JT’s DAILY BLOG for Month Of February 2012

All postings for the month are available here, sorted in descending order - i.e. most recent at the top

All times are Eastern Time - same as the NYSE

Final Posting Wednesday, 02/29/2012 7:00 PM

Well, stocks followed the script that was expected, experiencing a down day after the Dow30 had closed above 13000 yesterday for the first time since the financial crisis. It did not look like it was going to play out that way at first, as a couple of encouraging economic releases in the morning kept the rally going. But then, Fed Chairman Ben Bernanke threw cold water on the rally, as he gave his testimony to the House Financial Services Committee, serving notice that QE3 was definitely off the table, even though the recovery pace has been uneven and modest. Another discouraging sign for the bulls is that NYSE trade volume hit a February high today.

Only one additional upgrade/downgrade came out today since this morning, as Paychex (PAYX) was initiated with a Buy rating by UBS.

Hercules Technology Growth Capital (HTGC), a BDC I own and recommend, reported Q4 EPS 0f $.25 today, beating estimates by $.02. It wasn’t enough to keep HTGC from declining $.17 today, along with the market, closing at $10.32.

Although it is not on my recommended lists, AirCastle LTD (AYR), a “legacy” holding, surged today at the open after releasing better than expected earnings. I immediately put in a sell order, alas, just about a minute too late to get the price I was asking. AYR declined along with the rest of the market, so I did not get filled. AYR ventured above $14 today, briefly, for the first time since the financial crisis. I believe AYR is well-run, but I am not optimistic about the sector’s prospects, so I will take the exit opportunity if AYR gets above $14 again soon.  Note: a “legacy” holding is a stock I bought before I “didn’t know what I didn’t know” about investing in stocks.

On that note, I’ll close up shop and start getting ready for March.


1st Posting Wednesday, 02/29/2012 8:30 AM

Asian markets finished in the green except for Shanghai, which finished down nearly 1%. European markets are trading mostly in the green as well, except for Britain and Spain, which are very slightly below the flatline. U.S. futures are very modestly positive. Economic releases of note scheduled to come out today are the 4th Quarter, 2nd estimate of GDP, the Chicago PMI, Crude Oil and Products Inventories, and the Beige Book from the Fed. 

Upgrades/downgrades that have come out so far today on stocks I follow are:

NuStar Energy (NS) was upgraded from Sell to Neutral by Goldman, with a new price target of $61. I sold a call against my NS units on Monday, at a $65 strike, so if Goldman’s analysis is correct, I made a good option trade.

ONEOK Partners (OKS) was downgraded from Neutral to Sell by Goldman, citing valuation.

Plains All American (PAA) was upgraded from Neutral to Buy at Goldman.

Buckeye Partners (BPL) was downgraded from Conviction Buy to Buy at Goldman.

It appears that Goldman decided today was the day to announce new ratings for MLPs.

MarketWatch’s “Trading Deck” has a couple of articles on Warren Buffet, one analyzing his latest Berkshire missive to shareholders, and another critiquing his stance on gold as an investment.

Today should be an interesting day, as the first trading day following the Dow30’s close above 13000.


Final Posting Tuesday, 02/28/2012 5:30 PM

The Dow30 average finally closed above 13000, so says the headline on MarketWatch, and probably a hundred other places. Below that, another headline proclaims “Nasdaq 3000 In Play”. Welcome to the new Teflon market, where bad economic news is ignored, as stocks grind higher. The Durable Goods report certainly wasn’t good news this morning, but after trading in the red for an hour or two, stocks turned positive and stayed there the rest of the day, closing with only modest gains, which still were enough to generate the afore-mentioned headlines.

Only one upgrade/downgrade came out today after the morning issuances, at least on stocks of interest to me; Chevron (CVX) was upgraded from Hold to Buy by Deutsche Bank. While I concur that CVX is a great company, it is priced accordingly these days, as are most great companies. If only one could go back to 2008 briefly, load up the portfolio, then fast-forward rapidly to return to the present. Sigh!

One stock that is a bit down, at least for a mega-cap blue chip, is Pepsico (PEP), which barely held above $63 today. I added a small number of shares to my PEP holdings, which seemed like a good move, as PEP goes ex-dividend tomorrow.

Ares Capital (ARCC) reported (early this morning) Q4 EPS of $.48, beating estimates by $.09. ARCC responded favorably by gaining $.22 today, closing at $16.52.    

First Energy (FE) reported full-year 2011 GAAP EPS of $2.21, fully diluted, and provided 2012 GAAP earnings guidance at EPS $2.87 to $3.17. These results were not released until after the close today.

I own both of these stocks; FE is on my Tier1 list, and ARCC is on my Tier3 list. On that happy note (two stocks I own are making money), I will close up shop and call it a day.


1st  Posting Tuesday, 02/28/2012 9:00 AM

Asian markets were up, European markets are all trading in the green, and U.S. futures are indicating a positive start to the trading day on Wall Street. Perhaps Schaeffer’s Research was right in their contrarian view of the situation, as expressed in their Monday Morning Outlook article yesterday. That is, that because so many players are positioning for an anticipated pull-back, the market is likely to continue to advance, in keeping with the idea that market moves at all times are based on what will disappoint the most people. And who causes these moves?  The market gods, of course. Time will tell. Economic releases to come today are Durable Orders, the Case-Shiller Home Price Index, and Consumer Confidence. Durable Orders is a monthly manufacturer’s survey prepared by the U.S. Census Bureau. Today’s release will be from a survey performed in January. The Case-Shiller Home Price Index is sponsored by S&P, and tracks changes in the value of residential real estate nationally, with a key statistic being prices in 20 major metropolitan regions. Today’s release will cover prices through December. The Consumer Confidence survey is a monthly, probability-designed random sample prepared by The Conference Board, a private organization. The results are converted to an index, for comparison to prior periods. Today’s release will reflect a survey performed in February. 

Moving on, upgrades/downgrades that have come out today, for stocks I follow, are:

Genuine Parts (GPC) was downgraded from Buy to Hold by Argus, citing disappointing guidance and the prospect of slowing growth.

Procter & Gamble (PG) was upgraded from Neutral to Buy by BofA/Merrill.

Public Service Enterprise Group (PEG) was downgraded from OutPerform to Neutral by Credit Suisse, citing lower power price forecasts.

Durable Orders has come out since I started this letter, coming in at -4% vs. -.7% expected. European shares have turned negative, and U.S. futures have gone negative also. This was not an encouraging economic release. Perhaps ECRI is correct, that a new recession is coming, to arrive this summer. ECRI stands for Economic Cycle Research Institute, an independent, non-profit that has famously forecast a recession, even as the economic data has been showing improvement. Time will tell. I’ll bet you’re very weary of reading those three words. Unfortunately, when postulating about economics, stocks, and markets, those three words define the only sure status, as far as predictions are concerned.


Final Posting Monday, 02/27/2012 5:30 PM

Today was a mild roller-coaster ride, as stocks were down a fair amount for the first hour or so, then gradually moved into positive territory for a good part of the day, but then turned down again over the last hour or so to close modestly lower.

The only economic release today, Pending Home Sales, came in at a 2.0% increase Y/Y vs. 1.0% expected, which buoyed the early rise in the stock averages.

Only one additional upgrade/downgrade has come out (on stocks I follow) since this morning; Westar Energy (WR) was upgraded from Average to Above Average by Caris.

As for my own trading, I did accomplish a covered call sale today on NuStar (NS), which I’ve been trying to do for nearly a week now. It occurred as NS spiked up over $1.50 to $61.72 around 9:30 AM. NS then dropped back down below $61 within two minutes, staying there the rest of the day, closing at $60.78, a $.40 decline from Friday’s close. The option I sold was a September 2012 call with strike price $65, sold for $.75. Until today, the option was never quoted at more than $.60. This may not end well, but it is at least starting well. I have a new article out this afternoon on Seeking Alpha, where I present my results on covered calls on three stocks, NS being one of the three. My prior experience with NS, as detailed in the article, was such that it qualifies as my worst investment experience in covered call selling in the two years that I have been doing these trades. I selected it as an example of how you can get burned with covered call selling, when a stock that you have “pre-sold” with a call sale suddenly rockets up beyond all expectations. At that time, I had sold a $60 call. If it happens again, with a $65 call sold this time, I will hopefully not forfeit as large of a profit. Of course, if I really thought NS was going to shoot up to $70 or so again soon, I would not have sold the call. Stay tuned. If it happens again, I will probably add NS to my list of “Call Sales Not Allowed” stocks. Click on the “SA Articles” selection to get a link to the article.  

That’s enough excitement for today.


1st Posting Monday, 02/27/2012 9:15 AM

Another week begins with Asian markets down, except for a modest gain in the Shanghai Index. A recent report issued last week, prepared by the World Bank and the Development Research Center of China, warned that the country will be facing an economic crisis if major reforms of state-owned industries are not undertaken. It appears the call for reform is being taken more seriously than in the past, as imbalances become more pronounced, and an economic chill in China becomes more widespread. European markets are universally down. There seems to be consensus that the near-term solution for Greece reached last week has merely bought a little time, but not much else. U.S. futures are indicating a negative outlook at the open for the markets here. The only economic release on tap for today is Pending Home Sales, which is not likely to be a market-moving data release.

Several upgrades/downgrades out this morning on stocks I follow are:

American Electric Power (AEP) was upgraded from Hold to Buy at Jeffries, and the price target was raised to $41.50 from $39.00.

Proctor & Gamble (PG) was upgraded from Market Perform to OutPerform by BMO Capital, and the price target was raised to $78 from $68.

Ventas (VTR) was downgraded from Buy to Neutral by UBS, citing uncertainty of lease renewals by major tenants.

Digital Realty Trust (DLR) was downgraded from OutPerform to Sector Perform by RBC Capital, citing valuation and concerns over increased capital requirements.

As is my custom on the first post of the week, I will indicate any stocks on my lists going ex-dividend this week, as follows:

Novartis A G ADR (NVS) – 2/27/2012, yield 4.47%. This is an annual dividend, so if you don’t already own it, you missed it for this year.

Kellogg (K) – 2/28/2012, yield 3.26%.

Lockheed Martin (LMT) – 2/28/2012, yield 4.47%.

McDonalds (MCD) – 2/28/2012, yield 2.79%.

NStar (NST) – 2/28/2012, yield 3.84%.

Realty Income (O) – 2/28/2012, yield 4.69%. This is a monthly payer.

Safety Insurance Group (SAFT) – 2/28/2012, yield 4.50%.

Dominion Resources (D) – 2/29/2012, yield 4.11%.

Nextera Energy (NEE) – 2/29/2012, 3.95%

Pepsico (PEP) – 2/29/2012, yield 3.25%.

Molson Coors (TAP) – 3/1/2012, yield 2.91%.

Old Republic (ORI) – 3/1/2012, 6.55%.

Century Link (CTL) – 3/2/2012, yield 7.26%.

Stocks I follow that are slated to report earnings in the coming week, tentatively, are:

First Energy (FE) – 2/28/2012.

