Last Friday's Closing Prices:
S & P 500 1,936.16 +6.05 (+0.31%)
VIX: 12.02 -0.54 (-4.30%) : VOLATILITY S&P 500 (stable vix pattern)
VXN: 13.61 -0.24 (-1.73%) : CBOE NASDAQ 100 Volatility
TLT: $112.16 -0.05 (-0.04%) : iShares 20+ Year Treasury Bond ETF
GLD: $122.94 +0.30 (+0.24%) : SPDR Gold Trust
GSG: $33.82 -0.07 (-0.21%) : iShares GSCI Commodity-Indexed Trust
VWO: $43.61 +0.16 (+0.37%) : Vanguard FTSE Emerging Markets ETF
EWC: $31.51 +0.22 (+0.69%) : iShares MSCI Canada Index Fund
ENY: $17.35 +0.28 (+1.64%) : Guggenheim Canadian Energy Income ETF
FENY: $28.56 +0.22 (+0.78%) : Fidelity MSCI Energy Index ETF
Big Picture Synopsis:
S & P 500 1,936.16 +6.05 (+0.31%)
VIX: 12.02 -0.54 (-4.30%) : VOLATILITY S&P 500 (stable vix pattern)
VXN: 13.61 -0.24 (-1.73%) : CBOE NASDAQ 100 Volatility
TLT: $112.16 -0.05 (-0.04%) : iShares 20+ Year Treasury Bond ETF
GLD: $122.94 +0.30 (+0.24%) : SPDR Gold Trust
GSG: $33.82 -0.07 (-0.21%) : iShares GSCI Commodity-Indexed Trust
VWO: $43.61 +0.16 (+0.37%) : Vanguard FTSE Emerging Markets ETF
EWC: $31.51 +0.22 (+0.69%) : iShares MSCI Canada Index Fund
ENY: $17.35 +0.28 (+1.64%) : Guggenheim Canadian Energy Income ETF
FENY: $28.56 +0.22 (+0.78%) : Fidelity MSCI Energy Index ETF
Big Picture Synopsis:
Stocks:
Stable Vix Pattern (Bullish)
Vix Asset Allocation Model Explained Simply
Vix Asset Allocation Model Explained Simply
Short Term: Market in Dire Need of a 15% Correction
Intermediate Term: Slightly Bullish (rise since 3/2009 borrows from future gains)
Long Term Bullish
My energy stocks and ETFs hit new 52 week highs last week as oil prices surged due in large part to the escalating Iraq civil war.
The Canadian energy companies did particularly well last week with both CNQ and SU hitting new 52 week highs.
CNQ: $44.24 +0.88 (+2.03%)
SU: $42.69 +0.87 (+2.08%)
I own two ETFs that focus on the Canadian energy sector. If prices continue to surge next week, one of those, probably ENY, may be sold into the price spike, but I am in no hurry to do so:
Bonds:
Intermediate Term: Slightly Bullish (rise since 3/2009 borrows from future gains)
Long Term Bullish
My energy stocks and ETFs hit new 52 week highs last week as oil prices surged due in large part to the escalating Iraq civil war.
The Canadian energy companies did particularly well last week with both CNQ and SU hitting new 52 week highs.
CNQ: $44.24 +0.88 (+2.03%)
SU: $42.69 +0.87 (+2.08%)
I own two ETFs that focus on the Canadian energy sector. If prices continue to surge next week, one of those, probably ENY, may be sold into the price spike, but I am in no hurry to do so:
 |
| ENY Position as of 6/13/14 |
Short to Long Term: Slightly Bearish Based on Interest Rate Normalization
The Difficult Path to Interest Rate Normalization
The bond forecast assumes that the market is pricing correctly the average annual inflation number in the 10 year TIP. Based on the TIP pricing, the nominal ten year treasury is estimated to have a negligible real yield before taxes over the next ten years.
The average junk bond fell to almost a 5% yield last week. Barrons.com Bond yields are way of whack with credit risks, inflation and inflation expectations.
Over the past week, a few bond gurus have started to argue that the FED is behind the curve in raising the federal funds rate to contain inflation. I would not regard that as a debatable point. With CPI currently at 2% Y-O-Y, and accelerating, a federal funds rate at zero is indisputably behind the curve.
According to Harvard economist Martin Feldstein, FED rhetoric suggests that it will not respond appropriately to inflation accelerating over 2%. {MarketWatch; Feldstein's Op-Ed Column in the WSJ} I agree with that assessment.
In order to keep the pedal to the metal, the FED will argue that any spurt inflation in the coming months will be temporary. Their abnormal monetary policies, including ZIRP, are intended in part to create inflation.
The potential danger is that the FED creates an inflation problem which requires quick and significant rises in the FF rate at some point. In that kind of scenario, the possibility of a FED induced recession increases compared to a far less disruptive gradual and incremental rise in the FF rate to more normal levels consistent with current and anticipated inflation.
A similar warning was given by Joe LaVorgna, the chief U.S. economist for Deutsche Bank who argues that the FED is behind the curve and on the verge of sparking another crisis by refusing to respond appropriately to the improving economy and rising inflation. MarketWatch
I would agree that the real economy would not be damaged at all by raising the FF incrementally and gradually from zero, an abnormally low rate in existence for almost 6 years now. Some positives to the economy would flow by providing some incremental and disposable income to those savers who have now over $10T in risk free accounts earning zilch.
I would recognize that this is just an academic debate since the current FED will keep the FF rate at zero well into 2015, even if the core PCE price index, its preferred inflation measure at the moment, accelerates over 2%. That index went from a Y-O-Y increase of 1.1% in March 2014 to 1.6% in April 2014. News Release: Personal Income and Outlays The FED will risk letting the inflation genie back out of the bottle rather than to risk a relapse in the economy by raising the FF rate by just .25% every few months starting sooner rather than later.
The Difficult Path to Interest Rate Normalization
The bond forecast assumes that the market is pricing correctly the average annual inflation number in the 10 year TIP. Based on the TIP pricing, the nominal ten year treasury is estimated to have a negligible real yield before taxes over the next ten years.
The average junk bond fell to almost a 5% yield last week. Barrons.com Bond yields are way of whack with credit risks, inflation and inflation expectations.
Over the past week, a few bond gurus have started to argue that the FED is behind the curve in raising the federal funds rate to contain inflation. I would not regard that as a debatable point. With CPI currently at 2% Y-O-Y, and accelerating, a federal funds rate at zero is indisputably behind the curve.
