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phi1618
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Re: Stock Update for March 5, 2008 - NLY, JNY [Re: geokills] 1
#8111072 - 03/06/08 01:41 PM (15 years, 10 months ago) |
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Big problem for a lot of companies right now (look at TMA!) is that they have short term liabilities and long term assets. The assets are selling at depressed prices, which leads to margin calls - and BOOM!, a company (hedge fund, whatever) is gone, bankrupt - whoever buys the assets eventually makes a killing.
This is the exact same thing that killed LTCM 10 years ago - the assets were valuable, but they couldn't meet their short term obligations because of market chaos. Buffet bought some of their assets with cash at seriously depressed prices, and guess what? When the market chaos subsided, the prices recovered and he made a ton of money.
I haven't looked too closely at the financials of NLY or CMO (very similar company) yet. If they're highly leveraged and subject to margin calls, there's a not-insignificant risk of either one going to 0 in the next year (I doubt agency debt is really as safe as the market thinks right now). In other words - unless you do your homework, don't buy back in at a lower price.
I'm also looking carefully at AYR, the airline lease company I recommended above - the price is falling. and the controlling company (FIG) might be in serious trouble. Also, they have some (not a huge amount) of short term debt against all long-term assets, so I need to decide whether to sell and take my (pretty small) losses or hold on for the ride.
Another speculative company I own shares in now is PRS - Primus Guarantee. The main business of this company is in selling credit default swaps on investment grade companies. They have taken some losses on swaps related to residential mortgages, but have very limited exposure left - most of their questionable exposure is to financial companies - if too many of these go bankrupt, it will kill PRS as well. However, if you believe that the current pricing in the debt markets is currently irrational, this is a risky stock worth considering.
The reason is simple - although it's highly leveraged, it's not subject to margin calls. No matter how expensive its liabilities become on the open market and how huge its GAAP losses become (currently, the GAAP book value is around 0, but the company claims its economic book value is around $9/share not counting unearned premiums), PRS won't get called. In addition, they can continue to assume corporate default risk at today's attractive rates. At the end of the day, I consider it likely that TMAs assets will be vastly more valuable than it's liabilities - but since it's liabilities are short term and can be called, the banks will get it's "valuable" assets at vastly deflated prices and the stockholders of TMA will very likely get nothing. This cannot happen to PRS, because there is no time mismatch between their liabilities and assets - if they go belly up, it will be because their assets really are bad, and not because of the current flight to safety.
I am long PRS, but please don't invest any money you can't afford to lose here.
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phi1618
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Re: Stock Update for March 5, 2008 - NLY, JNY [Re: geokills] 1
#8111123 - 03/06/08 01:58 PM (15 years, 10 months ago) |
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Another related note -
There is currently a huge mismatch between the credit markets and the stock market.
The stock market's down a bit for the year, but's not really doing all that badly.
On the other hand, I'm going to suggest that any believer in the efficient market hypothesis look away from credit spreads - they are pricing in massive defaults on anything that can default. They are also pricing in massive contagion - looking at the prices, you might believe that as soon as one company defaults, it will cause the end of the world as every other company in every industry goes belly up.
IMO, the most likely reason for this is that banks and other institutions are being forced to unload safe assets at fire sale prices. This drives down those assets, further eroding the assets on their balance sheets, forcing them to sell more, which drives the prices down, again.
This is certainly what's likely to happen with TMA - their assets have lost value, and now, as a result, they have to dump billions of dollars of these assets on the market. I doubt that will raise prices in the short term.
If this thesis is correct, there are clearly opportunities out there for cash, non-levered buyers who can stomach massive paper losses (since who knows where prices are heading short term, regardless of the long term outcome) - it's just a challenge for the individual (particularly non-accredited) investor to figure out how to grab these assets - most are only available to institutions, and it's hard to figure out who's buying the right ones safely and how to get your money to them.
If my thesis is wrong, then the best investments are canned food, bottled water, and ammunition. (not really - spreads and correlation aren't that bad, yet...)
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geokills
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Re: Stock Update for March 5, 2008 - NLY, JNY [Re: phi1618] 1
#8115375 - 03/07/08 09:47 AM (15 years, 10 months ago) |
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> I doubt agency debt is really as safe as the market thinks right now
Looks like the market is beginning to see it that way too ...
Quote:
De-leveraging rolls across markets, hitting 'safer' mortgages 4:35p ET March 6, 2008 (MarketWatch)
SAN FRANCISCO (MarketWatch) -- The de-leveraging of the financial system picked up steam and entered new markets Thursday as more big investors were hit by margin calls.
