Thursday, April 29, 2010

Jeepers, Creepers, You Are Not Leapers!

I have been following the Greek saga with both concern and a bit of amusement.  Having an interest in high yield and preferreds, the National Bank of Greece's preferred (NBG-A, NBG.PRA, NBGpA) has been on my watch list a while.  It was severely depressed over the last couple of days, then sent out a buy signal for today.  

At open today, it all played out as I feared. It immediately shot up at open $1.10 from close price.  Now, 30 minutes into the market, it has sunk back to nearly yesterday's close price.  Those suckered into the buy signal at open were suckered into a 5% loss.

It reminds me of a great saying for timing your buy - "buy the creepers, sell the leapers."

With volatility coming back into the marketplace, what high yield issues are creeping along support, providing a stable climb in capital appreciation and a nice dividend?

I found three winners on my watch list.  These are creeping slowly up on the support lines, and did not plummet with the market a few days ago.

NRP:  MLP which owns and manages coal properties, as well as coal transportation and infrastructure.  It is not a mining stock.  It sports a 8.45% dividend, and is a frequent dividend raiser.  It recently announced a public offering, which shot the stock off of resistance lines.  It is now creeping back up on support.


JGT:  Closed end monetary CEF.  This CEF evenly splits holdings between US and foreign currencies such as Brazil and Israel.  Expenses are modest at 1.07%, and the dividend healthy at 9.8%.

TAXI:  This stock has a perfect creeper chart!  It's moniker also perfectly describes what this company - Medallion Financial - does, and that is provide financing to commercial taxis.  After months of volatility this issue has settled into a pattern since early March of climbing upont support.  It sports a 7.42% dividend, even with a divy haircut in 2010.

Disclosure:  long TAXI



Wednesday, April 28, 2010

More Potentially Safe Preferreds

Yesterday we experienced a 200+ point decline on the DOW, with a close below 11,000.  Warning bell...or capitulation?  The market is up today, but it is still time to think about capital preservation.

There aren't many options for a long in a bear market.  Hang on to your winners and DCA; go all or partial cash; or change teams and go all or partial short.  If you are like me, your brain short-circuits on the last option...most fundamental longs' brains don't compute with shorts.

That leaves fundamental longs with the first two options.  I am more comfortable with the second option - keep partial cash on the sidelines.

But what to do with the cash?  Should it just sit in your account?  Or earn 1 - 3% in either a brokerage sweep account or CD?

For this high yield investor, these options aren't very appealing!

So I began a quest for safer high yield vehicles.  "Safer" would be those issues which which have proven historically not significantly depreciate through another market fall. 

Yesterday, I found a clear winner:  MHRpC.  This oil / gas issue has never declined more than 2%.  It is priced at call right now - $25.00.  It has a current yield of 10.24%.  Buying right now is equivalent to locking in a CD with a variable interest rate of 8 - 10%!  

Excited with this find, I searched quantumonline.com for other potential issues.  The criteria I chose:

At or Under Call Price
Current Yield % Exceeds Historical Depreciation% Over 2 Year Period

It proved to be too big a task.  The market is still overheated.  I could not locate another issue besides MHRpC that is at or under call with such a history.

But I do have two watch lists for you.  As you increase your cash position, consider these:

Preferreds Over Call With No Significant History of Depreciation

STDpE - Santander Finance Preferred.   Problems in Europe keep me from getting too excited about this one (it dropped upon market open today).  Nonetheless, this issue has been fairly consistent.  It's lowest point is only 2% below current market price.  It sports a fab 9.63% yield.  The call is not until 2014.  My concern would be that news from Europe would mean this issue will see new lows from here.

SYBTP - S.Y. Bancorp, Inc. - This one is pretty much "Even Steven".  It has seen a historical decline of about 8% and sports about an 8% yield.

Preferreds for a Watch List

The following preferreds have a decent history but are at too high a price point to consider at this time:

BGLEI - BGLEH - BGLEN - BGLEP - CHSCP - CNTHP - DQUEK - EEXXF - HLpB -OKSBP - PPWLM - SCMFO - SDOpH - SDOGI - VELPI

These all present options to watch.  When the yield exceeds 3% of the historical depreciation, it may present a great buy opportunity in a falling market.

 

Tuesday, April 27, 2010

A Preferred Share Find That's Safe at the Top

Yesterday I looked at 15% tax advantaged preferred shares with a margin of safety in a downturn.  We discovered utility preferreds, three of which should not historically decline more than 10 - 12% from their current price point.

This morning I was scouting for a safe taxable preferred for my largest IRA.  I was again looking for an issue with a sound margin of safety that would not decline more than 10% from this point.  I also want to purchase at or under call.  I found a solid winner. 