According to Harvard economist Martin Feldstein, FED rhetoric suggests that it will not respond appropriately to inflation accelerating over 2%. {MarketWatch; Feldstein's Op-Ed Column in the WSJ} I agree with that assessment.
In order to keep the pedal to the metal, the FED will argue that any spurt inflation in the coming months will be temporary. Their abnormal monetary policies, including ZIRP, are intended in part to create inflation.
The potential danger is that the FED creates an inflation problem which requires quick and significant rises in the FF rate at some point. In that kind of scenario, the possibility of a FED induced recession increases compared to a far less disruptive gradual and incremental rise in the FF rate to more normal levels consistent with current and anticipated inflation.
A similar warning was given by Joe LaVorgna, the chief U.S. economist for Deutsche Bank who argues that the FED is behind the curve and on the verge of sparking another crisis by refusing to respond appropriately to the improving economy and rising inflation. MarketWatch
I would agree that the real economy would not be damaged at all by raising the FF incrementally and gradually from zero, an abnormally low rate in existence for almost 6 years now. Some positives to the economy would flow by providing some incremental and disposable income to those savers who have now over $10T in risk free accounts earning zilch.
I would recognize that this is just an academic debate since the current FED will keep the FF rate at zero well into 2015, even if the core PCE price index, its preferred inflation measure at the moment, accelerates over 2%. That index went from a Y-O-Y increase of 1.1% in March 2014 to 1.6% in April 2014. News Release: Personal Income and Outlays The FED will risk letting the inflation genie back out of the bottle rather than to risk a relapse in the economy by raising the FF rate by just .25% every few months starting sooner rather than later.
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Recent Developments:
The Mortgage Bankers Association composite index for mortgage applications increased 10.3% for the week ending 6/6/14 compared to the prior week.
The odds of another budget limit increase debacle probably increased with Eric Cantor's defeat last week, as Greg Valliere has already noted in a Barron's article. The next showdown is scheduled to occur early next year.
Cantor will soon step down as the House Majority Leader. Cantor was in the right wing of a party that is becoming more reactionary by the day. Cantor's lifetime rating from the "American Conservative Union" was 95%. MarketWatch He was not "conservative" enough. He was defeated by Brat who received backing from Laura Ingraham, one of those Fox "news" personalities, noteworthy only for her endless series of reality creations easily proven to be false. Laura Ingraham's file
I noted last week that those who were responsible for our $2+ trillion invasion of Iraq and the deaths of over a half-million Iraqis were blaming Obama for what is now happening in Iraq. There is no need to identify the perpetrators by name. If I understand their latest effort at formulating a thought, the U.S. needed to remain in Iraq another few decades "until the job was done" and to do the fighting for Iraqi army until the end of days whenever some bad guys show up in pickup trucks.
Four Divisions of the Iraqi army abandoned their posts and weapons at the first sign of trouble, and that is Obama's fault too. And Obama is responsible for Maliki's many failures as a leader. The Washington Post
Reuter's Story: "Iraq war to cost U.S. more than $2 trillion"
The Iraqi Army Collapse- NYT (4 divisions abandoned posts and left weapons)
"The Iraqi Army Left Weapons Like These in the Hands of Terrorists Today" - ABC News
FP Group: "Iraqis Stream Out of Mosul as Army Flees Islamist Advance"
It is reminiscent of what happened in Vietnam after the U.S. withdrew its military forces. Tens of millions are simply incapable of learning anything from history and are easily manipulated with cliches and false information.
The odds of another budget limit increase debacle probably increased with Eric Cantor's defeat last week, as Greg Valliere has already noted in a Barron's article. The next showdown is scheduled to occur early next year.
Cantor will soon step down as the House Majority Leader. Cantor was in the right wing of a party that is becoming more reactionary by the day. Cantor's lifetime rating from the "American Conservative Union" was 95%. MarketWatch He was not "conservative" enough. He was defeated by Brat who received backing from Laura Ingraham, one of those Fox "news" personalities, noteworthy only for her endless series of reality creations easily proven to be false. Laura Ingraham's file
I noted last week that those who were responsible for our $2+ trillion invasion of Iraq and the deaths of over a half-million Iraqis were blaming Obama for what is now happening in Iraq. There is no need to identify the perpetrators by name. If I understand their latest effort at formulating a thought, the U.S. needed to remain in Iraq another few decades "until the job was done" and to do the fighting for Iraqi army until the end of days whenever some bad guys show up in pickup trucks.
Four Divisions of the Iraqi army abandoned their posts and weapons at the first sign of trouble, and that is Obama's fault too. And Obama is responsible for Maliki's many failures as a leader. The Washington Post
Reuter's Story: "Iraq war to cost U.S. more than $2 trillion"
The Iraqi Army Collapse- NYT (4 divisions abandoned posts and left weapons)
"The Iraqi Army Left Weapons Like These in the Hands of Terrorists Today" - ABC News
FP Group: "Iraqis Stream Out of Mosul as Army Flees Islamist Advance"
It is reminiscent of what happened in Vietnam after the U.S. withdrew its military forces. Tens of millions are simply incapable of learning anything from history and are easily manipulated with cliches and false information.
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Apple Stock Split 7 for 1:
I received my stock split shares last week:
Item # 2 Bought: 5 AAPL at $524.5 (11/12/14 Post)
I now own 35 shares.
On the first trading day after the distribution, the shares rose some:
6/9/14 Closing Price: AAPL: $93.70 +1.48 (+1.60%)
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Performance Numbers Year-To-Date Through May 31, 2014 Calculated by Fidelity:
The first two numbers are large taxable accounts. The first taxable account shown in this snapshot has more cash earning zilch than the second one. The bottom two are IRAs.
Market Numbers YTD:
The Vanguard Roth IRA is up 8.9% from 1/1/14 through 5/31/14.
I have to compute that percentage gain. It is managed in the same way as the two IRAs at Fidelity and the performance of all three accounts are similar.
I am not publishing other account performance information including mutual funds held outside of brokerage accounts and smaller taxable satellite brokerage accounts. Some of those later accounts hold common stocks that have performed well this year including OHI, HCP and NVS.
Prior Performance Updates:
Stocks, Bonds & Politics: Performance Numbers YTD (5/17/14 Post)
Portfolio Management Goals-Snapshots of Performance Numbers (April 18, 2014)
Main Taxable and Regular IRA Accounts Performance Numbers Calculated by Broker (12/13/11 Post)
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Intel (own):
Needless to say, my recent pares of my Intel position were premature. Headknocker wanted to know which staff member here at HQ was responsible for leaving almost a $1,000 on the table. LB and RB quickly pointed to the Old Geezer who was taking a nap at the time, preparing to stay up late on Saturday in order to watch the Vanderbilt College World Series baseball game which starts at 7:00 P.M. C.S.T.
