Friday, March 30, 2012

EXAR Intel/Edgen Murray/Added 30 CHN at $22.62/Sold 100 of the LT TGX at $1.83/Added 50 Alcoa (AA) at $10.18

The ruling "Conservative" Party in the U.K. announced a sales tax increase on hot pastries to 20% while cutting the taxes paid by millionaires. NYT

Tiernan Ray summarizes in his Barrons blog a research report by an Argus Research analyst on Intel, where the analyst raised his price target to $34 from $29 based on the new ultra book laptops. Several brokerage companies offer Argus Research to their customers including Schwab. Intel rose 36 cents to close at $28.18, tempting me to harvest a mostly long term capital gain.

273.406 Shares of Intel- Unrealized Gain as of 3/29/2012 =+$2,826.33

Zions Bancorporation announced that it redeemed $700 million or 50% of the equity preferred stock, Series D, issued to the U.S. government. For as long as that preferred stock remains on the balance, Zions would have to eliminate its common dividend and defer the preferred dividend payable to the government before it could eliminate the dividend on it non-cumalative equity preferred issues. (see Item # 7 Bought 50 ZBPRB in Roth at $19.9) I currently own only the non-cumulative Series C, ZBPRC, which has a 9.5% fixed rate coupon on a $25 par value. I no longer own the Series A which is a floater.

The Edgen Group keeps filing Amendments to its S-1 SEC filing relating to its hoped for IPO. In the event this company is successful in selling stock, I would view it as a positive for the owners of the Edgen Murray bond senior secured bond maturing in 2015 (FINRA) for the reasons discussed in a prior post. Edgen Murray I own just one of those bonds. Bought 1 Edgen Murray 12.25% Senior Secured Bond Maturing 2015 (March 2011).

One of my Lottery Tickets, EXAR, has been showing some unusual upward price movement after going nowhere since my purchase last July, other than down in spurts. The stock was trading around $5.5 on 11/9/11 and subsequently broke above its 200 and 50 day SMA moving averages in late November. EXAR Interactive Chart Since that time, the stock has been moving up nicely and closed yesterday at $8.42, up 3.19% for the day. I would not profess anything other than superficial knowledge about EXAR's products. As of 1/1/12, the company had $4.42 per share in cash, EXAR Key Statistics, and I cited that cash position when making a purchase. Item # 3  Bought 40 EXAR as LT at 6.23 (July 2011). Yesterday, Exar announced what appears to be the final act in its restructuring to lower its operating expenses and in furtherance of its "goal to achieve consistent profitable growth".  As of 12/31/11, Dimensional Fund Advisors reported owning 8.15% of the common stock,,  Renaissance Technologies reported a 4.9% stake,, and the Soros Fund owned 14.88%. Several mutual funds also owned significant  stakes. The company lost 11 cents per share for the 3 month period ending on 1/1/12,  Form 10-Q, and 4 cents in a non-GAAP basis. Press Release I am tempted to sell this one and an up day today may provoke the harvesting.

1. Added 30 to China Fund (CHN) at $22.62 Last Monday (see Disclaimer): This only appears to be an average down from my recent 50 share purchase at $25.975 (Oct. 2011). This closed end fund declared a $2.9964 cent distribution after I bought those shares. Of that amount, $2.8222 was a long term capital gain distribution. Before taxes owed on that distribution, I am close to even. The shares purchased with the year end distribution were bought at $21.09. 

Prior to the October 2011 purchase, I had bought and sold a small odd lot at higher prices.  SOLD CHN at $30 (August 2010). 

Sponsor's website: The China Fund, Inc. - Welcome
Morningstar Page on CHN

The fund closed on 3/26/12 with a net asset value of $25.42. This number is only updated weekly. 

This is a link to the SEC Form N-Q for THE CHINA FUND, INC. listing the holdings as of 1/31/2012.  This report shows that the total cost of the fund's positions was at that time $529+million and the value was $620+ million. 

The last SEC filed shareholder report is for the period ending 10/31/11. At page 17 of that report, the net expense ratio is listed at 1.01%.

After I made this small add, the China Fund announced that it will purchase up to 25% of the outstanding shares at 99% of net asset value, subject to regulatory and other confirmations. Further, the Board approved a share repurchase plan whenever the discount exceeds 8% of net asset value. The China Fund, Inc. Announces the Adoption of a Discount Management Policy This announcement caused a 2.3% rise in the share price last Wednesday.  

China Fund fell 18 cents yesterday to close at $22.99. 

2. Added 50 Alcoa (AA) at $10.18 (see Disclaimer): This brings me up to 285.406 shares. I have an unrealized loss of slightly over $200 after I failed to harvest a $1000 or so unrealized gain when the shares traded hit $18 back in April 2011. I took a snapshot of the unrealized gain when it was over $800 in July 2011, Item # 4 Alcoa 

Before the Near Depression, the shares traded over $40. AA Interactive Chart At $10, the shares are back to 1994 levels. 

Based on the $10.18 price, some of the ratios are as follows with financial data through 12/31/2011:

Price to Sales: .44
Price to Book: .79
Forward P/E on 2013 Estimated Earnings: 10.58
Estimated 5 Year P.E.G.= 1.06

The analysts are currently predicting another tough year for Alcoa. The 2012 consensus E.P.S. is only 49 cents. If that number proves prescient, then I would not expect much upward price movement in the shares until there is a significant quarterly upside surprise or guidance. 

Morningstar has a five star rating on AA shares with a current $19 fair value estimate. 

I will need to be patient on this one. The first lot purchased is among the highest cost lots. I can profitably sell it at over $12 and may do so when and if the price exceeds that level. I am reinvesting the dividend. Patience is the operative word after I missed the chance to dispose of this position at much higher levels. If I had done so, I could have started accumulating the shares again at the current price and reset my average cost at a lower price. 

I have bought shares as low as $5.6 in March 2009 and still own those shares. My last purchase was on 11/23/2011. Added 30 AA at $8.97

Alcoa rose 20 cents yesterday to close at $10.03.

3. Sold 100 TGX at $1.83 Last Tuesday (Lottery Ticket Basket Strategy)(see Disclaimer):  RB, who runs the LT strategy here at HQ, is not exactly a stickler for details. To reduce risk in this strategy, Headknocker issued a fiat that the total exposure to LTs shall not exceed the realized gains. Prior to this sell, the realized gains since 2009 totaled $10,120.17, see snapshots at the end of Lottery Ticket Strategy: New Gateway Post. The total exposure was near $10,750 with the BUSE buy discussed in yesterday's post.

