As expected due to more trading opportunities in May the performance was much better than any month in 2011. We finished trading in May with an annualized gain of 17.499% , including allowing for .096% expense for the month. May was also helped with less expense from interest cost. That likely will not continue as the interest expense was lower than normal. May trading was helped significantly by oil stock gains. utility stock gains, telecom gains, and a fewer number of trades not meeting desired minimum results. Despite the good results we are not pleased with the current year to date results, 15.82%, as we trail 2010 by a good bit. Most of this is due to the less volatile market in 2011 versus 2010. Our annual goal is 18%.
Looking forward to June trading uncertainly reins as we await final fed decisions on the ending of QE2. We also expect interest rates could rise in July which could cause markets to be unstable. We again have good trading opportunties coming from expiring positions in June, so we still could produce 15% plus annualized gains. FTR, WIN, and SCCO are carry forward losses currently, but much less than the end of April. The slowing economy continues to be of concern as well and thus we have reduced more sensitive positions going forward into the last half of the year. Concentrated positions in oil, preferred bonds, junk bonds, and real estate might lessen danger for the ongoing portfolio. We also are moving gradually into larger cap stocks for similar reasons. Lastly we have shortened option expiration dates until we are more insight into future market conditions.
Our results for the year to date are beating many hedge fund results and currently we know of no other comparable fund matching our gains either. Our charitable trust is benefiting handsomely from the work. Most importantly we want to point out the STI Hedge Fund trades only the put side of the option trade in the fund and not the call side. We prefer this approach as it reduces risk significantly while still producing market beating results. If we did trade the call side we would increase our annual gain percentage by 6% to 8% over what we are doing now for a total of 22% to 24%.
Tuesday, May 31, 2011
Sunday, May 29, 2011
Like Owning a Oil Well plus a Safe Dividend Closed End Fund
Canadian Oil Sands, symbol COSWF, is about as close as you can get to owning your own oil well. The company is exclusively engaged in mining the oil sands of western Canada. Other companies own parts of this oil source, but COSWF is the major player here. Canadian Oil Sands does little else than produce oil from these sands and get it to refiners. In the past the price of a barrel of oil was not high enought to make the relative high cost of mining these sands worth the effort. But with oil prices now averaging over $100 per barrel COSWF, and a base cost of about $27 per barrel, mining these sands is extremely profitable. I expect oil will remain above $85 per barrel for the foreseeable future.
Add in the fact COSWF is still working to ramp up production towards it's goal of 350000 barrels daily and there is ample opportunity for profits. COSWF just increased their dividend from 20 cents to 30 cents quarterly. There is enough oil here to last at current extraction for 30 years plus, so you can count on getting paid for a long time. At the current price the payout is around 4.0% and if Goldman Sachs is correct that oil is headed to $135 per barrel this summer you can expect income to remain steady.
Remember this oil is from Canada, which is a stable democracy and the political environment there is friendly to oil business, unlike current United States policy. I highly recommend purchase of these shares for those who want exposure to oil. Note that dividends in Canada are subject to a 15% tax there before your payment, but can be taken back when you file taxes in the United States.
COSWF does not offer options so I currently do not own it due to STI Hedge Fund trading policy.
Reeves Utility Income Fund... symbol UTG...I have known about this fund for several years since I came upon it while researching utility and telecom stocks. UTG has run up in price nicely since early this year to around $25 per share. They also just increased their MONTHLY dividend from 11.5 cents per share to 12.5 cents per share making the annual payout around $1.50 total. In the past they have paid out a special extra dividend in December each year, but I expect since the increase to 12.5 cents that will likely not happen in the future. Still at the current rate and price the payout is right at 6.0%. If you were patient you likely could get UTG a little cheaper, but that of course is your choice, and frankly buying this closed end fund should be for income and not capital gains. Being a closed end fund, there is a expense charge that goes with the fund, but in my opinion worth the diversity of holdings you get. I really like the stocks in this fund, utilities, telecom, oil, some foreign holdings, high income mortgage reits, MLP's, and even some tobacco stocks. All of these securities are average to above average dividend payers. If you are looking for a safe, steady income producer then this is your fund. Traded on the markets it is easy to buy and to sell.
I do not own UTG due to STI Hedge Fund trading policies, but would buy it in my personal account when needing safe income.
Add in the fact COSWF is still working to ramp up production towards it's goal of 350000 barrels daily and there is ample opportunity for profits. COSWF just increased their dividend from 20 cents to 30 cents quarterly. There is enough oil here to last at current extraction for 30 years plus, so you can count on getting paid for a long time. At the current price the payout is around 4.0% and if Goldman Sachs is correct that oil is headed to $135 per barrel this summer you can expect income to remain steady.
Remember this oil is from Canada, which is a stable democracy and the political environment there is friendly to oil business, unlike current United States policy. I highly recommend purchase of these shares for those who want exposure to oil. Note that dividends in Canada are subject to a 15% tax there before your payment, but can be taken back when you file taxes in the United States.
COSWF does not offer options so I currently do not own it due to STI Hedge Fund trading policy.
Reeves Utility Income Fund... symbol UTG...I have known about this fund for several years since I came upon it while researching utility and telecom stocks. UTG has run up in price nicely since early this year to around $25 per share. They also just increased their MONTHLY dividend from 11.5 cents per share to 12.5 cents per share making the annual payout around $1.50 total. In the past they have paid out a special extra dividend in December each year, but I expect since the increase to 12.5 cents that will likely not happen in the future. Still at the current rate and price the payout is right at 6.0%. If you were patient you likely could get UTG a little cheaper, but that of course is your choice, and frankly buying this closed end fund should be for income and not capital gains. Being a closed end fund, there is a expense charge that goes with the fund, but in my opinion worth the diversity of holdings you get. I really like the stocks in this fund, utilities, telecom, oil, some foreign holdings, high income mortgage reits, MLP's, and even some tobacco stocks. All of these securities are average to above average dividend payers. If you are looking for a safe, steady income producer then this is your fund. Traded on the markets it is easy to buy and to sell.
I do not own UTG due to STI Hedge Fund trading policies, but would buy it in my personal account when needing safe income.
Thursday, May 26, 2011
A couple of securities to consider
Here are two stocks that I like for but are not allowed in my hedge fund due to option availability. However they could be good investments for you.
TCAP...Triangle Capital Corp...I highlighted this security back early in my posting blog. The company is a business development company that lends to small companies that generally are in start up phase or companies ready to expand. There are numerous BDC;s trading in the market, but Triangle Capital is in my opinion the best run, most conservatively financed BDC in the country. I frankly would feel very safe with a long term investment in TCAP. The CEO knows his stuff, and just keeps paying out a 8% plus dividend, that just got increased this year. Take a look at their chart and you will see nothing but up even through the economic downturn. TCAP kept their dividend intact the whole time as well. With every quarterly report I become more impressed with TCAP and frankly believe it might have one of the safest dividends out there, despite being a BDC. Local company for you Raleigh area investors, so you can actually go visit your investment.
TNH...If you want to get in on the fertilizer boom Terra Nitrogen is your opportunity. This company makes nitrogen fertilizer products and distributes it to various customers in the US. This company is a direct play on the US government requirements that ethanol be used in gasoline. If you buy groceries you have have seen the big increase in prices lately and those increases are a direct result of this requirement and the subsidy the government pays farmers who grow corn for ethanol. Owning this security is like being the arms supplier to the world's need for more food grains. TNH just announced a huge dividend for May of $4.00 plus due to the increased profits. That large dividend is profit from selling product for the spring planting season, TNH currently pays a $8.00 plus dividend annually. TNH is a partnership, so all profits are paid out as distributions and you do get a K-1 for tax season. The only risk I see here is the entire operation is located at ONE plant in Oklahoma so if something happens there you lose big. But if want in on the fertilizer boomthis is your ticket.
TCAP...Triangle Capital Corp...I highlighted this security back early in my posting blog. The company is a business development company that lends to small companies that generally are in start up phase or companies ready to expand. There are numerous BDC;s trading in the market, but Triangle Capital is in my opinion the best run, most conservatively financed BDC in the country. I frankly would feel very safe with a long term investment in TCAP. The CEO knows his stuff, and just keeps paying out a 8% plus dividend, that just got increased this year. Take a look at their chart and you will see nothing but up even through the economic downturn. TCAP kept their dividend intact the whole time as well. With every quarterly report I become more impressed with TCAP and frankly believe it might have one of the safest dividends out there, despite being a BDC. Local company for you Raleigh area investors, so you can actually go visit your investment.
TNH...If you want to get in on the fertilizer boom Terra Nitrogen is your opportunity. This company makes nitrogen fertilizer products and distributes it to various customers in the US. This company is a direct play on the US government requirements that ethanol be used in gasoline. If you buy groceries you have have seen the big increase in prices lately and those increases are a direct result of this requirement and the subsidy the government pays farmers who grow corn for ethanol. Owning this security is like being the arms supplier to the world's need for more food grains. TNH just announced a huge dividend for May of $4.00 plus due to the increased profits. That large dividend is profit from selling product for the spring planting season, TNH currently pays a $8.00 plus dividend annually. TNH is a partnership, so all profits are paid out as distributions and you do get a K-1 for tax season. The only risk I see here is the entire operation is located at ONE plant in Oklahoma so if something happens there you lose big. But if want in on the fertilizer boomthis is your ticket.
