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| The Yield Hunter lEt's Make some money and sleep well at night Starting our 4th Year |
If you are to watch the securities listed to the right of this column you will know what we like--we may
not own them all because we are now only 20% invested--but we own quite a few of them (our
personal holdings are in a article below this one)
We note Hickory Tech (HTCO) has jumped by 20% the last couple of days--we own this one and
certainly are pleased that some other investors have found this little gem. It sports a 7.9% yield
today, but was over 9% when we bought it and mentioned it here a few weeks back.
In addition to Hickory Tech most of the issues to the right have jumped very nicely in the last week.
We note that even some REIT's and Ocean Shippers have jumped a bunch---we wouldn't touch
these with a 10' pole (excepting a few of the preferred issues). You can take it to the bank that
there WILL BE many bankruptcies and liquidations in these two spaces in the next year. Many of
them have already suspended dividends and with the huge debt these companies have amassed
there is no other place to save money---remember most of these REIT's and Ocean Shippers have
only a few employees---you could cut 50% of the workforce and still save almost nothing. The
debts were incurred when we had ever rising valuations---and the underlying assets of this debt is
highly suspect at this point in time.
We have added 2 new issues to our personal portfolio---1 is a preferred issue and the other is a
exchange traded debt issue --- this bring our holdings up to 20% invested. We are also
considering adding one or both of these issues to the model portfolios for 2009.
1st we have added Prudential Financial (9% coupon) (Ticker PHR) subordinated notes (which trade
around $23 with a 9.72% current yield--callable after 6/2013 at $25.
2ndly we have added U.S Bancorp floating rate preferred (Ticker USB-PH) Currently the yield is
8.4% US Bancorp is one of the most solvent banks in the country
not own them all because we are now only 20% invested--but we own quite a few of them (our
personal holdings are in a article below this one)
We note Hickory Tech (HTCO) has jumped by 20% the last couple of days--we own this one and
certainly are pleased that some other investors have found this little gem. It sports a 7.9% yield
today, but was over 9% when we bought it and mentioned it here a few weeks back.
In addition to Hickory Tech most of the issues to the right have jumped very nicely in the last week.
We note that even some REIT's and Ocean Shippers have jumped a bunch---we wouldn't touch
these with a 10' pole (excepting a few of the preferred issues). You can take it to the bank that
there WILL BE many bankruptcies and liquidations in these two spaces in the next year. Many of
them have already suspended dividends and with the huge debt these companies have amassed
there is no other place to save money---remember most of these REIT's and Ocean Shippers have
only a few employees---you could cut 50% of the workforce and still save almost nothing. The
debts were incurred when we had ever rising valuations---and the underlying assets of this debt is
highly suspect at this point in time.
We have added 2 new issues to our personal portfolio---1 is a preferred issue and the other is a
exchange traded debt issue --- this bring our holdings up to 20% invested. We are also
considering adding one or both of these issues to the model portfolios for 2009.
1st we have added Prudential Financial (9% coupon) (Ticker PHR) subordinated notes (which trade
around $23 with a 9.72% current yield--callable after 6/2013 at $25.
2ndly we have added U.S Bancorp floating rate preferred (Ticker USB-PH) Currently the yield is
8.4% US Bancorp is one of the most solvent banks in the country
We Add Prudential Preferred to the 'High Yield Model Income Portfolio'
January 10, 2009
We have added Prudential Financial Exchange Traded Notes (PHR) to the 'High Yield Model Income
Portfolio' . Coupon on these is 9% with a current yield of 9.58%. They trade around $23.50 and the
notes are callable anytime after 6/2013. The volume on these is over 100,000 shares a day so there
is super liquidity.
Prudential Financial has had some issues this year, as most financial services companies have
experienced, yet they remain highly profitable.
Disclosure--as noted below we own this security in our personal portfolio.
January 10, 2009
We have added Prudential Financial Exchange Traded Notes (PHR) to the 'High Yield Model Income
Portfolio' . Coupon on these is 9% with a current yield of 9.58%. They trade around $23.50 and the
notes are callable anytime after 6/2013. The volume on these is over 100,000 shares a day so there
is super liquidity.
Prudential Financial has had some issues this year, as most financial services companies have
experienced, yet they remain highly profitable.
Disclosure--as noted below we own this security in our personal portfolio.
Still No Reason to Rush In
A Couple New Personal Portfolio Additions
January 8, 2009
The markets are still moving somewhat violently up and down as people feel better about economic
conditions ahead but then they figure out that there is no visibility and the small amount of visibility
that is out there is BAD--really bad. Just the same we can feel a bit better about the overall outlook
because the new administration knows that they have to perform some major work and are
preparing for it.
A Couple New Personal Portfolio Additions
January 8, 2009
The markets are still moving somewhat violently up and down as people feel better about economic
conditions ahead but then they figure out that there is no visibility and the small amount of visibility
that is out there is BAD--really bad. Just the same we can feel a bit better about the overall outlook
because the new administration knows that they have to perform some major work and are
preparing for it.
Extreme Caution Needed
January 20, 2009 7 am
We currently have all portfolios (personal and models) on hold as we try to figure out what is
happening in this economy and in these markets..
At this time we have a gut feel that while we may see some rallying on the Obama inauguration we
actually are on the verge of a major equity market drop.
January 20, 2009 7 am
We currently have all portfolios (personal and models) on hold as we try to figure out what is
happening in this economy and in these markets..
At this time we have a gut feel that while we may see some rallying on the Obama inauguration we
actually are on the verge of a major equity market drop.
We do have a somewhat increased level of confidence in the economy--although we don't have
any tangible reason for this and thus will be somewhat cautious.
We feel that this could be a year to lock in tremendous yields for the long term, but we think that the
euphoria surrounding the new president could get a bit carried away and we all know that even
if he is successful in making good economic progress that we will need months or even years to
get back on a solid footing. You simply can't fix a meltdown overnight--and even though the
markets see forward 6 to 9 months we think it will take all of this and more--time wise to get
where we need to be.
any tangible reason for this and thus will be somewhat cautious.
We feel that this could be a year to lock in tremendous yields for the long term, but we think that the
euphoria surrounding the new president could get a bit carried away and we all know that even
if he is successful in making good economic progress that we will need months or even years to
get back on a solid footing. You simply can't fix a meltdown overnight--and even though the
markets see forward 6 to 9 months we think it will take all of this and more--time wise to get
where we need to be.
Below we wrote numerous times that we were not buying many--if any--of the bank related preferreds
or debt because we couldn't figure out the financial condition of the companies. Additionally the
terms of the TARP keep changing. And of course we then see last week that Bank of
America--supposedly one of the very strongest banks is essentially broke. We don't believe that even
at this point in time they have any idea what their eventual losses will be--in particular in the Merrill
Lynch division.
In addition to the above we have NO visibility beyond today. The stimulus package that is going to
come may/may not work--we just don't know.
