I am retired and take educated guesses on all things financial.

March 31, 2010

March 31, 2010: Three Very Nice Inflation-Adjusted Securities

Within my own blog and outside for other publications such as Seeking Alpha, I have been recommending that investors unhappy with miserly dividends from short and intermediate term government securities and worried about stretching out too far on the maturity curve because of the distinct possibility of inflation should investigate trust preferred securities and inflation-adjusted preferred securities.

Three out of the larger number I have written about may be appropriate for you at this time.

Cusip 59156R504
MetLife Floating Rate Preferred Series A (METpA)
This security trades at $23.82 and currently yields 4.18%.The floating rate is based upon the 3-month LIBOR rate plus 1% with a floor of 4%.The call is at $25.00. Dividends are paid quarterly, with the next payout being June 15th.

Cusip 902973155
U.S. Bancorp Floating Rate Perpetual Preferred Series B (USBpH)
This security trades at $22.67 and currently yields 3.87%. The floating rate is based upon the 3-month LIBOR rate plus .60% with a floor of 3.5%. The call is at $25.00 Dividends are paid quarterly with the next payout being April 15th.

Cusip 744320409
Prudential Financial Inflation-Linked Notes due 4/10/2018 (PFK)
This is my personal favorite. The security trades at $24.44 and currently yields 5.22%.The floating rate is based upon the CPI plus 2.40% with. The call is at $25.00.
Dividends are paid monthly.

Preferred securities that are investment grade, liquid, priced below the call and offering a generous fixed rate or, as the above, a rate that will drift higher as our inflationary cycle begins, are a stable, easy and low-priced way to keep income-oriented portfolios diversified, viable and current with prevailing economic conditions.

March 25, 2010

March 27,2010: Inflation Protected Securities. Good Insurance For The Income Investor.

Many investors are weary of the miserly interest rates at their local bank and through Uncle Sam. They want safety. They do not want to loan out money practically free. They would like inflation protection over and above what TIPS provide.

The following select roster of securities will provide a stout yield with protection from inflation. All are rated Moody's Baa3 or higher. Most are trading at a discount from their $25.00 (or, rarely, $100.00) call price. Libor's are three month rates unless indicated differently. No caps for a maximum rate unless indicated.

This article is not to be considered a portfolio recommendation. The securities listed may be investigated for inclusion as a part of a diversified investment scheme. Most are thinly traded.

Aegeon Floating Rate(AEB) Libor+.875 with 4.00% floor. $20.22/share.
CABCO Trust (GYB) Libor+.85 with 3.25% floor and 8.25% cap. $19.12/share.
CABCO Trust (GYC) Libor+.65 with 3.25% floor and 8.00% cap. $20.62/share.
Goldman Sachs Pref. A (GSPRA) Libor+.75 with a 3.75% floor. $22.15/share.
Goldman Sachs Pref. C (GSPRC) Libor+.75 with a 4.00% floor. $23.98/share
Goldman Sachs Pref. D (GSPRD) Libor+.67 with a 4.00% floor. $22.39/share
HSBC Pref. D(HBAPRD) based upon 1-30 year T-bill basket with a 4.50% floor. 10.5% cap.$23.90/share.
HSBC Pref. G (HBAPRG)Libor+.75 with a 4.00% floor.$23.39/share.
HSBC Pref. F (HBAPRF) Libor+.75 with a 3.5% floor. $22.50/share
Lehman Trust Cert. (JBK) Libor+.75 with a 3.50% floor and 7.5% cap. $19.70/share.
MetLife Pref. A (METPRA) Libor+1.00 with a 4.00% floor. $23.79/share.
Goldman Sachs Cap I Certificates (PYT)Libor+.85 with a 3.00% floor and 8.00% cap. $18.29/share.
JP Morgan Floating Rate Certificates (PYV) 83% of CMT with a 3.00% floor and 9.25% cap. $25.40/share.
Morgan Stanley Pref. Series A (MSPFA) Libor+.70 with a 4.00% floor. $21.80/share.
Prudential Financial Inflation-Linked Notes (PFK) CPI+2.40%. $24.39/share.
Santander Finance Series 6 Pref. (STDPFB) Libor+.52 with a 4.00% floor. $18.80/share.
Southern California Edison Series A Pref.(SCEDN) Highest of Libor, 10-year CMT or 30-year CMT+1.45%.$99.75/share.
Tennessee Valley Authority PARRS/A Power Bond (TVE) 30-year CMT+.84%. $26.00/share.
Tennessee Valley Authority PARRS/B Power Bond (TVC) 30-year CMT+.94%. $26.58/share.
U.S. Bancorp Series B Pref. (USBPRH) Libor+.60 with a 3.5% floor.$21.86/share.
UBS Pref. Trust IV (UBSPRD) 1-month Libor+.70. $16.89/share.

My favorites are PFK and SCEDN. The author has a position in PFK.

March 15, 2010

March 15, 2010: Shaking The Tree, A Few Eclectic ETFs/ETNs.

