Tuesday, February 21, 2012

Bought 30 TC at 8.65-LT Category/Sold 100 CHW at $8.29/TEX/Sold All of the Bond CEF BHK at $14.058

This is a link to a positive article on the common stock of RR Donnelley (RRD) published at Barrons.com. The author maintains that RRD can continue its generous dividend and stock buybacks, while reducing its outstanding debt. This may turn out to be the case. I made the argument in a recent post that the bond market was not that optimistic. Bought 1 R.R. Donnelley 8.875% Senior Bond Maturing 5/14/2021 at 92.69 (2/13/12 Post)

Allied Motion (AMOT), a LT, had a good report for the 4th quarter. AMOT added 13.64% in trading last Friday.

Digirad (DRAD), a LT, had a ugly report for the 4th quarter.

General Mills (owned) fell $1.44 last Friday after lowering its E.P.S. forecasts for the quarter and the 2012 fiscal year. The new forecast calls for and adjusted E.P.S. of 54 to 56 for its fiscal third quarter and $2.59 to $2.61 for fiscal 2012. The F/Y ends in May. I own 50 shares plus reinvested dividends. Bought 50 GIS at 35.53 (January 2011). Eventually, I will buy another 50 shares. The stock fits into my Common Stock Dividend Growth strategy.

The Philly Fed manufacturing index improved to 10.2 in February from 7.3 in January.   philfed.pdf

Rick Santorum, one of the two leading  Presidential candidates for the GOP, claimed that Obama and "liberals" were leading religious people into oppression and beheadings similar to what happened in the French revolution.  Christians to the ‘guillotine’  Possibly, it would be a good lesson for Americans to elect this wingnut as their next President.

Santorum referred to public education, run by government, as "anachronistic" last Saturday.  NYT Possibly, his idea of a proper education is to turn the school system into an Americanized version of Pakistan's Madrasah, where American children can memorize the Bible and repeat it all day with their heads bobbing up and down.

His latest assertion is that global warming theory is phony political science.

He further claims that Obama and his allies oppose new drilling technologies so that they "can gain control of your lives". chicagotribune.com His reasoning on that point is best described as idiotic.  The thought process that generates Santorum's opinion is non-existent.

The latest Gallup Poll shows that Santorum is favored by 36% of registered Republicans nationally, extending a lead over Romney who has 26%. PBS

1. Bought 30 TC at $8.65 Last Wednesday-Lottery Ticket Category (Lottery Ticket Strategy)(see Disclaimer): Thompson Creek (TC) is a Canadian mining company. Since this company does not pay a dividend, I did not buy shares on the Toronto exchange. I will only buy income producing securities with my CAD stash. The Canadian dollar is trading close to parity with the USD and the price on the Toronto exchange was almost the same as on the NYSE. 

This Canadian company does file reports with the SEC. 

I intend at some point to buy another 70 shares. I would like to see higher prices for Molybdenum before buying more shares. 

The main reason for limiting my purchase now is the depressed price of Molybdenum. The price is currently below $15 per pound. LME (London Metal Exchange) The price fell precipitously in late 2008 as steel mills cut back production due to the recession. The price for molybdenum oxide fell to just above $5 a pound by early 2009 before starting to recover. The price had been over $30 per pound: 

That metal is used primarily with steel to give it anti-corrosive and other beneficial qualities. Thompson is the 4th largest producer of molybdenum outside China. 

Recent articles at Seeking Alpha and Motley Fool discuss the bull case for Thompson Creek. While a rebound in molybdenum prices would be helpful, the primary rationale for the LT purchase is Mt. Milligan project that will broaden TC into a cooper and gold producer. The article at Motley Fool contains an interview with TC's CEO. This mine is scheduled to start production during the second half of 2013. A lot will depend on the price of copper and the ultimate costs of production. I am more circumspect about this company than the authors of the foregoing articles due to those unknown factors. 

I do monitor the price of TC's senior bond, but have no interest in it at its current price. FINRA 

Investor Fact Sheet from TC: FactSheet.pdf

Thompson Creek Metals closed at $8.79 last Friday.

While the company reported a profit in the Q/E 9/30/11, that was mostly due to an accounting entry relating to a warrant which contributed 25 cents to the 27 cents in GAAP E.P.S..  The adjusted E.P.S. number was 2 cents down from 36 cents per share on a diluted share basis for the Q/E 9/2010. sec.gov

The current consensus is for an E.P.S. of 12 cents this year. The company is spending heavily to bring the Mt. Milligan project to fruition.

2. Sold All of the Bond CEF BHK at $14.058 Last Wednesday (see disclaimer): After investing the monthly dividends to buy more BHK shares, I ceased doing that a few weeks ago. I can not maintain much of an interest in a bond fund paying less than 6%. Based on the current monthly dividend of $.067 per share, and at a total cost of $14.06, the yield would be about 5.5%. I made a small profit on the 200 shares bought at $13.76 (October 2010), and on all of the shares bought with reinvested dividends. 

That table does not include the fractional shares which will be liquidated on the settlement date.

Blackrock Core Bond Trust closed at $14.12 last Friday.

3. Sold 100 of the Stock CEF CHW at $8.2929 Last Wednesday (see Disclaimer): This CEF was purchased at $7.18 last November and I received a few monthly dividends. This fund was sold solely in response to the recent spurt in the VIX prior to last Wednesday.

2012 CHW 100 Shares +$94.7

Calamos Global Dynamic Income Fund closed at $8.49 last Friday.  The VIX closed at 21.14 on 2/15/2012, and thereafter fell the next two days to close at 17.78 last Friday.

4. Terex (own 1 senior subordinated bond: FINRA):  I sold my common stock position in Terex, bought as a LT, too soon in retrospect.  Lottery Ticket Strategy: New Gateway Post Bought 30 of TEX at $12.68-LT Sold LT TEX at $19.11 I currently own 1 Terex senior subordinated bond. Bought: 1 Terex 8% Senior Subordinated Bond Maturing on 11/15/2017 at 96.947

Terex reported 4th quarter adjusted earnings from continuing operations of $32.5M or 30 cents per share. The GAAP number was a loss of $4M. Net sales for the 4th quarter increased 47.4% to $1.326 billion. Excluding an acquisition, net sales increased 20%.

Terex closed at $25.66 last Friday.

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