So LB was enlisted to reduce the exposure some to comply with HK's fiat. Compliance with this rule moved within $250 with another sell last Wednesday which will be mentioned briefly in the next post. RB protested, wanting to expand the strategy to a million or two dollars in exposure, or some sum with a lot of zeros.

The author of this article at Seeking Alpha gives seven reasons to buy TGX at $1.75. He may turn out to be right, but the company is simply not earning that price now in my opinion.  For 2011, the company reported net income of $3.064 million or 9 cents per share, up from $2.070 million or 6 cents per share in 2010. The number for 2009 was 9 cents per share and a big loss in 2008.  2011 Annual Report at page II-2

I will buy shares for less than $1.3 for the reasons given in the foregoing Seeking Alpha article and in my prior posts discussing this company. Bought 100 TGX at 1.24 as LT I am not likely to hold past $2 until I see more improvement in the bottom line.

2012 TGX 100 Shares +$42.49
This concludes my second round trip in this LT. The prior transactions consisted of a 100 share buy at $1.28, later sold at $1.63.

Theragenics closed at $1.82 yesterday. 

Thursday, March 29, 2012

First Niagara/XIN/Bought 60 HBNC at $17.55/BOUGHT 50 BUSE at $5-LT/Bought 1 Norcraft 10.5% Senior Second Lien Bond Maturing 12/15/2015 at 87

I did vote against the members of the First Niagara Board of Directors up for re-election and all proposals relating to compensation. I will continue to do so for as long as the current Board and management are in place. Eventually, I will sell my position and hopefully invest the proceeds in a bank less inclined to destroy shareholder value in pursuit of grandiose schemes. First Niagara: Just Another Incompetent Bank Board of Directors The richly compensated CEO of First Niagara called the $1 billion acquisition of HSBC branches in a dwindling market a "home run". Transcript - Seeking Alpha In a prior post, I mentioned that this statement called into question his ability to make sound judgments. Item # 3  First Niagara Dividend Slash The home run was hit by HSBC. First Niagara hit themselves with a fast ball in the groin.

I would not even regard it as debatable that the bank overreached with this acquisition. FNFG-Destruction of Shareholder Value The acquisition was funded in part by a 50% reduction in the dividend, the sell of over 52 million shares of common stock at $8.5 (Form 8-K), near a ten year low for the stock price (FNFG Interactive Chart); a $350 offering of preferred stock richly priced at 8.625% until 2/15/2017 and then at a whooping 7.375% spread over 3 month LIBOR unless redeemed (Pricing Term Sheet), which will restrain common stock dividend increases in my opinion; and a $300 million dollar 7.25% subordinated note maturing in 2021 (SEC Filing).

An article purportedly authored by a student investment club at Harvard contains positive comments about Xinyuan Real Estate. I own 100 shares as part of my Lottery Ticket Basket Strategy.  I have only recently moved into profit territory. Bought 50 XIN at 2.57-LT Added 50 to LT XIN at 2.36 This company did pay a small dividend of 10 cents per share last June. Xinyuan Real Estate Co. Ltd. ADS  (XIN)  There is a transcript of the CEO discussing 4th quarter results.  Seeking Alpha The company does file reports with the SEC. This is a link to the sec  filed press release announcing 2011 4th quarter earnings which were reported at 38 cents per ADS. The stock rose 17 cents in trading yesterday to close at $3.

According to Marketwatch, the ex dividend date for Zurich Financial's annual dividend is 4/2/12. I am referring to the ADS ZFSVY. BOUGHT 100 ZFSVY at $24.72

1. Bought 60 Horizon Bancorp (HBNC) at $17.55 Last Monday (Regional Bank Basket Strategy)(see Disclaimer):  This bank has offices in northwestern Indiana and southwestern Michigan, generally following the curvature of Lake Michigan from Hammond, Indiana to St. Joseph/Benton Harbor, Michigan. Locations and Hours The market capitalization of this bank at its current price is approximately $88 million.

This purchase was a partial fill on a 100 share limit order. Since I was willing to buy 100 at $17.55,  I will place a limit order for 40 shares when I can hit a ask price below $17.5.

For the 2011 4th quarter, the bank reported net income of $3.5 million or $.68 per diluted share, up 23% from the same period in 2010.  SEC Filed Press Release

I was unaware of Horizon until I noticed last week a news item that the bank raised its quarterly dividend 8.33% to 13 cents per share. SEC Filed Press Release As of 12/31/2011, the consolidated total capital ratio was 14.2% and 13.14% for the bank; tangible book value per share was reported at $20.37; net interest margin was 3.95%; and NPLs stood at 2.02% of total loans.

For 2011, the bank reported diluted earnings per share of $2.27, up from $1.81 in 2010.

There has been insider buying. HBNC Insider Transactions

Horizon's stock has already returned to its pre-recession levels. HBNC Interactive Chart That performance has to be contracted with Citigroup and Bank of America. A 5 year chart of BAC stock reveals a 80% loss of its value, while Citigroup has lost more than that ignoble sum. So, while earnings potential is not as great for a small bank like HBNC, it is far less likely to blow itself up on idiotic schemes and investments hatched by outrageously over-compensated Masters of Disaster who totally lack a grain of common sense.

The time to buy HBNC at a deep discount to its value was in March 2009 when the share price hit $7.5. Since the stock price has more than doubled from its recession lows, I am buying it now for far more modest total return expectations. It would be helpful for the Board to increase the dividend every year by 5% to 10%. Given the earnings of this bank, there is a lot of room for dividend increases.

Horizon recently entered into a merger agreement to acquire  Heartland Bancshares, Inc, a very small banking institution headquartered in Franklin, Ind. SEC Filing I spent a few minutes looking at this bank. It currently has 6 banking offices in central Indiana, near Indianapolis, and three of those are in Greenwood. The others are in Franklin, New Whiteland, and Bargersville. Locations Heartland Community Bank These towns are basically suburbs south of Indianapolis.

This small bank did not have current financial reports at its website, and no recent earnings reports have been filed with the SEC either. EDGAR For 2010, the bank reported a net loss of 31 cents per share, down from a 77 cent per share loss in 2009. annualreport2010.pdf Heartland had a total capital to risk-weighted assets ratio of 14.7% as of 12/31/2010 (note 15).  Heatland had government preferred stock on its balance sheet as of 12/31/2010 (note 18) I would not have bought shares in this bank. The only reason to buy it, in my opinion, would be for Horizon to expand its geographic service territory into the Indianapolis market. Hopefully, the Heartland acquisition would be a better way to acquire customers and branches compared to the alternatives.

