Wednesday, June 20, 2012

Updated Regional Bank Basket Table/Partial Redemption SCEDN/REM ETF/FCBC/Household Net Worth Decline 2005-2010

The Census Bureau released yesterday estimates of U.S. household net worth in 2010. Newsroom: Income & Wealth: New Census Bureau Estimates from 2005 to 2010 Show Changes in Household Net Worth U.S. household net worth declined by 35% between 2005 and 2010. The median value of stock portfolios fell 33%, and home equity declined 28%.

Householders between 35 and 44 had the largest decline of any age group, with their net worth declining 59 percent. Excluding equity in a home, the average net worth in 2010 was $15,000 with the total including equity in the home at $66,740. The data can be downloaded at Wealth and Asset Ownership - People and Households - U.S. Census Bureau

I received an email from Fidelity confirming that the 2023 U.S. West Communications senior bond will be redeemed by the issuer:

I also own 1 of these bonds in the ROTH IRA. As noted in Monday's post, I anticipate that this bond will be redeemed at 100.34 plus accrued interest. Qwest Proposes to Redeem 2023 Senior Bond I believe that the bond will be redeemed on 7/20/12.

First Community Bancshares (own) was upgraded by Keefe Bruyette & Woods to outperform and the price target to $16. Keefe raised its E.P.S. forecast for 2012 and 2013 to $1.25 and $1.4, respectively. The upgrade was apparently based on FCBC's FDIC assisted acquisition of Waccamaw Bank which was headquartered in Whiteville, North Carolina. This acquisition is discussed in a SEC Filed Press Release. I counted 16 Waccamaw branches, with 12 in NC and 4 in SC:

I own just 50 shares. Item # 3 Bought 50 FCBC at $12.5 First Community (FCBC) rose 40 cents or 3.12% to close at $13.24 yesterday. Regional Bank Basket Strategy

iShares FTSE NAREIT Mortgage PLUS Capped Index Fund (REM) was ex dividend for its $.44075 per share distribution. REM is one of highest yielding stock ETFs, possibly the highest yielding one. I own two hundred shares, with 100 of those in the ROTH IRA. This fund owns mortgage REITs. Annaly Capital was weighted at 22.35% and American Capital Agency at 17.68%, as of 6/18/12. iShares FTSE NAREIT Mortgage Plus Capped Index Fund (REM): Holdings I own this ETF as an alternative to buying individual mortgage REITs, though I do own 50 shares of Annaly and 100 shares of MFA Financial in the Roth IRA. Adjusted for the dividend, REM rose 8 cents yesterday to close at $14.

I did not have any purchases yesterday. I am baffled that the market apparently believes the Fed can pull another rabbit out of its hat.  The VIX has fallen below 20 again, closing yesterday at 18.39. It hit 17.54 in the early afternoon and rose into the close however. There were 24 consecutive closes above 20 and three of those were over 25. ^VIX Historical Prices The whipsaw action in the VIX between 20 to 30, with temporary spurts over 30 and below 20, is a defining characteristic of an Unstable Vix Pattern, Phase 1: Mark Hulbert and the Use of the VIX as a Timing Model The VIX has been in an Unstable Vix Pattern since the Trigger Event in August 2007. VIX Chart from 2007: Alerts and Triggers Major Disruption of Cyclical Stable Bull VIX PatternVix Charts from 2004 2005 2006 Stable VIX Patterns Phase 1 and Phase 2VIX and S & P Compared 1990 to 1997

1. Partial Redemption of SCEDN: I lost 9 out of 50 shares last Monday to a partial redemption of SCEDN. SCEDN is an equity preferred floating rate stock issued by Southern California Edison. I bought 50 shares back in 2009. Item # 4 BOUGHT 50 SCEDN AT $84 Par value for this security is $100. SCEDN pays qualified dividend at a 1.45% spread over the highest of the 3 month LIBOR, the ten year U.S. treasury or the 30 year treasury. Prospectus Supplement Dividends are paid quarterly. I still own 41 shares.

I realized a long term capital gain on the 9 shares:
2012 SCEDN 9 Shares Partial Redemption by Issuer +$142.56
I see no reason to sell this security.  I may develop a reason when and if Congress raises the long term capital gain rate and/or eliminates the 15% cap on qualified dividends:

SCEDN 41 Shares Unrealized Gain as of 6/19/12=$628.94
Advantages and Disadvantages of Equity Preferred Floating Rate Securities Snapshots of trades in this category are at the end of that post. This last transaction brings me to $8,611.51 in realized gains. Although these securities are technically part of equity capital and pay qualified dividends, I lump them into my bond allocation since their bond characteristics are more dominant. Common stock is also equity but represents an ownership interest in the business. An owner of an equity preferred stock has no such ownership interest, except in the relatively rare instance where the security can be converted into common stock. In most equity preferred stocks, the owner has only the right to a dividend with a priority in the capital structure lower than any bond.

Southern California Edison Co Series A PFD closed at $99.5 yesterday.

2. Updated Regional Bank Basket Table (Regional Bank Basket Strategy): After some recent sells, this basket now consists of 28 stocks. I am not tracking reinvested dividends in this table.

I have noticed that this basket will frequently rise or fall more than the major market averages, both up and down. Yesterday, the portfolio increased $757.54 or 1.88%. The DJIA rose .75%.

The dividend yield is calculated by Yahoo Finance at yesterday's closing price. The yield shown for FFBC is way off.  As previously noted, this bank recently raised its core quarterly dividend to 15 cents per share and is also paying a variable dividend representing the difference between its net income per share and that core rate. The most combined dividend was $.29 cents per share. First Financial Bancorp While the variable rate will change, and may not last, the dividend yield at a 29 cents per share quarterly rate would be 7.3% at a total cost of $15.88, yesterday's closing price, compared to the 3.8% shown in this table. I am reinvesting the FFBC dividend. Bought 50 FFBC @ 16.85ADDED 50 FFBC at $14.87.

Regional Bank Basket Strategy Table as of 6/19/12 (excluding reinvested dividends)

No comments:

Post a Comment