Thus we would prefer to preserve capital even at tiny returns versus assuming all is going to be well
in 6 months.
or debt because we couldn't figure out the financial condition of the companies. Additionally the
terms of the TARP keep changing. And of course we then see last week that Bank of
America--supposedly one of the very strongest banks is essentially broke. We don't believe that even
at this point in time they have any idea what their eventual losses will be--in particular in the Merrill
Lynch division.
In addition to the above we have NO visibility beyond today. The stimulus package that is going to
come may/may not work--we just don't know.
Thus we would prefer to preserve capital even at tiny returns versus assuming all is going to be well
in 6 months.
Additions to Model Portfolios
January 3, 2009
We have added PFIZER (PFE) to the Quality Income Model Portfolio. PFE is a quality company with
over 25 billion in the till--and a great yield of 7.2%.
Additionally we will be adding Omega HealthCare Preferred (OHI-PD) to the 2009 Blended Income
Portfolio. Omega is a REIT--but one of the few that we would touch as they are in the Health Care
Sector. The balance sheet is strong and income is being maintained. Of course it has a nice yield
of 10.47% also.
January 3, 2009
We have added PFIZER (PFE) to the Quality Income Model Portfolio. PFE is a quality company with
over 25 billion in the till--and a great yield of 7.2%.
Additionally we will be adding Omega HealthCare Preferred (OHI-PD) to the 2009 Blended Income
Portfolio. Omega is a REIT--but one of the few that we would touch as they are in the Health Care
Sector. The balance sheet is strong and income is being maintained. Of course it has a nice yield
of 10.47% also.
Model Portfolios
January 30, 2009
The model portfolios have been quiet for the last number of weeks--just about what we wanted.
As with our personal portfolio we have been sitting tight mostly in cash awaiting some clarity to the
marketplace. We still are looking and plan to add to the portfolios this weekend.
January 30, 2009
The model portfolios have been quiet for the last number of weeks--just about what we wanted.
As with our personal portfolio we have been sitting tight mostly in cash awaiting some clarity to the
marketplace. We still are looking and plan to add to the portfolios this weekend.
It is obvious that the markets have given the all clear in the higher yielding markets (although we
think that assumption would be a bit premature).
Lets look at some of the issues that have moved up nicely in the last week.
National Rural Utilities Debt (all 3 issues--NRU,NRN,NRC). NRN and NRC moved up 5-7%
while NRU which had been mispriced moved near 20%. We had a position in NRU which we
sold as it moved up too far too fast.
Great Plains Energy (GXP) another position we had owned moved up 6%, Progress Energy (PGN)
, Empire District Electric (EDE) and many other electric utilities moved up 5-8%.
Some of the best performers were exchange traded debt of insurance companies that had
current yields of 10-15%. In particular issues of Lincoln National and Selective Insurance
(LNC-PG, LNC-PF and SGZ) moved up 20 to 35%--WOW. We hold Lincoln National issues.
The ocean shippers moved up across the board--we think prematurely as we have no real
visibility for the year ahead.
The Canadian Energy Trusts which have performed poorly moved up by as much as 25% this
week which will give us the opportunity to sell calls again our PVX holdings at a nice price (we had
sold December $5 calls which gave us a near 10% return on the calls as they expired
worthless--offsetting some of our capital loss on the shares. It looks like we can pick up another
10% by selling either the March or June $5 calls.
Our Current Personal Portfolio
Hickory Tech (HTCO)
Lincoln National Exchange Traded Debt (LNC-PG)
Xcel Energy Exchange Traded Debt (XCJ)
Stonemor LP (STON)
Provident Energy (PVX)
B&G Foods Income Enhanced Securities (BGF)
Pfizer (PFE)
Pfizer is a new holding---one that all income investors should own as it yields over 7% and they
have 25 billion cash in the till. We think they have great capital gain possibilities in the next year
also.
National Rural Utilities (NRU) was sold with a big gain. We may buy back into NRN if it would dip
a bit.
Great Plains Energy (GXP) was called away from us as we had sold calls against the position to
add income--we were ok with giving up the shares as it gave us a gain of over 5% in a short
period of time.
Provident Energy (PVX) has performed poorly for us--but we sell calls against the position to add
income and we expect that longer term it will do great.
We are at 15% invested overall and now will go ahead and move toward 20% invested
New Model Portfolios
On the top of this page are some new links for our new model portfolios. These are dynamic
portfolios which we will buy and sell from as necessary.
Previously in 2006 we had 2 model portfolios which performed very well---at least until the second
half of 2008. Both of these were 'buy and hold' portfolios with only 5 issues in each and were
meant to test the 'buy and hold' strategy. The 'high yield' portfolio got massacred while the 'quality
income' held up fairly well.
The new portfolios are meant to mirror 'real life' (at least in our eyes). Thus they may well have a
high cash (money market) position in them at times.
We will be continuously building these portfolios.
think that assumption would be a bit premature).
Lets look at some of the issues that have moved up nicely in the last week.
National Rural Utilities Debt (all 3 issues--NRU,NRN,NRC). NRN and NRC moved up 5-7%
while NRU which had been mispriced moved near 20%. We had a position in NRU which we
sold as it moved up too far too fast.
Great Plains Energy (GXP) another position we had owned moved up 6%, Progress Energy (PGN)
, Empire District Electric (EDE) and many other electric utilities moved up 5-8%.
Some of the best performers were exchange traded debt of insurance companies that had
current yields of 10-15%. In particular issues of Lincoln National and Selective Insurance
(LNC-PG, LNC-PF and SGZ) moved up 20 to 35%--WOW. We hold Lincoln National issues.
The ocean shippers moved up across the board--we think prematurely as we have no real
visibility for the year ahead.
The Canadian Energy Trusts which have performed poorly moved up by as much as 25% this
week which will give us the opportunity to sell calls again our PVX holdings at a nice price (we had
sold December $5 calls which gave us a near 10% return on the calls as they expired
worthless--offsetting some of our capital loss on the shares. It looks like we can pick up another
10% by selling either the March or June $5 calls.
Our Current Personal Portfolio
Hickory Tech (HTCO)
Lincoln National Exchange Traded Debt (LNC-PG)
Xcel Energy Exchange Traded Debt (XCJ)
Stonemor LP (STON)
Provident Energy (PVX)
B&G Foods Income Enhanced Securities (BGF)
Pfizer (PFE)
Pfizer is a new holding---one that all income investors should own as it yields over 7% and they
have 25 billion cash in the till. We think they have great capital gain possibilities in the next year
also.
National Rural Utilities (NRU) was sold with a big gain. We may buy back into NRN if it would dip
a bit.
Great Plains Energy (GXP) was called away from us as we had sold calls against the position to
add income--we were ok with giving up the shares as it gave us a gain of over 5% in a short
period of time.
Provident Energy (PVX) has performed poorly for us--but we sell calls against the position to add
income and we expect that longer term it will do great.
We are at 15% invested overall and now will go ahead and move toward 20% invested
New Model Portfolios
On the top of this page are some new links for our new model portfolios. These are dynamic
portfolios which we will buy and sell from as necessary.
