Friday, February 17, 2012

SOLD 50 HBAPRG at $20.64/Sold 1 Commercial Metals 6.5% Senior Bond Maturing 7/15/2017 at 99.516/Bought 1 Quicksilver Resources 9.125% Senior Bond Maturing 8/15/2019 at 99/

Yahoo Finance has updated its Key Statistics page for Exide Technologies with information through 12/31/11. This information provides useful information for the selection of Lottery Tickets, and I currently own 70 shares of XIDE as a LT. The price to sales ratio is .07; price to book is .53; and the forward P/E for the F/Y ending 3/2013 is 4.27. I would not place much reliance on the consensus earnings estimate since this company had badly missed in its recent quarterly reports and refuses to give guidance for the foreseeable future.

I do not discuss earnings from companies in the LT category, unless I also own the bond. Two LTs released earnings yesterday, and I briefly reviewed the reports:

Huntsman: SEC Filed Press Release
Par Technology: PAR Technology 

Huntsman rose 7.7% yesterday in response to its release, closing at $13.99. Bought 30 HUN @ 9.91 and 30 FCE/A at 11.58 (1/1/12 Post)

Coca-Cola increased its quarterly dividend by 8.5% to 51 cents. This is the 50th consecutive annual dividend increase. I own 132+ shares as part of my Common Stock Dividend Growth StrategyBuy of KO at 38.72 ADDED 50 KO AT 54.26 Bought 50 KO at 53.77

KO Long Term Unrealized Gain as of 2/16/2012
1. Bought 1 Quicksilver Resources 9.125% Senior Bond Maturing 8/15/2019 at 99 Last Tuesday (Junk Bond Ladder Strategy)(see Disclaimer): This bond was bought as the replacement for the sold and discussed in Item # 2 below. I recently discussed KWK in connection with a 50 share purchase of its common stock. Bought 50 KWK at $5.3-LT Category (2/10/12). I do not have much to add to that discussion. Ultimately, I would anticipate that the success or failure of this investment will largely depend on KWK's emerging oil plays. 

Quicksilver Production Partners (QPP) recently filed a Form S-1 with the SEC. QPP was recently formed by KWK. 

If the IPO is successful, KWK is expected to be the largest unit holder in this publicly traded master limited partnership. KWK would be the general partner. KWK would contribute certain of its Barnett Shale assets to the partnership and will use net proceeds received by it from QPP to retire a portion of its debt. SEC Filed Press Release  

According to FINRA, this senior unsecured KWK bond is rated B2 by Moody's and B by S & P. FINRA 

Prospectus I did not have to pay the seller much in accrued interest, just $.51, since KWK just made the semi-annual payment.

My confirmation states that the current yield at my cost is 9.143% and the YTM is about the same at 9.162% since I bought the bond near its par value.

2. Sold 1 Commercial Metals 6.5% Senior Bond Maturing 7/15/2017 at 99.516 Last Tuesday (Junk Bond Ladder Strategy)(see Disclaimer): I would view this Commercial Metals bond to be "more safe" than the Quicksilver bond, an opinion based in part on the difference in yield.  In the current abnormally low interest rate environment, a two to three percent interest differential is significant. I would pay attention to the judgments made by bond investors as reflected in prices and yields. Those investors are clearly saying that the Quicksilver 2019 senior bond is more risky than the 6.5% Commercial Metals bond, though that conclusion is subject to change based on new information. A few months ago, the KWK 2019 bond was selling at a 10% premium to its par value. 

In the last analysis, I am not interested in a junk bond selling near par value with a 6.5% coupon and a 2017 maturity date.  As a matter of personal preference, I will accept the greater risk for more yield, and then control that risk by limiting my exposure to a nominal sum. I am also more interested in the totality of my cash flow than its individual components.   

3. Sold 50 HBAPRG at $20.64 Last Tuesday (see Disclaimer): I am trading the volatility of floating rate, non-cumulative equity preferred stocks issued by financial institutions. I have traded HBAPRG several times. The issuer is HSBC USA.  This security pays the greater of 4% or .75% above the 3 month Libor rate on a $25 par value. Advantages and Disadvantages of Equity Preferred Floating Rate Securities Floaters: Links in One Post
The 50 shares sold last Tuesday were bought at $16.8 (October 2011 Post).

2012 HBAPRG 50 Shares +$176.08

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