Bought 50 PIS at 25, 50 CBU @ 23.18, 50 GFW @25.04/FIBK MBVT FNB UBSI WSBC VLO/Sold: 200 ERF-UN.TO @ 28.05 CAD, 100 DKW @ 25.25

I can not do anything to change the double spacing that appears later in this post which is apparently a safari browser issue and does not impact users of internet explorer or firefox.

1. Bought 50 of the TC PIS at its $25 Par Value on Monday (see disclaimer): If I can sell this TC at break-even after collecting a few interest payments, I will be pleased. PIS is a trust certificate containing a senior Liberty Media bond. While my trading record on this TC is good, I would highlight an obvious problem which inevitably arises by virtue of the constant movement in and out of securities. I last sold this TC at $17.05 in July 2009, having bought those shares at $13.69. Prior to that PIS transaction, I sold in an IRA another 50 shares at $16.5 with a $9.85 total cost per share (10/2008). Those sales may have made some sense at the time (mid-2009). And, I do have many prejudices against the way John Malone treats bondholders in companies that he runs, which was the prime motivation noted for selling some of the PIS shares. SOLD 1/2 OF PIS POSITION I still have that negative opinion.

I have sold out of, more recently, another TC containing a Liberty Media bond, PKK at 24.1, and consequently had no position whatsoever to this company prior to buying back 50 of PIS on Monday. This buy back of just 50 shares is more of a knee jerk reaction to the continued Jihad by the FED against savers, though playing with the house's money and the current yield are also justifications for this latest foray.

There are several TCs that contain Liberty Media bonds, all junk rated of course. PIS had the highest yield when I placed the trade on Monday.

PIS Prospectus: www.sec.gov PIS has a 8.75% coupon, higher than the underlying bond at 8.25%. The bond matures on 2/1/2030. The underlying bond was trading slightly above its par value on Monday: FINRA That bond is also the underlying security in the TCs PYL and PYA.

2. Regional Bank Earnings: FIBK, MBVT, FNB, UBSI, WSBC (all owned):

First Interstate is a disappointment. The bank released disappointing earnings soon after its IPO. When discussing those earnings, I argued that the IPO would have had to be substantially reduced in price, if the market had even a hint of what was about to come. Item # 6 FIBK So I have an unrealized loss on lost on 50 shares of FIBK at 15.64. More importantly than the loss, it just stinks.

First Interstate reported diluted earnings per share of 18 cents, down from the 36 cents earned in the 3rd quarter of 2009 before its IPO. The consensus estimate made by 5 analysts was for 15 cents.

Merchants Bancshares, a small bank headquartered in Vermont, reported an E.P.S. of 73 cents, beating the 59 cent estimate made by 1 analyst. This bank earned 61 cents in the 3rd quarter of 2009. As of 9/30, NPLs as a percentage of total loans was just .38%; NPAs to total assets was lower at .23%; and net interest margin was 3.7%. Bought 50 MBVT at 22.9 Perhaps, the Masters of Disaster at the larger financial institutions can learn something from the small banks. Maybe it is better to make good loans and investments. But, how can the Masters of Disaster make millions for themselves by being prudent and responsible, and after all, it pays so well to be stupid and irresponsible?

F.N.B. reported net income of 17.2 million for the 3rd quarter, or 15 cents per diluted share, down from 16 cents in the 3rd quarter of 2009. This missed the expectation of 16 cents. I own FNB primarily for the dividend yield which is around 5.5% at a $8.65 price. The valuation is also reasonable based on anticipated 2011 earnings of 74 cents per share: FNB Analyst Estimates I currently own 150 shares bought in fifty share lots at 7.8, 8.42and 9.36. Most likely, I would sell the higher cost lot near $10.

I have a decent unrealized percentage gain in shares of Wesbanco bought at 13.3. Wesbanco reported an E.P.S. of 34 cents, up from 9 cents in the 3rd quarter of 2009, and higher than the consensus estimate of 30 cents made by 7 analysts. The current consensus is for $1.42 in 2011. WSBC Analyst Estimates | WesBanco As of 9/30, the tier 1 leverage ratio was 8.17%; the allowance for loan losses to NPLs was at 66%; NPLs to to total loans was at 2.69%; and the net interest margin was at 3.61%, up from 3.35% as of 9/30/2009.