Previously in 2006 we had 2 model portfolios which performed very well---at least until the second
half of 2008. Both of these were 'buy and hold' portfolios with only 5 issues in each and were
meant to test the 'buy and hold' strategy. The 'high yield' portfolio got massacred while the 'quality
income' held up fairly well.
The new portfolios are meant to mirror 'real life' (at least in our eyes). Thus they may well have a
high cash (money market) position in them at times.
We will be continuously building these portfolios.
If you check our portfolio pages you will see the results in 'real time'. Each portfolio started with
$100,000 and the page will give you the portfolio value as of the minute that you look.
The one item we are trying to add to the portfolios is the percentage of cash in each portfolio which is
not allowed at this moment.
We will be adding funds to each portfolio this weekend which will represent the money market returns
for January---we will be crediting the accounts at the same rate as Fidelity is using for their Ready
Reserves money market.
$100,000 and the page will give you the portfolio value as of the minute that you look.
The one item we are trying to add to the portfolios is the percentage of cash in each portfolio which is
not allowed at this moment.
We will be adding funds to each portfolio this weekend which will represent the money market returns
for January---we will be crediting the accounts at the same rate as Fidelity is using for their Ready
Reserves money market.
The Year End Treats Us Well
And New Model Portfolios for 2009
January 2, 2009
As 2008 ends and 2009 starts the hunt for higher yields has definitely shifted to high gear.
The issues that we follow---and own have sprinted nicely higher the last 2 trading days. In fact we
end the year very near break even which we think is a victory given the overall equity and debt
market performances.
And New Model Portfolios for 2009
January 2, 2009
As 2008 ends and 2009 starts the hunt for higher yields has definitely shifted to high gear.
The issues that we follow---and own have sprinted nicely higher the last 2 trading days. In fact we
end the year very near break even which we think is a victory given the overall equity and debt
market performances.
Additions to the Models
January 30, 2009
Today on the market close we added 2 holdings to our model portfolios.
1st we have added Interstate Power and Light Cumulative Preferred Stock (IPL-PB) to our 'High
Quality Income Portfolio'. The stocks has a 8 3/8% coupon and has a current yield of 7.81%. It is not
callable until 2013. We have added 300 shares. These are solid utility company preferreds and fit the
portfolio goals nicely.
Next we have added MetLife Non-Cumulative Preferred Stock (MET-PB). The shares are added to the
'High Yield Income Portfolio'.
January 30, 2009
Today on the market close we added 2 holdings to our model portfolios.
1st we have added Interstate Power and Light Cumulative Preferred Stock (IPL-PB) to our 'High
Quality Income Portfolio'. The stocks has a 8 3/8% coupon and has a current yield of 7.81%. It is not
callable until 2013. We have added 300 shares. These are solid utility company preferreds and fit the
portfolio goals nicely.
Next we have added MetLife Non-Cumulative Preferred Stock (MET-PB). The shares are added to the
'High Yield Income Portfolio'.
The bond market responded in a much larger way with rates in many areas hitting record lows. 1
yesterday.
Mortgage rates are now below 5% for prime customers and there is a refinancing wave that is
starting for those that qualify for loans.
Forgetting about any price movements in various income producing securities today (as it was
irrational exuberance).we will review some of the income areas.
REITS
By and large we are now and will continue to stay away from most REITS. At this time we really
see no loosening of credit for most REITS which puts most of them at risk as they have debt
coming due in the months ahead. Now this opinion pertains ony to the common stocks of REITS,
not the preferreds or debt as we think there are some opportunities out there and we will cover
some of those in days and weeks ahead if these markets get squared away.
Ocean Shippers
While the ocean shippers have taken nice jumps off their lows they no longer meet most our
requirements for risk/reward as we are looking for income and some such as Diana Shipping
(DSX) have suspended their dividends and day rates for charters are down 60-75%. Most of
these companies will have to suspend dividends eventually and we have no use for volatile
equities which pay no dividends.
Canadian Energy Trusts
We are liking most of the Canadian Trusts on a long term holding basis. Yields remain high even
with dividend cuts and we expect over the years the earnings are going to bounce back strongly.
We own Provident Energy (PVX) and added to this holding within the last 10 days. We like PVX,
Pengrowth (PGH) and Penn West (PWE) as they trade on the NYSE and have options available
which help to generate some added income through covered call writing.
Financial Preferreds
We continue to stay away from the banking preferreds, although they may well now be safe
enough to buy with the government underpinning damn near everything.
We find the insurance company preferreds most interesting and today added Lincoln National
Preferreds (LNC-PF) yielding over 11% to our holdings. Lincoln National has a couple of issues
that have a nice yield and we think with the Fed stepping up purchases of mortgages these are
now quite safe.
Exchange Traded Debt
We like a number of these issues very much. Of course we continue to like the National Rural
Utilities issues (NRU, NRC, NRN) with yields of 8-9% and great safety. US Cellular (UZG) has
performed well and we think will continue to do ok. Selective Insurance Group has a nice issue
with a great yield (SGZ) over 13%. We will be writing about more of these issues soon.
Our Holdings
We are now at 15% invested as we have added more Provident Energy (PVX) and just today some
Lincoln National Preferreds to the portfolio.
Our holdings are--
Xcel Energy Debt (XCJ)
Stonemor LP (STON)
Provident Energy Trust (PVX)
Lincoln National Preferred (LNC-PF)
Hickory Tech common (HTCO)
National Rural Utilities Debt (NRU)
B&G Enhanced Income Securities (BGF)
With these holdings we are now at -1% on the portfolio for the year. We have had nice jumps in
the last few days.
The bottom line is we are feeling much better about the markets (but not the economy) as so
much bad news is built in that not much has been shaking it.
We will continue to be cautious, but will start making a few purchases in the weeks ahead,
yesterday.
Mortgage rates are now below 5% for prime customers and there is a refinancing wave that is
starting for those that qualify for loans.
Forgetting about any price movements in various income producing securities today (as it was
irrational exuberance).we will review some of the income areas.
REITS
By and large we are now and will continue to stay away from most REITS. At this time we really
see no loosening of credit for most REITS which puts most of them at risk as they have debt
coming due in the months ahead. Now this opinion pertains ony to the common stocks of REITS,
not the preferreds or debt as we think there are some opportunities out there and we will cover
some of those in days and weeks ahead if these markets get squared away.
Ocean Shippers
While the ocean shippers have taken nice jumps off their lows they no longer meet most our
requirements for risk/reward as we are looking for income and some such as Diana Shipping
(DSX) have suspended their dividends and day rates for charters are down 60-75%. Most of
these companies will have to suspend dividends eventually and we have no use for volatile
equities which pay no dividends.
Canadian Energy Trusts
We are liking most of the Canadian Trusts on a long term holding basis. Yields remain high even
with dividend cuts and we expect over the years the earnings are going to bounce back strongly.
We own Provident Energy (PVX) and added to this holding within the last 10 days. We like PVX,
Pengrowth (PGH) and Penn West (PWE) as they trade on the NYSE and have options available
which help to generate some added income through covered call writing.
Financial Preferreds
We continue to stay away from the banking preferreds, although they may well now be safe
enough to buy with the government underpinning damn near everything.
