Don't Be A Dick... 20 Mar 2013 5:52 PM (12 years ago)

There's a neighborhood gas station/convenience store around the corner from my office. It faces the neighborhood's main artery which is a very busy two lane road. If you're exiting from the left, at times it can be tricky to get across if traffic is heavy. Turning right is no problem. Unfortunately, I have to turn left to go back to my office.

The other day a guy in a suit driving nice (leather, 4x4) pick up was exiting right as I was trying to get out to the left. I'm not trying to be whiny, but I was there first. However, he pulls up just enough to where he completely blocks my view of the oncoming traffic. He had the easier turn and there was no need for him to pull that far up. I know. I've made that right turn as many times as I've made the annoying left turn. He was just being a dick.

When I got back to my office and checked bids on the names I hold in the portfolios, I was pleased with the price of Dell (NASDAQ: DELL) at around $14.28. A few months ago as talk of a leverage buyout swirled, I decided to buy Dell in the premium total return strategy. The takeout price was said to be $14. Buying the stock at $13 and some change, I wrote a May 14 call against the position figuring with the premium I was taking in plus the $14 takeout plus a dividend, I'd be able to earn my clients a reasonably safe 9% in a few months. I'd look like a genius.A few weeks later it was announced that Michael Dell and private equity backers Silverlake Partners were going to make an offer to take Dell Computer private...at $13.65 a share. I didn't look like a complete moron. Just sort of a dumbass.

As the market has digested Dell's offer, activist investor Carl Ichan is bitching that the price is too low and other interested parties are slowly joining the fray which has bid the price up. All I wanted was $14. I have it now by accident. This time, the market has performed it's function as a semi-accurate voting machine. It's also proven that Michael Dell may very well be a dick.

The price talk was $14. Mike and Silverlake offer $13.65. Seriously? 35 cents? Is Dell being a hard nosed, shrewd businessman? No. He and Silverlake are just being dicks. Mike...you're a gozillionaire. You're going to take the company you founded, know like the back of your hand and turn it around. It'll be way more profitable than it is now. Then you'll take it public again and be a gozillionaire...again.

There's not much difference between $14 and $13.65. There's a big difference in being a dick and not being a dick.

Stock Market Predicitions 2013!! 1 Jan 2013 7:59 PM (12 years ago)

I started using the sensationalistic, hyperbolic title last year
(seekingalpha.com/article/316438-2012-stock-market-predictions).

For fun, I went back to see how I did in 2012. yes..I'm about to brag.

For the three names I profiled, International Paper (NYSE: IP), Eli Lilly(NYSE: LLY), and Intel (NASDAQ: INTC), the total return, inclusive of dividends, came to +21.41%. The best performer of the basket was IP with a capital gain of 33.4%. The biggest disappointment was INTC giving up 15.8%. However, the trio strongly out performed the S&P 500 total return by over 800 basis points (BPS). The crucial difference were the dividends. The blended yield of my 2012 trio was around 3.8% versus around 2.2% for the S&P 500. That's nearly a 72% pay raise! So, despite the bluster from the Washington wizards (not the basketball team!) and the fear of a higher dividend tax rate, common stock dividends should still be a crucial component of an investment strategy. 2013 is no exception.

Forget the outcome of the fiscal cliff. Forget the Europeans. Forget whatever the talking heads are saying about the yen and the Bank of Japan. Buy sensibility, value, quality, and yield. So, with that mantra, let's look at three ideas:

1. Astrazeneca PLC (NYSE: AZN) - this British pharma giant cranks out the wonder drugs that will keep millions of aging baby boomers healthy so that they can continue to burden Social Security and Medicare. Recently, the company completed an acquisition of a smaller biotech firm/pipeline partner. Look for acquisitions to play a major part in AZN's growth strategy for 2013. Shares trade at 7.8 times forward earnings (cheap!) and yield 6.04%. Currently, common dividends from UK companies are NOT subject to foreign tax.

2. Cisco Systems (NASDAQ: CSCO) - Former tech bubble golden child CSCO now looks and feels like an old, stodgy blue chip. That's because it is. And regardless of the fiscal cliff outcome, capital spending by business is going to happen, CSCO provides the backbone of information technology network buildout. Trading at not quite 10 times forward earnings and yielding 2.86%, the company currently has $5.38 cash per share, very little debt, and is the 9,000 pound gorilla of the networking business. With this much cash and ability, the dividend can grow.

3. Buckeye Partners, LP (NYSE: BPL) - Energy MLPs (master limited partnerships) were a mixed bag in 2012. For the most part, a lot of names look pretty attractive from a valuation standpoint. One of my favorites is petroleum transporter BPL. The company owns one of the largest, independent pipelines in the nation. Units throw off a tempting 9.15% yield and with oil production in the country's midsection growing exponentially, there's product that needs to be moved. Whether oil is at $150 per barrel or $50, the black stuff still needs to be moved from Tulsa to Tacoma. Expanding the nation's energy infrastructure should be a major investment theme going forward.

And the value is there right now. The blended yield of these three stocks is around 6%. Not bad considering the 10 year U.S. treasury yields a miserly 1.75% before taxes. Speaking of bonds, I touched on them briefly last year. My thesis remains the same: keep an eye on quality, get some yield, and NEVER...NEVER pay a premium. Let someone else pay 110. You're smarter than that.

Let's face it. despite decent equity market gains this year, it's still weird out there. And to quote Hunter S. Thompson, "When going gets weird, the weird turn pro." Who knows what next year will bring. Regardless, you can handle it like a pro.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it . I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I do hold these names in managed, client accounts.

The day after... 7 Nov 2012 4:26 AM (12 years ago)

Hey...look at that! The sun came up this morning. Apparently Obama was reelected and the world didn't end.

Incidentally, I "wasted" my vote on Gary Johnson.