Ares Capital (ARCC) – 2/28/2012.

Greif Inc (GEF.B) – 2/29/2012.

Hercules Technology Capital (HTGC) – 2/29/2012.

BlackRock Kelso (BKCC) – 3/1/2012.

A number of articles I have reviewed this morning, on Seeking Alpha and elsewhere, have had a decidedly bearish slant to them. By contrast, Schaeffer’s Research, interestingly, has indicated in their Monday Morning Outlook article that the bearish trade is a crowded trade, and that the bearish sentiment could result in stocks moving higher, based on their contrarian approach. Note that Schaeffer’s is a short-term oriented trading outlook website. For the serious investor, probably the best read that has come out recently is the new quarterly letter from noted value investing guru Jeremy Grantham, available at the GMO website, www.GMO.com/America. A shorter recap of the letter, which is entitled “10 Investment Lessons from Jeremy Grantham”, is available on MarketWatch’s “The Trading Deck”.    

Time to get ready for today’s action.


Final Posting Friday, 02/24/2012 8:30 PM

It was a very quiet day in the markets today, with the major averages finishing mixed, some slightly above the flatline and some slightly below. The NYSE TICK reading never got above +1000 or below -1000, indicative of an extremely low volatility day.

There was minimal action on the upgrade/downgrade front today, with only two ratings to report:

American Electric Power (AEP) was downgraded from Buy to Hold by ISI Group.

Fifth Street Finance (FSC) had coverage initiated by Barclays Capital, with an Equal Weight rating.

Doug Kass of The Street.com appeared on CNBC’s “Fast Money” yesterday, in which he made the case for a likely 4% to 5% market correction to come any day now. A free recap article at The Street.com website is available for readers that want to know Doug’s thinking on the topic.

Probably influenced by the article, I decided to take some money off the table today, selling 50% of my position in MicroSoft (MSFT), which has run up to the $31.50 area since I bought in the $25.00 range. It could go higher, which is why I kept 50%. If we have a dip, I will probably buy back the shares upon a decline below $28 or so.

Not much else to report.   


1st Posting Friday, 02/24/2012 9:00 AM

Asian markets finished higher except for India, and European markets are all trading higher except for Spain. U.S. futures indicate a slight bias to the upside, with less than hour to go before the open. Crude oil is making new interim highs, above $108, and the dollar is flat, with the Dollar Index at 78.52, down .11.

Economic releases scheduled for today are the final reading for the University of Michigan Sentiment Index for February, and New Home Sales for January, both to be released around 10:00 AM.

Upgrades/downgrades so far today on stocks of interest, at least to me, have been limited to just one:

Proctor & Gamble (PG) was upgraded from Hold to Buy by Buckingham, with a price target of $77.

As expected, Westar Energy (WR) reported after the bell yesterday, with Q4 EPS coming in at $.16, beating estimates by $.01.

Protein Design Labs Biopharma (PDLI), also after the bell, reported Q4 EPS of $.24, missing estimates by $.04. Q4 Revenue of $72.8M, down 4.3% Y/Y, was in-line with estimates. Full-year revenue was up 2% over the prior year. As I noted in an earlier post, PDLI has already announced the next four dividends, which will be $.15 per quarter, with ex-dividend dates in March, June, September, and December. PDLI closed yesterday at $6.40, with a current yield of 9.38%. Nothing that I can see tells me that PDLI should be dropped, so it stays on my Tier3, ultra-high yield list.

John Mauldin’s email newsletter delivered this morning, his “Outside the Box” edition offering views of other commentators, is a great read, as John’s emails usually are. As I have mentioned before, anyone interested in the financial markets, or just the world in general, should sign up for a free email subscription at www.JohnMauldin.com


Final Posting Thursday, 02/23/2012 5:00 PM

Stocks finished the day in positive territory, with all of the major averages sporting moderate gains.

The only earnings report that has come out so far today on stocks that I follow is for Public Service Enterprise Group (PEG), which reported Q4 EPS of $.47, missing estimates by $.01. The stock declined $.44 today, closing at $30.52. PDL Biopharma (PDLI) and Westar Energy (WR) are both slated to report after the close.  

No additional upgrades/downgrades have come out today on my stocks.

An interesting read on MarketWatch today describes the Euro crisis in terms of John Nash’s game theory, as portrayed in the movie “A Beautiful Mind”, as the various players struggle for advantage and practice various forms of one-upmanship. The author is Matthew Lynn, and the article is entitled “Greek Crisis Isn’t Economics, It’s Game Theory”.  

Only one more day to go this week.


1st Posting Thursday, 02/23/2012 9:00 AM

Asian markets finished mixed, while European markets are mostly trading in the red. The latest projections for the Eurozone economies indicate that a mild recession is likely, which caused these markets to go into sell mode. After a dull session yesterday, U.S. futures are modestly positive, as we await the weekly numbers on claims for unemployment. The weekly numbers just came out, at 351K for new claims, and 3390K for ongoing claims. The futures hardly budged, and are still slightly positive.

Moving on to upgrades/downgrades, we have three so far today:

Boeing (BA) had coverage resumed with a Hold, by Stifel Nicolaus.

Fifth Street Finance (FSC) was downgraded from Buy to Hold by Gifford Securities.

Kellogg (K) was upgraded from Hold to Buy by Deutsche Bank.  

I’ll be on the lookout for earnings news today on three stocks on my lists:

PDL Biopharma (PDLI) 

Westar Energy (WR)

Public Service Enterprise Group (PEG)

I’m working on a new article to submit to Seeking Alpha, on covered calls, to illustrate returns with and without selling calls. The results are interesting. You generally are ahead with selective call selling, until that one stock suddenly turns into a rocket, causing you to forfeit a significant gain in return for a puny call premium. That’s the nature of the option selling game. Nassim Taleb’s (author of the acclaimed “Black Swan”) other book, “Fooled By Randomness”, discusses this phenomena, among other sub-topics. I highly recommend his books, especially if you start to think you have about gotten it all figured out. Possibly you are being “Fooled By Randomness”.

Time to hunker down and try to make the rent – or even the latest auto repair, after dealing with that irritating dash light “check engine soon”, or whatever the heck it said.


Final Posting Wednesday, 02/22/2012 5:00 PM

Stocks finished the day with modest losses. The only economic data released today was indicative of a slowly recovering housing market, as Existing Home Sales came in at 4.57 million, a 4.3% increase.

Additional upgrades/downgrades on stocks I follow that came out today are:

Frontier Communications (FTR) was downgraded from Buy to Hold by Hudson Square Research.

Nucor (NUE) was downgraded from Buy to Neutral by Longbow.

Genuine Parts (GPC) was downgraded from Buy to Hold by Gabelli.

Public Service Enterprise Group (PEG) was downgraded from OverWeight to UnderWeight by Atlantic Equities.

Walmart  (WMT) was downgraded from Strong Buy to Market Perform by Raymond James.

Earnings reports that have come out today are;

Windstream Corp (WIN) reported Q4 EPS of $.19, missing estimates by $.01. WIN declined by $.35 today, closing at $12.12.

Solar Capital LTD (SLRC) reported earnings of $1.42 per share and net investment income of $.57 per share for the quarter ended 12/31/2011. NAV per share at year-end was $22.02. SLRC declined $.27 today, closing at $23.15.  

I did not execute any trades today. My GTC order to sell a September 2012 $65 strike call on Nustar (NS) remains in limbo.


1st Posting Wednesday, 02/22/2012 8:45 AM

Asian markets closed in positive territory, except for India, which declined over 1.5%. European markets are all trading in the red, although not by huge margins. U.S. futures are slightly negative at the moment. Dell computer is down over 6% in the pre-market after an uninspiring earnings release. I mention this not because DELL is a stock on my lists, but because it is one of the giants that can impact the market. One news item of note on my stocks is that the CEO of Johnson & Johnson (JNJ), Bill Weldon, will step down. It appears the most recent embarrassing product recall, the latest in a long string of recalls, was the final push to achieve this result, which shareholders have been clamoring for in recent months, if not years. It remains to be seen whether a new CEO will be the solution, but one of the conditions that comes with the territory of being a CEO is that management failures (which product recalls certainly are) will eventually get you if they are not corrected.

Todd Harrison of Minyanville has a thought-provoking read out on MarketWatch, “Is the European Crisis Over or Just Beginning”. His concerns are shared by many.

There is minimal economic data due out today; only the worthless weekly MBA Mortgage Index, and the marginal Existing Home Sales.   

Upgrades/downgrades so far today on my stocks are:

ONEOK Partners (OKS) was downgraded from OutPerform to Neutral by Credit Suisse, citing valuation; Price target raised to $58.

Medtronic (MDT) was downgraded from OutPerform to Neutral by Credit Suisse, citing slowing growth; Price target lowered to $43.

Medtronic (MDT) received a second downgrade, from Buy to Hold, by Deutsche Bank; Price target lowered to $41.

Phillip Morris (PM) was downgraded from Neutral to Reduce by Nomura, citing valuation.

Since it looks like a slow day, time for a new economics pop quiz; what is the “MBA Mortgage Index”, and who puts it out? To answer the second question first, it is released weekly by the Mortgage Bankers Association. The index is a composite index that considers both new purchase financing and refinancing applications, and is based on a weekly survey of financing providers. It is a leading indicator of home buying and refinancing activity levels. One shortcoming is that the data only covers about half of the U.S. residential mortgage market, and needs to be smoothed, such as to a four-week or longer moving average, to be meaningful, as the weekly value is somewhat erratic. It is the erratic nature of the weekly release that causes me to consider it none too useful.

Time to get ready for what looks like a slow day – which of course may or may not be the case.


Final Posting Tuesday, 02/21/2012 6:00 PM

Both the Dow30 and the NASDAQ indices threatened the next higher “round numbers” of 13,000 and 3,000, respectively, but were beaten back by the Bears to finish below those levels, on what was still a mostly positive day.

Two additional upgrades/downgrades came out on my stocks during the day:

Eaton Corp (ETN) was upgraded from Neutral to Buy at Longbow.

Norfolk Southern (NSC) was downgraded from Overweight to Neutral by J.P. Morgan.

Earnings out so far this week on my stocks are:

Penn Virginia Resources Partners L.P. (PVR) - Reported results Monday, as noted in this morning’s blog. The report was generally positive, with both full-year EBITDA and Adjusted Net Income for 2011 exceeding the comparable values for 2010. As is becoming more common for MLPs these days, PVR reported Distributable Cash Flow (DCF) for 2011, net of provisions for replacement capital expenditures, as $143.8 million, which based on 78 million units outstanding, computes to $1.83/unit. This is slightly less than the annual payout of $2.04 per unit, not ideal, but nothing to become overly alarmed about. PVR declined $.69 today, closing at $24.15.

Genuine Parts (GPC) – Q4 EPS of $.86 beat estimates by $.03. Evidently it wasn’t enough, as GPC declined $1.77 today, closing at $63.81.

