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  • What A Deal With Iran Really Means For Oil [View article]
    Thanks for an interesting article. However you should be more careful about the facts when speaking for all the American people: "The Republican house and senate, just elected, feel they have a strong mandate to govern in the name of the people. Republicans are against this deal, it is not popular with the American people..." A CNN poll March 13-15 found 68% in favor of negotiations with Iran. Admittedly, hardly anybody knows the details of what's in the plan, so it's hard to know what the opinion would be about a deal itself, so you can't know either.
    Mar 30, 2015. 02:26 PM | 5 Likes Like |Link to Comment
  • A Day In The Life [View article]
    Things tend to regress to a mean, DGI stock prices included, although I readily admit that for many of the top DGI stocks the dividends don't tend to regress at all even if the stock price does. However, I fear that DGI investors, if not stock investors in general, may have been lulled into a dangerous sense of complacency about the future based on the recent past. I guess that's why bull markets tend to last 4-5 years before no. 2 hits the fan. I suspect there may be more than a few DGI investors who have no dry powder now and may be shocked when their overvalued Aristocrats and Champions hit the skids in the next correction or bear market. I hope their dividend incomes get them through the next period of paper capital losses and they don't abandon ship at the bottom. My best wishes for successful investments for all.
    Mar 29, 2015. 11:42 PM | Likes Like |Link to Comment
  • The Puzzling Case Of Spreads Is Resolved: Western Asset Mortgage Capital [View article]
    Thanks for a couple of interesting articles about WMC. I became interested also and switched investment from NLY to WMC, and that's worked well so far. To cover the many unknowns I hedge capital value at times with puts.
    Mar 29, 2015. 07:30 PM | Likes Like |Link to Comment
  • Yellen: Gradual rate hikes likely this year [View news story]
    If the short rates go up and the long ones don't, we have a continuation of flattening of the yield curve that's been going on for a little over a year. That isn't good for my mREITs or my BDCs, and maybe not for E&P MLPs. If the yield curve is flat or inverted by mid 2016, there will be a recession in 2017, typical of a first presidential year. Given the still historically very high delinquency rates on residential mortgages, it won't be good for borrowers stuck in adjustable rates (assuming LIBOR follows Fed Funds up) or housing values. I wonder whether money market funds will pay a little more if Fed Funds goes up?
    Mar 29, 2015. 01:36 PM | Likes Like |Link to Comment
  • ARMOUR And Javelin Remain Attractive Opportunities With Double-Digit Dividend Yields [View article]
    Did I read that Orchid is also a follow on by one/more of the Bimini operators?
    Mar 29, 2015. 11:03 AM | Likes Like |Link to Comment
  • Best Buy warns on profit [View news story]
    Close 66 stores and reopen 65 of them with a new name, and blow $200-280MM doing it? What's the trick here? Is the name "Best Buy" worth that much more than "Future Shop"?
    Mar 29, 2015. 10:42 AM | 1 Like Like |Link to Comment
  • ARMOUR And Javelin Remain Attractive Opportunities With Double-Digit Dividend Yields [View article]
    "...both companies had been positioning their portfolios defensively in the past, which pressurized their core EPS. However, the companies now plan to invest in high-yielding assets to improve their dividends coverage and have taken these strategic initiatives in the first quarter." Well, their portfolio management apparently has been a very good contrarian indicator in the past, so, now I guess long rates will spike and long MBS will tank and they'll just keep losing book value.
    Mar 29, 2015. 10:36 AM | 3 Likes Like |Link to Comment
  • Prospect Capital: Have We Already Seen The Bottom? [View article]
    I see too many commentators concerned with capital gains or losses. BDCs are primarily vehicles for regular income. BDCs must pay out 90% of taxable earnings as distributions to shareholders and that's why they have high dividend yields and a small rate of capital growth, and therefore small, if any, growth in share price. Therefore, generally BDCs are not vehicles for trading profits or even big long term capital gains (if it happens more the better). Buy on the dips, hedge with puts if you think you bought too high or want to guard against the possible periodic surprise disappointments. As you hold for the long term the dividend income will meet your primary goal of regular income and will lower your effective cost. Capital gains are useful only if you wish to liquidate and forego the income (perhaps switch to an investment with higher income and/or better growth, or switch to a pure growth investment).

