Monday, March 24, 2014

Lawsuit Against Seeking Alpha Contributor Alan Brochstein/SOLD 100 IDE at $17.47/Bought 300 Temple Hotels at C$5.85, 50 RSOPRA at $23.79, 50 MET at $51.76/Bought 50 CCGPRA at $25.13-Roth IRA and 150 CCG at $8.51-Taxable Account/Sold 1 Albertson's 2026 Bond at 87.125-Roth IRA

A SeekingAlpha contributor, Alan Brochstein, has been sued by AVT Inc. who did not like one of Alan's critical articles about that company. "Investors Should Avoid AVT" - Seeking Alpha

I have never met Alan, but have exchanged a few emails about stocks with him. I view him as a good guy who tries very hard to be accurate in his well researched articles, frequently making abundant citations to SEC filings. I would not even consider buying AVT, even if I had never read his article.

I donated some money to help him with his legal fees. I urge everyone to consider making donations to help him out which can be done at this website: Fight Frivolous Lawsuit by AVT, Inc. by Alan Brochstein - GoFundMe

As a firm believer in the values expressed in the First Amendment, which I view as holy, I find AVT's suit offensive.

I discussed with Alan a frivolous suit filed against the analyst Dick Bove that ultimately cost him a fortune in legal fees. We need to fight back against companies that use lawsuits as a means to punish those exercising their First Amendment rights.

Big Picture Synopsis:

Stable Vix Pattern (Bullish)
Vix Asset Allocation Model Explained Simply
Use of the VIX as a Timing Model
Short Term: Hoping for a 15% Correction
Intermediate Term: Slightly Bullish
Long Term: Bullish

I left a number of comments last week to an article titled "The Four Horsemen Of The Stock Market Apocalypse" published by SeekingAlpha.

The market had a good rally last Monday after the Europeans and the U.S. barely gave Russia a light finger tap in response to its military aggression and blatant violations of the Budapest Memorandum signed by it.

The CEO of Rosneft, a Russian company and major energy supplier to western Europe, noted that his company could take its business elsewhere and added that the sanctions adopted against Russia show evidence of powerlessness. I would agree with his last statement about the sanctions, might as well have just said in unison "Vlad is BAD". I seriously doubt that Rosneft's shareholders would agree with his first argument.

Looking at the ROSNEFT stock chart, perhaps shareholders need to find a new set of managers. But what can shareholders of a Russian company run by one of Vlad's cronies do anyway, which explains the very low P/E multiples of Russian companies.

I do wonder whether all of the cash shown on the balance sheets of Russian companies is still in a corporate account or somewhere else. My suggestion is for all of those Russian companies merge into Vlad, Inc. which would give them more transparency and simplify the bookkeeping.

The market was reassured last Tuesday when Putin claimed that he did not intend to annex further Ukrainian territory.

I am curious why anyone would believe a single word coming out of his mouth. He is without question a pathological liar who has created a lawless state designed to enrich himself and a few cronies, best known as a kleptocracy. The Washington Post

Two weeks before Russia formally annexed Crimea, Putin stated that Russia had no intentions of doing so,, and he continually represented that those 20,000 or so heavily armed men wearing masks, driving around in Russian military vehicles, were just some locals who acquired the uniforms and weapons at the local army surplus store and were beyond Russia's control.

He now says that Russia has no intention of annexing parts of Eastern Ukraine, as he amasses troops along that border.

Words coming out of Putin's mouth, or his signature on a piece of paper, can not be relied upon by any sensible person. Western Europeans and other civilized persons need to cease having delusions about Russia. It would just be supremely foolish for western Europe to depend on Russia for anything important, particularly natural gas and oil. Let them sell to their buddies in China.  

"Russia Without Illusions" -

As I noted in the Politics and Etc. section of an earlier post, which also discussed Putin's theft of a $25,000 super bowl ring, Putin took control of two enclaves that had been part of Georgia in a previous military intervention (South Ossetia and Abkhazia). The NYT published an interesting story last week about what has happened to those poor souls in South Ossetia now under the thumb of Vlad and his Apparatchiks. Unemployment has risen and prices are high. Russian elites loyal to Vlad control the economy and drive around in big "glossy black cars" over unpaved roads. Russia of course did not keep its financial aid promises to the citizens of those two enclaves, and most of the small amount of aid actually given by the Russians was stolen by the boys.

