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.
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.
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.
Newmont Mining Is Now Too Cheap To Ignore With A 5% Yield [View article]
I understand that NEM does not hedge the selling price of their gold production. Therefore, the stock presents a leveraged play on the spot price of gold (going forward indefinitely). There may be some disenchantment among investors with the operational abilities of management; critical of cost over-runs, etc.
The ratio of the price of gold to XAU indicates how negative investor sentiment towards the miners has become. Based on the evident loathing of investors for gold miners, I recently bought NEM.
After a few years I imagine that investor sentiment could swing the other way. I feel it will be nice to be paid the NEM dividend derived from the price of gold until then.
4 Reasons The Junk Bond Rally Will Continue In 2013 [View article]
Theoretically junk bonds can be bid higher (already being bought at say 105% of face value.) It seems to me that one has to believe "greater fools" will pay an even higher premium. At some point (who knows when?) the recruitment of "greater fools" will be exhausted.
Why We Like The Most Hated But Cleanest Utility Stock, Exelon [View article]
Like Ray Merola I see short-term pessimism until the magnitude of the dividend cut is known. Personally I expect 50%. After holders have been chastened by the dividend cut, share price can "rise again".
Wells Fargo Got Some Nice Holiday Presents [View article]
I am both a shareholder in WFC and a customer at a WFC store. I have lived in PA where Wachovia branches have been acquired. No doubt the Eastern ways of doing things are regional. Where I think WFC excels is in surveying customers. Eastern, Western, or Central USA -- wherever -- after a transaction with WFC, there is a high probability that an email or postal questionnaire will follow. I believe every WFC employee is aware that customers will be asked to evaluate transactions. So, WFC is organized to continuously learn how to do it better for their customers. I suppose it's Total Quality Management 101. Find out what it takes to delight the customer. Do that, and cross x cross sell.
RFI share price alternates from premium to NAV (peaking at 15% to 20% historically) to discount (bottoming out at -7% to -20% historically). Last time I looked on CEF Connect, the premium was 12.4%
I would not be surprised to see the premium go a bit higher, because I believe the investor's appetite for yield is not about to go away.
Longer term, should interest rates begin rising, I would expect the NAV to be hard-hit, as 18% of RFI portfolio consists of preferreds.
The valuation of the REITs may be reaching a level which a Morningstar analyst described as "nuts". Again, I attribute the higher price/book & lower current yields to the tendency of investors to chase performance. REITs certainly have produced impressive returns since the 2009 lows! It's understandable that investors would be tempted to allocate larger amounts to REITs.
RFI is in a position to manage distributions, so that a target cash distribution can be paid per share annually, even if it is achieved in part by the return of the investor's capital.
Last I looked the NAV was $12.84 ... and I think I saw a graph on CEF Connect showing NAV dropping. I haven't dug deeper to see if RFIs latest distribution included a Return of Capital. Does a ROC distribution have to be reported to the SEC?
U.S. Taxes: Who Makes And Who Pays - More Than The Rich Will Have To Pay More [View article]
I appreciate the effort to bring data into the discussion of the Fiscal Cliff.
I wonder about the deficit figure of $900 billion for 2013. I have seen people, such as Hamilton, say the annual budget deficits under Obama have averaged $1,274 billion, which would be higher than $900 bn by about 40%.
Without in any way casting any aspersions on the original poster, and his fine piece, how do we know the 2013 deficit will be $900 billion?
Should Investors Embrace European Equities For 2013? [View article]
Unilever is a company I monitor (and recently took profits, no longer have a position).
The ticker UN is for the ADRs on the Netherlands-listed shares, where I understand there is significant dividend tax withholding.
An Alternative would be ticker UL, which is for the UK-listed shares, where a different tax treaty with the US is in effect and zero dividend tax withholding.
Consult a competent tax professional before buying or selling.
Unilever converted to quarterly dividend payments in 2008, replacing the former practice of paying a preliminary dividend followed by a final dividend each year.
ConAgra: Buy The Largest Packaged Food Stock For 3.5% Yield And Growth [View article]
This author is paid one cent per page view, with a minimum I assume to be $100.
FWIW, I just sold my position in CAG. I believe the news of the RAH acquisition and the positive media spin have priced CAG to perfection. Nice to take a profit on my CAG position.
