I finished writing this post today and decided to publish it before Saturday morning. The update for the regional bank and lottery ticket basket strategies will be unusually long and will be published next Monday.
Big Picture Synopsis:
Big Picture Synopsis:
Stocks:
Stable Vix Pattern (Bullish): VIX: 13.20 -0.22 (-1.64%)
Short Term: Expecting a 10%+ Correction (Market Not Cooperating)
Intermediate and Long Term: Bullish
I would just note that the S & P 500 closed today at 1,752.07 and at 1,099.23 on 10/3/11, Historical Prices | S&P 500.
Bonds:
Short Term: Slightly Bullish
Intermediate and Long Term: Slightly Bearish
The intermediate and long term forecast is based solely on interest rate normalization and assumes an average annual inflation increase of 2%-2.25% over the next ten years. The forecast embodied in today's closing price of the ten year TIP is an average annual CPI rate of 2.17%.
I have been adding bonds and bond like investments after changing my short term outlook to slightly bullish from slightly bearish. I changed the outlook to Bullish short term in my 10/9/13 Post. Due to the rally in bonds since that time, I have reduced the outlook to slightly bullish.
The recent economic data, such as the jobs report discussed below, has been anemic. On the day of that release, the ETF for the 20+ year treasury TLT rose $1.19 to close at $107.89. The intermediate term investment grade bond ETF, LQD, rose $.7 to $115.48.
The political dysfunction in Washington will cause more weakness in the current quarter than previously estimated prior to the GOP forcing a government shutdown. I have also delayed, as previously noted, the start of tapering until February-April 2014 and the end of QE to late 2015.
As a result, bonds have some breathing room under my current future forecast and I have been adding bonds and bond like investments as sources of income, but those will most likely be trades rather than long term holdings given my slightly bearish intermediate and long term outlook for bonds.
I have been adding bonds and bond like investments after changing my short term outlook to slightly bullish from slightly bearish. I changed the outlook to Bullish short term in my 10/9/13 Post. Due to the rally in bonds since that time, I have reduced the outlook to slightly bullish.
The recent economic data, such as the jobs report discussed below, has been anemic. On the day of that release, the ETF for the 20+ year treasury TLT rose $1.19 to close at $107.89. The intermediate term investment grade bond ETF, LQD, rose $.7 to $115.48.
The political dysfunction in Washington will cause more weakness in the current quarter than previously estimated prior to the GOP forcing a government shutdown. I have also delayed, as previously noted, the start of tapering until February-April 2014 and the end of QE to late 2015.
As a result, bonds have some breathing room under my current future forecast and I have been adding bonds and bond like investments as sources of income, but those will most likely be trades rather than long term holdings given my slightly bearish intermediate and long term outlook for bonds.
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Recent Developments:
The Labor Department reported that 148,000 jobs were added in September, with the unemployment rate declining slightly to 7.2%. Employment Situation Summary The expectation was for 180,000 jobs. The U-6 number declined to 13.6 from 13.7 in August. Table A-15. Alternative measures of labor underutilization Average hourly earnings for private employees rose 3 cents to $24.09. Over the past year, hourly earnings have risen by 49 cents. The average workweek was unchanged at 34.5 hours. Revisions to the August and July employment numbers resulted in an addition of 9,000 jobs.
The GOP shutdown of the federal government will significantly impact the October jobs report and will likely have some lingering effect thereafter. As noted in a WSJ article, several surveys have found that private employers have reduced hiring plans due to ongoing concerns about the budget disputes.
The GOP shutdown of the federal government will significantly impact the October jobs report and will likely have some lingering effect thereafter. As noted in a WSJ article, several surveys have found that private employers have reduced hiring plans due to ongoing concerns about the budget disputes.
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Corning (own)
Corning surged in price last Wednesday after announcing that it will acquire full ownership of Samsung Corning Precision Materials Company. Samsung Display will receive $1.9B in new GLW convertible preferred shares with a principal amount of $1.9B and will invest an additional $400M in GLW's new convertible preferred shares. GLW and Samsung will enter a new long term supply agreement for LCD display glass, lasting through 2023. GLW also authorized a share buyback of up to $2B. The deal will also give Corning access to the joint venture's $1.2B in cash. GLW released preliminary results for the third quarter in line with estimates. SEC Filed Press Release; Bloomberg; WSJ.com; Reuters
Item # 1 Bought 50 GLW at $11.98 (September 2012)
Closing Price 10/23/13: GLW: $17.52 +2.17 (+14.14%)
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All of the following securities were purchased during the week ending 10/18/13, as I moved some funds out of a MM fund yielding .01% into risk assets generating more income.
I added more bond and bond like investments throughout this week but will not be able to discuss those trades until next Saturday's post. I will have about 8 more of those to discuss.
1. Bought 200 PDT at $11.73 (see Disclaimer):
Corning (own)
Corning surged in price last Wednesday after announcing that it will acquire full ownership of Samsung Corning Precision Materials Company. Samsung Display will receive $1.9B in new GLW convertible preferred shares with a principal amount of $1.9B and will invest an additional $400M in GLW's new convertible preferred shares. GLW and Samsung will enter a new long term supply agreement for LCD display glass, lasting through 2023. GLW also authorized a share buyback of up to $2B. The deal will also give Corning access to the joint venture's $1.2B in cash. GLW released preliminary results for the third quarter in line with estimates. SEC Filed Press Release; Bloomberg; WSJ.com; Reuters
Item # 1 Bought 50 GLW at $11.98 (September 2012)
Closing Price 10/23/13: GLW: $17.52 +2.17 (+14.14%)
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All of the following securities were purchased during the week ending 10/18/13, as I moved some funds out of a MM fund yielding .01% into risk assets generating more income.
I added more bond and bond like investments throughout this week but will not be able to discuss those trades until next Saturday's post. I will have about 8 more of those to discuss.
1. Bought 200 PDT at $11.73 (see Disclaimer):
Snapshot of Trade:
Security Description: The John Hancock Premium Dividend Fund (PDT) is a leveraged balanced closed end fund. The common stock component includes electric utility and natural resource companies that pay decent dividends. Preferred securities would generally encompass more than equity preferred stocks or traditional preferred stocks, and would include trust preferred securities and European hybrids (in effect junior bonds). Some senior bonds may be found in the portfolio mix.
