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. 

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