I see that Hillary Clinton agrees with my earlier observation that Vlad has learned a thing or two from Hitler. Neither I nor Hillary are saying that Vlad can be compared to Adolf, at least at the moment, but his maneuvers involving neighboring sovereign nations are reminiscent of those made by Hitler. At least most folks know something about Vlad's role model.


Short Term: Slightly Bearish
Intermediate and Long Term: Slightly Bearish Based on Interest Rate Normalization

I have changed my short term forecast to slightly bearish from an equivocal "neutral to slightly bearish". I am sort of wavering back and forth.

The Fed announced another $10B reduction in its asset buying spree. FRB: Press Release--Federal Reserve issues FOMC statement --March 19, 2014 Thirteen of sixteen FED officials believe that the FED will start to raise short term rates in 2015 based on their current economic forecasts. FRB: March 19, 2014: FOMC ProjectionsNYT Eleven of the 16 members believe that the federal funds rate will be 1% or higher by the end of 2015.

The bond forecast assumes that the average annual CPI rate over the next ten years will be between 2% to 2.15%, the current projection embodied in the pricing of the ten year TIP.

For the first time in over two decades, Exxon tapped the debt market, selling $5.5B in fixed and floating rate notes.

There is an insignificant spread to the 3 month Libor rate for the floating rate notes. Free Writing Prospectus The one maturing in 2017 has a .04% spread to the 3 month Libor.


Bond and Equity Preferred Stock Internal HQ Trading Guidelines: 

I have adopted the following criteria in managing my bond and equity preferred stock portfolio based on my current short and intermediate term forecasts. I will be a buyer of several of those securities when the current yield is over 8%. I will consider selling REIT equity preferred stocks when their current yields fall below 7% or their price exceeds $25.75 with a lower than 7.25% current yield. I will consider selling long term investment grades bonds currently yielding less than 6%.

One problem with selling anything is that the proceeds will probably be parked in a MM fund yielding nothing, so I would be giving up current yield in return for a slender capital gain; an avoidance of a potential capital loss; and a possible re-entry price at lower than my last purchase price creating a higher current yield and cutting down on the risk of lost opportunity.

Next week, I will discuss selling 1/2 of a long term senior bond position yielding less than 6% at the price sold and one elimination of a REIT equity  preferred stock yielding less than 7% at the price sold. I am using the price sold to compute current yield rather than the yield at my purchase cost. The general idea will be to buy these securities back at prices lower than my last purchase price.

In a 12/31/13 Post, I list the share prices for some securities that would be necessary to hit that 8% bogey. 

Recent Developments:

The FED reported that industrial production increased .6% in February. Manufacturing output rose .8%. Capacity utilization increased to 78.8%. Industrial Production and Capacity Utilization

The NY FED Empire manufacturing report for February indicated an improvement in business conditions, with a 5.6 reading in the general business conditions index and an uptick in new orders. Empire State Manufacturing Survey (overview) - Federal Reserve Bank of New York

CPI rose .1% in February on a seasonally adjusted basis. Core CPI also rose .1%. Over a 12 month period, CPI rose only 1.1% on a non-seasonally adjusted basis.

The Philly FED manufacturing rebounded in March to 9, up from -6.3 in February. Any number above zero indicate expansion.

The 4 week moving average of initial unemployment claims is looking much better.  4-Week Moving Average of Initial Claims- St. Louis Fed


1. Bought 300 Temple Hotels (TPH:CA) at C$5.85 (Canadian Dollar (CAD) Strategy)(see Disclaimer): I will make a general observation about Canadian securities for U.S. investors. They are becoming cheaper for those buying them with USDs. USD/CAD Currency Conversion Chart It is odd in a way that the CAD appears to be in free fall against the USD. After all, Canada is about to move into a budget surplus. Reuters We can only dream. Actually, it would be grounds for committal for anyone to even suggest that the U.S. government is fiscally responsible.  

Snapshot of Trade:

Company Description: Temple Hotels Inc. (TPH:TOR) is a Canadian REIT that owns hotels.