It would be helpful for a sponsor to specifically break out the various categories in the holdings list. As of 7/31/13, PDT owns several equity preferred stocks that would pay qualified dividends. I noticed several securities that pay interest including the following:
BGE Capital Trust (BGEPRB) 6.2% Trust Preferred (in effect a junior bond)
DTE Energy (DTQ) 5.25% Junior Subordinated Bond
DTE Energy (DTZ) 6.5% Junior Subordinated Bond
Duke Energy (DUKH) 5.125% Junior Subordinated Bond
Entergy Mississippi (EFM) 6.25% First Mortgage Bond
HECO Capital Trust III (HEPRU) Trust Preferred
SCE Trust 1 5.625% (SCEPRF) Trust Preferred
SCE Trust II 5.1% (SCEPRG) Trust Preferred
Telephone and Data Systems (TDI) 6.625% Senior Bond
Telephone and Data Systems (TDE) 6.875% Senior Bond
United States Cellular (UZA) 6.95% Senior Bond
The foregoing is not a comprehensive list of non-equity preferred stocks owned by this fund.
It would be helpful for a sponsor to specifically break out the various categories in the holdings list. As of 7/31/13, PDT owns several equity preferred stocks that would pay qualified dividends. I noticed several securities that pay interest including the following:
BGE Capital Trust (BGEPRB) 6.2% Trust Preferred (in effect a junior bond)
DTE Energy (DTQ) 5.25% Junior Subordinated Bond
DTE Energy (DTZ) 6.5% Junior Subordinated Bond
Duke Energy (DUKH) 5.125% Junior Subordinated Bond
Entergy Mississippi (EFM) 6.25% First Mortgage Bond
HECO Capital Trust III (HEPRU) Trust Preferred
SCE Trust 1 5.625% (SCEPRF) Trust Preferred
SCE Trust II 5.1% (SCEPRG) Trust Preferred
Telephone and Data Systems (TDI) 6.625% Senior Bond
Telephone and Data Systems (TDE) 6.875% Senior Bond
United States Cellular (UZA) 6.95% Senior Bond
The foregoing is not a comprehensive list of non-equity preferred stocks owned by this fund.
Data on the Date of Purchase: 10/16/13
Closing Net Asset Value Per Share: $13.53
Closing Market Price: $11.73
Discount to Net Asset Value: -13.3%
Average Discounts:
1 Year: 6.88%
3 Years: 6.88%
5 Years: 6.45%
I view it as material that my purchase was at twice the average 5 year discount.
CEFConnect Page for PDT
Sponsor's website: John Hancock Investments - Premium Dividend Fund
SEC Form N-Q (holdings as of 7/31/13)(unrealized appreciation 91M+)
Last SEC Filed Shareholder Report (period ending 4/30/13)
Closing Net Asset Value Per Share: $13.53
Closing Market Price: $11.73
Discount to Net Asset Value: -13.3%
Average Discounts:
1 Year: 6.88%
3 Years: 6.88%
5 Years: 6.45%
I view it as material that my purchase was at twice the average 5 year discount.
CEFConnect Page for PDT
Sponsor's website: John Hancock Investments - Premium Dividend Fund
SEC Form N-Q (holdings as of 7/31/13)(unrealized appreciation 91M+)
Last SEC Filed Shareholder Report (period ending 4/30/13)
Prior Trades: None. This one was purchased when its discount to net asset value per share made it attractive as a trade.
Rationale: (1) Monthly Income Generation: This CEF is currently paying a monthly dividend at $.0755 per share. Historical Distributions
At that rate and at a total cost of $11.73, the dividend yield wold be about 7.72%.
(2) Possible Appreciation in Share Price: When purchasing this type of security, I am hoping for a relatively quick return to an average historical discount to net asset value per share. A return to a 6.5% average discount over the prior five years would yield almost a 7% return with the net asset value remaining constant. If the NAV also rises, the potential for a greater return is enhanced over and above the dividend yield.
Risks: The risks are normal ones for a balanced CEF fund that uses leverage. The recent expansion in the discount to net asset value per share highlights a CEF risk.
Closing Price 10/24/13: PDT: $12.39 +0.07 (+0.56%)
2. Added 200 FAX at $6.08 (see Disclaimer): This is an average down from a recent 100 share purchase. A more complete discussion can be found in that recent post: Item # 6 Bought 100 FAX at $6.35 (6/15/13). As noted in that post, I was able to buy this one at $3.39 in 2008.
Snapshot of Trade:
Security Description: The Aberdeen Asia-Pacific Income Fund (FAX) is a leveraged closed end bond fund that owns corporate and government bonds issued by companies and governments located in the Asia Pacific geographic region (Australia, New Zealand, China and HK, Indonesia, India, Malaysia, South Korea, Philippines, and Singapore. The primary weighting is Australian government bonds (provinces and federal) at 35.7% as of 7/31/13.
Overall, as of 7/31/13, government bonds were weighted at 67.1%; corporates at 58.7% and short term U.S. treasury notes at 4.3%. The number is greater than 100% due to the leverage.
Data as of Day of Purchase: Wednesday 10/16/13
Net Asset Value Per Share: $6.87
Market Price: $6.05
Discount: -11.94%
Average Discounts:
1 Year: -3.39%
3 Years: -2.84%
5 Years: -4.34%
For me, it is material that the current discount is more than twice the average discounts shown above.
CEFConnect Page for FAX
Sponsor's Website: Asia-Pacific Income Fund
FAX Page at Morningstar
SEC Form N-Q: Aberdeen Asia-Pacific Income Fund (holdings as of 7/31/13)(net unrealized appreciation at $17.406+)
Last SEC Filed Shareholder Report: Aberdeen Aisa Pacific Income Fund (period ending 4/30/13)
The credit quality is weighted in investment grade bonds, with a 35% weighting in AAA as of 8/31/13. That data is available at CEFConnect by clicking the "Portfolio Characteristics" tab. The AAA bonds would mostly be from the Australian government.
Rationale: (1) Monthly Income Generation: The current monthly dividend is $.035 per share. At a total cost of $6.08 per share, that would result in a dividend yield of about 6.9%.
(2) Bond Diversification: There is something to be said for a U.S. citizen owning higher quality foreign bonds, particularly AAA rated bonds issued by foreign governments such as Canada and Australia that are rational and more fiscally responsible than our own.
Brett Arends' identified both Canada, New Zealand and Australia has three countries whose debt is rated AAA. Australia's government debt to GDP ratio is 20.7%, while the U.S. is at 101.6% and growing fast. Government Debt To GDP - Countries - List
My lack of confidence in the U.S. government's ability to address its long term fiscal problems is the main source for this kind of diversification.
(3) The factors that caused the recent price decline can reverse. Interest rates stop rising and have fallen again. The discount remains at historically high levels and could narrow creating an "artificial" gain in the shares even when net asset value per share remains constant. The currency conversion issue has turned for the better already as shown in the charts referenced below.
