OJO Zafado

Income Stocks on Sale Once Again

I also own PWE. AAV,BTE,PGH, PVX, HTE,& ENY are all in my portfolio. I would note the unusual stong performance of BTE against it's peers. My speculation is that along with AAV, it being a small cap in the sector it is possibly a target. PWI was recently taken out at a +20% premium. The tax changes in Canada and Alberta are shaking these units out. The bottom line will remain their proven,probable reserves, their equity to debt ratio, and the globalization of the NA gas market. The US is importing 15% of their gas from Canada. Canada is now also our largest supplier of imported oil. Mexico's largest oil field saw a 15% production decline last year. LNG cargoes are typically receiving a $6-7 premium per MM`BTU for delivery in Japan, N Europe and Turkey. This makes the NA market price of ~ $10 tenuous at best. Despite the 2011 tax change deadline looming for these trust units, they are excellent trading vehicles if you note their 5 year charts! Trading! They are generally not good investments after the early summer as the market goes into a shoulder season especially for Nat Gas. Pre-MLK Holiday they are typically at great valuations. If you are unfortunate enough to get a position at or near a 52 week high you still are at least paid hansomely to ride out the next cycle. AAV is my favorite pick in this sector right now as it is pure vulture meat. It should go away at C$13-14.50 /unit. Perhaps it is a different asset class but near term CALL, preferred securities look awfully good now. Many of the adjustables are selling below default yields (BAC-PrE,UBS-PrD & FNM-PrP) most are 15% tax qualified. The exceptions are the likes of HJJ-6% way beaten down yielding +7% and with a March 2009 CALL date at $25. These financials are now floating new subordinated debt at 7.25-8.5% and still getting A & AA ratings on this BB yielding debt. When things eventually turn around in 2010?, the high yield debt will not be redeemable with mostly +3 year dates to the first call dates. Still to improve debt to equity the financials are quite likely to reddem many near term call dated preferreds. Caveat emptor! The $2.5 /0.5 Billion bailout proposal that a consortium of 8-9 banks and brokerages are sponsering for ABK, was labeled as inadequate by one of the ratings agencies last week. Inadeaquate to save the AAA rating or the company (ABK) from bankruptcy? WB is expected to float another preferred or CV offering to the tune of $350-450Million as their participation in the Equity infusion portion of the bailout. When finally crafted you can expect the 8% WB-PrS to drop in price below par. This would most likely make the WB-S a +8% yield in a security of the country's 4th largest bank with a 10 year Call date, and 15% tax qualified!