Horizon did participate in TARP, receiving $25 million dollar in exchange for cumulative equity preferred stock issued to the U.S. government.  SEC Form 8-K The bank reduced that amount to $18.75 million by repurchasing preferred stock on 11/10/2010. Last August, the bank issued $12.5 million in non-cumulative preferred stock and used those proceeds, along with other available funds, to redeem the remainder of the government's cumulative preferred stock, 10-K at page 6.

Horizon Bancorp rose 16 cents in trading yesterday to close at $17.69.

2. Bought 50 First Busey (BUSE) at $5 Last Monday (Lottery Ticket Basket Strategy)(see Disclaimer): This bank almost qualified for a 100 share purchase under the Regional Bank Basket Strategy, but I want to see more evidence of a successful turnaround before committing more cash. I therefore placed a LT classification on this purchase which limited my purchase amount to less than $300.

First Busey has its headquarters in Champaign, Illinois. The operating bank has 33 banking locations in downstate Illinois, one banking center in Indianapolis, and 7 branches in southwest Florida.

Prior to the Near Depression, this stock was trading over $20 per share. BUSE Interactive Chart The stock started to crater in 2008 and fell precipitously 2009. The stock closed at $18.05 on 1/2/2009, BUSE Historical Prices, and hit $3.26 on 11/25/2009. Obviously, something bad happened to this bank. A perusal of the 2009 Annual Report reveals some of the problems.

The annual dividend was 80 cents per share in 2008 and had been cut to a 40 cent annual run rate per share in 2009. The bank reported a GAAP loss in 2009 of $7.85 per share, up from just a terrible loss of $1.06 per share in 2008 (page 26, 2010 First Busey Annual Report-SEC Form 10-K Net charge offs to average loans was 7.96% (page 44).  NPLs and NPAs to total loans stood at 3.71%.  I did not want to buy any shares of this bank until I saw significant improvement. Those numbers are just awful.

The dividend was cut further from 40 cents annually to just 16 cents per year now, paid quarterly at 4 cents per share. That dividend history is further evidence of financial stress due to bad loans.

The 2011 Annual Report does contain evidence of a turnaround. For 2011, net charge offs to loans fell to 1.73% from 2.53% in 2010 (page 48). NPLs and NPAs to total loans declined to 2.28% (page 50). The allowance for loan losses to NPLs  was at 151.91%. SEC Filed Press Release 2011 4th Quarter Earnings The total capital to risk weighted assets ratio was at 18.65% and a Tier 1 capital to risk weighted assets ratio of 17.35%. The bank was profitable in both 2010 and 2011. For 2011, the bank reported net income available to common shareholders of $24.531 million or 29 cents per share, up from 27 cents per share in 2010.

For the 3 months ending in December 2011, the efficiency ratio was 64.83% and the net interest margin was 3.44%. Tangible book value per share was $3.46 on 12/31/2011.

The bank did redeem the government's cumulative preferred stock issued under TARP. In its place, the bank issued non-cumulative preferred stock in the amount of $72.644 million as part of the small business lending program. (pages 54-55). That preferred stock is included in the bank's TIER 1 capital.

Overall, the bank is showing some improvement, sufficient for a purchase under the LT strategy only. I will need to see continued improvement throughout 2012 before I would consider buying another 50 shares.  The consensus estimate is for 26 cents in 2012. BUSE Analyst Estimates I would want to see that number over 40 cents.

With a LT, I can wait a long time. If the bank returned to the 2008 annual dividend level of 80 cents per share, several years into the future, which may be too optimistic to even contemplate the mere possibility, the dividend yield would be 16% at a $5 total cost. Needless to say, the price would not be $5 per share under that dream scenario.

LB has a shorthand word for "too optimistic to even contemplate the mere possibility",  and that is "irrational".  The best case scenario would be a return to 80 cents in 10 to 12 years. I would not even anticipate a dividend raise in 2012.

First Busey fell 1 cent in trading yesterday to close at $5.02.

3. Bought 1 Norcraft 10.5% Senior Second Lien Bond Maturing 12/15/2015 at 87 Last Monday (Junk Bond Ladder Basket Strategy)(see Disclaimer): Norcraft is a private company that manufactures kitchen cabinets. Company Information - Businessweek The company markets cabinets under six main brands: the Mid Continent Cabinetry, Norcraft Cabinetry, Ultracraft, StarMark Cabinetry, Fieldstone Cabinetry and Brookwood.

I would not anticipate that this company to report consistent annual profits without a recovery in the new housing market. In the current environment, I would assign a high risk grade to this bond due to the amount of leverage as well as the current lack of profitability.

The company recently reported an annual loss for 2011 of $3.731 million on revenues of $269.305 million. A profit of $3.191 million was reported for 2010. SEC Filed Press Release

According to FINRA, this bond is currently rated B3 by Moody's and B by S & P.  As of 12/31/2011, there was $240 million of this bond outstanding.  I did not see any other debt on the balance sheet.  The credit facility matures in September 2015 and has aggregate commitments of $25 million, Form 10-Q at page 19.

This bond was originally issued in two private placements and later exchanged for identical ones registered with the SEC. Definitive Prospectus ($60 million) and Definitive Prospectus ($180 million)

The issuers of this bond are Norcraft Companies, L.P. and Norcraft Finance Corp. There is a guarantee from Norcraft Canada subject to certain exceptions. This is a secured note. The collateral is described at pages 6-7. Any funds provided by the secured credit facility would be secured by a first priority lien.

I bought this bond in a Vanguard brokerage account where the commission is $2 a bond for Voyager customers. Since I bought only one, and will most likely not buy another given the risk, my total commission cost was just $2.

Website: HOME
2010 Annual Report: Form 10-K

According to my confirmation, the yield to maturity at my cost is 15.115%. This is the bond substituted for the 2029 RRD bond recently sold. 

Wednesday, March 28, 2012

Bought 2 RadioShack 6.75% Senior Bonds Maturing 2019 at 80/Sold 50 SHOPRD at $25/CVO/BOUGHT 40 GGAL at $6.72-LT Category

Home prices continued their skid in January 2012 according to Case--Shiller.  standardandpoors Over the past year ending in January 2012, the 20 metropolitan area composite index has declined 3.8%. Atlanta leads the list of annual declines with a 14.8% plunge in home prices, followed by a 9% slide in Los Vegas and -6.6% in Chicago. A few metropolitan areas did show increases from December 2011, including Washington at 1.7%, Minneapolis at 1.1%, and Phoenix at 2%. San Francisco led the decliners from December with a 2.5% drop in home prices.