We find the insurance company preferreds most interesting and today added Lincoln National
Preferreds (LNC-PF) yielding over 11% to our holdings. Lincoln National has a couple of issues
that have a nice yield and we think with the Fed stepping up purchases of mortgages these are
now quite safe.
Exchange Traded Debt
We like a number of these issues very much. Of course we continue to like the National Rural
Utilities issues (NRU, NRC, NRN) with yields of 8-9% and great safety. US Cellular (UZG) has
performed well and we think will continue to do ok. Selective Insurance Group has a nice issue
with a great yield (SGZ) over 13%. We will be writing about more of these issues soon.
Our Holdings
We are now at 15% invested as we have added more Provident Energy (PVX) and just today some
Lincoln National Preferreds to the portfolio.
Our holdings are--
Xcel Energy Debt (XCJ)
Stonemor LP (STON)
Provident Energy Trust (PVX)
Lincoln National Preferred (LNC-PF)
Hickory Tech common (HTCO)
National Rural Utilities Debt (NRU)
B&G Enhanced Income Securities (BGF)
With these holdings we are now at -1% on the portfolio for the year. We have had nice jumps in
the last few days.
The bottom line is we are feeling much better about the markets (but not the economy) as so
much bad news is built in that not much has been shaking it.
We will continue to be cautious, but will start making a few purchases in the weeks ahead,
The shares have a 6.5% coupon with a current yield of 9.42%. The life insurance companies have been
buffeted by the credit crisis and do present a modest level of risk. Of course without risk you would not
receive the large 9.42% yield. Over time we believe this will work out and it gives the portfolio a chance
for some capital gains as well as the shares trade near $8 under call price. Given the level of risk have
we added just 200 shares.
buffeted by the credit crisis and do present a modest level of risk. Of course without risk you would not
receive the large 9.42% yield. Over time we believe this will work out and it gives the portfolio a chance
for some capital gains as well as the shares trade near $8 under call price. Given the level of risk have
we added just 200 shares.
A Review as We Are Near 0% Interest Rates
December 17, 2008 2 am
Well today the Fed announced a new Fed Funds target of 0 to 1/4%. Probably the bigger news
was that they announced they would be purchasing lots of mortgages and mortgage backed
securities.
Of course as I would expect the equity markets took off and ended up by 359 Dow points.
December 17, 2008 2 am
Well today the Fed announced a new Fed Funds target of 0 to 1/4%. Probably the bigger news
was that they announced they would be purchasing lots of mortgages and mortgage backed
securities.
Of course as I would expect the equity markets took off and ended up by 359 Dow points.
| SGM Publishing Copyright 2006-2009 |
Still No Safety---Almost Anywhere
February 14, 2009
As we watch and search everyday we are starting to think that there is NO safety in any investment.
There are surprises around every corner--in issues we think are firm.
The one area we have todate found safety in is in Utility Preferred issues.
In our model portfolios we have a few Utility Preferred issues--although some are actually $25.00 debt
issues (versus true preferreds). These and other similar issues we follow have held up very
well---when they sell off they bounce back fairly quickly.
February 14, 2009
As we watch and search everyday we are starting to think that there is NO safety in any investment.
There are surprises around every corner--in issues we think are firm.
The one area we have todate found safety in is in Utility Preferred issues.
In our model portfolios we have a few Utility Preferred issues--although some are actually $25.00 debt
issues (versus true preferreds). These and other similar issues we follow have held up very
well---when they sell off they bounce back fairly quickly.
On the other hand some issues we hold in our personal portfolio as well as in the model portfolios
have been disasters. The most disappointing thing is these are issues we classify as 'quality' issues.
In particular Pfizer (PFE) and Great Plains Energy (GPX) have been big disappointments as both cut
their dividends in half and the share prices have plummetted We hold Pfizer in our personal holdings
and both are in the 'high quality' model portfolio. Needless to say the 'quality portolio' has taken a
beating.
I think the need to remain diversified is the most key concept in these dangerous markets. Well
diversified portfolios have allowed us to remain in good financial shape for the recovery ahead (we
hope).
We still won't touch REITs and Ocean Shippers as we believe there will be bunches of bankruptcys in
these spaces. A huge percentage of these companies are in technical default on their loan covenants
and when time comes to roll debt they either won't be able to roll it or they will have to accept a much
higher interest rate.
We hold Stonmor Partners (STON) and it has performed very well----the funeral and cemetary business
has held up so far, but we a cautious as to whether STON can continue the large dividend payout
(15.4%).
Our favorite area continues to be some of the Candadian Oil and Gas Trusts. Our largest postition is
Provident Energy (PVX) which cut its payout this week by 33%. This was somewhat expected thus the
stock did not take a massive hit. The yield remains at almost 17%. The yield coupled with our practice
of selling covered calls has been favorable for us and we may buy more in the near future. When the
economy firms these issues are going to fly.
We do not personally hold Interstate Power Preferred (IPL-PB), but with a current yield of 8.19% we will
pick some up in the next week. The 'High Quality' portfolio does have it in it.
The model portfolios are performing relatively well. The 'Quality' portfolio has taken some hits, but
being mostly in cash they are not terrible. The 'High Yield' and 'Blended' portfolios are both up and
should show nice gains when the dividends on the holdings start to roll in.
Watch our model portfolios as we believe we will do VERY WELL as the year moves on. The S and P is
off over 8% year to date.
For those that think all the printing of money from the stimulus package will cause inflation and higher
interest rates ahead you can use the Ultra Short 20 Year Treasury Proshares (TBT) to play on interest
rates moving up. It moves in the opposite direction of the (at about twice the rate of change) 20 year
bond.
have been disasters. The most disappointing thing is these are issues we classify as 'quality' issues.
In particular Pfizer (PFE) and Great Plains Energy (GPX) have been big disappointments as both cut
their dividends in half and the share prices have plummetted We hold Pfizer in our personal holdings
and both are in the 'high quality' model portfolio. Needless to say the 'quality portolio' has taken a
beating.
I think the need to remain diversified is the most key concept in these dangerous markets. Well
diversified portfolios have allowed us to remain in good financial shape for the recovery ahead (we
hope).
We still won't touch REITs and Ocean Shippers as we believe there will be bunches of bankruptcys in
these spaces. A huge percentage of these companies are in technical default on their loan covenants
and when time comes to roll debt they either won't be able to roll it or they will have to accept a much
higher interest rate.
We hold Stonmor Partners (STON) and it has performed very well----the funeral and cemetary business
has held up so far, but we a cautious as to whether STON can continue the large dividend payout
(15.4%).
Our favorite area continues to be some of the Candadian Oil and Gas Trusts. Our largest postition is
Provident Energy (PVX) which cut its payout this week by 33%. This was somewhat expected thus the
stock did not take a massive hit. The yield remains at almost 17%. The yield coupled with our practice
of selling covered calls has been favorable for us and we may buy more in the near future. When the
economy firms these issues are going to fly.
