Monday, March 17, 2014

Bought 30 EPR at $53.3/Bought Roth IRA: 50 EPRPRF at $22.5,,100 AINV at $8.68/Sold IRA: 210+BTZ at $13.62/Sold: 100 WBSPRE at $24.4 and 200 RMT at $12.8-Lowers Average Cost Per Share to $8.61/Added 100 FAM at $13.68/Bought: 50 PRDSY at $15 and 300 Dundee International REIT at C$9.27 and 100 DLRPRG at $19.95/Cricket Communications

This post will be discussing trades made between 2/28/14 and 3/5/14, except that one of the trades made on 3/5/14 will be discussed in the next post since this one discusses 10 trades which is too many.

Big Picture Synopsis:

Stable Vix Pattern (Bullish)
Short Term: Hoping for a 15%+ Correction 
Intermediate Term: Slightly Bullish
Long Term: Bullish

Without a correction soon, followed by a period of consolidation and mostly sideways movement, the odds of a cyclical bear market increase, meaning a greater than 20% rapid decline in the S & P 500.

Short Term: Neutral to Slightly Bearish
Intermediate and Long Term: Slightly Bearish Based on Interest Rate Normalization
The Difficult Path to Interest Rate Normalization

The bond forecast assumes that the average annual inflation rate will be between 2% to 2.25% over the next ten years, which is in line with the current forecast embodied in the pricing of the 10 year treasury TIP. The break-even spread closed last Friday at 2.17%, the average annual CPI increase over the next ten years which would be necessary fro the 10 year TIP to break-even with the 10 year non-inflation protected treasury note. 

Putin's foolish gambit in the Ukraine is providing a serious boost to U.S. treasuries and investment grade corporate bonds. Treasuries love his expressions of Russian manhood. The 10 year treasury declined from a 2.8% yield on 3/7/14 to 2.65% last Friday

Putin has proven that he is capable of torpedoing the Russian ruble, Russian government bonds and the Russian stock market for his unquenchable desire to blatantly violate Russia's treaty obligations through military agression, and for what, a big rock near the Black Sea where Russia can legally operate out of a naval base until 2042 with no change in an existing agreement.

Over the weekend, there were reports that Russian had sent its military into eastern Ukraine. CBS News; The Russian Foreign Office claimed to have receive requests for protection.

Putin is just your typical fool with access to a large army.

There is no shortage of fools and jerks who have led our country, and we have certainly learned that rising to the top of any organization or government frequently has nothing to do with intelligence, competence or good judgment.

Russia claims that it currently has no intention of blatantly violating its treaty obligations by seizing eastern Ukraine. Russia is keeping its options open in that regard and may find it necessary to send in troops to quell the disturbances being caused by its activities and policies. Russia pointed to the death of a Ukrainian demonstrator who was murdered by pro-Russian ones in Donetsk.

All of these recent events in the Ukraine show that Putin has learned something from Hitler's pre-WWII playbook. So he is capable of learning.

The ignorant and uninformed Russian speakers regularly watch state controlled, "fair and balanced" Russian TV, a farce, and accept as true whatever is being fed to them by the Russian government propaganda machine.

Russia's economy would make Argentina look good without the abundant natural resources including the natural gas deliveries to the more prosperous western Europe. Perhaps, the West should allow Putin to choke on that natural gas and find alternative supplies for the Europeans, even at a higher cost. I am glad to see that Merkel has "apparently" acquired a backbone. NYT Possibly, a few Europeans will come to realize that relying on Russia for anything important, such as natural gas and oil, is not in their long term best interest.

RSX Technical Analysis | Market Vectors Russia ETF

Recent Developments:

Raymond James views it as likely that BDCs will be removed from the Russell indexes on June 27. PSEC and AINV are scheduled to be removed from the S & P 600 small cap and mid cap indexes respectively on 5/21. I will be monitoring the price action in PSEC and decide whether any decline in price due solely to its removal justifies a 100 share add.

Retail sales rebounded from the earlier weather induced results. The government reported a higher than expected .3% increase in February.

Some market participants view last week's economic numbers released by China's government in a negative light.