Tuesday, May 24, 2011
E-mail Contact List
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A Rare Opportunity GS
I seldom make recommendations on stocks outside my general trading rules, but sometimes the bait is so good it is hard to ignore. The bait this time is Goldman Sachs, symbol GS. Goldman is the largest, most successful, most profitable, most wanted to be employed at, top of the heap American investment bank. If you graduate from a business school you have hit the big time if you can sometime in your career work for Goldman Sachs. The pay is out of this world and the enhancement of your future assured as well. Goldman rules Wall Street like no other investment bank. As such they can pick and choose the best and brightest to work as associates. Most importantly Goldman Sachs is the most politically connected and politically protected firm in the entire country. Some people actually call them Government Sachs with good reason. The firm regularly supplies treasury secretaries for the US and they can get Barack Obama's ear anytime since their associates contribute hundreds of thousands of dollars to his campaign.
Goldman has got into some trouble lately when the US justice dept. opined that GS was the a guilty party in the sub prime collapse. Democratic Senator Carl Levin got in on the pounding and just came right out and said Goldman was THE cause of all the recent housing bubble troubles and needed to be prosecuted. Now there likely is some truth here as Goldman was deeply involved in the sub prime crisis and got a big time bailout when TARP was done and the even more TARP bailout when the bailout money of another big insurance firm AIG was literally handed over to Goldman when Goldman said they owed them the money. Sorta nice to be able to dip into the honey pot twice and only have to pay back once. But that is another story for another time. Goldman also is said to have sold sub prime securities to their customers and then the firm used their own assets to bet against their own customers. Goldman is now having to consider if to thrown their current chairman to the wolves in hopes to save their bacon. Again, I have no idea if any of this huffing and puffing is going to lead to anything since remember they have Barack's ear and likely protection. Barack might huff and puff himself about Wall Street fat cats, but the fella knows who butters his bread and has in the past protected these people. Of course in the world of political pressure anything is possible and Goldman might end up being hit with big penalties and such.
My opinion is this political pandering will blow up some more and then Barack will place a phone call to Carl Levin and Eric Holder and tell them to produce some milktoast prosecution or prepare for some serious butt kicking from the President himself. Carl likes the attention and like all senators is doing some ego massaging here too. Maybe a few indictments and such, but basically a slap on the wrist is what I expect will be the results of all this talk.
(By the way I am an equal opportunity political pounder. Yes, I criticize Obama on his financial policies, but I did the same for Bush. I am still hopping mad about his placement of tariffs on steel during his term. That little diddy cost me some serious bucks in my Posco investment. Posco is the steel maker in South Korea.)
Now what does this have to do with a rare opportunity. GS stock has been taken out back and beaten up pretty good. The stock is down from $175 range to now below $136. It very well might go lower. Many were of the opinion that GS was under priced back several months ago at $175, since it spent many days before the economy crashed well over $220. Rarely does one get a chance to buy a stock like Goldman on the cheap. So consider buying GS here or wait and see if it drifts down another $10 per share and go for it. Either way I would suspect that you will find this trade nicely profitable sometime down the road once the dust settles on this scenario.
Goldman has got into some trouble lately when the US justice dept. opined that GS was the a guilty party in the sub prime collapse. Democratic Senator Carl Levin got in on the pounding and just came right out and said Goldman was THE cause of all the recent housing bubble troubles and needed to be prosecuted. Now there likely is some truth here as Goldman was deeply involved in the sub prime crisis and got a big time bailout when TARP was done and the even more TARP bailout when the bailout money of another big insurance firm AIG was literally handed over to Goldman when Goldman said they owed them the money. Sorta nice to be able to dip into the honey pot twice and only have to pay back once. But that is another story for another time. Goldman also is said to have sold sub prime securities to their customers and then the firm used their own assets to bet against their own customers. Goldman is now having to consider if to thrown their current chairman to the wolves in hopes to save their bacon. Again, I have no idea if any of this huffing and puffing is going to lead to anything since remember they have Barack's ear and likely protection. Barack might huff and puff himself about Wall Street fat cats, but the fella knows who butters his bread and has in the past protected these people. Of course in the world of political pressure anything is possible and Goldman might end up being hit with big penalties and such.
My opinion is this political pandering will blow up some more and then Barack will place a phone call to Carl Levin and Eric Holder and tell them to produce some milktoast prosecution or prepare for some serious butt kicking from the President himself. Carl likes the attention and like all senators is doing some ego massaging here too. Maybe a few indictments and such, but basically a slap on the wrist is what I expect will be the results of all this talk.
(By the way I am an equal opportunity political pounder. Yes, I criticize Obama on his financial policies, but I did the same for Bush. I am still hopping mad about his placement of tariffs on steel during his term. That little diddy cost me some serious bucks in my Posco investment. Posco is the steel maker in South Korea.)
Now what does this have to do with a rare opportunity. GS stock has been taken out back and beaten up pretty good. The stock is down from $175 range to now below $136. It very well might go lower. Many were of the opinion that GS was under priced back several months ago at $175, since it spent many days before the economy crashed well over $220. Rarely does one get a chance to buy a stock like Goldman on the cheap. So consider buying GS here or wait and see if it drifts down another $10 per share and go for it. Either way I would suspect that you will find this trade nicely profitable sometime down the road once the dust settles on this scenario.
Monday, May 23, 2011
Stock Valuations getting extended
Even with the small selloff this morning stock valuations are getting extended. My trading portfolio is down to 20 stocks this morning after my dropping of SDRL, due to concern over rising interest rates. SDRL, Seadrill, has a ton of debt and their profits could be impacted by rising rates after the end of QE2. Also note that there are three stocks being traded out of the portfolio currently, FTR, WIN, and ARCC. All good stocks, but not longer fit my the criteria for the portfolio. WIN and FTR are still excellent buy and hold stocks. ARCC remains on watch as the economy again slows and their business is loaning money to small business where the slowdown will be felt first.
Many stocks in my portfolio are reaching maximum valuations to continue in the portfolio. May trading, which began this morning for my hedge fund, is causing me concern due to the increased risk of a selloff or correction in the market.
Many stocks in my portfolio are reaching maximum valuations to continue in the portfolio. May trading, which began this morning for my hedge fund, is causing me concern due to the increased risk of a selloff or correction in the market.
Sunday, May 22, 2011
Some of my favorite Restaurants
A little Sunday evening fun.
Due to the surprisingly large readership of the Jimmy V's Steakhouse posting I thought I would take the restaurant idea a step further. I love to eat and over the years have found certain foods and restaurants across southeastern North Carolina where I enjoy a good meal. I expect I have lived and worked in more counties in SE NC than anyone I know so my eating places are spread across the entire region. The list below is not an exclusive list, just a small list of eating places that I will drive to for the purpose of eating there. For you who live in my current county I have left out naming restaurants there to avoid conflicts.
K&W Cafeteria..Not just any K&W, but the one in Berkeley Mall in Goldsboro NC. There are several of these cafeterias near where I live, but the one in Goldsboro seasons their food to the old country taste I remember from grandma"s house. None of the others do so, trust me on this one. When at this K&W I dine on one meal only, the country style steak and mashed potatoes. Cover them up with a order of grilled onions and this is serious eating. Add a vege of your choice, I like okra. Now, when you are finished, head right around the block to finish off this meal with a visit to Krispy Kreme. Note I did not say this was a dieters meal, this is serious eating for comfort food.
Weiner Works...Just a few of these left in existence, they used to be a chain called Weiner King. The closest and best is right down the road in Fayetteville NC. Actually right off I-95 and one stoplight at that on Person Street. I got onto this place when I worked in Fayetteville and called for business from the owner of the stores. There are 5 locations in Fayetteville, but I like this one. It is quaint, it is in section of town where things are not as prosperous as they used to be, and the ladies in this store know how to load up a serious dog. Now if you are a Carolina Packer person this dog might not be your choice as these are are not Packer dogs. My favorite hands down is the regular deluxe which comes covered with onions, chili, slaw, and cheese. Note I said "covered" , but maybe should have said "smothered", because the first class toppings are a meal themselves. If you desire add a order of fries, the fries are pretty good too as the owner requires fries older than 3 minutes to be tossed, so they are always hot. I prefer just two or three dogs as my regular meal.
Melvins.. Elizabethtown NC is not as good as it was when Pat Melvin owned them, but I still crave the "secret" chili recipe on their burgers. Since the buyout the joint has added cheese and fries and such, but the old timers like me know not to waste your stomach and calories on nothing but hamburgers all the way. "All the way" means onions, chili, slaw, and mustard. Comes wrapped in white paper just like old times. This place used to be a pool hall, but when people just kept coming in for the burgers, they ditched the pooltables and made room for sitting tables and sold burgers. The place is right downtown Elizabethtown and do not get alarmed by a line of people waiting, the line moves quickly. Well not as quickly as 10 years ago when people would be lined up over a hundred deep at busy times. Still the taste is still there and worth the trip. White Lake is right up the road, so bring the family, and make it a day.
Cafe Carolina... Several of these across the state. The two I visit are downtown Raleigh on Fayetteville Street and in Cameron Village up the road. There are many good things to eat here and I frankly have never had a bad meal here. However the taste of the Charleston Smoked Turkey sandwich is what keeps me coming back. The sandwich which comes wrapped in a tomato baguette bread, with bacon, lettuce, cheese, and tomato, is really enhanced by the red pepper pesto mayonnaise. It is some kinda good and worth the trip. The meal comes with a choice of chips and such. The atmosphere at these stores is upscale and quite comfortable too. Note the store in downtown Raleigh closes for evenings and weekends.
