold LT TST @ 3.42/Sold 100 UZV @ 25.67/Sold 200 SRQ-UN.TO @ 7.29 CAD

The semiconductor analyst for Credit Suisse believes Intel is a "a significantly undervalued growth story" with an upside potential to 30+. Alan Abelson mentioned in his Barrons.com that Fred Hickey, a member of Barron's Roundtable, had some favorable comments about Intel recently. Abelson could never bring himself to actually make a stock recommendation.  He will occasionally, as in twice a year or so, mention a favorable comment about a stock from someone who share's his pessimistic outlook.  As for the market, Alan was tepidly bullish for about 15 minutes in the early 1980s when the DJIA was hovering below 1000.

I bought my shares of Intel during the Dark Period, and have yet to sell any. {Bought Intel at 15.87 (Oct 2008) Bought Intel at $14.46 (Oct 2008) Bought Intel at $15.25 (May 2009) Added to Intel at $19.08 (November 2009) Added 40 Intel at 18.35 (August 2010) Added 40 INTC @ 19.16 (October 2010)} And, I am reinvesting the dividend to buy more shares.  I am not, however, a buy and forget holder of this stock.  My most recent discussions can be found in Item # 5, Intel and in Item # 3  Intel 2010 4th Quarter Earnings.

According to CBS News, 17.9 million Americans receive federal disability checks or about 1 in 20 Americans.  Many are no doubt gaming the system. The CBS story focused on those receiving federal disability checks who claimed that their disability made them unable to work at any job but who nonetheless worked for the federal government.

The republicans in Wisconsin are doing what they can to destroy the collective bargaining rights of unions who support Democrats.  Tennessee, now controlled by the GOP, is moving along the same path, even though the state is in relatively sound fiscal condition.  The GOP's effort in Wisconsin does not impact the police and fire unions who supported the GOP in that state. NYT The New Republic Instead, the GOP is targeting those unions who typically support candidates of the Democratic party such as the teacher's union.  Still, I read some articles that put the average salary of a Wisconsin teacher at $59,500 in the 2011-2012 school year (9 months of work) and $101,091 with the benefits.

JSOnline (Milwaukee Journal newspaper).

There is a widespread perception now that the Democrats have been overly generous in granting benefits to public employees in exchange for their votes. In Nashville, a traditional Democrat stronghold, the City changed the vesting of pensions from 10 years to just five years (Benefits: Active Employee Handbook), which will place an unreasonable burden on taxpayers for generations.  Nashville pays 100% of that cost.  There is simply no excuse for that kin of largesse. The Crisis in Local Government Pensions in the United States

One of Sarah Palin's insiders, Frank Bailey, is preparing to publish an unfavorable book about Sarah according to an Anchorage newspaper that has reviewed the manuscript.

All four of the banks mentioned by money manager Nick Galluccio in his Barrons' interview have been part of my Regional Bank Stocks' basket for some time.  Those banks are WBS, FNFG, FFIC and WASH. {Buy of 50 WBS at $4.58 (March 2009) Bought 100 WASH at $15.26 (Jan 2010) Bought 50 FFIC at 12.18 (January 2010) Added 50 FFIC at 11.05 (August 2010) Added 50 FNFG at 12.62 (May 2010) Bought 50 FNFG at 11.7 (August 2010) Bought 50 FNFG at 11.74 (August 2010) Added 50 FNFG at 13.97}

Oil was surging more than $6 per barrel in early morning trading in response to the violence and turbulence in Libya. 

1. Bought 1 Wendy's Senior Bond at 87.5 Limit (88.3 with concession/commission) and Sold 1 Regions' Junior Bond at 105.05 Limit (104.25 with concession/Commission) Last Thursday(Junk Bond Ladder Strategy)(see Disclaimer):  The purchase of the Regions' junior bond caused a contretemps here at HQ, since virtually the entire staff holds this bank in very low regard. I sold the bond to relieve some of the tension.  The primary reason is that I refuse to read another earnings report from this bank and would have to do so for as long as I own one of its bonds. I actually netted a profit on this transaction of close to $75: Bought: 1 Regions Bond Maturing 2018 at 96.95

I have bought and sold the common stock as a LT: Bought Lottery Ticket:  50 shares of RF at $3.47  Sold 50 RF @ 6.57 The consensus analyst estimate is for a loss of 8 cents in 2011. Although RF reported a 3 cent profit in the 4th quarter of 2010,  that number included 16 cents per share in gains from the sale of investment securities and 2 cents per share in mortgage gains. Supplemental Financial Information

I have also bought and sold Regions' exchange traded TP, RFPRZ, for small profits on the shares plus a few interest payments (see, e.g.  Sold RFPRZ @ 25.98)

Given my predisposition toward this bank, the most that I will do is to re-purchase the common stock as an LT.  If I do elect that course, which is doubtful,  I would be buying no more than 30 shares and will put the position in the LT category of "forget about it for at least five years".   