GLD is trading above its 50 and 200 day SMA lines:  SPDR Gold Trust ETF Chart SLV is barely above its 50 and 200 day SMA lines and has significantly underperformed GLD over the past year. iShares Silver Trust ETF Chart

A Barrons' article points out that corporations need to start using more cash flow to upgrade plant and equipment. I would agree. Money now being deployed to buy stock needs to be used instead for reinvestment in the business. Buffett noted in the Berkshire annual report that its subsidiaries had capital expenditures of roughly $11B last year, double their depreciation charges, and BRK did not buy back any shares. (page 5: berkshirehathaway.pdf)

JZJ Partial RedemptionAnother Partial Call by the Owner of the JZJ Call Warrant

The profit realized on the redemption of 94 JZJ trust certificates was $488.32, bringing my net realized gain total for trust certificates to $27,467.64. (Trade snapshots at the end of Trust Certificates: New Gateway Post)

I received accrued interest of $49.52 on those 94 shares, incorrectly labelled by Fidelity as a dividend:

Snapshot of Profit: 

2014 JZJ 94 Shares +$488.17

General Mills (own): 

General Mills is one of my turtle stocks.

I last discussed buying 50 shares when the price was near $35.

Stocks, Bonds & Politics: Bought 50 GIS at $35.53 (1/5/11 Post)

It is sort of like watching grass grow. You never see it grow but leave it alone for a few years and see what happens. GIS Interactive Chart

Like many consumer staples, dividend and earnings growth is steady and relatively predictable. GIS has paid a dividend without interruption or reduction for 115 years. General Mills - Dividends and Stock Splits

On 3/13, the Board announced a 8% increase in the quarterly dividend. General Mills Declares 8 Percent Dividend Increase

The current price is in my "do nothing" range which is broad for this kind of stock. I would consider buying more at below $46. GIS Analyst Estimates

GIS declined last Friday after warning about fiscal third quarter results.  General Mills Updates Fiscal 2014 Outlook

Closing Price Last Friday: GIS: $49.77 -1.24 (-2.43%)

TICC Capital (own)

TICC sold 6 million common shares at $10.14 last Friday, and granted the underwriters an option to buy up to 900,000 more shares.

The constant share offerings by BDCs is known risk to existing shareholders. The price will decline in response to those offerings. At least the offering price was above the $9.85 per share net asset value as of 12/31/13, recently reported by TICC.

I recently bought 100 shares. Bought: 100 TICC at $9.97 (2/17/14 Post)

Friday's Closing Price: TICC: $10.00 -0.43 (-4.12%)

Leap Wireless: (own bond)

Leap Wireless announced its acquisition by AT & T was completed on 3/13/14. Cricket Communications was a Leap Wireless subsidiary. AT&T/Leap Merger

I own one Cricket Communications senior bond. Bought 1 Cricket Communications 7.75% Senior Note Maturing on 10/15/2020 at 96.5 As noted in that post, the bond was rated at B3 by Moody's and CCC+ by S & P at the time of that purchase back in 2011.

Due to the completion of the merger, the Cricket bond was upgraded by both Moody's and S & P as shown in these emails received from my broker:

Existing Position Priced at 113.5 as of Friday 
FINRA Data on Cricket 7.75% (closed higher at 114.5)

I did spend a few minutes reviewing the optional redemption language in the prospectus to see if I had any protection from an AT & T call now and if so, how much?

Ideally, I would want a standard make whole calculation that would make an optional redemption now punitive for AT & T. While I am certainly no bond expert, I would label the optional redemption a modified make whole provision that provides less protection than the standard one, page 58 et seq. Prospectus To figure out the redemption price, the investor has to first look at the price per year (e.g. 103.875% for 2015) and then make what the prospectus defines as an "Additional Interest" calculation to the redemption date. I can not calculate the "additional interest" number since I do not see a clear definition of what it includes in the prospectus (see definition at page 82) Since I am unable to figure that out, I may sell the bond, but most likely will not have an opportunity online since the minimum bids usually require more than just 1 bond. I could have the broker place the 1 bond out to bid and then either accept or reject any offer that may be given to me.

A received a notice after the publication of this post that this bond is being redeemed in full, so I will find out soon enough about that additional interest calculation:

In a notice received this evening, Fidelity stated that the redemption date will be 4/14/2014.


1. Bought 50 EPRPRF at $22.5-Roth IRA and 30 of EPR at $53.3 (see Disclaimer): I bought the preferred shares first and then decided to buy a starter position in the common, similar to what I have recently done with DLR. If the common share price falls below $50, I will consider buying another 30 shares.  

