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apoplectic

apoplectic
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  • I'm Buying W.P. Carey For The Long Haul [View article]
    I feel that the late William Polk Carey was a truly creative individual (... perhaps a unique individual!)

    I wonder if there is any significance to the fact Mr. Carey's Estate is systematically selling shares. Who, if anyone, is accumulating shares to assume prominence as controlling shareholder(s) of WPC?
    Apr 15 08:25 AM | 2 Likes Like |Link to Comment
  • A Few Reasons Why I'm Still Attracted To Shares Of Plum Creek Timber [View article]
    The October 2013 secondary public offering of 12,100,000 shares at $45 (at a time when the 200-day moving average of the share price was about $48.50) was dilutive. I believe the offering initiated a major round of selling.

    The recent price of $40.69 seemed to me a reasonable point to buy some more shares. If memory serves me, $40.29 was the price where PCL was buying back shares in the 2Q of 2007.

    Meanwhile lumber prices which fell from July 2007 to July 2009, have been higher every summer since. According to Random Lengths Composite series, 1000 board feet that was priced at $245 in July 2009, would be priced at $362 in April 2014.

    NAHB statistics on housing starts show a steep drop from 2007 to 2009-2010, and an ongoing recovery since then.

    PCL distributions are characterized as long term capital gains for tax purposes.

    (Disclosure: long PCL.)
    Apr 14 06:09 PM | 2 Likes Like |Link to Comment
  • Safety, Stability And High Income For The Retired Dividend Growth Investor [View article]
    I don't mean to imply there is anything wrong with leverage, per se. It has generally increased returns on an underlying profitable strategy. However, I associate higher levels of leverage with a less conservative way of doing business. (Disclosure: Long JLA since late 2013)
    Mar 26 02:15 PM | Likes Like |Link to Comment
  • Safety, Stability And High Income For The Retired Dividend Growth Investor [View article]
    In customizing "the traditional conservative portfolio" for a specific individual, it would be necessary to clarify any legacy needs (2nd-to-die spouse, planned bequests, etc.) A strategy for the 2nd-to-die to die broke, without risk of slipping into a condition where there is not enough income to live on, might involve annuities.

    The recommended allocation of 1/3 to utilities, 1/3 to corporate bonds, and 1/3 to large-cap dividend-growth stocks may be more appropriate in a situation where the investor is tolerant of volatility (accepting of unrealized losses on the stock portfolio in a bear market -- btw what probability value would be assigned to a 55% decline in the sp500 Index at some point in the 25 years between age 65 and 90?)

    For income, individual bonds have the advantage of precise predictability. For example one can select bonds with semiannual interest payments in January and July when property taxes are due. An individual with a goal of annuitizing might select bonds with call dates or maturities that match the planned annuitization (for example 1/3 of the bond portfolio matures during each of the years when the investor turns 73, 74, and 75).

    Also for income, as has been mentioned in other comments, a closed end fund with a buy-write option strategy might be considered. Due diligence would include understanding the return of capital in any distributions. Several such funds are managed WITHOUT leverage.

    Also, with a view to the expected rise in interest rates, there are some preferred shares with dividends that are fixed for several years (eg WFC pfd Q: fixed until 2023), and would then either be redeemed at par or begin paying a floating rate (eg 3mo LIBOR + 3%).

    Finally, I was surprised that there was no allocation to cash or short-term equivalents. As a retiree, I think it's reassuring to have cash reserves equal to about one full year's expense budget, as well as funds to "pay-as-you" for those items on the bucket list ... like soaking in a hot spring in the mountains of Colorado... and looking up at the stars... ah, bliss!
    Mar 25 10:16 AM | Likes Like |Link to Comment
  • Chemical & Mining Co. Of Chile: An Oversold High-Yielding Stock [View article]
    Further to vivian (Global Investment) earlier comment:

    The changing political landscape in Chile after the last election needs to be considered for it's potential to harm the interests of the current oligarchic control of SQM. Will he try to sell out to POT? If so, what would be the posture of the Chilean government on the control of this formerly state-owned enterprise passing to foreign investors? Would China be more welcome in control than POT?

