Friday's Closing Prices:
S & P 500 1,955.06 -0.12 (-0.01%)
DJI: 16,662.91 -50.67 (-0.30%)
VIX: 13.07 +0.65 (+5.23%) : VOLATILITY S&P 500
TLT: $117.71 +1.27 (+1.09%) : iShares 20 Year Treasury Bond ETF
LQD: $119.83 +0.43 (+0.36%) : iShares Investment Grade Corporate Bond ETF
XLU: $41.97 +0.16 (+0.38%) : SPDR Utility ETF
GLD: $125.48 -0.83 (-0.65%) : SPDR Gold Trust
SLV: $18.84 -0.26 (-1.36%) : iShares Silver Trust
Big Picture Synopsis
Stocks:
S & P 500 1,955.06 -0.12 (-0.01%)
DJI: 16,662.91 -50.67 (-0.30%)
VIX: 13.07 +0.65 (+5.23%) : VOLATILITY S&P 500
TLT: $117.71 +1.27 (+1.09%) : iShares 20 Year Treasury Bond ETF
LQD: $119.83 +0.43 (+0.36%) : iShares Investment Grade Corporate Bond ETF
XLU: $41.97 +0.16 (+0.38%) : SPDR Utility ETF
GLD: $125.48 -0.83 (-0.65%) : SPDR Gold Trust
SLV: $18.84 -0.26 (-1.36%) : iShares Silver Trust
Big Picture Synopsis
Stocks:
Stable Vix Pattern (Bullish Cyclical Indicator)
Short Term: Market Needs a 15%+ Correction
Intermediate Term: Slightly Bullish (gains have borrowed from the future)
Long Term: Bullish
A chart published in a MarketWatch article shows that the average investors has underperformed cash over the past twenty years.
Bonds:
Short to Long Term: Slightly Bearish Based on Interest rate normalization
The big picture view on bonds assumes that the market is correctly forecasting the average inflation rate over the next ten years.
The ten year treasury was trading near a 2.33% yield last Friday: 10 Year Treasury Note Interactive Bond Chart
The German 10 year bond fell below 1% last week. 10Y German Gov't Bond Benchmark
France's 10 year is close to a 1.35% yield. FR 10Y Gov't Bond Benchmark
I will start discussing some bond and bond fund buys in next week's post. I started to add some bond CEFs to replace the income lost with my stock allocation reduction.
The ten year treasury was trading near a 2.33% yield last Friday: 10 Year Treasury Note Interactive Bond Chart
The German 10 year bond fell below 1% last week. 10Y German Gov't Bond Benchmark
France's 10 year is close to a 1.35% yield. FR 10Y Gov't Bond Benchmark
I will start discussing some bond and bond fund buys in next week's post. I started to add some bond CEFs to replace the income lost with my stock allocation reduction.
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Recent Developments:
Rail traffic had the best July in history.
Weekly Rail Traffic Summaries
The government reported that seasonally adjusted retail sales were unchanged from June to July. census.gov/retail.pdf Sales did increase 3.7% Y-O-Y. Excluding autos, July sales did increase .1% compared to June, below the .4% consensus estimate.
The German 10 year bond fell below 1% for the first time in history. MarketWatch
The German economy contracted .2% in the second quarter. MarketWatch; Reuters; Bloomberg
Hong Kong's GDP declined .1% in the second quarter from the prior quarter and was up a lower than expected 1.8% Y-O-Y. Bloomberg
Industrial production increased .4% in July with manufacturing output increasing 1%. Industrial Production and Capacity Utilization
The government reported that seasonally adjusted retail sales were unchanged from June to July. census.gov/retail.pdf Sales did increase 3.7% Y-O-Y. Excluding autos, July sales did increase .1% compared to June, below the .4% consensus estimate.
The German 10 year bond fell below 1% for the first time in history. MarketWatch
The German economy contracted .2% in the second quarter. MarketWatch; Reuters; Bloomberg
Hong Kong's GDP declined .1% in the second quarter from the prior quarter and was up a lower than expected 1.8% Y-O-Y. Bloomberg
Industrial production increased .4% in July with manufacturing output increasing 1%. Industrial Production and Capacity Utilization
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MTY-Matured and Redeemed on 8/11/14
MTY was a senior unsecured bond issued by Citigroup Funding, and guaranteed by Citigroup, that paid an annual coupon of 3%, or between 3% and 35% depending on the percentage increase in the price of gold during each annual coupon period. Final Pricing Supplement The last coupon period ended on 8/4/14 with a 3% coupon payment on a $10 par value ($30 for 100 shares). The Starting Value was $1,329.75 per gold ounce and there was no gain in that price as of the P.M. London fix on 8/4/14. Kitco Inc. - Past Historical London Fix
I took a snapshot of the redemption in a satellite taxable account:
As a side note, I would emphasize the importance of examining your brokerage statements for errors. I noted in an earlier post that TDAmeritrade transferred almost $6,000 from my account to an account unknown to me. A husband was attempting to transfer some funds from his account to his wife's account. An error was made in entering the correct account number. (Discussed More Fully in Stocks, Bonds & Politics) I mention this episode again due to an error that Vanguard made in accounting for the redemption proceeds of my 100 shares of MTY at $10. The amount swept from my brokerage account to the Vanguard MM fund was $10,000.