Intel Raises Second-Quarter and Full-Year Revenue and Gross Margin Expectations
I still own 110+ shares:
Last Friday's Close: INTC: $29.87 +1.91 (+6.83%)
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Apple Stock Split 7 for 1:
I received my stock split shares last week:
Item # 2 Bought: 5 AAPL at $524.5 (11/12/14 Post)
I now own 35 shares.
On the first trading day after the distribution, the shares rose some:
6/9/14 Closing Price: AAPL: $93.70 +1.48 (+1.60%)
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Performance Numbers Year-To-Date Through May 31, 2014 Calculated by Fidelity:
The first two numbers are large taxable accounts. The first taxable account shown in this snapshot has more cash earning zilch than the second one. The bottom two are IRAs.
Market Numbers YTD:
The Vanguard Roth IRA is up 8.9% from 1/1/14 through 5/31/14.
I have to compute that percentage gain. It is managed in the same way as the two IRAs at Fidelity and the performance of all three accounts are similar.
I am not publishing other account performance information including mutual funds held outside of brokerage accounts and smaller taxable satellite brokerage accounts. Some of those later accounts hold common stocks that have performed well this year including OHI, HCP and NVS.
Prior Performance Updates:
Stocks, Bonds & Politics: Performance Numbers YTD (5/17/14 Post)
Portfolio Management Goals-Snapshots of Performance Numbers (April 18, 2014)
Main Taxable and Regular IRA Accounts Performance Numbers Calculated by Broker (12/13/11 Post)
********************************
Intel (own):
Needless to say, my recent pares of my Intel position were premature. Headknocker wanted to know which staff member here at HQ was responsible for leaving almost a $1,000 on the table. LB and RB quickly pointed to the Old Geezer who was taking a nap at the time, preparing to stay up late on Saturday in order to watch the Vanderbilt College World Series baseball game which starts at 7:00 P.M. C.S.T.
Intel Raises Second-Quarter and Full-Year Revenue and Gross Margin Expectations
I still own 110+ shares:
 |
| Intel Position as of 6/13/14 Average Cost Per Share=$15.52 |
Last Friday's Close: INTC: $29.87 +1.91 (+6.83%)
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1. Pared MIN-Sold 300 at $5.42 (see Disclaimer):
Snapshot of Trade:
Snapshot of Profit:
 |
| 2014 MIN 300 Shares +$38.87 |
The profit number will likely be increased early next year when the fund reports 2014 ROC.
Security Description: MFS Intermediate Income Trust MIN)
CEFConnect Page for MIN
Data as of 5/29/14:
Closing Net Asset Value Per Share: $5.61
Closing Market Price: $5.42
Discount: -3.39%
Average Discounts:
1 Year = -7.46%
3 Years= -1%
5 Years= -1.27%
The fund had an unrealized gain of about $20.325+M as of 1/31/14. MFS INTERMEDIATE INCOME TRUST N-Q
However, there was $33.184+M in loss carryforwards as of 10/31/13, as shown at page 36 of the last SEC Filed Shareholder report. MFS INTERMEDIATE INCOME TRUST N-CSR)
CEFConnect Page for MIN
Data as of 5/29/14:
Closing Net Asset Value Per Share: $5.61
Closing Market Price: $5.42
Discount: -3.39%
Average Discounts:
1 Year = -7.46%
3 Years= -1%
5 Years= -1.27%
The fund had an unrealized gain of about $20.325+M as of 1/31/14. MFS INTERMEDIATE INCOME TRUST N-Q
However, there was $33.184+M in loss carryforwards as of 10/31/13, as shown at page 36 of the last SEC Filed Shareholder report. MFS INTERMEDIATE INCOME TRUST N-CSR)
Prior Trade: I still own shares bought in a Roth IRA where I am reinvesting the dividends.
Rationale: This CEF has been supporting its dividend will a significant amount of ROC. And, the monthly dividend rate has been cut several times since topping out at $.04838 in November 2010: MFS Intermediate Income Trust (MIN) Dividend History The monthly rate is now at .03974. Even at that reduced rate the dividend is being supported significantly by a return of capital. According to CEFConnect, only $.0127 of the June dividend of $.0397 was earned by the fund. The remaining $.027 was a return of capital. (click "distributions" tab at CEFConnect)
The fund is rated at 2 stars by Morningstar which seems fair to me.
I regard the loss carryforward to be inconsistent with good portfolio management for an investment grade bond fund, given the very strong tailwind and long term secular bull market for that asset class.
Future Buys/Sells: I will simply continue owning the shares purchased in the ROTH IRA, where ROC is irrelevant, until I can realize a profit on the shares, or I become more concerned about net asset value per share trends. The general idea in the Roth is simply to harvest the dividends without losing anything on the shares.
Last Friday's Close: MIN: $5.33 -0.02 (-0.37%)
2. Added 100 NBB at $20.1 Roth IRA (see Disclaimer):
Snapshot of Trade:
Recent History:
NBB went ex dividend for its monthly dividend shortly after my purchase. NBB Historical Prices
Security Description: The Nuveen Build America Bond Fund (NBB) owns Build America Bonds which are taxable municipal bonds. The fund will terminate on or about 6/30/2020 and will then distribute the fund's assets to its shareholders. NBB uses leverage.
CEFConnect Page for NBB
Data from Date of Purchase 5/30/14:
Closing Net Asset Value Per Share: $22.18
Closing Market Price: $20.12
Discount: -9.29%
Average Discounts:
1 Year = 9.31%
3 Years= 6.52%
5 Years= Not Available
NBB Page at Morningstar (rated 3 stars)
Last SEC Filed Shareholder Report (period ending 3/31/14)
This fund is currently paying monthly distributions at $.116 per share. Nuveen Closed-End Funds Declare Monthly Distributions The last ex dividend date was last Wednesday.
Prior Trades: My last discussion was in this post: Item # 6 Added 50 of the Bond CEF NBB at $17.76 (November 2013 Post)
Other trades are linked in this post: Item # 2 Added 50 NBB at $18.55 (6/29/13 Post) Some flips have realized to date $184.16 in profits: Sold 100 NBB at $20.13-ROTH IRA November 2011; Sold 100 NBB at $20.07 November 2011; Sold 50 NBB @ 19.24 in the Regular IRA December 2010.