    I believe a change of control scenario could be quite positive for the stock of SQM. But it seems like a long shot, politically. Long SQM.
    Jan 22 10:36 AM | 1 Like Like |Link to Comment
  • Lessons For The Stock Market From Obamacare [View article]
    Agreed, Mr. Parnell. We saw the cost increases coming.
    Dec 6 11:18 PM | Likes Like |Link to Comment
  • Exelon: Selling At 10-Year Lows [View article]
    Can't say I agree that Scotty is all that great a contender, but I share your view that WEC is a well-managed utility. Exelon, on the other hand, IMHO is an accident waiting to happen.
    Dec 6 10:57 PM | 2 Likes Like |Link to Comment
  • City, Town, County, And State Municipal Bond Issuers Possessing Elevated Risk [View article]
    I believe that one of the root causes of municipal default is corruption. So part of the due diligence process (for me) is to try to assess the level of public corruption with a given municipality or state.
    Jefferson County AL is a case in point. Why did their waterworks revenue bonds default, when the vast majority of comparable bonds have paid interest and principal without fail? In 1996 the EPA accused Jefferson County of dumping raw sewage into rivers. The county complied with a grandiose plan for new sewage treatment - wastewater works. There was graft and contract-padding. The tunnel underneath the Cohaba River was an engineering fiasco that wasted $19 million. JPMorgan proposed a complicated bond deal with interest rates swaps... swaps which blew up in 2008. Brokers at JPMorgan and GoldmanSachs were accused of making payments to people tied to Jefferson County politicians. 17 people went to prison. JPMorgan eventually let the county out of its interest rates swaps contracts with a reported value of $647 million.

    Often the "tip of the iceburg" (rhymes with Harrisburg -- wink.) of public corruption is reported in news media and can be easily searched on Google or Yahoo. Example: "New Jersey Corruption".

    I believe that another root cause is an excessive degree of litigation. The Official Statements available at EMMA normally disclose litigation. A case in point would be Harrisburg's incinerator, or Honolulu's sewer system (where the Official Statement mentions the consent decree with the EPA which will cause the city/county of Honolulu to incur $3.4 billion in capital costs.)

    I do not imply that public corruption or costly legal settlements necessarily result in municipal defaults, but I prefer to select municipal bonds in cities, counties, and states which are free of the taint.
    Nov 20 11:52 AM | 1 Like Like |Link to Comment
  • City, Town, County, And State Municipal Bond Issuers Possessing Elevated Risk [View article]
    The stated premise is "minimal risk to principal", and a fund of bonds is riskier than a portfolio of individual bonds held to maturity.

    Furthermore, it is possible to match (more or less exactly) the interest payment dates of individual bonds with semiannual expenses, such as property taxes. But CEF fund distributions are either monthly or quarterly.

    Likewise, the maturity dates of individual bonds can be matched with years when there is a predictable need for cash, such as, for example, a planning decision to annuitize (dissipate) an investment portfolio at say, age 74-76. With a CEF the future price is quite unpredictable.

    Nuveen's NXC is one of the few CEFs without leverage. But I believe they may have employed leverage in the past, and could do so in the future. With NXC portfolio of 90+ California bonds (and zero from Puerto Rico), I agree that immediate diversification within the state is possible with an investment less than $100,000.

    The investors in CEFs are generally believed to be individual investors, whereas the individual investor is a relatively small segment of the market for municipal bonds. This fact helps to explain the varying discounts and premiums to NAV on CEFs. There is a noticeable "January effect" with CEFs which have had a down year, particular among those CEFs that are associated with a brokerage. I presume that brokers and financial advisors are active in pointing out the opportunities for tax-loss harvesting for their clients who have money-losing CEFs in their accounts. Incidentally, NXC is down double digits Year-to-Date, and it seems to me that NXC could be a candidate for some tax-loss harvesting and a rebound in January 2014. However, this trade would be of more interest to a speculator, and not consistent with the stated premise of the article.

    Always perform due diligence before investing.

    Nov 10 09:42 AM | 1 Like Like |Link to Comment
  • City, Town, County, And State Municipal Bond Issuers Possessing Elevated Risk [View article]
    After the Stockton CA bankruptcy, when pension benefits were maintained while bond investors received a haircut, there seems to be increased impetus to put an Initiative on the 2014 ballot in California. As I understand it, the initiative would change the law so that municipalities which are in difficulty paying for essential services will be able to unilaterally reduce pension benefits for current employees and retirees. I would be interested in the author's views on the likelihood of the Initiative getting on the ballot and passing.