United Bankshares reported earnings of 40 cents, in line with estimates. The total risk based capital ratio was at 13.36%. NPAs to total assets stood at 1.61%. The tier 1 capital ratio was estimated at 11.97%. Net interest margin was 3.6%. I have one of my larger unrealized gains in the regional bank basket in shares of UBSI. Bought 50 of UBSI at 16.65 One reason for sticking with it is the dividend yield, which was close to 7% at the time of my purchase in November 2009. The yield at a price of $26.5, near where it is currently trading, is around 4.5%.

Regions Financial also reported, but I will no longer view its reports on the grounds that they make me nauseous. Bought 50 shares of RF at $3.47 Maybe in another three or so years, I will be able to look at a Region's report without triggering a upchuck reaction.

3. Valero (owned): I bought a small stake in VLO at 17.12, viewing the company to be undervalued over the long term at that price. Valero Energy Corporation reported a profit of 51 cents for the 3rd quarter from continuing operations, up from a loss of $.61 per share on the same basis in the 3rd quarter of 2009. This beat the estimate by 3 cents. Refining throughput margins increased to $7.87 per barrel from $2.79.

4. FirstEnergy (FE) (own): FirstEnergy reported non-GAAP earnings of $1.21 for the 3rd quarter, up from a similar non-GAAP $1.11 per share from the 3rd quarter of 2009. GAAP earnings were much lower at 59 cents and included, among other items, a 60 cent charge for some plant charges, discussed in a August press release from this electric utility: FirstEnergy Corp. Investor: Investor Information: News Release The consensus estimate, which usually does not include one time items, was for an E.P.S. of $ 1.14 on revenues of 4.1 billion.

5. SOLD 200 ENERPLUS RESOURCES FUND (ERF-UN.TO) at 28.05 CAD (see Disclaimer): This security has been a good income producer. And I may buy it back after it completes a conversion to a regular corporation which is currently scheduled to take place on 1/1/2011. Enerplus Announces Plan to Convert to Corporation I do not care for the tax headache to a U.S. investor caused by such a conversion. As previously noted from last year, the conversion of another Canadian energy trust to a regular corporation was treated as a sale on the date of the conversion and the receipt of shares in the new corporation. Then, as I understand it, and my understanding may be in error on any tax topic, particularly complex ones, the U.S. investor assumes the cost basis at the price of the new shares on the date of the conversion. I was just as soon not fool with that process again. I have enough problems with creating these additional tax issues. The problems encountered last year on Advantage Oil are described in several posts: Item # 4 Canadian Trusts Converting to Regular Corporations; Warnings on Canadian Trusts Converting to Corporations I mentioned that I would not own Enerplus at the time of its conversion in a prior post due to my experience with the Advantage Oil conversion: Item # 2 ERF I believe the only buy of Enerplus discussed in the blog is a purchase of 100 shares on the Toronto exchange at 23.95 CAD.

6. Sold 100 DKW at 25.25 (see Disclaimer): I decided to go ahead and sell this TC, which was called by the warrant holder at par value plus accrued interest. Alert on TC DKW-Exercise of Call Warrant/SOLD 50 OF 150 @ 25.20 I bought those shares a at 22.86 a few days ago based in part on a possible call.

7. Bought 50 GFW at $25.04 in the Roth IRA (see disclaimer): This was an average up in the Roth account for this security. I bought 50 shares of GFW at 22.63 last February in the Roth.

I took a profit on 50 GFW bought at 22.76 in a taxable account by selling those shares at 25.13.

The only positive comments that I can make about this kind of trading activity is that I did sell GFW at a profit in the taxable account, and in effect moved the position entirely into a retirement account which is where I prefer to own bonds.

I will just copy from an earlier post my discussion of this security, making a deletion that describes my yield at the lower purchase cost:

"GFW is a senior bond from AAG Holding, which is a wholly owned subsidiary of Great American Financial (GAF) (History), who guarantees this note, and GAF's major subsidiary is the Great American Life Insurance Company.Great American Financial Resources, Inc. - Home Great American Financial is in turn a subsidiary of American Financial Group (AFG), a insurance holding company. AFG is the only public company in this litany. This is a link to its last earnings report for the Q/E 12/31/2009.ex991020910.htm

GFW has a maturity date in 2033 and has a coupon of 7.5%. . . . This is a link to the prospectus: Final Prospectus Supplement The quantum site shows that this bond is rated investment grade, and I did not attempt to verify that claim as either accurate or current. Exchange-Traded Debt Securities Table - QuantumOnline.com

American Financial Group is controlled by the billionaire Carl Lindner and his sons."