Carlyle Capital Corp. , an affiliate of private-equity giant Carlyle Group that invests in mortgage-backed securities, said Thursday that it failed to meet margin calls from four counterparties and had received one notice of default. See full story.
De-leveraging refers generally to a reduction in the amount of money that's borrowed. More specifically, margin calls happen when securities bought with borrowed money lose value. If they drop too far, brokers require that more cash be deposited in an investor's account to support the position or else sell some of the assets.
Last year's subprime-mortgage crisis has triggered a global credit crunch in which a decade of increased leverage, or borrowing, is beginning to unwind with often-painful consequences. Investment banks, hobbled by their own mortgage-related write-downs, are lending less and calling in loans made to hedge funds, mortgage finance companies and other borrowers.
This de-leveraging initially focused on investors who were exposed to subprime-mortgage- linked securities. In recent weeks, it spread to Alt-A home loans, which are usually made to more creditworthy borrowers but require less documentation.
But now investors holding safer, so-called agency mortgage securities -- backed by the government-sponsored enterprises Fannie Mae and Freddie Mac -- are being hit, too.
Carlyle Capital invested in a $21.7 billion portfolio of mortgage-backed securities issued by Fannie and Freddie. The investment fund paid for most of those purchases through repurchase agreements, which are a type of short-term collateralized loan.
But despite focusing on agency securities, Carlyle Capital has still been hit with multiple margin calls. That's sparked concerns that the fund will have to sell agency assets to meet demands for more cash.
Investors are also worried that other similarly leveraged agency investors have got margin calls, too, and may have to sell agency securities to meet their obligations.
Real-estate investment trusts that hold agency mortgage securities swooned after the Carlyle news. Shares of Annaly Capital Management dropped 18%, while Anworth Mortgage Asset Corp. , Capstead Mortgage and MFA Mortgage Investments all slumped more than 20%.
"What's happening now in the markets is a rolling de-leveraging where individual asset classes de-lever one at a time," said Andrew Chow, portfolio manager at SCM Advisers, a $14 billion San Francisco-based investment firm specializing in fixed-income and structured- finance markets. "They won't de-leverage at the same time, but they all will in the end.
"Investors in each of these asset classes want to think that their sector is unique, but slowly everyone is being disabused of that notion."
Some types of agency mortgage securities traded at yields that were a full three percentage points above Treasury-bond yields Thursday, Chow noted. They usually trade at 1.25 to 1.5 percentage points above Treasurys.
Agency mortgage securities look cheap now, considering historical prices and risks. But they don't look cheap versus some other asset classes.
"On a relative basis, agency securities are not compelling, and we are not seeing a lot of buyers rushing in to buy at these levels," Chow said. "So, even though they're cheap, they could get cheaper."
Fannie and Freddie are the most exposed to the falling price of agency securities. However, these companies finance themselves using loans that aren't subject to margin calls, Chow noted.
In contrast, mortgage REITs like Annaly and Anworth and Capstead, will likely use less leverage to protect themselves against higher margin requirements, Bose George, an analyst at Keefe Bruyette & Woods, wrote in a note to clients on Thursday.
He downgraded Anworth and MFA to Market Perform from Outperform on Thursday and took Annaly and Capstead off KBW's Best Ideas list.
The disruption in the agency mortgage market is a symptom of broader de-leveraging across the financial system, Chow explained.
"As a national economy, we went through 10 years of increasing leverage because of the wide availability of capital," he said. "That means the de-leveraging is going to take more than one quarter."
Policy-makers are trying to delay this inevitable de-leveraging through widespread government intervention, he added.
"I would rather the adjustment happens quickly," Chow said. "But either way it will be painful."