Elijahs.. Downtown Wilmington Chandlers Wharf...I have informed my wife, kids, and mortician, if I am either on my death bed or interned at Central Prison awaiting execution that my last meal is to be a bowl of Carolina Chowder from Elijahs. Put yourself between me and a bowl of this stuff and your life is not safe. The chowder is made with RICH CREAM, and comes loaded with shrimp, clams, and potatoes. Pepper it up and consider it heaven on earth. I bet if I brought a bowl of this to Saint Peter I would be a shoo in to heaven. Anyway, add a meal of Fish and Chips, which is some lightly fried Codfish and fries and you have my favorite meal anywhere. When I first went to Elijahs over twenty five years ago I dined on the Hot Crab Dip, which is divine on it's own, but once I got my mouth wrapped around the chowder if was love at first bite. I had never had any meal here that was not just delightful and the location right on the Cape Fear River adds to the dining experience. Did I mention that you should try the Carolina Chowder?
Parkers...Wilson NC, there are numerous Eastern NC Barbecue places out there and they are all good. In fact your tastes might be different than mine, so enjoy your favorite. I have tried many of them and still if I want some serious "cue Parkers in Wilson is my joint. I like good barbecue, but a crave Parker's barbecue. Once here I simply do not when to stop eating to my own detriment. If you are a serious Eastern NC barbecue eater, you know if they do not cook over wood nothing else matters, and Parker's does. Now the slaw and trimmings are frankly better elsewhere, but I will put up with less there to get this barbecue. I do like the corn sticks however. If you decide to try this place, be prepared as the place is really busy at mealtime. But the place is quite large so the wait is not long. Also, take some cash, they do not take credit cards. But they know their barbecue is that good so why bother.
Country Squire...Kenansville NC..I will be real honest with you and tell you the food here is not as good as it used to be. The owner who I know personally, however does something right since this year they are celebrating their 50th Anniversary. If you like out of the way places, with tons of great atmosphere, the Country Squire fits your need. They even have a small motel if you desire to stay the night. I usually get any of their steaks with the trimmings and settle in for a nice treat. The dining experience here makes you think you are back in old Ireland as a Country Squire. Make sure you try their Squire cheese was an appetizer. That stuff is good.
Arnolds Family Restaurant...Richlands NC..This is my hometown treat. When in Richlands I head for Arnolds and lay my teeth into a Big A Burger. For those who remember this is the original Tastee Freeze hamburger with that delicious sauce, sorta a Big Mac before there was a Big Mac. The original owner of this store was a fellow named Arnold Mobley, who passed on about two years ago, but even his heirs know not to mess with a good thing like the Big A. Oh, and try some fries too. They change their cooking oil regularly and few places will deliver to you those "white" fries that are so good. This place is convenient right on the way to the beach at Emerald Isle.
Sunset Terrace Grove Park Inn... I simply defy you to find a place to eat that has a better view anywhere. I will personally buy your meal if you can. The Grove Park Inn is one of those things that if you have not spend the night there, actually more than one night if possible, you need to put it on your bucket list. Grove Park Inn defies the conventional and is just a spectacular place. There are five restaurants on the premises and they all serve excellent food. However dining on the Sunset Terrace outside in mountain air is something that can not be described, only experienced in person. To set the scene, you are on top of a mountain, overlooking the mountains and downtown Asheville. Enough said. Your choice of food does not matter, because it is all good. When I used to work I had the privilege of staying there two to four times a year on expense account and I do miss it terribly. By the way if you are not on an expense account be prepared to pay some serious bucks for this experience, but trust me it is worth every single penny.
Pleasant Pizza..Lumberton NC...This is one of those hole in the walls you can drive right by and never know what you missed. Well I no longer drive right by, since I lived in Lumberton now over two decades ago. The pizza is darn good, the subs are first rate, and the spaghetti will hook up the first time. Ask anyone in Lumberton and ask people who have lived there where to eat in Lumberton and they will tell you if you have not tried Pleasant Pizza you have not lived. There have been numerous restaurants to come and go in this medium sized town, but Pleasant's has been the forever and will be as long as their food remains this good.
Riverview Cafe..Sneads Ferry NC..Now I am partial to this place since I have been coming here since I was 18 months old. Yeah, I did not eat anything then as my parents ate freshly caught oysters as I sat in my cradle on the bar, but I got the air in my lungs and when I got older knew it was something not to miss. This folks is just good down home southern cooking. They have seafood and it is fresh, hence the Riverview name, but they also have lots of good other stuff too. The atmosphere is truly down home and with good food this place just feels right. They must be doing something right as they just remodeled and celebrated their 65th anniversary. Now it is hard, real hard, to find. So ask before getting lost in Sneads Ferry.
My Kitchen...now this my friends is my most favorite regular meal. It starts in the spring when you plant some Better Boy tomato plants in the ground. The key here is water them just enough, keep the suckers pulled, and wait for warmer weather. Sure enough you get those delicious home grown tomatoes about late June or early July. You take these babies, get some bread, add some mayonnaise, place on several pieces of bacon, pepper and salt (salt on the tomatoes before you add anything else) and this my friends is something else. Recipe handed down so many generations no one can remember. I always wondered what the person thought who first put these ingredients together and took a bite? If you do not like a bacon and home grown tomato sandwich you are not human, but some alien species. Quiz: What are the things you can not buy? Answer: true love, scratch biscuits, and home grown tomatoes. Enough said.
Due to the surprisingly large readership of the Jimmy V's Steakhouse posting I thought I would take the restaurant idea a step further. I love to eat and over the years have found certain foods and restaurants across southeastern North Carolina where I enjoy a good meal. I expect I have lived and worked in more counties in SE NC than anyone I know so my eating places are spread across the entire region. The list below is not an exclusive list, just a small list of eating places that I will drive to for the purpose of eating there. For you who live in my current county I have left out naming restaurants there to avoid conflicts.
K&W Cafeteria..Not just any K&W, but the one in Berkeley Mall in Goldsboro NC. There are several of these cafeterias near where I live, but the one in Goldsboro seasons their food to the old country taste I remember from grandma"s house. None of the others do so, trust me on this one. When at this K&W I dine on one meal only, the country style steak and mashed potatoes. Cover them up with a order of grilled onions and this is serious eating. Add a vege of your choice, I like okra. Now, when you are finished, head right around the block to finish off this meal with a visit to Krispy Kreme. Note I did not say this was a dieters meal, this is serious eating for comfort food.
Weiner Works...Just a few of these left in existence, they used to be a chain called Weiner King. The closest and best is right down the road in Fayetteville NC. Actually right off I-95 and one stoplight at that on Person Street. I got onto this place when I worked in Fayetteville and called for business from the owner of the stores. There are 5 locations in Fayetteville, but I like this one. It is quaint, it is in section of town where things are not as prosperous as they used to be, and the ladies in this store know how to load up a serious dog. Now if you are a Carolina Packer person this dog might not be your choice as these are are not Packer dogs. My favorite hands down is the regular deluxe which comes covered with onions, chili, slaw, and cheese. Note I said "covered" , but maybe should have said "smothered", because the first class toppings are a meal themselves. If you desire add a order of fries, the fries are pretty good too as the owner requires fries older than 3 minutes to be tossed, so they are always hot. I prefer just two or three dogs as my regular meal.
Melvins.. Elizabethtown NC is not as good as it was when Pat Melvin owned them, but I still crave the "secret" chili recipe on their burgers. Since the buyout the joint has added cheese and fries and such, but the old timers like me know not to waste your stomach and calories on nothing but hamburgers all the way. "All the way" means onions, chili, slaw, and mustard. Comes wrapped in white paper just like old times. This place used to be a pool hall, but when people just kept coming in for the burgers, they ditched the pooltables and made room for sitting tables and sold burgers. The place is right downtown Elizabethtown and do not get alarmed by a line of people waiting, the line moves quickly. Well not as quickly as 10 years ago when people would be lined up over a hundred deep at busy times. Still the taste is still there and worth the trip. White Lake is right up the road, so bring the family, and make it a day.
Cafe Carolina... Several of these across the state. The two I visit are downtown Raleigh on Fayetteville Street and in Cameron Village up the road. There are many good things to eat here and I frankly have never had a bad meal here. However the taste of the Charleston Smoked Turkey sandwich is what keeps me coming back. The sandwich which comes wrapped in a tomato baguette bread, with bacon, lettuce, cheese, and tomato, is really enhanced by the red pepper pesto mayonnaise. It is some kinda good and worth the trip. The meal comes with a choice of chips and such. The atmosphere at these stores is upscale and quite comfortable too. Note the store in downtown Raleigh closes for evenings and weekends.
Elijahs.. Downtown Wilmington Chandlers Wharf...I have informed my wife, kids, and mortician, if I am either on my death bed or interned at Central Prison awaiting execution that my last meal is to be a bowl of Carolina Chowder from Elijahs. Put yourself between me and a bowl of this stuff and your life is not safe. The chowder is made with RICH CREAM, and comes loaded with shrimp, clams, and potatoes. Pepper it up and consider it heaven on earth. I bet if I brought a bowl of this to Saint Peter I would be a shoo in to heaven. Anyway, add a meal of Fish and Chips, which is some lightly fried Codfish and fries and you have my favorite meal anywhere. When I first went to Elijahs over twenty five years ago I dined on the Hot Crab Dip, which is divine on it's own, but once I got my mouth wrapped around the chowder if was love at first bite. I had never had any meal here that was not just delightful and the location right on the Cape Fear River adds to the dining experience. Did I mention that you should try the Carolina Chowder?
Parkers...Wilson NC, there are numerous Eastern NC Barbecue places out there and they are all good. In fact your tastes might be different than mine, so enjoy your favorite. I have tried many of them and still if I want some serious "cue Parkers in Wilson is my joint. I like good barbecue, but a crave Parker's barbecue. Once here I simply do not when to stop eating to my own detriment. If you are a serious Eastern NC barbecue eater, you know if they do not cook over wood nothing else matters, and Parker's does. Now the slaw and trimmings are frankly better elsewhere, but I will put up with less there to get this barbecue. I do like the corn sticks however. If you decide to try this place, be prepared as the place is really busy at mealtime. But the place is quite large so the wait is not long. Also, take some cash, they do not take credit cards. But they know their barbecue is that good so why bother.
