Friday, December 2, 2011

Bought Back 100 IRR at $12.17/Sold 400 ACG at $8.122/Sold 100 of the TC PJR at 25.76

I thought that Maureen Dowd hit the nail on the head describing Newt Gingrich as a pompous hypocrite. NYT

Michele Bachmann is in favor of closing the U.S. embassy in Iran in response to the recent incident at the British embassy in Tehran.  ABC News  Someone had to tell her that the U.S. did not have diplomatic relations with Iran.

The ISM reported that its manufacturing index rose to 52.7 in November, a level indicating expansion. New orders rose to 56.7 from 52.4 in the October report.

U.S. auto sales for November were robust. Reuters

I have never owned the trucking company known YRC Worldwide. I knew that it was in serious financial difficulty and was trading near zero. I happened to see a news story while reviewing "InPlay" at Yahoo Finance that the stockholders had approved a 1 for 300 reverse split. The company had previously split its stock 1 for 25 back in October 2010, and that was one of the largest reverse splits in my memory bank. YRC Worldwide.  The 1 for 25 reverse split took the adjusted price for February 2007 to over $1,100 per share. I know that a 1 for 300 reverse split is the largest that I have ever seen.  The former CEO of this company, Bill Zollars, was at one time highly regarded by many pundits.

This WSJ article details how the pilot's union overplayed their hand in negotiations with AMR and will likely now have to accept a far less generous package after the bankruptcy filing. If the unions refuse to make substantial concessions, then liquidation is always an alternative for AMR, resulting in job losses for the employees and a significant cut in their pension benefits.  AMR Bankruptcy The pilot's union refused to submit a generous offer to their members for a vote, which was the last straw for AMR.

1. SOLD 400 of the Leveraged Bond CEF ACG at $8.122 Last Wednesday (see Disclaimer): I mentioned in a recent post that I really do not like this fund. Barrons Article on Income for Retirees (11/22/11 Post) That opinion is based on the fund's use of leverage to buy low yielding U.S. treasuries. While I am not a buyer of our destitute Uncle Sam's 2% ten year paper, other investors are falling over each other for the privilege of earning a negative real rate of return before taxes. As long as that mass delusion continues, I will frequently trade this fund for small profits, collecting a few dividends along the way.  I sold 400 shares on Wednesday that were bought recently in two 200 share lots. Bought 200 ACG at 7.85 August 2011 ADDED 200 OF THE BOND CEF ACG at $7.98 October 2011

Snapshot of 2011 ACG Trading Profits:

2011 ACG Trading Profits=$100.93/ This Transaction: $59.28

Some prior trades include the following: Bought 200 ACG at $8.12 in Roth May 2010Added 400 ACG at 7.85 May 2010; Sold 200 ACG at 8.35 August 2010; SOLD 200 ACG 8.45 August 2010Bought 300 of the Bond CEF ACG at 7.63 April 2011; and Sold 300 of the Bond CEF ACG at 7.82 May 2011.  From that litany, it is fair to say that I am not a long term holder of this fund.

ACG closed yesterday at $8.12.

2. Bought Back 100 of the Stock CEF IRR at $12.17 Last Wednesday (see Disclaimer): I have not owned this CEF since 2009. IRR BUY at $12.50 December 2008-Sold 100 IRR at $17.4 October 2009Sold  109+ IRR at $16.65-Retirement Account (July 2009). So I bought back the 100 sold at $17.4 at $12.17.

Sponsor's webpage: ING Risk Managed Natural Resources Fund - Fund Profile - Overview

The current quarterly distribution is $.363 per share: ING Risk Managed Natural Resources Fund -Distributions

IRR Page at the Closed-End Fund Association.

Morningstar has a 3 star rating on this fund. As shown on that page, the fund has recently supported the dividend with returns of capital, viewed negatively here at HQ. The only practical way for the fund to earn the distribution is with capital gains on stock sales.

As shown in its recent shareholder report for the period ending 8/31/11, the fund uses a buy-write strategy. ING Risk Managed Natural Resources Fund Semi-Annual Report The fund had a net unrealized gain of $43.289 million as of 8/31/11. As of that date, the fund's holding in Exxon and Chevron accounted for 22% of assets.

As of 11/29/11, IRR closed at $11.98 and the net asset value per share was then $13.07, creating a discount to net asset value at that time of -8.34. When I last sold this CEF, it was selling at a premium to its net asset value.  Yesterday, IRR closed at $12.18 with a net asset value of $13.29.

Last Wednesday, the day of my purchase and the big stock rally, the net asset value closed at $13.33, creating a discount at that time of -8.18 based on the closing price of $12.24.  If the price closed above net asset value, I would consider selling this small position.  I have a larger position in BCF.

3. Sold 100 of the TC PJR at $25.76 Last Wednesday-ROTH IRA (see Disclaimer): The trust certificate PJR contains as its underlying security a senior bond from Unum. (prospectus: I bought those shares in two fifty share lots in 2010. Bought 50 PJR in ROTH IRA at $23.61 May 2010 Bought 50 PJR in ROTH IRA at 24.88 October 2010

I mentioned in a recent post that I was a seller of this 100 shares lot and would keep the 50 share lot purchased at a  at $16.72 (July 2009). Item # 2 Unum Those shares were bought in a taxable account and I see no reason to add to my tax bill this year. My realized gains in 2011, both short and long term, are higher than they have ever been already.  

Trust Certificates: New Gateway Post The snapshot of the realized gain will also be included in that Gateway Post.

2011 ROTH IRA PJR +129.55

Merrill Lynch Depositor Inc. PreferredPLUS 7.4% Trust Ctf. Series UPC-1 for UnumProvident Corp (PJR) closed yesterday at $25.75.  The coupon is 7.4% on a $25 par value, and there is a call warrant attached to this trust certificate. (see pages S-3 and S-4 at

I will discuss the remaining trades from last Wednesday in the next post.

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