The current yield at a total cost of $25.04 would of course be a tad below the coupon of 7.5%. Interest is paid quarterly, which is a plus compared to regular bonds traded in the bond market where semi-annual payments are the norm.

One way to look at it is that the interest generated by a security yielding 7.5%, bought in the Roth IRA, would in essence be equivalent to an investment grade tax free municipal bond yielding 7.5% in a taxable account. And, we all know that such a creature does not exist. That is about the only way that I can justify to myself the purchase of these senior bonds in a IRA at current prices.

I decided to add 50 shares of CBU near the close at 23.18 on Tuesday after discussing it in a post from earlier that day. That discussion was made in connection with its proposed acquisition for stock and cash of Wilber, which is still owned. (Regional Bank Stocks basket strategy) (see disclaimer). Since most of the price to be paid for my 151 shares in Wilber was to be paid in CBU stock, I looked into CBU as a preliminary step in deciding whether or not to keep the GIW shares. I was not familiar with CBU before reading about the merger proposal.

I had several other trades on Tuesday, and hope to discuss most of them in the next post.

GIW- Being Acquired/Bought 50 GYB @19.07/Sold: 50 HPQ @ 43.11, 50 WAG @ 34.45/Pared Trade: Sold 50 BMLPRJ @ 18.73-Bought 50 KRBPRD @ 25.14

I have a large inventory of stocks to sell into rallies. In an Unstable VIX Pattern, which has been effect since August 2007, I will do some minor selling when the VIX falls below 20 and will buy some stocks when the VIX shoots over 30. For purchases on those spikes, I basically attempt to identify whatever securities appear to me to offer value based on the then existing price, focusing mainly on those large cap companies that have good finances and stable and growing businesses.

I am that concerned about the firms earnings during a down economic cycle, but I nonetheless prefer to add consumer staples and less cyclical companies when making purchases during a long term secular bear market experiencing an Unstable VIX Pattern. Since I date the start of the long term bear market in stock as October 1997, I suspect that we are near the end of the current long term cycle, hopefully with no more than another two or three years to go. Or, alternatively with the VIX below 20 now, it may form a Stable Pattern which will give me a green light to add even more stock positions even if I believe that the longer term cycle remains in tact.

During the Unstable VIX Pattern Period, which can last for years, I may elect to pare positions on a day when the VIX is moving up significantly, as was the case yesterday, while the market was enjoying a rally. This assumes the VIX is below 20. At around 2:25 p.m EST, I noticed the S & P had moved up to 1191 from its starting value of 1183. The ^VIX , which ended the day up 5.75% at 19.86, was not confirming the market's move. The VIX was around 19.58 or so at that time as the market moved higher, up from its starting value of 18.78. That is an intra-day non-confirmation event, and that is when I decided to sell some stock. This is a variation of the swing trade discussed in this post from October 2008: More on the VIX AND ASSET ALLOCATION

Vix Asset Allocation Model Explained Simply

Current Status of The Vix Asset Allocation Model Signal (August 2010 post).

VIX Chart from 2007: Alerts and Triggers Major Disruption of Cyclical Stable Bull VIX Pattern

VIX and S & P Compared 1990 to 1997

I will generally require 3 months of continuous movement in the VIX below 20, allowing for some variations, before declaring the start of a Stable Vix Pattern. I am currently at day 9 in my count. I did not characterize the close at 20.63 on 10/19 as requiring a re-start of the count. However, it will be taken into account as a factor justifying a re-start of the count in the event of one or more closes above 20 soon.