Medtronic (MDT) – FQ3 EPS of $.84 was in-line with estimates. MDT declined $.95 today, closing at $38.99.

Oneok Partners L.P. (OKS) – Also reported results Monday, with Q4 earnings per unit of $1.26, a significant increase from Q4 of the prior year. Full-year 2011 results were similarly favorable. DCF for 2012 is expected to be in the range $925 million to $985 million. A few days earlier, OKS announced that a proposal for a 2 for 1 split will be voted on at the upcoming annual meeting in May. OKS increased $1.34 on the day, closing at $60.90.

Walmart (WMT) – Last, and also least, for today, WMT reported Q4 EPS of $1.51, beating estimates by $.05, but revenue of $122.3 billion, while up Y/Y by 5.8%, still fell short of estimates by $2 billion. Poor fellows, the stock declined today by $2.41, closing at $60.07.

I have a new article out on Seeking Alpha today, on my put selling experiences with ConocoPhillips (COP) the last two years. A link is available from the SA Articles selection at my website.   

I sold a new call against my Unilever (UN) stock today, with an August 2012 expiration at a strike of $35.00. My sale price was $1.26. My cost basis on these shares is about $30, so I will let them go if the price rises above the strike. Stay tuned.

That’s about it for today; time to hit the gym.


1st Posting Tuesday, 02/21/2012 9:00 AM

Well, a nice long week-end it was. My wife, who is Chinese, has suddenly taken interest in professional basketball, part of the “Linsanity” phenomena. She has never watched an NBA game in her life, yet there she was Sunday, watching the Knicks and the Mavs, on an emotional roller-coaster with each basket, foul, or what-have-you.

Anyway, moving on to the markets, the big news of the day is the apparent approval of the Greek bailout. Other geo-economic news is the stand-off between Iran and the West continues to drive oil prices higher, and Japan posted a record trade deficit in January. Asian markets closed higher except for Japan, with the Nikkei posting a small loss. European markets are all trading in the red, but the U.S. futures are positive, presumably on the Greek news. No economic releases are scheduled for today.

Not much to report on upgrades/downgrades this morning. Only one so far today; Energy Transfer Partners L.P. (ETP) was downgraded from OutPerform to Market Perform by Wells Fargo.   

Stocks on my lists going ex-dividend this week are:

Avista Corp (AVA) – 2/22/2012, yield 4.53%.

General Electric (GE) – 2/23/2012, yield 3.53%.

Northrop Grumman (NOC) – 2/23/2012, yield 3.33%.

Atmos Energy (ATO) – 2/23/2012, yield 4.34%.

Johnson & Johnson (JNJ) – 2/24/2012, yield 3.51%.

Earnings announcements expected this week, tentatively, are:

Penn Virginia Resources Partners L.P. (PVR) – 2/20/2012. PVR did release results yesterday, regardless of the fact that it was a market holiday. I’ll report on PVR tonight with any others that come out today.  

Genuine Parts (GPC) – 2/21/2012.

Medtronic (MDT) – 2/21/2012.

Oneok Partners L.P. (OKS) – 2/21/2012.

Walmart (WMT) – 2/21/2012.

Windstream Corp (WIN) – 2/22/2012.

Solar Capital LTD (SLRC) – 2/22/2012.

PDL Biopharma (PDLI) – 2/23/2012. I’ll be watching this one; PDLI may be coming off my Tier3 list if the report is not encouraging. PDLI has already announced all four dividends for 2012, which is a bit unusual. Any reneging on the promised payouts would be a disaster for the stock.

Westar Energy (WR) – 2/23/2012.

Public Service Enterprise Group (PEG) – 2/23/2012.

It looks like the week won’t be too dull, with at least a few earnings reports on tap.

My February 2012 call, strike $35.00, on Unilever (UN) expired worthless, so I was informed when I logged on to my E*Trade account this morning. Of course, I already knew that, since UN closed at $33.78 Friday. Covered call selling is great when it works, just like “free money”. Of course, when it doesn’t work, it becomes clear that it isn’t “free money”, that risk is assumed when entering a covered call trade, same as for any trade in the markets. 

Time to buckle in and get ready for today’s action.


Final Posting Friday, 02/17/2012 5:00 PM

Stocks opened in positive territory to start the day, and stayed there for the most part. The Dow30 and the S&P 500, where most of my stocks reside, finished in positive territory, while the NASDAQ and the small-cap Russell 2000 ended the day with small declines. All of the major averages ended the week with respectable gains from where they stood a week ago. 

Earnings came out today for the following stocks on my lists:

Campbell Soup (CPB) – FQ2 EPS reported at $.64, beating estimates by $.02. CPB gained $.84 today, closing at $32.90.

Ventas Inc (VTR) – Q4 FFO of $.89 missed estimates by $.01. VTR declined $.43 today, closing at $57.17.

Heinz H J Co (HNZ) – FQ3 EPS came in at $.95, beating estimates by $.10. HNZ gained $2.37 today, closing at $54.47.

Digital Realty Trust (DLR) – Q4 FFO of $1.03 beat estimates by $.02. DLR gained $.23 today, closing at $69.93.

A few additional upgrades/downgrades on my stocks that have come out since this morning were:

Frontier Communications (FTR) was initiated at Buy by Janco.

Health Care REIT (HCN) was downgraded from Buy to Hold by Sandler O’Neill.

J.M. Smucker (SJM) was downgraded from Conviction Buy to Buy by Goldman.

Health Care REIT (HCN) received a second downgrade today, from Neutral to UnderPerform, by Hilliard Lyons.

Today I bought back a put I had sold on ConocoPhillips (COP) only a little over two weeks ago, on January 30th. The put was for August 2012 at the $60.00 strike, sold for $2.50, and the buy back price was $1.26. After commissions each way, this trade yielded a net profit of $102.49, with no cash outlay; only a hold on $6000, to ensure funds would be available if required to buy 100 shares of COP, should I be assigned. As to the question, why buy back, when it seems highly unlikely that the put would be assigned over the time frame, my reasoning is that I had made nearly 50% of the profit after only 10% of the time in the trade, I should go ahead and take it, and free myself from the obligation, however remote it might seem today. A lot can change in six months in the stock market. If you consider the return as if $6000 was “invested”, it comes out to, roughly, an annualized 100% return. My belief is that “take the money and run” is an appropriate strategy in the stock market, if the return is enough to make an exit worthwhile. As I have said before, when the market gives you a gift, you need to take it, because it doesn’t happen often.

Adding to my personal “era of good feelings” today, as far as options are concerned, anyway, is that a February call on Unilever (UN), at the $35.00 strike, that I had sold some months ago for $1.00, expired worthless today, yielding nearly $90.00 after a one-way commission.

Time to declare victory and go home before anything bad happens! But what the heck, I am home, time to go out for awhile instead, just be very careful.


1st Posting Friday, 02/17/2012 9:00 AM

Asian and European markets are all green, all the time, today, as are U.S. futures, at least modestly so. If this initial sentence sounds familiar, it is because I copied it from Wednesday’s initial post. Such is the nature of markets, where patterns repeat endlessly.

Economic releases on tap today are CPI and Leading Indicators. Upgrades/downgrades so far today, on my stocks that is, are:

J.M. Smucker (SJM) was upgraded from EqualWeight to OverWeight by Stephens, based on valuation. I guess in their view a $6 drop in the price makes SJM a better value, which is certainly true – just not better enough to tempt me.

Frontier Communications (FTR) was upgraded from UnderPerform to Neutral by MacQuarie. Price target is a whopping $4.65. Talk about a cautious upgrade. But an upgrade is still an upgrade, so as a holder of FTR, I’ll take it.

Statoil (STO) was downgraded from Neutral to UnderPerform by Credit Suisse.

A couple of dividend announcements resulting in new ex-dividend dates for a couple of my stocks since Monday morning's posting are:

Northrop Grumman (NOC) – 02/23/2012

Coca Cola (KO) – 02/23/2012

After another quick review, I found no stocks on my lists with an ex-dividend date of 02/21/2012, which would have meant action would be required today to get the dividend. I will review all stocks on my lists for approaching ex-dividend dates and earnings dates this weekend, and list these on my initial posting next Tuesday. (Remember – markets will be closed for President’s Day Monday.)

Earnings expected today are:

Campbell Soup (CPB)

Ventas Inc (VTR)

Heinz H J Co (HNZ)

Digital Realty Trust (DLR)

I will comment on these stocks this evening.

Before I close, I want to recommend an excellent, in-depth article on Seeking Alpha from contributor “Jaded Consumer”, entitled “Understanding American Capital’s 2011 Results”. American Capital (ACAS), like many BDCs, was put into severe distress during the financial crisis, but has survived, and hopefully will rise again to be a reasonable dividend-paying BDC.

Time to get ready for today’s action.


Final Posting Thursday, 02/16/2012 6:00 PM

The U.S. markets erupted into a substantial rally today, with the Dow30 up 123 points, to close at 12904, and the S&P 500 up 15 points, to close at 1358. The Dow30 reached a new post-2009 high, surpassing the previous high from May 2011, and the S&P 500 was close, only about 12 points below the May 2011 high for that venerable measuring stick.

Additional (since this morning) upgrades/downgrades on my stocks today were:

National Health Investors Inc. (NHI) was downgraded from Neutral to UnderPerform by Hilliard Lyons.

Energy Transfer Partners L.P. (ETP) was downgraded from OutPerform to MarketPerform by Morgan Keegan.

Now for earnings on my stocks:

MFA Inc (MFA) – Q4 EPS of $.22 missed estimates by $.02. MFA declined $.05, closing at $7.42. The key metrics for high-yielding MREITs such as MFA are the Debt/Equity Ratio and the aggregate Interest Rate Spread. The new values for these items, respectively, were reported at 3.7:1 and 2.62 as of the 4th quarter-end , compared to the prior quarter values of  3.4:1 and 2.83. Based on this, MFA is holding up very well so far as the conditions tighten for MREITs.

DTE Energy (DTE) – Q4 EPS of $.88 beat estimates by $.08. DTE gained $.79 today, closing at $54.00.

Duke Energy (DUK) – Q4 EPS of $.24 beat estimates by $.03. DUK gained $.23 today, closing at $21.10.

Frontier Communications (FTR) – Q4 EPS of $.07 beat estimates by $.02. FTR gained $.15 today, closing at $4.46. This stock has been closely watched by dividend investors lately. The market has priced in a dividend cut or worse for some time. If FTR can maintain the dividend going forward, investors who bought at the recent lows will be well-rewarded.

Health Care Reit (HCN) – Q4 FFO of $.91 beat estimates by $.01. HCN declined $.62, closing at $55.62.

Senior Housing Properties Trust (SNH) – Q4 FFO of $.42 missed estimates by $.01. SNH declined $.26 today, closing at $21.99.

Waste Management (WM) – Q4 EPS of $.58 missed estimates by $.03. WM declined $.60 today, closing at $34.42.

