Tuesday, September 18, 2012

Sold 50 DIVS at 25.97/Sold 50 SYMM-LT/Sold 100 PBNY at $9.05/Added 100 EMLP at $21.32

This article, published at Seeking Alpha, compares Nokia's new Lumina 920 with IPhone 5. The Lumina appears to be as good, or slightly better, in some respects. I own 50 NOK as a Lottery Ticket. NOK: 2.97 -0.01 (-0.34%)

The Empire State manufacturing index, released by the N.Y. Fed yesterday, fell to -10.41 in September, the lowest reading since April 2009.

According to Barrons, the average junk bond yield broke the record low yield mark again yesterday with a 6.205% number.

The long treasury bond ETF, TLT: 119.72 +1.42 (+1.20%), recouped some of its recent losses yesterday. The iShares GSCI Commodity-Indexed declined 2.74% to close at $34.38. (ETN: DJP: 44.13 -1.19 (-2.63%) : iPath Dow Jones UBS Commodity Index).

1. SOLD 50 DIVS 25.97 Last Thursday (see Disclaimer): The sponsor for DIVS, Russell Investments, decided to terminate its 25 passively managed ETFs, which included DIVS, on or before October 24, 2012. WSJ I did not notice that news item until last Thursday.

As a consequence of that decision made by Russell, I did not see any reason to keep this security recently purchased at $25.15. I will simply deploy the proceeds into another fund.

2. Sold 50 SYMM at $6.66 Last Thursday (Lottery Ticket Basket Strategy)(see Disclaimer): The OG sold this one over the vehement protests of the RB.

2012 SYMM 50 Shares +$39.58
The only reasons given by the OG was that he wanted to sell one LT selection during the robust rally last Thursday.  Since he had forgotten the nature of this firm's business, and did not want to spend the time to figure it out, the position was jettisoned instead.

SYMM: 6.71 -0.02 (-0.30%)

3. Added 100 EMLP at 21.32 Last Friday (see Disclaimer): Back in July 2012, I made an initial purchase of this new ETF. Bought 50 of the ETF EMLP at $20.87 This fund will invest at least 80% of its net assets in firms, headquartered in the U.S. and Canada, that are part of the energy infrastructure sector.

I do not have much to add to that previous discussion except for the following.

This fund will own MLPs but will limit its ownership to no more than 25% of assets.

As previously noted, one serious problem with MLP ETFs is that they are organized as regular "C" corporations. Consequently, a MLP ETF is required to pay taxes on the taxable distributions paid by the MLPs as well as any gains from securities sales. Those "C" corporations will consequently estimate the amount of that tax liability and keep those funds. In effect, this creates a double taxation issue and will cause this type of fund to underperform the index.

The Investment Company Act of 1940 requires that no more than 25% of an open-end fund's assets can be invested in MLPs. That is the reason why those concentrated MLP ETFs have to form the "C" corporations, since those funds exceed that 25% limitation. MLP ETFs and ETNs

EMLP will own MLPs but will keep the weighting below 25% of the fund's assets. This will allow this fund to flow through the benefits of MLPs to its shareholders and to avoid the double taxation issue:
MLP Limited to 25% of EMLP's Assets 
‎Prospectus. This is a new fund and has not yet paid a dividend. Dividends will be paid quarterly according to the Prospectus (see page 13).

Sponsor's website: First Trust North American Energy Infrastructure Fund (EMLP). The expense ratio is high at .95%.


I own the following MLP ETFs: 200 YMLP, 100 AMLP and 100 MLPA: ADDED 100 YMLP at $18.75BOUGHT 50 of the ETF YMLP at 19.08-Taxable AccountBought 50 YMLP at $19.05-Regular IRABought 100 AMLP at $16.19; and Bought 100 MLPA at $14.75.

The rationale for choosing the ETF form of ownership, compared to the ETN or to owning individual MLPs, is explained in a previous post:

The EMLP type of ETF is a way to avoid all of these problems by limiting the MLP ownership to less than 25% of assets.

EMLP: 21.25 -0.11 (-0.51%)

4. Sold 100 PBNY at $9.05 Last Friday (Regional Bank Basket Strategy)(see Disclaimer): I bought these shares in June 2012:  Bought 100 PBNY at $7.4

2012 PBNY 100 Shares +$149.36
As previously noted, I made a decision to cut back on my regional bank basket in response to the Federal Reserve's statement that abnormally low interest rates would likely persist into 2015. This will place pressure over an even longer period on bank's net interest margin, making it difficult for them, along with higher regulatory costs, to increase profits. I am now about $5,000 below my minimum level of investment in this category, which is $40,000.

PBNY: 9.27 +0.08 (+0.87%) 

No comments:

Post a Comment