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geokills
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Stock Update for March 6, 2008 - BP, MOS, DE [Re: geokills] 1
#8115640 - 03/07/08 11:15 AM (15 years, 10 months ago) |
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- British Petroleum (BP) - Currently Trading at $63.85
Ever since I sold some of my Transocean (RIG) stock a few months ago, I have been underweight on the oil sector (underweight basically means that I had less of an investment in the oil sector with respect to my investments in other sectors). This is unfortunate, as oil seems securely footed around or above $100 a barrel, and I ended up missing some of the recent run up. As a result I picked up a few shares of BP right before the close yesterday, which operates in oil and natural gas exploration and production, refining and marketing, and gas, power, and renewables. The company by and large hasn't been doing terribly well, particularly its refining unit, but if you listen to their most recent conference call and slideshow (available on their website), they seem to have a solid plan in place to improve their operations. My belief in their improving operations, not to mention the high probability of sustained high oil and natural gas prices, makes this stock ripe for an upside surprise. When a sector has really caught on fire as oil has, sometimes it pays to get involved in a company that may not be the best of its breed. The reasoning here is that the earnings estimates are already depressed, so even if they don't necessarily improve operations, the simple fact that the price fetched for oil and natural gas is much higher than it was a year ago will probably lead to an upside earnings surprise since all of the analysts covering the company had lowered their targets due to relatively poor performance over the past year. The icing on the cake came not only from their encouraging conference call, but also from the fact that this stock currently yields 5% through its dividend. Get paid to wait! I would still like to get into Petrobras (PBR), the Brazilian oil outfit, but since PBR does not offer a substantial yield and is already fairly richly valued, I am going to wait for it to come in below $110 a share before making any purchases.
- Mosaic (MOS) - Currently Trading at $105.27
Down 5.4% so far today, I added a small amount to my position, as the stock fell 6% below my cost basis (where I had initially purchased the stock). Agricultural stocks have been met with some selling pressure this week, but I can't imagine it will last long. They've always seemed to bounce back rather quickly as soon as there is any sign of strength in the market (and even when there is not!). This one does carry a high Price to Earnings multiple however, and remember that in a falling market, high PE stocks tend to get punished the worst. I would not be surprised to see this one fall below $100 a share if the overall market re-tests its January 22nd intraday low of around 11600 on the Dow (broke below 12000 again today, currently at around 11,940). So be sure to scale into your positions slowly, because we probably will end up retesting those lows!
- Deere & Co. (DE) - Currently Trading at $83.87
Down 4.5% on the day, I also added a small amount to my position in this stock today, as it fell approximately 3% below my cost basis. Also in the agricultural industry, though on the manufacturing side of things, this company could get hit hard if there are changes or restrictions implemented to the North American Free Trade Agreement (NAFTA). Both Clinton and Obama have seemed to hint at their willingness to toughen up that agreement, which will hurt exports for John Deere. The reason why I am continuing to build a position here is because Clinton and Obama are still in a dead heat, and that will give an advantage to McCain as the sole republican candidate. Though I would personally prefer to see Obama in the white house, the fact that there will probably be a strengthening positive perception toward McCain will keep fears of NAFTA tinkering at bay, for now... Couple that with the high prices for grain and the need for increased agricultural productivity (which involves better, more efficient machinery), Deere should continue to report excellent earnings in the near term.
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phi1618
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Re: Stock Update for March 5, 2008 - NLY, JNY [Re: geokills] 1
#8126716 - 03/10/08 08:38 AM (15 years, 10 months ago) |
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On second thought, I don't think Congress will allow FNM/FRE mortgage bonds to default, and I doubt that prices will fall much further on these bonds in the near term, so I went ahead and bought some NLY at 14.65 this morning. I also bought some CMO at 11.01. These companies are levered 10-1 rather than 30-1 for the blown-up Carlyle fund, so they should survive (I hope and expect).
Edited by phi1618 (03/10/08 09:14 AM)
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geokills
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Stock Update for March 10, 2008 - NLY, MOS, DE [Re: phi1618] 1
#8127672 - 03/10/08 02:23 PM (15 years, 10 months ago) |
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That's what I was figuring, but as the government has not come out and explicitly stated their backing of these AAA-rated mortgage-backed securities, there will still be doubt hanging over the stock. Annaly has a great manager, who hasn't used excess leverage and even raised their quarterly dividend today to 48 cents a share, making for a great 13% yield. But if they need to put up more collateral on future borrowing, they may still need to issue more shares which will dilute their current value. It's a risky bet, but the risk/reward ratio is definitely better today than it was last week. Still, I'm just not sure if I have the stomach for it. Below $14, I may get interested.
On that note...
- Mosaic (MOS) - Currently trading at $95.36
Hit hard today, down better than 8%, I added to my position just before the market close at $95.10. George W. Bush told the International Renewable Energy Conference on Friday that plans for increased use of ethanol fuel face challenges. Ben Bernanke also suggested on Feb. 28 that eliminating a US tariff on ethanol imports would help ease food price inflation. As a result of this sentiment, corn futures for May fell 3.5% a bushel, which was the maximum limit that they can fall in one day due to trading regulations in Chicago (source). Cargill has also suspended plans to build a $200 million ethanol plant outside Topeka, Kansas, citing poor market conditions (source).