J. M. Smucker (SJM) – FQ3 EPS of $1.22 missed estimates by $.19.  SJM declined $6.55 today, closing at $71.60. If this could repeat another 5 or 6 times, SJM would be in buy range.

Molson Coors (TAP) – Q4 EPS of $.97 beat estimates by $.27. TAP gained $1.24 on the day, closing at $45.10. An early surge took the stock near $46, as this was the biggest positive earnings surprise of the day, before the stock settled back down.  

Otelco (OTT) issued a press release today, announcing that 2011 results will be released after the market close on Tuesday, February 21.

I sold a call against my TAP shares today, which I had entered as a GTC order a couple of weeks ago. I had about given up on getting filled, but when I saw TAP jumping up this morning on the strength of the positive earnings surprise, I vowed to take advantage of the opportunity.  Watching the stock tic-by-tic, I quickly lowered my limit price from $.90 to $.80 when I saw TAP starting to pull back, and was immediately filled on my July $50.00 strike call at $.80, at which time the stock was at $45.76. TAP continued pulling back the rest of the day, closing at $45.10, still logging a $1.24 gain from yesterday’s close.  

I expected to get filled on another GTC option sell order today, this one on NuStar (NS) for October 2012, at a $65.00 strike, for $.75. I guess the option market makers don’t share my optimism for NS’ prospects, as the option never sold for more than $.40. I resisted the urge to settle for less, which I knew I would regret if I meddled with the order.

So, nothing done on NS today.

Time to call it a wrap.


1st Posting Thursday, 02/16/2012 9:00 AM

What a difference a day makes. Following the U.S. lead from yesterday’s trade, Asian and European markets are universally down this morning, with new concerns about the 2nd Greek bailout and Moodys’ warning of potential downgrades of over 100 financial institutions. U.S. futures are indicating a negative start for today, but with a batch of economic data to be released at 8:30 AM, a futures prediction on the start of trade today must wait a few more minutes to be meaningful.

Upgrades/downgrades so far this morning, on my stocks, are:

Enterprise Products Partners L.P. (EPD) was upgraded from Hold to Buy by Argus, with a price target of $61.

General Mills (GIS) was upgraded from UnderPerform to OutPerform by CLSA, with a price target of $44.

Nestle S A ADR (NSRGY) reported earnings, with 2011 net profit up 9.8%, even with a Y/Y 10.1% drop in revenue from the strong (Swiss Franc) currency and divestures. The world’s largest food company warned that 2012 is expected to be a difficult year because of the economic uncertainties.

A number of my stocks are expected to report today. I’ll update readers with results as I can find them in tonight’s post.

With the 8:30 AM economic reports all coming in as expected or slightly better, the futures have rebounded a bit to essentially flatline. What kind of day it will be is anyone’s guess, but there is quite a bit of fear present in the market these days, primarily because of two reasons, as I see it: the markets have risen almost unabated since the October swoon, and are resting at or near interim highs; and the economic uncertainties persist, amid a backdrop of an excruciatingly-slow economic recovery in the U.S.   

Time to get ready, it should be an “interesting” day, as in the Chinese proverbial “interesting times”.


Final Posting Wednesday, 02/15/2012 6:00 PM

Well, the market opened in the green and stayed there for all of maybe five minutes, then began a day-long descent. Causes cited were a hold-up on the Greek bail-out (NO! Say it isn’t so!), less than wonderful economic data, Fed minutes revealing that a majority of the members are opposed to further QE, and probably a couple of other reasons I missed. All of the major averages finished down, with the Dow30 leading the pack (in % decline) at minus 97 points in the red.

A couple of new ex-dividend dates since Monday are:

Buckeye Pipeline Partners L. P. (BPL), 2/16/2012.

United Parcel Service (UPS), 2/16/2012.

Two of my stocks had coverage initiated since early this morning, Phillip Morris (PM) and Altria (MO), both with a Hold rating, by Jeffries.

Earnings that have come out today on my stocks are:

National Health Invs Inc (NHI) – After the bell, NHI released results, with Q4 FFO (normalized), the key REIT metric, showing an increase of 7.1%. NHI declined $.26 today, closing at $48.72.

Avista Corp (AVA) – Q4 EPS of $.42, missed by $.03. Shares down $.28, closing at $25.45.

CenturyLink Inc (CTL) – Q4 EPS of $.58, missed by $.03. Shares up $.01, closing at $37.83.

Energy Transfer Equity L P (ETE) – After the bell, ETE reported Q4 EPS of $.38, missing estimates by $.04. ETE declined $.36 today, closing at $41.88.

Energy Transfer Partners L P (ETP) – Q4 EPS $.41, missed by $.31. Shares up on the day by $.75, closing at $48.27.

Scana Corp (SCG) – Q4 EPS of $.75, missed by $.04. Shares down on the day by $.40, closing at $44.60.

ENI S P A ADR (E) – Reported that Q4 adjusted net profit slipped 9.5% on the year, hurt by the Libyan civil war, low NG prices, and weak refining margins. Adjusted in this case  means the impact of oil prices on inventories is adjusted for. The (presumably) unadjusted Q4 net profit was Euro 1.32 Billion vs. Euro 548 Million in the comparable quarter a year ago. E closed down $.69, ending the day at $44.92. E forecast a more difficult year lay ahead, yet still announced an intention to raise the dividend.

That’s it for today.


1st Posting Wednesday, 02/15/2012 9:10 AM

Asian and European markets are all green, all the time, today, as are U.S. futures. The headline on MarketWatch attributes this giddy state to comments made by China’s central-bank governor regarding investment in Europe, further buoyed by some better-than-expected economic data out of Europe.

Stocks I follow that had upgrades/downgrades were:

Lockheed Martin (LMT), downgraded from OutPerform to MarketPerform by Bernstein, based on valuation and U.S. budgetary constraints. Price target lowered to $99.

Kimberly Clark (KMB), downgraded from Buy to Neutral by Janney Capital, price target lowered to $74.

Several of my stocks are due to report today. See the Monday morning posting for details.

A number of economic releases are scheduled for today. The Empire State Manufacturing Index has just come out, at 19.5 vs. 15 expected, further juicing the pre-market excitement. Still to come are readings on Industrial Production/Capital Utilization, Capital Flows, NAHB Housing Index, and, as always occurs on Wednesdays, the Department of Energy’s Oil Inventories report.

We will see if the positive vibes continue into the trading day, or if something occurs to upset the proverbial applecart. I have noticed a few more “market pullback is coming” articles lately than usual (there are always some of these out there), which usually means the opposite is more likely to occur. I have to agree with the logic of these articles, but unfortunately (or perhaps fortunately) the market does not operate based on logic.

Time to get ready.


Final Posting Tuesday, 02/14/2012 5:15 PM

Stocks ended today with mixed results, with the major averages finishing essentially flat, with some slightly up and others slightly down. The economic data came in generally as expected.

HCP Inc (HCP) reported today as expected, with Q4 FFO (adjusted) at $.67, beating estimates by $.01. Annual results were overall positive, with full year EPS (diluted) up 29% to $1.29. HCP yesterday was admitted to the elite S&P 500 Dividend Aristocrats, and today further justified that selection with a dividend increase to $.50 per quarter, a 4.2% increase. Following all of these positives, HCP was downgraded from Neutral to UnderPerform by Hilliard Lyons, and the stock declined $.71 today, closing at $40.99. I guess you just can’t please some people.

General Mills (GIS) was initiated by Morgan Stanley today with an OverWeight rating.

That’s about it for today.


1st Posting Tuesday, 02/14/2012 9:10 AM

Even though I’m up a bit earlier than usual, I’m behind schedule, having taken the time to read a fascinating email from John Mauldin’s “Outside the Box” free email newsletter regarding an interview with Dr. Lacy Hunt of Austin, Texas-based Hoisington Investment Management. The essence of the article is that the current economic troubles in the U.S., Europe, and Japan are rooted in excessive debt, and there is no easy solution to bring prosperity back anytime soon. Anyone can subscribe for free to the newsletter at www.JohnMauldin.com.

Returning to the brutal, everyday realities, I observe that Asian markets ended mixed, with the Nikkei, Hang Seng, and Sensex positive, and Shanghai and the S&P ASX in the red. Europe is mostly trading in plus territory, with only the FTSE showing a tiny loss at this moment. U.S. futures are slightly negative, indicating a flat to lower start for trading here.

Economic releases scheduled for today are Retail Sales, Import Prices, Export Prices, and Business Inventories. Crude prices broke above $100 yesterday with surprisingly little fanfare.

Upgrades/Downgrades were plentiful this morning:

Frontier Communications (FTR) was initiated at MarketPerform by BMO Capital.

Annaly Capital (NLY) was downgraded from OutPerform to Neutral by Macquarie.

Spectra Energy (SE) was initiated at Buy by Deutsche Bank.

Breitburn Energy Partners L.P. (BBEP) was resumed at Hold by Deutsche Bank.

NuStar Energy L.P. (NS) was resumed at Hold by Deutsche Bank.

Enterprise Products Partners L.P. (EPD) was resumed at Buy by Deutsche Bank.

Buckeye Partners L.P. (BPL) was resumed at Hold by Deutsche Bank.

Boardwalk Pipeline Partners L.P. (BWP) was resumed at Hold by Deutsche Bank.

Plains All American Pipeline L.P. (PAA) was downgraded from Buy to Hold by Deutsche Bank.

Magellan Midstream Partners L.P. (MMP) was downgraded from Buy to Hold by Deutsche Bank.

Kinder Morgan Energy Partners L.P. (KMP) was upgraded from Hold to Buy by Deutsche Bank.

Energy Transfer Partners L.P. (ETP) was upgraded from Hold to Buy by Deutsche Bank.

Oneok Partners L.P. (OKS) was initiated at Hold by Deutsche Bank.

Earnings are expected today from HCP Inc (HCP), a health facilities REIT.

Time to get ready for today’s action.


Final Posting Monday, 02/13/2012 5:45 PM

After a slow first hour, stocks managed to stage a respectable rebound from Friday’s sell-off, with all of the major averages ending up over a half of a per cent.

Other than that, there is not much else to report. My new entry onto my Tier3 list, Otelco (OTT), is off to a good start, with coverage being initiated at Neutral by Sidoti, and finishing the day up $1.27, to close at $14.79. OTT is the smallest company on any of my lists, being classified as a “micro-cap” stock. I was hoping to buy some on a pull-back, but no opportunity has arrived as yet. I had owned OTT a long time ago, before the 2008 crisis, and did OK, but I had decided it was too small to be safe, so I never bought it back. It is pretty darn small for a dividend stock, but I guess I’m willing to overlook that now; it’s not size that matters, it’s performance.

MFA Inc (MFA) produced a press release today announcing that earnings would be released later on this week, on Thursday, February 16.

