Tuesday, April 5, 2011

Sold 100 of 200 MSF at 16.2/Sold 100 of the LT BDSI at 3.53/Bought 100 ERH at 11.88/Bought 50 FPOPRA at 24.99

Although my phone numbers are on the do not call list at both the state and federal level,  National Do Not Call Registry, I constantly receive calls in violation of this privacy law, usually from telemarketers.  I tell them that their call is a violation of the law, they claim not to know that the number was on the prohibited list, and then I inquire whether they bothered to check.  Usually, they hang up after I say that I will file a complaint with the Federal Trade Commission. Until last night, I had not bothered to file such a complaint. My cell phone number, which only a few individuals have, is also on the Do-Not-Call list, and the telemarketers who call that number far outweigh the ones calling my land line.

The most frequent calls to my cell phone come from a student debt collection service. A voice mail is sometimes left requesting that someone with a Spanish sounding name call back about a student loan. I could not spell the name of that person if you held a gun to my head. The number of that frequent caller is 866-484-0211. Several calls were made yesterday to my cell phone. I finally googled the number last night and found several message boards complaining about a company called Progressive Collection Services who allegedly is in the business of collecting delinquent student loans.  I filed a complaint against the company with the FTC last night, my first. I am not exactly a recent graduate of any school.  I will soon turn 60.  My last day in the classroom was in May 1976. The last school which I attended was the George Washington Law School where I received a J.D. in 1976.  And, I never had any student loans. Based on the messages boards about this company, I could tell the representative of this company all of that and it would only increase the calls.

1. Bought 50 of FPOPRA at 24.99 on Friday (see Disclaimer):  FPROPRA is a new cumulative, equity preferred stock  issued by the REIT First Potomac Realty (FPO).  The coupon is 7.75% on a  $25 par value. I am buying current yield with this security and would be surprised to receive much, if any, capital appreciation in the shares.  Dividends are cumulative and can not be deferred as long as First Potomac pays a dividend on its common stock. Dividends will be paid quarterly. The next payment date is 5/15.  I discuss these type of issues relating to REIT preferred stocks in REIT CUMULATIVE PREFERRED LINKS IN ONE POST/Advantages & Disadvantages

This is a link to the prospectus:  SEC Filed Prospectus

I have bought and sold the common stock. Sold 100 FPO at 14.75 I may buy the common back at some point in a retirement account. This is my first purchase of a FPO preferred stock.   This REIT focuses on owning industrial properties primarily in the D.C. region including southern Maryland and Northern Virginia.

This is a link to the recently filed 2010 Annual Report: Form 10-K A list of the REIT's properties can be found at pages 30-33 of that report.

If there is a decline in price unrelated to a credit quality issue, I may average down by buying another 50 shares.  I certainly have downside risk with REIT preferred stocks at their current price levels, mostly near or even above their par values, while having a negligible chance at share gains.  That judgment requires extremely limited purchases of them, and a willingness to sell at small profits after collecting one or more dividends.   

2. Bought 100 of the CEF ERH at 11.88 Last Friday (see Disclaimer): Basically, this fund owns junk bonds and utility stocks (electric, gas and phone). Wells Fargo Advantage Utilities and High Income Fund 

This is a link to the last filed SEC Form N-Q, which contains the fund's holdings as of 11/30/2010. SEC Form N-Q 

The last shareholder report was the Annual Report for the period ending in August 2010:  www.sec.gov 

This is a link to the  Morningstar page for ERH.  It is rated 3 stars. 

I only bought 100 shares due to the expense ratio being high for this kind of fund.  The fund does employ some leverage.  Excluding the interest expense, the expense ratio is around 1.33%.  

The fund does pay monthly dividends, currently at a $.075 per share. Assuming a continuation of that rate, which is of course in no way assured, the yield at a total cost of $11.88 would be about 7.57%. Wells Fargo Advantage Utilities & High Income Fund, ERH Fund Quote  The next monthly ex dividend date is 4/11. As I have discussed, the most basic strategy that I employ is best described simply as the income generation strategy. By focusing on income stocks, I have developed a constant stream of cash flow into my brokerage accounts . That cash flow is used to purchase more income generating securities, creating a compounding effect, and some of it is used to speculate on occasion.  A security like ERH is meaningless in isolation.  But as one small cog in an esoteric and diversified portfolio of over 400 securities, it serves a purpose, particularly in its monthly cash generation.  

The daily net asset value can be found at the sponsor's web site, the Closed-End Fund page at the WSJ, or at the Closed-End Fund Association.  Last Thursday, the net asset value was $12.52. The shares closed that day at $11.84, creating a 5.43% discount at that time. That would have been the latest information available to me when I purchased 100 shares last Friday.  The fund closed last week at $11.89, with a net asset value per share of $12.62, created a discount to net asset value of -5.78.   

3. Sold 100 of the stock CEF Morgan Stanley Emerging Markets Fund (MSF) at $16.2 in Satellite Brokerage Account Last Friday (see Disclaimer):  I decided that this CEF was not appropriate in the satellite brokerage since it did not pay monthly or quarterly dividends. That particular account was solely devoted to an online savings account used to purchase bank certificates of deposit. As those CDs came due, I have not been rolling them over given the low rates.  Instead, I opened a brokerage account and have been investing some of those funds in dividend paying stocks and a few bond CEFs.  I bought the shares of MSF in that account  at $15.68 last January. 

I am keeping the 100 shares bought last November in a main taxable account, where I have been trading this somewhat volatile CEF.  BOUGHT: 100 MSF @ 15.69  I would want to wait until the price falls sufficiently to lower my average cost per share, which would suggest a buy below $15.20.  Sold 100 MSF at 17.02 (November 2010)- Added 100 MSF at $13.57 (7/14/2010 Post). I own other securities with exposure to emerging market stocks, including two ETFs and a mutual fund.   Bought 100 VWO @ 48.93  Bought 100 of SCHE at 28.9

This is a snapshot of my CEF portfolio with the recent additions and deletions,  including reinvested dividends:

CEF Portfolio as of 4/2/2011
The portfolio is increasingly tilting to current income generation. (Added: I noticed later in the day that this table did not include my shares of GGN, which I will include in a revised table tomorrow)

4. Sold 100 of the LT BDSI at $3.53 Last Friday (LOTTERY TICKET strategy)(see Disclaimer):   I saw this security when scrolling down a long list of holdings in my main taxable account, and the OG had completely forgotten the nature of BDSI's business.  LB refused to research it to refresh the OG's recollection, and thereafter sold it before Headknocker could intervene.  Bought 100 BDSI as LT at 2.93 

No comments:

Post a Comment