Snapshot of Trades:

2014 Roth IRA Bought 50 EPRPRF at $22.5
2014 Bought 30 EPR at $53.3
Security Descriptions: The EPR Properties 6.625% Series F Cumulative Preferred (EPR.PF) is an equity preferred stock issued by the REIT EPR Properties (EPR) that pays cumulative and non-qualified dividends at the fixed coupon rate of 6.625% on a $25 par value. EPR has the option to redeem at par on or after 10/12/2017. Prospectus

As of 12/31/13, EPR owned 121 megaplex theaters that were 100% leased; educational properties including 48 charter schools that were 100% leased; and owned recreational areas that were also 100% leased. The company had $89.5 of properties under development at year end.

The prospectus for EPRPRF contains a typical Dividend Stopper Clause (S-24) and a change of control provision (S-8 et. seq.).

The last quarterly ex dividend date for EPRPRF was on 12/27/13.

The last monthly dividend paid by EPR went ex dividend on 2/26: EPR Properties (EPR) Dividend Date & History -

After my purchases, EPR was mentioned favorably in a article, written by Jack Hough, that focuses on "pass through" companies, defined to mean those ownership structures that avoid corporate taxes on income pass through to their shareholders. Both REITs and BDCs are in that category. Hough refers to a JPM analyst who argues that EPR is his "top name" for income investors.

SEC Filings For EPR: EDGAR

EPR has one other preferred stock that is functionally equivalent to EPRPRF except for the coupon and optional redemption date:

EPR Properties 5.75% Cum. Conv. Pfd. Series C  (EPR.PC)-Prospectus

At the time of my purchase, the dividend yield on the 5.75% preferred was less at the then existing prices.

There is also a convertible preferred outstanding:

EPR.PE Stock Quote - EPR Properties 9.00% Cum. Conv. Pfd. Series E (EPR.PE )-Prospectus

Prior Trades: None

Recent Earnings Report: For the 2013 4th quarter, EPR reported a $1.23 FFO per share, up from $.87 in the 2012 4th quarter. FFO for 2013 was reported at $199.4M or $4.13 per share. The payout ratio for 2013 was 81% of adjusted FFO. Debt to gross assets was at 40%.

The company guided 2014 FFO to a range between $4.12 and 4.22. At the midpoint of that range, the P/FFO at a total cost of $53.3 is 12.78, viewed by me as a fair price for an equity slice.

EPR-12/31/2013 earnings release

Rationale: Since 9/1/13, I have built up a basket of equity REIT common and preferred shares after a correction in their prices. This basket will generate income in the 6% to 7% yield range, bringing me close to a potential 10% annualized return with very modest price appreciation. As with other baskets, I will harvest some profits and add new positions in order hopefully to meet my modest goal of a 10% annualized total return derived mostly from dividends.

As noted above, the P/FFO is between 12-13 based on estimated 2014 guidance. I view that price to be reasonable.

EPR also pays monthly dividends at the current rate of $.285 per share. At that rate, the dividend yield is about 6.41% at a total cost of $53.4. Both the yield and the monthly payment schedule are viewed favorably.

EPR Properties (EPR) Dividend

Risks: The company summarizes risks factors for the preferred stock starting at page S-15 of the Prospectus. Risk factors relating to EPR's operations are summarized starting at page 9 of its 2013 Annual Report recently filed with the SEC. EPR-12.31.2013-10-K

At the moment, interest rate and volatility risks are the most important risks, but credit risk issues can easily come into play during a recession.

There is also a risk of a dividend cut during a recession, as consumers cut back on discretionary spending. EPR did cut its quarterly dividend from $.84 to $.65 in the 2009 first quarter. The quarterly rate was thereafter gradually increased to $.79 by the 2013 first quarter. EPR then went to a monthly dividend payment schedule. With the recent rise in the monthly rate, the annual rate is now slightly over the annual rate when the quarterly dividend was at $.84 per share. 

Future Buys and Sells: I will need a current yield of 8% or greater to buy another 50 shares of EPRPRF. I will likely toss it when and if the price approaches par value.

I will consider adding 30 more of the common at below $50. Splitting the orders into two 30 share lots, and remaining hopefully disciplined about entry and exit points, is my alternative to buying 50 shares of a stock, priced over $50, all at once.