I sent Vanguard an email. I was hoping that some fan of the blog gifted me $10,000, you never know. I quit making the assumption that anything is being done right about 40 years ago. Vanguard corrected the error within 24 hours after receiving my email.
My sole remaining Citigroup Funding PPN is MOL, which has a chance of paying more than its 2% annual coupon. There is one remaining annual coupon period before this senior unsecured note matures on 11/26/2014. Par value is $10.
Starting Value Gold London P.M 11/20/13: $1,257
Kitco Inc. - Past Historical London Fix
Maximum Violation Level: ($1,257 x. 1.19=1,495.83)
End Date: 11/19/14
Prospectus
Bought 200 MOL at $9.95-Sold 100 MOL @ 10.3; Added 100 MOL at $9.78
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Healthlease Properties Real Estate Investment Trust (HLP.UN:TOR)
HealthLease Properties Real Estate Investment Trust agreed to be acquired by Health Care REIT for C$14.2 in cash.
I own 300 shares. Item # 3 Added 200 HLP_UN:CA at C$10.2 (5/31/14 Post); Item # 7 Bought: 100 HLP_UN:CA at C$10.17 (5/3/14 Post)
I will make a decision next week whether to sell the shares and when.
I will generally go ahead and sell shares in response to a cash offer since the price will generally be close to the offer. I might hold onto the shares when I conclude that a bidding war is likely, which is not the case here in my opinion.
Another reason for holding onto the shares is the Healthlease monthly dividend, which generates over an 8% yield at my total cost. This in effect becomes like a bond maturing in less than a year, with the maturity date being the deal's completion.
The countervailing consideration, as always, is that the deal may fall through for whatever reason, and I lose the nice gain of almost C$1,200. I generally prefer not to risk that kind of gain for a few dividend payments. On the other hand, I will risk that C$1,200 or so in profit for a few days, long enough to own the shares on the next monthly ex dividend date.
Closing Price 8/13/14: HLP-UN.TO: C$14.20 +3.37 (+31.12%)
Snapshot of Position as of 8/13/14:
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MTY-Matured and Redeemed on 8/11/14
MTY was a senior unsecured bond issued by Citigroup Funding, and guaranteed by Citigroup, that paid an annual coupon of 3%, or between 3% and 35% depending on the percentage increase in the price of gold during each annual coupon period. Final Pricing Supplement The last coupon period ended on 8/4/14 with a 3% coupon payment on a $10 par value ($30 for 100 shares). The Starting Value was $1,329.75 per gold ounce and there was no gain in that price as of the P.M. London fix on 8/4/14. Kitco Inc. - Past Historical London Fix
I took a snapshot of the redemption in a satellite taxable account:
As a side note, I would emphasize the importance of examining your brokerage statements for errors. I noted in an earlier post that TDAmeritrade transferred almost $6,000 from my account to an account unknown to me. A husband was attempting to transfer some funds from his account to his wife's account. An error was made in entering the correct account number. (Discussed More Fully in Stocks, Bonds & Politics) I mention this episode again due to an error that Vanguard made in accounting for the redemption proceeds of my 100 shares of MTY at $10. The amount swept from my brokerage account to the Vanguard MM fund was $10,000.
I sent Vanguard an email. I was hoping that some fan of the blog gifted me $10,000, you never know. I quit making the assumption that anything is being done right about 40 years ago. Vanguard corrected the error within 24 hours after receiving my email.
My sole remaining Citigroup Funding PPN is MOL, which has a chance of paying more than its 2% annual coupon. There is one remaining annual coupon period before this senior unsecured note matures on 11/26/2014. Par value is $10.