The market has been ignoring this kind of data for several months now.

The author of this article at Investopedia argues that natural gas producers are a bargain at current prices. He mentions several stocks including Quicksilver (KWK). He may be right,  but I would not anticipate a recovery in natural gas prices anytime soon. It will probably take a spike in natural gas prices to send most of these stocks up in price to any meaningful extent.

There is one long term demand driver for natural gas, but it may take several years to unfold. Historically, gas turbines have been used as peaking units, with coal and nuclear units operated to meet base load requirements. With coal plants being shutdown, and no new nuclear plants likely to come online for years, gas turbines may have to expand beyond their traditional use.

Several article appeared yesterday about proposed regulations impacting new coal plants.   The Washington PostPOLITICOReuters, and WSJ.

Recently enacted EPA regulations are causing a number of utilities to plan shut downs of older coal plants. I have discussed those new requirements primarily in connection with Edison Mission. {Item # 4 Sold 2 Edison Mission 7.75% Senior Bonds Maturing in 2016 at 73.25; Item # 3 Edison Mission Bonds; see also EPA news release on new emissions rule and Reuters news article on how EPA emissions rule will impact U.S. coal capacity}

I am not sure that environmentalists, the Obama administration and the EPA fully appreciate how electricity requirements are met  in the U.S., or how that demand will be met with a significant number of large base load generating stations shut down. Power costs will shoot up at a minimum.

S & P placed Cenveo's debt on a negative outlook, noting the recent difficulty in refinancing that will leave a significant portion of CVO's 2013 bond outstanding. TEXT I recently made the same observation. CVO

With stocks purchased as part of the Lottery Ticket Basket Strategy, I do not need to fully comprehend a firm's products. At best, I have only a superficial understanding of the products made by PLX Technology (PLXT). Yesterday, this company issued a press release announcing a new 10GBase-T PHY Optimized for ToR Switches. This is a snapshot of the first paragraph of that press release:

The RB thinks that is really cool. Bought 70 PLXT at $3.37-a LT; and PLXT (2/23/12 Post)

1. Bought 2 RadioShack 6.75% Senior Bonds Maturing 5/15/2019 at $80 Last Friday (Junk Bond Ladder Basket Strategy)(see Disclaimer): I recently discussed RSH in connection with a LT purchase of its common shares. Item # 3 Bought 40 RSH at $6.89-LT CATEGORY I mentioned this 2019 senior bond in that post and discussed RSH's debt which appears manageable to me. 

According to FINRA, this bond is rated Ba3 by Moody's and B+ by S & P. 

Assuming RSH survives to pay off this bond in about seven years, I have a $400 profit built into this position plus semi-annual interest payments. 

This bond was originally offered in a private placement which is typical. That offering occurred in May 2011. Last October, the bond was registered with the SEC and consequently became available for purchase by the hoi polloi

In addition to my earlier comments, I would note a recent development concerning an agreement with a Malaysian retail group called Berjaya Retail Berhad. RadioShack Announces Southeast Asia Expansion With Berjaya In this deal, Berjaya is expected to open 1000 RSH franchise locations in ten Southeast Asian countries. When I read this news release, I thought that it was a significant positive development, but investors did not respond as the stock continued to drift sideways to southward on the day of the press release. RSH Historical Prices Another investor picked up on this development to support his buy recommendation, Seeking Alpha.

Instead of buying the stock, however, I decided to pick up the bond which gives me a guaranteed 10.742% annualized return provided RSH survives to pay off the principal at maturity and to make all interest payments.

My confirmation states that the current yield at my cost is 8.395%, while the yield to maturity is 10.742%.

2. Sold 50 SHOPRD at $25-Roth IRA (see Disclaimer): SHOPRD pays a 8% cumulative dividend on a $25 par value.  Bought 50 SHOPRD at 24.15 in Roth IRA PROSPECTUS SUPPLEMENT

With two quarterly dividend payments, the total gain for this position was $78.47. The position was bought on 7/7/11 for a total cost of $1,214.5. 

I still own 50 shares of SHOPRA. 


Sunstone Hotel Investors Inc. 8.00% Cum. Redeem. Pfd. Series D  (SHO.PD) at $25 yesterday.

I have been raising my cash level in the ROTH IRA just in case the market repeats its performance from last year, where strength early in the year gave way to a significant correction. 

3. BOUGHT 40 GGAL at $6.72 Last Friday-LT Category (Lottery Ticket Basket Strategy)(see Disclaimer)Grupo Financiero Galicia S.A. is the holding company for the Banco de Galicia y Buenos Aires, which operated 239 bank branches in Argentina as of 12/31/2010.

Holding Company Website: GFG HOME

Press Release Announcing 4th Quarter and 2011 Earnings: .pdf That information is also filed with the SEC as an exhibit to Form 6-K. SEC Filed Press Release 

Profile at Reuters. In an article at Reuters, it is stated that GGAL reported 4th quarter net profit of 355.1 million pesos or $82.5 million, up 87% from the year ago period. This is the number in the above referenced press release. That release also states that the earnings were .286 Pesos per share or 2.86 Pesos per ADS. Each ADS share is equal to 10 ordinary shares. 

At Bloomberg, I noted that the estimated P/E for 2012 was 4.02, but can not verify that number. The YF Key Statistics page shows a trailing P/E of 3.29; price to sales at .64 and price to book at 1.01 as of last Friday when I purchased the shares. 

Some articles about this bank can be found at

This LT selection was based primarily on valuation. I do not purport to know much about this bank. I can look at a chart and see that it has been banged up pretty good over the past year. The stock traded at over $14 in August 2011 and fell precipitously thereafter.  GGAL Interactive Chart For most of 2012, the  stock has been meandering between $6 and $8.  A smashed stock price is another LT characteristic. 

Part of the problem is linked to the Argentine government, as discussed in this Motley Fool article. 

I recall reading a book many decades ago that discussed what went wrong with Argentina. While I am a little fuzzy on the details, there was a time around the Civil War when the GDP of the U.S. and Argentina was about the same. A century ago, there were only seven countries in the world more prosperous than Argentina. What Happened to Argentina? - The problem has been the government that is explored in this Wikipedia article on the Economic history of Argentina. Perhaps, some lessons have been learned and mistakes from the past will not be repeated with such frustrating regularity. Since most people do not learn anything from history, and will repeat the same mistakes over and over again,  I would doubt that result.