The ethanol craze is one of the major factors that has helped agricultural stocks rise over the past year, since crop productivity must increase to support the strain on this grain. If we start to import ethanol and farmers stop expanding production, corn prices may continue to fall which could lead to less of a need for the agricultural fertilizers Mosaic provides. Nevertheless, I still believe in a long term positive trend for agricultural markets because we WILL need more food to feed all the people that keep getting birthed onto this planet. At $95, I believe this is a great entry point for investors looking for agricultural exposure. If we break through the current support level (which we're sitting on), the stock may fall to $88 in the near-term.
- Deere & Co (DE) - Currently Trading at $81.25
Another stock getting hit for similar reasons as Mosaic. On the equipment and machinery side of this sector, it is not free from worry of reduced demand. But as with Mosaic, I don't feel that agriculture is going to severely cool down in the near term. Even if we do stop growing corn for ethanol here in the US, and even if a Democratic white house may pose a threat to NAFTA, these things likely won't show up on this company's next couple of earnings reports. With that, I added to this position today as well, at $81.20.
These stocks are not without risk, heck the whole market is just awful - with the S&P 500 down for five of the last six trading days. In Europe stocks have been down for the eighth time in nine sessions, largely on account of fears that the slowing US economy will negatively impact the world markets as well.
Nevertheless, with sentiment so bad and such a streak of losing days, it is not unconscionable that the market is in for a short-term bounce here. Combine that with the Federal Reserve's meeting next week and we're likely in store for a 50 or 75 basis point rate cut, which should help act as a positive catalyst. Even so, the overall market is at critical levels - where news either way can cause a violent reaction to the up or downside. I can only hope that the upcoming Fed cut will take precedence and result in a rocket higher, rather than some bankruptcy that could cause the market to tank even faster than it has. This uncertainty is why I am maintaining the cash position of my portfolio at 25%, and will look to sell into strength.
My Discretionary Portfolio as of 3/10/08:- Cash - 24.92%
- Altria (MO) - 11.74%
- Mosaic (MOS) - 7.99%
- Deere (DE) - 8.02%
- AT&T (T) - 7.26%
- McDonalds (MCD) -7.24%
- Proctor & Gamble (PG) - 6.89%
- Hudson City Bank (HCBK) - 6.39%
- Jones Apparel (JNY) - 6.31%
- Transocean (RIG) - 5.92%
- Apple (AAPL) - 3.94%
- British Petroleum (BP) -3.38%
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Edited by geokills (03/10/08 05:55 PM)
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geokills
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Video Discussion - Staying in the Game / Chart Analysis for AAPL, NLY, & GOOG [Re: geokills] 1
#8128422 - 03/10/08 05:42 PM (15 years, 10 months ago) |
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Some short discussion videos..
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geokills
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Stock Update for March 11, 2008 - MOS, T [Re: geokills] 1
#8131225 - 03/11/08 10:37 AM (15 years, 10 months ago) |
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The Federal Reserve served as a positive catalyst today with the good news that they are offering 28-day short term liquidity by lending $200 billion to primary banks through treasuries in exchange for the bank's residential mortgage backed securities. This could help the banks feel more comfortable lending for themselves again, which is one of the largest problems affecting the economy right now - the lack of capital for lending/investment aka the "Credit Crunch". As noted in my post yesterday, the market was quite oversold, so any good or bad news would cause a violent reaction - and fortunately, good news won the battle today!
- Mosaic (MOS) - Currently trading at $102.15
Up better than 7% from yesterday's close (where I added to my position), I am now going to sell these shares back into this strength. True, the recent boost in the market could lead to a sustained rally lasting throughout the duration of the week, but I am not going to take my chances here - a 7% gain overnight is fantastic outperformance with the market itself up only about 1.5% as of mid day trading. This sale still leaves me with about a half-size position in Mosaic, as I still believe that this company is well positioned for the long haul. But with the market as volatile (up and down swingin') as it is, I believe it is smart to trade around my core positions in efforts to take advantage of the short-term volatility. As an entry point, this is still a good price, and should the stock fall back into the mid to low $90's, I will likely be buying back the shares I sold today.