Related Trades: I have also bought and sold NBD, a similar fund from the same sponsor. Sold 100 of the Bond CEF NBD at $21.86-Roth IRA (May 2013)
Rationale: The usual reasons are behind this purchase. I turn this taxable bond fund into a tax free one by buying it in the Roth IRA. Taxable municipal bonds will have higher yields than tax free ones. The Build America Bonds represent a way to own municipal bonds in a retirement account. I would never buy a tax free municipal bond in a retirement account.
As noted above, the fund is tilted toward "A" or better rated bonds.
At the current monthly distribution rate, the dividend yield at a total cost of $20.1 is about 6.93%.
I am basically trading these long duration funds. I also own them to address a low probability scenario which I usually just call the Japan Scenario. In that low possibility scenario, rates remain range bound at abnormally low levels, possibly even moving lower, due to persistent low inflation with drifts into deflationary periods. The best security to own during a deflationary period would be high quality long term bonds. Since I assign a very low probability to the Japan Scenario, I will address it with a limited number of securities and NBB is just one of them.
Risks: This CEF has significant interest rate given its long duration number. As of 4/30/14, the fund calculated the leveraged adjusted duration at 12.2 years. NBB - Holdings and Detail Tab
To calculate how a fund will react to a change in interest rates, the rule of thumb is to multiply the duration by the percentage change in interest rates for similar maturities and bonds. Get to know your bond fund: Duration | Vanguard Thus, a 2% rise in rate could generate almost a 25% loss in NBB's value. That kind of loss would wipe out about 3 1/2 years of dividend payments, so I tread softly with these long duration funds unless I significantly raise the odds of a Japan Scenario for the U.S.
The timing of the liquidation could be disadvantageous to shareholders, which would be the case with interest rates spiking near the liquidation date in 2024 that causes significant price deterioration in the securities just before they are sold by the fund.
Last Friday's closing price: NBB: $20.05 +0.05 (+0.25%)
3. Sold 50 MHNC at $25.5 (see Disclaimer):
Snapshot of Trade:
Snapshot of Profit:
Item # 3 Bought: 50 MHNC at $22.8 (2/10/14 Post)
Total Return= $169.12 or 14.72%
Security Description: The Maiden Holdings Ltd. 7.75% Notes 2043 (MHNC) is a senior unsecured note issued by Maiden Holdings North America and guaranteed as provided in the Prospectus by Maiden Holdings Ltd. (MHLD), a Bermuda based company that provides reinsurance solutions.
Maiden Holdings does significant business with AmTrust. Barry Ziskind is a large shareholder in both companies. Profile
Rationale: When I purchased 50 MHNC shares, I cited a series of articles that raised questions about AmTrust's accounting. Barron's was one of the publications that discussed these issues, Barrons, along with several published at SeekingAlpha by a short seller known as the "Geo Team". The GeoTeam's Articles on AFSI at Seeking Alpha I reluctantly bought this 50 share lot of a Maiden Holding's senior bond, even at a 8.5% yield, after reviewing those articles.
More accounting issues were raised in another Barron's article that focused on both AmTrust and Maiden. I simply have no training in accounting and consequently can not offer a worthwhile opinion on the issues raised by Barron's. My response, an admittedly knee jerk one, is just to take my profit and exit the position at a premium to par value.
Last Friday's Closing Price: MHNC: $25.99 +0.05 (+0.19%)
4. Sold 116 of the Highest Cost ADX Shares Held for More than 1 Year at $13.61 (see Disclaimer):
Snapshot of Trade:
Snapshot of Profit:
This snapshot includes the profit realized from selling 200 of the highest cost shares, purchased in 2008, earlier this year.
Of those shares, only one lot, the 50 shares bought on 6/03/11, was an open market purchase. Added 50 ADX at $10.95 (6/6/11 Post) The remaining shares were purchased with dividends including the 33.737 shares bought on 12/27/12 and 20.02 shares purchased on 12/28/10.
By focusing on selling shares bought with dividends profitably, I increase the dividend yield of those payments.
By choosing the highest cost shares purchased more than one year ago, I lessen my tax liability and improve the dividend yield on the remaining shares.
ADX does not pay dividends supported by a ROC.
Position After Trade:
I did not sell the 42.071 shares purchased on 12/27/2013 with the year-end dividend distributions (mostly long term capital gains; snapshot in introduction under Adams Express) Those shares were bought at $12.61. I will consider selling those next year, along with the 100 share lot purchased 11/16/12 at a total cost of $10.22, provided the S & P 500 is near or preferably over 2100. Bought 100 ADX at $10.14 (11/21/12 Post)
Prior Trades: In addition to those linked above, some of the earlier discussions include the following: Added 50 of the Stock CEF ADX at $9.77; Added 50 ADX at 10.95; Bough 200 ADX @ $9.99; Added 50 ADX at $9.7; Added To CEF ADX at $9.98; Bought ADX at $8.34
Security Description: Adams Express Co. (ADX) is a closed end stock fund that was formed shortly before the 1929 crash.
ADX page at CEFConnect
ADX Page at Morningstar
Last SEC Filed Annual Report: ADAMS EXPRESS COMPANY - FORM N-CSR - DECEMBER 31, 2013
ADAMS EXPRESS COMPANY - FORM N-Q - MARCH 31, 2014 (list of holdings)
Adams Express Company | Quarterly Changes in Portfolio Securities
This fund will typically trade a 14% to 15% discount to net asset value per share.
ADX committed in September 2011 to an annual distribution rate "of at least 6%". Adams Express Company Historically, ADX has not supported its dividends with a ROC. Most of the dividends are sourced from long term capital gains distributed in December. Adams Express Company Dividend History
Average Discount to Net Asset Value Per Share as of 6/6/14:
1 Year: 14.1%
3 Years: 14.16%
5 Years: 14.61%
This persistent large discount range takes away a profit opportunity for a CEF representing a significant narrowing of the discount after a purchase, when the net asset value is climbing as the the discount shrinks.
Rationale: I am slightly reducing my stock allocation in ways that make sense to me.
Last Friday's Closing Price: ADX: $13.59 +0.03 (+0.26%)
5. Bough 50 of the Bond CEF BWG at $17.75-Roth IRA (see Disclaimer):
Snapshot of Trade:
Security Description: Legg Mason BW Global Income Opportunities Fund (BWG) is a leveraged world bond CEF with significant exposure to junk rated securities.