We all enjoy searching for profit in an expanding universe of security opportunities. Sometimes it is fun to search recreationally for a few ideas, some of which are eclectic. Here are a few you may find fitting that descriptor:

FaithShares Christian Value ETF (FOC): Trading at $27.17 with a trading range since the late 2009 inception of $24.86-28.60. Average volume 2,200 shares. Yield .34% and expenses .84%. The fund is designed to invest at least 80% of assets in securities that comprise the CHV index, which measures the performance of large cap U.S. companies screened based upon Christian Best Practices. Some companies qualifying may surprise you. Market cap to date is $2.6m. FaithShares also offer Catholic, Baptist and other religious-centric ETFs. Many of the same companies are in each.

Credit Suisse Nassau Global Warming ETN (GWO): Trading at $6.97 with a trading range since inception in September, 2009 of $3.09-9.59. Average volume is 865 shares. Yield is nil and expenses are .75%. The fund seeks to replicate the Credit Suisse Global Warming Index. The index covers a wide spectrum of green companies that meet the index criteria. I suspect it was just bad luck that GWO appeared very close to the oft-derided Copenhagen Global Warming Summit and the frauds and fiasco's that exposed a great deal of global warming science as suspect. The ETN has a market cap of $2.8m. Maybe there will be more interest when companies in this sector actually display a profit without government subsidies.

Now, three that show promise:

Claymore Global Shipping ETF (SEA): Trading at %15.05 with a 52-week trading range of $7.76-15.40. Average volume is a hefty 152,000 shares. Yield is .90% and expenses are .65%. This timely ETF seeks to track the performance of the Delta Global Shipping index. SEA will hold at least 90% of total assets in common stocks, ADRs, global depositary receipts (GDRs) and MLPs of qualifying companies. This is an interesting play on world trade and a gradual recovery from deep recession. The ETF has a market cap of $136.1m.

Claymore Canadian Energy ETF (ENY): Trading at $18.12 with a 52-week trading range of $8.25-18.48. Average volume is about 32,500 shares. Yield is 2.53% and expenses are .65%. ENY tracks the Sustainable Canadian Energy Income index. The index is comprised of thirty stocks qualifying from the Toronto Stock Exchange. The mix is varied and subject to "other criteria" vs. proven results and weighting. I believe that the yield is paltry compared to what an investor may select independently. However, the performance has been good overall and the $83m market cap indicates that this ETF is going to be around indefinitely. Average volume is approximately 33,700 shares.

ETFS Palladium ETF (PALL): This newcomer trades at $46.27 with a trading range of $38.49-47.78 since inception in early February of his year. With a market cap of over $234m and average trading volume of over 217,000 shares, this ETF is very popular and one of many that are presently or going to be involved in the direct purchase and storage of metals other than gold and silver. Expenses are .60%. The sub-sector of storage commodities should prove to be very interesting to investors that want some direct exposure to product rather than indirectly through securities of commodity companies.

As investors seek out funds in specific niche areas, it is a good idea to take a hard look at market cap, daily volume and expenses. Like micro-cap stocks, many of these so-called boutique funds may be destined to end their stint on the ash heap of history sooner rather than later.

March 08, 2010

March 8, 2010: A Yen for Asian Pacific Banks

Jimmy Rogers, traveling the world from his Singapore home base, is adamant when he states that most western countries in debt up to their eyeballs to the Asian Pacific world face an economic holocaust. How this plays out is open to speculation, but many scenarios look grim for the spenders and bright for the lenders.

Investors who want to explore exposure the Asian Pacific region may want to explore regional banks with a strong yield that are traded in US markets. I like three of them:

Malayan Banking (MLYBY): Trading at $4.18/share and yielding 3.08%, Malayan Banking is a $14.8b southeast Asia banking conglomerate. MLYBY has a stake in countries such as Indonesia, Pakistan, Cambodia, Viet Nam, the Philippines, Brunei, Singapore, New Guinea, Hong Kong, PRChina, the UK and the US, amongst others.It is a player in Islamic banking practices and has operations in banking,finance, stock brokering, insurance, asset management and venture capital. Malayan Banking's 52-week trading range is $2.00-9.75/share. It appears to be solidly traded.

DBS Group Holdings (DBSBY): Trading at $40.45/share and yielding 3.99%, this $23b Singapore-headquartered holding company operates through its main subsidiary, DBC Bank. DBSBY is engaged in all levels of retail banking, and does a brisk business in corporate and investment banking services. DBS Group's 52-week trading range is $16.35-45.00/share. It is thinly traded in the US, but has a following footprint overseas.

Westpac Banking Corporation (WBK): Trading at $123.04/share and yielding 4.30%, this $72b Australian-based bank has a strong balance sheet and is well-positioned in the South Pacific, managing six units: Wespac Retail, Westpac Business Banking, St. George Bank, Ltd.,BT Financial Group, Westpac Institutional Banking, New Zealand Banking and other entities. Thinly traded in the US, like DBSBY, it appears to be expanding into very profitable ventures through organic growth and strategic acquisitions. With a 52-week trading range of $48.63-128.48, WBK may be looked to for purchase on weakness.

I believe that owning strong, diverse banks in the Asian-Pacific sector is a conservative, long term way to game the continuing growth of that region. There are other banks in the region worthy of consideration, but these three look appealing to me at this time.