Monday, January 9, 2012

JOBS/XIDE/Bought 50 CVY at $20.68/SOLD 52 LARK at $18.75/Edison Mission/Bought 1 ArvinMeritor 8.125% Senior Bond Maturing 9/15/2015 at 93.5

The Labor Department reported a 200,000 increase in December nonfarm payrolls and a drop in the unemployment rate to 8.5%. Employment Situation Summary The U-6 number continued to trend down, falling to 15.2 from 15.6 in November. Table A-15. Alternative measures of labor underutilization The consensus forecast was for 150,000 jobs and an unemployment rate of 8.7%.  Wages increased by four cents an hour. Over the past twelve months, wages rose 2.1%, lower than the 3.4% inflation rate. The decrease in the unemployment rate came largely from real gains in jobs, rather than workers becoming discouraged and leaving the work force.

XIDE rose 11.39% last Friday, closing at $3.13, after Wedbush raised the stock from neutral to outperform, with a price target of $12. CBS News  Last Thursday, the Maxim Group initiated coverage with a buy rating and a $7 price target. I do not have access to either report. I own 70 shares of XIDE as a Lottery Ticket and two of its senior secured bonds.  Bought 70 XIDE as LT at $2.75 Bought 2 Exide 8.625% Senior Secured Bonds Maturing 2/1/2018 at 81.375

1. Bought 50 of the ETF CVY at $20.68 (see Disclaimer): CVY is an ETF that invests in dividend paying large cap value stocks. For an ETF, the expense ratio is high at .6%. 

List of Holdings: CVY Holdings 
Fact Card:  cvy_fact_card.pdf

Dividends are paid quarterly at a variable rate. CVY Distributions. For 2011, the total payment was $1.107 per share. At that rate and at a total cost of $20.68, the dividend yield would be around 5.35%. The fund is unleveraged. 

Morningstar currently rates this fund 4 stars: Morningstar As shown at that page, the dividend is not supported by any return of capital.  This is a link to the ETF Guide page on this fund.

Guggenheim Multi-Asset Income ETF closed at $20.7 last Friday, down 2 cents or .1% from Thursday's close.  The DJIA Index closed down .45%. 

2. Bought 1 ArvinMeritor 8.125% Senior Bond Maturing on 9/15/2015 at 93.5 (Junk Bond Ladder Strategy)(see disclaimer): This purchase was made in a satellite taxable brokerage account held at Vangurad, taking advantage of that firm's new $2 commission rate for a 1 bond purchase (applicable to Voyager customers).

FINRA Information on this Bond
Prospectus: ArvinMeritor  

My confirm states that the YTM is 10.283% and my current yield is 8.69%.

ArvinMeritor is now known as Meritor (MTOR). I briefly discussed this company in connection with another bond purchase.  Bought 1 ArvinMeritor 10.625% Senior Bond Maturing on 3/15/2018 at 96 

The current consensus estimate is for $1.34 for the F/Y ending September 2012 and $1.75 for F/Y 2013. MTOR 

This is a junk bond, currently rated B3 by Moody's, CCC+ by S & P and B- by Fitch. The Finra page on this bond provides the ratings, as does the information provided to me by Vanguard on the order and confirmation pages: 

Confirmation Page

3. Sold 52 Landmark Bank (LARK) at $18.75 Last Thursday (REGIONAL BANK BASKET STRATEGY GATEWAY POST)(see Disclaimer): Two of these shares originate from a recent 5% stock dividend. This bank is thinly traded, with a wide bid/ask spread. I just decided to take a small profit and reinvest the proceeds in a more liquid stock.  Bought 50 LARK @ 16.6

LARK 52 SHARES +$91.89
I totaled up my 2011 cash dividends paid in 2011 by the stocks contained in this basket and the total was $1,660.57.  That number is noted at the end of the REGIONAL BANK BASKET STRATEGY GATEWAY POST. Dividends will be an important component of this strategies total return.

4. EDISON MISSION (own 3 2016 senior unsecured bonds-FINRA)(Junk Bond Ladder Strategy): Midwest Generation, a subsidiary of Edison Mission, announced that it had completed the "installation of Selective Non-Catalytic Reduction systems to reduce emissions of nitrogen oxides . . . These new controls will enable Midwest Generation to comply with both State of Illinois and USEPA limits for NOx which are scheduled to take effect Jan. 1, 2012" The company added that it will meet the new USEPA limits on sulfur dioxide that are scheduled to go into effect this month. Midwest Generation owns 6 coal fired units in Illinois. 

The emissions problems appear to be more problematic from a cost-benefit analysis for the coal plants at Homer.

In another recent development, EMG closed on $242 million in financing for three wind energy projects, with a total generating capacity of 204 megawatts. 

I will discuss the remaining trades from last Thursday and Friday in the next two posts.

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