I replaced the Regions' junior bond in my junk bond ladder strategy with a senior Wendy's bond maturing on 12/25/2025. The common stock symbol is  WEN.  The current consensus is for an E.P.S. of 16 cents in 2011 and 22 cents in 2012. Morningstar rates the common shares 4 stars. I did review that report.  WEN is currently under consideration by the RB for a LT purchase. Since RB does not consider much of anything prior to making a LT purchase, the word "consideration" in the preceding sentence requires the most liberal interpretation conceivable.     

The 2025 bond has a 7% coupon and is rated junk. According to FINRA, Moody's rate this bond at Caa1 and S & P has it at B-, so that is deep into junk territory. The bond has traded mostly in a range between 85 to 90 over the past year, with some spurts above and below that channel. My purchase was at 87.5, the midpoint in that channel pattern.  My YTM is around 8.39%.

This is a link to the  Prospectus for this bond. The bond is described at page S-13 as "unsecured and unsubordinated", which means a senior unsecured bond.  Interest is paid on 12/15 and 6/15. 

The bond was originally issued by Wendy's International in December 1995. 

The outstanding debt is listed in note 4 to the last filed  Form 10-Q for the quarter ending 10/3/2010.  As of that debt, the company had 520.514 in cash and cash equivalents and listed long term debt at close to 1.556 billion dollars. The company recorded a loss of 909 thousand for that quarter on over 861 million in revenues.

The Old Geezer did check out the local Wendy's before making this purchase and found an improvement in their fries. The OG concluded that Wendy's was trying to imitate "Five Guys" in that essential food category. Wendy's did add the innovations of "sea salt" and "natural cut" to their fries offering.  The lettuce on the cheese burger was crisp but the tomato was subpar.  LB could not resist adding that this was typical for the kind of research the OG performs before making a security selection.  

2. Sold 50 of 205 NWBI at $12.5 on Thursday (Regional Bank Stocks' basket strategy)(see Disclaimer):  My highest cost NWBI shares were bought first in two fifty shares.  Using FIFO accounting, I sold the 50 shares purchased  at $11.47. I will also dispose of the 50 shares bought next  at $11.88, but will wait until the price exceeds $13. The remaining 100 shares were bought in two fifty share lots at $11.10 and at $10.45. I am reinvesting the dividend which has produced another 4.7818 shares.  I am not keeping track of shares in the following table, which reflects the current holdings in my regional bank basket: 

The dividend yield shown in this table is at the current price, not at my cost.  Where there is more than one purchase, I am using the trade date of the last purchase and a weighted average cost.   I am not including commissions in the cost, nor am I keeping track of reinvested dividend.  The realized gains are being tracked in Item # 3  Realized Gains Regional Banks, currently at $4665.05. That number does include commission costs.  

3. Sold LT TST at $3.42 on Friday (LOTTERY TICKET strategy)(see Disclaimer): This is my second round trip on TheStreet.com, Inc.  I do not see much upside potential from the current level. The shares were bought at  $2.86

I previously bought 100 shares at $1.88 and sold those shares  at $3.02

4. Sold 100 of the 200 of UZV at 25.67 on Friday (see Disclaimer): UZV is an Exchange Traded senior bond from U.S. Cellular maturing in 2034.  It has a $25 par value and a 7.5% coupon.  www.sec.gov  I am reducing my exposure to long term bonds with yields less than 8% due to my concerns about interest rate risk and the possible end of the long term secular bull market in bonds. I sold the 50 shares in the ROTH IRA that were bought at $24.42.  I bought those 50 shares in a satellite taxable account at $25.12 last September.  Added to UZV at 25.12

5. Sold 200 Scott's Real Estate Investment (SRQ-UN.TO at YF or TSE:SRQ.UN at Google Finance) at  7.29 CAD (Canadian Dollar Strategy)(see Disclaimer): I took a small loss on this position having bought the shares  @7.53 CAD, but the result was near break-even with the monthly dividend.

I sold this security since this REIT is currently involved in some issues, which are taking a long time to resolve, that make it undesirable for me.  It is just impossible for me to figure out the repercussions so I elected to exit the position with a small loss.  I have been noticing over the past several weeks that this REIT was having some difficulty obtaining a longer term mortgage to replace one that recently matured last year in the amount of 55 million.  Instead, Scott's has been granted short term  extensions of the original 55 million dollar mortgage, with the latest one, the third extension, being for five months: Extension of $55 million Scott's Real Estate Investment Trust Senior Loan Apparently, the problem involves the solvency of Scott's largest tenant, Priszm Limited Partnership, which recently requested permission to assign 8 master leases impacting 79 of Priszm's fast food restaurants (KFC, Taco Bell and Pizza Hut in Canada).  I looked at the stock quote for Priszm on the Toronto exchange and the last price was .095 cents per share, last Friday. Quote   I am simply not capable of assessing this risk after recognizing that it is material. (see T.QSR.UN - News Releases) I may re-repurchase this security, which has a good monthly dividend, when I receive some clarity on the issues bothering me at the moment.  

No comments:

Post a Comment