Magnum Hunter Resources Corporation is an oil and gas exploration company.  The ticker symbol for the preferred shares is MHR.C, MHRPRC or MHRpC.  Today this issue is exactly at its call price of $25.00.  It sports a fantastic 10.24% dividend.  In terms of liquidity, I had no issues at all in having my limit order fulfilled.

But here's the real kicker - this issue has NEVER in the two year history I traced been below a market price of $24.50.  That's only 50 cents below call!  AMAZING!

Barring unforeseen bad news there appears to be little to no downside in owning shares of this preferred. 

Disclosure:  Long MHRpC

Monday, April 26, 2010

Investing at the Top

Investing is so much fun.  Why limit yourself to just one brokerage portfolio?

Such was the thinking when I opened yet another brokerage account last week.  The first brokerage account focuses only on tax-free muni CEFs and one tax free MLP.  The portfolio holds the following:

ATAX (an MLP, most recent purchase), 9.01% dividend
APX     5.96% dividend
FMN     6.94% dividend
KTF     6.91% dividend
NMZ     7.60% dividend
OIA     6.37% dividend
PMF     7.15% dividend



I have since discovered 15% tax-advantaged trust preferreds on quantumonline.com.  I thought, let's keep the portfolio clean.  I will open a second brokerage which will focus only on 15% tax-advantaged issues.


Then...I remembered.  The time to get on the rollercoaster is when it hits the bottom.  Not at the top.

The longer this rally goes on, the more uncomfortable I am with buying new shares.  The typical historical trend for bull runs in secular bears is between 1-1/4 to 1-3/4 years.  In other words, we're getting to the top of the rollercoaster.  Therein is the dilemna...I want in on trust preferreds, but am not anxious to have that investment depreciate significantly within a few months.


I then remembered a particular issue I discovered a while back.  In the last two years, which included two significant market dips, this issue only depreciated 10% under from the original issuance price.  

Friends, that is an investment that allows you to sleep at night when the market is tanking!

The issue is Pacific Gas and Electric Company's preferred - symbols PCG-A, PCG.PRA, PCGpA.  In November 2008 and March 2009, the price dipped down to only $22.50 - exactly 10% below the issued price of $25.00.  As for current market price, it's not overpriced at $25.66, but it is still above the call price of $25.00.


I'm not a big fan of buying over call, so I turned my attention to the sector as a whole - utility company preferreds.  I conducted a new search on quantumonline with these parameters:
     UTILITY Company Preferred
     15% Tax Advantaged

I then used the tools in my Scottrade account to hone in on those issuances that had these properties:
     No more than 10% variance UNDER issuance price
     Currently UNDER call price



The search turned up one winner - San Diego Gas & Electric Company preferreds - symbol SDOGI (pink sheets).  As of Friday, April 23rd it was priced at $25.10.  The call price is actually $25.80, which is above the issuance price of $25.00, making this under call.  It sports a nice 6.7% dividend, and your dividend will only be taxed at 15%.  Best of all, when the market falls, if SDOGI sticks to its trend, the market price should not fall below $22.00, which is just slightly more than 10% depreciation.  NOTE:  Some brokerages, esp. low cost brokerages, do not allow trading on pink sheets.

Another utility preferred to consider, in addition to PCG-A and SDOGI, is Georgia Power Company preferred - symbols GP-A, GP.PRA and GPpA.  It is currently over call by 35 cents, but it is the only other utility preferred located in my search that did not depreciate more than 10% in a market free fall.


For those concerned with taking out new holdings at the top of this rollercoaster, utility preferreds are most certainly worth your consideration.

Disclosure:  no positions

Sunday, April 25, 2010

Welcome to YoYoMama Stocks!

Hello, friends!  Welcome to my blog.  I'm known as "YoYoMama" on Seeking Alpha.  I spend about 1 to 2 hours every day researching investment opportunities for my own portfolios.  I LOVE investing!  I have so many "eureka" moments every day in this rich field of study that I decided - why not share my eureka moments with you!


The author of this blog is not a professional, an analyst or an economist.  I am a business owner, wife and mother.  I have made all the classic investing mistakes - buying high/selling low, buying the hot sectors, panicking at the bottom, ignoring the technicals, falling in love with a sector or stock and unable to sell.  I will say this much - I am embarrassed to tell you my YOY average was BEFORE I got the hang of things!!
 
So while the year 2008 was extremely painful for me (and for most of you), through it I learned a system that works for me.  In fact, on my primary portfolio, I have increased the market value 120% since the market bottom in March 2009. That's with NO money in...only trading.

So begins this journey of discovery.  I hope you enjoy the blog.  

Happy Trading,
Denise, a/k/a YoYoMama