Country Squire...Kenansville NC..I will be real honest with you and tell you the food here is not as good as it used to be. The owner who I know personally, however does something right since this year they are celebrating their 50th Anniversary. If you like out of the way places, with tons of great atmosphere, the Country Squire fits your need. They even have a small motel if you desire to stay the night. I usually get any of their steaks with the trimmings and settle in for a nice treat. The dining experience here makes you think you are back in old Ireland as a Country Squire. Make sure you try their Squire cheese was an appetizer. That stuff is good.
Arnolds Family Restaurant...Richlands NC..This is my hometown treat. When in Richlands I head for Arnolds and lay my teeth into a Big A Burger. For those who remember this is the original Tastee Freeze hamburger with that delicious sauce, sorta a Big Mac before there was a Big Mac. The original owner of this store was a fellow named Arnold Mobley, who passed on about two years ago, but even his heirs know not to mess with a good thing like the Big A. Oh, and try some fries too. They change their cooking oil regularly and few places will deliver to you those "white" fries that are so good. This place is convenient right on the way to the beach at Emerald Isle.
Sunset Terrace Grove Park Inn... I simply defy you to find a place to eat that has a better view anywhere. I will personally buy your meal if you can. The Grove Park Inn is one of those things that if you have not spend the night there, actually more than one night if possible, you need to put it on your bucket list. Grove Park Inn defies the conventional and is just a spectacular place. There are five restaurants on the premises and they all serve excellent food. However dining on the Sunset Terrace outside in mountain air is something that can not be described, only experienced in person. To set the scene, you are on top of a mountain, overlooking the mountains and downtown Asheville. Enough said. Your choice of food does not matter, because it is all good. When I used to work I had the privilege of staying there two to four times a year on expense account and I do miss it terribly. By the way if you are not on an expense account be prepared to pay some serious bucks for this experience, but trust me it is worth every single penny.
Pleasant Pizza..Lumberton NC...This is one of those hole in the walls you can drive right by and never know what you missed. Well I no longer drive right by, since I lived in Lumberton now over two decades ago. The pizza is darn good, the subs are first rate, and the spaghetti will hook up the first time. Ask anyone in Lumberton and ask people who have lived there where to eat in Lumberton and they will tell you if you have not tried Pleasant Pizza you have not lived. There have been numerous restaurants to come and go in this medium sized town, but Pleasant's has been the forever and will be as long as their food remains this good.
Riverview Cafe..Sneads Ferry NC..Now I am partial to this place since I have been coming here since I was 18 months old. Yeah, I did not eat anything then as my parents ate freshly caught oysters as I sat in my cradle on the bar, but I got the air in my lungs and when I got older knew it was something not to miss. This folks is just good down home southern cooking. They have seafood and it is fresh, hence the Riverview name, but they also have lots of good other stuff too. The atmosphere is truly down home and with good food this place just feels right. They must be doing something right as they just remodeled and celebrated their 65th anniversary. Now it is hard, real hard, to find. So ask before getting lost in Sneads Ferry.
My Kitchen...now this my friends is my most favorite regular meal. It starts in the spring when you plant some Better Boy tomato plants in the ground. The key here is water them just enough, keep the suckers pulled, and wait for warmer weather. Sure enough you get those delicious home grown tomatoes about late June or early July. You take these babies, get some bread, add some mayonnaise, place on several pieces of bacon, pepper and salt (salt on the tomatoes before you add anything else) and this my friends is something else. Recipe handed down so many generations no one can remember. I always wondered what the person thought who first put these ingredients together and took a bite? If you do not like a bacon and home grown tomato sandwich you are not human, but some alien species. Quiz: What are the things you can not buy? Answer: true love, scratch biscuits, and home grown tomatoes. Enough said.
Friday, May 20, 2011
Sears Holdings
This posting is about a big whopper of a mistake I made back in the early 2000's. When Eddie Lampert took over K-mart on the auction block and then deftly merged Sears and K-mart Mr. Lampert was showing why his investment skills at the time were considering some of the best. He had bought and sold several stocks and securities for his ESL Hedge Fund over the preceding decade and had made boatloads of money for his investors. He was at the time talked about as being the heir apparent to Warren Buffett. Yes, he was that good. His specialty had been taking over ailing retailers and turning them around and then selling them for nice gains. When he merged Sears and K-mart into Sears Holdings most people thought he would do the same for them. Witness that Jim Cramer bought into this idea too, so I was in good company.
Sears Holdings had everything going for it. Great management and real estate locations that others wanted. Mr. Lampert went right to work and began cutting costs and trimming staff. The results were nice added cash flow which he put to good use buying back stock. The investment world responded by pushing up SHLD stock from about $12 to almost $200 per share. I got in around $120 and of course was happy with the gains and the options trading income. Mr. Lampert was getting lots of praise as well.
As Mr. Lampert's management went on things began to top out as Sears began to show why it is no longer what it once was retailer wise and of course K-mart was old news too. Those of us old enough to remember can tell you there was a time that Sears was top dog. Owning a Sears credit card in the 1970's was considering a badge of honor. Investors convinced themselves that even though the business model for Sears Holdings was slowing the real estate holding would make up for any concerns. Truth be the real estate portion of Sears Holdings is indeed most valuable being at great mall locations, highly sought urban locations, and were back in the early 2000's being requested for purchase by other retailers such as Walmart and Target.
Unfortunately the economy went bust and the desire for real estate went down too. There are some locations Sears Holdings owns still being sought, but not like before. The downturn also did a number on the business of Sears Holdings. Never a strong suit, but when people got tight with their wallets they looked for more inexpensive places to shop. The company is longer turning in nice profits and the accompanying stock buy backs have dwindled as well. Sears Holdings is not the darling they were when Mr. Lampert took over.
I got out of SHLD around $80 per share and licked my wounds. During the bottom of the economic downturn SHLD traded under $40 per share, Today it is in the low $70. I frankly can not see it moving much anywhere but down going forward. There simply is no profit to plow back into the company and unless the economy turns around there is trouble ahead.
Sears Holdings still is the country's largest appliance seller and it's name brand Kenmore is still considered a major brand. The Craftsmen tools brand is without question the most desired tools for professionals anywhere. I suppose Sears Holdings could reduce their offering at stores to those brands and likely survive, but that restructure would be a tall order. Of course their is the K-mart stores and what to do with them too. Maybe liquidate at today's fire sale prices and move forward. Frankly it is anybody's guess where Mr. Lampert will go next. But if anyone can do it he is likely the person.
SHLD is one big risky bet if you are into serious betting. Count me out on the risk.
Sears Holdings had everything going for it. Great management and real estate locations that others wanted. Mr. Lampert went right to work and began cutting costs and trimming staff. The results were nice added cash flow which he put to good use buying back stock. The investment world responded by pushing up SHLD stock from about $12 to almost $200 per share. I got in around $120 and of course was happy with the gains and the options trading income. Mr. Lampert was getting lots of praise as well.
As Mr. Lampert's management went on things began to top out as Sears began to show why it is no longer what it once was retailer wise and of course K-mart was old news too. Those of us old enough to remember can tell you there was a time that Sears was top dog. Owning a Sears credit card in the 1970's was considering a badge of honor. Investors convinced themselves that even though the business model for Sears Holdings was slowing the real estate holding would make up for any concerns. Truth be the real estate portion of Sears Holdings is indeed most valuable being at great mall locations, highly sought urban locations, and were back in the early 2000's being requested for purchase by other retailers such as Walmart and Target.
Unfortunately the economy went bust and the desire for real estate went down too. There are some locations Sears Holdings owns still being sought, but not like before. The downturn also did a number on the business of Sears Holdings. Never a strong suit, but when people got tight with their wallets they looked for more inexpensive places to shop. The company is longer turning in nice profits and the accompanying stock buy backs have dwindled as well. Sears Holdings is not the darling they were when Mr. Lampert took over.
I got out of SHLD around $80 per share and licked my wounds. During the bottom of the economic downturn SHLD traded under $40 per share, Today it is in the low $70. I frankly can not see it moving much anywhere but down going forward. There simply is no profit to plow back into the company and unless the economy turns around there is trouble ahead.
Sears Holdings still is the country's largest appliance seller and it's name brand Kenmore is still considered a major brand. The Craftsmen tools brand is without question the most desired tools for professionals anywhere. I suppose Sears Holdings could reduce their offering at stores to those brands and likely survive, but that restructure would be a tall order. Of course their is the K-mart stores and what to do with them too. Maybe liquidate at today's fire sale prices and move forward. Frankly it is anybody's guess where Mr. Lampert will go next. But if anyone can do it he is likely the person.
SHLD is one big risky bet if you are into serious betting. Count me out on the risk.
Thursday, May 19, 2011
Electric Utility Stock worth considering.
If you have read my blog long you know my favorite electric utility stock is Southern Company, symbol SO. Their management is top notch and their regulatory environment plus sheer size of customer base make them in my opinion the single best stock to own if one iw weighting risk and safety. However no one should put all their investment eggs in one basket. So if you are looking for another electric utility to own that compares to SO, then SCG is your pick.
SCG operates and sells almost all their electric generation in South Carolina. Simply put the regulatory environment for a regulated utility is the best in the state of South Carolina. The safety factor for SCG is only beat by Southern Company because SO is just so much larger. South Carolina however is a growing state and has attracted numerous high profile industrial businesses of late. Boeing and BMW came to SC because of that friendly regulatory environment. SCG cooperates to help these businesses prosper and of course the electric power sold helps SCG.