Starting Value Gold London P.M 11/20/13: $1,257
Kitco Inc. - Past Historical London Fix
Maximum Violation Level: ($1,257 x. 1.19=1,495.83)
End Date: 11/19/14
Prospectus
Bought 200 MOL at $9.95-Sold 100 MOL @ 10.3; Added 100 MOL at $9.78
Healthlease Properties Real Estate Investment Trust (HLP.UN:TOR)
HealthLease Properties Real Estate Investment Trust agreed to be acquired by Health Care REIT for C$14.2 in cash.
I own 300 shares. Item # 3 Added 200 HLP_UN:CA at C$10.2 (5/31/14 Post); Item # 7 Bought: 100 HLP_UN:CA at C$10.17 (5/3/14 Post)
I will make a decision next week whether to sell the shares and when.
I will generally go ahead and sell shares in response to a cash offer since the price will generally be close to the offer. I might hold onto the shares when I conclude that a bidding war is likely, which is not the case here in my opinion.
Another reason for holding onto the shares is the Healthlease monthly dividend, which generates over an 8% yield at my total cost. This in effect becomes like a bond maturing in less than a year, with the maturity date being the deal's completion.
The countervailing consideration, as always, is that the deal may fall through for whatever reason, and I lose the nice gain of almost C$1,200. I generally prefer not to risk that kind of gain for a few dividend payments. On the other hand, I will risk that C$1,200 or so in profit for a few days, long enough to own the shares on the next monthly ex dividend date.
Closing Price 8/13/14: HLP-UN.TO: C$14.20 +3.37 (+31.12%)
Snapshot of Position as of 8/13/14:
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1. Bought 50 of the ETF FIDU at $27.41-Commission Free at Fidelity (see Disclaimer):
Snapshot of Trade:
Security Description: The Fidelity MSCI Industrials Index ETF (FIDU) has an expense ratio of .12% and can be traded commission free by Fidelity customers provided the security is held for at least 30 days.
Top Holdings as of 7/29/14 (356 holdings):
Rationale: I was hesitant to buy any shares given the market's current level. When imbued with that kind of doubt, I fall back on buying a partial position, referred to by our RB as a chicken buy, recognizing that another buy, at a lower price, could easily happen.
As of 8/1/14, FIDU's YTD total return based on net asset value was -1.41% vs. the S & P 500 at +5.66%.
As of 8/1/14, FIDU's YTD total return based on net asset value was -1.41% vs. the S & P 500 at +5.66%.
Future Buys/Sells: With a 50 share lot purchase, I will probably never average up. Instead, if there is a quick 10% jump (i.e. occurring within 6 months), I would consider selling the 50 share lot and hope to buy at a lower price than my first purchase price at $27.41. Conversely, I will consider averaging down with another 50 share purchase, generally when and if the price declines more than 5% and preferably more than 10%.
Friday's Closing Price: FIDU: $27.33 -0.20 (-0.73%)
2. Sold 50 SU at $40.95 (see Disclaimer):
Snapshot of Trade:
Snapshot of Profit:
Recent Earnings Report: The last earnings report provoked a decision to harvest a profit. The earnings report is discussed in this Seeking Alpha article. The report is also discussed in these articles: Bloomberg; Reuters; Zacks.
News Release: Suncor Energy reports second quarter results
Rationale: I was dissatisfied with the last earnings report and somewhat concerned about the recent decline in oil prices. Oil sands production is relatively high cost.
I was in a stock allocation reduction mode when these shares were sold on 7/31/14.
I had a good percentage profit in the 50 share lot, as shown above, and that fact supported a decision to sell along with the other considerations outlined above.
Future Buys: Unless I see some improvement in earnings, I will want a 20% decline in the share price before repurchasing this lot. Since my CAD stash has built up over the past few weeks, due to a number of sells, I will consider buying 100 shares on the Toronto exchange using CADs which are currently generating no income. I can not buy odd lots on the Toronto exchange. The commission cost at Fidelity is more than twice the USD transactions on U.S. exchanges which is another consideration.
Friday's Closing Price: SU: $39.43 +0.97 (+2.52%)
3. Sold 300 FIE:CA at C$7.59 (Canadian Dollar (CAD) Strategy)(see Disclaimer):
Snapshot of Trade:
Snapshot of Profit:
Item # 4 Bought 300 of the Canadian ETF FIE:CA at C$7.26 (3/31/14 Post)
Dividends: $33.04
Total Return: $91.11 (holding period 2+ months)
Security Description: The iShares Canadian Financial Monthly Income ETF (FIE:TOR) is a Canadian ETF.
Sponsor's Website: IShares Canada ETFs
The top two holdings are two other Canadian ETFs. I already own 300 shares of the low cost 1-5 Year Laddered Corporate Bond ETF (CA:CBO) (corporate bonds rated "A" or better, staggered equal weightings, expense ratio .28%):
Rationale: Since this ETF was recently acquired, and I had a profit, I decided to include it in my ongoing stock allocation reduction.