Data from Date of Trade:
Closing Net Asset Value Per Share: $20.67
Closing Market Price: $17.76
Discount: -14.08%
Average 1 Year Discount: -12.54%
Fund Is Less than 3 Years Old
CEFConnect Page for BWG
Sponsor's Website: Overview (effective duration 9.4 years)
Full Holdings
Credit Quality and Currency Exposure as of 3/31/14:
BWG Page at Morningstar
Last SEC Filed Form N-Q: Legg Mason BW Global Income Opportunities Fund (period ending 1/31/14)
Last SEC Filed Shareholder Report: LM BW Global Income Opportunities Fund (period ending 10/31/13)(average interest rate cost for year at .85%, see page 33, item # 5)
Prior Trades: I am slightly in the hold for shares held in a taxable account after averaging down:
My most recent purchases are discussed in these posts: Bought: 50 BWG at $16.43 (November 2013); Bought 50 BWG at $16.68 (10/3/13 Post)
Rationale: This fund is currently paying a monthly dividend of $.125 per share. Assuming a continuation of that rate, which is in no way assured, the yield at a total cost of $17.75 per share would be about 8.45%. In the Roth IRA, that taxable dividend is transformed into a tax free one. Money will double in about 8.54 years at 8.45% compounded annually. Estimate Compound Interest
The fund is also selling at a large discount to net asset value and hopefully that discount will narrow some with the net asset value going up hereafter.
Since inception through 6/10/14, the total annualized return based on market price was 3.17% but the fund's annualized return based on net asset value was 12.45%. That is a significant disconnect in my opinion.
Those numbers are calculated by CEFConnect and are available by clicking the "performance" tab.
BWG is a new fund that started in March 2012. On the first day of trading (3/28/12), this fund closed with a net asset value of $19.06 per share. The net asset value per share as of 6/10/14 was $20.98, or a 10% increase, unadjusted for monthly dividend payments. The market price was $20.05 on 3/28/12, declining 11.47% until I purchased shares at $17.75.
The general idea is to collect several monthly dividends and then to exit the position without losing money on the shares before interest rates turn up significantly. Any profit on the share will be viewed as acceptable and as a bonus to the monthly dividend.
Risks: This kind of fund has an abundance of risks attached to it, including credit, interest rate, currency, country and normal CEF risks. One of the normal CEF risks is that the percentage decline in the market price can far exceed the percentage drop in net asset value per share.
Last Friday's Closing Price: BWG: $18.10 +0.11 (+0.61%)
6. Added 50 CCNE at $16.11 (REGIONAL BANK BASKET STRATEGY)(see Disclaimer):
Snapshot of Trade:
Company Description: CNB Financial (CCNE) is the parent company of CNB bank, its principal subsidiary. CNB bank has 28 full service banking offices in Pennsylvania. CCNE recently acquired FCBank, now a division of CNB Bank, that has 8 full service offices in central Ohio.
The bank owns 25 offices and leases the remainder from independent owners. Page 27, Form 10-K.
Bank CNB - Locations
Divisions of CNB
CCNE's market capitalization at my purchase price is less than $250M. Trading volumes are normally thin with a significant bid/ask spread.
CCNE is currently paying a quarterly dividend of $.165 per share. CNB Financial Corporation
CCNE did not cut its dividend during the last recession. The quarterly dividend rate has gone from $.037 per share in 1991 to $.165. However, the dividend has been stuck at $.165 since the 2008 4th quarter.
Prior Trade: I currently own 50 shares bought in 2010: Bought 50 CCNE at $11.06 (6/30/2010 Post)
Prior Earnings Report:
2014 First Quarter vs. 2013 First Quarter:
E.P.S.: $. 36 / $.34
Net Income: $5.2M / $4.3M
Net Interest Margin: 3.79% / 3.41% (a notable increase)
ROA= .97% (okay, prefer over 1% or higher)
ROE: 11.97% (fine)
Net Charge Offs-Total Loans: .18% / .47% (good to go down)
NPA Ratio: .62% / .93% (better)
Total Risk Based Capital Ratio: 14% / 15.53%
Tangible Common Equity/Tangible Assets: 6.7% / 7.51% (a negative)
SEC Filed Press Release
Form 10-Q
Rationale: Overall, the financial metrics point to a well run bank with solid capital ratios. At a total cost of $16.11 per share, the dividend yield is decent at 4.1%. While the dividend rate has been stagnant for several years, there are rational reasons to postulate a return to dividend growth in the coming years, though the current abnormal FED monetary policies are negatively impacting net interest margins, the key variable component of earnings for small banks.
The current TTM P/E is reasonable. CCNE Key Statistics
Only one analyst provides estimates. That "consensus" E.P.S. estimate is for $1.4 in 2014 and $1.5 in 2015. CCNE Analyst Estimates At a $16.11 price, the forward P/E based on the 2015 estimate is 10.74. The dividend yield as noted above at that total cost per share number is 4.1%.
Risks: Bank stocks perform poorly during recessions which is far from a pithy observation. CCNE's stock price did better than most regional banks during the last big nasty. The price was hovering around $14 back in 2007 and bottomed near $9 during early 2009. CCNE Interactive Chart
There are also disadvantages associated with the small size. There is just not much interest in this bank. Trading volume is extremely light. CCNE Historical Prices
The abnormal FED monetary policies are contributing to net interest margin compression. Due to the last financial crisis, costs associated with new regulations have increased.
CCNE discusses risks incident to its operations starting at page 17 of its 2013 Annual Report. Form 10-K Many of these risks are just generic to banks and simply need to be identified and understood.
Last Friday's Closing Price: CCNE: $16.34 -0.11 (-0.67%)
7. Sold 50 EXL at $13.68-Roth IRA (See Disclaimer):
Snapshot of Trade:
Snapshot of Recent Roth IRA History:
Snapshot of Profit:
Roth IRA: Bought 50 EXL at $11.75 (12/3/13 Post)
Total Return: $100.48 or 16.92%
Security Description: Excel Trust (EXL) is a self-administered REIT that owns "value oriented community and power centers, grocery anchored neighborhood centers and freestanding retail properties". Page 13 FORM 10-Q
Excel Trust Profile Page at Reuters
Key Developments Page at Reuters
Excel does have an equity preferred stock outstanding: Final Prospectus Supplement; Excel Trust Inc. 8.125% Cum. Redeem. Pfd. Series B Stock (EXL.PB)
SEC Filed Earnings Report for Q/E 3/31/14 (FFO at $.23, up from $.22 as of 3/31/12)
Rationale: A number of insiders recently sold stock (see page 8: S-3) That development triggered this disposition taking into account the good annualized total return over about a six month period. I was not exactly enthusiastic with this REIT as evidenced by just a 50 share purchase.
Last Friday's Closing Price: EXL: $13.40 +0.05 (+0.37%)
8. Sold 100 MDIV at $22.17 (see Disclaimer): After I completed last Sunday an analysis of stock additions, pares and deletions, and discovered that I had unintentionally added $31,000 to my stock allocation, I started on Monday selecting securities to sell to take that number down to February 2014 levels.