Closing Prices Last Friday:
EPR: $53.97 +0.31 (+0.58%)
EPR-PF: $24.03 -0.12 (-0.50%) 

2. Sold 100 WBSPRE at $24.4 (see Disclaimer):  

Snapshot of Trade:

2014 Sold 100 WBSPRE at $24.4

Snapshot of Profit/Loss:   

Security Description: The Webster Financial Corp. 6.4% Non-Cumulative Preferred Series E (WBS.PE) is an equity preferred stock that pays qualified and non-cumulative dividends at the fixed coupon rate of 6.4% on a $25 par value. Prospectus Supplement

This preferred stock went ex dividend for its quarterly distribution on 2/27/14, the day before I sold my 100 shares, so I will receive that dividend this week: 

Rationale: While this equity preferred stock has a junk rating, I have a BBB- comfort level with it. My problem with the security was that I bought my first 50 share lot at too high of a price. The $25.1 price paid for the first 50 share lot severely limits my potential upside capital appreciation and increases my interest rate risk compared to the second purchase at $22.59.

In addition, there is a meaningful current yield difference between the two 50 shares lots. At a total cost of $25.1 per share, the current yield would be about 6.37% compared to about 7.08% at a total cost of $22.59. 

Future Buys: I will revisit this security when I can purchase the first 50 share lot at less than $22.5 and the second lot at less than $20. By selling the security with that high priced lot now, I can reset my constant average cost per share number.

Closing Price Last Friday: WBS-PE: $24.19 +0.02 (+0.08%) 

3. Bought 50 PRDSY at $15 (The $500 to $1,000 Flyers Basket Strategy)(see Disclaimer):

Snapshot of Trade:

2014 Bought 50 PRDSY at $15
Company Description:  Prada S.p.A. ADS (PRDSY) is an Italian based company engaged in the design, manufacture, and distribution of high end goods, including leather handbags, jackets, skirts, trousers, eyewear and perfume.  The primary market for the shares is in Hong Kong. China is a very important market for Prada.

Company Website: Prada Group

Prada - Wikipedia

Closing Price In Hong Kong on 2/281/4:  HKD $58.3 

I took a snapshot of the conversion value of $58.3 Hong Kong Dollars into USDs on 2/28/14:

One PRDSY ADS shares equals two ordinary shares traded in Hong Kong. That would indicate a price for PRDSY at $15.0238. When I entered my limit order at $15.05, the PRDSY shares were trading at a premium to the HK closing price at $15.1. My limit order was filled on a downdraft, near the close, at $15.  

Closing Price PRDSY on 2/28/14PRDSY: $14.88 -0.42 (-2.75%) : PRADA SPA ADR (day's range $14.82 to $15.13)

PRDSY Interactive Chart

Financial Report for the Period Ending 7/31/13: Interim Financial Report.pdf


Sales growth was 9% in the year ended 1/31/14, less than expected, due to weakness in Europe and currency issues. Prada opened 79 stores last year, bringing its retail store total up to 540 by the end of January 2014. Reuters

Rationale: This is sort of a play on the top 1%. I never have understood why women will pay hundreds, or thousands of dollars for a handbag. I have one wallet bought on sale at Target for less than $10 and its shows more than a little wear and tear. Maybe I will buy a new one in ten years or so.   

Risks: I am at my limit with a 50 share buy. I would have to promote this company out of the Flyer's Basket category to buy more. I see no reason for a promotion at this time. Among the risks, Bloomberg reported that Italian authorities "may" be allegedly investigating Prada for tax evasion, Bloomberg, and there have recently been several reports that China is clamping down on conspicuous consumption by their elite.

Closing Price Last Friday: PRDSY: $14.75 +0.20 (+1.37%) 

4. Bought 300 of Dundee International REIT at C$9.28  (see Disclaimer):

Snapshot of Trade:

2014 Bought 300 DI_UN:CA at C$9.28

Company Description: The Dundee International Real Estate Investment Trust (DI.UN:TOR) is a Canadian REIT that owns property outside of Canada. At the time of my purchase, those properties were located solely in Germany. Dundee International REIT - Portfolio This is a new REIT that started trading in August 2011. Stock Market Chart Toronto Stock Exchange

The early history is summarized on page 1 of the 2011 Annual Report. Annual-Report-2011.pdf The Dundee Group initially funded this REIT with $120M and an IPO was completed in August 2011. The initial foray into Germany involved the purchase of a portfolio primarily occupied by Deutsche Post.