I added to my position on NuStar (NS) on Friday’s down day, which was good, but added too soon in the day to get the best price I could have gotten, which was not so good. Breaking my rule on only adding to a position if I can average down, I decided to add more on the small pull-back that NS was experiencing, to get to 100 shares, so I could sell an option against the shares. At any rate, now that I have accomplished getting to 100 shares, I’m now trying to sell a covered call. After reflecting on it, I decided to settle for an option sale price of $.75, which is less than the $1.00 I usually require, in exchange for a higher strike at $65, in lieu of the $60 I originally had in mind. To have a chance of getting filled, I chose the September 2012 option, leaving the order in place as a GTC, which again is not something I usually do. Sometimes you have to bend the rules a bit, and settle for less than the ideal, if you want to have a chance to make some money. I could easily see NS going back up into the high sixties over the next 6 to 12 months, so I determined that a $60 strike was just too low, I would rather make less on the option and not have to kick myself quite as hard if the stock suddenly shoots on up, where it has been before in the case of NS.

Time to call it a day.


1st Posting Monday, 02/13/2012 8:40 AM

Asian markets finished in the green, and European markets are trading likewise. The headline news is that the Greek parliament passed the necessary austerity measure amid continued rioting by the citizenry, clearing the way for receipt of the bailout funds that had been held up. U.S. futures are indicating a positive open is in store.

There are no economic releases scheduled for today. The only upgrade/downgrade so far was for Buckeye Partners L P (BPL), downgraded from Neutral to Sell by Citigroup, citing concerns over leverage and valuation. The price target was reduced from $66 to $58. For comparison purposes, note that BPL closed at $63.75 Friday. This rating sounds like they (Citigroup) really mean it. I concur that BPL is not a buy at the current price, with a maximum buy price of $50.00 reflected on my list.

Ex-dividend dates occurring this week on stocks I follow are shown below. Unless otherwise specified, dividends are quarterly.

Monday 2/13/2012

DuPont E I De Nemours (DD)

Excelon (EXC)

Fifth Street Finance (FSC) Note; FSC pays monthly.


Tuesday 2/14/2012

Black Hills Corp (BKH)

Boardwalk Pipeline Partners L P (BWP)


Wednesday 2/15/2012

Astrazeneca PLC ADR (AZN) Note; AZN pays semi-annually.

Chevron (CVX)

Unilever PLC ADR (UL)

Duke Energy (DUK)

Emerson Electric (EMR)

3M Co (MMM)

Royal Dutch Shell PLC ADR B (RDS.B)


Thursday 2/16/2012

Gladstone Investment Corp (GAIN) Note; GAIN pays monthly.


Friday 2/17/2012

ConocoPhillips (COP)


Earnings expected this week are as listed below. These dates are to be considered tentative, to be confirmed.


Monday 2/13/2012

MFA Financial (MFA)


Tuesday 2/14/2012



Wednesday 2/15/2012

National Health Invs Inc (NHI)

Avista Corp (AVA)

CenturyLink Inc (CTL)

Energy Transfer Equity L P (ETE)

Energy Transfer Partners L P (ETP)

Scana Corp (SCG)



Thursday 2/16/2012

DTE Energy (DTE)

Duke Energy (DUK)

Frontier Communications (FTR)

Otelco (OTT) Note; OTT is new to Tier3 this week.

Health Care Reit (HCN)

Senior Housing Properties Trust (SNH)

Waste Management (WM)

Molson Coors (TAP)

Nestle S A ADR (NSRGY)


Friday 2/17/2012

Campbell Soup (CPB)

Ventas Inc (VTR)

Heinz H J Co (HNZ)

Digital Realty Trust (DLR)


This is going to be a busy week, at least as far as earnings are concerned.

Time to hit the send button and get ready for the day.


Final Posting Friday, 02/10/2012 8:40 PM

I am a little late getting the end-of-day post out today; I had to go run some errands.

Stocks finished the week on a down note today, with all of the major averages closing in the red. The Greek situation has elevated into a stand-off between the Euro-Zone leaders demanding still more austerity and the Greek public and some politicians saying no, which unsettled the markets.

An additional upgrade/downgrade came out today on one of my stocks; ConocoPhillips (COP) was upgraded from Hold to Buy, with a price target of $90, by Deutsche Bank. The $60 put that I sold a few days ago looks like a winner at this point. I sold it at $2.50. Since it has until August to go, if I can buy it back for $1.00, I would accept that, for a three week option play yielding $150 (before commissions). So, I put in a GTC order to try and accomplish that result. If COP continues to climb, I should get filled when COP gets into the mid-70’s. Stay tuned.

Upon reviewing my filtered news feed on Seeking Alpha, I see that Total Petroleum (TOT), one of my foreign stocks, reported today. The sources I rely on for anticipated earnings dates do not give me any data for most foreign stocks, so I had not anticipated TOT reporting today. In addition to being on my lists, I own TOT. The news blurb says Q4 EPS of Euro 1.20 may not be comparable to consensus of Euro 1.22, but does not say why. Adjusted Q4 net profit was Euro 2.73B vs. consensus of Euro 2.56B. Production was down 1%. TOT declined $.88 today, closing at $53.65.

There are several interesting articles available from MarketWatch’s “The Trading Deck” today, such as “Macro Problems Not Going Away” by Thomas Kee, a fact which was evident today, and the latest diatribe from Minyanville, “How Bull Markets Become Bubbles”. 

I failed once again to get the information out on stocks on my lists going ex-dividend Monday 02/13/2012, in time for action to be taken to get the dividend. For the record, there are three:

Excelon (EXC)

DuPont (DD)

First Street Financial (FSC)  Note:this is a monthly dividend payer.

Also, although it is not on my lists anymore, Southern Copper (SCCO) also goes ex-dividend Monday.

That’s it, time to call it a week.


1st Posting Friday, 02/10/2012 9:10 AM

I have a new article out on Seeking Alpha on preferreds, a link to which is provided from the selection “SA Articles”. As always, some excellent comments have been posted to enlighten me further since I wrote the article. As I suspected, there is not a lot of interest in preferreds. It looks like this article is going to get less attention than any article of the eight I have written so far. Oh, well, creating the article was informative and therapeutic for me, so I can’t complain too much.

It looks as if a funny thing may be happening today on the way to stock market Nirvana, with Asian markets mostly down, European markets solidly in the red, and U.S. futures pointing towards a lower opening today. The hold-up appears to be Greece, with the Euro-Zone leaders wanting a bit more in the way of commitment from Greece’s leaders before releasing the next batch of bailout funds.

The only upgrade/downgrade so far today on any of my stocks was Realty Income (O), downgraded from OutPerform to Sector Perform by RBC Capital.

Earnings expected today on two of my stocks have already come out:

PPL Corp (PPL) beat estimates for Q4 EPS by $.08, coming in at $.70. Revenue Y/Y really beat estimates, up 126%, $1.18B over, coming in at $4.22B. What a shame that such a good report has to come out on what is shaping up to be a down day. Maybe PPL can buck the tide with these strong results.

Buckeye Partners LP (BPL) missed estimates for Q4 EPS by $.21, coming in at $.64. Revenue Y/Y, however, beat estimates by 30%, coming in at $1.31B. Shares are trading down in the pre-market action.

Time to hunker down and get ready for the market day.


Final Posting Thursday, 02/09/2012 5:55 PM

The U.S. averages finished mixed, with the DOW30 (INDU +6.5), the S&P 500 (SPX +1.99), and the NASDAQ (COMPX +11.37) up on the day, and the New York Composite (NYA -1.73) and the Russell 2000 (RUT -3.4) down. The weekly Unemployment Claims number continued to show steady if modest progress in the labor market, which set the stage for a positive day.

Earnings news continues to dominate the financial news scene, with Cisco (CSCO) reporting positive results on just about every metric that matters, and still ending up finishing the day down $.43 on trading volume of 131M shares. Go figure!

Earnings on my stocks were:

Pepsico Inc (PEP) beat estimates by $.03 on Q4 EPS of $1.15. Revenue beat estimates by $300M. PEP made the news earlier in the day in announcing plans to cut 8.7K employees by 2014, raise the dividend 4% to $.5375/quarter, and continue share buybacks of around $3B (that’s Billion, Pepsi fans) in 2012. Whatever, it wasn’t enough, apparently, as PEP lost $2.47 on the day, closing at $64.27. Another “go figure” situation. PEP has been in a turn-around mode for a while now, and investors are apparently disappointed at the slow pace.

Realty Income Corp (O) beat estimates, and reported that the key REIT metric, Funds From Operations (FFO), for Q4 was $.52/share, in-line with expectations. O closed at $37.15, down $.22.

Phillip Morris (PM) beat estimates on both EPS and revenue, and finished up $2.18 on the day, closing at $80.06. Betting on companies with unhealthy products remains one of the healthiest moves you can make as far as your portfolio is concerned, it seems.

Prospect Capital Corp (PSEC) announced that net income for Q4 was $.59/share above the same metric for the prior sequential quarter, and net asset value increased by $.28/share., with a year-end value of $10.69. This is a key metric for a Business Development Company (BDC) like PSEC. The shares rose $.08 on the day to close at $10.68. Pinch me, I must be dreaming, the market makes sense on this one, for one day at least.

Companies on my lists expected to report tomorrow are:

Buckeye Partners LP (BPL)

PPL Corp (PPL)

That’s all, folks. (Remember Porky Pig, of Looney Tunes, always saying that at the end of the cartoon at the movies? Does anyone even remember cartoons at the movies? So sad to see our culture deteriorate.)


1st Posting Thursday, 02/09/2012 9:10 AM

Asian markets finished flat to slightly down, except for the Sensex from India, which finished up .70%, +123. Surprisingly, even though the wrangling continues over the next phase of the Greek bailout, European markets are trading mostly in the green. U.S. Futures are indicating a modestly negative start to the trading day here, although the release of the weekly unemployment claims numbers at 8:30 AM may change that reading.

Only one upgrade/downgrade to report on my stocks so far today, with 3M (MMM) downgraded from Buy to Hold by Deutsche Bank.

Earnings that came out yesterday after the close were:

Plains All American Pipeline LP (PAA) – Q4 EPS of $1.65 beat estimates by $.04, revenue of $8.8B (+23% Y/Y) missed by $320M. Those analysts sure set a high bar for PAA to leap over!

Cincinnati Financial (CINF) – Q4 EPS of $.83 beat estimates by $.27.

Diageo (DEO) – A tax write-down hurt net profit, but sales were up 8%.

Pennantpark Investment Corp (PNNT) – Q4 net investment income increased 6.5% over the comparable prior year quarter. The quarter-ending net asset value per share was reported to be $10.19.

Fifth Street Financial (FSC) – Q4 net investment income was up 11% over Q4 2010, while net asset value declined a little over 1%. The fair value of the portfolio at year-end 2011 was determined to be $1.1B, essentially unchanged from the prior quarter. The first six months of monthly dividends were declared, at a constant rate of $.0958.

All in all, decent reports, no disasters at least.

Earnings reports expected today are:

Pepsico Inc (PEP)

Realty Income Corp (O)

Phillip Morris (PM)

Prospect Capital Corp (PSEC)

The unemployment numbers are out, slightly better than expected, so the futures have turned modestly positive. Time to send and get ready for the trading day.


