Saturday, February 28, 2015

Added 150 AEG at $7.79/Sold: 50 CBLPRD at $26.06 in Roth IRA and 50 FPOPRA at $26.2 in Taxable Account/Bought 1000 Asaleo Care at AUD$1.86

I discuss last Friday's purchase of Aegon (AEG) in a SA Instablog:  

Added To AEGON (AEG) - South Gent | Seeking Alpha

Stable Vix Pattern (Bullish):
Links to SeekingAlpha Instablog, Articles and Comments:

South Gent's Instablog | Seeking Alpha

South Gent's Articles | Seeking Alpha

South Gent's Comments | Seeking Alpha


Recent Developments:

The American Trucking Associations reported that truck tonnage increased 1.2% in January. The ATA's Truck Tonnage Index hit an all time high at 135.7 last month.

Seasonally adjusted CPI declined by .7% in January. Energy costs declined by 9.7% and 19.6% over the past 12 months. On a non-adjusted basis, CPI fell .1% over the twelve month period ending in January. Core consumer prices rose .2% in January. Core CPI has risen 1.6% over the past year before seasonal adjustments. Consumer Price Index Summary The Cleveland Fed's Median CPI Index rose .2% in January, a 1.9% annualized rate, and is up 2.2% over the past year. Current Median CPI

The government revised 4th quarter real GDP growth to 2.2% from its 2.6% original estimate. Growth in consumer spending was left unchanged at a rapid 4.2%. The PCE price index fell at a .4% annualized pace due to energy price declines. Excluding food and energy, the core PCE price index rose at a 1.1% rate. News Release: Gross Domestic Product

First Trust Take on the GDP Report

The following snapshot contains treasury yield data starting 2/2/15 and ending on 2/27/15:

Daily Treasury Yield Curve Rates

1. Sold 50 CBLPRD at $26.06 in Roth IRA (Equity REIT Common and Preferred Stock Basket Strategy)(see Disclaimer):

Snapshot of Trade:

2015 Roth IRA Sold 50 CBLPRD at $26.06

Snapshot of Roth IRA History:

Dividends: $138.3

Snapshot of Profit:

2015 CBLPRD 50 Shares +$58.98

Item # 6 Bought 50 CBLPRD at $24.6 (9/14/13 Post)

Total Return: $197.28 or 15.94% (holding period 17+ months)

Security Description:  CBL & Associates Properties Inc. 7.375% Cumulative Preferred Series D stock (CBL.PD) is a cumulative equity preferred stock issued by mall REIT CBL & Associates Properties Inc that will pay mostly or entirely non-qualified dividends at the fixed coupon rate of 7.375% on a $25 par value. Prospectus

CBLPRD can be called now at the issuer's option. It is possible that CBL will call the security provided it can refinance at a sufficiently lower rate to make it worthwhile.  

CBLPRC, which had a 7.75% coupon. was redeemed in November 2012. CBL Announces Redemption of 7.75% Series C Cumulative Redeemable Preferred Stock My first buy of that one was near $10. I am pleased that I have not lost money on any of those preferred stocks yet, and I would like to keep that way.

Total Realized Gains to Date CBL Equity Preferred Stocks: +$522.39

Prior Trades: As noted in the post discussing this trade, I have nibbled on CBL preferred stocks for several years (snapshots at Item # 5 Bought 50 CBLPRE at $22.7). I have also bought and sold the functionally equivalent CBLPRE as part of my equity REIT basket strategy. Sold:  50 CBLPRE at $23.81

Rationale: I see more downside risk than upside potential at a $26.06 price, which represents a 4.24% premium to the $25 par value.

This preferred stock traded down to $23.75 during the 2013 interest rate spike, falling from a April 2013 high near $25.5. CBL.PD Stock Chart

Future Buys: I will consider buying this preferred stock back in an IRA when its current yield exceeds 8%.