This security was the third one sold last Monday, and will be the only one of those three discussed in this post. The other two will be mentioned in the next post. I selected MDIV to discuss now since I sold 100 shares in a ROTH IRA last week, and have nothing to add to that recent discussion: Sold 100 MDIV at $21.81.
Multi-Asset Diversified Income ETF Chart
Snapshot of Trade:
Snapshot of Profit:
Item # 2 Bought 100 MDIV at $20.51 (September 2012)
Snapshot of History:
Dividends Received: $210.01
Total Return: $367.33 or 17.85%
Security Description: The First Trust ETF VI Multi-Asset Diversified Income Index Fund (MDIV) is an ETF that attempts to track, before fees and expenses, the Nasdaq Multi-Asset Diversified Income Index:
Multi-Asset Diversified Income Index Fund (MDIV) Holdings
Last Friday's Closing Price: MDIV: $22.11 +0.11 (+0.50%)
9. MBC Redeemed at its $10 Par Value:
MBC was a principal protected note whose coupon was the greater of 3% or a percentage gain in the Russell 2000. I am leaving out some important details since they no longer matter.
In an earlier post, I mentioned that this note would be redeemed by the issuer on 6/9/14. The redemption proceeds would consist of the final annual coupon payment and the $10 par value. MBC Ends Its Final Annual Period with about a 13.03% Coupon Payment on a $10 Par Value I noted that this one provided some excitement in its 2013 coupon period, when it came down to the wire whether I would receive almost $600 or $60 in interest payments. I received $60 due to a Maximum Level Violation three days before the End Date.
I owned 200 shares. Those shares were held in two separate accounts in 100 share lots. Bought 100 MBC at $9.84; Bought 100 MBC at $9.78
I received redemption proceeds of $1,130.27 for each 100 share lot, consisting of $1,000 in principal and $130.27 in interest.
I realized a negligible profit on the bonds in addition to their interest payments.
The next owned Citigroup Funding PPN to mature will be MKZ which will likely pay more than the 3% coupon.
Rationale: This CEF has been supporting its dividend will a significant amount of ROC. And, the monthly dividend rate has been cut several times since topping out at $.04838 in November 2010: MFS Intermediate Income Trust (MIN) Dividend History The monthly rate is now at .03974. Even at that reduced rate the dividend is being supported significantly by a return of capital. According to CEFConnect, only $.0127 of the June dividend of $.0397 was earned by the fund. The remaining $.027 was a return of capital. (click "distributions" tab at CEFConnect)
The fund is rated at 2 stars by Morningstar which seems fair to me.
I regard the loss carryforward to be inconsistent with good portfolio management for an investment grade bond fund, given the very strong tailwind and long term secular bull market for that asset class.
Future Buys/Sells: I will simply continue owning the shares purchased in the ROTH IRA, where ROC is irrelevant, until I can realize a profit on the shares, or I become more concerned about net asset value per share trends. The general idea in the Roth is simply to harvest the dividends without losing anything on the shares.
Last Friday's Close: MIN: $5.33 -0.02 (-0.37%)
2. Added 100 NBB at $20.1 Roth IRA (see Disclaimer):
Snapshot of Trade:
 |
| 2014 Roth IRA Bought 100 NBB at $20.1 |
NBB went ex dividend for its monthly dividend shortly after my purchase. NBB Historical Prices
Security Description: The Nuveen Build America Bond Fund (NBB) owns Build America Bonds which are taxable municipal bonds. The fund will terminate on or about 6/30/2020 and will then distribute the fund's assets to its shareholders. NBB uses leverage.
CEFConnect Page for NBB
Data from Date of Purchase 5/30/14:
Closing Net Asset Value Per Share: $22.18
Closing Market Price: $20.12
Discount: -9.29%
Average Discounts:
1 Year = 9.31%
3 Years= 6.52%
5 Years= Not Available
NBB Page at Morningstar (rated 3 stars)
Last SEC Filed Shareholder Report (period ending 3/31/14)
This fund is currently paying monthly distributions at $.116 per share. Nuveen Closed-End Funds Declare Monthly Distributions The last ex dividend date was last Wednesday.
Prior Trades: My last discussion was in this post: Item # 6 Added 50 of the Bond CEF NBB at $17.76 (November 2013 Post)
Other trades are linked in this post: Item # 2 Added 50 NBB at $18.55 (6/29/13 Post) Some flips have realized to date $184.16 in profits: Sold 100 NBB at $20.13-ROTH IRA November 2011; Sold 100 NBB at $20.07 November 2011; Sold 50 NBB @ 19.24 in the Regular IRA December 2010.
Rationale: The usual reasons are behind this purchase. I turn this taxable bond fund into a tax free one by buying it in the Roth IRA. Taxable municipal bonds will have higher yields than tax free ones. The Build America Bonds represent a way to own municipal bonds in a retirement account. I would never buy a tax free municipal bond in a retirement account.
As noted above, the fund is tilted toward "A" or better rated bonds.
At the current monthly distribution rate, the dividend yield at a total cost of $20.1 is about 6.93%.
I am basically trading these long duration funds. I also own them to address a low probability scenario which I usually just call the Japan Scenario. In that low possibility scenario, rates remain range bound at abnormally low levels, possibly even moving lower, due to persistent low inflation with drifts into deflationary periods. The best security to own during a deflationary period would be high quality long term bonds. Since I assign a very low probability to the Japan Scenario, I will address it with a limited number of securities and NBB is just one of them.
Risks: This CEF has significant interest rate given its long duration number. As of 4/30/14, the fund calculated the leveraged adjusted duration at 12.2 years. NBB - Holdings and Detail Tab
To calculate how a fund will react to a change in interest rates, the rule of thumb is to multiply the duration by the percentage change in interest rates for similar maturities and bonds. Get to know your bond fund: Duration | Vanguard Thus, a 2% rise in rate could generate almost a 25% loss in NBB's value. That kind of loss would wipe out about 3 1/2 years of dividend payments, so I tread softly with these long duration funds unless I significantly raise the odds of a Japan Scenario for the U.S.
The timing of the liquidation could be disadvantageous to shareholders, which would be the case with interest rates spiking near the liquidation date in 2024 that causes significant price deterioration in the securities just before they are sold by the fund.