As of 1/6/2014, the portfolio consisted of 26 hotels with over 3,600 rooms. It is the largest hotel owner in Fort McMurray Alberta with over 800 rooms in 8 properties. Temple Hotels Inc. General Information Fort McMurray is considered the heart of one of Canada's largest oil sand areas known as the Athabasca oil sands

Company Website:  Temple Hotels Inc. Homepage

Key Developments Page at Reuters

The current monthly distribution is C$.045 per share: Announcement of February Distribution.pdf

Temple Hotels Inc. Cash Distributions

Temple Hotels Inc. Income Tax Information

Assuming a continuation of that rate, which is of course in no way assured, the dividend yield at a total cost of C$5.85 would be about 9.23%.

This REIT agreed to acquire the Hotel Saskatchewan, located in Regina, for C$32.6M, subject to the customary closing conditions. News Release/2/19/2014.pdf

In January, Temple Hotel closed its acquisition of an extended stay property known as Nova Court in the NWT for a price of C$21.67.

In May 2013, Temple sold 1,448,495 at C$5.4.

Prior Trades: None

Recent Earnings Report: The last earnings report at the time of my purchase was from the 2013 third quarter. Third Quarter - 2013 MD&A.pdf For that quarter, the company reported revenues of C$42+M, up from $25.254M in the 2012 third quarter. Adjusted FFO rose to $.25 from $.12. The occupancy level was at 79%, up from 72%. The RevPar increased to $125.15 from $116.8.  Interest expense decreased by 7%. The weighted average interest rate on outstanding mortgages decreased to 5.17% from 5.26%. I found this to be a comprehensive report with a lot of details.

Subsequent to my purchase, Temple Hotels reported on 3/13 its 4th quarter results. For the year, AFFO was $.70 per unit, up from $.50 in 2012. The AFFO payout ratio was 76%.

Interest cost has been trending down as shown in this table from that earnings release:

Rationale: Again, I am attempting to generate income on my Canadian dollar stash. By buying these shares in Toronto, I will receive monthly distributions in Canadian dollars after a 15% withholding tax.

Risks: As usual, this one has currency risk associated with its purchase by a U.S. investor. Discretionary leisure spending will decline during recessions. A long term chart reveals that this stock closed at C$9.7 on 9/8/2008 and cratered to C1.8 by April 2009. TPH.TO Interactive Chart

The Canadian dollar has been trending down against the USD, which trend accelerated some after the Fed released its policy statement last Wednesday. USD/CAD Currency Conversion Chart On the bright side, an investor with no exposure to Canadian securities can now buy more Canadian dollars with their USDs, effectively lowering their cost per share, assuming no change in ordinary shares price when the USD would buy fewer CADs.

FFO is not predictable within a comfortable range. I noted that two analysts had a prediction for the current year, one was at C.$72 and the other was at C$.3, Reuters, so I would not even hazard a guess. Hopefully those two analysts know far more about this Canadian REIT than I do.

I can only point out the historical FFO numbers. I did not have the 2013 4th quarter report when I made my purchase, and the latest Annual Report was from 2012.

2012 Annual Report.pdf
Page 7
Adjusted FFO/Distributable Income (defined at page 32)
2012: C$.50/C$.53
2011: C$.44/C$.48
2010: C$.43/C$.28

I generally would not want to own this kind of security with a recession clearly on the horizon.

Commercial mortgage maturities are generally relatively short (5 years would be an average length), and consequently will need to be refinanced often. Mortgages represented 70% of this REIT's debt as of 9/30/13. Mortgages with an outstanding principal balance of C$41M mature before September 2014 and hopefully will be refinanced at lower rates than their existing ones. Refinancing existing debt is always a risk, at least as to the interest rate and possibly on the ability to do so under the then existing circumstances.

This REIT has outstanding a significant amount of high cost convertible debentures. By high cost, I am referring to the coupons on these convertible instruments:

The highest cost one, with a 8.5% coupon, was redeemed in April 2013.

Closing Price Last Friday: TPH.TO: C$5.84 +0.07 (+1.21%)

2. Bought 50 CCGPRA at $25.13-Roth IRA and Bought 150 CCG at $8.51-Taxable Account (see Disclaimer): Since I am more than a little reluctant to buy bonds at their current yields, I have been adding REIT common and preferred stocks as bond substitutes. I am picking up more yield and simply hope to exit these two positions at a combined profit of 5% on the shares plus one or two dividend payments.  I would not label Campus Crest as a quality REIT, and the yield on the common indicates to me that the market agrees with that assessment at the current time.