- AT&T (T) - Currently Trading at $35.25
This telecom stock seems fairly safe right now, sporting a 4.5% dividend yield, with shares depressed from the downward pressure in the market over the past couple of months. With Sprint losing its subscriber base, AT&T and Verizon still stand to pick up market share in the comming quarters. Nevertheless, as I also own AT&T in my retirement portfolio, I don't want to be over-exposed to this name. With the discipline to maintain diversification, the smart move is to "right size" this position by selling half of it right here. Make no mistake, I firmly believe this is a solid investment at this level, but my position had simply grown too large as I began buying even more during recent weakness at $33.40. If there were some unexpected bad news, I would be kicking myself for having been so irresponsible by letting this position grow to double the size of my normal stake in any single company.
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phi1618
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Re: Stock Update for March 5, 2008 - NLY, JNY [Re: phi1618] 1
#8132077 - 03/11/08 02:20 PM (15 years, 10 months ago) |
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Quote:
On second thought, I don't think Congress will allow FNM/FRE mortgage bonds to default, and I doubt that prices will fall much further on these bonds in the near term, so I went ahead and bought some NLY at 14.65 this morning. I also bought some CMO at 11.01. These companies are levered 10-1 rather than 30-1 for the blown-up Carlyle fund, so they should survive (I hope and expect).
I bought more CMO late in the day, bringing my cost basis to about 10.80. CMO is now at 12.35 and NLY is at 16.86. Not a bad first day for this trade. FNM and FRE are a scandal waiting to happen, but for now thank the FED, pawn broker extraordinare.
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geokills
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Re: Stock Update for March 5, 2008 - NLY, JNY [Re: phi1618] 1
#8134033 - 03/11/08 09:02 PM (15 years, 10 months ago) |
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Congratulations, today finished very nicely indeed. Though I could have waited to sell my Mosaic all the way above $107 (better than 12% gain from yesterday's purchase), and the AT&T above $36, I had to cut my day short to visit my grandmother. Took her to the emergency on Sunday night where she had to have a pacemaker installed. Didn't make it home that night until 4am, which kept me out of the market until the last hour on Monday. Thought I'd get to pick her up today, but after waiting at the hospital with her from Noon 'til 6pm, it turns out they'd like to keep her another day... which is fine by me (though she definitely is yearning to be home!).
It has been a crazy week to be certain, but being able to help keep my grandmother alive, and watching the stock market stage a nice recovery thanks to the Fed, has my spirits lifted quite high. Thanks be to being able to live in this wild world! 
12 positions between my retirement and discretionary portfolio, all in the green today. Highlights to include:- AT&T, up 4.16%
- Jones Apparel, up 4.46%
- Deere & Co, up 5.51%
- Transocean, up 5.78%
- Apple, up 6.4%
- Hudson City Bank, up 7.21%
- Mosaic, up 12.27%
A lot of money made back today, probably my best day in the market over my three years of experience thus far. Yet another confirmation that you have to bear a little bit of pain, maintain a discipline to slowly scale into positions on the way down, so that you don't miss the days like today where such big money can be made.
How exciting! But I mustn't let this excitement make me cocky or overconfident. I don't think there will be many (if any) opportunities to buy throughout the remainder of this week... but there will almost certainly be opportunities to sell in order to book some profits on the way up. I'd suggest others keep this in mind, as not to get greedy. Today brought with it much improved sentiment, but the aggregate housing and credit market turbulance will not be resolved so easily...
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phi1618
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Re: Stock Update for March 5, 2008 - NLY, JNY [Re: geokills] 1
#8135758 - 03/12/08 06:46 AM (15 years, 10 months ago) |
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I agree - the fundamental credit problems remain, and this is more likely to be a bear market rally than the end of the bear market.
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Re: Stock Picks for January 3rd, 2008 - STJ, SGP, CVS [Re: Cowgold] 1
#8135832 - 03/12/08 07:57 AM (15 years, 10 months ago) |
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Quoted at 10 A.M.
XTO Energy XTO - 60.93
Chesapeake CHK- 47.12
Sandridge Energy SD - 40.81
Breakdown of Sandridge's financials. (released 3/3/08)
Fourth Quarter:
-- Income available to common stockholders of $4.9 million, or $0.04 per share, versus a loss applicable to common stockholders of $7.3 million, or ($0.09) per share, in fourth quarter 2006 -- Natural gas and crude oil production of 20.4 Bcfe, up 152% compared to production of 8.1 Bcfe in fourth quarter 2006 -- Operating cash flow (1) of $109.2 million, up 520% from fourth quarter 2006 -- Adjusted EBITDA (2) of $135.3 million, an increase of 330% from fourth quarter 2006 -- Proved reserves at quarter end of 1.516 Tcfe, up 19% from 2007 third quarter end of 1.272 Tcfe
Full Year:
-- Income available to common stockholders of $10.3 million, or $0.09 per share, versus $11.7 million, or $0.16 per share, for full year 2006 -- Total natural gas and crude oil production of 64.2 Bcfe, an increase of 320% compared to 2006 production of 15.3 Bcfe -- Operating cash flow of $295.6 million, up 255% from 2006 -- Adjusted EBITDA of $394.9 million, an increase of 273% from 2006 -- Proved reserves at year end of 1.516 Tcfe, up 51% from year-end 2006 of 1.002 Tcfe
Tom Ward (CEO, President) intends to buy $100,000,000.00 worth of shares from the open market. The company does not plan to issue new shares for this purchase.