Earlier this week,  Argentina's national statistics agency, Indec, reported that GDP increased 7.3% in the 2011 4th quarter, better than the consensus estimate of 7%. Argentina's central bank is forecasting 6% growth in 2012.

Grupo Financiero Galicia S.A. ADS (GGAL) has been sliding since my purchase, closing at $6.38 in trading yesterday.  The 52 week range is between $5.6 and $14.76. 

Tuesday, March 27, 2012

Travelport/SOLD 30 GRTPRF at $25.42-LT/Bought 50 SYMM at $5.55-LT Category/Sold 1 RRD 6.625% Senior Bond Maturing in 2029 at 82

A 37 page report from Goldman Sachs, titled "The Long Good Buy; The Case for Equities" is available at SCRIBD. I made the same basic point in a May 2009 Post titled "To Professor Siegel: Time for a Re-Think". Assuming an investor has a time horizon spanning several years, possibly a decade or two, stocks will most likely provide much better total returns than bonds. It would not be going to far out on a ledge to predict that the S & P 500 will outperform a ten year treasury purchased with a 2% yield over the next ten years. I made the same point in the foregoing post from 2009. Even with the rise in stocks since March 2009, this thesis still holds, and GS provides a large number of charts and obvious points to support that thesis.

The WSJ reported yesterday that several insurance companies were preparing bids for ING's Asian insurance operations, with the bids possible reaching $6 billion.

RRsat announced a 23 cent per share dividend. The company will withhold 25%-30% for Israeli taxes. I recently bought shares as a LT in a taxable account. Bought 50 RRST at $3.95-LT Category

The CBOE Volatility Index  (VIX) for the S & P 500 fell .56 yesterday to close at 14.26.

The CBOE NASDAQ 100 Volatility Index  (VXN) fell.65 to close at 15.92.

The DJIA Volatility Index  (VXD) fell .51 to close at 13.18. Generally, this index will be less volatile than other major indexes.  Further Discussion of Volatility and Asset Allocation (November 2008 Post)

1. Travelport (own 3 bonds): The prices of my Travelport bonds have deservedly declined since my purchase based on subsequent events, some of which are discussed in an earlier posts. Item # 3  Update on Travelport; Item # 1 Travelport.

Last week, Travelport announced its 2011 4th quarter results. Press Release dated March 22, 2012  The company reported 4th quarter net revenue of $465 million and operating income of just $4 million. The adjusted EBITDA number was reported at $106 million, down from $115 in the 2010 4th quarter. On a GAAP basis, the company reported a loss $82 million. Of that amount, $22 million originated from Travelport's equity investment in Orbitz Worldwide. 

2. Sold 30 GRTPRF at $25.42 (Lottery Ticket Basket Strategy)(see Disclaimer): GRTPRF provided me with the best total return for a LT selection. The realized gain was over 1500% plus annual dividends that exceeded my adjusted cost basis since the 4th quarter of 2008. The purchase was originally made during the Dark Period at $2.9, and the cost basis was adjusted down some for dividends classified as returns of capital.

The coupon is 8.75% on a $25 par value, and the issuer, Glimcher Realty, did not miss a cash dividend payment. As I noted when I bought this security in November 2008, the price was based on the assumption that there was a high probability that the security would become worthless, which obviously did not happen. I just sold this preferred stock at a price above its par value:  

2012 GRTPRF 30 Shares +$708.86/Adjusted Cost Basis $45.77
Before return of capital adjustments, the original total cost basis was $95 with a $8 commission.

The annual dividend payment on 30 shares was $65.64, more than my adjusted cost basis:

2011 GRTPRF Dividend Payments on 30 Shares 
The next ex dividend date is 3/28/12. 

Glimcher Realty just concluded an offering of common stock. The company sold 20 million shares at $9.9.  I also owned the common shares as an LT, buying the position at $1.61 and  at $2.79. I sold that position at $9.5. Sold 100 GRT at $9.5 (May 2011). 

3. BOUGHT 50 SYMM at $5.55 Last Thursday (Lottery Ticket Basket Strategy)(see Disclaimer): Symmetricom is a leading provider of "highly precise timekeeping technologies, instruments and solutions".

Company website:  Time Synchronization Solutions
Profile page at Reuters
Key Developments page at Reuters
Last Filed Annual Report on Form 10-K for the F/Y ending 7/3/11

For SYMM's second fiscal quarter, which ended 1/1/12, the company reported net income of $2.445 million or 6 cents per share on revenues of $58.294 million. As of 1/1/12, the company had $22.794 million in cash and cash equivalents and another $35.352 million in short term investments. SEC Filed Press Release Together, that cash equaled about $1.39 per share. 

Some pertinent data found at YF's Key Statistics' page:

Forward P/E 10.92
Trailing P/E 34.38 
Price to Sales=1.05
Price to Book=1.27

Those numbers will, of course, change with the stock price, as well as future data. Those were the figures on the day of my purchase last Thursday. 

The current consensus E.P.S. estimate, made by just two analysts, is 45 cents for the F/Y ending June 2012 and 51 cents for the next F/Y. SYMM Analyst Estimates 

Unlike most LT selections, the stock price has not been smashed recently. For the most part, the five year chart shows a channel trade between $4 to $7 since July 2007. SYMM Interactive Chart The stock did trade over $16 during the Nasdaq bubble, but that has more to do with the madness of crowds and mobs.

At its current price and financial position, I viewed the stock to be reasonably priced at $5.55 for a small buy. Possibly, this company will become an acquisition target for a much large company involved in scientific instruments.

SymmetriCom rose 22 cents or 3.86% in trading yesterday to close at $5.92.

Headknocker cut the RB loose recently, as noted in a 3/9/12 Post, which has inevitably led to an unusual number of LT buys, bringing the total basket up to around 50 stocks. HK may need to place a harness on RB. "Squash the Nit Wit", LB implored.

4. Sold 1 R.R. Donnelly 6.625% Senior Bond Maturing in 2029 at 82 Last Week (Junk Bond Ladder Strategy)(see Disclaimer): I took about a $100 loss on this bond, but was near break-even with the interest payments. Bought 1 R.R. Donelley 6.625% Senior Bond Maturing 4/15/2029 at 93 (May 2011).

I substituted yesterday another, riskier junk bond that matures in 2015 that will pay me considerably more than this RRD long term bond. It will probably be next Thursday before I will discuss the new one. While I increased the credit risk with the new bond, compared to the 2029 RRD bond, I substantially reduced the interest rate risk with the swap.