This company operates as conservative as it gets. They raise their dividend, but only when the company is absolutely sure they can pay the new dividend long term. No you will not get rich owning SCG stock, but you also will not get poorer either. Take a look at their chart for 20 years and all you see is up and up, yes slow up and up, but nevertheless up. Even when the economy hits other utilities SCG just fades a bit and keeps going. If you need some diversification in your portfolio and want solid safety with a 4.7% dividend SCG is your ticket.
This stock since it is a smaller utility and only operates in a small area is essentially not covered by the big investment houses, but that does not mean it is not a good stock to own.
I do not own SCG and do not have plans in the future to do so. SCG does not fit my hedge fund trading profile.
SCG operates and sells almost all their electric generation in South Carolina. Simply put the regulatory environment for a regulated utility is the best in the state of South Carolina. The safety factor for SCG is only beat by Southern Company because SO is just so much larger. South Carolina however is a growing state and has attracted numerous high profile industrial businesses of late. Boeing and BMW came to SC because of that friendly regulatory environment. SCG cooperates to help these businesses prosper and of course the electric power sold helps SCG.
This company operates as conservative as it gets. They raise their dividend, but only when the company is absolutely sure they can pay the new dividend long term. No you will not get rich owning SCG stock, but you also will not get poorer either. Take a look at their chart for 20 years and all you see is up and up, yes slow up and up, but nevertheless up. Even when the economy hits other utilities SCG just fades a bit and keeps going. If you need some diversification in your portfolio and want solid safety with a 4.7% dividend SCG is your ticket.
This stock since it is a smaller utility and only operates in a small area is essentially not covered by the big investment houses, but that does not mean it is not a good stock to own.
I do not own SCG and do not have plans in the future to do so. SCG does not fit my hedge fund trading profile.
Tuesday, May 17, 2011
Current Complete Trading Portfolio
This posting is an update of every stock in my trading portfolio. My having these securities in my portfolio does not mean they are good buys for you in your situation. The reason they are in my trading portfolio is because they, as a group, fit my needs for option trading. These stocks are only one side of The Small Town Investor's Hedge Fund, the other side consists entirely of municipal bonds, about 95% domiciled in North Carolina, the other about 5% being domiciled in Puerto Rico and Guam.
AEP..Large electric utility in the midwest. I like the management and the large size. This stock is a keeper. Rumored merger candidate, which is smart business in the political enviroment. Currently no concerns regarding regulation activities.
ARCC..Largest business development company in the country. Their size makes them a good buy for dividend income and relative safety. My concern is about the economy slowing down going forward and this stock has lots of bets on the economy getting stronger. I am considering dropping this stock.
BCE..Largest telecom in Canada. I like owning stock in Canada. I like owning a telecom stock. Shareholder friendly managment.
CTL..Largest legacy telecom. Management has shown they know their knitting and how to consolidate mergers. 7% plus payout. A real good stock to bet on. Rumors of possible merger with Sprint make me like it even better.
DO..Deep water driller. Has moved many rigs out of US waters away from Obama's punitive policies. Volatile price with good divy. Careful buying is important when playing with DO, for professional traders only.
DUK..Soon to be largest electric utility in country. Current poor management to be replaced with good management upon merger. Price is about right now. Regulation concerns have eased in North Carolina.
ERF..Great way to play the oil market. Canadian firm that operates in country where oil exploration is not politically punished. Nice monthly dividend. My current largest holding. I love this stock and have made lots of money on it for years. Basically like owning your own oil well.
FTR..Legacy telecom I will be dropping from trading soon. Still good company but does not fit my trading style.
HCN..Solid health care real estate operator. I like it a lot at $50, not so much at $55. Healthcare real estate is a no brainer going forward.
JNK..Good ETF play on corporate junk bonds. Monthly dividend upwards to 8%.
LO..Maybe the best play on tobacco. Cheap price for what is a growing company. One of my best money makers percentage wise. These people know how to play politics the hardball way too.
MO..If you want to do business with the US Government and have the trial lawyers protect your payout then this is your stock. Nothing makes one sleep well at night knowing two of the largest special interests in the country are watching over your money.
NNN..One of the best managed real estate companies in country. Raises dividend annually and operates in triple net environment. What's not to like.
O..Premium priced stock, but such a great operater I have to own it. One of the most friendly stockholder companies on the planet. Monthly dividend. Has moved up to my second largest holding. Has made me money for many years.
PFF..Steady Eddie. Preferred stock ETF which pays monthly dividend. Owns preferred stock across a wide range of industries. Solid Solid Solid!
RAI..Tobacco company. Sells addictive product. Guaranteed by the US Government. Very good dividend. Any other questions?
RRD..World's largest printing company. Keeps buying up weaker competitors. Printing is not sexy anymore, but someone has to do it. Price is starting to get a bit frothy.
SCCO..My gold play, except this one is a copper producer. Copper, unlike gold, is a required metal for the technology of today. This company is the world's largest miner of copper. Does do business in Peru where political concerns can pop up from time to time. Frankly price volatility can keep me up at nights, but the profits are real nice too.
SDRL..New deep water driller with new rigs and lots of business. Contracts backed up for a long time. Domilciled in Norway where Obama can not touch it.
SO.,.Safest most dependable company on the planet. If I was dying I could put my mother's entire estate in this stock and die in peace. I might not make much money percentage wise on SO, but I never lose money either. Just keeps paying about a 5% dividend forever.
WIN..Legacy telecom. Good company, but will be dropped since no longer fits my trading style.
AEP..Large electric utility in the midwest. I like the management and the large size. This stock is a keeper. Rumored merger candidate, which is smart business in the political enviroment. Currently no concerns regarding regulation activities.
ARCC..Largest business development company in the country. Their size makes them a good buy for dividend income and relative safety. My concern is about the economy slowing down going forward and this stock has lots of bets on the economy getting stronger. I am considering dropping this stock.
BCE..Largest telecom in Canada. I like owning stock in Canada. I like owning a telecom stock. Shareholder friendly managment.
CTL..Largest legacy telecom. Management has shown they know their knitting and how to consolidate mergers. 7% plus payout. A real good stock to bet on. Rumors of possible merger with Sprint make me like it even better.
DO..Deep water driller. Has moved many rigs out of US waters away from Obama's punitive policies. Volatile price with good divy. Careful buying is important when playing with DO, for professional traders only.
DUK..Soon to be largest electric utility in country. Current poor management to be replaced with good management upon merger. Price is about right now. Regulation concerns have eased in North Carolina.
ERF..Great way to play the oil market. Canadian firm that operates in country where oil exploration is not politically punished. Nice monthly dividend. My current largest holding. I love this stock and have made lots of money on it for years. Basically like owning your own oil well.
FTR..Legacy telecom I will be dropping from trading soon. Still good company but does not fit my trading style.
HCN..Solid health care real estate operator. I like it a lot at $50, not so much at $55. Healthcare real estate is a no brainer going forward.
JNK..Good ETF play on corporate junk bonds. Monthly dividend upwards to 8%.
LO..Maybe the best play on tobacco. Cheap price for what is a growing company. One of my best money makers percentage wise. These people know how to play politics the hardball way too.
MO..If you want to do business with the US Government and have the trial lawyers protect your payout then this is your stock. Nothing makes one sleep well at night knowing two of the largest special interests in the country are watching over your money.
NNN..One of the best managed real estate companies in country. Raises dividend annually and operates in triple net environment. What's not to like.
O..Premium priced stock, but such a great operater I have to own it. One of the most friendly stockholder companies on the planet. Monthly dividend. Has moved up to my second largest holding. Has made me money for many years.
PFF..Steady Eddie. Preferred stock ETF which pays monthly dividend. Owns preferred stock across a wide range of industries. Solid Solid Solid!
RAI..Tobacco company. Sells addictive product. Guaranteed by the US Government. Very good dividend. Any other questions?
RRD..World's largest printing company. Keeps buying up weaker competitors. Printing is not sexy anymore, but someone has to do it. Price is starting to get a bit frothy.
SCCO..My gold play, except this one is a copper producer. Copper, unlike gold, is a required metal for the technology of today. This company is the world's largest miner of copper. Does do business in Peru where political concerns can pop up from time to time. Frankly price volatility can keep me up at nights, but the profits are real nice too.
SDRL..New deep water driller with new rigs and lots of business. Contracts backed up for a long time. Domilciled in Norway where Obama can not touch it.
SO.,.Safest most dependable company on the planet. If I was dying I could put my mother's entire estate in this stock and die in peace. I might not make much money percentage wise on SO, but I never lose money either. Just keeps paying about a 5% dividend forever.
WIN..Legacy telecom. Good company, but will be dropped since no longer fits my trading style.
Sunday, May 15, 2011
Eastern North Carolina Press Association
For about one quarter century I have been associated with and attended most of the meetings of a small newspaper group named the Eastern North Carolina Press Association. As one of the members of this loosely organized group I once served as President as all of us took turns getting the annual meeting put together. The group is not only small in number, but almost every newspaper represented has a circulation less than 10000 per week. Most of these publications are owned by individuals and not large corporate chains. All are intimately connected to their communities and do much of the grunt work to get their publications to the subscribers.
What does this have to do with Small Town Investor? Plenty. I worked for over three decades at several of those publications. If there ever was a small town investor these guys are it. Many of these entrepreneurs bought or started their publications with saved or borrowed capital and today are struggling to keep their businesses going in a tough economy. They deal with ever evolving technology, staff problems, doing bookkeeping, being an editor, dealing with customers both advertising and subscribers, covering local sporting events, attending almost every possible community event from birthdays to local celebrations, and the list just goes on and on.