Both CCG and CCGPRA are ex dividend today, Monday 3/24/14, for their quarterly dividends. The market prices have been adjusted to reflect the amounts of those distributions.

Snapshot of Trades:

2014 Roth IRA Bought 50 CCGPRA at $25.13 
2014 Bought 150 CCG at $8.51
Security and Company Description: Campus Crest Communities Inc. 8% Series A Preferred (CCG.PA) is an equity preferred stock that pays cumulative and non-qualified dividends at the fixed coupon rate of 8% on a $25 par value. The issuer is the REIT Campus Crest Communities, an owner and developer of student housing properties.

Including pro forma for the "Copper Beach restructure", the company has "ownership interests" in 80 student housing properties with over 43,000 beds and another 10 in development or redevelopment as of 12/31/13. An amendment to an agreement for the Copper Beach portfolio was executed in September 2013 that enabled Campus Crest to acquire a 67% interest in 30 properties while deferring ownership in 7 others until the company exercises further purchase options. The initial acquisition of that Copper Beach portfolio was made in February 2013 through the acquisition of a 48% interest for $230.2 million including the repayment of $106.7M in debt. That portfolio consists of 35 student housing properties, one undeveloped land parcel and a corporate office building (page 4- 10-k)

The CCGPRA prospectus does contain a typical Dividend Stopper clause and a provision allowing for a possible conversion into common shares after a change of control, as defined in the prospectus, unless the issuer elects to redeem this preferred stock at par value. Final Prospectus Supplement

For the reasons discussed below, CCG's common share have become a falling knife, as reflected in a two year chart. CCG Interactive Chart The common shares have declined from over $14 in April 2013 to near $8.5. As noted in the preceding chart, there was a plunge of nearly 10% after CCG released its 4th quarter earnings report and provided lower guidance for 2014. At least two brokerage firms downgraded the common shares after that report.

The decline in the CCG share price from the $14 plus area to $8.5 has raised the dividend yield of course. The current quarterly rate is $.165. Campus Crest Communities (CCG) Dividend History- Assuming a continuation of that rate, which is in no way assured, the yield at a total cost of $8.51 per share would be approximately 7.75%.

The dividend yield on CCGPRA would be about 7.96% at a total cost of $25.13. Comparing the two yields, I sense some concern by investors as to the sustainability of the common dividend at its current level. That dividend was raised from $.16 in the 2013 first quarter.

At the moment, I see the operational issues to be less important to the preferred stock owner than the normal risks associated with any potentially perpetual equity preferred stock, including interest rate and volatility risks.

The decline in CCGPRA price is probably more reflective of the interest rate rise that started in early May 2013. That increase pounded a number of fixed coupon preferred issues. CCGPRA was trading near $28 in early May but appears to have hit a bottom in the $24.5 to $25 range, at least for now. CCG.PA Stock Chart  A new and lower range could easily be established, however, with renewed concerns about a spike in interest rates and/or increased credit concerns about Campus Crest.

Prior Trades: None

Recent Earnings Report: For the Q/E 12/31/13, the company reported adjusted FFO of $.21 per share up from $.20 in the year earlier quarter. AFFO for 2013 was reported at $.8, up from $.75 for 2012. Occupancy stood at 92.4% at year end. SEC Filed Press Release

Guidance for 2014 was viewed negatively by the market. The company guided AFFO to $.72 to $.74, compared to the actual $.8 in 2013. That forecast assumes that the company will not exercise its first Copper Beach option this year. As I understand it, the exercise of the first purchase option would give CCG more of an ownership interest and "give us day to day control".

So I asked myself this question. The company has already spent a great deal of money acquiring an ownership stake and it may not exercise an option that would give it operational control. That is just a negative and a big question mark for me.

The earnings release was made after the market closed on 2/26/14. The share price closed at $9.33 on 2/26/14 and closed down $.97 on 2/27/14 or a 10.4% decline in response to this release and the conference call. CCG Historical Prices I missed that decline and bought some common shares on 3/6 after the price look like it was stabilizing around $8.5, at least for now.