Future Buys: I will want a 5+% correction in price before considering a repurchase.
Friday's Closing Price: FIE.TO: C$7.53 +0.01 (+0.07%)
4. Sold 108+ WIN at $10.53 (see Disclaimer). This was particularly bad timing. I sold these shares the day before WIN shares popped after announcing that some of its operations would be transferred into a new REIT.
Snapshot of Trade:
Snapshot of Minuscule Profit:
Rationale: This sell was motivated primarily by my belief that Winstream's business is in a long term secular decline. At some point in the future, I expect a dividend cut.
Given this stock's significant dividend yield at a $25 per share quarterly rate, my goal is simply to harvest any profit after collecting dividend payments for a year or more, which is identical to my main objective when purchasing a BDC.
Since I sold my WIN position one day before the REIT announcement, I only read the Morningstar report about how this proposed transaction would impact WIN shareholders. The analyst believes that the formation of a REIT, and the transfer of selected assets and operations to the REIT, will not change WIN's unfavorable outlook and that analyst kept the stock at 2 stars with a $8 fair value estimate. He has mentioned that the dividend would be cut by 30% when the foregoing split occurs. (rated 2 stars by Morningstar: WIN)
Seeking Alpha
Future Buys: Highly unlikely.
Friday's Closing Price: WIN: $11.36 -0.04 (-0.35%)
5. Sold 50 FENY at $27.81 (see Disclaimer):
Snapshot of Trade:
Snapshot of Profit:
Item # 2 Bought 50 FENY at $25.49 (3/10/14 Post)
Security Description: The Fidelity MSCI Energy Index ETF (FENY) has a .12% expense ratio and can be traded commission free by Fidelity customers, provided the position is held for at least 30 days.
Rationale: I simply harvested a profit in furtherance of my overall ongoing stock allocation reduction.
Oil prices had declined for several days in a row before I elected to include this position in my stock allocation reduction. Crude Oil Brent Price-NASDAQ.com; WTI Crude Oil Spot Price
Energy stocks looked weak when I sold this position, possibly due to weakening European economies and the sputtering growth in many emerging markets. Reuters Article on Eurozone Economy Grinding "To Halt" Energy stocks recovered last Friday some based on developments in the Ukraine which also gave bonds another lift.
Future Buys: I will be looking at a re-entry point when and if FENY falls below my last purchase price of $25.49.
Closing Price Last Friday: FENY: $27.93 +0.20 (+0.72%)
6. Sold All of JABAX at $30.99 (see Disclaimer):
Closing Price 8/4/14: JABAX: 30.99 +0.12 (+0.39%) : Janus Balanced Fund T Shares
JABAX Page at Morningstar: Rated 4 Stars (5 year total annualized return was 10.68% and YTD 4.13% through 84/14-click performance tab)
Snapshot of Trade:
Snapshot of Profit:
Dividends Received 2008-2014 (all reinvested): $1,211.41
Total Return: $2,547.44 or 44.6% Based on Total Cost
Share purchases, other than through dividend reinvestment, were made in the following years:
2008: $3,500
2010: $ 250
2012: $ 250
2004: $ 500
Links to Blog Discussions: Item # 3 Added to JABAX (2/3/14 Post); Item # 1 Added to Janus Balanced (1/31/12 Post); and noted at Stocks, Bonds & Politics: 10/22/08 Post
Rationale: The top four holdings are treasuries notes. Three of them mature in 2016 and have coupons of .25%, .375%, and .375%. The management fee is .83%. The overall yield for this balanced fund was shown by the sponsor at 1.47% as of 6/30/14. Janus Balanced Fund
It would not be difficult for me to secure two to three times that yield with the proceeds from this redemption by investing in a combination of blue chip dividend growers and a few selected investment grade bonds, without incurring an ongoing management fee charge.
I also harvested a decent profit. This balanced fund, with its very low yield, was also sold in furtherance of my stock allocation reduction.
Future Buys: I will want to receive significant income from the bond allocation before venturing back into this mutual fund. I am simply not interested in a balanced fund who buys treasuries, yielding almost nothing, as a significant part of the bond allocation.
7. Rounded KIO Lot to 100 Shares-Bought 34 Shares at $17.79 (see Disclaimer): Earlier this year, I had a partial 66 share fill for this security. Item # 4 Bought 66 KIO at $17.95 (partial fill)(4/1/14 Post) After a slight downdraft in the price, I decided to round the lot up to 100 shares.