Risks: This kind of fund has the usual interest rate, credit, leverage, currency and CEF risks inherent in a leveraged closed end bond fund that owns foreign bonds. I am not currently concerned about the credit quality given the fund's diversification and the credit quality of its bonds.
Interest rate, currency, leverage and CEF risks have been pronounced recently as the market price slid from $7.76 on 4/25/13 to $5.86 on 8/6/13.
In addition to the rise in rates, the Australian dollar was declining in value against the USD during that period. USD/AUD Currency Conversion Chart In April 2013, one AUD would buy more than 1 USD. By 8/6/13, 1 USD would buy AUD$1.12. This fund owns a lot of bonds denominated in AUDs. When the Fed backed away from tapering, interest rates in the U.S. started to decline and the AUD started to recover back to 1 USD buying less than 1.04 AUDs at the time of my purchase.
The decline in the currencies of Malaysia, India and Indonesia were also unfavorable for any unhedged position in assets priced in those currencies.
USD/INR Currency Conversion Chart (India's Rupee)
USD/IDR Currency Conversion Chart (Indonesian Rupiah)
USD/MYR Currency Conversion Chart (Malaysia Ringgit)
USD/SGD Currency Conversion Chart (Singapore Dollar)
As the rise in interest rates and currency decline issues took a toll on net asset value, the use of leverage to buy more assets declining in value added to the decline. When net asset value turns south in that fashion, the discount to net asset value per share will likely expand by a significant amount making the losses even worse. On 4/25/13, FAX closed at a premium to net asset value per share of .52%. The closing net asset value per share that day was $7.75. When I purchased shares, the shares were selling at a 11.94% discount to a $6.87 net asset value per share.
Unadjusted for the monthly dividends, the net asset value per share had declined 11% but the market price per share had declined by 21.65%. The greater decline in the market price was due to the expansion of the discount to net asset value from a premium to a 11.94% discount.
Future Buys and Sells: I will consider flipping this one when the discount shrinks below 5%.
Closing Price 10/24/13: FAX: $6.49 +0.04 (+0.62%)
3. Added 50 RZA at $24.29 (see Disclaimer): This was a purchase made in the taxable account to replace income lost after reducing my stock allocation:
Snapshot of Trade:
Security Description: The Reinsurance Group of America Inc. 6.20% Fixed-to-Floating Rate Subordinated Debt Due 2042 (RZA) is an Exchange Traded junior bond issued by the Reinsurance Group of America (RGA), a company primarily engaged in the reinsurance of individual life, health, annuity and disability income products. 10-K at page 4
RZA has a 6.2% fixed rate coupon on a $25 par value from 12/15/12 to but excluding 9/15/22. From 9/15/22, this note will pay interest at an annual rate equal to the 3 month Libor rate, reset quarterly, plus 4.37%. The issuer may redeem this bond at par plus accrued interest on or after 9/15/22. If not redeemed early, the notes mature on 9/14/42.
Prospectus
The next ex interest date is 11/26/13.
At a total cost of $24.29, the current yield is about 6.38%.
RGA senior bonds are currently rated Baa1 by Moody's and A- by S & P. The RGA senior unsecured bond, with a 5.625% coupon and maturing on 3/15/2017, was trading at over 111 when I bought RZA. FINRA The RGA 4.7% senior unsecured bond maturing in 2023 was trading near 102.
RZA is subordinate to RGA's senior unsecured bonds and consequently carries a lower rating which is still investment grade. According to Quantumonline, the ratings are Baa2 from Moody's and BBB from S & P.
Company Website: Home - Reinsurance Group of America
RZA was issued in August of 2012 and hit $29 earlier this year before sliding when interest rates started to rise. RZA Interactive Chart
Prior Trade: Item # 3 Bought 50 RZA at $24.47-ROTH IRA (9/28/13 Post)
Rationale and Risks: I have nothing to add to my recent discussion.
Future Buys/Sells: I am hoping for a 8%-10% annualized return. In order to achieve that goal, I will need a pop in the share price, and investors may be unwilling to accommodate me. Understandably, investors are hesitant in taking the price back up after being burned by a rapid decline from $29 to below par value for RZA.
Closing Price 10/24/13: RZA: $24.67 -0.09 (-0.36%)
4. Added 50 GYC at $18.66-Roth IRA (see Disclaimer): This is a cash flow purchase.
Snapshot of Trade:
Security Description: The Corporate Asset Backed Corp. CABCO Series 2004-102 Trust SBC Communication Inc. Floating Rate Certificates (GYC) is an Exchange Traded Bond. GYC is a Synthetic Floater in the Trust Certificate legal form of ownership.
It is a complicated security.
For as long as a swap agreement is in force, the owners of this security will not receive the fixed coupon amount of the senior AT & T bonds owned by the trust. Instead, the Trustee will make quarterly interest payments at the greater of 3.25% or .65% over the 3 month Libor rate, capped at 8%, on a $25 par value. GYC Prospectus
GYC Interactive Chart
Underlying Bond: FINRA
Underlying Bond Prospectus: SEC web site
When purchasing a synthetic floater, I can calculate the minimum and maximum current yields.
At the minimum 3.25% coupon, the current coupon would be about 4.35% at a total cost of $18.66.
At the maximum 8% coupon, hit when the 3 month Libor computation exceeds 7.35%, the current coupon yield would be about 10.72% at a total cost of $18.66. If there is no redemption prior to maturity, the owner of GYC would receive $25 for each trust certificate.
Prior Trades: I recently bought 50 shares at $20.
Total Realized Gains in 2012: $357.45
Stocks, Bonds & Politics: Sold 100 GYC at $22.22 (July 2012)
Rationale/Risks: This is a complicated security that has unique benefits and risks. I have nothing to add to my prior discussion made a few weeks ago: Item # 1 Bought Roth IRA: 50 GYC at $20 (9/7/13 Post).
Future Buys/Sells: I am not likely to own more than 100 shares at any point in time. I will consider selling my highest cost lot at over $22 and then keep for a longer period the lowest cost lot. Volume is light and there is generally a wide bid/ask spread. I will use limit orders on this one.
Closing Price 10/24/13: GYC: $19.60 +0.58 (+3.05%)
5. Bought 50 FHNPRA at $21.39 (see Disclaimer):
Snapshot of Trade:
Security Description: The First Horizon National Non-Cumulative Perpetual Preferred Series A (FHN.PA) is an equity preferred stock that pays qualified, non-cumulative dividends at a 6.2% per annum rate on a $25 par value.