This is a link to a December 2012 interview with Jane Gavan, CEO, Dundee International REIT- YouTube

Snapshot of Recent Monthly Dividend Payment in Canadian Dollars:

Assuming a continuation of that C$.0667 monthly rate per share and a total cost of C$9.28 per share, the dividend yield would be about 8.625%. I would emphasize that no dividend increases are likely in the foreseeable future since this REIT is already paying out close to 100% of its AFFO.

Prior Trades: None

Recent Earnings Report: I just took a snapshot of the relevant information contained in Dundee's 4th quarter report:

Click to Enlarge:


As noted in footnote number one to the preceding table, results are converted from Euros to Canadian Dollars. This creates two currency risk issues for a U.S. investor. I have both the CAD to USD risk and the Euro to CAD risk. In exchange for the currency and other risks, I receive a good monthly dividend and exposure to high quality real estate in Europe's strongest economy without having to buy a European REIT with Euros.

Rationale: I am using a basket approach in the REIT sector similar to what I do with other sectors. This purchase gives me exposure to Germany, which improves my geographical diversification, and provides me with a monthly dividend yield of about 8.63%.

Risks: I mentioned the dual currency risk above. Needless to say, sitting at a desk in the SUV Capital of the World, I know zilch about the German real estate market. I did note that the occupancy rate increased to 86.4% as of 12/31/13 from 83.2% on 12/31/12. Occupancy levels, particularly during recessionary times, can be a significant risk for obvious reasons. If this REIT can lease more of its vacant space over the course of 2014, this will increase funds from operations and increase the spread between the dividend payout and AFFO.    

Future Buys and Sells: I am not likely to buy more. I do not yet have a target price. I would be more than pleased with a 10% return on the shares plus the dividend payments within 12 to 24 months.

Closing Price Last Friday: DI-UN.TO: C$9.17 +0.01 (+0.11%)

5. Bought 100 AINV at $8.68-Roth IRA (See Disclaimer): I will be monitoring the price action of AINV on May 21, the day that AINV will be kicked out of the S & P 400 index.

Snapshot of Trade:

2014 Roth IRA Bought 100 AINV at $8.68
Company Description: Apollo Investment Corp.  (AINV)

AINV's last public offering was last February, when it sold 12 million shares with an over allotment option of up to an additional 1.8M shares. Apollo Investment Corporation Prices Public Offering of Common Stock The underwriters bought the stock at $8.69 per share. Prospectus The company intends to use the proceeds to pay indebtedness under its senior secured credit facility.

Prior to the Near Depression, AINV stock traded over $23 in 2007 and then made a swan dive into the low single digits which simply highlights a risk. AINV Interactive Chart Since August 2011, the stock has moved mostly in a narrow channel between $6.5-$9.

AINV was paying a quarterly dividend of $.52 per share in 2008 and then slashed it $.26 effective for the 2009 first quarter. The dividend was slashed again to $.2 in the 2012 first quarter and has thereafter remained at that level. Apollo Investment Corporation (AINV) Dividend History Needless to say, I view that dividend history most unfavorably.

Recently, I was reading some comments to a SA article about Prospect Capital, who slashed its dividend when it went from a quarterly to a monthly payment schedule. Some of those investors made the statement that PSEC's dividend was "safe". No BDC dividend is safe, and how could anyone maintain that a dividend is safe when the company slashed it recently? I felt compelled to leave a comment about the alleged safety of any BDC dividend. Seeking Alpha

Recent Earnings Release: For the fiscal 2013 3rd quarter, which ended 12/31/13, Apollo Investment Corporation reported net investment income of $.22 per share and a net asset value of $8.57, up from $8.3 on 9/30/13. The percentage increase in net asset value (3.3% in one quarter) was good enough to bring me back into buying a small position. In addition, I paid only a 1.3% premium to the 12/31/13 net asset value per share.  There were 101 portfolio companies at year end

This BDC is currently paying a quarterly dividend of $.2 per share.