The consensus estimate now is for $.76 this year and $.85 in 2015. At a total cost of $8.5, that would put the P/FFO at 10 based on the 2015 estimate. Given the quality of this REIT, I would not want to pay more. I would probably be a seller at a 12 forward year estimated P/FFO or $10.2.

The company expects to deliver 8 new development projects for the 2014-2015 academic year totaling 5,213 beds.

During the 4th quarter, the company sold $95.2M in its cumulative preferred stock series and $100M of a 4.75% senior bond maturing in 2018.

Earnings Call Transcript - Seeking Alpha

Rationale: I am attempting to increase cash flow through a blended purchase of CCG's common and equity preferred stock. While the current yields are comparable, there is more risk to the common dividend. The preferred dividend can not be cut or eliminated short of a BK. The preferred dividend has to be paid in full as long as any cash dividend is paid to the common shareholders, and CCG must pay a common share dividend when it has net income in order to maintain its tax status.

I do not expect much, if any, significant appreciation in the common until there is more clarity about Copper Beach which is viewed favorably by institutional investors.

Risks: Some of the risks are discussing in the Earnings Report section above. The risk revolves around the Copper Beach acquisition.

The company discusses risks incident to its business starting at page 11 of its last filed Annual Report: 10-k

I would credit risk to be important for the preferred stock. I am not comfortable either the credit or interest rate risk.

Future Buys: I am not likely to average down by buying more of the common or preferred shares. I will consider selling the preferred when and if I have a 10% annualized total return which could be achieved with 4 quarterly dividend payments and around a $26 exit price on the preferred shares. To hit that price, interest rates will need to remain abnormally low for at least another year, with no projected significant future increases, and Campus Crest will need to resolve some of the material investor's concerns. I may exit the position at a loss based on a evaluation of future earnings reports or renewed concerns about interest rate risk.

As to the common, I will have a hair trigger on that one. I would certainly consider selling at a P/FFO equal to or greater than 12 based on the consensus estimate made by analysts for the forward year.

Closing Prices Last Friday:
CCG: $8.73 +0.16 (+1.93%)
CCG-PA: $25.65 +0.11 (+0.43%)

4. Sold 1 Albertsons 7.75% Senior Unsecured Bond at 87.125-Roth IRA (see Disclaimer):

Snapshot of Trade:

Snapshot of Profit:

Bought 1 Albertsons 7.75% Senior Note Maturing 6/15/2026 at 80

According to FINRA, this bond is currently rated CCC by S & P, deep into junk territory.

This transaction is the second round trip for this particular bond. BOUGHT 1 Albertsons Bond Maturing 2026 at 80 (February 2011)- SOLD: 1 Albertsons 7.75% 2026 Bond @ 88.3 (May 2011)

This was my last Albertsons' bond. I no longer viewed it as an appropriate investment in an IRA. Albertsons is no longer a public company. It was acquired by an investor led group led by Cerberus Capital Management from Supervalu (SVU) who had paid too much for this chain in 2006.

On 3/6/14, that same private equity consortium agreed to acquire Safeway. Safeway and Albertsons Announce Definitive Merger Agreement It would be just too difficult and time consuming to monitor its financial reports, and to assess the long term impact of these leveraged buyouts on the credit quality issue, particularly when my position was limited to just a single $1,000 par value bond.

5. Sold 100 IDE at $17.47 (see Disclaimer):

Snapshot of Trade:

2014 Sold 100 IDE at $17.47

Snapshot of Profit:
2014 IDE 100 Shares +$138.39
Rationale: IDE was another underperforming buy-write stock CEF. Over the past 3 years, ending on 3/14/14, the total annualized return based on net asset value per share was a most disappointing 4.16%.

Closing Price Last Friday: IDE: 17.24 +0.07 (+0.41%)

6. Bought 50 RSOPRA at $23.79 (see Disclaimer): This one makes the OG nervous. When researching this one, I noted that someone had bought 100 shares of the functionally equivalent RSOPRB, and I thought that I only owned 50 shares-another OG type of moment. LB just added helpfully that the OG was an embarrassment and way past his prime.

Snapshot of Trade:

Security Description: The Resource Capital Corp. 8.50% Cumulative Preferred. Series A (RSO.PA) is an equity preferred stock issued by the paper REIT Resource Capital (RSO) that pays cumulative and non-qualified dividends at the fixed coupon rate of 8.5% on a $25 par value.