I attend the annual meeting now to visit with people who I have known for years and to keep up with current trends in the industry. (Ok, I admit it I do go for the excellent seafood dinner too.) I also go to admire these people and what they do to continue to work in a business that has seen declining prospects of late. Remember these people are not the big corporate types, they are working to pay their bills for the business and personal living. Most times a large portion of their life savings is tied up in the value of their publications.
This weekend I attended the 64th annual meeting of the group. As usual I came away impressed with their efforts and convinced as long as their are small towns that have local boards that need covering, local high schools that needs pictures of marching bands and football teams, brides wanting wedding pictures in local newspapers, someone wanting to sell their used car, local grocers needing to advertise specials, local auto dealers wanting to sell vehicles, and the list goes on, the need for local newspapers will always be there. Therefore there will always be people who want to do the hard work of putting out a small local newspaper.
The individuals who operate small newspapers are some of the world's great optimists and we as citizens and the towns we live in are made better because they exist. I am blessed to have worked with many of these people, to visit with them this weekend, and remain convinced they are truly small town investors. I look forward to next year's meeting where I will again get a dose of real world investing.
What does this have to do with Small Town Investor? Plenty. I worked for over three decades at several of those publications. If there ever was a small town investor these guys are it. Many of these entrepreneurs bought or started their publications with saved or borrowed capital and today are struggling to keep their businesses going in a tough economy. They deal with ever evolving technology, staff problems, doing bookkeeping, being an editor, dealing with customers both advertising and subscribers, covering local sporting events, attending almost every possible community event from birthdays to local celebrations, and the list just goes on and on.
I attend the annual meeting now to visit with people who I have known for years and to keep up with current trends in the industry. (Ok, I admit it I do go for the excellent seafood dinner too.) I also go to admire these people and what they do to continue to work in a business that has seen declining prospects of late. Remember these people are not the big corporate types, they are working to pay their bills for the business and personal living. Most times a large portion of their life savings is tied up in the value of their publications.
This weekend I attended the 64th annual meeting of the group. As usual I came away impressed with their efforts and convinced as long as their are small towns that have local boards that need covering, local high schools that needs pictures of marching bands and football teams, brides wanting wedding pictures in local newspapers, someone wanting to sell their used car, local grocers needing to advertise specials, local auto dealers wanting to sell vehicles, and the list goes on, the need for local newspapers will always be there. Therefore there will always be people who want to do the hard work of putting out a small local newspaper.
The individuals who operate small newspapers are some of the world's great optimists and we as citizens and the towns we live in are made better because they exist. I am blessed to have worked with many of these people, to visit with them this weekend, and remain convinced they are truly small town investors. I look forward to next year's meeting where I will again get a dose of real world investing.
Wednesday, May 11, 2011
100 days...1000 hits...400 unigue visitors
I started this blog 100 days ago at the urging of some friends and former co-workers. All the time I told them I do not have the time to do it and who the heck wanted to read this stuff anyway. Well I have been proved wrong. Seems I have had the time to have posted 46 times or about one every two days. I currently work to do about two per week. maybe three. In that time the blog has been viewed just over 1000 times by just under 400 people. About 10 hits per day. Now that might not be much to some high octane blogs, but for someone who has no national exposure it is a good bit. I suppose what makes me wonder the most is where all these people come from, try South Korea, Denmark, Singapore, India, Russia, in all 10 different countries. Most of them at their home computer, but mobile is gaining ground. The vast majority from Facebook as it should be since I post updates there. The most read posting far and away is the one on "Common sense on oil and the price of gasoline." But some surprise me, like the posting on Jimmy V's Steakhouse has had an unusual number of hits for the time it has been up. Anyway we will keep doing this thing, at least for awhile longer, since someone out there likes it and must be getting something from it. I know that because having worked in media all my working life I know I am not a professional writer by any stretch. At some point soon I will finish completeing a posting on the Dixon Charitable Trust. Since the Hedge Fund is wrapped in the trust and the vast majority of the income from the trust currently and eventually will go to my charities I want all my readers to know that what I am doing profitwise is not neccesarily for me, but for the trust.
Tuesday, May 10, 2011
Jimmy V's Steakhouse
Posting note: The last two weeks I have been busy getting our son married and this week attending an annual conference so posting of regular investing topics is light. Next week I will be back to regular posting. In the meanwhile I appreciate your readership and enjoy some different small investor angles.
If a small town investor has done well with their investments nothing like a good steak will do to celebrate. Ok, I admit it the celebration was actually the rehearsal dinner for our soon to be married son. But that is beside the point. Frankly I like a really good steak and have tried a good number of local steakhouses. Here I am talking local steakhouses, not the chain steakhouses. I am also talking prime cut steakhouses, not the choice cut ones.
Last Friday night was my first visit to Jimmy V's in Cary NC. Enjoy this one State fans that a Carolina fan would go to Jimmy V's but the location was perfect for the dinner and the reviews good. Jimmy V's is in McGregor Center off of US 64 and frankly not easy to find since it is in back of the shopping complex. However it is easy to get to and the parking ample. Trust me the work to find Jimmys is worth the effort. The laid back enjoy yourself atmosphere makes this place just seem to say come on over after work and take a load off. You get both the ambience of a good NY style steakhouse with good old southern charm.
In our party not a complaint was heard. We tried many of their entrees including chicken, seafood, and two steak selections. My choice was a 16 oz. NY Strip Steak. There is little choice in sizes, but that goes along with traditional upscale steakhouses. The steak flavor was divine and the cooking perfect, medium rare my choice. The potato was also top notch as well, having been rubbed in sea salt and served topped as I like it with butter and sour cream. The service was superb. The staff was also extremely friendly and joined our celebration that added to the occasion. The manager kept in contact with us to make sure we had not only what we needed, but everything we desired to make the evening a success.
One complaint for the evening this meal just blew my diet completely. Having been losing weight since January 1 of this year the results of this fine meal will soon be weighting on me so to speak. Oh well, it is just one day and recovery can be found.
Also if you are not prepared to pay in three figures for a night out for two this is not your venue. Jimmy V's is an upper end steakhouse so you get the quality for which you pay. But this IS the best steakhouse at which I have ever dined and I will pay them the ultimate compliment of saying we will be back.
If a small town investor has done well with their investments nothing like a good steak will do to celebrate. Ok, I admit it the celebration was actually the rehearsal dinner for our soon to be married son. But that is beside the point. Frankly I like a really good steak and have tried a good number of local steakhouses. Here I am talking local steakhouses, not the chain steakhouses. I am also talking prime cut steakhouses, not the choice cut ones.
Last Friday night was my first visit to Jimmy V's in Cary NC. Enjoy this one State fans that a Carolina fan would go to Jimmy V's but the location was perfect for the dinner and the reviews good. Jimmy V's is in McGregor Center off of US 64 and frankly not easy to find since it is in back of the shopping complex. However it is easy to get to and the parking ample. Trust me the work to find Jimmys is worth the effort. The laid back enjoy yourself atmosphere makes this place just seem to say come on over after work and take a load off. You get both the ambience of a good NY style steakhouse with good old southern charm.
In our party not a complaint was heard. We tried many of their entrees including chicken, seafood, and two steak selections. My choice was a 16 oz. NY Strip Steak. There is little choice in sizes, but that goes along with traditional upscale steakhouses. The steak flavor was divine and the cooking perfect, medium rare my choice. The potato was also top notch as well, having been rubbed in sea salt and served topped as I like it with butter and sour cream. The service was superb. The staff was also extremely friendly and joined our celebration that added to the occasion. The manager kept in contact with us to make sure we had not only what we needed, but everything we desired to make the evening a success.
One complaint for the evening this meal just blew my diet completely. Having been losing weight since January 1 of this year the results of this fine meal will soon be weighting on me so to speak. Oh well, it is just one day and recovery can be found.
Also if you are not prepared to pay in three figures for a night out for two this is not your venue. Jimmy V's is an upper end steakhouse so you get the quality for which you pay. But this IS the best steakhouse at which I have ever dined and I will pay them the ultimate compliment of saying we will be back.
Sunday, May 8, 2011
North Carolina Community Foundation
Last Thursday night I had the pleasure of attending my first NC Community Foundation fundraiser. This was the Johnston County chamber of the organization. I have known about this organization for several years, but never took the time to get to know their work in detail or contribute. After last Thursday I am glad I took the next step and I would encourage you to do the same. If you are wondering what can I do to give, trust me they have every possible way for you to make a difference. You can just give a few dollars to already estahlished funds or you can create your own endowment to last forever. The fundraiser in Johnston County was the 20th Anniversary for the local foundation. Even in this economy the group raised what was said to be a record amount. I believe that is because Americans, and Johnston Countians in this case, see the need and repsonded. The causes the foundation contributes to cover every town in the county and touch about every point of need you can imagine. Many are non profits. The affliation with the NC Community Foundation assures your gifts go in full to the need you desire and assures solid stewardship of the funds. . If does not get better than that. If you need help in estate planning they got people who can help you there as well.
Take a look at their website www.nccommunityfoundation.org. If you are in Johnston County look for their chapter. You can contact the regional representative at jlawson@nccommunityfoundation.org or call 919-256-6914
Take a look at their website www.nccommunityfoundation.org. If you are in Johnston County look for their chapter. You can contact the regional representative at jlawson@nccommunityfoundation.org or call 919-256-6914
Thursday, May 5, 2011
Do you own a CD or US Government Bond?