Last Friday's closing price: NBB: $20.05 +0.05 (+0.25%)
3. Sold 50 MHNC at $25.5 (see Disclaimer):
Snapshot of Trade:
 |
| 2014 Sold 50 MHNC at $25.5 |
 |
| 2014 MHNC 50 Shares $119.07 |
 |
| Interest Paid=$50.05 |
Security Description: The Maiden Holdings Ltd. 7.75% Notes 2043 (MHNC) is a senior unsecured note issued by Maiden Holdings North America and guaranteed as provided in the Prospectus by Maiden Holdings Ltd. (MHLD), a Bermuda based company that provides reinsurance solutions.
Maiden Holdings does significant business with AmTrust. Barry Ziskind is a large shareholder in both companies. Profile
Rationale: When I purchased 50 MHNC shares, I cited a series of articles that raised questions about AmTrust's accounting. Barron's was one of the publications that discussed these issues, Barrons, along with several published at SeekingAlpha by a short seller known as the "Geo Team". The GeoTeam's Articles on AFSI at Seeking Alpha I reluctantly bought this 50 share lot of a Maiden Holding's senior bond, even at a 8.5% yield, after reviewing those articles.
More accounting issues were raised in another Barron's article that focused on both AmTrust and Maiden. I simply have no training in accounting and consequently can not offer a worthwhile opinion on the issues raised by Barron's. My response, an admittedly knee jerk one, is just to take my profit and exit the position at a premium to par value.
Last Friday's Closing Price: MHNC: $25.99 +0.05 (+0.19%)
4. Sold 116 of the Highest Cost ADX Shares Held for More than 1 Year at $13.61 (see Disclaimer):
Snapshot of Trade:
 |
| 2014 Sold 116 ADX at $13.61 |
 |
| 2014 Realized LT Gain ADX 116 Shares=$319.38 |
Of those shares, only one lot, the 50 shares bought on 6/03/11, was an open market purchase. Added 50 ADX at $10.95 (6/6/11 Post) The remaining shares were purchased with dividends including the 33.737 shares bought on 12/27/12 and 20.02 shares purchased on 12/28/10.
By focusing on selling shares bought with dividends profitably, I increase the dividend yield of those payments.
By choosing the highest cost shares purchased more than one year ago, I lessen my tax liability and improve the dividend yield on the remaining shares.
ADX does not pay dividends supported by a ROC.
Position After Trade:
 |
| 610.274 Shares Average Cost Per Share=$10.02 |
Prior Trades: In addition to those linked above, some of the earlier discussions include the following: Added 50 of the Stock CEF ADX at $9.77; Added 50 ADX at 10.95; Bough 200 ADX @ $9.99; Added 50 ADX at $9.7; Added To CEF ADX at $9.98; Bought ADX at $8.34
Security Description: Adams Express Co. (ADX) is a closed end stock fund that was formed shortly before the 1929 crash.
ADX page at CEFConnect
ADX Page at Morningstar
Last SEC Filed Annual Report: ADAMS EXPRESS COMPANY - FORM N-CSR - DECEMBER 31, 2013
ADAMS EXPRESS COMPANY - FORM N-Q - MARCH 31, 2014 (list of holdings)
Adams Express Company | Quarterly Changes in Portfolio Securities
This fund will typically trade a 14% to 15% discount to net asset value per share.
ADX committed in September 2011 to an annual distribution rate "of at least 6%". Adams Express Company Historically, ADX has not supported its dividends with a ROC. Most of the dividends are sourced from long term capital gains distributed in December. Adams Express Company Dividend History
Average Discount to Net Asset Value Per Share as of 6/6/14:
1 Year: 14.1%
3 Years: 14.16%
5 Years: 14.61%
This persistent large discount range takes away a profit opportunity for a CEF representing a significant narrowing of the discount after a purchase, when the net asset value is climbing as the the discount shrinks.
Rationale: I am slightly reducing my stock allocation in ways that make sense to me.
Last Friday's Closing Price: ADX: $13.59 +0.03 (+0.26%)
5. Bough 50 of the Bond CEF BWG at $17.75-Roth IRA (see Disclaimer):
Snapshot of Trade:
 |
| 2014 Roth IRA Bought 50 BWG at $17.75 |
Data from Date of Trade:
Closing Net Asset Value Per Share: $20.67
Closing Market Price: $17.76
Discount: -14.08%
Average 1 Year Discount: -12.54%
Fund Is Less than 3 Years Old
CEFConnect Page for BWG
Sponsor's Website: Overview (effective duration 9.4 years)
Full Holdings
Credit Quality and Currency Exposure as of 3/31/14:
 |
| Credit Quality as of 3/31/14 |
 |
| Currency Exposure Including Hedging |
BWG Page at Morningstar
Last SEC Filed Form N-Q: Legg Mason BW Global Income Opportunities Fund (period ending 1/31/14)
Last SEC Filed Shareholder Report: LM BW Global Income Opportunities Fund (period ending 10/31/13)(average interest rate cost for year at .85%, see page 33, item # 5)
Prior Trades: I am slightly in the hold for shares held in a taxable account after averaging down:
 |
| BWG TAXABLE ACCOUNT As of 6/13/14 |
Rationale: This fund is currently paying a monthly dividend of $.125 per share. Assuming a continuation of that rate, which is in no way assured, the yield at a total cost of $17.75 per share would be about 8.45%. In the Roth IRA, that taxable dividend is transformed into a tax free one. Money will double in about 8.54 years at 8.45% compounded annually. Estimate Compound Interest
The fund is also selling at a large discount to net asset value and hopefully that discount will narrow some with the net asset value going up hereafter.
Since inception through 6/10/14, the total annualized return based on market price was 3.17% but the fund's annualized return based on net asset value was 12.45%. That is a significant disconnect in my opinion.
Those numbers are calculated by CEFConnect and are available by clicking the "performance" tab.
BWG is a new fund that started in March 2012. On the first day of trading (3/28/12), this fund closed with a net asset value of $19.06 per share. The net asset value per share as of 6/10/14 was $20.98, or a 10% increase, unadjusted for monthly dividend payments. The market price was $20.05 on 3/28/12, declining 11.47% until I purchased shares at $17.75.
The general idea is to collect several monthly dividends and then to exit the position without losing money on the shares before interest rates turn up significantly. Any profit on the share will be viewed as acceptable and as a bonus to the monthly dividend.
Risks: This kind of fund has an abundance of risks attached to it, including credit, interest rate, currency, country and normal CEF risks. One of the normal CEF risks is that the percentage decline in the market price can far exceed the percentage drop in net asset value per share.