Snapshot of Trade:
Security Description: The KKR Income Opportunities Fund (KIO) is a leveraged bond/bank loan CEF.
Data on Date of Trade 8/4/14:
Closing Net Asset Value Per Share: $19.5
Closing Market Price: $17.81
Discount: -8.67%
CEFConnect Page for KIO
The current monthly dividend rate is $.125 per share. At that rate, the dividend yield would be about 8.43% at a total cost of $17.79 per share.
Sponsor's Website: KKR Funds (as of 3/31/14: 112 holdings, duration at 3.99 years, average coupon at 10.71%; weighted in BB and B rated credits: KIO-Factsheet.pdf
Last SEC Filed Shareholder Report: Period Ending 4/30/14 (net unrealized appreciation at $9.442+M)
The rationale for buying this leveraged CEF is to generate income and hopefully exit the position at a profit. The risks are summarized in my post discussing the 66 share purchase which is linked above. I am not reinvesting the dividends. I may average down in one, or no more than two 50 share lots.
Closing Price Last Friday: KIO: $17.81 +0.09 (+0.51%)
Ex-Dividend 8/14/14 After Purchase: KIO Historical Prices
8. Sold 113+ DPG of 333+ at $21.19-Roth IRA (see Disclaimer):
Snapshot of Trade:
Snapshot of History:
Dividends: $259.54
Snapshot of Profit:
Item # 3 Bought 100 DPG at $17.31 (12/12/12 Post)
Total Return: $662.61 on original investment of $1,738 or 38.1% (holding period about 20 months)
Prior Trades: I still own 200 shares in a taxable account where I am not reinvesting the dividend. Item # 1 Bought 100 of the CEF DPG at $17.3 (12/29/12 Post); Item # 7 Added 100 DPG at $18.58 (2/3/14 Post)
Snapshot of DPG in Taxable Account as of 8/15/14:
Security Description: The Duff & Phelps Global Utility Income Fund (DPG) is a leveraged CEF that invests in utility and telecommunication stocks as well as MLPs.
Sponsor's website: Duff & Phelps Global Utility Income Fund — Home
CEFConnect Page for DPG
DPG Page at Morningstar
Data on Date of Trade 8/6/14
Closing Net Asset Value Per Share: $24.11
Closing Market Price: $21.11
Discount: -12.15%
Average Discounts
1 Year: -11.54%
3 Year: -6.79%
Subsequent to my disposition, Kinder Morgan (KMI) announced that it wanted going to consolidate its MLPs into KMI and offered a premium price for the units in those MLPs. One of those MLP's, Kinder Morgan Energy Partners (KMP), rose 17.15% to $94.12 in response to that acquisition offer. KMI rose 9%. As of 4/30/14, DPG owned 800,000 shares of KMI and 283,803 shares of KMP. Duff & Phelps Global Utility Income Fund On the day of that announcement (8/11/14), DPG's net asset value per share rose 1.76% to $24.4 when XLU's NAV per share declined .36%, suggesting to me that DPG still owned KMI and KMP on that day.
As I noted in a recent post, DPG also had a significant stake in two electric utilities when they received acquisition offers earlier this year. (introduction section: Stocks, Bonds & Politics: DPG)
Closing Prices Last Friday for KMI and KMP:
KMI: $41.43 +1.55 (+3.89%)
KMP: $98.90 +3.42 (+3.58%)
I did buy KMI in a trust account in early June, when the price was around $35. It just looked to me that it was about to break above its 200 day SMA line. KMI Interactive Chart
Rationale: The main reason for selling the 113+ shares in the Roth IRA was profit taking. Secondary considerations include de-risking in the IRAs, the likely negative impact on utility stock prices from rising rates (rates are still falling however) and a weak looking charts among utility stocks and utility stock ETFs at the time of my sell.
DPG Interactive Chart
When I decided to pare DPG, the Select Sector SPDR-Utilities Fund ETF (XLU) has broken its 200 day SMA line to the downside and subsequently moved back over that line. The price action looks weak, however, since 7/1/14: XLU Chart.
Future Buys: I may buy back 100 of the 113 shares sold in a regular IRA after a minor correction. My general rule of thumb now is to do a Roth IRA conversion whenever a security purchased in a regular IRA declines more than 10% from my purchase price. Before I reach 70.5, all of my assets formerly held in a regular IRA will have been transferred to ROTH IRA accounts and hopefully I will never need to withdraw any of those funds.