Preferred Stock ETFs: Not Created Equal 30 Oct 2012 7:16 PM (12 years ago)

As much as the crusty and stubborn Jack Bogle hates to admit it, ETFs have taken cost-effective investment management to a whole new level, trumping his bulky, lumbering open-ended index fund (he vetoed the idea of creating an ETF during his time at the helm of Vanguard). As with the swift proliferation of any new, innovative product, the choices and nearly identical similarities often reach a confusing and dizzying heights. One prime example is the case of two well-known preferred stock ETFs: the iShares S&P U.S. Preferred Stock Index Fund (PFF) and the PowerShares Preferred Portfolio (PGX).

Read more at SeekingAlpha

Chips and Dips: Intel Looks Tasty! 10 Oct 2012 6:16 PM (12 years ago)

Thanks to the geniuses at Frito Lay (PEP), the snack food universe has evolved into a bout a gazillion different varieties, many of which I haven't eaten and plan to never eat. However, few people could argue that two of their original core, old school products, original Lay's potato chips and Ruffles, are just as good today as they were have a century ago. Sometimes I feel like a broken record when it comes to some of my stock ideas, but like those potato chips, they're good, dependable and satisfying. I've lost track on how many times I've written positively about Intel Corp (INTC). Find out more at Seeking Alpha.

Now..I'm Mad As Hell 3 Oct 2012 12:33 PM (12 years ago)

So..I read this cover story about this guy who is an extremely high ranking DOD civilian lawyer. He's got estate planning issues because he's married to another guy.

My issue isn't the gay marriage thing. Like Kinky Friedman said.."I believe they have the right to be as miserable as everyone else." What chaps my ass is that a government lawyer has created enough wealth for himself over the span of his career that he's going to have estate issues.

I'm sorry. That's bullshit. He's supposed to have those problems if he has spent his working life in private practice not as a federal government employee.

That's what's wrong. I'm pissed. You should be too.

Checking Under the Hood of an ETF: the numbers don’t add up 25 Sep 2012 7:23 PM (12 years ago)

Recently, a client of mine brought the Alerian MLP ETF (AMLP) to my attention. He was interested in owning some energy master limited partnerships (MLP’s) and thought an exchange traded fund (ETF), basket approach might make more sense. My curiosity piqued, I offered to do some analysis on AMLP. I was surprised at my findings.

The Market’s Looking Tired…Make a Shopping List Now! 18 Aug 2012 7:14 AM (12 years ago)

The S&P 500 is up nearly 25% year over year. That’s a helluva run considering everything the macro world has thrown at global financial markets. Will the party continue to rock? The doe eyed optimist in all of us hopes so. However, my Spidey sense is tingling telling me otherwise. Here are a few things that don’t necessarily keep me up at night but I do think about them when I’m brushing my teeth.

Big companies…big punishment: As talk of a global economic slowdown has turned to fear has evolved to some evidence of softness, large cap companies that have enjoyed overseas fueled growth are starting to experience weakness which is flowing through to their earnings.

Read the rest at SeekingAlpha

What if... 14 Jun 2012 9:19 AM (12 years ago)

I can feel the hand wringing out there concerning Greece and the Eurozone and our fiscal cliff. And it all comes down to this...

If Greece exits the Euro...the world will not end.

If Spain leaves the Euro...the sun will still come up the next morning.

If the Chinese economy slows down...children will still laugh.

Invest accordingly.

Burying Mom and Pop 6 Jun 2012 5:36 PM (12 years ago)

The Big Boxes have done it…but no one did it better than Guitar Center

I’m a useless guitar player. Can’t read music. Nerve damage hearing loss in one ear. Play in an old man garage band. A room full of amps and guitars that pisses off my wife every time she sees it. To quote General George S. Patton: “God, I love it so.” Playing rock-n-roll guitar has been one of my passions since I was 12 years old and I was fired by the classical guitar teacher my mother sent me to. In addition to Malcolm Gladwell’s 10,000 hours of practice (read “Outliers”…it will change your life), I’ve probably spent the equivalent loitering in local music shops, ogling guitars and twiddling them through amps. 98% of the time, I’ve had absolutely no intention whatsoever of spending any money. That was before Guitar Center when the mom and pop music store was the outlet for new Stratocasters or fuzz pedals or strings.

Guitar Center grew and grew and, for the most part, planted mom and pop’s ass six feet under in most smaller markets. It’s often popular to be a populist and bemoan the evil big box retailers for squelching the middle class shopkeeper and enslaving the consumer. To some extent, Wal Mart did do that building giant, Orwellian looking stores that attract disability drawers on mobility scooters like garbage dumps attract seagulls. I avoid Wal Mart at all costs. I refuse to go there unless it’s absolutely necessary and all of my other options have been exhausted. However, Guitar Center did it right and, honestly, I don’t miss Mom and Pop’s Music much at all.

I live in a smallish city. At one point, there were probably ten independent music stores that focused on guitars in town. Today, there’s one and guitars probably make up 25% of their business if that much. I hate going there and rarely do. The guy in charge, who doesn’t own it, hovers over you and not in a good way. I get the vibe that he thinks I’m going to try to put one of their crappy Yamaha amps down my pants and try to steal it. It’s always a chore if you ask to try one of the instruments. You can almost feel them rolling their eyes. That was the customer experience at just about every local music store: touch the merchandise…but not too much and we’ll act very put out about it and treat you like a criminal. Not at GC. Wanna jam on $1200 custom shop Strat? Go for it. Turn it up. It almost seems that when Guitar Center did marketing research, they asked us loser musicians what we hated about music stores and then made sure they didn’t include that in the customer experience.