It's just hard to go wrong with energy right now.
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geokills
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Stock Update for March 12, 2008 - NLY [Re: geokills] 1
#8137230 - 03/12/08 02:35 PM (15 years, 10 months ago) |
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An ugly close today, the market started out strong this morning, but gave up its gains and then some during the last hour of trading. With both stocks and treasury bond yields leaning towards the downside, this lends support to the theory that this could be another short-lived bear market rally.
Regarding natural gas, I do believe that those are good stocks - particularly Chesapeake Energy (CHK), Apache (APA), and XTO (XTO) - however it seems that we are ripe for some sort of pullback in the oil market after the sustained run we have seen over recent weeks. I would wait for this pullback, before making purchases in these names. I am content with my position in British Petroleum (BP), as it offers some natural gas exposure and feels more comfortable to me thanks to its 5% dividend yield in conjunction with the low expectations that analysts have set for this company.
- Annaly Capital Management (NLY) - Currently Trading at $15.40
As noted in recent updates, this stock got killed last week on the heels of trouble with Thornburg Mortgage and Carlyle Capital. Both Thornburg and Carlyle use leverage (aka debt aka margin) to invest, and both experienced a margin call (a request to pay back debt) that they could not complete due to lack of capital (cash). Annaly hasn't done anything wrong at this point, using less leverage than the two aforementioned firms, and only investing in the highest rated mortgage-backed security market - AAA rated paper from federal agencies such as Freddie Mac and Fannie Mae, that are suppoedly backed by the full faith of the federal government and should be at very low risk of default. Annaly features a balance sheet that will benefit from continued Fed rate cuts, and in efforts to boost confidence they also raised their quarterly dividend by 40% to 48 cents a share (making for an annual 12.5% yield at the current price). The first 48 cent per share dividend will be payable to shareholders on record as of March 28th.
That said, so long as similar firms such as Carlyle Capital (who used much more debt to finance their investments than Annaly is doing) continue to default on their margin calls, there will be selling pressure on Annaly. If Annaly is required to put up more capital for future leveraging, they may need to raise this cash by issuing new stock, which will dilute the value of the current shares. Nevertheless, Annaly has weathered these storms before, and while I'm not nearly as enthusiastic as I was when I first brought this name up... I did go ahead and buy back about 40% of the shares that I sold last week above $16. Even though I didn't get the bargain that I could have had if I purchased on Friday when the stock neared $14 a share, I still want to carry a piece of this name in my portfolio - if not to make fast money - at least to keep a close eye on the situation and learn through experience. The Fed's proactive move yesterday has given me some more confidence, and I want to qualify for their dividend on the 28th, but I am certainly not buying back my whole position right here as I could see this stock fall another 10 - 20 % if the storms in the financial sector heat up once again.
My Discretionary Portfolio as of 3/12/08:- Cash - 28.14%
- Altria (MO) - 11.33%
- Deere (DE) - 8.12%
- McDonalds (MCD) - 7.08%
- Proctor & Gamble (PG) - 6.87%
- Hudson City Bank (HCBK) - 6.65%
- Jones Apparel (JNY) - 6.44%
- Transocean (RIG) - 6.04%
- Mosaic (MOS) - 5.44%
- Apple (AAPL) - 4.06%
- AT&T (T) - 3.62%
- British Petroleum (BP) - 3.38%
- Annaly Capital (NLY) - 2.82%
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wiggles
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Re: Stock Update for March 12, 2008 - NLY [Re: geokills] 1
#8137407 - 03/12/08 03:14 PM (15 years, 10 months ago) |
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Today pissed me off tbh, I had such high hopes when I logged in and saw all green arrows. Anyone know what exactly killed this morning's momentum? I heard that oil went over $110 a barrel and the price of gold went up as well.
