Thursday, October 20, 2011

CPI/Exchange Traded Bond and Preferred Stock Table as of 10/19/11/NHTB/Bought as Lottery Tickets: 30 ZINC at $7.9 and 100 TST at $1.8/Sold 30 DFP at 23.96 in Roth IRA

Protestors have shut down Greece, again, clashing with police (Reuters and Bloomberg). Those Greeks apparently believe that international creditors have a duty to subsidize the bloated Greek patronage state. The Greeks are opposed to any restriction or condition on their inalienable right to consume other people's money. According to the protestors, Greece's creditors apparently need to just shut up and to give the Greeks whatever they want, irrespective of course of Greece's ability to actually repay those loans. In their core, they are no different than other spoiled citizens in developed countries who have been living far beyond their means on borrowed money and time.

US pay data shows that the median paycheck in the U.S. fell 1.2% in 2010 and is lower adjusted for inflation than the median for 1999. This data comes from the Social Security Administration: Wage Statistics for 2010 In that year, there were 81 people in the U.S. who reported incomes over $50 million.

Seasonally adjusted CPI rose .3% in September. Over the 12 month period, CPI has increased 3.9% before seasonal adjustment. Consumer Price Index Summary To continue its Jihad against the Saving Class, the FED has to downplay the CPI numbers by arguing that the rise in inflation is only temporary. I would estimate that the federal funds rate would be at least 3% and moving up, assuming a lack of concern about the potential after shocks from the Near Depression.

Goldman Sachs reported a third quarter loss of $393 million or 84 cents per share, its first loss since the 4th quarter of 2008. I own GSPRA, GSPRD, GYB and GJS.

The Coca-Cola Company (own) reported third quarter E.P.S. on a comparable basis of $1.03 on worldwide volume growth of 5%. Gross margins declined to 60.2% from 65.4% due to higher costs. The company now estimates that commodity costs will rise $800 million this year which is $100 million higher than their previous estimate. (page 4 Earnings Call Transcript, Seeking Alpha) I currently own 132+ shares (see snapshot at 10/5/11 Post). Some of those shares were bought during the Dark Period with cash flow: Buy of KO at $38.72 March 2009 I mention those purchases from that period to highlight the importance of buying some stocks during the darkest of times. Coca-Cola shares rose 29 cents in trading yesterday to close at $67.03.

United Rentals (own bond only) reported net income of $65 million or 91 cents per share, 19 cents better than the consensus estimate. Bought: 1 Terex 8% Senior Subordinated Bond Maturing on 11/15/2017 at 96.947 and 1 United Rentals 8.37% Senior Subordinated Bond Maturing 9/15/2020 at 91.5 (8/31/2011 Post). The common shares (URI) rose 10.26% in trading yesterday to close at $23.22.

As of 9/30/11, Apple Computer is sitting on top of $81.57 billion dollars. That figure includes cash, cash equivalents, short-term and long-term marketable securities. Text of press release issued by Apple Inc. on October 18, 2011 (SEC Filing)

Moody's downgraded Spain's debts two notches last Tuesday. The new rating is A1 with a negative outlook.

1. New Hampshire Bancshares (NHTB)(own Regional Bank Stocks's basket strategy): New Hampshire Thrift Bancshares had an unremarkable third quarter. The bank reported net income of $2.01349 million or 31 cents per share, down from 34 cents in the year ago quarter. The Tier 1 core capital was reported at 9.42%. The dividend payout ratio was 41.94%. The bank realized gains on security sales of $929,822 during the third quarter, compared to $1,216,008.

The securities gains for the first nine months of 2011 were $2,239,313. This contribution to earnings needs to be discounted in my opinion. Optimal conditions for realizing gains in bonds and mortgage securities will not last forever.

While NHTB did not reduce its dividend during the Near Depression, it has not increased it either since 2006. The dividend has been at a 52 cent annual rate from 2007 through 2011

The bank's operating subsidiary is known as Lake Sunapee Bank.  The bank has 28 branches in New Hampshire and Vermont:  Locations & Hours Of those locations, 18 are owned by the bank. Form 10-K at page 18.

Overall, this stock is a weak hold. The main positive is the dividend yield at my constant total cost number, which is close to 5.43%, taking into consideration that my brokerage money market funds are earning nothing due to the Fed's Jihad against the Saving Class.  Bought 100 NHTB at $9.51

New Hampshire Thrift Bancshares rose 3 cents in trading yesterday to close at $11.71. The shares were ex dividend yesterday.