    In a Bloomberg roundtable 3 pundits shared their view that CA finances were improving, due to the 7-year income tax increase on the wealthiest Californians... program cuts... economic recovery, etc. I don't know of anybody who is saying Illinois is on the mend.

    Speaking of CA, I would add Hercules to the list of weak municipalities.

    Typo: New Orleans is in Louisiana, not Rhode Island.

    Disclosure: I own a ladder of muni bonds, but no bonds in the states I have mentioned.
    Nov 9 09:58 AM | 1 Like Like |Link to Comment
  • Buy ICICI Bank As Blood Flows On Indian Streets [View article]
    In the past I owned IBN shares and profited handsomely. There is a point (a lower share price) where I would buy shares, because I agree with the assessment of management talent... ICICI is basically a well-run bank, well-diversified in the India market. Additionally IBN serves the "diaspora" in UK, USA, and elsewhere.

    However, I have trouble agreeing that the bottom is in with the INR x USD. I suspect that the rupee is being punished by the USA & Co, in response to India continuing to buy petroleum from Iran. I have no proof, only a suspicion. But if I am correct, the rupee will continue to lose relative to other currencies as long as Iran continues to sell to India.

    Clearly the government in India has taken notice of the declining exchange value of the rupee. Press reports suggest that the government is committing to this or that policy to halt the decline. Time will tell if the government has grasped the right nettle. (Thus far, I don't believe that the government has gotten their act together. But some, like Mark Mobius, want to believe the worst is over for the rupee.)

    The investment merits of IBN, of course, are a function not only of the bank's earnings and management, but also the strength or weakness of the Rupee relative to the USD.
    Sep 3 08:18 PM | Likes Like |Link to Comment
  • Omega Healthcare Investors: Solid REIT At This Price [View article]
    Correct me if I am wrong, but I believe OHI depends heavily on Uncle Sam continuing to pay the bills for their clients.

    Holding OHI would require some faith that Washington will find a way to continue the "generosity" in the coming decade.
    Jul 6 12:40 AM | Likes Like |Link to Comment
  • Nordic American Tankers: Rise Of The Phoenix [View article]
    From what I can read, India is shifting away from Iran and towards Nigeria as a crude oil supplier. I understand that India is building a 135 million barrel strategic crude oil storage facility, and constructing two new refineries. So I would foresee more tanker voyages from West Africa to India.

    Iran appears to be evading sanctions with NITC (Iran government owned) VLCC tankers venturing to Batam or Labuan and thence to China. Hypothetically, some future event may halt these voyages, resulting in increased independent tanker traffic into the Chinese market.

    Patience.
    Jun 4 05:00 PM | 1 Like Like |Link to Comment
  • Nordic American Tankers: Rise Of The Phoenix [View article]
    The peer group of tanker owners is populated with some highly leveraged enterprises, in contrast with NAT, which continues to issue equity.

    Recent years have witnessed bankruptcy filings by General Maritime (2011) and Oversees Shipbuilding Group (2012). Frontline (FRO) has a billion dollars of debt, including a $225 million convertible bond maturing in 2015, and I believe there is a possibility of a huge bankruptcy filing by FRO.

    The industry has been in pain for more than 6 years. I can't imagine recovery in the industry without the scrapping of excess tankers... Those tanker companies whose business model depends on borrowing will have a significant disadvantage, in that the banks with expertise will have experienced horrendous uncollectable loans along with collateral than has dropped in realizable value by 70%.

    Eventually NAT may emerge as a survivor... in a down-sized industry.
    May 31 11:29 AM | 6 Likes Like |Link to Comment
  • A Discussion With Managers That Know How To Hedge [View article]
    A short-only fund will have its detractors, no matter what its periodic returns may be.
    IMHO there is a choice to made, when hedging a long-term portfolio of equities, between a fund actively managed by humans (such as HDGE or GRZZX) or a passive mechanistic computer output such as the inverse $SPX.
    "Human Error" goes with active management, as does "Human Achievement", or mojo, or expertise. Moreover, human managers can be approached to explain their decisions.
    The human managers even blush occasionally.
    Apr 29 07:55 PM | Likes Like |Link to Comment
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