And speaking of marketing, that’s another area where they hit it on the screws. “Guitar Center Sessions” on Direct TV is perfect. I don’t dig all of the bands they have but I’ll watch it if I land on it. To me, the concept says that he marketing guys decided to spend money paying musicians to provide decent content rather than wasting it on newspaper inserts (a dying medium), direct mail (another dying medium), TV commercials…you get the picture. A few weeks ago, my phone rings. It’s a kid from Guitar Center. “Hey, Mr. Yieldpig (not my real name). Just wanted to shout at you and let you know that the weekend sale is gonna be extended through Tuesday and you can get 10% off of anything in the store.” I thanked him and said I’d swing by if I needed anything. I didn’t but I didn’t mind the unsolicited call. The kid was pleasant and polite and tried to add some value. 10% isn’t much but it’s better than a poke in the eye with a sharp stick.

I am not…repeat…not a paid shill. Just a satisfied customer. I know mom and pop work hard. I’ve been there. It sucks. It’s tough and thankless. But so is running a huge business. Both can be rewarding if they’re done correctly. Guitar Center went private in 2007 so you can’t blame their success on being an evil public company backed by Wall Street. They’ve probably got the same corporate structure as lot of mom and pops. They just know how to rock the customer’s world. Everyone should copy that riff.

Sideways Summer? 17 May 2012 6:08 PM (12 years ago)

It's beginning to look a lot like last summer SeekingAlpha

Bear Market..Bull Market? It Just Doesn't Matter 4 May 2012 1:33 PM (12 years ago)

SeekingAlpha

High Tech...High Yield! 19 Apr 2012 5:00 AM (13 years ago)

Check out a recent post to Seeking Alpha. No shortage of Apple fanboy blowback. SeekingAlpha

The Three States of Wealth 4 Apr 2012 5:06 PM (13 years ago)

My oldest son is finishing up 6th grade. It was a big change from 5th grade. Puberty. Girls. Tighter cliques. iPhones. Profanity (an unavoidable rite of passage among males). And a more challenging academic regimen, mainly, science. Hard as Chinese arithmetic science. Chemistry. Not my stronger suit as a dad, tutor, and spirit guide. Luckily, my mom is a science teacher with 40 plus years in the can. I grew up around it and have a pretty good understanding.

A few weeks ago I was meeting with a client: one of the brightest media/advertising/marketing guys I've ever known and incidentally, an educational background in microbiology. Smarter than a tree full of owls. As we talked about the business outlook, the markets. and the inordinate amount of twenty something female employees who walked around his shop loudly in boots, our conversation turned towards the hobbled real estate market. We trade stories about deals we has heard about where investors who while surfing the wave of the 2003 to 2007 "anyone can make money" real estate business would parlay a big win into the next deal and then the next until the tone arm was abruptly ripped from the record. His conclusion was a theory that wealth, like matter, isn't really created or destroyed. It's just moved around or changing states. He's a smart cookie.

I never looked at it that way but it makes sense. So if you took the three different states of matter, solid, liquid, gas, what asset classes would fall under each?

Solids - Naturally, commodities or, what Dennis Gartman refers to as "stuff that hurts if you drop it on your foot: metals, energy (I know..it comes in all three solid, liquid and gas..but work with me here), even real estate. You can touch and pick up coal or gold or corn or the dirt on a commercial lot. The value of these can go way up or way down. But at the end of the day, it's still there. It may be worth a million dollars. It may be worth pennies. It's worth something if you can sell it. Then it becomes a liquid.

Liquids - Financial assets like stocks and bonds and cash are pretty liquid. So are mutual funds and ETF's to some extent but I have my doubts. More in a second. Stock and bond markets flow by the minute. By the tick. Constantly in motion. You can literally press a button and get a check that day. I've always loved that idea. The danger is that they could become the third state of matter: gas.

Gas - The price of a stock goes to zero. A bond issuer defaults. That's what I would consider a gas. It's there but you can't really see it and, eventually, it evaporates all together. Most options, save for calls written against a long stock position, are gaseous. They have a defined expiration date which means that they are guaranteed to go to zero. CMO's on all the insane asset backed shit Wall Street cooked up during the boom? Y'know...the ones that were layered with so many slivers of different mortgages that the dumbass ratings agencies said "What the fuck! AAA!!" A lot of that stuff is or will eventually be in the gas bracket when some analysts throw in the towel on trying to figure out what's in them. Beachfront condo pre-sales for condos that were never built? Nebulous. And although my jury is still out, ETF's are increasingly giving me that derivative, bullshit vibe. I hope I'm wrong.

As much as the investment industry, especially the technicians, wants you to think it's a science, it's not. It's an art with a lot of math mixed in. Leave the science to the smarter people.

Why Rick Santorum Scares the Crap Out of Me 23 Mar 2012 10:36 AM (13 years ago)

I try to keep this column somewhat politically neutral. But with the 2012 Presidential race gaining engine pressure, I can't resist.

I don't like Rick Santorum at all. I have no clue about his economic or national security policies. To my knowledge, he has none. I am pretty familiar with his social issues. My impression is that if it feels remotely pleasurable, he's against it.

He hates porn. He's virulently homophobic. He believes that married people should only have sex to procreate. These really have nothing with fixing the economy of or the huge fiscal issues we have staring down the barrel at us. Unless he plans to tax them or eliminate them so that we can focus better.

Rick is a politician of the worst kind. The kind that doesn't have a clue about how to govern a state as complex as the U.S. So, in order to win, he resorts to vitriol and demogougery. Hmmm...sounds like a guy you can catch anytime on the Military Channel.

Ultimately, this is even more dangerous than a clueless, rookie senator with a scary sounding ethnic name or an out of touch, ultra wealthy uber white guy who is about as exciting as beige paint.

I don't like where our nation is. We need our groove and can do spirit back. Taking the Oliver Cromwell approach isn't going to fix things.

Santorum is a guy standing on the corner of Repressed and Denial. Let's make him and his kind go away.

Who's with me?

Imagine All the Fanboys...Living Without Steve 27 Feb 2012 6:31 PM (13 years ago)

Over my shoulder the other day, I barely saw a snippet of a segment on CNBC about two guys who were organizing some kind of birthday celebration thing for Steve Jobs who, sadly, won’t celebrate anymore real, earthly realm birthdays. After grumbling under my breath about how stupid that seemed, I recalled the scene from the John Lennon docu-pic “Imagine” where a dirty, young hippie was caught sleeping (stalking?) in the garden of Lennon’s gigantic mansion: Tittenhurst.