I still own RRD bonds maturing in 2017 and 2021: Bought 1 R.R. Donnelley 8.875% Senior Bond Maturing 5/14/2021 at 92.69;  Bought 1 R.R. Donnelley 6.125% Senior Bond Maturing 1/15/2017 at 89 

Monday, March 26, 2012

UPDATED CEF TABLE/HPQ CVO MTOR/HARLAND CLARKE/Sold 50 HBAPRF at $20.65/Bought 50 HMA at $6.87-LT Category

Meritor (MTOR) reaffirmed its guidance for its 2012 fiscal year ending in a SEC Filed Press Release The company expects adjusted earnings to be between $1.08 to $1.39 per share. That reaffirmation last Wednesday was sufficient to cause a 12.6% pop in the share price. I own two senior bonds. Bought 1 ArvinMeritor 10.625% Senior Bond Maturing on 3/15/2018 at 96  Bought 1 ArvinMeritor 8.125% Senior Bond Maturing 9/15/2015 at 93.5 On 3/7/12, the common shares closed at $6.66 and at $8.48 last Friday. MTOR Stock Chart

Cenveo priced its new 11.5% senior notes due in 2017 and a 7% convertible also due in 2017 last Friday. The 11.5% 2017 senior notes were issued at 96.238. The net proceeds from these offerings will be about $291.7 million.

The proceeds will be used to fund a tender for existing bonds. Earlier, the company had conditioned the tender on being able to sell "at least $450 million". Cenveo Announces Cash Tender Offers for Its Outstanding Debt Securities I then noticed a press release on 3/8/12 that the company was commencing an offering of $450 million in senior notes due in 2020. Cenveo Announces Commencement of Senior Notes Offering That had to flop since the next news items were an offering for the 2017 convertible debt, Commencement of Senior Exchangeable Notes Offering, and a limit on the amount CVO was willing to accept of its 2013 subordinated bonds. Cenveo Announces Amendments to Its Pending Cash Tender Offer for Its Outstanding 2013 Senior Subordinated Bonds It seemed to late last week that the company was having some difficulty floating this refinancing, and the common shares fell significantly in price.

I previously sold two of the 2013 senior subordinated bonds before these events took place.  Sold 2 Cenveo 7.875% Senior Sub Bonds Maturing in 2013 at 95 Averaged Down by Buying 1 Cenveo 7.875% Senior Subordinated Maturing 12/1/2013 at 81.5 I will keep an eye on the pricing of that bond and the new 2017 senior bond when it becomes available for purchase by the public. Cenveo's common shares closed at $3.43 last Friday after closing at  $5.23 on 5/13/12. CVO Stock Charts

Hewlett-Packard's Board voted to increase the quarterly dividend to 12 cents per share from 10 cents. Form 8-k Over 200 million votes were cast against the re-election of several Directors including Marc Andreessen, Rajiv Gupta, John Hammergren and G. Kennedy Thompson. The most "no" votes, 249+ million were cast against Hammergren. Over 276+ million "no" votes were cast against executive compensation.

In a research report summarized in Barrons, a Bernstein analyst reaffirmed outperform ratings on KO and PEP based on positive sales trends in Western Europe. I own both, with the larger position in KO:
KO Unrealized Gain as of 3/23/2012=$2,748.02

1. Harland Clarke (own three 9.5% senior bonds maturing in 2015): HC reported a net loss of $78.9 million for the 2011 4th quarter on revenues of $403.7 million. SEC Filed Press Release The loss was primarily due to a non-cash impairment charge of $109.2 million or $93.3 million after-tax relating to the GlobalScholar and Spectrum K12 acquisitions and other items as explained in the press release:

Adjusted EBITDA for the 4th quarter was calculated by the company at $111.6 million, down 4.7% from the 4th quarter of 2010. 

Harland Clarke also filed its 2011 Annual Report. Harland Clarke Financial Solutions estimated that its backlog was $399.3 million as of 12/31/2011.  The company has too much debt in my opinion, and there is a lot of senior secured debt as shown at pages 39 and F-26 et. seq.  As of 12/312011, the Company owed $1.719 billion on its senior secured credit facility. I own a senior unsecured note, and HC shows at page F-27 of its Annual Report an outstanding balance for that note of $271.3 million. There is also a senior floating rate note due in 2015 with $204.3 million outstanding.

On the same day as the earnings release, Harland announced an acquisition that makes no sense to me, but it is easy to see the reason for it. For $70 million in cash, Harland purchased New Funeuil which engages in call center operations, staffing, toll collections and toll road services and back office operations according to Harland's SEC filing. Ronald Perelman owns, indirectly or directly, 100% of the companies being sold to Harland in this transaction. HCHC Faneuil 8-K And he controls Harland. This is a link to Faneuil's website. This is a link to Perelman's MacAndrews & Forbes Holdings website. More about Perelman and MacAndrews & Forbes can be found at Wikipedia.

I did not note any significant movement in the 2015 bond in response to the foregoing. FINRA Information on Harland's 9.5% Senior Bond Maturing 5/15/2015 

2. Sold 50 HBAPRF at $20.65 (see Disclaimer): I sold this security in the same account where I recently purchased 100 shares of MSPRA at $18.9. (3/19/2012 Post). MSPRA pays the greater of 4% or .7% above the 3 month LIBOR rate on a $25 par value. HBAPRF pays the greater of 3.5% or .75% above the 3 month LIBOR rate on a $25 par value. Prospectus Both securities pay non-cumulative qualified dividends. The HBAPRF shares were bought at $19.89 last August. 

3. BOUGHT 50 HMA at $6.87 Last Wednesday (Lottery Ticket Basket Strategy)(See Disclaimer): Health Management Associates (HMA) operates hospitals and other health care facilities in non-urban areas. As of 12/31/2011, the company operated 66 hospitals with a total of 10,330 licensed beds. A list of those facilities can be found starting at page 32 of HMA's recently filed Form 10-K.

I was allowed to exceed the $300 limit for LT purchases due to prior profitable trades. In this strategy I can exceed $300 by the amount of the total net realized gains. I have no prior losses in HMA, so my total prior trading history was a net realized gain of $123.33:

The purchases made in 2010 were not classified as Lottery Tickets and were made at higher prices than last week's LT purchase. Bought 100 HMA at $8.82 (April 2010); Sold 100 HMA at 9.28 (May 2010); Bought 50 HMA at 7.55 (July 2010);  Sold:  50 HMA @ 8.57.  So I view that this stock has more risk attached to it now even at a lower price.  