Final Posting Wednesday, 02/08/2012 4:15 PM

The market logged a somewhat lackluster session today, with the major averages all eking out small gains.

A couple of additional upgrades/downgrades came out today on my stocks:

Magellan Midstream Partners LP (MMP) was upgraded from Neutral to OutPerform by Raymond James.

Consolidated Communications (CNSL) was upgraded from UnderPerform to Neutral by DA Davidson.

Annaly (NLY) received a second downgrade today, going from Buy to Hold at Stifel Nicolaus.

A stock that is not on my lists but that I have considered for Tier3, Otelco (OTT), was upgraded from OutPerform to Strong Buy by Raymond James. OTT is a rural telecom yielding 12.88% as I write, up over a dollar today, probably due to this upgrade. I don’t usually allow myself to be influenced by upgrades/downgrades other than Sells, but Strong Buy is, well, a strong recommendation. Stay tuned on this one.

Another Tier3 stock, PDL Biopharma (PDLI), is a drop candidate from Tier3. PDLI announced an entire year’s worth of dividends a couple of weeks ago, all at the current rate, possibly to forestall concerns of a dividend cut this year. At this time PDLI is still on the list, but under review. I may wait until after the next quarterly earnings to make a decision.

The only earnings results I have so far today on my stocks is Statoil (STO), already commented on in the AM posting. Others due to report after the close are:

Plains All American Pipeline LP (PAA) – Awaiting results.

Cincinnati Financial (CINF) – Awaiting results.

Pennantpark Investment Corp (PNNT) – Results just announced, I will digest and report on in the AM.

Fifth Street Financial (FSC) – Awaiting results.

I need to wrap it up early today, I have to go run a couple of errands. I’ll investigate these four tonight and report back on what I can find out in the Thursday AM posting.


1st Posting Wednesday, 02/08/2012 7:55 AM

Asian and European markets are universally positive this morning, as are U.S. futures, although only modestly so. Economic releases scheduled for today are minimal, the essentially useless MBA Mortgage Index from the Mortgage Bankers Association and the Department of Energy’s weekly oil inventories report.

Upgrades/downgrades on stocks I track were:

Annaly Capital Mgt (NLY) – Downgraded from OutPerform to MarketPerform by FBR Capital, citing disappointing Q4 results and the negative impact on NLY from a flattening yield curve. The price target was lowered from $17.50 to $16.00. No surprise here, considering NLY’s earnings release less than 24 hours ago. I expect to see more downgrades after the webcast today to review these results.

American Capital Agency (AGNC) – Downgraded from Buy to Neutral by Sterne Agee, citing valuation.

Both of these MREITs (Mortgage Real Estate Investment Trusts) are encountering deteriorating conditions compared to the ideal conditions of recent years. As an aside, note that AGNC just yesterday declared their next dividend, which will be $1.25 per share, with an ex-dividend date of 03/05/2012. Dividends on MREITs are variable, but this dividend computes to an annualized yield of 16.8% based on AGNC’s closing price of $29.74 yesterday. Contrast that with Money Market rates available today!

J M Smuckers (SJM) – Initiated at Buy by KeyBanc Capital Markets. 

A worthwhile read for dividend investors popped up on my radar this morning, “Finding a Hidden Dividend Play”, by Bill DeShurko, available on MarketWatch’s “The Trading Deck” section. 

Earnings expected today are:

Statoil ADR (STO) – Results already out, which were outstanding, with net operating income 42% above the year-ago quarter. I own STO, which pays an annual dividend in the May-June time frame, in Norwegian Krones. Last year’s dividend equated to $1.15. With the current exchange rate from the Norwegian Krone (NOK) to the U.S. Dollar (USD) being 1.00 NOK equal to .173890 USD, I’m expecting this year’s dividend to be even more.

Plains All American Pipeline LP (PAA)

Cincinnati Financial (CINF)

Pennantpark Investment Corp (PNNT)

Fifth Street Financial (FSC)

I will post early today, as I’m up earlier than usual.


Final Posting Tuesday, 02/07/2012 6:00 PM

Stocks started off on a down note, but that did not last long, as the averages reversed course around 10:00 AM, climbed to a new range by 11:30 AM, and pretty much stayed there the rest of the day, closing modestly higher. The only economic release of the day was Consumer Credit at 3:00 PM, which came in at $19.3 B vs. -4.5 B to +15 B expected. It doesn’t look to me like the consumer is de-leveraging much.

A couple of additional upgrades/downgrades came out today on my stocks:

Magellan Midstream Partners LP (MMP) was upgraded from MarketPerform to OutPerform by Morgan Keenan.

J M Smucker (SJM) was initiated at Buy by KeyBanc.

Earnings results for the day on my stocks were:

Atmos Energy (ATO) – Results were generally below the comparable quarter a year ago. A web cast conference call to discuss results is set for 8:00 AM tomorrow. ATO was up $.27 today, closing at $32.87. 

Magellan Midstream Partners LP (MMP) – Beat analysts estimates, up $.24 today, closing at $68.45.

Coca Cola (KO) – Beat, rising $.52 on the day, closing at $68.55.

Emerson Electric (EMR) – Missed, declining $1.45 on the day, closing at $51.92.

Universal Corp (UVV) – Reported improved results over the comparable prior quarter. EPS was up 13%. UVV dropped $.59 on the day, closing at $46.29. (Remember – the first mistake you will make in dealing with the market is believing it should make sense!)

Annaly Capital (NLY) – Reported a significant drop in GAAP net income for the quarter compared to the corresponding quarter of 2010. Numerous reported data items point towards a deteriorating economic environment for NLY. The key metric for this Mortgage REIT (and all MREITs), the average Interest Rate Spread, declined to 1.71% from 2.08% at the end of the prior quarter. Reflecting management’s movement towards a more conservative posture as conditions deteriorate, the leverage ratio continued to decline from prior periods, and is now standing at 5.4 to 1. NLY closed today at $17.12. Surprisingly, since the results were released, it is only down $.04 in after-hours trade. A further reduction in the dividend is likely before the next scheduled payout in the March-April time frame.

That’s about all the excitement I can stand for now, time to take a break.


1st Posting Tuesday, 02/07/2012 9:00 AM

Asian and European markets, closed and midway, respectively, are firmly if not hugely in the red. U.S. futures indicate the same outlook for today’s markets here.  

An interesting read is available this morning on MarketWatch’s “Trading Deck”, entitled “There are 3 Stages In a Typical Bull Market” by trader Ivan Hoff”, brought to MarketWatch by Mick Weinstein. An interesting article on General Electric (GE) is posted on the front page of Seeking Alpha (SA), entitled “General Electric Is Diversified, Undervalued, and At A Turning Point“, from contributor David Zanoni. The tone is implicit in the title, which I basically agree with. I have neglected my authoring for the past two weeks in favor of upgrading my web site. I’m pleased to report that task is complete, and I will get back to more serious work soon. (Playing with computers is fun, although frustrating at times. If you have any questions on how to set up an RSS feed, just ask me.)

Another article of interest on SA is “4 Utilities Preferred Stocks To Consider Now”, by contributor ValueMax. Preferreds might be a good place to invest right now, with most dividend-paying common stocks having been bid up to over-valued levels. I usually require a 7% yield to entertain a preferred, since there is little prospect of capital appreciation. But in today’s situation, investing in common stocks means there is a significant risk of capital depreciation, so I would be willing to compromise a bit. Of the four preferreds the article touts, I find the Nextra Energy (NEE) 6.60% Series A Enhanced Debentures to be the most attractive. NEE is on my Tier1 list. Note that the yield actually received on a preferred depends on what you pay for it (as with any stock), and can vary significantly from the yield indicated in the description or name of the issue.  

The lone economic release scheduled for today is Consumer Credit, due out from the Federal Reserve at 3:00 PM. (I don’t consider retail sales updates from Redbook and ICSC (whoever that is) to be significant economic releases.)

Upgrades/downgrades this AM affected two of my stocks:

HCP Inc (HCP) was upgraded from Hold to Buy by Stifel Nicolaus. This specialized Health Care Facility REIT just announced a dividend increase on January 26.

Senior Housing Property Trust (SNH) was downgraded from Buy to Hold by Stifel Nicolaus, citing valuation, with a $23.00 price target. I happen to own this stock. The “valuation” argument would be more comforting if SNH had just had a big run-up, but since it has been stuck in the $21 to $23 range for months, I don’t see that a case can be made for a downgrade based solely on “valuation”. SNH closed Monday at $23.05.   

Time to close this log and get ready for the day.


Additional Final Posting Monday, 02/06/2012 9:45 PM

I am doing some fine-tuning of my RSS feed and I need to put out another post to see if I have gotten it figured out. Bear with me on this, hopefully I'm close to finishing all web technical work and can focus on stocks.


Final Posting Monday, 02/06/2012 5:45 PM

All major averages posted modest declines on what was a lackluster day, with below average trading volumes. Volatility was also low, with no TICK readings above +1000 or below -1000. Perhaps it was a case of “Super Bowl letdown”.

Companies that were expected to report today, with results and consequences, are:

Universal Corp (UVV) – Earnings now set to be released 02/07/2012 after market close.

Mercury General (MCY) – Missed, Down $1.66, Closed at $43.35

Boardwalk Pipeline Partners LP (BWP) – Missed, Up $.01, Closed at $27.56

Unilever PLC ADR (UL) – It seems UL reported on 02/02/2012. Sales growth reported for both the full year and Q4. Full year “core” EPS up 4%. UL has dropped by about $1.50 since early January. Today UL was Down $.17, Closing at $32.06. Interestingly, the E*Trade “snapshot” view, my source for earnings date, still shows 02/06/2012 for UL.   

American Capital Agency Corp (AGNC) – EPS Q4 $.99, Consensus $1.15,  Down $..22, Closed at $29.48

Sysco Corp (SYY) – Beat, Down $1.13, Closed at $29.27

A couple of additional upgrades/downgrades (and coverage initiations) that came out during the day on my stocks were:

Intel (INTC) Initiated at Buy by Maxim

Digital Realty Trust (DLR - Initiated at Sell by Cantor. (Don’t ask me why coverage would be initiated on a stock at Sell – I cannot recall ever having seen that before.)

Triangle Capital (TCAP) – Downgraded from Buy to Neutral by Davenport.

One final note on Southern Copper (SCCO) – The shares were downgraded from Hold to Sell on January 26 by Dahlman Rose. On January 27, SCCO announced the upcoming dividend would be paid in stock (.0107 shares per share owned) and cash ($.19). Either Dahlman Rose knew this was coming, or the timing was very good. Here is what I reported on the day of the downgrade, 01/26/2012:

“Southern Copper (SCCO) was downgraded from Hold to Sell by Dahlman Rose, citing concerns over political stability in Peru. This stock is in my high-risk Tier3 group. Adhering to my maximum buy price will compensate for the high risk. In addition to political risk, the stock is captive to world copper prices, which in turn are affected by world economic activity levels.”