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  You can turn your back on a person, but never turn your back on a drug, especially when its waving a razor sharp hunting knife in your eye. Hunter S. Thompson
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geokills
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Re: Stock Update for March 12, 2008 - NLY [Re: wiggles] 1
#8137590 - 03/12/08 04:13 PM (15 years, 10 months ago) |
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I believe it's a simple continuation of the prevailing negative sentiment in the market. Credit troubles will not be resolved overnight. The Fed action does show that they are getting creative at using their resources to help address the situation, which is a definite positive, but unless the government actually steps in to purchase all the bad mortgage-backed securities from the banks permanently (instead of temporarily, as they have), it's going to take a while to work through this problem.
Keep in mind, we face an adverse feedback loop here... tightening credit has led to less lending, which leads to less buying, which leads to continued depreciation in asset values, which then leads to an even greater tightening of credit. This is NOT an easy cycle to break.
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geokills
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Re: Good dividend stock - AYR [Re: phi1618] 1
#8137949 - 03/12/08 05:20 PM (15 years, 10 months ago) |
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Quote:
phi1618 said:
A good dividend/value stock right now is AYR Aircastle. This is an airplane leasing company. They buy mainly used airplanes and lease them to airlines all around the world. The initial purchases of airplanes are made with cash/equity, and they then sell asset backed securities for portfolios of their owned planes. Their combination of sophisticated financing and airline contacts is a strong competitive advantage (in a competitive industry). They are profitable (P/E around 10-11) and earnings are growing quickly (net income 51 mil. in 2006, 127 mil. 2007). Best of all, they finance deals with equity as needed and return earned capital to their investors through dividends - current yield based on the most recent regular dividend is around 14%! They missed analysts earnings last quarter, and the stock is pretty beaten down as a result. The current price (about $20/share) is a good price for a good stock.
Heard a piece on Cramer's Mad Money program today regarding AYR Aircastle, discussing two headwinds the stock faces. Though the stock does offer an impressive ~17% yeild at the current price, the whole airline leasing group is trading down because they need too much money on loan to finance their deals. Therefore, anyone interested in buying this name should make sure that the company is not using excess leverage to finance their deals - as that has led to disasterous results as evidenced most recently by the action in companies like Annaly Capital as noted in recent updates on this thread. Secondly and most important, is that Aircastle has a big ownership position by Fortress Investment Group (a public hedgefund). Apparently, Cramer has evidence that a lot of shorts out there (people who bet against stocks) are actually trying to break FIG by continuously shorting AYR Aircastle. Until that pressure relents, AYR Aircastle may not see relief.
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phi1618
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Re: Good dividend stock - AYR [Re: geokills] 1
#8138164 - 03/12/08 06:15 PM (15 years, 10 months ago) |
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Yeah - I found out about the FIG element after I had already lost a good amount of money on the trade. Not only is FIG under pressure, their management is not known for looking out for the interests of passive minority shareholders. Oh well... I just didn't understand the risks.
On point 1: AYR usually finances new buys using warehouse loans and cash, and then pays off the loans by issuing new stock or creating a structured credit vehicle secured by a portfolio of planes, which has worked pretty well in the past for getting long term financing at a very reasonable rate. Right now, they have one significant (I think 750 million, but that's just from memory) short term obligation in a warehouse credit line that expires in Dec. 2008 that they will need to refinance to a longer term loan over the summer - a recent shareholder presentation (on their website) indicates that they anticipate a much higher interest rate on whatever financing they acquire than they were able to get from previous securitizations - their financing is affected by the collapse of the structured credit markets.
Based on the balance sheet and business plan, I think this is an under priced stock. The dividend should be announced this week - based on the funding troubles, I wouldn't be too shocked to see it cut (though, if FIG's having real trouble, you can bet the dividend will be high to get as much cash out of AYR as possible whether the underlying business can support it long term or not). Right now, it's trading around book value, which is a real steal based on fundamentals alone.
Anyway, I've kept buying on the way down - here's hoping to a large dividend and massive short squeeze.
I also have a much smaller position in GLS in the same sector - it's hemorrhaging money at a much slower rate.
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wiggles
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Re: Good dividend stock - AYR [Re: phi1618] 1
#8140978 - 03/13/08 11:09 AM (15 years, 10 months ago) |
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Personally I'm in love with Fidelity Financial (FNF). It did have a great PE ratio (.57), and some of the best dividends out there considering the price per share (averages about 1.20 per share). Not to mention their stock took a dip over the past year because they're restructuring their company so you can get it at bargain basement prices. They hold the title insurance to most of the west coast, and have strong financials and even better management. They've become one of my cash cows now that I've got a decent number of shares - just reinvest your dividends and it'll be a money machine for you.