If you own a CD or US government bond you likely know the interest earned rates are low. The best CD rates I can find today are from 1.25% to 2.42% for a one year or five year CD. US bond rates are from .22% to 4.35% for a one year to 30 year bond. If you own any of these interest bearing vehicles I expect you are not happy, but at least believe you are safe. Well I have some sad news for you, not only are you not safe, but you are actually losing money. Official inflation rate via the CPI as reported by the US Government is 2.7%. So unless you are willing to tie up your money and the inflation risk it involved over 30 years you are actually losing money on your interest bearing account. Next the CPI does not include groceries and gas, and of course if you happen to be in the market for either of those goods you know the prices there are a whole lot more than going up just 2.7%.
Now I know the first thing most of you are going to say is at least it is safe and I will always get back my principal. Well if inflation is 2.7% and more you are not only not making money you are losing principal via lost purchasing power each and every day. So what is a saver or investor to do? Frankly I do not know since only you can decide your tolerance for risk and volatility. What I do know is the Federal Reserve is most determined via Quantitative Easing, which is massive increases in money supply, to force you to buy some other asset. Other assets the Fed has in mind is real estate, stocks, commodities, and anything where they deem the necessity to inflate asset prices. See the Fed is using their printing press to keep up and push up asset prices to make people feel richer. They also are trying to support the weak housing market by forcing mortgage rates down and stabilize prices so you will want to go buy a home. The Fed is hoping if you feel richer you will go buy a car, appliance, or something to keep the economy up and add some jobs.
The Fed and US Government is in cahoots here since the current administration is spending money via the federal deficit to support what the Fed is doing. The government also has a vested interest here as they want low rates to finance the massive borrowing. Imagine the interest costs if the borrowing rate just doubled from .22% to .44%. Frightening huh?
So again what is a investor to do? You can buy stocks that pay dividends. There are numerous large cap stocks that pay 5% or better. Many of these are utilities who are solid stable companies that are not going anywhere. Duke Power (DUK) and Southern Company (SO) are two that come to mind. You can also invest in real estate. A home loan for 15 years is right now below 4% and just a few years from now that will basically be the inflation rate going forward. So it is for my purposes free money. There are also preferred stocks in many of these utilities, but also banks, which are all but guaranteed to pay a dividend and being preferred you are the first to get paid if something does go wrong. I like a ETF for preferred stocks, symbol PFF. Master Limited Partnerships are another choice. These pay upwards of 6% and are tax favored as you basically pay no tax until you sell the security. There are some tax issues here when preparing your return, but if you need income these are virtually as safe as can be. OKS, KMP, and EPD are three that come to mind. Lastly, I favor municipal bonds. Right now you can buy investment grade muni bonds paying 5% plus and if you buy them in the state you live they are totally tax free. Muni bonds are issued by state governments and are also deemed extremely safe.
So next time you consider renewing a CD at a low rate, or buy a government bond at almost no interest, consider other alternatives. This by no means suggests you put everything you own in stocks or other assets. Wise saving and investing says keep some cash, but enhance your returns by diversifying your assets and make some real interest.
Now I know the first thing most of you are going to say is at least it is safe and I will always get back my principal. Well if inflation is 2.7% and more you are not only not making money you are losing principal via lost purchasing power each and every day. So what is a saver or investor to do? Frankly I do not know since only you can decide your tolerance for risk and volatility. What I do know is the Federal Reserve is most determined via Quantitative Easing, which is massive increases in money supply, to force you to buy some other asset. Other assets the Fed has in mind is real estate, stocks, commodities, and anything where they deem the necessity to inflate asset prices. See the Fed is using their printing press to keep up and push up asset prices to make people feel richer. They also are trying to support the weak housing market by forcing mortgage rates down and stabilize prices so you will want to go buy a home. The Fed is hoping if you feel richer you will go buy a car, appliance, or something to keep the economy up and add some jobs.
The Fed and US Government is in cahoots here since the current administration is spending money via the federal deficit to support what the Fed is doing. The government also has a vested interest here as they want low rates to finance the massive borrowing. Imagine the interest costs if the borrowing rate just doubled from .22% to .44%. Frightening huh?
So again what is a investor to do? You can buy stocks that pay dividends. There are numerous large cap stocks that pay 5% or better. Many of these are utilities who are solid stable companies that are not going anywhere. Duke Power (DUK) and Southern Company (SO) are two that come to mind. You can also invest in real estate. A home loan for 15 years is right now below 4% and just a few years from now that will basically be the inflation rate going forward. So it is for my purposes free money. There are also preferred stocks in many of these utilities, but also banks, which are all but guaranteed to pay a dividend and being preferred you are the first to get paid if something does go wrong. I like a ETF for preferred stocks, symbol PFF. Master Limited Partnerships are another choice. These pay upwards of 6% and are tax favored as you basically pay no tax until you sell the security. There are some tax issues here when preparing your return, but if you need income these are virtually as safe as can be. OKS, KMP, and EPD are three that come to mind. Lastly, I favor municipal bonds. Right now you can buy investment grade muni bonds paying 5% plus and if you buy them in the state you live they are totally tax free. Muni bonds are issued by state governments and are also deemed extremely safe.
So next time you consider renewing a CD at a low rate, or buy a government bond at almost no interest, consider other alternatives. This by no means suggests you put everything you own in stocks or other assets. Wise saving and investing says keep some cash, but enhance your returns by diversifying your assets and make some real interest.
Tuesday, May 3, 2011
Reducing Exposure
As we move closer to the end of QE2 I am reducing equity exposure to lessen risk. Frankly there is no way to know what will happen, if anything, when The Fed ends printing money and increasing supply. Caution at this point will become paramount and I prefer to be in equities which are very large cap and best of breed. So as noted earlier NYB and FTR will be dropped from trading. (FTR once options trading will allow.) I am also dropping recently added PBI and LLY. Additionally I plan on dropping HCN when options expire in May. Additional exposure will be added to PFF, JNK, and O. All these securites pay monthly dividends and are solid performers going forward. This reduces my number of equity securities from about 25 to 19. The following securities will be put on watch for removal, ARCC and SDRL. Once QE2 is past we will likely move some assets to additional municipal bonds as prices allow.
These moves are not meant to scare anyone. As a trader one must consider situations as this as points where caution is the best approach. If you are a buy and hold long term investor holding positions is still a good approach. The purpose of this posting is to continue to be open about our trading positions moving forward.
I am pleased that comparable hedge fund investors in April actually lost money, so our performance as noted in an earlier post presents evidence we are making correct moves in 2011.
These moves are not meant to scare anyone. As a trader one must consider situations as this as points where caution is the best approach. If you are a buy and hold long term investor holding positions is still a good approach. The purpose of this posting is to continue to be open about our trading positions moving forward.
I am pleased that comparable hedge fund investors in April actually lost money, so our performance as noted in an earlier post presents evidence we are making correct moves in 2011.
Five Deadly Business Sins
I expect many of you do not know who Peter Drucker was, or ever read any of his business writings. If not, go google and read some of his knowledge. He was the father of the modern knowledge worker and wrote extensively on management practices and was THE most influential thinker, scholar, and writer of the past century on business practices.
Many of us have original copies of what is his most widely read articles penned in the Wall Street Journal October 21, 1993 entitled "The Five Deadly Business Sins". I present it here as it was written almost two decades ago. Still as relevant today as it was then.
Recent years have seen the downfall of one once-dominant business after another - General Motors, Sears Roebuck and IBM, to name just a few. In every case the main cause has been at least one of the five deadly business sins - avoidable mistakes that harm the mightiest business.
The first and easily the most common is the worship of high profit margins and of 'premium pricing'. The prime example of what this leads to is the near-collapse of Xerox in the 1970s. Having invented the copier, it soon began to add feature after feature, each priced to yield the maximum profit margin and driving up the machine's price. Xerox's profits and stock price soared.
But the vast majority of consumers, who need only a simple machine, became increasingly ready to buy from a competitor. When Japan's Canon appeared it immediately took over the US market. Xerox barely survived.
GM's troubles - and those of the entire US motor industry - are in large measure also the result of the fixation on profit margin. By 1970 the Volkswagen Beetle had shown there was US demand for a small, fuel-efficient car. Yet domestic car makers were content for many years to leave it to the Japanese, since small car profit margins appeared so much lower than those for big cars.
In the end, GM, Chrysler and Ford increasingly had to subsidise their big car buyers with discounts, rebates and cash bonuses.
The lesson: the worship of premium pricing always creates a market for the competitor. And high profit margins do not equal maximum profits. Rather, maximum profit is obtained by the profit margin that yields the largest total profit flow, and that is usually the one that produces optimum market standing.
Closely related to this first sin is mispricing a new product by charging 'what the market will bear'. This, too, creates risk-free opportunity for the competition.
The Japanese have the world's fax machine market today because the Americans - who invented the machine, developed it and first produced it - charged what the market would bear, the highest price they could get. The Japanese, however, priced the machine in the US two or three years down the learning curve - and had the market virtually overnight.
In contrast, DuPont has remained the world's largest producer of synthetic fibres because, in the mid-1940s, it offered its new and patented nylon on the world market for the price at which it would have to be sold five years hence to maintain itself against competition.
This not only delayed competition, but also immediately created a market for nylon that no one at the company had even thought about (for example, in car tyres). And this soon became both bigger and more profitable than the womenswear market could ever have been.
The third deadly sin is cost-driven pricing. Most American and practically all European companies arrive at their prices by adding up costs and putting a profit margin on top. And then, as soon as they have introduced the product, they have to cut the price, redesign it at enormous expense, take losses and often drop a perfectly good product because it is priced incorrectly. Their argument? 'We have to recover our costs and make a profit.'