The “security detail”, who look like they could’ve been in his band at the time, nab the scraggly kid and bring him to Lennon on the porch. Obviously, the kid is an obsessed fan and when he comes face to face with his messiah, he presses Lennon for the deep, mystical, inner meaning behind his songs. John, ever the cynical realist, bursts the kid’s bubble with a plain “I’m just a guy who writes songs.” I’m sure the former Beatle was playing up the working class hero thing for the cameras before he hopped into his Rolls Royce to be whisked to his waiting private jet. But whether Lennon saw himself as “just a guy who writes songs” or not, he was trying to put things into perspective for his young visitor.

After putting that all together, It kind of makes me wish that Steve Jobs had done the same for the legion of Apple fan boys or the market for that matter. Granted, Jobs was a genius on the level of a Thomas Edison (and consequently and equal SOB as well). He helped change the way we do a lot of stuff and made himself and many others obnoxiously wealthy in the process. But when you break it down, he was a guy in a black mock turtleneck and jeans that sold computers.

But wait? If Steve had kept it real for the fan boys he would have lost his slavish army that would help to hype product launches and insure that the shiny, happy people would line up in the freezing dark around the block to buy the newest shiny happy gadget. Couldn’t John Lennon have done the same thing? Convince the kids that the Beatles were still bigger than Jesus so they’d keep buying the shiny happy records? Sure he could’ve and he could’ve probably pulled it off. But he didn’t. And they still bought the records. And to think that Steve Jobs was so into the Beatles that he named his computer after their record label.

Again, I’m not knocking Steve Jobs. The guy helped change media as we know it. But just like John Lennon said that he was a guy who just wrote songs. Steve Jobs was just a guy who sold consumer electronics. And now he’s gone. Remember him, if you like, but let it be.

Honestly, Apple’s cool and all, but who in their right mind should pay $500 for their stock? Here’s how to get exposure to AAPL, at a decent value, using these three lil’ piggies.

AT&T (T)

Recent Price: 30.14
Fwd P/E: 11.9
Current Yield: 5.8%

Ma Bell got first dibs on the iPhone since it’s inception. They were also the first telecom provider to peddle the iPad. Sure, everyone else sells the iPhone now, but T was there first. And something tells me that the deal with giving away the old iPhone 3’s is sort of a consolation price when the exclusivity went away. The company’s a cash flow monster and the yield is sweet. Think of T as the railroad. Apple makes the locomotives. But T gives ‘em something to roll on.

Corning, inc. (GLW)

Recent Price: 13.52
Fwd P/E: 9.73
Current Yield: 2.21%

After building tens of thousands of miles of fiber optic cable for telecom providers to over build at the end of the century and seeing their stock price soar to near $100 and crater to around $2, GLW proves that there are second, third and fourth acts in America. The company created a boss product in Gorilla Glass which is used for touch screens in smart phones and tablets as well as LCD panels and televisions. The company counts Apple as well Samsung and other tablet and smart phone titans as customers. Great fundamentals: good free cash flow, low debt, trades right at book value. Remember, iPhones aren’t the ONLY smart phones and lots of smart phone makers use Gorilla Glass.

Intel Corp (INTC)

Recent Price: 26.89
Fwd P/E: 11.14
Current Yield: 3.12%

What can you say? INTC is a hoss. Piles of cash. Low debt (if any). A growing dividend. And they make the brains for 80% of the world’s desktops and laptops. Wait? Those’re buggy whips? Oh, well, I guess the $9 billion commitment to capex to develop products for the smart phone, tablet, and everything else space. Pretty soon your handheld, your tablet, your car, your microwave, your refrigerator will all have Intel inside. Consider the people who make the Core processor a core holding.

Follow us on the Twitter. @Yieldpig

Yieldpig, Copyright © 2012 All rights reserved. No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned. While we believe the sources of information to be reliable, we in no way represent or guarantee the accuracy of the statements made herein. Yieldpig does not provide individual investment counseling, act as an investment advisor, or individually advocate the purchase or sale of any security or investment Communications from Yieldpig are intended solely for informational purposes. Statements made by various authors, advertisers, sponsors and other contributors do not necessarily reflect the opinions of Yieldpig, and should not be construed as an endorsement by Yieldpig, either expressed or implied. Yieldpig is not responsible for typographic errors or other inaccuracies in the content. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided "AS IS" without any warranty of any kind. Past results are not indicative of future results. s should not view this publication as offering personalized legal or investment counseling. Investments recommended in this publication should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company in question

Oil? Shmoil. 24 Feb 2012 6:30 AM (13 years ago)

I'm looking at the weekly chart of USO. I'm the farthest thing from a wiggle reader. But it looks like lower lows and lower highs

The whole thing with oil is really starting to piss me off. And if you drive, too, you should share the sentiment. There's absolutely NO reason for prices to be here.

Iran? Please.

Oh..I know I've been dark. I owe you guys at least 1500 words. I'll make good. Promise.

How to Fix The Postal Service 1 Feb 2012 5:49 PM (13 years ago)

Last year, the U.S. Postal Service lost over $5 billion on operating revenue of $65.7 billion for fiscal year 2011. The USPS needed about $70 billion or so for expenses and officials warn that the agency could run out of cash completely by the end of FY 2012. How the hell do you have a near monopoly and run the business into the ditch that badly? I wish I knew. Probably having a business model that relies on the oldest mode of transportation known to man, the feet, where small, cheap items are delivered, by hand, six days a week to over 100 million different locations is a logistical bitch and an enormous drag on resources. And I’m sure the $5 billion plus retiree health care pre-funding and other human capital related liabilities don’t help matters.

