Wednesday, January 4, 2012

CEF Portfolio as of 12/31/2011/CWH/ISM Manufacturing Index/Sold 50 CBLPRD at $23.71

The S & P 500 ended 2011 at 1,257.60, falling .04 points over the course of the year. Given the inflation rate for 2011, the real rate of return for this index, with reinvestment of dividends, would be slightly negative. For the major U.S. stock indexes, the Russell 2000 declined the most, with a 5.5% decline, while the DJIA posted the largest gain at 5.5%. 

The ten year treasury note ended the year with a 1.874% yield. The 5 year treasury was at .837% and the 30 year at 2.889%. The 3 month Libor rate was last quoted at .58%, with the 3 month treasury bill continuing to hug zero at .02%. The equity risk premium is close to a 40 year high.

According to the WSJ, the forward 12 month P/E ratio for the Russell 2000 was 37.96, 11.21 on the DJIA, and 14.58 on the S & P 500, all as of 12/30/2011. The forward P/E of the MSCI World Index is close to 11.  

Bank of America was easily the worst performing stock in the DJIA, losing close to $80 billion of its market value and declining 58%. BAC finished the year at $5.56, and closed 2010 at $13.34. The 52 week high was at $15.31.

The EURO lost 3.2% last year. The Dollar Index rose 1.5%.

The ISM manufacturing index for December rose to 53.9%. The new orders component increased to 57.6. Employment rose to 55.1 from 51.8 in November.

1. Commonwealth REIT (CWH-Own Common): CWH is planning to split off a large number of its properties into a separate company called Select Income REIT and to sell shares of that company in an IPO. This new REIT will have 253 properties currently owned by CWH, including properties in Oahu, Hawaii. For the nine months ending 9/30/11, the total revenues from those properties were $81.775 million from 21.4 million rentable square feet. The rentable square footage leased was 95.2%.

CWH's last filed SEC Form 10-Q indicates to me that the properties being spun off may be the cream. As of 9/30/2011, 87% of the total square footage was leased which indicates that the properties being contributed to Select Income will cause a meaningful decline in the lease rate percentage for the remaining properties owned by CWH.

S & P put CWH's credit ratings on negative CreditWatch. S & P noted that the properties being contributed to this new REIT included "some of the most stable assets". Text-S&P

CWH has been divesting properties in this manner for some time. The last divestiture consisted of properties contributed to Government Properties Income Trust (GOV). (see page 4 Two prior transactions involved the formation of Senior Housing Properties (SNH) and Hospitality Properties Trust (HPT). CommonWealth REIT

I no longer own the CWH's exchange traded bond (CWHN), which has a $20 par value.  Sold 100 CWHN at $21.22 in RothSold 100 CWHN at $20.57

2. SOLD 50 CBLPRD at $23.71 Yesterday (see Disclaimer): I still own CBLPRC. I just clipped the quarterly dividend on CBLPRD and realized a few bucks on the shares recently bought at $23. (12/12/11 Post). This security is a cumulative equity preferred stock issued by the REIT CB & L Properties, an owner of retail properties.


3. Cisco (own common shares only): I am at break-even on my 100+ shares of Cisco after the shares popped yesterday. J.P. Morgan raised its rating to outperform and increased the price target to $21 from $19. TheStreet JPM expects federal IT spending to increase 3.1% in 2012 after declining by 2.1% in 2011.

I have previously traded small lots for profits. SOLD 50 CSCO @ 24.42 (Nov. 2010)-Bought CSCO at 20.39 (September 2010); Sold Cisco (August 2010)-Bought 50 CSCO at $22.45 (June 2010).

My last two buys were near where the stock closed yesterday: Added 50 CSCO at $18.75 (February 2011);  Bought 50 CSCO @ 19.55 (November 2010).

Cisco shares were purchased under the Large Cap Valuation Strategy. (see also: Explaining Low Valuations of Large Cap Tech Stocks (September 2010 Post). Microsoft is another large cap tech stock, which I own, purchased under the same strategy.

4. CEF Portfolio as of 12/31/2011:  With CEF's, I attempt to achieve a balanced world allocation. I will move the bond and stock allocations up and down, though most of the allocation shifts are relatively minor.

The following table includes several recently received shares purchased with dividends. Some of the largest share purchases included ADX, JQD, RVT and RMT:

ADX Reinvestment
JQC Reinvestment
RMT and RVT Reinvestment
The ADX dividend shown above was mostly a year end capital gain distribution, while JQC, RVT and RMT are quarterly distributions.

Yesterday, the S & P 500 rose 1.55%. The focus of the following CEF table is income generation, mostly on a monthly or quarterly basis. This portfolio rose 1.35% yesterday:

CEF Portfolio as of 12/31/2011
The only remaining large dividend originating from 2011, which will be used to purchase shares when paid, was made by the Swiss Helvetia Fund.  

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