The treasury re-opened a 5 year TIP, with 4 years and 6 months remaining, and the auction was at a coupon yield of -.55%. www.treasurydirect.gov .pdf This was the first negative yield for a TIP. WSJ The break-even point is around 1.7%, suggesting the market anticipates very modest inflation over the next five years (for a general discussion of what a TIP break-even point says about the market's forecast for inflation, see Advantages and Disadvantages of Treasury Inflation Protected Securities)

1. Wilber (GIW) Being Acquired by CBU (Regional Bank Stocks basket strategy): I was in the red on my Wilber shares almost from the time of purchase until yesterday. I stayed with the shares because I viewed this small NY bank to be undervalued. Bought 100 GIW at 7.03 Added 50 GIW at 6.55 The share price closed at $6.02 last Friday so this was one of my losers in the regional bank basket. The shares rose almost 48% yesterday in response to an offer to acquire GIW made by Community Bank System (CBU). The press release says the acquisition will be in stock and cash, valued at $9.5 per share, and I would assume that valuation would be at CBU's closing share price from last Friday. CBU expects the deal to be 2% to 4% accretive in 2011, excluding one time costs.

I was sufficiently interested in CBU that I looked at its last 10Q. I did check some items that I view as important. CBU did not have any government preferred stock on its balance sheet. It did not participate in TARP (see page 7 of 10k2008) I always like to see that in a potential purchase.

CBU earned 48 cents per diluted share for the Q/E 6 2010, up from 28 cents in the 2nd quarter of 2009. NPLs to total loans was at .68%. The allowance for loan losses to NPLs was comforting at 204%. The dividend payout ratio was then at 50.5% and the stock is currently yielding over 4%. The board increased the quarterly dividend by 2 cents in April 2010. pressrelease2010q1 The tier 1 leveraged ratio was 7.75% as of 6/30. The capital ratios for the year ending 12/31/2009 can be found at page 73 of the 2009 annual report. 10k2009.htm I counted six acquisitions of smaller banks between 2005 until the end of 2009 at pages 3-4 of the last annual report. My initial impression is that GIW is a good fit for CBU. CBU has 150 branches in upstate NY and northeastern PA. (operating under Community Bank N.A. & First Liberty Bank)

The consensus estimate for CBU, made by 6 analysts, is for 46 cents in the soon to be reported 3rd quarter and $1.81 in 2010. The estimate for 2011 is currently at $1.9: CBU Analyst Estimates | Community Bank System, So, one knock is a lack of earnings growth based on current analyst expectations. I will take a look at the earnings when they are released later this week.

2. NWBI (own-regional bank strategy): Northwest Bancshares reported net income of 15.5 million or 14 cents per share, up from 11 cents in the 3rd quarter of 2009. The consensus estimate was for 15 cents. The Board declared the regular 10 cent quarterly dividend. The net interest margin improved to 3.63% from the 3.47% reported for the Q/E 6/2010. As of 9/30/2010, tangible book value was $10.28 per share; NPAs to total assets was at 2.14%; NPLs to total loans was 2.7%; and allowance for loan losses to NPLs was 51.08% (below my comfort zone). The bank reported that it had experienced "strong lending and deposit growth".

3. Bought 50 of GYB @ 19.07 (see Disclaimer): I have bought and sold the synthetic floaters tied to Goldman Sachs' bonds on numerous occasions. I recently sold out of my positions entirely after netting close to $2500 in share profits, all with small positions (50 or 100 shares at a time), plus interest payments. These securities include GYB and PYT, both tied to a 2034 GS Trust Preferred, and GJS that has the 2033 GS senior bond as its underlying security. I am not including JBK in that computation, since it is no longer a floater. This is a summary of my trading activity in GYB, PYT and GJS in 2009-2010:

Profit after Commissions/ DATE

GYB $76.06 10/2010

$183.98 9/2009

$691.71 4/2010

$82.71 10/2010

$36.54 5/2009

SUB-TOTAL: $1071

PYT $685.02 9/2010

$187.73 3/2010

$20.98 2009

SUB-TOTAL: 893.73

GJS $64.08 10/2010

$ 244.53 11/2009

$168.15 2009 (3 ENTRIES)

SUB-TOTAL: $476.76

GRAND TOTAL: $2411.49

Trust Certificates: Links in One Post Duplicate Post

Synthetic Floaters

Some of my prior trades of GYB can be found in the following posts: Added another 100 GYB in Regular IRA at $11 Bought 50 GYB at $11 Sold 50 GYB at $15 Pared Trades in Roth: Sold 100 PYT at 19.25 & Bought 100 GYB at 18.98 Sold 70 PYT at 18.66 and Bought 70 GYB at 18.49 in Regular IRA Sold 50 GJS @ 16.20 & 100 GYB @ 19.9 Sold 100 GYB @ 19.4

I do not have high expectations for a purchase of GYB at $19.07. If GS survives and I held the security until the underlying bond matures, I would receive $25 for each share in 2034. It is extremely doubtful that I will hold onto these shares for more than a few months or a year.