Yes, it would appear that the USPS is terminally screwed. Unfortunately, old timey mail is still kind of a necessity. How else will registered mail travel to deadbeats and miscreants? Like anyone will click on a received receipt on an e-mail if they’re being sued for back child support, again. The good news is that the business is fixable. The bad news is that it’s going to be an ugly, bloody process.

Check Your Package

Shipping and package services contribute a little better than $10 billion to the Post Office’s annual revenue. Sell that concession to FedEx or UPS. Make ‘em bid on it. Keep the USPS branding. They would just be using UPS or FDX as the mule. They’re gonna be in the neighborhood anyway, right? Think about all of the enormous transportation overhead. Gone. Instantly. All processing, tracking, anything logistical (that the two private companies excel at), farm it out. Are people going to lose their jobs? Sure they are. But we’re talking about the survival of an American institution that was founded by Ben Franklin: the father of true, American enterprise. The free marketeers will touch themselves like Natalie Portman in “Black Swan”. The non-freemarketeers or whatever the hell they’re called will stroke out. Fine. Fox and MSNBC always need content.

Aye…Robot

The rest of the USPS $60 billion+ in revenue comes from regular, first class mail, periodicals, and the crap known as direct mail advertising. Keep that business. It can be a money maker. Automate it even more than it is now. I mean REALLY automate it. Even more robots in the sorting process. Even experiment with automation in the mail delivery process. Google has been developing driverless cars (and for the life of me it mystifies and scares the shit out of me. I mean, why the hell does a search engine/media company need to get into the driverless car business?). I’m sure they’d JV with the USPS. Imagine. Electric, robot mail trucks rolling through your cul de sac. Will there be casualties? Of course. But the human factor is, unfortunately, part of the problem. So reigning it in is part of the solution.

And there’s another solution. Instead of dumping $5 billion into retiree health care prepayment (c’mon…that’s putting money up a goat’s ass. Have you seen the kinda shape some of the people who work at the post office are in?), quasi privatize the USPS and take a $5 billion equity stake in the business. Would the pride of ownership alter the attitude of the lady behind the counter at the post office in the mall that stays open till 10pm on April 15th? Good question. The guys in the brown uniforms seem to get the job done efficiently. I’d bet they’ve got UPS shares in their 401(k).

Here’s How Blackberries SHOULD be sold… 25 Jan 2012 7:19 PM (13 years ago)

I use an older, hand cranked, coal fired Blackberry. I’m loyal to it. Sometimes, when I fiddle with my son’s iPhone, I feel dirty, like some old, shriveled college professor trying to shtup a nubile coed. And I get mad as hell at Research in Motion for blowing the lead they had initially in smartphones.

This week when the company announced it’s management shuffle, the marketplace didn’t necessarily do back flips. The founders were replaced by an insider with a multi-national, bureaucratic pedigree. Doesn’t exactly scream “innovation”. So I’ll pretend I’m an ad guy pitching the company on how to sell Blackberries like a boss.

First, I’d hit the fact that one of the company’s biggest customers is the U.S. government. Sure, it’s a risky strategy. No one really thinks “Yeah! Department of Agriculture! Badass!”. But that’s not who we’re trying to reach. RIMM’s position was that it had the most secure network and OS out there. Then the system goes down because it gets hacked. News flash: everyone’s been hacked, is getting hacked, or will be hacked in the very near future. It’s the world we live in. It’s still a pretty secure platform. The President of the United States, who has NEVER been allowed to have a cell phone for security reasons, has a Blackberry.

Second, functionality. The Blackberry’s internet ability, especially on older handsets, sucks. So what? I screw off on the internet enough at the office.. There are a couple of sites that have a decent mobile app for Blackberry and I can get what I need. Is it iPhone awesome? Not even close. But I don’t particularly want or need that. I dig on Twitter and, frankly, Twitter for Blackberry is just fine for what it is. E-mail and texting still rock like the Who on “Who’s Next”. Ever wondered why the text is so intuitive on an iPhone or an Android device? It’s because touch screens, as magical and amazing (the most over used word of the decade) as they are, aren’t really worth a shit when you’re trying to do real, grown up work. And that’s what they’re used for: work.

Lastly, integrity. RIMM has had difficulty getting a decent foothold in emerging markets. The main reason is that most emerging market governments are at least a wee bit oppressive and typically demand access to the Research in Motion network. Why? So they can spy on their citizens. The company typically doesn’t oblige. Apple doesn’t give a shit about an iPhone users privacy and Google seems to sliding down the same slope. RIMM hasn’t gone their or, seemingly, not as overtly. That says something.

Yes. I like my Blackberry. They’re not for everyone. They’re not cute. They’re not particularly fun. But they work well. And there’s your tag line, Mr. Client: “Blackberry: Work well” That one’s on the house.

The Trend Is Not Your Friend 18 Jan 2012 7:08 PM (13 years ago)

Think about all of the trends you’d like to forget: leisure suits, shoulder pads, disco, rollerblading. The fallout typically involves photographs that find their way to the internet 20 years later, possibly injury, or even the regrettable one night stand that haunts us every time you hear Spandau Ballet’s “True”. Trends can also come back to haunt us as investors.

I’ve never been a momentum guy or technical guy, and certainly not a trend guy. I’m just too uncoordinated. Besides, it seems that once everyone starts jumping on a trend, it’s done for the most part. If you follow the rest of the lemmings, you will soon have your rear end handed to you in a Ziploc bag with your name written on it with a Sharpie.

The cloud. Energy MLP’s. Treasuries. Oh, and gold…the mega trend of the decade. Did you finally break down and go long GLD in September 2011 because EVERYONE said the shiny, yellow metal was going to $45,000 an ounce because a huge, cataclysmic collapse was coming? Congratulations, you’ve given back 12% of your money. But it’s OK. You’re still getting a dividend, right? My bad, GLD or Krugerands buried in Ron Paul’s back yard don’t pay a dividend. But you can always trade it for some ammunition or water at the displaced persons camp underneath the interstate after the huge upheaval.

