Tuesday, February 28, 2012

SHO OMX/Sold 200 of the CEF JQC at $9.094/Added to BAM at $31.16/Sold 100 BMLPRJ at $19.55/Paired Trade: Sold 50 ENY at $18.25 and Bought 100 of the Canadian Stock ETF XEG:CA at 18.24 CADs

1. Sold 200 of JQC at $9.094 Last Wednesday (see Disclaimer): This sale reduces my position to 804+ shares. According to Morningstar, the average three year discount for this CEF is 14.45%. The discount last Tuesday had narrowed to -8.09%, which is uncharacteristically low for this CEF. That caused me to pare my position slightly.

Nuveen Multi-Strategy Income & Growth Fund 2 closed at $9.18 yesterday.  The discount was -7.65% as of yesterday's closing price of $9.18 and a net asset value per share of $9.94. JQC Page at the Closed-End Fund Association

2. Paired Trade: Added 100 of the Canadian Stock ETF XEG:CA at 18.24 CADs and Sold 50 ENY at $18.25 Last Wednesday (Canadian Dollar (CAD) Strategy)(see Disclaimer): I recently bought the ETF ENY, which owns Canadian energy companies, at $17.18 (item # 5: January 12, 2012 Post). While I am certainly no expert on Canadian energy companies, I am familiar with several of them. I have individual stakes in Suncor, Husky and Enerplus. After looking at the portfolio of ENY and the Canadian ETF XEG, I preferred the weightings in the Canadian ETF offered by IShares Canada and available for purchase on the Toronto exchange.

ENY Holdings
XEG Holdings - iShares ETFs

I took a snapshot of the two weightings, covering just the positions with a 1% or greater weighting:

XEG:CA Weightings >1%

ENY Weightings
The ENY snapshot includes all holdings, whereas XEG has several positions at less than 1%.

Some major differences include the following:

Suncor: XEG at 17.06% and ENY at 3.5%
Canadian Natural Resources: XEG at 13.17% and ENY at 2.61%
Cenovus: 9.24% at XEG and ENY at 2.95%
Talisman: 4.63% at XEG and ENY at 0%
Encana: 4.61% at XEG and ENY at 0%
Petrobakken:  .4% at XEG and 4.99% at ENY
Gibson Energy: 0% at XEG and 3.5% at ENY
Vermillion Energy: 1.49% at XEG and 3.49% at ENY
Batex Energy: 2.15% at XEG and 5.3% at ENY
Freehold Royalites: .29% at XEG and 3.38% at ENY

These two portfolios will likely diverge significantly in performance. ENY has a focus on smaller and more speculative companies. Possibly that focus will bear fruit, but I would prefer a higher weighting in Suncor and Cenovus than the current small ENY allocations. I currently own 50 shares of Suncor, bought recently at $28.67; 150 share of Enerplus and 200 shares of Husky Energy.

iShares S&P/TSX Capped Energy Index Fund (TOR: XEG) declined 22 cents in trading yesterday to close at 18.24. The Guggenheim Canadian Energy Income ETF  (ENY) Fund  declined 8 cents to close at $18.19.

3. SOLD 100 BMLPRJ at $19.55 Last Thursday (see Disclaimer): This non-cumulative equity preferred stock, originally issued by Merrill Lynch, was sold at near break-even. Bought 100 BMLPRJ @ 19.32 (FEB 2011 Post). I no longer own any equity preferred stock issued by Bank of America or one of its acquired companies. Floaters: Links in One Post

Since my gain was less than $30, I will not include a snapshot of this trade in Advantages and Disadvantages of Equity Preferred Floating Rate Securities.

BMLPRJ pays non-cumulative, qualified dividends at the greater of 4% or .75% above the 3 month LIBOR rate on a $25 par value.  Final Prospectus Supplement

4. Added to Brookfield Asset Management (BAM) at $31.16 Last Thursday (Canadian Dollar (CAD) Strategy)(see Disclaimer): Brookfield Asset Management is a Canadian holding company with over a $150 billion in assets under management, focusing on property, power, infrastructure and private equity. Brookfield Asset Management | Home

The company recently released its year end results. Brookfield Asset Management Announces Year End-2011 Financial Results and Dividend Increase The company reported then that the "intrinsic value of Brookfield's common equity was $40.99 per share at December 31, 2011", and the tangible asset value was at $34.52 per share. The current quarterly dividend is 14 cents per share.

This is a link to the shareholder's letter discussing 2011 results: brookfield.com pdf As noted in that letter, the 10 and 20 year compounded returns for BAM shares were 20% and 16% respectively, see page 3.

Link to Earnings Call Transcript for the 4th quarter:  brookfield.com .pdf

The company does file reports with the SEC as a foreign issuer: SEC The foregoing referenced press release is attached to a Form 6-K. SEC

I last bought this security during the Dark Period at $13.73 (March 13, 2009 Post), and still own those shares. Last Thursday, I bought the shares listed on the NYSE rather than on the Toronto exchange, since my commission is cheaper that way. My broker has been converting those shares to the Toronto exchange symbol which is what I want to happen, since I will receive BAM's dividends in CADs rather than USDs. The Canadian Dollar Strategy is in part a diversification move out of assets priced in USDs, and I want to increase my CAD stash with dividend distributions. I pay the 15% withholding tax either way for securities held in a taxable account.

Brookfield Asset Management Inc. Cl A (BAM) closed at $31.66 yesterday. The shares listed on the Toronto exchange closed at 31.63, Brookfield Asset Management Inc. Cl A, BAM.A (TOR: BAM.A), indicating a near parity in the CADUSD exchange rate.

5. Sunstone Hotel Investors (own cumulative preferred only):  Sunstone Hotel Investors beat the consensus estimate by reporting 4th quarter FFO of 29 cents, a 45% increase, on 245.1 million in revenues. SEC Filed Press Release

Sunstone Hotel Investors Inc. 8% Cum. Redeem. Pfd. Series A, SHO.PA
Sunstone Hotel Investors Inc. 8.00% Cum. Redeem. Pfd. Series D, SHO.PD

6. OfficeMax (own 2 senior bonds: FINRA): OMX reported adjusted earnings per share of 17 cents per share, two cents better than the consensus estimate, on a 3.9% increase in revenues to $1.84B. The GAAP E.P.S., which included an impairment charge, was 3 cents.  OfficeMax Incorporated Earnings Release dated February 23, 2012 On the day of the earnings release, the common shares, OMX, rose 9.42% to close at $6.04 and closed at $5.61 yesterday. 

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