In other words, I will avoid the mandatory withdrawal rules associated with regular IRAs by doing Roth conversions, which started in October 2008, and will not withdraw any funds from the Roth IRA unless absolutely necessary. The Roth IRA will be my last line of defense for meeting living expenses in retirement.
Closing Price Last Friday: DPG: $21.69 -0.10 (-0.46%)
9. Sold 100 BGAOY at $6.9 (see Disclaimer): I recorded a $20.93 loss on the shares. Both WIN and BGAOY are obvious selections for disposition when conducting a stock allocation reduction. Both securities have substantially underperformed the market since purchase and their prospects for future growth are most likely significantly below average.
Snapshot of Trade:
Dividends Received: $182.77
Total Return: $161.84 or 23%
Rationale: While this one generated decent income, the overall total return for a stock bought in 2011 was very poor. And it was worse until just recently. BGAOY Interactive Chart When conducting a stock allocation reduction, an underperforming stock is a candidate for elimination. Lastly, this ADR is priced in USDs, but the ordinary shares are priced in Euros which has been declining against the USD. EUR/USD Currency Conversion Chart The Euro's decline flows through into the pricing of BGAOY.
Closing Price Last Friday: BGAOY: $7.02 +0.13 (+1.89%)
Snapshot of Trade:
 |
| 2014 Sold SU 50 Shares at $40.95 |
 |
| 2014 SU 50 Shares +$598.05 |
News Release: Suncor Energy reports second quarter results
Rationale: I was dissatisfied with the last earnings report and somewhat concerned about the recent decline in oil prices. Oil sands production is relatively high cost.
I was in a stock allocation reduction mode when these shares were sold on 7/31/14.
I had a good percentage profit in the 50 share lot, as shown above, and that fact supported a decision to sell along with the other considerations outlined above.
Future Buys: Unless I see some improvement in earnings, I will want a 20% decline in the share price before repurchasing this lot. Since my CAD stash has built up over the past few weeks, due to a number of sells, I will consider buying 100 shares on the Toronto exchange using CADs which are currently generating no income. I can not buy odd lots on the Toronto exchange. The commission cost at Fidelity is more than twice the USD transactions on U.S. exchanges which is another consideration.
Friday's Closing Price: SU: $39.43 +0.97 (+2.52%)
3. Sold 300 FIE:CA at C$7.59 (Canadian Dollar (CAD) Strategy)(see Disclaimer):
Snapshot of Trade:
Snapshot of Profit:
 |
| 2014 FIE:CA 200 Shares +$58.07 |
Dividends: $33.04
Total Return: $91.11 (holding period 2+ months)
Security Description: The iShares Canadian Financial Monthly Income ETF (FIE:TOR) is a Canadian ETF.
The top two holdings are two other Canadian ETFs. I already own 300 shares of the low cost 1-5 Year Laddered Corporate Bond ETF (CA:CBO) (corporate bonds rated "A" or better, staggered equal weightings, expense ratio .28%):
The other ETF holding is the Canadian Preferred Share Index Fund (CA:CPD) which has 205 holdings and a .45% expense ratio. FIE will include acquired fund fees in its expense ratio.
The other holdings are a smattering of Canadian REITs, banks and insurance companies.
The current monthly dividend is C$.04 per share: Distributions
Rationale: Since this ETF was recently acquired, and I had a profit, I decided to include it in my ongoing stock allocation reduction.
Future Buys: I will want a 5+% correction in price before considering a repurchase.
Friday's Closing Price: FIE.TO: C$7.53 +0.01 (+0.07%)
4. Sold 108+ WIN at $10.53 (see Disclaimer). This was particularly bad timing. I sold these shares the day before WIN shares popped after announcing that some of its operations would be transferred into a new REIT.
Snapshot of Trade:
Snapshot of Minuscule Profit:
Rationale: This sell was motivated primarily by my belief that Winstream's business is in a long term secular decline. At some point in the future, I expect a dividend cut.
Given this stock's significant dividend yield at a $25 per share quarterly rate, my goal is simply to harvest any profit after collecting dividend payments for a year or more, which is identical to my main objective when purchasing a BDC.
Since I sold my WIN position one day before the REIT announcement, I only read the Morningstar report about how this proposed transaction would impact WIN shareholders. The analyst believes that the formation of a REIT, and the transfer of selected assets and operations to the REIT, will not change WIN's unfavorable outlook and that analyst kept the stock at 2 stars with a $8 fair value estimate. He has mentioned that the dividend would be cut by 30% when the foregoing split occurs. (rated 2 stars by Morningstar: WIN)
Seeking Alpha
Future Buys: Highly unlikely.