However it would be even nicer to be the largest shareholder in RAH, Keith Meister.
I'll grant that the acquisition of RAH at 11x EBITDA, on the fourth bid, will add to CAG revenues. I would also accept CAG CEO Rodkin's prediction that the consolidated entity will save $225 million in costs annually. Meanwhile CAG issues $350 million of new equity (so every positive media story about the deal is worth something, if it means a higher price for these shares.)
But a big acquisition may prove to be a disappointment for the acquiring company. I have reservations about this one. 1. The goal of becoming #1 in private label packaged food follows a lengthy run with a national brands strategy for ConAgra. CAG has brands in frozen entrees, peanut butter, tomato sauce, french fries, hot dogs, etc. ... but seemingly not the most popular brands with consumers. 2. National brands and private labels are locked in a battle for market share. Maybe private label enjoys 17-18% share now. CAG may be convinced that better packaging and product innovation will enable them to take more market share. But national brands are awake and battling to win back market share. The issue of pricing, which is putting pressure on national brands' margins, can only do similar damage to private label suppliers, in my opinion. 3. Commodity prices (etc) are going up. It is hard to believe CAG will be able to maintain profit margins, even though revenues and unit sales are headed higher. 4. Fitch was first to lower their ratings on CAG's debt (from BBB to BBB-). Others are saying they will review it. To maintain "investment grade" debt, CAG is promising to "reduce share buybacks" for a couple of years while they pay down the debt on this buy (and presumably the debt of RAH that is being assumed). In the next few years I do not foresee major increases in CAG dividends per share.
The Time To Short U.S. Bonds Is Now [View article]
Shorting HYG and JNK also may be profitable, if there will be a swift rise in Treasury yields (and a corresponding compression of the junk spread). Not to mention, junk bond issuance has reached a record for volume and a low coupon rate... with a noticeable presence of PIK toggles.
The Best Short-Term Non-Junk Bond Investments Are CDs, Not Bond Funds Or Bonds [View article]
"Junk" bonds are called that for the reason that the issuers are quite levered with debt on their balance sheets, and bond rating services give them a LOW rating. So, the return of principal can be problematic when your issuer defaults!
With insured CDs there is no question about the return of principal, so I agree, CDs (and I Bonds) have an advantage over Junk Bonds.
I would not be surprised to see the outflows from junk bond funds continue, and the junk gradually repriced for higher yield, reverting to the norm of say, 10.5% ... And the buyers of Junk Bond Funds still chasing yield at this late date will very likely rue the day.
(Long a half-dozen muni bonds, highly rated, with yields to call (at the time I bought the bonds) of 3.0 to 3.25% My intention is to hold until maturity.)
For Income Investors: 2 Companies Going Ex-Dividend September 4th [View article]
And furthermore, NEM's stated dividend policy is based on the price of gold. To plan on rising dividends from NEM, one needs to believe the price of gold will go up (bull market continue).
Nordic American Tankers: Rise Of The Phoenix [View article]
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.
Nordic American Tankers: Rise Of The Phoenix [View article]
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.
A Discussion With Managers That Know How To Hedge [View article]
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.
Newmont Mining Is Now Too Cheap To Ignore With A 5% Yield [View article]
The ratio of the price of gold to XAU indicates how negative investor sentiment towards the miners has become. Based on the evident loathing of investors for gold miners, I recently bought NEM.
After a few years I imagine that investor sentiment could swing the other way. I feel it will be nice to be paid the NEM dividend derived from the price of gold until then.
4 Reasons The Junk Bond Rally Will Continue In 2013 [View article]
At some point (who knows when?) the recruitment of "greater fools" will be exhausted.
Why We Like The Most Hated But Cleanest Utility Stock, Exelon [View article]
After holders have been chastened by the dividend cut, share price can "rise again".
Wells Fargo Got Some Nice Holiday Presents [View article]
So, WFC is organized to continuously learn how to do it better for their customers.
I suppose it's Total Quality Management 101. Find out what it takes to delight the customer. Do that, and cross x cross sell.
CEF Weekly Review: Advent Claymore Convertible [View article]
I would not be surprised to see the premium go a bit higher, because I believe the investor's appetite for yield is not about to go away.