Q3 2014 Results - Earnings Call Transcript - Seeking Alpha

Rationale: As with other BDCs, I do not plan to become a long term owner. The dividend yield at a total cost of $8.68 is about 9.22%. To achieve an annualized total return of 10%, which is generally my goal for a BDC, I will need a minimum return on the stock.

As with other BDC, it takes a lot of paper and words for AINV to describe the risks relevant to its operations. The last SEC filed Annual Report starts discussing risks at Page 9 and the discussion ends at page 32. Form 10-K

Risks: The very nature of the BDC beast is risk. Those companies invest in other companies that are frequently highly leveraged and unproven, particularly over the course of an entire business cycle. "Safe" companies are not now borrowing money at 12% or so. There will be defaults. A first or second lien will not prevent the lender from suffering losses in the event of a BK. The company acknowledges at page 30 that an investment in its common stock "involves a high degree of risk and is highly speculative". The company acknowledges the conflicts of interests between shareholders and management at pp. 18-20, 26.

These firms will frequently sell stock to replenish their coffers and many offerings are made at below net asset value. BDCs pay their managers hedge fund type compensation, yet none of them deserve anywhere near that level of pay for the results in my opinion. Part of the compensation is called a base fee that is 2% of total assets including the amounts borrowed by the company. The incentive is consequently to increase assets through common and preferred stock issuances and bond sales. The managers also receive an incentive fee on top of that base management fee which would entice them to invest in highly speculative securities.

Future Buys: I may add another 100 shares depending on how far AINV declines in response to its upcoming removal from the S & P 400 index. I do not have a price in mind, but below $8 would probably trigger a buy. A $8.25 to $8.5 is my definite "do nothing" range, and I am not likely to buy between $8 to $8.25.

Closing Price Last Friday: AINV: $8.48 -0.01 (-0.12%)

6. Bought 100 DLRPRG at $19.95-Satellite Taxable Account (see Disclaimer): I hope to flip this one. This is a trade, looking for a slender profit and one or two dividends. This security went ex dividend for its quarterly dividend shortly after my purchase (3/12/14) and rose in price that day to recoup $.23 cents of the $.367 per share ex distribution subtraction from the previous close (3/12/14 close: DLR-PG: $20.44 +0.23 (+1.14%)

Snapshot of Trade:

2014 Bought 100 DLRPRG at $19.95
Security Description: The Digital Realty Trust Inc. 5.875% Cumulative Preferred Series G (DLR.PG) is an equity preferred stock issued by the REIT . Non-qualified and cumulative dividends are paid at the fixed coupon rate of 5.875% on a $25 par value.

Prospectus Supplement

This prospectus has a typical Dividend Stopper clause (S-22) and a change of control provision (S-6 et. seq.).

DLR has the right to redeem this security on or after 4/9/2018. I seriously doubt that DLR will ever redeem it unless it found it advantageous to do so under the change of control provision. I would just say now that it is highly unlikely, though not impossible, that DLR could ever refinance this security at a lower rate sufficient to compensate it for the costs of refinancing.

As noted previously in connection with another purchase, Moody's rates DLR preferred stocks at BBB-and S & P has them at BB+.

At a total cost of $19.95 per share, the dividend yield is about 7.36%.

Digital Realty sold this preferred stock to the public at $25 in April 2013, a most opportune time for it. This security briefly traded near its $25 par value before sliding to a low near $18 during late December. DLR.PG Stock Chart

Subsequent to this last purchase, Brad Thomas wrote a detailed article about Digital Realty that was published by Seeking Alpha. One of the issues for data center REITs is that several large users are moving away from leasing space to owning their own. For now, this trend would be more of a concern to the common shareholders rather than the preferred shareholders. The equity preferred shareholder has no ownership interest in the business and is concerned about whether the company has sufficient capital to pay the preferred dividend without a deferral or default. A slowdown or decline in FFO is a matter of concern, but far less of an issue for the preferred shareholder. I will be monitoring this issue to decide whether I will buy another 30 shares of the common when and if the price declines below $50.

Prior Trades: None

Related Trades: I recently bought 30 shares of the common and 50 shares of DLRPRE.

