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 

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