The issuer, First Horizon National, may redeem this security, at its option, on or after 4/10/18. With no optional redemption, this security will be perpetual.
First Horizon is the holding company that owns First Tennessee Bank which has the top market share in Tennessee.
The prospectus does contain a "stopper clause" at page S-15, the legal means to enforce the preferred stock's preference right to cash dividend payments over the common shares.
Prospectus
This equity preferred stock is rated at Ba1 by Moody's and BB by S & P, both junk ratings.
First Horizon National Profile Page at Reuters
First Horizon National Key Developments Page at Reuters
2012 Annual Report
Prior Trades: None
Related Trade: I bought the common as a Lotto and still own the shares. I am at break-even. FHN made a disastrous foray into national mortgage banking before the Near Depression that caused large losses and smashed the stock price.
FHN Interactive Chart
Recent Earnings Report: For the third quarter, FHN reported a GAAP during the quarter due to charges. Excluding items, the bank reported net income of $.19 per share. SEC Filed Earnings Report
Q3 2013 Results - Earnings Call Transcript - Seeking Alpha
Summary of Report at Zacks
Rationale: (1) Tax Advantaged Income Generation: At a total cost of $21.39 per share, the dividend yield is about 7.25%. The dividends will be classified as qualified which caps the tax rate at 15% for me.
(2) Possible Capital Appreciation: I would view capital appreciation to be more likely when and if FHN is acquired by a larger institution with significantly higher credit ratings. First Tennessee has a large deposit share in Middle Tennessee, a growth market. Some appreciation is possible with stable or lower intermediate and long term rates provided there are no new concerns about FHN's risk profile and investors recover from the price shellacking which occurred shortly after this issues IPO.
Risks: The prospectus contains a laundry list of risk factors starting at page S-5.
The main risk, at the moment, would be a loss in market value due to an interest rate rise. FHNPRA is another recently issued equity preferred stock that was sold to the public at a $25 par value and quickly declined in price when interest rates started to rise. FHN.PA Stock Chart After hitting a high of $25.83 on 5/10/13, the price dived to $21.25 on 10/3/13. That 17.73% price decline was due to the interest rate rise.
For FHN, it is hard for me to figure out when it will put the mortgage problems entirely in the rear view mirror. It is the roach motel kind of concern.
Credit risk can be important for non-cumulative equity preferred stocks issued by leveraged financial institutions. In a bankruptcy (BK) or after the FDIC seizes the operating bank, those types of securities would become worthless.
As demonstrated by the recent Near Depression, clearly and unequivocally, concerns about credit risk can drive the prices of bank issued preferred stocks into the single digits even when the bank continues to make all dividend payments.
Fear of a collapse becomes the driving force in pricing decisions. Fear feeds on itself and individual dump shares bought at much higher levels and bids dry up. The pricing was not irrational in October 2008, since the world's financial system was on the verge of an implosion, but became irrational after the federal government and the federal reserve shored up the financial system with highly accommodative monetary policies and a liberal amount of fiscal stimulus.
Future Buys and Sells: With a 50 share buy of a preferred stock, I really do not care much what happens as long as the issuer pays the dividends. Once I become more comfortable that FHN has put its mortgage fiasco entirely in the past, I would consider buying another 50 shares when and if that happens and the yield is greater than 8%.
Closing Price 10/24/13: FHN-PA: $21.76 0.00 (-0.01%)
6. Pared DWX: Sold 50 at $48.4 (see Disclaimer): The SPDR S&P International Dividend ETF Fund (DWX) invests in high yielding international stocks.
SPDR S&P International Dividend ETF (exp. ratio .45%)
Discussion of this ETF: ETF Trends
Snapshot of Trade:
Position Before Trade:
Position After Trade:
Profit on 50 Lot Excluding Dividends: $26.05 (no snapshot-less than $30)
I sold the highest cost lot purchased first: Item # 3 Bought 50 of the Stock ETF DWX at $47.56 (September 2012)
Rationale: With this kind of trade, I hope to replace the shares sold at 5%+ below my current average cost per share. This would require a correction. That would put the re-entry buy at $41.92.
Closing Price 10/24/13: DWX: $48.81 +0.23 (+0.47%)
7. Paired Trade: Bought 100 GDO at $17.79 Regular IRA and Sold 100 IGI at $20.22 in the ROTH IRA (see Disclaimer)
Snapshot of Trades:
Snapshot of IGI Profit:
Bought Roth IRA: 100 IGI at $19.43 (9/7/13/ Post). I have received one monthly $10 dividend and will receive another, bringing the total return since the 8/30/13 purchase to $85.36 or 4.38% in about 1.5 months.
Security Descriptions:
The Western Asset Investment Grade Defined Opportunity Trust (IGI) is an unleveraged closed end bond fund that invests primarily in U.S. investment grade bonds.
The Western Asset Global Corp Defined Opportunity Fund (GDO) is a leveraged closed end bond fund that invests primarily in global investment grade bonds. GDO does utilize a small amount of leverage.
Unlike most bond funds, both GDO and IGI have a term date. Both funds will be liquidated on or about 12/2/2024. This gives the fund one of the characteristics of owning an individual bond, the promise to pay a specific sum at a future date. Unlike an individual bond, however, there is no promise to pay a fixed sum (i.e. par value). The investor in GDO will receive their pro-rata share of the liquidation proceeds, which may be more or less than the current net asset value per share.
Hopefully, the managers of these two funds will keep that liquidation date in mind when selecting bonds to own.
GDO Page at CEFConnect
GDO Page at Morningstar (currently rated 4 stars)
GDO SEC Form N-Q (Holdings as of 7/31/13)(net unrealized appreciation $16.370+M, page 15)
GDO Last SEC Filed Shareholder Report (period ending 4/30/13)
IGI Data Date of Trade Friday 10/18/13
Closing Net Asset Value Per Share: $21.52
Market Price: $20.25
Discount: -5.9
Current Yield at $22.25 Market Price= 5.93%
GDO Data Date of Trade Friday 10/18/13
Closing Net Asset Value Per Share: $20.22
Market Price: $17.83
Discount: -11.82%
Current Yield at $17.83 Market Price: 7.74%
GDO is currently paying a monthly dividend of $.115 per share, while IGI is paying a monthly dividend of $.10 per share.
GDO has an effective duration of 4.39 years, as of 6/30/13 and had 287 holdings at that time.
IGI has a larger percentage in investment grade bonds:
I would regard the difference in credit quality as significant, but GDO still has a 63.64% weighting in investment grade bonds.