Last Friday's Closing Price: BWG: $18.10 +0.11 (+0.61%)
6. Added 50 CCNE at $16.11 (REGIONAL BANK BASKET STRATEGY)(see Disclaimer):
Snapshot of Trade:
Company Description: CNB Financial (CCNE) is the parent company of CNB bank, its principal subsidiary. CNB bank has 28 full service banking offices in Pennsylvania. CCNE recently acquired FCBank, now a division of CNB Bank, that has 8 full service offices in central Ohio.
The bank owns 25 offices and leases the remainder from independent owners. Page 27, Form 10-K.
Bank CNB - Locations
Divisions of CNB
CCNE's market capitalization at my purchase price is less than $250M. Trading volumes are normally thin with a significant bid/ask spread.
CCNE is currently paying a quarterly dividend of $.165 per share. CNB Financial Corporation
CCNE did not cut its dividend during the last recession. The quarterly dividend rate has gone from $.037 per share in 1991 to $.165. However, the dividend has been stuck at $.165 since the 2008 4th quarter.
Prior Trade: I currently own 50 shares bought in 2010: Bought 50 CCNE at $11.06 (6/30/2010 Post)
Prior Earnings Report:
2014 First Quarter vs. 2013 First Quarter:
E.P.S.: $. 36 / $.34
Net Income: $5.2M / $4.3M
Net Interest Margin: 3.79% / 3.41% (a notable increase)
ROA= .97% (okay, prefer over 1% or higher)
ROE: 11.97% (fine)
Net Charge Offs-Total Loans: .18% / .47% (good to go down)
NPA Ratio: .62% / .93% (better)
Total Risk Based Capital Ratio: 14% / 15.53%
Tangible Common Equity/Tangible Assets: 6.7% / 7.51% (a negative)
SEC Filed Press Release
Form 10-Q
Rationale: Overall, the financial metrics point to a well run bank with solid capital ratios. At a total cost of $16.11 per share, the dividend yield is decent at 4.1%. While the dividend rate has been stagnant for several years, there are rational reasons to postulate a return to dividend growth in the coming years, though the current abnormal FED monetary policies are negatively impacting net interest margins, the key variable component of earnings for small banks.
The current TTM P/E is reasonable. CCNE Key Statistics
Only one analyst provides estimates. That "consensus" E.P.S. estimate is for $1.4 in 2014 and $1.5 in 2015. CCNE Analyst Estimates At a $16.11 price, the forward P/E based on the 2015 estimate is 10.74. The dividend yield as noted above at that total cost per share number is 4.1%.
Risks: Bank stocks perform poorly during recessions which is far from a pithy observation. CCNE's stock price did better than most regional banks during the last big nasty. The price was hovering around $14 back in 2007 and bottomed near $9 during early 2009. CCNE Interactive Chart
There are also disadvantages associated with the small size. There is just not much interest in this bank. Trading volume is extremely light. CCNE Historical Prices
The abnormal FED monetary policies are contributing to net interest margin compression. Due to the last financial crisis, costs associated with new regulations have increased.
CCNE discusses risks incident to its operations starting at page 17 of its 2013 Annual Report. Form 10-K Many of these risks are just generic to banks and simply need to be identified and understood.
Last Friday's Closing Price: CCNE: $16.34 -0.11 (-0.67%)
7. Sold 50 EXL at $13.68-Roth IRA (See Disclaimer):
Snapshot of Trade:
Snapshot of Recent Roth IRA History:
Snapshot of Profit:
 |
| 2014 Roth IRA EXL 50 Shares +$82.98 |
Total Return: $100.48 or 16.92%
Security Description: Excel Trust (EXL) is a self-administered REIT that owns "value oriented community and power centers, grocery anchored neighborhood centers and freestanding retail properties". Page 13 FORM 10-Q
Excel Trust Profile Page at Reuters
Key Developments Page at Reuters
Excel does have an equity preferred stock outstanding: Final Prospectus Supplement; Excel Trust Inc. 8.125% Cum. Redeem. Pfd. Series B Stock (EXL.PB)
SEC Filed Earnings Report for Q/E 3/31/14 (FFO at $.23, up from $.22 as of 3/31/12)
Rationale: A number of insiders recently sold stock (see page 8: S-3) That development triggered this disposition taking into account the good annualized total return over about a six month period. I was not exactly enthusiastic with this REIT as evidenced by just a 50 share purchase.
Last Friday's Closing Price: EXL: $13.40 +0.05 (+0.37%)
8. Sold 100 MDIV at $22.17 (see Disclaimer): After I completed last Sunday an analysis of stock additions, pares and deletions, and discovered that I had unintentionally added $31,000 to my stock allocation, I started on Monday selecting securities to sell to take that number down to February 2014 levels.
This security was the third one sold last Monday, and will be the only one of those three discussed in this post. The other two will be mentioned in the next post. I selected MDIV to discuss now since I sold 100 shares in a ROTH IRA last week, and have nothing to add to that recent discussion: Sold 100 MDIV at $21.81.
Multi-Asset Diversified Income ETF Chart
Snapshot of Trade:
 |
| 2014 Sold 100 MDIV at $22.17 |
 |
| 2014 MDIV 100 Shares +$157.32 |
Snapshot of History:
 |
| MDIV History-Taxable Account |
Total Return: $367.33 or 17.85%
Security Description: The First Trust ETF VI Multi-Asset Diversified Income Index Fund (MDIV) is an ETF that attempts to track, before fees and expenses, the Nasdaq Multi-Asset Diversified Income Index:
Multi-Asset Diversified Income Index Fund (MDIV) Holdings
Last Friday's Closing Price: MDIV: $22.11 +0.11 (+0.50%)
9. MBC Redeemed at its $10 Par Value:
MBC was a principal protected note whose coupon was the greater of 3% or a percentage gain in the Russell 2000. I am leaving out some important details since they no longer matter.
In an earlier post, I mentioned that this note would be redeemed by the issuer on 6/9/14. The redemption proceeds would consist of the final annual coupon payment and the $10 par value. MBC Ends Its Final Annual Period with about a 13.03% Coupon Payment on a $10 Par Value I noted that this one provided some excitement in its 2013 coupon period, when it came down to the wire whether I would receive almost $600 or $60 in interest payments. I received $60 due to a Maximum Level Violation three days before the End Date.
I owned 200 shares. Those shares were held in two separate accounts in 100 share lots. Bought 100 MBC at $9.84; Bought 100 MBC at $9.78
I received redemption proceeds of $1,130.27 for each 100 share lot, consisting of $1,000 in principal and $130.27 in interest.
I realized a negligible profit on the bonds in addition to their interest payments.
The next owned Citigroup Funding PPN to mature will be MKZ which will likely pay more than the 3% coupon.
