Thursday, February 2, 2012

Lottery Ticket Portfolio Table/Sold 100 NHTB at $12.15/Bought Back 100 ETO at $18.68/HUN STL

ADP reported that private sector payrolls increased by an estimated 170,000 in January. More jobs will ultimately be the tonic for a lot of problems. adpemploymentreport.pdf

A secret U.S. military report concludes that the Taliban, aided by Pakistan, will be in a position to reclaim Afghanistan as soon as U.S. military forces leave. This has been by assumption for years and should surprise no one. BBC News Reuters

The ISM manufacturing index for January was reported at 54.1%, up 1% from December. Importantly, the new orders component rose to 57.6 from 54.8, and the export number increased to 55 from 53.

The VIX declined 4.53% yesterday, closing at 18.56. 

1. Sold 100 New Hampshire Thrift Bancshares at $12.15 Last Monday (REGIONAL BANK BASKET STRATEGY)(see Disclaimer): I bought these shares at $9.51 back in January 2010: 

2012 NHTB 100 Shares +$248.02
NHTB paid a quarterly dividend of 13 cents per share during the entire period of my share ownership.

I sold the shares simply because I did not like the last earnings report. New Hampshire Thrift reported net income of $1.6 million or 24 cents per share for the 4th quarter, down from $2.1 million or 34 cents in the year ago quarter. When comparing those numbers I will make allowance for quarterly differences in realized gains from the sale of securities and loans.

Non-performing loans increased to 2.32% as of 12/31/2011, compared to 1.45% a year earlier. There was a big jump from the Q/E 9/2010, when the ratio was 1.66%. SEC Filed Press Release

Snapshots of realized gains are posted at the end of REGIONAL BANK BASKET STRATEGY GATEWAY POST. A running total is kept at Realized Gains Regional Bank Basket Strategy.

New Hampshire Thrift Bancshares closed at $12.15 yesterday.

2. Bought 100 of the Balanced CEF ETO at $18.68 Last Monday (see Disclaimer): The  Eaton Vance Tax-Advantaged Global Dividend Opportunities Fund is a world balanced closed end fund. I have been moving some money into balanced funds after the Fed announced an intent to continue its Jihad against the Saving Class for another three years.

This fund does use leverage. As of 9/30/2011, the fund had a 106.4% weighting in common stocks, 20.8% in preferred stocks, 9.9% in corporate bonds, and 1.2% in cash. The numbers exceed 100% due to the use of leverage. Most of the preferred stocks are equity preferred stocks or European hybrids that would pay qualified dividends. The exceptions would be the series "A" and "B" preferred stocks issued by the REIT Sunstone Hotel which I also own. REIT preferred stocks generally do not pay qualified dividends due to the lack of taxation at the corporate level. Most of the corporate bonds are "trust preferred" which are in essence junior bonds that pay interest rather than dividends.

When I last bought this fund, I paid $20.14 per share, quickly sold at a small profit. Item # 4 Bought 100 of ETO at 20.14 (12/9/2010). I noted in that post that the net asset value per share was then $22.05 and the discount was at -8.48%. The fund was then paying a monthly dividend of $.1167 per share, which is the amount currently being paid by it. Tax-Advantaged Global Dividend Opportunities Fund | Performance Page According to Morningstar, the distribution has not been supported recently by a return of capital.

At a total cost of $18.68, and assuming a continuation of the $.1167 monthly dividend, which is in no way assured, the dividend yield would be about 7.5%.

As of last Friday's close, the net asset value was $21.34. Based on a closing market price of $18.72 that day, the discount to net asset value was -12.28% at that time. Last Monday, the day of my purchase, ETO closed at $18.68, with a net asset value per share at that time of $21.25. This fund is listed by the WSJ with the world equity CEFs.

CEFA Page on ETO
Last SEC Filed Shareholder Report:  SEC Form N-CSR for Period Ending 10/31/11

Eaton Vance Tax-Advantaged Global Dividend Opportunities Fund rose 25 cents yesterday to close at $19.05. The net asset value per share as of 2/1/2012 was $21.56, creating a discount at yesterday's closing price of -11.64.

3. Sterling Bancorp (STL)(own Trust Preferred only): I sold my common shares of STL at $10.5, but still own its TP STLPRA which has a 8.375% coupon on a $10 par value. Prospectus  After buying and selling that TP several times, I currently own 200 shares in the ROTH IRA. Trust Preferred Securities: Links in One Post

If I own only a bond issued by a company, I will still review its earnings reports, with a different focus compared to owning just the common stock. I am primarily concerned as a bond owner with the creditworthiness of the issuer and how investors may perceive creditworthiness. Those two issues will sometimes differ, as the perception of reality is not the same as the reality.

Sterling Bancorp reported net income of $5.3 million or 17 cents per share, up from 13 cents in the 2010 4th quarter, beating the consensus estimate by 2 cents. As of 12/31/2011, the net interest margin was 3.77%; the total risked capital ratio was 13.71%; the tangible common equity to assets ratio was 8.01%; NPAs to total assets stood at .33%; and the allowance for loan losses to NPLs was at 315.02%.

Sterling Bancorp Trust I 8.375% Cum. Trust Pfd. Secs closed at $10.39 yesterday.

4. Lottery Ticket Portfolio Table as of 2/12012 (Lottery Ticket Basket Strategy): The RB is in charge of this strategy which is not taken seriously by other staff members here at HQ. Somehow, the Lame Brain has produced green, with realized gains of $9,166.34 so far.

Generally, no more than $300 can be used to purchase a LT position, though that sum may be increased by prior net profits for that security. I expect some of these investments to fail of course. Snapshots of the realized gains and losses can be found at the Gateway Post highlighted in orange above. The largest percentage unrealized gain is in GRTPRF where my adjusted cost basis is currently hovering just above $40.

(Unrealized Percentage Gain=1,551.08% plus dividends at a 75+% annual yield rate at my original unadjusted cost basis) Maybe I could have bought more.

I have one  name on this list which I have not yet had time to discuss, with the purchase made yesterday. I omitted another which will be discussed in the next post.

Lottery Ticket Basket Portfolio as of 2/1/2012

Original 2009 Gateway Post on this strategy: LOTTERY TICKET PURCHASES: LINKS IN ONE POST I still update that later post with new adds and eventually I will try to make a note of any sales also. The main post now on this strategy is the one written last October: Lottery Ticket Strategy: New Gateway Post Snapshots of realized gains and losses in excess of $30 can be found in that post.

I will generally not discuss the LT's except when I make the purchase and later when I sell the security. I will consequently not discuss earnings reports.

I may mention something of interest to readers who have positions in one of these securities. For example, I would note that Huntsman closed yesterday at $13.41, up 68 cents or 5.34% yesterday. I made a LT purchase a few days ago @ 9.91 (1/11/2012 Post). I would attribute that pop to merger activity in the chemical industry. A few years back, Huntsman was a takeover target but is not currently subject to any public offer.  It is being discussed as a possible takeover target.  Bloomberg

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