This did not warrant dropping SCCO at that time – heck, there are always “concerns over political stability in Peru”. But the cash/stock dividend vs. cash only pushes SCCO over the edge for me. Bye Bye SCCO.


1st Posting Monday, 02/06/2012 8:55 AM

It is hard to get back into the routine after a pretty exciting Super Bowl, not to mention Friday’s favorable employment report and ensuing rally. But, life (and the market) goes on.

Asian markets closed up except for the Hang Seng, which finished in the red by .23%. European markets are trading in the red over renewed concerns regarding Greece. U.S. futures are indicating a down day, at least at the start of it.

No economic releases are scheduled for today. Upgrades/Downgrades on stocks on my lists are:

Royal Dutch Shell (RDS.A & B) – Downgraded from Outperform to Neutral by Credit Suisse.

That’s it for upgrades/downgrades today, so far at least. I guess all of those analysts must have watched the Super Bowl instead of analyzing stocks this weekend.

I conducted a review of all of my stocks this weekend (before the Super Bowl took away my attention), to confirm my posting from Friday regarding ex-dividend dates and earnings reports expected this week, to try for better accuracy than last week. I guess I will reserve this compilation for the weekend in the future, so as to avoid mistakes from being too rushed. I will, however, in Friday’s Initial posting, note any stocks going ex-dividend on the next market day (usually Monday), so there will be time to act if anyone wants to buy in time to get the dividend. Also note, I only report on stocks on my Tier1 (strongest), Tier2 (Good, but not as strong), and Tier3 (speculative high yield) lists.

To re-iterate from Friday’s posting, stocks going ex-dividend this week are:

American Electric Power (AEP) - 02/08/2012

Boeing (BA) - 02/08/2012

J M Smuckers (SJM) - 02/08/2012

Exxon Mobil (XOM) - 02/08/2012

Amerigas Partners LP (APU) - 02/08/2012

Olin Corp (OLN) - 02/08/2012

Spectra Energy (SE) - 02/08/2012

 Stocks reporting this week are tentatively listed below. Five additions to this list since Friday are AGNC, PEP, PM, PPL, and SYY. These dates are from the E*Trade “snapshot” view, and may be revised as the week goes on..

 Universal Corp (UVV) - 02/06/2012

Mercury General (MCY) - 02/06/2012

Boardwalk Pipeline Partners LP (BWP) - 02/06/2012

Unilever PLC ADR (UL) - 02/06/2012

Amarican Capital Agency Corp (AGNC) – 02/06/2012

Sysco Corp (SYY) – 02/06/2012

Atmos Energy (ATO) - 02/07/2012

Magellan Midstream Partners LP (MMP) - 02/07/2012

Coca Cola (KO) - 02/07/2012

Emerson Electric (EMR) - 02/07/2012

Plains All American Pipeline LP (PAA) - 02/08/2012

Cincinnati Financial (CINF) - 02/08/2012

Pennantpark Investment Corp (PNNT) - 02/08/2012

Fifth Street Financial (FSC) - 02/08/2012

Pepsico Inc (PEP) – 02/09/2012

Realty Income Corp (O) - 02/09/2012

Phillip Morris (PM) – 02/09/2012

Prospect Capital Corp (PSEC) - 02/09/2012

Buckeye Partners LP (BPL) - 02/10/2012

American Capital Agency Corp - 02/10/2012

PPL Corp (PPL) – 02/10/2012

I have updated all of my stock watch lists (Tier1, 2, and 3) with prices as of Friday’s close, current dividends, and yields. Also updated are the price lows and highs since 1/1/2008, and the second set of lows and highs since 1/1/2011. Some stocks have set new 1 year and 4 year highs since these prices were last updated. The only additions/deletions are the addition of one stock to my Tier2 list, National Health Invs (NHI), a REIT yielding 5%, and the deletion of one stock, Southern Copper (SCCO), from my Tier3 list. SCCO has retreated to a combination of cash and stock for the next dividend cycle, which is upcoming with an ex-dividend date of 02/13/2012. Based on the current price of $35.23 and a cash dividend of $.19, the yield on the cash component is only 2.15%. This is an unfavorable development for SCCO shareholders, and does not justify the risks SCCO presents.    

I am aware that my “maximum buy” and “ideal buy” prices are more wishful thinking than reality in most cases today, considering the rally that has ensued since these prices were set in October 2011. I was expecting a January decline instead of a killer rally, as the holiday cheer melted away and the geopolitical realities came back into focus. However, the market tricked me and quite a few others, which is what the market does most of the time. As I have said in earlier postings, my game plan is to hold to these prices until after the 1st Quarter of 2012, and if no decline has occurred, then increase some of the prices to reflect reality, at least on top quality stocks. For some stocks, only a bargain price justifies an investment. As far as my advice to anyone wanting to buy now, I would recommend only buying a starting position of 25% to 33% (i.e. one-fourth to one-third) of the shares desired to be owned (eventually), and only near the stock’s ex-dividend date. That way, you get some payback sooner rather than later, plus you leave plenty of room to average down if the long-predicted decline ever comes. (Of course, you must also hold some cash in reserve to be able to act when the opportunity arrives.)

Time to close this rather-lengthy posting and get ready for the market day.


1st Posting Sunday, 02/05/2012 11:55 AM

Just browsing some of my favorite web sites, while waiting for the Super Bowl, I came across a couple of articles on Seeking Alpha relating to options. After reading them, I began to reflect on my own experiences and results with options, and where I am today on options. To define the subject, I am talking about options on stocks, primarily, although options on stock indices are also relevant to the conversation. First, let me say that I am fascinated by options. When I first began trading/investing full-time after retirement, I investigated options extensively, reading book after book. As I learned more, I began cautiously experimenting with various strategies. What I learned was that there is no guaranteed options trade. Just as with any trade or investment, an options trade is a wager on the future. The unique thing about options is that you can make a bet that will prosper if the underlying stock or index (simply referred to as the “underlying”, in options talk) goes up, you can make a bet that will prosper if the underlying stock or index goes down, and you can even make a bet that will prosper if the underlying stock or index goes nowhere. Further, using various spread and spread combination strategies, you can define with some precision how much risk (of loss) you want to take, and weigh that against the potential gain. Going into the topic even deeper, you can review the option “greeks” of a particular option, the historical volatility of the underlying, and calculate a theoretical option price using various values of anticipated future volatility (implied volatility, in options talk). Then, you can compare the calculated price to the available option price quotes, to determine if an option quoted is a “good deal” or not. To do all of these things, you must enter the world of option spreads, straddles, strangles, butterfly spreads, condor spreads, iron condor spreads, calendar spreads, volatility spreads, collars, option greeks (delta, gamma, vega, theta, and rho), Black-Scholes option pricing model calculator, or other options calculators, and much more that I have not mentioned. To wrap this all up, I will simply say that I learned a lot, but my results were modest for the effort expended. Like much in life, to be successful trading options requires an intense focus. I found that it would be very difficult to give my options trading the required attention without neglecting what I wanted to be my primary focus, locating and evaluating dividend-paying stocks, to be acquired as long-term investments.

That takes me to where I am today with options. I do not usually consider taking a position on a stock solely on the basis of options availability, with the intent of entering a stock position and an options position simultaneously, or in close proximity time-wise. I also usually do not enter an option-only position, either a simple call or put, or some type of spread. I primarily use options as an auxiliary, add-on strategy to “juice” returns. I only sell options, so time decay is always on my side. To limit risk, I only enter “covered” call sales, or put sales “covered” by cash. Note that I do not consider a put sale as a contradiction to the statement above that I do not enter option-only positions. I view a put sale as a conditional buy order, just as I consider a call sale as a conditional sell order. Now I will explain when (under my approach) these option positions should be considered. A call sale is viable if the market over-all has been rising and seems to be up to at least an interim high, I have a stock that has enjoyed a nice run-up, and I can sell an option at a strike that is above the current price that would be an attractive selling price, yielding a gain I would be happy to take. Further, the option sale price is at least $1.00 or more. Conversely, a put sale is viable if the market over-all has been declining and seems to be down to at least an interim low, there is a stock I would like to own that has come down along with the market, but is still not as low as I would prefer to buy it at. If a put can be sold that has a strike low enough that I would be a buyer at that price, and the option price is reasonable - $2.00 to $3.00 – I will consider a put sale. I require a little more here than in the case of a call sale, since this strategy ties up capital, and is perceived (by me, at least) to be higher risk.

Now, a further word of caution. Don’t get carried away, with calls sold against nearly all stock positions. The covered call selling strategy should be selective, only on stocks that one is willing to sell. Keep in mind that the call sale proceeds received is not a lot of money – if the stock shoots up beyond all expectation, you will end up sacrificing a significant gain in exchange for what will seem like a paltry sum that was received from the option sale. The put selling strategy should be used even more selectively. Even though you maintain cash balances adequate to meet all put assignments, if an unexpected (is there any other kind?) market decline occurs, maybe even a crash, you can end up with all of your cash being used up to buy the stocks that you had sold puts on. Further, the prices paid, which were once thought to be somewhat attractive, might be well above the market at the time of assignment, which is definitely not attractive when buying stock. Further, if most of your cash is expended honoring these put contracts, you will not have funds available to take advantage of the many buy opportunities that will suddenly be appearing as the decline gathers steam.

That sums up my options philosophy that I have incorporated into my overall approach.


Final Posting Friday, 02/03/2012 6:45 PM

The rally got back on track today, with all of the major averages finishing strongly positive, on the strength of a better-than-expected jobs report. Market volatility was again at low extremes, with no TICK readings above +1000 or below -1000, and the VIX slipping even further to close just barely above 17 (17.10). In fact, the $tick only had 1 reading below 500, which is extremely rare. Stocks shot up at the open and stayed there all day. This is the type of market where everyone is an investing genius, as long as they are not shorting stocks or buying puts. How long it can last, no one knows. Even though I’m at 30% cash vs. 70% stocks, a somewhat high cash level for me, I still can enjoy seeing my “mark-to-market” balances soaring higher and higher on the strength of my 70% allocation to stocks – but I know full well that these balances can (and likely will) go back down somewhat when the storm clouds gather once again. Still, I do react to reality, being very reluctant to sell out of positions where I have nice gains. In in a more cash-starved situation, you would see me taking profits. I also am more cautious about selling calls at too low of a strike, although I am continuously looking for call selling opportunities, since this is the right environment for it – selling calls is an alternative to selling stock, so as to not waste the opportunity the rally is providing.

Clorox did report, beating analyst estimates by $.13, and CLX gained on the day by $1.13, closing at $69.86.