We do not personally hold Interstate Power Preferred (IPL-PB), but with a current yield of 8.19% we will
pick some up in the next week. The 'High Quality' portfolio does have it in it.
The model portfolios are performing relatively well. The 'Quality' portfolio has taken some hits, but
being mostly in cash they are not terrible. The 'High Yield' and 'Blended' portfolios are both up and
should show nice gains when the dividends on the holdings start to roll in.
Watch our model portfolios as we believe we will do VERY WELL as the year moves on. The S and P is
off over 8% year to date.
For those that think all the printing of money from the stimulus package will cause inflation and higher
interest rates ahead you can use the Ultra Short 20 Year Treasury Proshares (TBT) to play on interest
rates moving up. It moves in the opposite direction of the (at about twice the rate of change) 20 year
bond.
Decimation in Income Issues
February 19, 2009
Again today we had what looks like hedge fund liquidation of income issues as issues that had been
stable in these rocky times took major hits. These issues include many of the issues we hold
personally and in the model portfolios.
The securities of all financials--whether it be preferred shares or exchange traded debt issues got
murdered. We are fortunate to have a high level of cash in all portfolios or we would have losses that
would sicken a person. The losses today also ran through the REITs, Shippers and even
February 19, 2009
Again today we had what looks like hedge fund liquidation of income issues as issues that had been
stable in these rocky times took major hits. These issues include many of the issues we hold
personally and in the model portfolios.
The securities of all financials--whether it be preferred shares or exchange traded debt issues got
murdered. We are fortunate to have a high level of cash in all portfolios or we would have losses that
would sicken a person. The losses today also ran through the REITs, Shippers and even
Oil and Gas Trusts even though crude was up strongly.
We believe that we may have to back out of most all of the positions that we have, both in our
personal portfolio and in the model portfolios. Nothing pisses us off more than having to do this, but
sometimes you have to bite the bullet and this may be one of those times. In the last 12 months we
have personally had near flat performance--which, of course on a relative basis isn't too bad, but just the
same it doesn't help our retirement needs much.
As we have scoured the horizon we can find NO reason to be optimistic on the economy. On a global
basis all news is negative and while the markets look out maybe 6-9 months there is no news that
indicates it will be anything but worse in the world economy at that time.
Additionally we see so many marginal financial practices continue to be used---such as the sale of
'guaranteed annuities' at 'guaranteed' rates of returns that are not realistic. In particular we know of one
very LARGE insurance company selling annuities guaranteeing 7% returns. Of course many people are
piling into these products---but it is not possible to have a 7% return 'guaranteed'. The guarantees are
only guarantees from the company themselves---this is just another recipe for disaster.
We believe that we may have to back out of most all of the positions that we have, both in our
personal portfolio and in the model portfolios. Nothing pisses us off more than having to do this, but
sometimes you have to bite the bullet and this may be one of those times. In the last 12 months we
have personally had near flat performance--which, of course on a relative basis isn't too bad, but just the
same it doesn't help our retirement needs much.
As we have scoured the horizon we can find NO reason to be optimistic on the economy. On a global
basis all news is negative and while the markets look out maybe 6-9 months there is no news that
indicates it will be anything but worse in the world economy at that time.
Additionally we see so many marginal financial practices continue to be used---such as the sale of
'guaranteed annuities' at 'guaranteed' rates of returns that are not realistic. In particular we know of one
very LARGE insurance company selling annuities guaranteeing 7% returns. Of course many people are
piling into these products---but it is not possible to have a 7% return 'guaranteed'. The guarantees are
only guarantees from the company themselves---this is just another recipe for disaster.
Updates on Personal and Model Portfolios
March 18, 2009
It has been a month since we have written (we have been too busy with our real job) and we wanted to
give an update of the Model Portfolios and what we have done personally.
1st off we made no changes in the Model Portfolios in the last month---we felt we would but our
relatively low commitment to anything except cash held our losses to a minimum. Kind of funny that
the 'High Quality" portfolio took a big hit in the credit market downturn during the last month. This
portfolio is off approximately 3.5% YTD.
The 'High Yield' model is off almost 5%--but the portfolio has what we believe we will be great issues
over the course of the year as the high yields are going to power the model up.
March 18, 2009
It has been a month since we have written (we have been too busy with our real job) and we wanted to
give an update of the Model Portfolios and what we have done personally.
1st off we made no changes in the Model Portfolios in the last month---we felt we would but our
relatively low commitment to anything except cash held our losses to a minimum. Kind of funny that
the 'High Quality" portfolio took a big hit in the credit market downturn during the last month. This
portfolio is off approximately 3.5% YTD.
The 'High Yield' model is off almost 5%--but the portfolio has what we believe we will be great issues
over the course of the year as the high yields are going to power the model up.
Later tonight we will add new issues to each of the portfolio's.
Our Personal Portfolio
In late February we dumped the Lincoln National Preferred (LNC-PG) after taking a hit on it---then it
became priced for bankruptcy in early March---so we bought a 2% position at $6.13 with a current
yield of 25%. Now it is at $11.38----our yield being 25% we will most likely be keeping this one for a
long time. Lincoln National is most likely a survivor.
We did NOT sell anything further since a month ago--but we did ADD more Provident Energy (PVX) and
unlike previous postiions we did NOT sell covered calls against the position thus fully participating in
the nice upmove of the last few weeks (from 2.50 to 3.50). This is now a 3% position in our portfolio
and one of our long term holds.
We are now personally at about 22% invested----we plan to take this higher tomorrow--up toward the
30% level as the Fed Announcement on Mortgage purchases as well as a quantatative easing may be
the most important move in the cycle---we could be moving toward a bottoming in the economy.
We are very happy with the portfolio we are building and will review it here soon. We are off 2% YTD.
Further Adds to Model Portfolio (and personal holdings)
April 9, 2009
Back when we last wrote on March 18th we said we may be moving toward a economic bottom and
we were moving our personal portfolio to 30% invested. We did do this and more.
We have sold none of our personal portfolio and have added the following issues--
April 9, 2009
Back when we last wrote on March 18th we said we may be moving toward a economic bottom and
we were moving our personal portfolio to 30% invested. We did do this and more.
We have sold none of our personal portfolio and have added the following issues--
Wells Fargo Cap Trust IX 5 3/4% (JWF)---bought after their stellar earnings announcement. Current
yield of 8.4%.
Bank of America Cap Trust I (BAC-PW)--bought 3 weeks ago with a yield to us of 13.5%.
B and G Foods Enhanced Income Securities (BGF)--we added more to our previous position. Our
position is now 3-4% of the portfolio. Our yield on these is 15%.
iShares Financials Preferreds ETF (PGF)---a good blend of preferreds of financials institutions. Our
yield 15%.
Consumers Waterheater Fund (CSUWF)--a Canadian Income Trust with a yield to us of 18%. And
yes in Canada they rent lease their water heaters.
These have taken our personal portfolio to 38% invested---we think just right at this stage. We hope
to maintain everyone of our positions. We are heavy in the financials (Banks and Insurance) and
hope that we do not get blown out by any surprises. If you want to maximize returns for the long haul
you must buy before the crystal ball is perfectly clear---waiting until it is fully clear will result in a lower
yield and huge lost capital gains. On the other hand those wanting very low risk can wait another
month or two and still find super issues available.