RSO has the option of redeeming this stock on or after 6/14/17. Prospectus Supplement The prospectus contains a typical dividend stopper clause and a change of control provision, both viewed as material.

Dividend Stopper:

That clause is the legal means by which the preferred stock's preference rights to income over the common stock is enforced. As long as the common shareholders receive a cash dividend, the preferred stockholders must be paid in full. And, since RSO is a REIT, it must pay out cash dividends to its common shareholders as long as it has net income in order to maintain its tax status. Once cash dividend payments to the common shareholder are eliminated, however, the company would have the right to defer the preferred dividend payment and no interest will be earned or accrued on the deferred amount. The dividend stopper clause will normally extend to cash purchases of common stock in addition to cash dividend payments.

Prior Trades: None

Related Trades: Until I started to research this company again, I did not realized that I owned 100 shares of RSOPRB (50 shares in two accounts). "Maybe the OG is losing contact with reality again", the LB noted with a tinge of sarcasm, adding with the usual super serious tone, "Time to put the Stock Stud back in control of the Trading Desk". Added 50 RSOPRB at $24.75; Bought Roth IRA: 50 BANCL at $25.20  50 RSOPRB at $24.9 (March 2013)

Recent Earnings Release: 12/31/2013

Rationale: As with other preferred stocks, this purchase is all about income generation. I have lost several bonds to calls recently and the options for income replacement generally range from clearly undesirable to barely desirable with numerous reservations and a few "ifs, ands and buts".

The current dividend yield is about 8.93% as a total cost of $23.79.

There is some potential for capital appreciation back above par value, where this security was trading between April-July 2013: RSO.PA Stock Charts

Equity preferred stocks issued by highly leveraged financial institutions, particularly those whose business model can be substantially impacted by sudden changes in rates. And we know what happened to the paper REITs when rates spiked starting last May.

RISKS: Risks are in abundance. Unlike equity REITs, paper REITs are highly leverage with debt far exceeding equity. If things go wrong quickly, there is not that much equity supporting that mountain of debt.

As with all REITs and BDCs, money is flying out the door to the common shareholders. Preferred shareholders would prefer that all or most of those funds be kept as a cushion for the payment of their dividends. Those dividends are all that the preferred shareholder really has, other than a higher priority claim in a BK to the common shareholder and a potential conversion right to common in the event of a change of control.

Spikes in interest rates can be most disruptive to a paper REIT's business model. A spike in short term rates could easily have the same disruptive impacts, causing credit concerns among those owning preferred issues.

A potentially perpetual preferred stock will react negatively to increases in long term interest rates viewed by the market as non-temporary.

The company discusses risks relating to its operations starting at page 17 of its recently filed 2013 Annual Report: RSO-2013.12.31-10K

In a BK, I would seriously doubt that a preferred stock issued by a paper REIT will have any value whatsoever. So the downside potential is zero.

Closing Price Last Friday: RSO-PA: $23.78 -0.02 (-0.08%)

7. Bought 50 MET at $51.76 (Large Cap Valuation Strategy)(see Disclaimer):

Snapshot of Trade:

Closing Price Day of Trade: MET: $51.74 -0.95 (-1.80%)

Company Description: MetLife Inc (MET) is a well known provider of insurance and financial services. It is the largest life insurer in the U.S by total assets and provides group life insurance to 90 of the Fortune 100. In recent years, the company has been expanding to international markets and expanding its business lines beyond life insurance. Earnings from international market have risen to 35% of the total. Morningstar estimates that income from retirement and asset management businesses will rise at a combined 8% compound annual growth rate.

Key Statistics Based on Price and Data as of 3/14/14:
MET Key Statistics
Forward P/E 2015: 8.49
Five Year Estimated P.E.G. 1.22
Price to Book: .94
Price to Sales: .85
Projected E.P.S. Growth Rate 2014-2015: $5.7 to $6.12 MET Analyst Estimates
Projected Growth in E.P.S. 2014-2015: 7.37%

Barrons recently published a favorable article on MET.