In performing my review of ex-dividend dates coming up next week (on my stocks), I see that I missed a couple last Friday that occurred this week. Sorry about that, I will try to do better going forward. For the record, I missed:

Pfizer (PFE) – 02/01/2012

Penn Virginia Resources LP (PVR) – 02/02/2012

Eaton Corp (ETN) - 02/02/2012

HCP Inc (HCP) - 02/02/2012

Breitburn Energy Partners LP (BBEP) - 02/02/2012

Health Care Reit (HCN) - 02/03/2012

Energy Transfer Equity LP (ETE) - 02/03/2012

Energy Transfer Partners LP (ETP) - 02/03/2012

NuStar Energy LP (NS) - 02/03/2012


Stocks going ex-dividend next week are:


American Electric Power (AEP) - 02/08/2012

Boeing (BA) - 02/08/2012

J M Smuckers (SJM) - 02/08/2012

Exxon Mobil (XOM) - 02/08/2012

Amerigas Partners LP (APU) - 02/08/2012

Olin Corp (OLN) - 02/08/2012

Spectra Energy (SE) - 02/08/2012

I will take another pass through over the weekend to try to catch any I missed this time. Some stocks announce weeks ahead, while others wait until the last minute, as if it’s a secret they don’t want to share. A weekly pass through is not often enough, it seems.

Earnings will be coming out for quite a few of my stocks again next week. Tentative reporting dates are:

Universal Corp (UVV) - 02/06/2012

Mercury General (MCY) - 02/06/2012

Boardwalk Pipeline Partners LP (BWP) - 02/06/2012

Unilever PLC ADR (UL) - 02/06/2012

Atmos Energy (ATO) - 02/07/2012

Magellan Midstream Partners LP (MMP) - 02/07/2012

Coca Cola (KO) - 02/07/2012

Emerson Electric (EMR) - 02/07/2012

Plains All American Pipeline LP (PAA) - 02/08/2012

Cincinnati Financial (CINF) - 02/08/2012

Pennantpark Investment Corp (PNNT) - 02/08/2012

Fifth Street Financial (FSC) - 02/08/2012

Realty Income Corp (O) - 02/09/2012

Prospect Capital Corp (PSEC) - 02/09/2012

Buckeye Partners LP (BPL) - 02/10/2012

American Capital Agency Corp - 02/10/2012

That’s it for now.

Giants, Patriots – I don’t care who wins, as long as the chili is hot and the beer is cold. (I make chili annually on Super Bowl Sunday).



1st Posting Friday, 02/03/2012 9:00 AM

Welcome to the 1st Friday of the month (of February 2012). It is on the 1st Friday of each month that the most important economic release occurs, the monthly U.S. Department of Labor’s Employment Situation report. Key components with expected vs. actuals as released this morning will be posted below as the report comes out.

While waiting, note that Asian markets closed mostly in positive territory, except for the Nikkei (Japan), which closed down .42%. European markets are mostly trading positively also, except for the FTSE 100 (Britain), which is down slightly. U.S. futures are meaningless at this point – what matters is the Payroll release and the futures post-release.

Four upgrades/downgrades to report this AM:

Hercules Tech (HTGC) – Upgraded from Hold to Buy by Stiefel Nicolaus, new price target $11.50.

Merck (MRK) – Downgraded from Buy to Neutral by Davenport, new price target $40.00.

Unilever (UN) - Downgraded from Buy to Hold by Societe Generale.

El Paso (EP) – Downgraded from Buy to Hold by Citigroup.

El Paso is actually not on any of my lists. As my former employer, I keep up with it out of interest, not as a stock to buy or sell. My first article on Seeking Alpha (link available from the SA Articles selection on this website), entitled “EP Delivers Option Trading Lesson”, explains my most recent investing experience with EP, which will be my last regarding this stock.

Clorox (CLX) has an earnings webcast set for 10:30 AM today, per their website. Black Hills (BKH) reported encouraging results, with EPS (unadjusted) up 6% for 2011 over 2010, and 4th quarter 2011 results up 51% over the corresponding 4th quarter of 2010.

Annaly (NLY) has nothing that I can find on their website regarding when earnings will be released. Both the E*Trade “snapshot” and Yahoo Financial now show the next earnings release date as 02/21/2012, which is new – yesterday they had it as 02/02/12, after market close. So I guess it will be awhile yet before we get the results for this largest Mortgage REIT.  

 Well, the Payroll results are out:

 Unemployment Rate – Expected 8.5%, Actual 8.3%

NonFarm Payrolls – Expected 155K, Actual 243K

NonFarm Private Payrolls (excludes government employees) – Expected 168K,

Actual 257K

Hourly Earnings – Expected +0.2%, Actual +0.2%

Average Work Week – Expected 34.4 hours, Actual 34.5 hours

The U.S. futures responded in a big way, indicating a significant uptick will occur when the market opens (S&P vs. fair value: +14.20, NASDAQ vs. fair value: +26.00).

Time to buckle in & get ready to rock!


Final Posting Thursday, 02/02/2012 6:30 PM

The market averages finished in the green (barely), except for the Dow30, which finished (again, barely) in the red. The market was said by some pundits to be spooked a bit by Bernanke’s testimony before Congress today, where he chided the lawmakers about the deficit and the lack of progress on dealing with it. The market volatility was at extreme lows, with no TICK readings above +1000 or below -1000, and the VIX slipping to close below 18.

A couple of additional upgrades/downgrades came out during the day on my stocks:

First Energy (FE) - Upgraded from Neutral to Buy by UBS.

Johnson & Johnson (JNJ) – Downgraded from OutPerform to MarketPerform by First Global.

Earnings results and consequences for stocks on my lists that reported today were:

Astrazeneca PLC (AZN) – Beat, Down $1.37, Closed $47.21

Merck (MRK) – Beat, Down $.19, Closed $38.44

Spectra Energy (SE) – Missed, Down $.64, Closed $30.87

Xcel Energy (XEL) – Missed, Down $.35, Closed $26.35

Kellogg (K) – Beat, Up $1.28, Closed $50.59

Still waiting on announcements from Annaly (NLY) and  Black Hills (BKH).

A very well-crafted and informative article on Seeking Alpha’s front page today is “Dividend Growth Investing Goes Mainstream”, by author David Crosetti. (Link Provided)

I noticed that FE had jumped up by $1.75 early, and I took advantage to sell a call against my 100 shares I had purchased in January at $43 via a put assignment. Followers of this blog will note that I wrote at length about the strategy I was trying out on FE; sell an at the money put, with the objective of being assigned, then wait for a bounce and sell a call against the shares, and collect a dividend right away. FE goes ex-dividend tomorrow. At this point, I’m reminded of the oft-repeated quote by the character played by George Peppard in the old TV series “The ‘A’ Team”, which was “I love it when a plan comes together”!   

I’ll close on that high note.


1st Posting Thursday, 02/02/2012 8:45 AM

Asian markets all finished higher, while European markets are mostly trading modestly down. U.S. futures are flat to slightly under “fair value”.  It’s time for another “pop quiz”. What is meant by the comment I just made regarding futures? The definition from Investopedia states:

The "fair value" quoted on TV refers to the relationship between the futures contract on a market index and the actual value of the index. If the futures are above fair value then traders are betting the market index will go higher, the opposite is true if futures are below fair value.


Moving on to upgrades/downgrades, there are two this AM on my stocks:

Northrop Grumman (NOC) – Downgraded from Neutral to UnderPerform by BofA/Merrill, new price target $56.00.

Centurylink (CTL) – Downgraded from Buy to Neutral by Goldman, new price target $38.00.

Several earnings reports expected today have already come out:

Astrazeneca PLC (AZN) – Beat

Merck (MRK) – Beat

Spectra Energy (SE) – Missed

Xcel Energy (XEL) – Missed

Kellogg (K) - Beat

Still expected today are earnings from Annaly (NLY) and Black Hills (BKH).

Economic releases on tap are the weekly Initial Claims for unemployment (for the week ending January 28) and the quarterly report (for Q4) on Labor Productivity and Unit Labor Costs, both coming from the U. S. Department of Labor. As I’m writing, these reports have come out, with the weekly Initial Claims coming in at 367K vs. 375K expected, and the Productivity / Unit Labor Costs coming in at 0.7% / 1.2% vs. 0.7% / 0.7% expected. These numbers are in line, with minimal impact on the futures following their release.

It should be a quiet day, unless something breaks, news-wise.


Final Posting Wednesday, 02/01/2012 6:35 PM 

The rally continued today, aided by some modestly encouraging economic numbers and the lack of anything newsworthy coming out of the Eurozone. The CNBC chatter was mostly about the Facebook IPO, which added to the bullish tone. It seems that Keynes’ “animal spirits” have been unleashed upon the markets. The famous British economist John Maynard Keynes coined the term to describe the way that humans’ economic decisions are frequently based on emotion and misguided intuition, and are often irrational. A fairly recent book of the same name by authors Akerlof and Shiller expanded upon the topic. It’s why bull markets go beyond any rational evaluation of worth based on fundamentals, and why bear markets do the same thing, only in the opposite direction.   

Earnings results (on my stocks) and reactions were:

Northrop Grumman (NOC) – Beat, Up $1.20, Closed at $59.25

Enterprise Products Partners L P (EPD) – Beat, Up $1.81, Closed $50.11

Medical Properties Trust (MPW) – Missed, Down $.58, Closed $10.14

Gladstone Investment Corp (GAIN) – This BDC is followed by few, if any, analysts. Results were generally positive, with NAV increasing from $9.00/share to $9.58/share. The stock gained $.15 today, closing at $8.29.

AstraZeneca (AZN) will report tomorrow before the open, as will Merck (MRK), Excel Energy (XEL), and Spectra (SE). Two others that are supposed to report tomorrow, per E*Trade’s “snapshot” view, are Kellogg (K) and Black Hills Corp (BKH).  Annaly (NLY) is set to report tomorrow after the close, per Seeking Alpha. .

Time to call it a day.


1st Posting Wednesday, 02/01/2012 9:15 AM

Asian markets were mixed, with Chinese markets finishing in the red, while Japan and India finished in the green. European markets, in contrast, are trading solidly in the green, presumably on the strength of the new financial agreement touted yesterday. U.S. futures indicate a strongly positive open. Major economic releases scheduled for today are, at 8:15 AM, the ADP Employment Report, a precursor to the all-important monthly Unemployment Report coming Friday, and two other monthly items; at 10:00 AM,  the ISM Manufacturing Index and the U.S. Census Bureau report of Construction Spending.

The ADP number just came in at 170K, a bit of a disappointment, as 200K had been expected.

The only upgrade/downgrade so far of stocks on my lists is Exxon Mobil (XOM), downgraded from Buy to Hold by Argus. One interesting tidbit on XOM  is noted short seller Jim Chanos is rumored to be shorting XOM, as he believes all the oil majors are effectively self-liquidating, as they spend more and more money to find less and less oil, while reserves continue to shrink. An interesting hypothesis -  but don’t forget he was very early in recognizing that the numbers at Enron didn’t add up, possibly his most successful short, or at least his most successfully publicized short.

Earnings expected today for my stocks are:

Northrop Grumman (NOC)

Enterprise Products Partners L P (EPD) - Beat Analysts’ estimates

Gladstone Investment Corp (GAIN)

Medical Properties Trust (MPW) - Missed

Time to get ready for action.