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geokills
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Re: Fidelity Financial FNF [Re: wiggles] 1
#8141254 - 03/13/08 12:14 PM (15 years, 10 months ago) |
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Log in to view attachment
> Fidelity Financial (FNF). It did have a great PE ratio (.57), and some of the best dividends out there
Well you're right about the dividend, currently yielding over 7%. However, the PE multiple is certainly not 0.57... it's around 28, which is two to three times the average PE of competitors in the Property & Casualty Insurance industry. You might have gotten confused with its price to sales ratio, which is around 0.62.
Since coming public in 2005, this company has been boasting declining revenues, declining operating income, and declining net income. FNF has missed its earnings estimates over 7 of the last 9 quarters. Their first day of trading saw the stock up at $26, which has the stock down well over 30% from its debut. While it is up nicely year to date, and earnings estimates show higher growth for the coming year... keeping in mind their robust history of failing to meet estimates, I'm not encouraged.
The stock is up nicely today... I would consider taking profits!
I've attached a research report on the company to this post.. I didn't take the time to go through it myself, but thought you may be interested since you are a shareholder.
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Edited by geokills (03/13/08 12:30 PM)
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geokills
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Stock Update for March 13, 2008 - DE, NLY, MO [Re: geokills] 1
#8141546 - 03/13/08 01:44 PM (15 years, 10 months ago) |
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The market is behaving pretty well today, but it's still wise to play it safe...
- Deere & Co (DE) - Currently Trading at $84.25
I picked up some shares on the cheap a few days ago when the stock was trading around $81, and while I still believe Deere has the potential to run all the way back up to $100, this market is just too choppy for me to feel comfortable with such an oversized position in the stock. At the last update, my Deere position was over 8% of the portfolio, which really isn't too large in and of itself... but remember that I also have exposure to the agricultural sector through my position in Mosaic (about 5% of my portfolio). Therefore, I am going to "right size" my agricultural sector exposure by selling a small portion of Deere here at $84.25. Even after this sale, Deere is still over 5.8% of the portfolio, and if it should fall back to $80 in the near term I will plan to buy back the shares I sold today.
- Annaly Capital Management (NLY) - Currently Trading at $15.50
I woke up this morning to an opportunity to purchase shares at $13.96, and while I was awake enough to notice it, I was too groggy and hesitant to make my move (darn time zones, they should move the exchanges to the west coast so I don't have to get up so dang early!). Unfortunately, my reluctance to buy at that level cost me what could have been a sweet 11% gain on the day. Though the market is still oversold over the short-term, I am still a little shaken by the extreme volatility in Annaly. I will try to do better at capitalizing on this volatility in the future, but for now I am content with my small position in this name. I have set a trade trigger to automatically double-down on my position should the stock hit $13.50 in the coming days. That is a point where I feel the risk to reward ratio is just too positive to pass up.
- Altria (MO) - Currently Trading at $73.10
Currently the largest stock position in my portfolio, I'm not taking any action at this time. But I wanted to alert anyone reading to a fantastic entry point. This stock appears to be an extremely safe investment, with the potential for significant reward in the near-term. The corporation just started their "road show" this week, where they will explain and promote their spin-off of Philip Morris International and Domestic. Shareholders will receive stock in both names, in addition to a dividend increase on top of the already impressive 4% annual yield (better than treasuries). The stock has been hovering around the low to mid $70's for a while now, but it probably won't stay here much longer. If you have cash to put to work and are looking for a safe play with a solid dividend and near-term positive catalysts, consider picking up some Altria without delay.
Discretionary Portfolio as of 3/13/08:- Cash - 30%
- Altria (MO) - 11.15%
- McDonalds (MCD) - 7.19%
- Proctor & Gamble (PG) - 6.86%
- Hudson City Bank (HCBK) - 6.82%
- Jones Apparel (JNY) - 6.49%
- Transocean (RIG) - 6.09%
- Deere (DE) - 5.88%
- Mosaic (MOS) - 5.57%
- Apple (AAPL) - 4.12%
- AT&T (T) - 3.63%
- British Petroleum (BP) - 3.34%
- Annaly (NLY) - 2.82%
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-------------------- ┼ ··∙ long live the shroomery ∙·· ┼ ...╬π╥ ╥π╬...
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