Thursday, December 29, 2011

Added 50 IGD at $8.78/SLV/Bought 50 SU at $28.67/At Least Gingrich Is A Consistent Hypocrite

Newt Gingrich praised RomneyCare, the forerunner of ObamaCare, in a 2006 memo. WSJ Since it is generally believed that virtually all of the TB's are opposed to both health insurance plans, it is no longer viable for any GOP politician to say anything positive about those health insurance plans.

Hypocrisy is a common human trait among TBs, so Gingrich will not miss a beat criticizing his opponent for RomneyCare. At least Gingrich is consistent in his hypocrisy.  

I am at least consistent on this issue. I have opposed the Democrats health care plan, primarily for fiscal reasons. I would admit, of course, that private health insurance premiums are increasing at a rapid rate. The premium on my $5,000 deductible plan with BlueCross BlueShield of Tennessee increased 23.5% in December. My Inflation Rate A large number of American households, who do not qualify for Medicaid, simply can not afford to pay for health insurance, and the number of uninsured will continue to rise.  

Just as an aside, I would add that my electric utility rate has increased by 25% over the past four years, another component of My Inflation Rate. While other insurance rates are not increasing as fast as health insurance, I have noted substantial increases in auto and home insurance premiums, well in excess of the government's CPI numbers.

I have problems with every broker that I use, and some issues are relatively minor. The prices shown by Fidelity in my list of holdings do not reflect ex-distributions. Other brokers provide the correct adjusted price information. So, when I open up that list on significant ex-dividend days, I will be showing either a greater loss or a lesser gain than the reality. Such was the case yesterday.

Yesterday, I had a number of securities go ex-distribution, including the following:

Semi-Annual: KTN 

The market was unnerved yesterday by the substantial increase in the European Central Bank's balance sheet to €2.7 trillion and by the decline in the Euro. Over the past week, lending to European banks jumped by €879 billion.

1. Added 50 IGD at $8.78 Last Tuesday (see Disclaimer): The monthly distribution was 10 cents per share for this world stock CEF. ING Global Equity Dividend and Premium Opportunity Fund - Distributions Effective for the December 2011 payment, the rate was reduced to to $.093. .pdfAs shown by the data at Morningstar, the dividend has been supported in part by a return of capital.  Assuming a continuation of that reduced rate, which is of course in no way assured, the yield at a total cost of $8.78 would be around 12.71%.

As of 12/23/2011, the net asset value per share was $9.8 per share. Based on a closing price that day of $8.86, the discount to net asset value was then -9.59. The daily net asset value per share information can be found at the sponsor's web site (IGD) and at the Closed-End Fund Association

IGD is a buy-write world stock fund, using call and put options on major indices.

This is a link to the last SEC filed semi-annual report for the period ending 8/31/2011:  ING Global Equity Dividend and Premium Opportunity Fund Semi-Annual Report As of that date, the U.S. had the largest allocation at 31.5%.

My most recent purchase of IGD was 100 shares in a retirement account: Bought 100 IGD at 10.94 (August 2010). Besides the hefty dividend payments, other reasons for the price decline since that purchase were an increase in the discount to net asset value and the European holdings. IGD was ex-dividend yesterday for its monthly distribution.

I also changed my reinvestment option to the purchase of shares, given the higher than normal discount to net asset value. I had quit purchasing shares with dividends in the Spring of 2009. 

2. Bought 50 Suncor at $28.67 Last Tuesday (see Disclaimer): Suncor is a large Canadian energy company that has significant assets in long lived oil sands.  The stock is currently trading below its 50 and 200 day simple moving averages. The stock traded over $47 in February 2011 and hit $68.35 back in 2010.  SU Interactive Chart

The current consensus estimate is for an E.P.S. of $3.33 this year and $3.27 in 2012. SU Analyst Estimates Those estimates could be way off, either up or down depending on the prices of crude and natural gas as well as many other factors including refining margins. Price to sales is currently at 1.14 and price to book is at 1.22. The five year expected P.E.G. is around .39. SU Key Statistics

Suncor is currently rated five stars by Morningstar.  S & P rates SU three stars with a $43 twelve month price target.

SU is discussed in this recent article at Seeking Alpha.

As previously discussed, Charles Maxwell mentioned SU favorably as one of the best positioned companies in the Canadian oil sands.  (Barrons' Interview 2/12/2011 edition).

I may buy another 100 of SU with my Canadian dollar stash on the Toronto exchange.  Those CADs earn nothing sitting in my brokerage account.

Suncor Energy closed at $27.88 yesterday, down 80 cents for the day.

3. Silver: SLV closed at $26.24 yesterday, down 5.74% or $1.6 per share. SLV hit a 52 week high at $47.26 on 4/28/11 and decisively broke below its 50 and 200 day SMA late in September.  Since that breakdown, the price would turn down after approaching the 50 day SMA line.  SLV Fund Chart

I do not own SLV. I was sufficiently uncomfortable with silver's rise this year that I elected to sell some junk silver coins in early September.

I am not comfortable buying silver above $10 and have not done so.  If and when silver falls below that level, I will likely use the proceeds from those sales to buy a silver ETF or more U.S. bullion silver dollars. Sold Some Junk Silver Coins  (9/13/2011). I also sold my first gold when the price went over $1,900 per ounce. Item # 1 Recent Gold and Silver Sales (9/15/11) That post contains snapshots of two transactions.  Those sales were made on 9/6/11 and 9/12/11. The cost basis for the junk silver was the face value of the coins. 

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