Our personal portfolio is even on the year.
MODEL PORTFOLIOS
We are moving the 'High Quality' portfolio up to 35% invested with the purchase of 300 shares of Xcel
Energy Exchange Traded debt shares (XCJ) at Thursdays closing price of 24.18/share. These have a
current yield of around 8%.
We are moving the 'High Yield' portfolio up to 35% invested with 400 shares of B&G Foods Enhanced
Income Securities (BGF) with a current yield of 14.32%.
We have taken the 'Blended Income' up to just 16% with the addition of Pimco High Yield Income
Fund (PHK) with a current yield of 22.74% (we expect this to be cut somewhat in the months ahead).
This fund suspended their payout for a month because of issues with their Auction Rate Preferred
shares which are outstanding and which provide leverage to the fund.
We will be updating these portolios in the days ahead by getting all dividends and interest receipts
plugged in (some go in automatically--some we have to do manually).
As you can see there are lots of high yield 'deals' out there and if we can avoid getting blown out by
huge market surprises we are building portfolios that will beat growth stocks mutual funds.
yield of 8.4%.
Bank of America Cap Trust I (BAC-PW)--bought 3 weeks ago with a yield to us of 13.5%.
B and G Foods Enhanced Income Securities (BGF)--we added more to our previous position. Our
position is now 3-4% of the portfolio. Our yield on these is 15%.
iShares Financials Preferreds ETF (PGF)---a good blend of preferreds of financials institutions. Our
yield 15%.
Consumers Waterheater Fund (CSUWF)--a Canadian Income Trust with a yield to us of 18%. And
yes in Canada they rent lease their water heaters.
These have taken our personal portfolio to 38% invested---we think just right at this stage. We hope
to maintain everyone of our positions. We are heavy in the financials (Banks and Insurance) and
hope that we do not get blown out by any surprises. If you want to maximize returns for the long haul
you must buy before the crystal ball is perfectly clear---waiting until it is fully clear will result in a lower
yield and huge lost capital gains. On the other hand those wanting very low risk can wait another
month or two and still find super issues available.
Our personal portfolio is even on the year.
MODEL PORTFOLIOS
We are moving the 'High Quality' portfolio up to 35% invested with the purchase of 300 shares of Xcel
Energy Exchange Traded debt shares (XCJ) at Thursdays closing price of 24.18/share. These have a
current yield of around 8%.
We are moving the 'High Yield' portfolio up to 35% invested with 400 shares of B&G Foods Enhanced
Income Securities (BGF) with a current yield of 14.32%.
We have taken the 'Blended Income' up to just 16% with the addition of Pimco High Yield Income
Fund (PHK) with a current yield of 22.74% (we expect this to be cut somewhat in the months ahead).
This fund suspended their payout for a month because of issues with their Auction Rate Preferred
shares which are outstanding and which provide leverage to the fund.
We will be updating these portolios in the days ahead by getting all dividends and interest receipts
plugged in (some go in automatically--some we have to do manually).
As you can see there are lots of high yield 'deals' out there and if we can avoid getting blown out by
huge market surprises we are building portfolios that will beat growth stocks mutual funds.
B&G Foods Powers Portfolio Higher
April 30, 2009
B&G Foods (BGS) announced great sales and earnings for the first quarter which set off quite a rally
in the common shares as well as the Enhanced Income Securities (BGF) The common shares
jumped from 5.20/share to 6.40 and the EIS shares jumped from around $11 to $13. We mentioned
in articles below that we have been adding to our BGF holdings--locking in an average yield of 15%.
If you do not hold any of either the common or the EIS units (1 share of common and a portion of
debt) there is still time to pick up some of these for the long haul. BGF still yields 11.7% and BGS
yields 10.63%. Of course our preference is for BGF as it provides better yield protection because of
the debt portion of the security.
April 30, 2009
B&G Foods (BGS) announced great sales and earnings for the first quarter which set off quite a rally
in the common shares as well as the Enhanced Income Securities (BGF) The common shares
jumped from 5.20/share to 6.40 and the EIS shares jumped from around $11 to $13. We mentioned
in articles below that we have been adding to our BGF holdings--locking in an average yield of 15%.
If you do not hold any of either the common or the EIS units (1 share of common and a portion of
debt) there is still time to pick up some of these for the long haul. BGF still yields 11.7% and BGS
yields 10.63%. Of course our preference is for BGF as it provides better yield protection because of
the debt portion of the security.
With the above gains our personal portfolio is now up 4% on the year.
Additionally it should be noted that the 'High Yield' and 'Blended Income' model portfolios have both
gone positive for the year. The 'High Quality' portfolio remains 1.5% in the red for the year, but we are
confident it will do nicely in the future/
Additionally it should be noted that the 'High Yield' and 'Blended Income' model portfolios have both
gone positive for the year. The 'High Quality' portfolio remains 1.5% in the red for the year, but we are
confident it will do nicely in the future/
The Best Bank Preferred Stock
May 11, 2009
Right under our nose we have come across what we believe is the best Bank Preferred Stock Issue
available today.
The Issue is TCF Financial Trust Preferred Stock (TCB-PA).
TCF Financial is a Minnesota Bank that is modest in size (around 19 billion in assets), that has done
quite well during the recent crisis. They have been profitable every quarter and recently became the
largest bank to pay back TARP funds (361 million), which they did not ever need in the first place.
May 11, 2009
Right under our nose we have come across what we believe is the best Bank Preferred Stock Issue
available today.
The Issue is TCF Financial Trust Preferred Stock (TCB-PA).
TCF Financial is a Minnesota Bank that is modest in size (around 19 billion in assets), that has done
quite well during the recent crisis. They have been profitable every quarter and recently became the
largest bank to pay back TARP funds (361 million), which they did not ever need in the first place.
This issue has a coupon of 10.75% with a current yield of 10.2% at the present price of 26.05.
The company did cut their common stock dividend in order to preserve funds.
This is now the largest holding in our personal portfolio with a 5% position--we have also added it to
the Blended Income Model Portfolio.
You can check out TCF at this link.
Note - this issue goes ex-dividend on 5/12/2009
The company did cut their common stock dividend in order to preserve funds.
This is now the largest holding in our personal portfolio with a 5% position--we have also added it to
the Blended Income Model Portfolio.
You can check out TCF at this link.
Note - this issue goes ex-dividend on 5/12/2009
A Very Good 1st Half
July 3, 2009
Our apologies for being out of touch for a couple of months on our website, but our 'real' business
has been so busy that it left little time to write here.
Everything on the website is out of date and the 'portfolio tracker' for the model portfolio's doesn't
work worth a damn (Stockalicious was supposed to be so damned good). We will be working to
get things up to date.
Of course we have paid attention to our investments as 'buy and hold' is not workable any more and
we watch our investments closely.
July 3, 2009
Our apologies for being out of touch for a couple of months on our website, but our 'real' business
has been so busy that it left little time to write here.