GYB is a trust certificate that has as its underlying security a trust preferred issue from Goldman Sachs. While this security has multiple legal layers, I view the underlying security as a GS junior bond. While the underlying bond has a fixed coupon of 6.345%, www.sec.gov, GYB is a synthetic floater that pays the greater of 3.25% or .85% above the 3 month Libor rate, but no more than 8.25%, www.sec.gov. The float is created by a swap agreement with UBS.

The trustee for GYB collects the fixed coupon payments at 6.345% from GS and then exchanges those funds with UBS for either the guarantee of 3.25% or the amount due under the Libor float. So, that is a good deal without question for UBS now. UBS takes no risk of a GS default, which is borne by the owners of the TC, and collects the difference between the applicable rate now which is the 3.25% guarantee and the 6.345% paid by GS. The worm will turn against UBS when the LIBOR rate exceeds 5.495%. It is what it is and I can not be concerned about the merits of the deal for UBS but only whether I am satisfied with the terms of GYB at the $19.07 price. I would say just barely satisfied, and only barely in light of the Jihad by the Fed against savers now in its third year. So, it is relative.

At a total cost of $19.07, the current yield based on the 3.25% guarantee is 4.26% paid quarterly, which would be the minimum yield. The maximum yield, hit when the 3 month LIBOR hits .074% (maximum of 8.25% minus .85%=.074%), would be 10.82% (just multiply .0825% times the $25 par value and then divide by the total cost per share of $19.07) For as long as GS pays the interest due on the underlying security, I will receive a yield somewhere between 4.26% and 10.82%. I only own the synthetic floaters in retirement accounts due to complex tax issues associated with the swap agreement.

If the LIBOR rate rose to say 6% in the distant future, then the yield would rise to 8.69% at that total cost number.

Of course, if UBS goes bankrupt, and the swap agreement terminates, then the owners of GYB would receive the fixed coupon amount of the underlying bond paid on its schedule. JBK had this happen when Lehman, its swap counterparty, went bankrupt, and the trustee took the position that the owners of JBK were thereafter entitled to receive the the 6.345% of the 2034 GS TP rather than the much lower amount due under the swap agreement.

Information about the underlying bond in GYB can be found at FINRA.

GYB fell 51 cents yesterday to close at $18.7.

4. Sold 50 HPQ at 43.11 (see Disclaimer): Since I am admittedly not a tech investor, I will just try to trade them, clip a few bucks, and then move on to something where my comfort level is higher. HPQ may very well be undervalued at the $43.11 price. I certainly believed that the stock presented good value when I bought those 50 shares 38.2 in mid-September. I am not impressed with the actions taken by the Board and several Board members recently, or over the past several months. HPQ closed up 1 cent at $42.88 yesterday. The main reason for selling the shares is summarized in the opening part of this post.

5. Pared Trade: Sold 50 BMLPRJ at $18.73 and Bought 50 KRBPRD at $25.14 (see Disclaimer): I waited until my limit order on BMLPRJ was filled before entering an order on KRBPRD. Both of these securities are Bank of America obligations. BMLPRJ is an a non-cumulative equity preferred stock, originally issued by Merrill Lynch, that pays the greater of issue of 4% or .75% above the 3 month LIBOR rate. The KRBPRD security is a trust preferred security, that contains as its underlying security a junior bond originally issued by MBNA, which was acquired by BAC.

KRBPRD has a 8.125% coupon and a $25 par value, so my current yield is close to the coupon rate. It is rated the same as the other TPs originally issued by BAC. According to QuantumOnline.com, Moody's rates KRBPRD at investment grade, barely, at Baa3 and S & P has it rated BB, a junk classification. You can find these ratings also at Bank of America's web site: Bank of America | Investor Relations | Fixed Income Investor Relations

Bank of America also has links to the prospectuses for its trust preferred and equity preferred securities, along with some basic information about them at Bank of America | Investor Relations | Capital Issuances.

