Monday, January 9, 2017

GMTA: Sold 30 at $24.5-Used Commission Free Trade-Small Ball in Potentially Long Duration Exchange Trade Bonds

GATX Corp. 5.625% Senior Notes due 2066 (GMTA) 

GMTA is an Exchange Traded Senior Bond which is currently rated Baa2 by Moody's and BBB by S & P. 

This senior unsecured bond was sold to the public at $25 last May. The issuer has the right to redeem on or after 5/30/2021 "at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, on the principal amount of the notes being redeemed to the applicable redemption date." If not redeemed early at the issuer's option, the bond will mature on 5/30/2066.  

Position in Schwab Account Prior to Pare: 

I sold the highest cost 30 share lot at $24.5 that was bought at $24.06 (11/29/16) and kept the 50 share lot bought at $22.23 (12/14) and a 20 share lot bought at $22.95 (12/12). 

Closed 1/9/16 at $$24.56
Yield at That Price = 5.73%
Last Quarterly Ex Interest Date: 11/10/16

All of those lots were bought with commission free trades and would not have been in that manner at Schwab's regular commission rate. 

By selling my highest cost lot, I reduced my average cost per share from $22.92 to $22.44, which mitigates future interest rate risk and increases my current yield as well. I will consider buying back that lot at less than $21.75 or up to 50 more shares at less than $20. The foregoing summarizes one trading strategy designed to mitigate interest rate risk. 

The lowest cost lot in that series of odd lot purchases was made in a ROTH IRA at $21.76 and is still owned.   

I now own 110 GMTA shares as part of my Exchange Traded Bonds and Preferred Stocks Basket Strategy. 

GATX SEC Filings 

2016 3rd Quarter Results 

GATX Analyst Estimates

I decided a few weeks ago to buy some longer duration bonds and to attempt interest rate risk management through a variety of measures summarized here:  Summary of Portfolio Management and Positioning at Update For Portfolio Positioning And Management 2016 4th Quarter - South Gent | Seeking Alpha


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    Hope this home works well for you :).

  2. LMH: Welcome to my Old Blog. I have to approve comments before they are published in order to cut down on spam and troll comments.