2. Sold 50 FPOPRA at $26.2 (Equity REIT Common and Preferred Stock Basket Strategy)(see Disclaimer):

Snapshot of Trade:

2015 Sold 50 FPOPRA at $26.2

Snapshot of Profit:

2015 FPOPRA 50 Shares +$81.58

Item # 1 Bought: 50 FPOPRA at $24.25 (1/6/14 Post)

Dividends: $121.09 (5 quarterly dividends)

Total Return: $202.67 or 16.6% (holding period 13 + months)

Security Description: The First Potomac Realty Trust Cumulative Preferred Stock Series A. FPO.PA) is an equity preferred stock issued by the REIT First Potomac Realty Trust (FPO:NYSE). This preferred stock pays cumulative and non-qualified dividends at the fixed coupon rate of 7.75% on a $25 par value. Distributions are paid quarterly. FPO has the option to redeem this security on or after 1/18/2016. There is a typical dividend stopper clause contained in the prospectus at page S-18.

There is also a change of control provision (pages S-19 to S-23)


SEC Filings for FPO

FPO 2014 10-K

Rationale: I see more downside risk than upside potential at a $26.2 price, which represents a 4.8% premium to par value.

During the interest rate rise in 2013, this preferred stock fell to about $24 after trading over $26.6 in May 2013. FPO.PA Stock Chart

Future Buys/Sells: I will consider repurchasing this preferred stock when and if the price falls below my last purchase price.

3. Bought 1000 Asaleo Care Limited at AUD$1.8576 (Australian Dollar Strategy)(see Disclaimer):

This stock went ex dividend for a AUD$.054 distribution three days after my purchase. Asaleo Care Ltd - Bloomberg The company currently intends to pay out 70% to 80% of statutory net profits after tax (NPAT). I can not link the reference, but I am referring to page 11 of 115 in the "Appendix 4E for 2014 Financial Year", which can be downloaded for review at Asaleo Care.

Snapshot of Trade:

Conversion USDs into AUDS:

Currency Exchange Without Broker's Fee-Approximate Value:

When I placed the trade at approximately 10:00 P.M. CST, the rate was 1.2764 or about 1.35%. The fee is supposed to be 1% which is built into the exchange rate.

Company Description: Asaleo Care Ltd (AHY:ASX) is an Australian based personal care products company. I took a snapshot of the products rather than describing them in words:

Asaleo's products are distributed in Australia, New Zealand and Fiji.

For 2015, the company is currently projecting low to mid single digit growth in net profit before taxes, and it does not anticipate paying Australian income taxes until F/Y 2016. The company did pay $2.5M in tax to New Zealand in F/Y 2014 and $.4M to Fiji.

Svenska Cellulosa AB (SCAB:STO) owned 32.5% of Asaleo's shares as of 12/31/14. I own 50 shares of Svenska's ADR which has performed well since my purchase: Bought Svenska Cellulosa (SVCBY)-A Swedish Personal Care And Tissue Company - South Gent | Seeking Alpha I mentioned Asaleo when discussing that purchase.

The company claims that EBITDA is growing:

Last Earnings Report: All amounts are expressed in Australian Dollars.

F/Y 14 Financials vs. F/Y 13:

The fiscal 2014 results were adversely impacted by significant non-recurring costs connected to the firm's IPO. Those items are described at page 26 of the Appendix referenced above.

The company provides pro-forma adjustments to its reported profits:

The company has drawn $271M on its $350M credit facility as of 12/31/14 at an "all up" cost of 4.4%.

Rationale:  The primary reasons are diversification, valuation and dividend support.

Bloomberg has the P/E at 13.74 based on estimated 2015 E.P.S and a AUD$1.8 share price. That is cheaper than other personal care product companies. I also was able to acquire shares at a discount due to using my USDs to make the purchase. I will soon receive a dividend paid in AUDs. While that dividend will not be franked, future dividends starting in F/Y 2016 may be partially or entirely franked depending on the company's tax rate.

Risks: The company summarizes risks incident to its operations starting at page 35 of the previously referenced Appendix 4E available for download at Asaleo Care.

This company is a small minnow in a highly competitive industry.

The company's history as a public company is of recent vintage.

Needless to say, an investor who is not a long term owner of AUDs is exposed to currency risk when buying a foreign stock after converting their native currency into the foreign local currency in order to complete the purchase.

I also bought some AUDs in excess of what I needed to pay for this purchase:

AUD/USD Chart 

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