The TP and the underlying bond in the TP mature on 2/15/2032. This one has both credit and interest rate risk. Interest payments are made quarterly, and the distributions are cumulative. BAC would have to eliminate the common and equity preferred dividends in order to defer payments on its TPs. Any KRBPRD payment which is deferred will earn interest at the coupon rate. Assuming no activation of the stopper provisions, deferral can not be longer than 5 years. (see particularly page s-12 of the prospectus: www.sec.gov)

I own a similar security, KRBPRE, in the Roth IRA, but it was yielding less than KRBPRD yesterday. Both of those securities were yielding more than a TP, originally issued by BAC, that matures at around the same time. Bac Capital Trust I, BACPRW (2031-not owned); BAC Capital Trust VIII, BACPRZ (2035 not owned); & BAC Capital Trust IV, BACPRU (2033-not owned). Those TPs yield less than 7% at yesterday's closing prices.

Prospectus: www.sec.gov

Trust Preferred Securities: Links in One Post

BML-PJ closed at $18.35, down 35 cents, in light trading. KRB-PD closed down 5 cents at $25.13.

The reasons for the pared trades include a higher current yield in favor of the TP, its higher priority, the presence of a maturity date which is absent in BMLPRJ, and the cumulative nature of the TP's distributions. Given the current uncertainty in the foreclosure mess, I will move up the priority chain for more protection and, in this case, a higher yield.

I mentioned in a prior post that some recent developments relating to BAC have increased the OG's anxiety. Item # 3 BAC

6. Sold 50 WAG at 34.45 (see Disclaimer): I bought those shares in June at 30.15. The reason for selling those shares has less to do with WAG than the trading strategy currently being followed here, summarized briefly in the opening part of this post.

WAG closed at $34.44, up 37 cents.

I will discuss the earnings reports from MBVT, FNB, WSBC and FIBK, all positions in the regional bank basket, in the next post. Merchants Bancshares continues to impress. I also have one other purchase, a TC yielding around 8.75%, to discuss from Monday.

Sold 75 GDO at 19.24/VZ EXC OCFC/SOLD 100 of 200 OSM at 18.18

A man in Florida has now been living in his home for 8 years, without making a mortgage payment, since the lender can not produce the 1.5 million note signed by the borrower. BusinessWeek J P Morgan noted that the average time for a borrower to stay in their home after defaulting on the mortgage payments was 678 days in Florida and 792 days in New York. NYT For the most part there is not any question about the borrower defaulting, and the legal game is to keep them in their house, free of charge, for as long as possible. For Some Homeowners in Foreclosure, a Rent-Free Approach - NYTimes.com This legal stratagem is successful in a large number of jurisdictions and is encouraging strategic defaults by borrowers who are able to pay. Mortgages: Just Walk Away? - CNBC.com (see Item # 4 Strategic Defaults) A corollary to this legal strategy is to find members of the press who will be sympathetic to those who have defaulted on their obligations and to write articles mostly about the lenders' failure to follow certain procedures, such as the use of Robo-signers. The ultimate goal is for the defaulting borrower to live in their home for a year or two rent-free, and then to either invalidate the mortgage or force a substantial modification of the debt, both in the amount and the terms, in favor of the borrower. Some of the legal arguments on invalidation of the mortgage are summarized in this article in the NYT.

1. Sold 75 of the bond CEF GDO in Roth at $19.24 on Thursday (see Disclaimer): I pared a small part of my overall position in this CEF, which stood at 556 shares before I reduced the position in the ROTH IRA from 175 shares to 100. The shares sold on Thursday were part of a 100 share lot bought at $18.63. I am reinvesting the dividend in the taxable account, where I currently own 311 shares. The fund is currently paying a monthly dividend of 13 cents per share which results in a 8.09% yield at a total cost of $19.27. The last distribution went ex dividend on 11/17.

While I will add to and sell shares in GDO, hopefully to reduce my overall cost basis in the shares, I intend to keep a significant position until this CEF liquidates in 2024. The importance of a term date liquidation as a means to reduce interest rate risk in a bond fund is discussed in several earlier posts. Item # 4 More on GDO; Bought 100 of the CEF GDO at 18.6

Since this CEF holds foreign bonds, its asset value will fluctuate some based solely on currency fluctuations. Over the past few weeks, the USD has fallen in value against the Euro, and that decline has benefited U.S. shareholders of GDO. The opposite happened when the Euro plunged in value, falling below €1.2 per $1 during the recent European sovereign debt crisis, and the price of GDO fell below $17 in May: GDO Historical So with the rally in the foreign currencies, this presented an opportunity to trim GDO, and then hopefully pick up those shares again at a lower price.