Prior Trades IGI: I still own 100 shares of IGI bought earlier this month: Item # 3 Added 100 IGI at $19.28
Bought 100 CEF IGI at $19.89 in IRA (February 2010); Added 100 of the CEF IGI at $19.78 (February 2010); Sold 100 IGI at 21.26 In IRA (June 2010); Sold 100 IGI at $21.26 In IRA (June 2010); Sold:100 IGI @ $20.75 (November 2010); Added 100 IGI at $19.65 (March 2011); Sold 100 IGI @ $20.76 (May 2011); Bought 100 IGI at $20.7 in Roth IRA (July 2011); Bought 100 IGI at $20.69 (August 2011); Sold 200 IGI at $21.52+ (August 2011)
Realized Share Gains to Date for IGI=$527.43, consisting of $462.07 prior to 2013 (snapshots in Item # 3, Stocks, Bonds & Politics: Bought Roth IRA: 100 IGI at $19.43) + $65.36 (snapshot above)
Prior Trades GDO:
2013 Realized Share Gains for GDO in ROTH IRA: $343.33
Paired Trade Roth IRA: Sold 120 GDO at $20.73-Bought 100 GSPRD at $21.38 (February 2013)
I have repeatedly traded GDO: Bought 100 of the CEF GDO at $18.6 March 2010; Bought 70 of the CEF GDO in Regular IRA at $18.61 March 2010; Bought 200 of the CEF GDO at 18.63 and 18.53 (100 in Roth and 100 Taxable Account respectively) March 2010; Bought 100 GDO at $18.57 April 2010; Bought Back 50 shares of GDO at 17.8 in the Roth IRA previously sold at $19.24 December 2010; Sold 100 GDO at $18.72 January 2012; Sold 200 GDO at $19.18 June 2012; Sold Remaining GDO in Taxable Account at $19.69 July 2012; Bought 100 Shares of GDO at $18.9 November 2012; Sold 100 GDO at $20.79 December 2012; Paired Trade Roth IRA: Sold 120 GDO at $20.73-Bought 100 GSPRD at $21.38
Rational and Risks: I recently discussed the benefits and risks of GDO: Item # 4 Added 50 GDO at $17.58-Roth IRA
The discount to net asset value was -9.86 when I purchased the 100 IGI share lot. The discount rapidly shrunk to 5.93% as the adjusted net asset value per share rose, providing me with a quick profit opportunity.
With GDO, I am buying bonds at a larger discount to their value while picking up more yield compared to IGI. I do add more credit risk with the bonds owned by GDO as well as the risks and benefits of leverage. The GDO fund is lightly leveraged which will add to the total return when borrowing costs are abnormally low, as now, and the value of the assets purchased with those borrowed funds are stable or rising in value.
Future Buys/Sells: I am obviously in a trading mode for both IGI and GDO. This paired trade was based primarily on GDO's higher yield and larger discount to net asset value per share.
If GDO falls another 10% in price, I will consider moving those shares from the regular IRA to a Roth IRA account.
I will consider selling GDO when and if I achieve a 10% total return. Most of that return over a year period could be achieved through the dividend payments, requiring only a 2.25% appreciation in price per year after commission costs.
Closing Prices 10/24/13:
IGI: $20.07 -0.05 (-0.25%)
GDO: $17.99 +0.07 (+0.39%)
8. Sold 50 HGI at $18.47-Roth IRA (see Disclaimer):
Snapshot of Trade:
Snapshot of Profit:
Rationale: I was not pleased with this ETF's performance and consequently decided to try something else that would generate more income.
9. Added 50 SGL at $9.18-Roth IRA (see Disclaimer): The Strategic Global Income Fund is an unleveraged world closed end bond fund. This last purchase was made shortly before the ex dividend date which was 10/22/13. Strategic Global Income Fund, Inc. – Distribution Declaration and Updated Price & Distribution Rate Information
SGL page at CEFConnect
SGL Page at Morningstar
Last SEC Filed Shareholder Report: Strategic Global Income Fund (period ending 5/31/13)
Data on day of trade (10/18/13)
Closing Net Asset Value Per Share: $10.61
Closing Market Price: $9.18
Discount: -13.48%
Average Discount as of 10/21/13:
1 Year: -8.74%
3 Years: -6.53%
5 Years: -8.57%
The five year average discount will drop when the October 2008 to December 2008 numbers are no longer included in that average. The discount went over 30% briefly in October 2008.
Rather than making a snapshot of the trade, I took a snapshot of my recent SGL history in the Roth IRA since I transferred 109 shares from another Roth IRA account back in January 2011:
Snapshot of History:
Due to the price weakness in this bond CEF, caused by the usual world bond CEF risks, I started to reinvest the monthly dividend last June.
I successfully traded SGL before digging myself into a hole with my last series of purchases. The first re-entry purchase was made at just about the worst possible day which was 4/30/13.
I have discussed this bond CEF in several prior posts. The most recent discussion was last June in Item # 7 Bought Roth IRA 50 SGL at $9.35 I have nothing more to to add.
Closing Price 10/24/13: SGL: 9.18 0.00 (0.00%)
Closing Price 10/24/13: PDT: $12.39 +0.07 (+0.56%)
2. Added 200 FAX at $6.08 (see Disclaimer): This is an average down from a recent 100 share purchase. A more complete discussion can be found in that recent post: Item # 6 Bought 100 FAX at $6.35 (6/15/13). As noted in that post, I was able to buy this one at $3.39 in 2008.
Snapshot of Trade:
Security Description: The Aberdeen Asia-Pacific Income Fund (FAX) is a leveraged closed end bond fund that owns corporate and government bonds issued by companies and governments located in the Asia Pacific geographic region (Australia, New Zealand, China and HK, Indonesia, India, Malaysia, South Korea, Philippines, and Singapore. The primary weighting is Australian government bonds (provinces and federal) at 35.7% as of 7/31/13.
Overall, as of 7/31/13, government bonds were weighted at 67.1%; corporates at 58.7% and short term U.S. treasury notes at 4.3%. The number is greater than 100% due to the leverage.
Data as of Day of Purchase: Wednesday 10/16/13
Net Asset Value Per Share: $6.87
Market Price: $6.05
Discount: -11.94%
Average Discounts:
1 Year: -3.39%
3 Years: -2.84%
5 Years: -4.34%
For me, it is material that the current discount is more than twice the average discounts shown above.