Everything on the website is out of date and the 'portfolio tracker' for the model portfolio's doesn't
work worth a damn (Stockalicious was supposed to be so damned good). We will be working to
get things up to date.
Of course we have paid attention to our investments as 'buy and hold' is not workable any more and
we watch our investments closely.
We are now at near 60% invested--our highest invested position in a couple of years. Our current
positions are as follows--
TCF Financial Exchange Traded Debt (TCB-PA)
B&G Foods Enhanced Income Shares (BGF)
Stonemor Limited Partnership (STON)
Xcel Energy Exchange Trade Debt (XCJ)
Willis Lease Finance Preferred (WLFCP)
US Cellular Exchange Traded Debt (UZG)
Prudential Exchange Traded Debt (PUK-P)
Bank of America Trust Preferred (BAC-PZ)
Provident Energy (PVX)
Pimco Corporate Income Fund (PCN)
Selective Insurance Exchange Traded Debt (SZG)
Constellation Energy Preferred (CEG-PA)
Consumers Waterheater Fund (CWI-UN.TO) (Canadian Fund)
Macquarie Power and Infrastructure Fund (MPT-UN.TO) (Canadian Fund)
At the time of purchase we locked in yields in the neighborhood of 13% on these investments.
Of course over the last 2 months we have eased in and out of a few positions--taking a few huge
profits while doing so (i.e. selling Lincoln National Preferred (LNC-PG) which we purchased at
around 6--and sold at 17). We had generally planned to hold everything we had purchased but it is
hard to not bank a triple.
So far this year we are up around 9%. Additionally we can sleep at night quite well as these income
issues that we own are now acting as we had hoped they would---quite flat even on big down days.
We would be more than happy to have the issues we own flat line forever. Regardless of how well
these issues are acting we can never let down our guard as this economy is still deathly sick
positions are as follows--
TCF Financial Exchange Traded Debt (TCB-PA)
B&G Foods Enhanced Income Shares (BGF)
Stonemor Limited Partnership (STON)
Xcel Energy Exchange Trade Debt (XCJ)
Willis Lease Finance Preferred (WLFCP)
US Cellular Exchange Traded Debt (UZG)
Prudential Exchange Traded Debt (PUK-P)
Bank of America Trust Preferred (BAC-PZ)
Provident Energy (PVX)
Pimco Corporate Income Fund (PCN)
Selective Insurance Exchange Traded Debt (SZG)
Constellation Energy Preferred (CEG-PA)
Consumers Waterheater Fund (CWI-UN.TO) (Canadian Fund)
Macquarie Power and Infrastructure Fund (MPT-UN.TO) (Canadian Fund)
At the time of purchase we locked in yields in the neighborhood of 13% on these investments.
Of course over the last 2 months we have eased in and out of a few positions--taking a few huge
profits while doing so (i.e. selling Lincoln National Preferred (LNC-PG) which we purchased at
around 6--and sold at 17). We had generally planned to hold everything we had purchased but it is
hard to not bank a triple.
So far this year we are up around 9%. Additionally we can sleep at night quite well as these income
issues that we own are now acting as we had hoped they would---quite flat even on big down days.
We would be more than happy to have the issues we own flat line forever. Regardless of how well
these issues are acting we can never let down our guard as this economy is still deathly sick
Adding Ford Motor 7 1/2% Notes
July 23, 2009
After a surprise profit for Ford Motor this morning we had added Ford Motor Company Exchange
Traded Debt - 7 1/2% (Yahoo Ticker F-PA) to our personal portfolio and will be adding 300 shares
to the Blended Income Model Portfolio. These have a current yield of almost 12% and high yielding
vehicles are getting harder each day to find.
Of course Ford is not totally out of the woods so like all investments we make in this day and age
we have to keep track of the company fundamentals.
Our personal portfolio is now 70% invested----and we are only very slowly adding to it at this point
in time. We have our eye on some nice high yield securities, but they are too risky at this point so
we aren't making further commitments.
July 23, 2009
After a surprise profit for Ford Motor this morning we had added Ford Motor Company Exchange
Traded Debt - 7 1/2% (Yahoo Ticker F-PA) to our personal portfolio and will be adding 300 shares
to the Blended Income Model Portfolio. These have a current yield of almost 12% and high yielding
vehicles are getting harder each day to find.
Of course Ford is not totally out of the woods so like all investments we make in this day and age
we have to keep track of the company fundamentals.
Our personal portfolio is now 70% invested----and we are only very slowly adding to it at this point
in time. We have our eye on some nice high yield securities, but they are too risky at this point so
we aren't making further commitments.
High Yields--Tough to Find--But Here is One
August 10, 2009
Since the market has bounced back so strongly in the last 6 months many of the easy pickens
sporting double digit yields are now priced to where they are no longer bargains. We are fortunate
in our personal portfolio to be almost fully invested and locked in to what we believe are some very
nice yields (see below).
But we are still always searching for those 'gems in the rough' issues out there and we think we
have laid our hands on a pretty decent one.
The company is Windstream Corp (Ticker: WIN). While not a familiar name the company was
formed as the landline spinoff from Alltel. Really all of these smaller rural telephone companies
are quite similar---declining landline revenues, increasing broadband and satellite TV revenues as
well as an increasing service businesses. You can heck the company out further at their website
at this link.
August 10, 2009
Since the market has bounced back so strongly in the last 6 months many of the easy pickens
sporting double digit yields are now priced to where they are no longer bargains. We are fortunate
in our personal portfolio to be almost fully invested and locked in to what we believe are some very
nice yields (see below).
But we are still always searching for those 'gems in the rough' issues out there and we think we
have laid our hands on a pretty decent one.
The company is Windstream Corp (Ticker: WIN). While not a familiar name the company was
formed as the landline spinoff from Alltel. Really all of these smaller rural telephone companies
are quite similar---declining landline revenues, increasing broadband and satellite TV revenues as
well as an increasing service businesses. You can heck the company out further at their website
at this link.
The company has had fairly stable free cash flow since the spinoff in 2006 and has consistently
paid a very attractive dividend of .25/quarter for a current yield of over 11%. The stock has traded in
a range of 6.28 to 12.90 in the last 52 weeks meaning that there is some nice upside potential
from the current price of $8.75. assuming the economy stays stable or improving from here.
We have added a 3% position to our personal portfolio and will be adding a 5% position to our
High Yield Model Portfolio.
As always in this economy we must monitor all holdings and this one will be no different.
ABN AMRO Capital Trusts Preferred Shares---Time to Buy?
September 9, 2009
ABN AMRO -the Dutch Banking Giant, which required a rescue from The Dutch Government, the
Royal Bank of Scotland and Banco Santander is likely now in a position that makes the purchase
of the various Trust Preferred Shares of the company good buys for our High Yield Portfolio
The company continues to lose money, but the company is being split up into various pieces with
the bailout companies and governments taking different pieces. We fully expect that while times
will remain tough for the company (as with most banking companies) they will survive and the
Trust Preferred shares will provide us with a very nice Reward for our Risk.