2. Verizon (own stock and bond in TC form): Excluding one time items, Verizon posted earnings of 56 cents per share, besting the consensus estimate by 2 cents. GAAP earnings were 31 cents per share. VZ added 997,000 new wireless customers, down from 1.2 million in the 3rd quarter of 2009. There was 226,000 net FiOS internet and 204,00 net FiOS TV customers additions during the quarter. Free cash flow for the first 9 months increased to 13.4 billion in 2010 compared to 10.7 billion in the first nine months of 2009. VZ said that its adjusted E.P.S. for the second half of 2010 will be at the high end of the range of its previous guidance.

VZ fell 43 cents on Friday to close at $32.09. (BOUGHT 100 VZ at $26.74)

3. OceanFirst (OCFC) (own- Regional Bank Stocks' basket strategy): OCFC reported net income of 5.2 million or 29 cents per share, up from 27 cents in the 3rd quarter of 2009. The consensus estimate by 4 analysts was for 28 cents. As of 9/30, the net interest margin was 3.75%; NPLs as a percentage of total loans was at 2%; the allowance for loan losses as a percentage of NPLs was 55.05%; and the efficiency ratio was at 57.85. Bought 50 OCFC at 10.4

4. Exelon (EXC)(owned): Exelon's adjusted E.P.S. rose to $1.11 per share from 96 cents in the 3rd quarter of 2009. This utility raised its guidance range for the full year to $3.95 to $4.1 from $3.8 to $4.10 per share.

Exelon fell 3.49% or $1.52 in trading on Friday. Exelon traded briefly over $90 in 2008: Exelon Corporation Common Stock Stock Chart | EXC If I had to ascribe a reason for the decline on Friday, it would not be the earnings report for the 3rd quarter or the guidance for the remainder of the year. Instead, I suspect it has to do with weakness in Exelon's merchant power business, as shown by the low prices received for forward sales of generation output. Exelon hedged an additional 5% of its output for 2012. Management reduced its high end guidance for 2012 gross margins by 200 million for Exelon Generation, and this apparently caused some analysts to reduce earnings estimates for 2012 and 2013.

5. Sold 100 of the 200 Shares of OSM at $18.18 (see disclaimer): This was my only trade from Friday. I have discussed this floater in several posts, and have bought and sold it many times. When I started to talk about it, it was trading at around $10 a share. CPI FLoaters PFK AND OSM (12/2008) CPI FLOATER: OSM (12/2008) CPI and CPI Floaters-OSM (12/2008)

OSM is a senior bond issued by SLM, known as Sallie Mae, that pays monthly interest based on a spread to an obtuse CPI calculation that I explain in this post: Item # 1 Sh-- Happens/CPI It has a $25 par value and matures in 2017. www.sec.gov So this security would have a decent yield based just on the spread between its par value at maturity and the current market price, assuming SLM survives to pay off the note.

For some time, I have been concerned only about the credit risk of this issue given the government's takeover of student lending, and the end to its guarantees for lenders like SLM. I am far more comfortable holding until maturity a similar type bond issued by Prudential that matures in 2018: Added 50 PFK at $17.83 Bought 100 PFK at $18.466 Bought 90 PFK in IRA at $18.94 Added 50 PFK in Roth at 20.88-Averaged UP Unfortunately, PFK is now selling at over its $25 par value, and I have no interest in it at the current prices. (note: a similar CPI floater from SLM is ISM, with a 2018 maturity which I no longer own: prospectus at www.sec.gov)

6. CZNC Dividend Raises: Citizens & Northern, part of the regional bank basket, raised its dividend to 12 cents from the 10 cents paid last quarter. For the 2nd quarter of 2010, the bank paid 9 cents and 8 cents in the first quarter. The bank raised its annual rate gradually from $.60 in 2000 to $.90 in 2005, then cut it to 71 cents for 2006-2007, and then raised it again to $.96 for 2008, and lowered it again during the Near Depression period to 72 cents in 2009. The rate in 2010 will be 39 cents, but the Board appears to be in a raising mood. If the bank makes it bank to $.90, and based on my average cost for 100 shares of around $11.12, then my yield under that assumption would be about 8%. CZNC closed at $14.62 last Friday.