Friday, April 1, 2011

GMR/GRT/Reynolds Group/ Bought 1 GMAC 7.25% Bond Maturing 4/15/2018 at 98.396/Sold 100 TRK at 16.08

Added: I can tell by the price action today that MKN is ex interest.  Yesterday, it closed at $12.60.  Today, in early trading, it was up 55 cents at $10.6.  So I was right about the amount of the interest payment: $2.55.  MKN Closes with a 25.56% Gain

Southside Bancshares (SBSI) declared a 5% stock dividend payable to shareholders of record on 4/20. SBSI is owned as part of Regional Bank Stocks' basket strategyBought 50 SBSI at 19.49 Bought 50 SBSI @ 18.73

1. Bought 1 7.25% GMAC Bond Maturing on 4/15/2018 at 98.396 (Junk Bond Ladder Strategy)(see Disclaimer): This was the purchase that got the OG fired by Headknocker. The reason for buying it had something to do with adding to some years where ownership was light or non-existent in this Ladder Strategy.  

GMAC, formerly known as General Motors Acceptance Corporation, is just another large financial institution that had to be bailed out by the government in order to survive. GMAC received an infusion of 17.2 billion dollars from our destitute Uncle Same, and the government currently owns 74% of the common stock.

The Masters of Disaster at GMAC did have one bright idea, and that was to rename the corporation Ally which the OG finds humorous.

Ally has managed to dig itself out of one big hole and actually reported a profit for 2010 (see page 32: Form 10-K). And the company is preparing for a huge stock offering:  

Interest is paid monthly on the GMAC note that I bought, always viewed positively.  Moody's currently rates this bond at B1 and S & P is at a B.  RB just said that a B is almost a B+ which is not that far from an A-.  The bond can be called now at par value.

The Cusip number is 37042G2T2 and the note was originally issued in 2003 as part of the GMAC SmartNotes offerings.

This is a link to the FINRA information on this bond: FINRA 

My confirmation states that the current yield at my cost is 7.308% and the YTM is 7.396%.  HK was not pleased with those numbers given the risk. 

2. Sold 100 TRK last Wednesday at $16.08 (see Disclaimer):  There was no reason specific relating directly to  Speedway Motorsports that motivated me to sell 100 shares.  The recent earnings report was not bad. Press Release Possibly the only reason is that I am not a believer that the market is on a sustainable upward path or that the current recovery is self-sustaining after the Federal Reserve withdraws its monetary stimulus and the fiscal stimulus passed early in Obama's administration winds down. As a consequence, I am just gradually reducing my equity exposure.  I made a small short term profit on those shares and received one quarterly dividend.   

3. General Maritime (own senior bond only: Bought 1 General Maritime Senior Bond Maturing in 2017):   On March 16th, General Maritime disclosed that it was in financial difficulty.  SEC Filed Press Release The stock tanked after that disclosure falling from a close of $2.50 on 3/16 to $1.81 on the next trading day.  I own only one GMR senior bond, maturing in 2017, and the price slid 10 points from around 95 to 85. This price action is shown at the FINRA web site.

I noticed a few days ago that the price of my bond was rising 10 points in one day, back to where it was before the March 16th announcement.  I looked for any news then that might explain the abrupt turnaround in price for this bond, and could find nothing.  I concluded that somebody knew something that was not yet public knowledge

After the close of trading last Wednesday, GMR disclosed that Oaktree Capital Management had agreed to lend it 200 million in PIK floating rate secured notes and has Oaktree has received warrants to purchase common shares.  The warrant aspect of the deal is not the best of news for the common stock holders. Further, for the current bondholders, GMR looks like it is making progress in negotiating a new 550 million revolving credit facility.   SEC Form 8-K filed 3/30/2011   After the market closed yesterday, General Maritime announced that it sold 23 million common shares at $2 per share and had granted the underwriters an option on an additional 3.45 million shares.

4. Reynolds Group Holdings (own senior bonds only):  This private company released its 373 page annual report, which is available at its website: reynoldsgroupholdings. pdf Reynolds recently acquired Pactiv, formerly known as Tenneco Packaging. A more succinct presentation can be found in a 34 page release by the company: .pdf  I own two senior Tenneco Packaging bonds.

For 2010, revenues increased 15% to 6.774 billion dollars  (revenues were 9.972 billion on a pro forma basis with the Pactiv acquisition which occurred late in 2010) The adjusted EBITDA numbers for each segment is presented at page 27.

1 Tenneco Packaging 7.95% Senior Bond Maturing 12/15/2025 
1 Tenneco Packaging 8.375% Senior Bond Maturing in 4/15/2027 at 92.25

I may add one more bond to this grouping.  

5. Glimcher Realty (own common and preferred: LOTTERY TICKET strategy):  During the Dark Period, I bought GRTPRF, a $25 par value cumulative equity preferred stock with a 8.75% coupon, at $2.9 and still own it.  GRTPRF: A WALK ON THE WILD SIDE (10/24/2008 Post)  Glimcher never missed a dividend payment.  I also bought 100 shares of the common stock at an average cost of $1.83 per share:

GRT Common Shares Average Cost Per Share of $1.83

The average cost figure includes commissions for two trades of 50 shares each.  At the current quarterly dividend rate of 10 cents per share, the yield at the constant cost figure is 21.86% per annum.

Glimcher  completed a modification and extension of its credit facility by increasing the amount from 200 million to 250 million and otherwise improved the conditions.

Glimcher Realty Trust closed at $9.25 cents yesterday, up 18 cents for the day.

GRTPRF closed at $25.60 in trading yesterday. So in addition to the handsome yield, I am up about 1600% on the shares. I previously mentioned that I had sold some of my shares.  I am now down to just 30 shares with an average cost of $1.53 per share:


At that cost number, the yield now is about 143% per year. (.0875% coupon multiplied by $25 par value= $2.1875 per share per year divided by $1.53 cost= 143% per year).  I think that my initial cost number of $2.9 per share may have been adjusted down by my broker some by a return of capital adjustment.  At $2.9, the annualized yield is about 75%.  

I might as well hang onto the GRTPRF but may sell the common shares whenever I get the urge to take more profit.

No comments:

Post a Comment