CEFConnect Page for FAX
Sponsor's Website: Asia-Pacific Income Fund
FAX Page at Morningstar
SEC Form N-Q: Aberdeen Asia-Pacific Income Fund (holdings as of 7/31/13)(net unrealized appreciation at $17.406+)
Last SEC Filed Shareholder Report: Aberdeen Aisa Pacific Income Fund (period ending 4/30/13)
The credit quality is weighted in investment grade bonds, with a 35% weighting in AAA as of 8/31/13. That data is available at CEFConnect by clicking the "Portfolio Characteristics" tab. The AAA bonds would mostly be from the Australian government.
Rationale: (1) Monthly Income Generation: The current monthly dividend is $.035 per share. At a total cost of $6.08 per share, that would result in a dividend yield of about 6.9%.
(2) Bond Diversification: There is something to be said for a U.S. citizen owning higher quality foreign bonds, particularly AAA rated bonds issued by foreign governments such as Canada and Australia that are rational and more fiscally responsible than our own.
Brett Arends' identified both Canada, New Zealand and Australia has three countries whose debt is rated AAA. Australia's government debt to GDP ratio is 20.7%, while the U.S. is at 101.6% and growing fast. Government Debt To GDP - Countries - List
My lack of confidence in the U.S. government's ability to address its long term fiscal problems is the main source for this kind of diversification.
(3) The factors that caused the recent price decline can reverse. Interest rates stop rising and have fallen again. The discount remains at historically high levels and could narrow creating an "artificial" gain in the shares even when net asset value per share remains constant. The currency conversion issue has turned for the better already as shown in the charts referenced below.
Risks: This kind of fund has the usual interest rate, credit, leverage, currency and CEF risks inherent in a leveraged closed end bond fund that owns foreign bonds. I am not currently concerned about the credit quality given the fund's diversification and the credit quality of its bonds.
Interest rate, currency, leverage and CEF risks have been pronounced recently as the market price slid from $7.76 on 4/25/13 to $5.86 on 8/6/13.
In addition to the rise in rates, the Australian dollar was declining in value against the USD during that period. USD/AUD Currency Conversion Chart In April 2013, one AUD would buy more than 1 USD. By 8/6/13, 1 USD would buy AUD$1.12. This fund owns a lot of bonds denominated in AUDs. When the Fed backed away from tapering, interest rates in the U.S. started to decline and the AUD started to recover back to 1 USD buying less than 1.04 AUDs at the time of my purchase.
The decline in the currencies of Malaysia, India and Indonesia were also unfavorable for any unhedged position in assets priced in those currencies.
USD/INR Currency Conversion Chart (India's Rupee)
USD/IDR Currency Conversion Chart (Indonesian Rupiah)
USD/MYR Currency Conversion Chart (Malaysia Ringgit)
USD/SGD Currency Conversion Chart (Singapore Dollar)
As the rise in interest rates and currency decline issues took a toll on net asset value, the use of leverage to buy more assets declining in value added to the decline. When net asset value turns south in that fashion, the discount to net asset value per share will likely expand by a significant amount making the losses even worse. On 4/25/13, FAX closed at a premium to net asset value per share of .52%. The closing net asset value per share that day was $7.75. When I purchased shares, the shares were selling at a 11.94% discount to a $6.87 net asset value per share.
Unadjusted for the monthly dividends, the net asset value per share had declined 11% but the market price per share had declined by 21.65%. The greater decline in the market price was due to the expansion of the discount to net asset value from a premium to a 11.94% discount.
Future Buys and Sells: I will consider flipping this one when the discount shrinks below 5%.
Closing Price 10/24/13: FAX: $6.49 +0.04 (+0.62%)
3. Added 50 RZA at $24.29 (see Disclaimer): This was a purchase made in the taxable account to replace income lost after reducing my stock allocation:
Snapshot of Trade:
Security Description: The Reinsurance Group of America Inc. 6.20% Fixed-to-Floating Rate Subordinated Debt Due 2042 (RZA) is an Exchange Traded junior bond issued by the Reinsurance Group of America (RGA), a company primarily engaged in the reinsurance of individual life, health, annuity and disability income products. 10-K at page 4
RZA has a 6.2% fixed rate coupon on a $25 par value from 12/15/12 to but excluding 9/15/22. From 9/15/22, this note will pay interest at an annual rate equal to the 3 month Libor rate, reset quarterly, plus 4.37%. The issuer may redeem this bond at par plus accrued interest on or after 9/15/22. If not redeemed early, the notes mature on 9/14/42.
Prospectus
The next ex interest date is 11/26/13.
At a total cost of $24.29, the current yield is about 6.38%.
RGA senior bonds are currently rated Baa1 by Moody's and A- by S & P. The RGA senior unsecured bond, with a 5.625% coupon and maturing on 3/15/2017, was trading at over 111 when I bought RZA. FINRA The RGA 4.7% senior unsecured bond maturing in 2023 was trading near 102.
RZA is subordinate to RGA's senior unsecured bonds and consequently carries a lower rating which is still investment grade. According to Quantumonline, the ratings are Baa2 from Moody's and BBB from S & P.
Company Website: Home - Reinsurance Group of America
RZA was issued in August of 2012 and hit $29 earlier this year before sliding when interest rates started to rise. RZA Interactive Chart
Prior Trade: Item # 3 Bought 50 RZA at $24.47-ROTH IRA (9/28/13 Post)
Rationale and Risks: I have nothing to add to my recent discussion.
Future Buys/Sells: I am hoping for a 8%-10% annualized return. In order to achieve that goal, I will need a pop in the share price, and investors may be unwilling to accommodate me. Understandably, investors are hesitant in taking the price back up after being burned by a rapid decline from $29 to below par value for RZA.
Closing Price 10/24/13: RZA: $24.67 -0.09 (-0.36%)
4. Added 50 GYC at $18.66-Roth IRA (see Disclaimer): This is a cash flow purchase.
Snapshot of Trade:
 |
| 2013 Roth IRA Added 50 GYC at $18.66 |
It is a complicated security.
For as long as a swap agreement is in force, the owners of this security will not receive the fixed coupon amount of the senior AT & T bonds owned by the trust. Instead, the Trustee will make quarterly interest payments at the greater of 3.25% or .65% over the 3 month Libor rate, capped at 8%, on a $25 par value. GYC Prospectus
GYC Interactive Chart
Underlying Bond: FINRA
Underlying Bond Prospectus: SEC web site
When purchasing a synthetic floater, I can calculate the minimum and maximum current yields.
At the minimum 3.25% coupon, the current coupon would be about 4.35% at a total cost of $18.66.
At the maximum 8% coupon, hit when the 3 month Libor computation exceeds 7.35%, the current coupon yield would be about 10.72% at a total cost of $18.66. If there is no redemption prior to maturity, the owner of GYC would receive $25 for each trust certificate.