I do view the stock as undervalued at its current price. 

On valuation, the trailing P/E is less than 10. The forward P/E on estimated 2013 earnings is 7.92. The five year estimated P.E.G. is .66. Price to sales is .3. HMA Key Statistics The current consensus E.P.S. for 2012 is 88 cents. Moreover, the 2011 4th quarter adjusted E.P.S. number was 26 cents, beating the consensus estimate of 20 cents. SEC Filed Press Release Announcing 2011 4th Quarter Earnings On the same basis, the company earned 16 cents for the 2010 4th quarter. 

2011 Annual Report: Form 10-K For 2011, HMA reported $5.804 billion in revenues and net income of $178.710 million or 72 cents per share from continuing operations (86 cents on an adjusted basis).

One potential long term positive would be the provision requiring individuals to purchase health insurance or pay a fine, which is scheduled to take effect on 1/1/14, pursuant to the Patient Protection and Affordable Care Act. If the GOP has the power, it will repeal this law. The Supreme Court will likely decide whether the law is Constitutional later this year, and the case will be argued this week. NYT If this law survives with its insurance requirement, then it will cut down significantly on HMA's bad debt problems. The provision for doubtful accounts was 12.4% of net revenues as of 12/31/2011. 

While I believe that HMA is undervalued, it does come with a lot of baggage, and most of that baggage is common among publicly traded hospital companies. 

Medicare and Medicaid will likely be curtailing reimbursement rates as the U.S. budget problems deepen in the years to come. Some changes, already enacted into law, are discussed at pages 12-16 of the 2011 Annual Report.  

Potential and alleged violations of federal law are a constant source of problems. The most current and serious alleged violation against HMA may be by a former director of compliance Paul Meyer who was also a 30 year veteran of the FBI.  Mr. Meyer alleges that HMA improperly billed Medicare through improper patient admissions. Businessweek His allegations are summarized in an order from Federal District Court Judge Scola remanding the case back to a state court where Meyer initially filed it. MEYER v. HEALTH MANAGEMENT ASSOCIATES, INC. - January 20, 2012. 

While I would not predict the outcome of this suit, the allegations are worthy of note as providing possible future downside catalysts. Downside pressure on the stock price has already resulted from those allegations, as have a number of class action lawsuits. Key Developments page at Reuters

Another issue is the amount of leverage. As of 12/31/2011, long term debt and capital lease obligations totaled $3.489489 billion. The debt is discussed starting at page 74 of the 2011 Annual Report. 

Due to my assessment of the negatives, I have classified any potential purchase as a LT, which limits my total exposure to $300 plus any prior net realized gains.

I did read a recent Credit Suisse report on HMA, available to Schwab clients. The CS analyst has an outperform rating on the stock with a $12 price target. Barclays recently reiterated an overweight with a $8 price target.  

I believe the company paid a special $10 per share dividend in March 2007. HMA Historical Prices It has not paid a dividend since 2008 and is not likely to do in the foreseeable future in my opinion. Over the past two years, the stock did briefly trade above $11 in 2011. HMA Interactive Chart  I would likely sell my small position when and if the price returned to $9 which was last crossed in November 2011.

Health Management Associates Inc. Cl A fell 7 cents to close at $6.66 last Friday.

4. Updated CEF Portfolio TABLE: The following table updates my last posting of this table and corrects a few errors in it. For a few CEFs, I have positions in multiple accounts and will sometimes add or subtract from a position in one account without making a change in this table. The last table, for example, did not include a recent add of 100 IRR in a retirement account and only showed the 100 shares owned in a taxable account. I also recently substituted 200 IMF for 200 of the functionally equivalent WIW. I also received last Friday reinvested shares purchased with dividends paid by RVT and RMT:

Currently, I am only reinvesting the dividends paid by ADX, RMT, RVT, CHN, SWZ, EOI, IGR and IGD.

CEF Portfolio as of 3/23/12

Friday, March 23, 2012

Is Mitt Romney a Pathological Liar?/Bought 50 PWER at $4.66-LT Category/Bought 50 of the Stock ETF DIVS at $25.15/Sold 100 ETO at $19.86

The Trust Certificate, DKQ, has been called by the owner of its call warrant. Structured Asset Trust Unit Repackagings (SATURNS) Series 2003-7 Trust Receipt of Notice of Intent to Exercise Warrants in Full I did profitably trade this security, which contains a senior bond from May Department store, but no longer own it. Instead, I transitioned to just 1 senior bond from Macy's which acquired May. Bought 1 Macy's Bond Maturing in 2030 @ 99.5/Sold 50 DKQ at 23.32 (1/10/11 Post).

A senior executive from BHP Billiton said Tuesday that China's demand for iron ore is "flattening out".

HSBC's manufacturing survey for China, released yesterday, continues to show contraction falling to 48.1 in March from 49.6 in February. That problem is linked to Europe's recession.

Markit reported yesterday that its eurozone PMI index for services and manufacturing declined to 48.8 in March from 49.3 in February.

The U.S. economy is not immune to slowdowns in Europe and China.

The Australian dollar has been sliding some against the USD based on recent news about China's economy, falling from 1.06 on 3/19 to 1.04 yesterday. AUD/USD Currency Conversion Chart Precious metals have also fallen in price.

There was no Canadian withholding tax for the ERF dividend recently paid into my ROTH IRA account. The tax was withheld for the ERF dividend paid into a taxable account.

The U.S. treasury sold 10 year TIPs yesterday with a negative yield. .pdf Investors are willing to accept a negative yield of -.089% for the inflation protection provided by the security. Advantages and Disadvantages of Treasury Inflation Protected Securities In a recent post, I took a snapshot of the unrealized gain from 3 ten year TIPs bought at a 2009 auction in my ROTH IRA. Stocks, Bonds & Politics The coupon then was 1.875%, hardly worth mentioning, except investors are willing to pay me close to $3,800 for those 3 bonds now which generated less than $60 in interest payments to me last year. FINRA - Investor Information on TIP Maturing 7/15/2019

A recent positive article on SandRidge Energy can be found at Forbes, where the author interviews money manager Graham Tanaka who believes the stock "is an easy double-if not triple-from its current price". An author of an article at the Motley Fool believes that SD's aggression could be its downfall. I own SD as part of my LT basket strategy. Bought 40 SD at $7.68-LT Category The shares of SandRidge Energy had a bad day yesterday, closing at $7.63, down 33 cents or 4.15% for the day. I would agree with the argument that there is too much motion at Sandridge.