I have nothing more to add to the discussion contained in those two recent posts:

Item # 9 Bought: 30 Digital Realty (DLR) at $53.4 (3/3/14 Post)

Item # 3 Bought 50 DLRPRE at $23.36 (2/25/14 Post)

The company summarizes risks relating to this preferred starting at page S-11 of the Prospectus. Risks relating to its operations are discussed starting at page 8 of its 2012 Annual Report. Form 10-K

Closing Price Last Friday: DLR-PG: $20.51 -0.08 (-0.39%)

7. Added 100 FAM in Taxable Account at $13.68 (see Disclaimer): I have not had much good fortune with this one for about a year now.

Snapshot of Trade:

2014 Bought 100 FAM at $13.68

Security Description: First Trust/Aberdeen Global Opportunity Income Fund (FAM)

Data Date of Trade 3/4/13
Closing Net Asset Value Per Share: $15.05
Closing Market Price: $13.66
Discount: -9.1%
Average Discounts:
1 Year -6.01%
3 Years -3.72%
5 Years -4.91%

CEFConnect Page for FAM

Sponsor's Website: First Trust/Aberdeen Global Opportunity Income Fund (FAM)

Morningstar Page for FAM (rated 4 stars at the time of this last purchase)

Last SEC Filed Shareholder Report: SEC (period ending 12/31/13)(unrealized gain less than $3M)

Credit Quality as of 12/31/13
Of the $27.155M in distributions paid to shareholders in 2013, the fund classified $6.105+M of that amount as a ROC.

To cut down on the ROC, the fund recently trimmed its monthly distribution from $.13 to $.11 per share. First Trust/Aberdeen Global Opportunity Income Fund Decreases its Monthly Common Share Distribution to $0.11 Per Share for March Individual investors will respond to negatively to that kind of cut, even though the fund is simply cutting back on a ROC with the reduction.

At a total cost of $13.68 per share, the dividend yield is about 9.65%.

Prior Trades: I am in a hole with my current FAM position. Item # 5 Added 50 FAM at $13.74 (December 2013); Item # 5 Bought 50 FAM at $14.2 (10/7/13 Post)Item # 6 Added 50 FAM at $14.95-Roth IRA (June 2013)Item # 10 Bought 50 FAM at $17.51 (April 2013)

I did a relatively good job at exiting a prior position: Sold 50 FAM at $17.99 September 2012-Bought 50 FAM @ 17.37 in Roth IRA November 2010 and Item # 4  Sold 150 of 200 FAM at $18.64 (October 2012)(profit snapshot +$114.23)-Bought 50 FAM @ 17.37 (November 2010)-Bought 100 FAM @ 17.9 (November 2010).

Rationale and Risks: I would just refer anyone interested to my last two discussions:

Item # 5 Bought 50 FAM at $14.2-ROTH IRA (10/7/13 Post)

Item # 6  Added 50 FAM at $14.95-Roth IRA (6/22/13 Post)

Closing Price Last Friday: FAM: $13.71 +0.07 (+0.51%)

8. Sold 210+ BTZ at $13.62-Roth IRA (see Disclaimer):

Snapshot of Trade:

2014 Roth IRA Sold 210+ BTZ at $13.62
Snapshot of Profit: I realized an artificial profit on these shares. I bought 200 shares in March 2013, which turned out to be a less than optimal timing decision. Bought 200 of the Bond CEF BTZ at $13.96-Regular IRA March 2013

2014 BTZ  210+ Shares +$128.85
Starting in May of last year, bond CEFs started to tank. I decided in to transfer those shares to from the Regular IRA to a Roth IRA, which will require me to include the depreciated share value as income. I then waited for the shares to recover most of their lost value after the ROTH conversion. The new cost basis for the shares was based on the price at the time of the ROTH conversion which resulted in the artificial profit shown in the following snapshot:

This kind of maneuver will occur frequently after a significant price drop. My first Roth IRA conversion occurred in October 2008. By performing that transfer when the security has declined significantly in price, I pay less income tax and I then allow the security to recover most of its lost value while owned in the Roth IRA.

Prior Trades: I have managed to trade this one successfully and still own shares in another ROTH IRA account and in a taxable account. I am mindful of what happened to leveraged bond CEFs between May and September last year and consequently believed that some profit taking at this juncture might be the prudent course.

One of my purchases within the past year are discussed in the following posts: Item # 3 Added 50 BTZ at $12.35 (8/31/13 Post)(discount then at -14.87%). In that post, I have some snapshots of prior trading profits totaling $413.80. 