    I agree that PSEC has it's issues with shareholder non friendly management manifesting in high management fees and a history of issuing shares too far below NAV, but unless you can find an investment that has equal income yield plus better growth those things are irrelevant.
    Mar 28, 2015. 03:03 PM | 2 Likes Like |Link to Comment
  • There Will Be No Oil Storage Crisis In 2015 [View article]
    Finviz says SCO cannot be shorted. Could also use options on USO or oil futures, long calls or spreads, or short puts or spreads, ratio spreads, etc.
    Mar 28, 2015. 02:05 PM | Likes Like |Link to Comment
  • Greece scrambles reforms under new pressure [View news story]
    So, collusion to force default?
    Mar 25, 2015. 05:50 AM | 1 Like Like |Link to Comment
  • Chesapeake Granite Wash: Risky Bet Even If Energy Prices Rebound [View article]
    Thank you so much for your several very informative and helpful articles regarding energy-related royalty trusts. Having owned at various times ECT, ROYT, SDT, SDR and CHKR, all with strong put hedges, I'm now out of all of them except CHKR. Based on your article, I'll be liquidating that position. I've been moving some of those funds into LNCO, BBEP and ARP, all with put hedges, and considering MEMP for some additional energy exposure (out of the frying pan and into the fire!). However, those vehicles are much more liquid, easier to hedge efficiently than any of the royalty trusts, and have some possibility of long term growth. All the E&P securities have their difficult issues, but most, if not all, of the royalty trusts seem to have a complete slate of negatives, including poor liquidity, near term earnings problems, very severe long term earnings problems, little hope for earnings improvement, expiring hedges, future dilution, and no possibility of long term growth.
    Mar 24, 2015. 08:57 AM | 1 Like Like |Link to Comment
  • Oil Will Bottom In 3 Weeks: A Comprehensive Analysis Of Domestic Oil Production [View article]
    Very interesting article, although mathematical models tend to induce a misleading impression of precision. I worry about a deal with Iran flooding the market with another big source which isn't in the model. Also, one must look at demand dynamics in addition to supply dynamics. I also wonder if market pricing of oil-related securities doesn't anticipate a stabilization or turnaround well before the supply/demand/storage data would support it (markets discount the future).

    According to Finviz, SCO is not shortable.
    Mar 23, 2015. 06:49 PM | 2 Likes Like |Link to Comment
  • 13% Dividend CYS Investments' Strategy Is Looking Better After The Dovish Fed Announcement [View article]
    "Lower oil prices (lower oil revenues = lower dollar amount of goods produced = technically less goods produced), lower refined products prices, lower oil companies' CapEx's for 2015, and lower oil company employment in 2015, all argue that U.S. GDP growth in Q1 2015 will be much less than the GDP growth seen in Q4 2014." You are the first contributor to SA I've read to theorize this point, and I think it's correct. However, stable or lower long rates plus slightly higher short rates means poorer spreads for mREITs.
    Mar 23, 2015. 12:23 AM | Likes Like |Link to Comment
  • Annaly Capital: 11% Dividend Should See Benefits From The Fed's New Dovish Stance [View article]
    Thanks for the article.

    "The biggest change with regard to AGNC..." Didn't you mean NLY?

    "...he would not feel comfortable lowering rates until early 2016." Shouldn't that be "raising" not lowering?

    There won't be much pressure on CPR from refis in 2015. All the borrowers who qualified to refi did that in 2014 with the 3-3.25% fixed rates. We may see rates like that or lower again if the US note yields drop to approach the European ones, which could happen with arbitrage, but that would take quite some time. Meanwhile HARP ends December 31, 2015, if it isn't extended.

    The problem last year for fixed rate coupon mREITs was the general decline in long yields, with the 10/2-year yield spread dropping more than 1%, just after they had cut leverage and were hedging in expectation of rising long rates; should have done the opposite!. Perhaps now they'll go erroneously the opposite way, like ARR is saying.

    As shown in 2014, dropping long rates are not necessarily good for fixed rate coupon mREITs: book values might increase if they're not hedged the wrong way too much, but the interest rate spreads inevitably drop for new assets. I'm thinking it might be time to pare back certain of the fixed rate mREITs and switch funds to the less volatile adjustable rate ones like MFA, ANH, CMO, or HTS where spreads are more stable and book values less volatile but dividend yields about the same or better than NLY or AGNC.
    Mar 21, 2015. 06:22 PM | 3 Likes Like |Link to Comment
  • Annaly Capital: 11% Dividend Should See Benefits From The Fed's New Dovish Stance [View article]
    Borrowers must wait 3 years after a foreclosure to get an FHA loan, but as little as one year with certain exceptions regarding the cause of the foreclosure. 4-7 years for Fannie Mae or Freddie Mac conventional mortgages. Not sure about VA or USDA loans. Unfortunately the Fed and all the banking and mortgage lending regulators summarily and stupidly put all the subprime and Alt A lenders out of business with new rules in October, 2006, and that caused the financial crisis and has ruined the real estate markets permanently; so the foregoing five government sources are nearly all the main sources to choose from, unless you've got a lot of income and are buying a McMansion with a jumbo loan.
    Mar 21, 2015. 04:53 PM | 1 Like Like |Link to Comment