Friday, October 21, 2011

Intel/RNST/SVU/Bought 40 XRX at 7.55 as LT/Bought 1 Boyd Gaming 9.125% Senior Bond Maturing on 12/1/2018 at 89/Sold 50 of 100 JBI at $26.25

SUPERVALU (own senior bonds) reported a 28 E.P.S. for its fiscal second quarter, beating the consensus estimate of 20 cents. Revenues were reported at $8.7 billion, higher than the consensus forecast of $8.36 billion.  The company estimated FY 2012 earnings per share within a range of $1.2 to $1.3.  1 SuperValu 7.5% Senior Bond Maturing 11/15/2014 1 SuperValu 8% Senior Bond Maturing 5/1/2016 1 Senior 8.7% Albertsons' Bond Maturing 5/1/2030

A new movie about the Masters of Disaster, called "Margin Call", has received a very favorable review in the NYT.

Why would any state require an employer to pay unemployment benefits to an employee who voluntarily quit their job? NYT

After several months of declines, the Philly FED manufacturing index rose into expansion territory in October, with the index rising to 8.7 from -17.5 in September. Manufacturers See an Increase in Activity (October 20, 2011) - Philadelphia Fed

U.S. money market funds continue to substantially reduce their exposure to European banks. WSJ


1. Intel (own): Intel reported Non-GAAP income of 3.7 billion for the 3rd quarter or 69 cents per share.  The consensus estimate was for 61 cents per share.  The GAAP E.P.S. was 65 cents. Revenues rose 29% year-over-year. Gross margin fell 1.7% to 64.4% on a non-GAAP basis year-over-year. PC client group revenue increased 22% compared to the year ago quarter. PC microprocessor revenue was up 15.1%.

Given the recent price rise in Intel shares, I have elected to quit reinvesting the dividend.

INTEL UNREALIZED GAIN AS OF 10/20/11
Intel fell 63 cents in trading yesterday to close at $23.61, losing most of the prior days gains generated by the much better than expected third quarter earnings report.  INTC Historical Prices There appears to be a brick wall in the $24 to $25 share area that may prove difficult to break through.  Still, I am likely to hold until the price moves into the $27 to $30 range. 

2. Renasant (own: Regional Bank Stocks' basket strategy): Renansant (RNST) reported net income of $6.532 million or 26 cents per shares for the third quarter.  Press Release The consensus estimate was for 25 cents per share. The net interest margin increased to 3.92% from 3.76% as of 6/30/11 and 3.55% at the end of the first quarter. As of 9/30/11, the efficiency ratio was 70.64% (much prefer a number under 60%); NPLs to total loans was at 2.22%; the allowance for loan losses to NPLs was at 98.97%; the total risk-based capital ratio was at 14.89%; the Tier 1 risk-based capital ratio was at 13.63%; and the tangible capital ratio was at 7.47%. I own 150 shares plus reinvested dividends. 

3. BOUGHT 40 XRX at $7.55-Lottery Ticket (LOTTERY TICKET strategy)(see Disclaimer): As with many Lottery Ticket purchases, the decision to buy XRX was based primarily on several of the usual statistical points.  According to YF, the price to sales ratio is currently .47 and the price to book ratio is .81. The P/E based on estimated 2012 earnings is 6.3. The estimated 5 year P.E.G. is .33. XRX Key Statistics

There was an argument among staff here at HQ whether XRX was even appropriate as a LT selection, since the company was of a higher caliber than the companies typically found in this category. While the matter was subject to some dispute, it was resolved by LB, acting Head Trader, when it claimed to associate the names of Eastman Kodak and Xerox together.  RB claimed that was entirely unfair to Xerox. RB wanted to make it clear that it wanted to buy ten million shares rather than the 40 shares actually bought by the Lame Brain "Stock Stud" . LB was going to point out that such a purchase would require funds greatly in excess of Headknocker's capital base, but why argue with a Nitwit. Besides, LB knows what the RB is about to say. "That is not the RB's problem, if RB has been in charge of the trading desk for the last 40 years, 70 or 80 million dollars would be pocket change".

Xerox closed its acquisition of Affiliated Computer Systems (ACS) in February 2010.

Xerox reported second quarter earnings of 22 cents per share on a GAAP basis and 27 cents adjusted.  SEC Filed  second quarter 2011 earnings press release Second quarter revenue increased only 2% and was down 1% on a constant currency basis. XRX generated $347 million in operating cash flow during the second quarter. XRX raised its full year guidance to between $1.07 to $1.12 on an adjusted basis. That report was released on July 22nd.  The stock closed at $10.02 that day. XRX Historical Prices Analysts were expecting 24 cents on an adjusted basis.  Xerox 

Xerox is currently paying a quarterly dividend of $.0425 per share or $.17 annually.

Xerox closed at $7.57 in trading yesterday. The 52 week high was $12.08. As with all LT selections, the chart looks horrible. XRX Stock Chart 

I reviewed the S & P report, dated 10/14/11, that rated XRX as five stars with a 12 month $10 price target.

Morningstar also has a five star rating


4. Bought 1 Boyd Gaming 9.125% Senior Unsecured Bond Maturing on 12/1/2018 at $89 Last Tuesday (Junk Bond Ladder Strategy)(see Disclaimer): BYD is a publicly traded owner and operator of casinos. The stock is owned as a Lottery Ticket based on statistical criteria such as the P/S and P/B ratios. BYD Key Statistics 

This is a link to Boyd's website:  BoydGaming.com A map of its casinos can be found at Boyd Gaming Corporation Destinations.


FINRA Information on this bond: FINRA  According to FINRA, the bond is currently rated at "B".

Prospectus for this bond: Prospectus

BYD 10Q 6.30.11 (DEBT DISCUSSED IN NOTE 8, STARTING AT PAGE 32).

I am assigning a 5 risk rating to this bond. Personal Risk Ratings For Junk Bonds  That is one notch lower than the senior subordinated bond issued by Boyd maturing in 2016 which is also owned as part of this strategy. 

My confirmation states that the current yield at my cost is 10.161% and my YTM is 11.241%.

5. Sold 1/2 of the Trust Certificate JBI at $26.25 Last Tuesday (see Disclaimer): I sold the 50 shares held in a taxable account that were bought at a premium to par value. I am going to wait for a price correction of at least 10% and then buy back this 50 share lot in a retirement account. I currently own 50 shares in the ROTH IRA with a total cost basis of slightly less than par value. Bought 50 JBI at 24.81 (May 2010 Post) 

I have been selling this TC when its price exceeded $26. Par value is $25 and there is a call warrant attached to this TC.  Sold 100 JBI at 26.5 I first discussed it in an October 2008 post when it was selling at $16. I first sold out of the position when the shares reached par value in January 2009.  SOLD 100 JBI AT PAR VALUE 

JBI fell 28 cents in trading yesterday to close at $25.97.

No comments:

Post a Comment