Friday's Closing Price: WIN: $11.36 -0.04 (-0.35%)
5. Sold 50 FENY at $27.81 (see Disclaimer):
Snapshot of Trade:
 |
| 2014 Sold 50 FENY at $27.81 |
 |
| 2014 FENY 50 Shares +$115.96 |
Security Description: The Fidelity MSCI Energy Index ETF (FENY) has a .12% expense ratio and can be traded commission free by Fidelity customers, provided the position is held for at least 30 days.
Rationale: I simply harvested a profit in furtherance of my overall ongoing stock allocation reduction.
Oil prices had declined for several days in a row before I elected to include this position in my stock allocation reduction. Crude Oil Brent Price-NASDAQ.com; WTI Crude Oil Spot Price
Energy stocks looked weak when I sold this position, possibly due to weakening European economies and the sputtering growth in many emerging markets. Reuters Article on Eurozone Economy Grinding "To Halt" Energy stocks recovered last Friday some based on developments in the Ukraine which also gave bonds another lift.
Future Buys: I will be looking at a re-entry point when and if FENY falls below my last purchase price of $25.49.
Closing Price Last Friday: FENY: $27.93 +0.20 (+0.72%)
6. Sold All of JABAX at $30.99 (see Disclaimer):
Closing Price 8/4/14: JABAX: 30.99 +0.12 (+0.39%) : Janus Balanced Fund T Shares
JABAX Page at Morningstar: Rated 4 Stars (5 year total annualized return was 10.68% and YTD 4.13% through 84/14-click performance tab)
Snapshot of Trade:
 |
| 2014 Sold 227+ JABAX at $30.99 |
.jpg){kind=small} |
| 2014 JABAX 227+ Shares +$1,336.03(Long Term=$1,258.29) |
Dividends Received 2008-2014 (all reinvested): $1,211.41
Total Return: $2,547.44 or 44.6% Based on Total Cost
Share purchases, other than through dividend reinvestment, were made in the following years:
2008: $3,500
2010: $ 250
2012: $ 250
2004: $ 500
Links to Blog Discussions: Item # 3 Added to JABAX (2/3/14 Post); Item # 1 Added to Janus Balanced (1/31/12 Post); and noted at Stocks, Bonds & Politics: 10/22/08 Post
Rationale: The top four holdings are treasuries notes. Three of them mature in 2016 and have coupons of .25%, .375%, and .375%. The management fee is .83%. The overall yield for this balanced fund was shown by the sponsor at 1.47% as of 6/30/14. Janus Balanced Fund
It would not be difficult for me to secure two to three times that yield with the proceeds from this redemption by investing in a combination of blue chip dividend growers and a few selected investment grade bonds, without incurring an ongoing management fee charge.
I also harvested a decent profit. This balanced fund, with its very low yield, was also sold in furtherance of my stock allocation reduction.
Future Buys: I will want to receive significant income from the bond allocation before venturing back into this mutual fund. I am simply not interested in a balanced fund who buys treasuries, yielding almost nothing, as a significant part of the bond allocation.
7. Rounded KIO Lot to 100 Shares-Bought 34 Shares at $17.79 (see Disclaimer): Earlier this year, I had a partial 66 share fill for this security. Item # 4 Bought 66 KIO at $17.95 (partial fill)(4/1/14 Post) After a slight downdraft in the price, I decided to round the lot up to 100 shares.
Snapshot of Trade:
Security Description: The KKR Income Opportunities Fund (KIO) is a leveraged bond/bank loan CEF.
Data on Date of Trade 8/4/14:
Closing Net Asset Value Per Share: $19.5
Closing Market Price: $17.81
Discount: -8.67%
CEFConnect Page for KIO
The current monthly dividend rate is $.125 per share. At that rate, the dividend yield would be about 8.43% at a total cost of $17.79 per share.
Sponsor's Website: KKR Funds (as of 3/31/14: 112 holdings, duration at 3.99 years, average coupon at 10.71%; weighted in BB and B rated credits: KIO-Factsheet.pdf
Last SEC Filed Shareholder Report: Period Ending 4/30/14 (net unrealized appreciation at $9.442+M)
The rationale for buying this leveraged CEF is to generate income and hopefully exit the position at a profit. The risks are summarized in my post discussing the 66 share purchase which is linked above. I am not reinvesting the dividends. I may average down in one, or no more than two 50 share lots.