Prior Trades: I recently bought 50 shares at $20.
Total Realized Gains in 2012: $357.45
Stocks, Bonds & Politics: Sold 100 GYC at $22.22 (July 2012)
Rationale/Risks: This is a complicated security that has unique benefits and risks. I have nothing to add to my prior discussion made a few weeks ago: Item # 1 Bought Roth IRA: 50 GYC at $20 (9/7/13 Post).
Future Buys/Sells: I am not likely to own more than 100 shares at any point in time. I will consider selling my highest cost lot at over $22 and then keep for a longer period the lowest cost lot. Volume is light and there is generally a wide bid/ask spread. I will use limit orders on this one.
Closing Price 10/24/13: GYC: $19.60 +0.58 (+3.05%)
5. Bought 50 FHNPRA at $21.39 (see Disclaimer):
Snapshot of Trade:
Security Description: The First Horizon National Non-Cumulative Perpetual Preferred Series A (FHN.PA) is an equity preferred stock that pays qualified, non-cumulative dividends at a 6.2% per annum rate on a $25 par value.
The issuer, First Horizon National, may redeem this security, at its option, on or after 4/10/18. With no optional redemption, this security will be perpetual.
First Horizon is the holding company that owns First Tennessee Bank which has the top market share in Tennessee.
The prospectus does contain a "stopper clause" at page S-15, the legal means to enforce the preferred stock's preference right to cash dividend payments over the common shares.
Prospectus
This equity preferred stock is rated at Ba1 by Moody's and BB by S & P, both junk ratings.
First Horizon National Profile Page at Reuters
First Horizon National Key Developments Page at Reuters
2012 Annual Report
Prior Trades: None
Related Trade: I bought the common as a Lotto and still own the shares. I am at break-even. FHN made a disastrous foray into national mortgage banking before the Near Depression that caused large losses and smashed the stock price.
FHN Interactive Chart
Recent Earnings Report: For the third quarter, FHN reported a GAAP during the quarter due to charges. Excluding items, the bank reported net income of $.19 per share. SEC Filed Earnings Report
Q3 2013 Results - Earnings Call Transcript - Seeking Alpha
Summary of Report at Zacks
Rationale: (1) Tax Advantaged Income Generation: At a total cost of $21.39 per share, the dividend yield is about 7.25%. The dividends will be classified as qualified which caps the tax rate at 15% for me.
(2) Possible Capital Appreciation: I would view capital appreciation to be more likely when and if FHN is acquired by a larger institution with significantly higher credit ratings. First Tennessee has a large deposit share in Middle Tennessee, a growth market. Some appreciation is possible with stable or lower intermediate and long term rates provided there are no new concerns about FHN's risk profile and investors recover from the price shellacking which occurred shortly after this issues IPO.
Risks: The prospectus contains a laundry list of risk factors starting at page S-5.
The main risk, at the moment, would be a loss in market value due to an interest rate rise. FHNPRA is another recently issued equity preferred stock that was sold to the public at a $25 par value and quickly declined in price when interest rates started to rise. FHN.PA Stock Chart After hitting a high of $25.83 on 5/10/13, the price dived to $21.25 on 10/3/13. That 17.73% price decline was due to the interest rate rise.
For FHN, it is hard for me to figure out when it will put the mortgage problems entirely in the rear view mirror. It is the roach motel kind of concern.
Credit risk can be important for non-cumulative equity preferred stocks issued by leveraged financial institutions. In a bankruptcy (BK) or after the FDIC seizes the operating bank, those types of securities would become worthless.
As demonstrated by the recent Near Depression, clearly and unequivocally, concerns about credit risk can drive the prices of bank issued preferred stocks into the single digits even when the bank continues to make all dividend payments.
Fear of a collapse becomes the driving force in pricing decisions. Fear feeds on itself and individual dump shares bought at much higher levels and bids dry up. The pricing was not irrational in October 2008, since the world's financial system was on the verge of an implosion, but became irrational after the federal government and the federal reserve shored up the financial system with highly accommodative monetary policies and a liberal amount of fiscal stimulus.
Future Buys and Sells: With a 50 share buy of a preferred stock, I really do not care much what happens as long as the issuer pays the dividends. Once I become more comfortable that FHN has put its mortgage fiasco entirely in the past, I would consider buying another 50 shares when and if that happens and the yield is greater than 8%.
Closing Price 10/24/13: FHN-PA: $21.76 0.00 (-0.01%)
6. Pared DWX: Sold 50 at $48.4 (see Disclaimer): The SPDR S&P International Dividend ETF Fund (DWX) invests in high yielding international stocks.
SPDR S&P International Dividend ETF (exp. ratio .45%)
Discussion of this ETF: ETF Trends
Snapshot of Trade:
Position Before Trade:
 |
| Average Cost Per Share $45.8 |
Position After Trade:
 |
| Average Cost Per Share $44.12 |
I sold the highest cost lot purchased first: Item # 3 Bought 50 of the Stock ETF DWX at $47.56 (September 2012)
Rationale: With this kind of trade, I hope to replace the shares sold at 5%+ below my current average cost per share. This would require a correction. That would put the re-entry buy at $41.92.
Closing Price 10/24/13: DWX: $48.81 +0.23 (+0.47%)
7. Paired Trade: Bought 100 GDO at $17.79 Regular IRA and Sold 100 IGI at $20.22 in the ROTH IRA (see Disclaimer)
Snapshot of Trades:
 |
| 2013 Regular IRA Bought 100 GDO at $17.79 |
 |
| 2013 Roth IRA Sold 100 IGI at $20.22 |
 |
| 2013 ROTH IRA IGI 100 Shares +$65.36 |
Bought Roth IRA: 100 IGI at $19.43 (9/7/13/ Post). I have received one monthly $10 dividend and will receive another, bringing the total return since the 8/30/13 purchase to $85.36 or 4.38% in about 1.5 months.
Security Descriptions:
The Western Asset Investment Grade Defined Opportunity Trust (IGI) is an unleveraged closed end bond fund that invests primarily in U.S. investment grade bonds.
The Western Asset Global Corp Defined Opportunity Fund (GDO) is a leveraged closed end bond fund that invests primarily in global investment grade bonds. GDO does utilize a small amount of leverage.
Unlike most bond funds, both GDO and IGI have a term date. Both funds will be liquidated on or about 12/2/2024. This gives the fund one of the characteristics of owning an individual bond, the promise to pay a specific sum at a future date. Unlike an individual bond, however, there is no promise to pay a fixed sum (i.e. par value). The investor in GDO will receive their pro-rata share of the liquidation proceeds, which may be more or less than the current net asset value per share.