Look folks, I’m sure there’re many of you reading this who did make money on commodity trends or surfing other investment waves. God bless you. But I’m also willing to bet that a lot of you didn’t. Let’s remember Einstein’s definition of insanity: doing the same thing over and over expecting different results. If you’ve been chasing investment trends since the tech boom of the late 90’s and you’re still working with the same $10,000 in your Ameritrade account, but down the crack pipe and get help. It’s not working.

What works? A process. Look at Benjamin Graham. Look at Warren Buffett. Look at Mario Gabelli. Look at John Calamos. Why are they the greatest of the great? They have or had a definitive, disciplined process. Were they correct 100% of the time? No. But, they’re more successful on a consistent basis because of their process. Warren Buffett didn’t just throw a wad of money at IBM because he figured that Berkshire (BRKA) needed some tech exposure and he kinda new the name. He, and the rest of the big brains at Berkshire, used their process and came to the conclusion that IBM would be a good addition to Berkshire’s portfolio because of the different criteria that Berkshire looks for in a holding; strong cash flow generation, high quality, well known franchise, excellent management. If Buffet had just wanted some tech exposure, he could’ve just bought a tech ETF. Of course, as soon as the talking heads caught wind of that trade, the ETF share price would’ve spiked like Stephen Tyler’s blood alcohol level after falling off of the wagon. And what would happen? The lemmings would jump on the trend.

Even the stodgy, boring Dow Jones Utilities went through a bit of a trendy phase last year returning an astounding 19%. If you put new money in that space are you paying too much? Maybe. So, avoid the trend trap. Find a big name with decent fundamentals that’s cheaper. Southern Company (SO) trades at 18 times earnings (expensive for a utility) and yields 4.2%. Exelon (EXC) trades at around 10 times and yields 5.3%. An 80% discount in P/E and a pickup of 130 basis points in yield makes more sense and may protect you from the market handing you the aforementioned Ziploc bag.

Follow us on Twitter...@Yieldpig

Yieldpig, Copyright © 2012 All rights reserved. No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned. While we believe the sources of information to be reliable, we in no way represent or guarantee the accuracy of the statements made herein. Yieldpig does not provide individual investment counseling, act as an investment advisor, or individually advocate the purchase or sale of any security or investment Communications from Yieldpig are intended solely for informational purposes. Statements made by various authors, advertisers, sponsors and other contributors do not necessarily reflect the opinions of Yieldpig, and should not be construed as an endorsement by Yieldpig, either expressed or implied. Yieldpig is not responsible for typographic errors or other inaccuracies in the content. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided "AS IS" without any warranty of any kind. Past results are not indicative of future results. s should not view this publication as offering personalized legal or investment counseling. Investments recommended in this publication should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company in question

2012 Stock Market Predictions!!! 28 Dec 2011 5:48 PM (13 years ago)

OK. I’ll admit it. I used the cheesy headline to get lots (dozens and dozens) of hits. Everyone’s constantly hunting, scouring the information universe to see what gurus and pundits think about the forthcoming year. In 2009, I wrote a “prediction” piece that was a little more longer horizon. How’d I do? I didn’t pick any individual stocks, per se. More macro stuff than anything. You can go back and read it if you like

http://www.thestreet.com/story/10653348/1/go-long-bottled-water-twenty-teens-predictions.html

I think we did OK. We skipped writing a prediction for 2011 and judging from this year’s action, it’s just as well. It would have been a complete exercise in futility.

I will make a forecast for 2012, though. I predict, at best, the markets will be unpredictable. They always are. Could anyone predict the enormous, maybe bigger than ours, monetary crisis in Europe? I’m sure there are a lot of naysayers who may be proven somewhat right who doubted the viability of the Euro all along. But on this magnitude? Probably not. It’s always that way. I’m currently reading Reinhart and Rogoff’s “This Time Is Different” on the Kindle (thank to my wise and thoughtful sister for the gift card!). If you’re serious about investing and economics, I mean TRULY serious about really learning about it, red this book. It’s tough. It’s like going to school. But that’s what it takes.

Anyway, so, agreeing that markets are as unpredictable as Charlie Sheen and a stolen prescription pad, what do you do? I’m sticking with the strategy, yet to be named, I’ve been using for the past few years. As far as stocks are concerned, own big, cheap, well run, well known names that pay you something. What do I mean by cheap? A good place to start is the forward P/E ratio. The S&P 500 currently has a P/E of around 12 or 13. So, good stocks with a P/E less than that of the index are probably a smart move. Stocks like International Paper (IP) trading at 9.6 times 2012 earnings yielding 3.5%, Eli Lilly (LLY) at 9.5 times 2012 earnings with a 4.7% yield, and Intel (INTC) at 10.32 times 2012 earnings and yielding 3.4% are probably good ideas. I know. I’ve talked about these names before. I still like them. They’re great companies. Their multiples are reasonable to just down right cheap. And they pay you more than a ten year treasury for your risk.

Incidentally, had you owned those three names this year, your return just from capital appreciation would have been a little better than 15%. Throw in dividends and you’d be flirting with 20%. Not bad considering the S&P 500 has returned…oh…almost nothing this year? Did I mention I’ve written about these names in the recent past?

As far as bonds go, caution is probably the operative word. I’d stay away from government stuff. Hell, I haven’t bought a government bond for a client since 1997. Yeah, I’ve missed some run up. But I’ve always been taught that bonds are for income. They should pay you something. I’ve always gravitated toward corporate bonds. I guess it’s the equity background. I still hold the same belief. Again, use the same philosophy for corporates that you would for stocks. Big, cheap, liquid, well known names. Don’t pay too much (par or less…NEVER pay a premium for a bond) and get some yield. Don’t be afraid to dabble in the upper end (“B” rated or better) of the junk bond world. Don’t go out too far on the curve (10 years…tops!) and trade ‘em if you can. Yes…trade bonds. If you buy it at 96 and it goes to 110 and paid you 6% in the process, that’s a 20.5% total return. At the end of the day, the bond is really only worth 100. Let someone else pay 110.
Also, some financial company bonds are floating around out there that look attractive from a price standpoint. Worth a look, but be choosy and expect the worst while you hold it. Also, plan on trading those as well.