This is true, but irrelevant. Customers do not see it as their job to ensure a profit for manufacturers. The only sound way to price is to start out with what the market is willing to pay - and thus, it must be assumed, what the competition will charge - and design to that price specification.
Cost-driven pricing is the reason there is no American consumer electronics industry any more. If Toyota and Nissan succeed in pushing the German luxury car makers out of the US market it will be a result of their using price-led costing.
Starting out with price and then whittling down costs is more work initially. But in the end it is much less work than to start out wrong and then spend loss-making years bringing costs into line.
The fourth of the deadly business sins is slaughtering tomorrow's opportunity on the allure of yesterday. It is what derailed IBM.
IBM's downfall was paradoxically caused by unique success - catching up, almost overnight, when Apple brought out the first personal computer in the mid- 1970s. But then, when IBM had gained leadership in the PC market, it subordinated this new and growing business to the old cash cow, the mainframe computer.
This did not help the mainframe business. But it stunted the PC business just as, 40 years ago, when IBM first had a computer, it threatened its future by trying to protect the existing punch card business.
The last of the deadly sins is feeding problems and starving opportunities. All one can get by 'problem-solving' is damage containment. Only opportunities produce results and growth.
I suspect that Sears Roebuck has been starving the opportunities and feeding the problems in the retail business these past few years. This is also probably what is being done by the leading European companies - for example, Siemens - that have steadily lost ground on the world market.
The right thing to do has been demonstrated by GE, with its policy of getting rid of all businesses - even profitable ones - that do not offer long-range growth and the opportunity for the company to be number one or number two worldwide.
Then it places its best-performing people in the opportunity business, and pushes and pushes.
All this has been known for generations and has been simply proved by decades of experience. There is thus no excuse for managements to indulge in the five deadly sins. They are temptations that must be resisted.
Many of us have original copies of what is his most widely read articles penned in the Wall Street Journal October 21, 1993 entitled "The Five Deadly Business Sins". I present it here as it was written almost two decades ago. Still as relevant today as it was then.
Recent years have seen the downfall of one once-dominant business after another - General Motors, Sears Roebuck and IBM, to name just a few. In every case the main cause has been at least one of the five deadly business sins - avoidable mistakes that harm the mightiest business.
The first and easily the most common is the worship of high profit margins and of 'premium pricing'. The prime example of what this leads to is the near-collapse of Xerox in the 1970s. Having invented the copier, it soon began to add feature after feature, each priced to yield the maximum profit margin and driving up the machine's price. Xerox's profits and stock price soared.
But the vast majority of consumers, who need only a simple machine, became increasingly ready to buy from a competitor. When Japan's Canon appeared it immediately took over the US market. Xerox barely survived.
GM's troubles - and those of the entire US motor industry - are in large measure also the result of the fixation on profit margin. By 1970 the Volkswagen Beetle had shown there was US demand for a small, fuel-efficient car. Yet domestic car makers were content for many years to leave it to the Japanese, since small car profit margins appeared so much lower than those for big cars.
In the end, GM, Chrysler and Ford increasingly had to subsidise their big car buyers with discounts, rebates and cash bonuses.
The lesson: the worship of premium pricing always creates a market for the competitor. And high profit margins do not equal maximum profits. Rather, maximum profit is obtained by the profit margin that yields the largest total profit flow, and that is usually the one that produces optimum market standing.
Closely related to this first sin is mispricing a new product by charging 'what the market will bear'. This, too, creates risk-free opportunity for the competition.
The Japanese have the world's fax machine market today because the Americans - who invented the machine, developed it and first produced it - charged what the market would bear, the highest price they could get. The Japanese, however, priced the machine in the US two or three years down the learning curve - and had the market virtually overnight.
In contrast, DuPont has remained the world's largest producer of synthetic fibres because, in the mid-1940s, it offered its new and patented nylon on the world market for the price at which it would have to be sold five years hence to maintain itself against competition.
This not only delayed competition, but also immediately created a market for nylon that no one at the company had even thought about (for example, in car tyres). And this soon became both bigger and more profitable than the womenswear market could ever have been.
The third deadly sin is cost-driven pricing. Most American and practically all European companies arrive at their prices by adding up costs and putting a profit margin on top. And then, as soon as they have introduced the product, they have to cut the price, redesign it at enormous expense, take losses and often drop a perfectly good product because it is priced incorrectly. Their argument? 'We have to recover our costs and make a profit.'
This is true, but irrelevant. Customers do not see it as their job to ensure a profit for manufacturers. The only sound way to price is to start out with what the market is willing to pay - and thus, it must be assumed, what the competition will charge - and design to that price specification.
Cost-driven pricing is the reason there is no American consumer electronics industry any more. If Toyota and Nissan succeed in pushing the German luxury car makers out of the US market it will be a result of their using price-led costing.
Starting out with price and then whittling down costs is more work initially. But in the end it is much less work than to start out wrong and then spend loss-making years bringing costs into line.
The fourth of the deadly business sins is slaughtering tomorrow's opportunity on the allure of yesterday. It is what derailed IBM.
IBM's downfall was paradoxically caused by unique success - catching up, almost overnight, when Apple brought out the first personal computer in the mid- 1970s. But then, when IBM had gained leadership in the PC market, it subordinated this new and growing business to the old cash cow, the mainframe computer.
This did not help the mainframe business. But it stunted the PC business just as, 40 years ago, when IBM first had a computer, it threatened its future by trying to protect the existing punch card business.
The last of the deadly sins is feeding problems and starving opportunities. All one can get by 'problem-solving' is damage containment. Only opportunities produce results and growth.
I suspect that Sears Roebuck has been starving the opportunities and feeding the problems in the retail business these past few years. This is also probably what is being done by the leading European companies - for example, Siemens - that have steadily lost ground on the world market.
The right thing to do has been demonstrated by GE, with its policy of getting rid of all businesses - even profitable ones - that do not offer long-range growth and the opportunity for the company to be number one or number two worldwide.
Then it places its best-performing people in the opportunity business, and pushes and pushes.
All this has been known for generations and has been simply proved by decades of experience. There is thus no excuse for managements to indulge in the five deadly sins. They are temptations that must be resisted.
Sunday, May 1, 2011
STI Hedge Fund April Results.
April was a sub par month for performance due to the fund having less positions available for trading. May will present about 35% more positions for trading and should improve results. This situation is to be expected and are nothing more than the normal flow of hedge fund trading. May I would expect will bring the year to date results up significantly. We traded 17 positions this month and will likely trade 23 to 25 in May.
Results for April were 12.7% annualized. Still an excellent gain for most, but below the about 15% for this year and below the expected 18% plus for the hedge fund. These numbers include adjusted expenses and losses for the month. One loss taken during the month, RGC was sold at a loss. However the loss from RGC as noted in my first quarter report was due to a trade made in December 2010 to gain a large special dividend. The loss was more than offset from the dividend. That is how trading works sometime. The loss cost us about 3% for the month.
Looking forward to the next two months performance should improve as noted above. Due to the upcoming ending of QE2 I will likely limit expirations to June as we move forward to limit exposure to possible losses until the Federal Reserve monetary situation is more in focus. As noted earlier I will be dropping NYB and FTR from trading as soon as possible. I now also have concerned about HCN due to the upward movement in the security and making the risk there abovet $55 of concern. HCN might be dropped as well shortly. I added LLY and PBI to the fund trading earlier, but now have concerns with PBI as well, despite the low PE. PBI reported less than desirable results last week.
There still are excellent trading opportunities in ARCC, AEP, BCE, CTL, RAI, JNK, PFF, O. and others in the portfolio. The normal narrowing of trading securities is normal in a market that has moved upward significantly. SO and LO remain solid performers despite their higher valuations. Oil related securities ERF, DO, and SRDL, remain three of the best investment producers due to the continued restrictive political decisions by the Obama administration that limits oil production. However these actions despite being bad for consumers offer excellent opportunities for investment gains as noted in previous postings.
I remain cautiously optimistic, but know the ending of QE2 is a hurdle to cross. Once this policy is better known the volatility that could result might make the second half of the year most promising.
Results for April were 12.7% annualized. Still an excellent gain for most, but below the about 15% for this year and below the expected 18% plus for the hedge fund. These numbers include adjusted expenses and losses for the month. One loss taken during the month, RGC was sold at a loss. However the loss from RGC as noted in my first quarter report was due to a trade made in December 2010 to gain a large special dividend. The loss was more than offset from the dividend. That is how trading works sometime. The loss cost us about 3% for the month.
Looking forward to the next two months performance should improve as noted above. Due to the upcoming ending of QE2 I will likely limit expirations to June as we move forward to limit exposure to possible losses until the Federal Reserve monetary situation is more in focus. As noted earlier I will be dropping NYB and FTR from trading as soon as possible. I now also have concerned about HCN due to the upward movement in the security and making the risk there abovet $55 of concern. HCN might be dropped as well shortly. I added LLY and PBI to the fund trading earlier, but now have concerns with PBI as well, despite the low PE. PBI reported less than desirable results last week.
There still are excellent trading opportunities in ARCC, AEP, BCE, CTL, RAI, JNK, PFF, O. and others in the portfolio. The normal narrowing of trading securities is normal in a market that has moved upward significantly. SO and LO remain solid performers despite their higher valuations. Oil related securities ERF, DO, and SRDL, remain three of the best investment producers due to the continued restrictive political decisions by the Obama administration that limits oil production. However these actions despite being bad for consumers offer excellent opportunities for investment gains as noted in previous postings.
I remain cautiously optimistic, but know the ending of QE2 is a hurdle to cross. Once this policy is better known the volatility that could result might make the second half of the year most promising.
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