MET is currently paying a quarterly dividend of $.275 per share. At that rate and a total cost of $51.76 per share, the dividend yield would be about 2.12%. Prior to reverting to the quarterly dividend, MET paid out $.74 per share annually starting in 2007 and ending in 2012. MetLife, Inc. (MET) Dividend Date & History -

This stock does not qualify under my dividend growth strategy. It does qualify under my Large Cap Valuation Strategy based on the data cited above. I view it to be better for a stock to qualify under both. Item # 6 Stocks, Bonds & Politics Common Stock Dividend Growth vs. Long Term Investment Grade Bonds

Prior and Related Trades: My related trades for MET involve only METPRA that I have traded successfully. All of my METPRA trades were profitable and I found the following examples looking just in my Fidelity accounts:

2012 100 Shares METPRA  +$1,283.99 
2011 Regular IRA 50 Shares +$492.52

2009 Regular IRA 50 Shares +$117.97
Recent Earnings Report: For the 2013 4th quarter, MET reported operating earnings of $1.6B, up 14% from the 2012 4th quarter. On a per share basis, operating earnings were 10% higher at $1.37. Book value per share was reported at $48.49. SEC Filed Press Release

Rationale: I really do not expect much of a dividend raise until the federal government decides how it is going to treat MET's capital requirements as a systemically important financial institution.  MET does not agree with that characterization but the government is not listening to those protestations. MET expects to be so designated late this year, or in 2015, but it is simply not known now whether the company will need to raise equity capital to meet the regulatory standard. Due to this uncertainty, which will probably be cleared up within a year, MET is not using capital to buy back stock and the dividend increases have been to say the least stingy.

While dividend growth may pick up when a favorable resolution of future capital requirements, I would not view MET's dividend history as supporting a long term robust dividend growth.

I am buying the stock based on current valuation primarily, with some dividend support to the share price being a secondary consideration.

Risks: I mentioned one of the risks involving a possible, though currently unknown, material change in MET's capital requirements.

Some of the risk is on display simply by looking at a long term chart: MET Interactive Chart From September 2002 to October 2007, the stock rose around $21 to over $70, which works for me. Then the nasty happened and the price cascaded down to around $12.25 (3/09). Now, that had to hurt for a long time holder. The stock appears to have found a bottom, when it was trading between $30-$40 between September 2011 and May 2013. While it may be too early to tell, the stock looks like it is breaking out to a new trading range. Please remember that I have zero training in the art form known as technical analyses.

The company summarizes risks starting at page 34 of the recently filed 2013 Annual Report: MET-12.31.2013-10K

Future Buys and Sells: I may average down on this one, but I will not average up.

This one has moved up since my purchase.

Closing Price Last Friday: MET: $53.42 -0.23 (-0.43%)


Politics and Etc:

1. Dmitry Kiselyov-One of Putin's Many New Stooges: Putin has basically silenced the free press in Russia. Best to eliminate the possibility of widespread dissemination of facts that would challenge the Putin line. Putin recently promoted Dmitry, labelled as a "journalist" by the subservient Russian media, to the head of a news agency. One of Dmitry's first journalistic observations was to pronounce that the U.S. better behave or Russia will turn our homeland into radioactive ash. MarketWatch I am not sure what Dmitry is saying except that nuclear suicide is an option for Putin unless the west plays ball on Russia's military aggression.

I wonder whether Dmitry and other Russian "journalists" have read from the Budapest Memorandum on Security Assurances. The Europeans may need to be reminded that Russia will violate the clear meaning of any treaty that it signs whenever it wants to do so. This is just the latest in a long list of examples.

The more serious long term question is whether Nato will respond when and if Putin attempts to annex countries, formerly part of the Soviet Union, that are now part of the NATO protection umbrella, such as the three Baltic states. Personally, if I was living in Estonia or Latvia, I would not count on the Western European countries, particularly Germany, to do much of anything of consequence. Trade is more important to them. If Russia's aggression is to be challenged with force, the U.S. will be carrying that burden probably with meaningful assistance from the U.K. and possibly France.

Demitry and his ilk do serve an important function in Russian society today. It is imperative to divert attention from Putin's kleptocracy and growing dictatorship and to instead focus the attention of ordinary citizens on a big rock known as Crimea.

I have only one other thought on this topic. I would prefer watching the faux blondes on the "fair and balanced" network than to look at Dmitry.