Tuesday, April 26, 2011

Sold 100 of APF at 17.32/Added 100 to the Stock CEF JLA @ 12.67/RB Bought as LT 30 NPBC @ 7.83/Sold 100 of the Bond CEF IGI @ 20.25/Added 50 FNFG at 13.54

1. RB Buys 30 NPBC as a LT at $7.83 on Friday (LOTTERY TICKET strategy)(see Disclaimer):  The agreement between the LB and the RB on Lottery Tickets is that the RB can buy whatever it wants provided the LB will only have to examine the company one time.  The NPBC shares will have to be an exception, which LB has graciously acknowledged, since Headknocker owns 150 shares of a trust preferred originating from National Penn: Bought 50 of the TP NPBCO at $24.93  Bought 100 NPBCO at 24.91. The amount devoted to that TP is sufficient to require monitoring of the bank for as long as those shares are in the portfolio.  Once the TP position is sold, LB will ignore this banking institution for several years, and no further discussion will be made in this blog,  in full compliance with the recent compromise with that Nit Wit idiot RB. 

2. Added 50 FNFG at 13.54 on Thursday (Regional Bank Stocks' basket strategy)(see Disclaimer): I discussed the 1st quarter earnings report from First Niagara in yesterday's post. I have nothing to add to that discussion.

All but 50 of my shares are owned in a satellite taxable account, where I am reinvesting the dividend.  I also own 50 shares in the main taxable account, where I am taking cash distributions.  I will sell those 50 shares at some point, preferably for a long term capital gain larger than $100:   

FNFG AVG Cost =$11.91 Per Share

I own over 200 shares in the other account.  

First Niagara Financial Group closed at $14.01 yesterday and has a dividend yield of around 4.57%, assuming a total cost of $14 per share.     

3. SOLD 100 of 350 of the Bond CEF IGI at $20.25 on Thursday (see Disclaimer): I have bought and sold this bond CEF in my current hyper active trading for bond funds. Some of the trades are discussed in these posts: Added 100 of the CEF IGI at 19.78 (February 2010) Bought 100 CEF IGI at $19.89 in IRA (February 2010) Sold 100 IGI at 21.26 In IRA (June 2010-selling at over NAV at that time) Bought 50 IGI at 20.05 in the Roth & 100 @ 19.85 in a Taxable Account (NOV 2010) Sold:100 IGI @ 20.75 (Nov 2010).

I still own 250 shares and will buy the 100 shares sold last Thursday back at $19.50 or less.   The shares sold were my highest cost shares in my main taxable account. By waiting to buy at a lower price, I will lower my average cost per share some after collecting a few monthly dividends and booking some profits.  The profit generated by this last sale was minuscule. My goal is just to avoid losing money on the shares while capturing the dividend without any diminution from losses in the shares.  That is a modest goal. So far, I have netted realized gains on the shares of +233.74. If that number remains green in the coming years, then I would have successfully captured the dividends without diluting that return with losses on the shares. I will be pleased with that modest result.  I would be more than satisfied with a few hundred in profits on the shares plus the dividends. 

I like this bond CEF for several reasons that will likely keep me interested in it until the termination date.   The fund pays monthly dividends and is selling at a discount to net asset value.  Importantly, the fund liquidates in 2024.  The term date reduces my interest rate risk some compared to a bond fund that makes no promise to liquidate.  The fund also invests mostly in investment grade corporation bonds.  Lastly, the effective duration of the bonds owned by the fund is 6.38 years with a weighted average term of 10.69 years.  IGI Portfolio Characteristics   I view those statistics as relevant in relation to the term liquidation date when evaluating interest rate risk of a bond fund. 

This is a link to the current holdings of IGI:  IGI Holdings 

4. Added 100 JLA at 12.67 on Thursday (see disclaimer):  I recently bought 100 shares of this stock CEF  at $12.84.  For those shares, I recently received the quarterly dividend of $.3127 per share so I am close to break-even so far.  The yield at a total close of $12.67 would be about 9.87%.  I will just copy the relevant part of my prior discussion on this CEF: 

"The Nuveen Equity Premium Advantage Fund (JLA) is a stock closed end fund (JLA) that seeks to "replicate price movements of a 50%/50% combination of the S & P 500 Stock Index and the Nasdaq-100 Stock Index, respectively" As of 1/26/2011, the day of my purchase, this CEF had a net asset value of $13.82 per share and closed that day at a -7.09 discount to its NAV. The fund has a managed distribution policy, and currently pays a quarterly dividend of .317 per share. . .   

Due to Near Depression, the fund was not able to support this dividend with capital gains and consequently part of the dividend distributions in 2009 and 2010 were classified as returns of capital.   Morningstar rates the fund 3 stars.  The Morningstar site also now contains information about return of capital distributions for the past three years, and I regularly consult it whenever I am considering a CEF purchase. Given what happened in the Dark Period, I am not going to place much negative weight on the fact that stock CEFs supported too generous dividends by returning some of their investor's capital. 

This is a link to the last filed  Form N-Q which lists the funds holdings as of 9/30/2010. As shown in that report, the fund sells call options on the S & P 500 and Nasdaq 100 in an effort to reduce volatility.  The fund also reports in that filing that the value of its stock investments had risen to $367,949,430 with a cost basis of 293,405,451.  That suggests that the fund could support the 2011 dividend with capital gains.  It will never be able to support the dividend at its current level without those gains.    

The last shareholder report for the six month period ending in June 2010 can be found at  www.sec.gov."

This fund has a large weighting in Apple.   JLA I suspect that percentage will decrease some when the fund next discloses its holdings to the re-weighting of Apple in the Nasdaq index: NDXSpecialRebalancePresentation.pdf

I will likely manage my average cost by selling the first lot when and if the price exceeds $13.5.

JLA closed yesterday at $12.65 and had a net asset value per share of $13.91, creating at that time a discount to net asset value of -9.06 based on those numbers. CEFA 

5. Sold 100 of the Stock CEF APF at 17.32 Last Thursday-4/21 (see Disclaimer):  The closed end fund APF invests in stocks from the Asia-Pacific region.  I waited until the shares turned into a long term capital gain before selling the last 100 shares owned by me.  This sale was part of my ongoing paring of my stock allocation, while increasing my exposure to LTs.  Since LTs have a maximum purchase limit of $300, plus any prior profits + distributions from the LT purchase, the net effect is to reduce my stock allocation. Most of the stock allocation has been in low yielding stock ETFs and CEFs.  The 100 APF shares were bought   Added 100 of APF at 15.64  The total realized long term gain on the 200 share of APF, held until the gains turned into LT capital gains, was $292.86:

I owned 200 shares at the time of the annual dividend and received $8.16.

APF closed at $17.23 yesterday and had a net asset value per share of $19.39, creating as of yesterday's close a -11.14% discount to NAV.  CEFA

I am running way behind in discussing my trades. 

No comments:

Post a Comment