Hopefully, the managers of these two funds will keep that liquidation date in mind when selecting bonds to own.
GDO Page at CEFConnect
GDO Page at Morningstar (currently rated 4 stars)
GDO SEC Form N-Q (Holdings as of 7/31/13)(net unrealized appreciation $16.370+M, page 15)
GDO Last SEC Filed Shareholder Report (period ending 4/30/13)
IGI Data Date of Trade Friday 10/18/13
Closing Net Asset Value Per Share: $21.52
Market Price: $20.25
Discount: -5.9
Current Yield at $22.25 Market Price= 5.93%
GDO Data Date of Trade Friday 10/18/13
Closing Net Asset Value Per Share: $20.22
Market Price: $17.83
Discount: -11.82%
Current Yield at $17.83 Market Price: 7.74%
GDO is currently paying a monthly dividend of $.115 per share, while IGI is paying a monthly dividend of $.10 per share.
GDO has an effective duration of 4.39 years, as of 6/30/13 and had 287 holdings at that time.
 |
| GDO Credit Quality as of 6/30/13 |
 |
| IGI Credit Quality as of 6/30/13 |
Prior Trades IGI: I still own 100 shares of IGI bought earlier this month: Item # 3 Added 100 IGI at $19.28
Bought 100 CEF IGI at $19.89 in IRA (February 2010); Added 100 of the CEF IGI at $19.78 (February 2010); Sold 100 IGI at 21.26 In IRA (June 2010); Sold 100 IGI at $21.26 In IRA (June 2010); Sold:100 IGI @ $20.75 (November 2010); Added 100 IGI at $19.65 (March 2011); Sold 100 IGI @ $20.76 (May 2011); Bought 100 IGI at $20.7 in Roth IRA (July 2011); Bought 100 IGI at $20.69 (August 2011); Sold 200 IGI at $21.52+ (August 2011)
Realized Share Gains to Date for IGI=$527.43, consisting of $462.07 prior to 2013 (snapshots in Item # 3, Stocks, Bonds & Politics: Bought Roth IRA: 100 IGI at $19.43) + $65.36 (snapshot above)
Prior Trades GDO:
2013 Realized Share Gains for GDO in ROTH IRA: $343.33
 |
| 2013 ROTH IRA GDO 120 Shares +$340.33 |
I have repeatedly traded GDO: Bought 100 of the CEF GDO at $18.6 March 2010; Bought 70 of the CEF GDO in Regular IRA at $18.61 March 2010; Bought 200 of the CEF GDO at 18.63 and 18.53 (100 in Roth and 100 Taxable Account respectively) March 2010; Bought 100 GDO at $18.57 April 2010; Bought Back 50 shares of GDO at 17.8 in the Roth IRA previously sold at $19.24 December 2010; Sold 100 GDO at $18.72 January 2012; Sold 200 GDO at $19.18 June 2012; Sold Remaining GDO in Taxable Account at $19.69 July 2012; Bought 100 Shares of GDO at $18.9 November 2012; Sold 100 GDO at $20.79 December 2012; Paired Trade Roth IRA: Sold 120 GDO at $20.73-Bought 100 GSPRD at $21.38
Rational and Risks: I recently discussed the benefits and risks of GDO: Item # 4 Added 50 GDO at $17.58-Roth IRA
The discount to net asset value was -9.86 when I purchased the 100 IGI share lot. The discount rapidly shrunk to 5.93% as the adjusted net asset value per share rose, providing me with a quick profit opportunity.
With GDO, I am buying bonds at a larger discount to their value while picking up more yield compared to IGI. I do add more credit risk with the bonds owned by GDO as well as the risks and benefits of leverage. The GDO fund is lightly leveraged which will add to the total return when borrowing costs are abnormally low, as now, and the value of the assets purchased with those borrowed funds are stable or rising in value.
Future Buys/Sells: I am obviously in a trading mode for both IGI and GDO. This paired trade was based primarily on GDO's higher yield and larger discount to net asset value per share.
If GDO falls another 10% in price, I will consider moving those shares from the regular IRA to a Roth IRA account.
I will consider selling GDO when and if I achieve a 10% total return. Most of that return over a year period could be achieved through the dividend payments, requiring only a 2.25% appreciation in price per year after commission costs.
Closing Prices 10/24/13:
IGI: $20.07 -0.05 (-0.25%)
GDO: $17.99 +0.07 (+0.39%)
8. Sold 50 HGI at $18.47-Roth IRA (see Disclaimer):
Snapshot of Trade:
Snapshot of Profit:
 |
| 2013 Roth IRA HGI 50 Shares +$32.99 |
Rationale: I was not pleased with this ETF's performance and consequently decided to try something else that would generate more income.
9. Added 50 SGL at $9.18-Roth IRA (see Disclaimer): The Strategic Global Income Fund is an unleveraged world closed end bond fund. This last purchase was made shortly before the ex dividend date which was 10/22/13. Strategic Global Income Fund, Inc. – Distribution Declaration and Updated Price & Distribution Rate Information
SGL page at CEFConnect
SGL Page at Morningstar
Last SEC Filed Shareholder Report: Strategic Global Income Fund (period ending 5/31/13)
Data on day of trade (10/18/13)
Closing Net Asset Value Per Share: $10.61
Closing Market Price: $9.18
Discount: -13.48%
Average Discount as of 10/21/13:
1 Year: -8.74%
3 Years: -6.53%
5 Years: -8.57%
The five year average discount will drop when the October 2008 to December 2008 numbers are no longer included in that average. The discount went over 30% briefly in October 2008.
Rather than making a snapshot of the trade, I took a snapshot of my recent SGL history in the Roth IRA since I transferred 109 shares from another Roth IRA account back in January 2011:
Snapshot of History:
Due to the price weakness in this bond CEF, caused by the usual world bond CEF risks, I started to reinvest the monthly dividend last June.
I successfully traded SGL before digging myself into a hole with my last series of purchases. The first re-entry purchase was made at just about the worst possible day which was 4/30/13.
I have discussed this bond CEF in several prior posts. The most recent discussion was last June in Item # 7 Bought Roth IRA 50 SGL at $9.35 I have nothing more to to add.
Closing Price 10/24/13: SGL: 9.18 0.00 (0.00%)
Minor correction: I have GDO in my Roth IRA. The liquidation date is Dec 2, 2024, not 2014.
ReplyDeleteNice timing on the GLW purchase.