An article published by Morningstar discusses several esoteric reasons to avoid Exchange-Traded Notes. I do not own any.

According to news reports, Robert Bales, the American soldier accused of murdering 17 Afghanistan civilians, including 9 children, joined the military after an elderly man filed an arbitration case against him for securities fraud. The arbitration panel later awarded that investor $1.2 million against Bales. Reuters ABC News

Jonathan Chait wrote an article for the New York arguing that Mitt Romney lies a lot but he is not a pathological liar, though Chait admitted in an earlier article that "Romney appears unusually prone to dishonesty" even for a politician. In a similar vein, I would note  articles published by Esquire and Vanity Fair.

This observation has nothing to do with ideology.

Chait also wrote a history summarizing Romney's evasions on health care.

I do believe that Romney is not capable of telling the truth with any consistency and will not suddenly change that personality characteristic when and if he becomes President. A typical false claim uttered by Romney is explored in this recent article at I have no reason to dispute Newt Gingrich's statement that Romney is a liar. Gingrich: Mitt Romney is a liar - CBS News

Frequently, politicians from both tribes will state an opinion as a fact, when the opinion is primarily based on ideological beliefs of a political party rather than the best evidence. An example would be Romney's frequent statement that Obama made the recession worse. Such a contention is not supported by the best evidence, as noted in this article at the NYT, but I would not call the statement a lie, which is common characterization among liberals, because I view the statement as more of an argument than a knowing misrepresentation. All politicians lie in that fashion, by stating an argument or an opinion as a fact.

Never before has a toy so aptly summed up a serious political candidate for President. The stock of Ohio Arts, the manufacturer of the Etch A Sketch toy, soared in value yesterday due to its association with Romney's substance as a candidate. CNN  While Romney claims that the Etch A Sketch comment by a top aid, Eric Fehrnstrom, dealt with organizational changes occurring after a candidate receives the nomination, Fehrnstrom was clearly referring to changing substantive positions in order to win the election. YouTube

{This toy is made by Ohio Art,, and I did not find any SEC filings for this company after 2005 when the shares were delisted. While there were news reports about the stock soaring yesterday, apparently only 800 shares traded on the pink sheet exchange, OART Ohio Art Company. I would not touch it!}

1. Bought 50 PWER at $4.66 Last Monday (Lottery Ticket Basket Strategy)(See Disclaimer): As with all Lottery Ticket selections, Power-One's stock price has been smashed with some justification. One could entertain a good faith argument on whether it has been smashed too much. A five year chart reveals a stock trading below its 200 day SMA since January 2011. PWER Interactive Chart The stock did trade in a channel roughly between $10 and $12 in 2011 before breaking down in early 2011. 

Among other products, PWER is a major manufacturer and supplier of photovoltaic inverters used in the renewable power industry to convert wind and solar energy into energy usable in an electric grid. While that sounds cool to the RB, and the OG wants to support clean energy, the solar power energy has been in a world of hurt for over a year now. Solar stocks have been on a downward spiral since 2008, as manifested in this five year chart of the Guggenheim Solar ETF (TAN) that just underwent an ignominious 1 for 10 stock split.

In addition to inverters the company also makes converters and other products used in the data service industry.

I have had Power-One on my LT stock monitor list, which has about 200 names, for over a year but decided to pull the trigger after reviewing this article at Seeking Alpha, published March 15th which also discusses my recent LT buy of RRST. Bought 50 RRST at $3.95-LT Category (3/8/11 Post).

With LT buys, I have no financial pressure, given the small sum associated with each selection. I can wait for a turnaround. Possibly, if every LT selection went to zero, there would be a slightly material impact on Headknocker's capital base, but that event is unlikely to happen. The primary purpose of this strategy is to entertain the RB and keep it from interfering with LB's serious work.

Most LT's are selected based primarily on statistical criteria. The following is a summary of some of this data for PWER taken from YF's Key Statistics page, with the financial data based on information as of 1/1/12 and the stock price at $4.51:

Trailing P/E: 5.12
Forward P/E: 6.73
Price to Sales: .55
Price to Book: 1.38
5 Year Estimated P.E.G.= .53
Total Cash Per Share: 1.68

Of course, this kind of data, except for total cash per share, changes with the stock price.

Profile page at Reuters

The Key Developments page at Reuters points to another problem, a series of revenue warnings by the company.

The 2011 Annual Report shows at page 30 that PWER reported net income of $138.5 million on net sales of $1.0167 billion. This was for the fiscal year ending 1/1/12. This equated to a net income per share of $1.08, down from $1.3 in prior year. The balance sheet does not show any long term debt.

For the quarter ending 1/1/12, the company reported net income of 21 cents per share.  SEC Filed Press Release

S & P does have a report on PWER, rating the stock 3 stars with a $5.5 12 month target price.

This selection may need a lot of patience. As with all LT selections, I can afford to wait.

PWER declined 6 cents in trading yesterday to close at $4.51.

2. BOUGHT 50 Shares of the Stock ETF DIVS AT $25.15 Last Monday (see Disclaimer):
DIVS is a new ETF offering from Russell ETFs.  The name of this ETF describes its focus: Russell Small Cap High Dividend Yield ETF (DIVS). The expense ratio is .38%, and the fund currently has 150 holdings. FactSheets/DIVS.pdf  A list of the holdings can be found at Russell Small Cap High Dividend Yield ETF (DIVS) - Product Holdings. The general idea will be to average down when and if the price declines more than 7.5% plus commission cost or less than $23.1. Once I own 100 or more shares, I may start to reinvest the dividend.

Recently, I have gingerly been adding several stock ETFs just in case the VIX forms a Stable VIX Pattern.

Another fund focusing on small cap dividend payers is the WisdomTree SmallCap Dividend Fund (DES).  Its expense ratio is currently .38% and dividends are paid quarterly. The fund has a large number of holdings. Among the top ten weighted holdings are a number of BDCs and REITs.

Russell Small Cap High Dividend Yield ETF declined 30 cents in trading yesterday to close at $24.68. I may not have to wait for very long to average down.

3. Sold 100 of the CEF ETO at $19.86 Last Tuesday (see Disclaimer): I intend to plow the proceeds from this transaction into an average down. ETO was bought at $18.68 earlier this year and pays monthly dividends.

Eaton Vance Tax-Advantaged Global Dividend Opportunities Fund closed at $19.59 yesterday and went ex dividend for its monthly distribution on 3/21/12.