Remember that Capital Trusts are trusts set up to purchase debt from a company and then with
the interest payments the trusts receive they pay dividends to the preferred shareholders.
ABN has 3 different issues available
Yahoo Tickers
ABN-PE (5.9% Coupon--current yield of 17.19%)
ABN-PF (6.25% Coupon--current yield of 14.56%)
ABN-PG (6.08% Coupon--Current yield of 17.51%)
You can read more specifically on the companies website the details of these issues by going
here. It should be noted that these issues are NOT Cumulative thus if dividends were suspended
they will not accrue for payment in the future. Additionally each of them can be called (at $25) at
any time, but given the low coupons this most likely will not happen.
We will be purchasing a small quantity (a 1-2% position) for our personal portfolio. Additionally we
will purchase a 4-5% position in the High Yield Portfolio Model. This model is intended to be a
higher risk/reward portfolio thus we are at a higher position than we would normally be in our
personal portfolio.
NOTE--please do your due diligence. This issue carries somewhat more risk than most of
what we currently own and you must be WELL DIVERSIFIED---no loading up on 17% yield
securities. If for any reason the payments of interest to the trust are delayed/suspended etc
these issues can fall even further. Remember that this is not a U.S. company and we can not
depend on the 'bailout' to be handled in the same manner.
September 9, 2009
ABN AMRO -the Dutch Banking Giant, which required a rescue from The Dutch Government, the
Royal Bank of Scotland and Banco Santander is likely now in a position that makes the purchase
of the various Trust Preferred Shares of the company good buys for our High Yield Portfolio
The company continues to lose money, but the company is being split up into various pieces with
the bailout companies and governments taking different pieces. We fully expect that while times
will remain tough for the company (as with most banking companies) they will survive and the
Trust Preferred shares will provide us with a very nice Reward for our Risk.
Remember that Capital Trusts are trusts set up to purchase debt from a company and then with
the interest payments the trusts receive they pay dividends to the preferred shareholders.
ABN has 3 different issues available
Yahoo Tickers
ABN-PE (5.9% Coupon--current yield of 17.19%)
ABN-PF (6.25% Coupon--current yield of 14.56%)
ABN-PG (6.08% Coupon--Current yield of 17.51%)
You can read more specifically on the companies website the details of these issues by going
here. It should be noted that these issues are NOT Cumulative thus if dividends were suspended
they will not accrue for payment in the future. Additionally each of them can be called (at $25) at
any time, but given the low coupons this most likely will not happen.
We will be purchasing a small quantity (a 1-2% position) for our personal portfolio. Additionally we
will purchase a 4-5% position in the High Yield Portfolio Model. This model is intended to be a
higher risk/reward portfolio thus we are at a higher position than we would normally be in our
personal portfolio.
NOTE--please do your due diligence. This issue carries somewhat more risk than most of
what we currently own and you must be WELL DIVERSIFIED---no loading up on 17% yield
securities. If for any reason the payments of interest to the trust are delayed/suspended etc
these issues can fall even further. Remember that this is not a U.S. company and we can not
depend on the 'bailout' to be handled in the same manner.
According to the original prospectus the company can redeem the notes after 10/30/2009. Each
EIS share has 1 common share and $7.15 of the 12% note. Thus the value of the BGF shares is
1 share of BGS and $7.15. Around $16.50 at the closing prices on 9/11/2009.
Regardless we plan to simply hold our EIS shares as we think there is generally little downside in
doing so.
EIS share has 1 common share and $7.15 of the 12% note. Thus the value of the BGF shares is
1 share of BGS and $7.15. Around $16.50 at the closing prices on 9/11/2009.
Regardless we plan to simply hold our EIS shares as we think there is generally little downside in
doing so.
B & G Foods Gravy Train May End
September 12, 2009
After a good run with nice capital gains and high dividends it looks like the B & G Foods Enhanced
Income Securities (Ticker: BGF) will be the subject of an offer by the company to purchase the
securities.
As you will note the shares have fallen by $1.00 per share in the last 2 days as B & G announced
a 9 million common share offering and at the same time said they would likely use the proceeds
to buy some of their debt--they have 8% notes due in 2011 and 12% notes due in 2016 (these are
a part of the EIS securities).
We have known this was a possibility since 8/5 when B & G announced a credit agreement
amendment allowing them to buy back some of the debt..
September 12, 2009
After a good run with nice capital gains and high dividends it looks like the B & G Foods Enhanced
Income Securities (Ticker: BGF) will be the subject of an offer by the company to purchase the
securities.
As you will note the shares have fallen by $1.00 per share in the last 2 days as B & G announced
a 9 million common share offering and at the same time said they would likely use the proceeds
to buy some of their debt--they have 8% notes due in 2011 and 12% notes due in 2016 (these are
a part of the EIS securities).
We have known this was a possibility since 8/5 when B & G announced a credit agreement
amendment allowing them to buy back some of the debt..
Super Solid 8% Investment From a Super Solid Financial Services
Company
September 13, 2009
We have decided to add a full 5% position of Credit Suisse 7.9% Tier 1 Capital Notes (Ticker:
CRP) to the High Quality Model Portfolio. These shares are callable after 3/28/2013 at $25/Share.
This purchase will bring the Porfolio up to only 40% invested, which is an even further lag in
getting funds deployed than in the other 2 model portfolios, but just the same it has done fairly
well and will likely beat the goal (7.5%) over the course of the year. We are more concerned in
having the right quality holdings in this model than we are about scoring massive returns (since
this would require massive risk).
Credit Suisse has had solid financial results even while continuing to take write downs. We
consider Credit Suisse to be one of---if not the best, banks in the world. They have solid
investment banking services, wealth management, private client banking services and retail and
corporate banking. The retail and corporate banking segment has continued to take the
writedowns while all of the segments produce very nice profits, which have far outweighed the
writedowns.
The Credit Suisse website give very good detailed information on the company (as you might
expect) and we encourage you to take a look here.
The interest on these notes is paid quarterly and is NOT cumulative.
Company
September 13, 2009
We have decided to add a full 5% position of Credit Suisse 7.9% Tier 1 Capital Notes (Ticker:
CRP) to the High Quality Model Portfolio. These shares are callable after 3/28/2013 at $25/Share.
This purchase will bring the Porfolio up to only 40% invested, which is an even further lag in
getting funds deployed than in the other 2 model portfolios, but just the same it has done fairly
well and will likely beat the goal (7.5%) over the course of the year. We are more concerned in
having the right quality holdings in this model than we are about scoring massive returns (since
this would require massive risk).
Credit Suisse has had solid financial results even while continuing to take write downs. We
consider Credit Suisse to be one of---if not the best, banks in the world. They have solid
investment banking services, wealth management, private client banking services and retail and
corporate banking. The retail and corporate banking segment has continued to take the
writedowns while all of the segments produce very nice profits, which have far outweighed the
writedowns.
The Credit Suisse website give very good detailed information on the company (as you might
expect) and we encourage you to take a look here.
The interest on these notes is paid quarterly and is NOT cumulative.