2. Bought 100 TST at $1.8 Last Monday as Lottery Ticket (LOTTERY TICKET strategy)(see Disclaimer):  At the $1.8 price, the market cap of this company is around $57.25 million. As of 6/30/11, TST had $56,281,748  in cash, cash equivalents and marketable securities. Page 1  Form 10-Q for the Q/E 6/2011 There is no debt. So the stock is now selling close to the value of the cash on the balance sheet. YF reports that the P/S is 1.01 and P/B is .63. Jim Cramer has been selling shares based on an automatic sales plan. TST Insider Transactions The company is not profitable. TST lost 5 cents per share in the last quarter. The quarterly dividend is currently $.025 cents per share.

I have previously booked some profits trading this stock as a Lottery Ticket. (see snapshots at Lottery Ticket Strategy: New Gateway Post). Since I first purchased 100 shares, the symbol changed from TSCM to TST: Lottery Ticket Purchase: 100 Sold 100 TSCM at 3.02 Bought 100 TSCM at 2.86 Sold LT TST @ 3.42 February 2011. I bought back the 100 shares sold at $3.42 at $1.8 last Monday.

Being an internet financial publication, I would anticipate that the firm's net profit margin expands when the subscriber base increases, since the fixed costs remain largely constant as revenues increase.  It remains to be seen whether the company can leverage that model with a meaningful number of new subscribers, at least sufficient to start turning a profit.

TST closed at $1.83 yesterday, up four cents.

3. Sold 30 DFP at 23.96 in the ROTH IRA Last Monday (see Disclaimer): This Exchange Traded Bond, issued by Delphi Financial, was recently bought on a downdraft at $20.99. I will receive one quarterly interest payment.  This baby bond can not be bought through Fidelity for no good reason. I will buy this security back at a lower price in my ROTH IRA which is no longer at Fidelity due to that firms unreasonable trade restrictions. Fidelity Brokerage Extends Denial of Trading Opportunities to Synthetic Floaters and Even an Exchange Traded Junior Bond DFP Fidelity Prohibits New Purchases of SIPs Fidelity Prohibits Purchase of HBAPRF (while permitting purchases of the functionally equivalent HBAPRD and HBAPRF). Snapshots of my DFP trades are below:




TOTAL REALIZED GAINS DFP= +$815.59 plus interest payments.

This baby bond, traded on the stock exchange, can be volatile to the downside during periods of market stress. Bought 50 DFP at $17.10 October 2009 Bought 100 DFP at $17.1 December 2009 Sold 50 of the 150 DFP January 2010 Added 50 DFP at $19.75 July 2010 Sold 50 of 150 DFP at $21.7 August 2010 Sold: 50 DFP @ 23.10 and @ 23.17 October 2010 (100 shares)

DFP closed yesterday at $24.19. Par value is $25.

4. BOUGHT 30 ZINC at $7.9 as Lottery Ticket Last Monday (LOTTERY TICKET strategy)(see Disclaimer): I recently discussed this company when summarizing how I search for stocks meeting my Lottery Ticket criteria. Lottery Ticket Strategy: New Gateway Post During the market rout on Monday, my limit order to buy 30 shares was hit after the stock declined almost 8% that day.  I have nothing to add to that discussion.  I will just reiterate that this is primarily a statistical selection. Both the price to sales and price to book ratios are less than 1. The forward estimated P/E is less than 9. The cash per share is $2.96.  ZINC Key Statistics

ZINC recently issued 80 million dollars in convertible notes, expanded to $100 million with the over-allotment option:  Form 8-K The company is building a new environmentally friendly plant at a currently estimated cost of $350 to $370 million. SEC Filed Press Release The company believes that this plant will reduce annual operating costs between $60 to $70 million.  The current estimate is that this new plant will commence operations in the 3rd quarter of 2013.

This stock has been volatile lately. On Tuesday, the day after my purchase, ZINC rose 7.33% to close at $8.49. Yesterday, Horsehead Holding shares closed at $ 7.99, down 50 cents or 5.89% for the day.

5. Exchange Traded Bond and Preferred Stock Table as of 10/19/11: This is the table of exchange traded bonds and preferred stocks that I currently own. Exchange traded bonds include trust preferred stocks, baby bonds, "principle protected notes", European hybrids, and trust certificates. I no longer own any European hybrids. By preferred stocks, I am referring to traditional or equity preferred securities. While those securities are technically part of a firms equity capital, I view them as having more in common with bonds than common stock. Their equity attributes are uniformly negative including their low priority in the capital structure and their lack of a maturity date.

Exchange Traded Bonds and Preferred Stock Table Part 1 of 2

Part 2

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