Another recent purchase was discussed in this post: Item # 4 Added 70 BTZ at $12.63 (7/13/13 Post)(discount then -13.57)

Security Description:  The BlackRock Credit Allocation Income Trust (BTZ)

Data From Day of Trade (3/4/14)
Net Asset Value Per Share: $15.32
Closing Market Price Per Share: $13.66
Discount: -10.84%
Average 1 Year Discount: -12.42%
Average 5 Year Discount: -10.79%

CEFConnect Page for BTZ

Rationale: I am simply trying to control my interest rate, volatility and normal CEF risks by selectively adding and deleting shares. The discount had declined some since my recent purchases, as noted above, and had fallen in line with the five year average discount.

Closing Price Last Friday: BTZ: $13.49 0.00 (0.00%)

9.  Sold 200 RMT at $12.8 to Lower Average Cost Per Share (see Disclaimer): This stock CEF has been a tear for the five year period ending 3/4/2014, producing an average total return based on net asset value of 31.83%. CEFConnect

Snapshot of Trade:

Sold 200 RMT at $12.8

The average cost per share was $9.68 per share for 749.075 shares before I sold this 200 share lot bought in 2007. I was able to exit that position with a slight profit. RMT does not support its dividend with a ROC.

By selling my highest cost shares, I avoid a tax liability in this case while keeping in place a significant unrealized gain on both my open market purchases and the shares acquired with reinvested dividends since 2008.

Snapshot of Position Shortly After Sale:

549+ RMT Shares Average cost per share=$8.61
I mentioned in a December 2013 post that I may sell 200 of my highest costs shares this year. Stocks, Bonds & Politics: RMT (introduction section)

Subsequent to this 200 share disposition, Royce Micro-Cap Trust increased its managed distribution rate to 7%. The first quarter's dividend was $.23, totally sourced from net realized capital gains.

Prior Trades: I have briefly discussed adds to this position in several posts including the following: Item # 2 Bought RJA at $6.73 (August 2009)Item # 6 Added to CEF RMT at $7.64 (January 2010)Item # 6 Added 50 RMT at 7.82 with Cash Flow (July 2010); Item # 2 Added 50 RMT at $9.45 (April 2012)Item # 4 Added 50 RMT at $8.62 (June 2012). I will frequently add to this kind of position with cash flow received from dividends and interest.

I have also flipped some shares in an IRA.

2012 Roth IRA Flip and Dividend Clip: 200 Shares +$84.37
Security Description: The Royce Micro-Cap Trust (RMT) is a closed end stock fund.

CEFConnect Page for RMT

Sponsor's website: Royce Micro-Cap Trust (RMT)

Last SEC Filed Shareholder Report Period Ending 12/31/13:

RMT Page at Morningstar

Rationale: Small caps are in my opinion overvalued after their tremendous appreciation over the past five years. The current P/E on estimated forward year earnings is almost 20 for the Russell 2000. P/Es & Yields on Major Indexes- WSJ.comYChartsSeeking Alpha

I also wanted to get rid of my highest cost shares at a profit which will reduce the average cost of the remaining shares without incurring a meaningful tax obligation.

Closing Price Last Friday: RMT: $12.44 -0.01 (-0.08%) 


  1. Noticed you often enter a position a few days before its ex-dividend date. Usually with ETFs, AINV for example recently. If you don't mind me asking, is there a site that lists them, ETFs that is, sorted by ex dividend dates?

  2. Meant BDCs is this case.

  3. I will generally track what is happening in multiple ways.

    If I want to track just the ex dividend dates for BDCs, I would simply create a portfolio with all of the companies at Yahoo Finance. When you customize what you want to view when the portfolio is opened, one of the items would be the ex dividend date. YF does not include that information in a portfolio table for all dividend paying securities, including all preferred stocks. The AINV dividend date is shown as 3/19; ARCC at 3/12; TICC at 3/21 and so on.

    I can verify that information by going to the company's website or possibly Marketwatch which is pretty good about listing the ex dividend dates.

    I will also look at least once every weekday at the dividend declarations and ex dividend information at the WSJ.Com which may be available to non-subscribers.

    At the moment that page is showing dividend declarations made on March 19th and securities going ex dividend on 3/21. Later today, it will be updated with dividend declarations made today and those securities going ex dividend on Monday 3/24.

  4. Thanks a lot, exactly the information I was looking for!