2011 was weird. 2012? Who knows? But judging from the past few years, at least some weirdness is guaranteed.

Yieldpig, Copyright © 2011 All rights reserved. No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned. While we believe the sources of information to be reliable, we in no way represent or guarantee the accuracy of the statements made herein. Yieldpig does not provide individual investment counseling, act as an investment advisor, or individually advocate the purchase or sale of any security or investment Communications from Yieldpig are intended solely for informational purposes. Statements made by various authors, advertisers, sponsors and other contributors do not necessarily reflect the opinions of Yieldpig, and should not be construed as an endorsement by Yieldpig, either expressed or implied. Yieldpig is not responsible for typographic errors or other inaccuracies in the content. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided "AS IS" without any warranty of any kind. Past results are not indicative of future results. s should not view this publication as offering personalized legal or investment counseling. Investments recommended in this publication should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company in question

Blame The Euro Crisis on Charlemagne 21 Dec 2011 6:51 PM (13 years ago)

It all goes back to the 700 and 800’s to the brother of a hunchback and the son of Pepin the Short.

It’s easy to hang the albatross of blame for the shitstorm in Europe on the French and the Germans. After all, they’re the economic Alpha males of the continent and, let’s face it, the Euro was just a way to ensure their continued dominance. Not like they haven’t been running the joint since the Romans left.

No, the real culprit was a guy by the name of Charlemagne. If you took Western Civ in 9th grade, you remember him. A Frankish (French) king, Charlemagne was crowned Holy Roman Emperor by Pope Leo the Third in 800. But what did Charlemagne do?

The Roman Empire as everyone knew it had long since gone teats up. Greater Europe was basically a tribal bouillabaisse: the Franks in France, the Saxons over in most of Germany, the Moors and the Basques over in Spain. Charlemagne became the first Pan E

uropean badass and pulled all of it together. He converted the Saxons to Christianity, kicked the Lombards out of Italy, and basically, backed the Roman Catholic church as the premiere “spiritual” and political force on the continent. Charlemagne was the muscle. When all was said and done, His Holy Roman Empire stretched as far east as Czechoslovakia, Serbia and Croatia, as far south as Barcelona and Rome and as far north as the Danish border. Yep. Pretty much all of Europe. Oh, and there was a common currency known as the Livre Carolinienne backed by a silver standard.

Ironically, Charlemagne was probably born somewhere in Belgium but is identified more as a Frankish or French guy. However, his favored capital was in Aachen with the throne residing in Aachen Cathedral. Where is Aachen? Oh yeah…in Germany although France has held the deed to the town a couple of times. So, the quick version is that once all of the different, indigenous European tribes kicked out the Romans and did their own thing for a century or two, a Franco-Germanic dude decides it would be a better idea if everyone was united under his terms, of course. He mixed it up semi-successfully with the Moors. Never conquered them but worked out a couple of alliances that he eventually hosed them on.

Let’s see. A Franco-Germanic power consolidator who makes war and forces conversion on to peripheral peoples. Hmmmmm? Anyone see a pattern here? Anyone? Bueller? Three centuries later, Frederic Barbarossa continued to piss off the Italians and everyone else. Then Napoleon, Kaiser Wilhelm, Hitler. But it all goes back to Charlemagne. And it never really seems to work at least not long term. It’s Einstein’s classic definition of insanity: doing the same thing over and over while expecting different results. It’s been 1200 years, France and Germany. Time to let go.

The Karate Kid 30 Nov 2011 6:56 PM (13 years ago)

If you listen to the financial television news yappers long enough, especially around mid-day (I’ve got a big ass flat screen..not my idea..outside of my office so…unfortunately…I don’t have much of a choice), they start sounding like Ralph Macchio’s mentor, Mr. Miyagi (played by Pat Morita in his biggest role since Arnold on “Happy Days”). Only instead of the zen like “wax on…wax off” it’s “risk on…risk off”. I’ve been in this racket long enough to collect a few buzz phrases and, by far, “risk on…risk off” is one of the most moronic. Enough already.

Newsflash: all investing is “risk on”. Stocks go up and down. Bonds are subject to fluctuations in interest rates and credit ratings. Currencies are at the mercy of their sovereign issuers and the court of world confidence. And commodities? If a butterfly in Brazil bats its wings on Tuesday, a flood in Missouri on Thursday can guarantee financial ruin by Friday. Translation: you’ll lose an assload of money on your soybean trade.

Risk still ticks deep within the bowels of the perceived “no lose” bank certificate of deposit. You could get caught with a shitty, low rate if rates decide to go up. If the issuing bank fails and you’re insured up to the FDIC limit, you’ll get your money back. However, it could take a while based on how screwed up the failing institution is. Risk is everywhere. It doesn’t care what you think. Deal with it.

Honestly, Daniel San was pretty much an enormous pussy whose ass got kicked on a regular basis. Then he stepped up, got some mad skills, started doing the ass kicking himself, and won the love of Elisabeth Shue. Granted, Daniel San would’ve probably been happier if it was the nasty, “Leaving Las Vegas” Elisabeth Shue, but we’re talking about a character played by Ralph Macchio so he was lucky to get ANYTHING.

Investors should take a cue and stone up. Who knows where this whole thing is going? However, I think it’s probably one of the better times in history to buy awesome stocks cheap. Keep in mind they’re NOT going to go up 167% in a week. But, with huge names, and again, I’m beating the same drum I’ve been beating for months, like International Paper (IP), Eli Lilly (LLY), or Intel (INTC) at 20% or better discounts to the S&P 500’s P/E and beating it’s dividend yield by 120 basis points or better, why wouldn’t you make a fist and go long. You’re probably going to do OK.