Longer term, should interest rates begin rising, I would expect the NAV to be hard-hit, as 18% of RFI portfolio consists of preferreds.
The valuation of the REITs may be reaching a level which a Morningstar analyst described as "nuts". Again, I attribute the higher price/book & lower current yields to the tendency of investors to chase performance. REITs certainly have produced impressive returns since the 2009 lows! It's understandable that investors would be tempted to allocate larger amounts to REITs.
RFI is in a position to manage distributions, so that a target cash distribution can be paid per share annually, even if it is achieved in part by the return of the investor's capital.
Last I looked the NAV was $12.84 ... and I think I saw a graph on CEF Connect showing NAV dropping. I haven't dug deeper to see if RFIs latest distribution included a Return of Capital. Does a ROC distribution have to be reported to the SEC?
U.S. Taxes: Who Makes And Who Pays - More Than The Rich Will Have To Pay More [View article]
I wonder about the deficit figure of $900 billion for 2013. I have seen people, such as Hamilton, say the annual budget deficits under Obama have averaged $1,274 billion, which would be higher than $900 bn by about 40%.
Without in any way casting any aspersions on the original poster, and his fine piece, how do we know the 2013 deficit will be $900 billion?
Should Investors Embrace European Equities For 2013? [View article]
The ticker UN is for the ADRs on the Netherlands-listed shares, where I understand there is significant dividend tax withholding.
An Alternative would be ticker UL, which is for the UK-listed shares, where a different tax treaty with the US is in effect and zero dividend tax withholding.
Consult a competent tax professional before buying or selling.
Unilever converted to quarterly dividend payments in 2008, replacing the former practice of paying a preliminary dividend followed by a final dividend each year.
ConAgra: Buy The Largest Packaged Food Stock For 3.5% Yield And Growth [View article]
FWIW, I just sold my position in CAG. I believe the news of the RAH acquisition and the positive media spin have priced CAG to perfection. Nice to take a profit on my CAG position.
However it would be even nicer to be the largest shareholder in RAH, Keith Meister.
I'll grant that the acquisition of RAH at 11x EBITDA, on the fourth bid, will add to CAG revenues. I would also accept CAG CEO Rodkin's prediction that the consolidated entity will save $225 million in costs annually. Meanwhile CAG issues $350 million of new equity (so every positive media story about the deal is worth something, if it means a higher price for these shares.)
But a big acquisition may prove to be a disappointment for the acquiring company. I have reservations about this one.
1. The goal of becoming #1 in private label packaged food follows a lengthy run with a national brands strategy for ConAgra. CAG has brands in frozen entrees, peanut butter, tomato sauce, french fries, hot dogs, etc. ... but seemingly not the most popular brands with consumers.
2. National brands and private labels are locked in a battle for market share. Maybe private label enjoys 17-18% share now. CAG may be convinced that better packaging and product innovation will enable them to take more market share. But national brands are awake and battling to win back market share. The issue of pricing, which is putting pressure on national brands' margins, can only do similar damage to private label suppliers, in my opinion.
3. Commodity prices (etc) are going up. It is hard to believe CAG will be able to maintain profit margins, even though revenues and unit sales are headed higher.
4. Fitch was first to lower their ratings on CAG's debt (from BBB to BBB-). Others are saying they will review it. To maintain "investment grade" debt, CAG is promising to "reduce share buybacks" for a couple of years while they pay down the debt on this buy (and presumably the debt of RAH that is being assumed). In the next few years I do not foresee major increases in CAG dividends per share.
The Utility Sector On Discount Plus One For The Radar [View article]
The Time To Short U.S. Bonds Is Now [View article]
The Best Short-Term Non-Junk Bond Investments Are CDs, Not Bond Funds Or Bonds [View article]
With insured CDs there is no question about the return of principal, so I agree, CDs (and I Bonds) have an advantage over Junk Bonds.
I would not be surprised to see the outflows from junk bond funds continue, and the junk gradually repriced for higher yield, reverting to the norm of say, 10.5% ... And the buyers of Junk Bond Funds still chasing yield at this late date will very likely rue the day.
(Long a half-dozen muni bonds, highly rated, with yields to call (at the time I bought the bonds) of 3.0 to 3.25% My intention is to hold until maturity.)
For Income Investors: 2 Companies Going Ex-Dividend September 4th [View article]