Closing Price Last Friday: KIO: $17.81 +0.09 (+0.51%)
Ex-Dividend 8/14/14 After Purchase: KIO Historical Prices
8. Sold 113+ DPG of 333+ at $21.19-Roth IRA (see Disclaimer):
Snapshot of Trade:
Snapshot of History:
Dividends: $259.54
Snapshot of Profit:
 |
| 2014 Roth IRA 113+ DPG +$403.07 |
Item # 3 Bought 100 DPG at $17.31 (12/12/12 Post)
Total Return: $662.61 on original investment of $1,738 or 38.1% (holding period about 20 months)
Prior Trades: I still own 200 shares in a taxable account where I am not reinvesting the dividend. Item # 1 Bought 100 of the CEF DPG at $17.3 (12/29/12 Post); Item # 7 Added 100 DPG at $18.58 (2/3/14 Post)
Snapshot of DPG in Taxable Account as of 8/15/14:
 |
| DPG 200 Shares Unrealized Gain as of 8/15/14=$789.66 |
Security Description: The Duff & Phelps Global Utility Income Fund (DPG) is a leveraged CEF that invests in utility and telecommunication stocks as well as MLPs.
Sponsor's website: Duff & Phelps Global Utility Income Fund — Home
CEFConnect Page for DPG
DPG Page at Morningstar
Data on Date of Trade 8/6/14
Closing Net Asset Value Per Share: $24.11
Closing Market Price: $21.11
Discount: -12.15%
Average Discounts
1 Year: -11.54%
3 Year: -6.79%
Subsequent to my disposition, Kinder Morgan (KMI) announced that it wanted going to consolidate its MLPs into KMI and offered a premium price for the units in those MLPs. One of those MLP's, Kinder Morgan Energy Partners (KMP), rose 17.15% to $94.12 in response to that acquisition offer. KMI rose 9%. As of 4/30/14, DPG owned 800,000 shares of KMI and 283,803 shares of KMP. Duff & Phelps Global Utility Income Fund On the day of that announcement (8/11/14), DPG's net asset value per share rose 1.76% to $24.4 when XLU's NAV per share declined .36%, suggesting to me that DPG still owned KMI and KMP on that day.
As I noted in a recent post, DPG also had a significant stake in two electric utilities when they received acquisition offers earlier this year. (introduction section: Stocks, Bonds & Politics: DPG)
Closing Prices Last Friday for KMI and KMP:
KMI: $41.43 +1.55 (+3.89%)
KMP: $98.90 +3.42 (+3.58%)
I did buy KMI in a trust account in early June, when the price was around $35. It just looked to me that it was about to break above its 200 day SMA line. KMI Interactive Chart
Rationale: The main reason for selling the 113+ shares in the Roth IRA was profit taking. Secondary considerations include de-risking in the IRAs, the likely negative impact on utility stock prices from rising rates (rates are still falling however) and a weak looking charts among utility stocks and utility stock ETFs at the time of my sell.
DPG Interactive Chart
When I decided to pare DPG, the Select Sector SPDR-Utilities Fund ETF (XLU) has broken its 200 day SMA line to the downside and subsequently moved back over that line. The price action looks weak, however, since 7/1/14: XLU Chart.
Future Buys: I may buy back 100 of the 113 shares sold in a regular IRA after a minor correction. My general rule of thumb now is to do a Roth IRA conversion whenever a security purchased in a regular IRA declines more than 10% from my purchase price. Before I reach 70.5, all of my assets formerly held in a regular IRA will have been transferred to ROTH IRA accounts and hopefully I will never need to withdraw any of those funds.
In other words, I will avoid the mandatory withdrawal rules associated with regular IRAs by doing Roth conversions, which started in October 2008, and will not withdraw any funds from the Roth IRA unless absolutely necessary. The Roth IRA will be my last line of defense for meeting living expenses in retirement.
Closing Price Last Friday: DPG: $21.69 -0.10 (-0.46%)
9. Sold 100 BGAOY at $6.9 (see Disclaimer): I recorded a $20.93 loss on the shares. Both WIN and BGAOY are obvious selections for disposition when conducting a stock allocation reduction. Both securities have substantially underperformed the market since purchase and their prospects for future growth are most likely significantly below average.
Snapshot of Trade:
Dividends Received: $182.77
Total Return: $161.84 or 23%
Rationale: While this one generated decent income, the overall total return for a stock bought in 2011 was very poor. And it was worse until just recently. BGAOY Interactive Chart When conducting a stock allocation reduction, an underperforming stock is a candidate for elimination. Lastly, this ADR is priced in USDs, but the ordinary shares are priced in Euros which has been declining against the USD. EUR/USD Currency Conversion Chart The Euro's decline flows through into the pricing of BGAOY.
Closing Price Last Friday: BGAOY: $7.02 +0.13 (+1.89%)
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