You’ll also probably do OK takin’ a look at this week’s three lil’ piggies…

“Nice Assets…”

Federated Investors (FII)
Recent Price: 15.87
P/E: 10.59
Current Yield: 6.04%

The Skinny
We’ve probably oinked about this one before…so…what the hell…we’ll oink again. FII is an asset manager…mutual funds…managed accounts..pension plans…etc. It been smacked about like most financials. The difference is that this one may be worth holding. Stock’s cheap at 10x’s forward earnings. Average ROE over the last five years has been around 39%. Pretty strong. The yield is especially compelling for a financial name and a non-bank financial at that. Analyst estimates have also been relatively stable compared to FII’s peer group.

The Danger
With the market up 300 one day down 278 the next…who wants to own ANY type of investment? That’s the challenge FII and every other money manager faces: outflows by scardey investors. And, despite the fundamentals, psychology will probably keep a lid on financial stock prices for a while. Growth’s pretty anemic as well. And although it looks like the world fired the money bazooka at the Eurozone problem, it’s not going away anytime soon. Financials aren’t for the lilied of livers.

“Better homes and dividends…”

Meredith Corp (MDP)
Recent Price: 29.00
P/E: 11.09
Current Yield: 5.27%

The Skinny
Good franchise here. Company publishes 80 titles with it’s flagship brand being Better Homes and Gardens. Branded online media grabs an average 22 million visitors monthly. Stock’s cheap at 11x’s forward earnings. Low debt to capital at only 15%. Makes you feel OK with the 5+% dividend. MDP has also done a good job of licensing the brands, again mainly Better Homes and Gardens, through smart deals with the retail Leviathan Wal Mart (WMT).

The Danger
Print media has that jaundiced, walking around with an oxygen tank look. Better Homes is a great brand and will probably do OK in the post print, tablet world. But what sleepers like ”Diabetic Living” and “Quilts and More”? Don’t see those burning up the ol’ iPad, huh?

“United we log on…”

United Online (UNTD)
Recent Price: 5.28
P/E: 6.60
Current Yield: 8.2%

The Skinny
Another Yieldpig repeater here. Starting out as Juno Online, a Johnny Comelately dial up service, UNTD has evolved into an interesting amalgamation of social media sites that include classmates.com, memorylane.com, and their strongest brand, FTD.com (yes…the flower thing). Classic deep value metrics: 0.5 times sales, 96% of book value, and a $1.27 in cash per share. It’s no Groupon. Oh yeah…they’re actually making some money AND giving it to shareholders.

The Danger
While UNTD’s properties are in the “hot” social media sector, they don’t exactly possess the heft of a Facebook. Year over year revenue growth is also a little soft giving up about 5%. Long term debt is a little concerning, too: about $260 million on a market cap of $470 million. Odd in a space that typically doesn’t have a whole lot of debt. And although FTD.com is a known quantity, it’s definitely a consumer discretionary. Might be more classic value trap than classic value.

Jump on the bandwagon...follow us on Twitter @Yieldpig

Yieldpig, Copyright © 2011 All rights reserved. No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned. While we believe the sources of information to be reliable, we in no way represent or guarantee the accuracy of the statements made herein. Yieldpig does not provide individual investment counseling, act as an investment advisor, or individually advocate the purchase or sale of any security or investment Communications from Yieldpig are intended solely for informational purposes. Statements made by various authors, advertisers, sponsors and other contributors do not necessarily reflect the opinions of Yieldpig, and should not be construed as an endorsement by Yieldpig, either expressed or implied. Yieldpig is not responsible for typographic errors or other inaccuracies in the content. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided "AS IS" without any warranty of any kind. Past results are not indicative of future results. s should not view this publication as offering personalized legal or investment counseling. Investments recommended in this publication should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company in question

Let 'Em Dangle* 16 Nov 2011 6:23 PM (13 years ago)

On Halloween, we got a visit from the ghost of markets past. MF Global, a major, global financial derivatives broker run by Goldman Sachs, U.S. Senate and New Jersey Governor’s Mansion alumni John Corzine, filed for what is now the 8th largest bankruptcy in U.S. history. No surprise that the S&P 500 gave up nearly 2.5% on that day as investors had flashbacks of the Lehman Brothers failure in fall of 2008.

Immediately, there was pulling of hair and gnashing of teeth comparing MF’s flop to Lehman’s. There are similarities and differences (some of which I debated with Fox Business News’ Charlie Gasparino via Twitter that morning). The major difference was the size and scope. While certainly newsworthy, MF’s (kinda makes me laugh writing “MF”) failure was nowhere near the size and scope of Lehman’s. Lehman was like the class skank who gave the entire football team herpes; they had sold EVERYONE their shitty mortgage backed products and everyone had bought tons of what would eventually become Lehman’s shitty bonds. No wonder Hank Paulson was so pissed! They helped infect the whole system. MF Global affected an already gun shy market mostly psychologically.

The main similarity is how both MF and Lehman blew themselves up (and Bear Stearns and Wachovia and Long Term Capital Management): some kind of derivative. There’s a reason Warren Buffett called them “financial weapons of mass destruction”. If used incorrectly, they almost guarantee wrecked markets and firms who dabble with them. You’d think that eventually, these guys would learn. Apparently, they don’t.

When institutions fail due to their own stupidity, I have very little sympathy. Wachovia was an awful bank. I had a checking account with them because I had to open one with a home equity line we had with them. It was an awful bank. I’m sure many people are glad it’s dead. Although, while firms like MF Global and Lehman and Bear Stearns were arrogant. Wachovia was more dumpy and pitiful. Good riddance.

There’s enough blame for where we are to go around. However, what really makes me angry is that the “bank runs” that created chaos and failure in 2008 and today, mostly in Europe are all institutionally driven. It had everything and nothing to do with how you and I as individuals invest our money. And we feel powerless. To steal from Chris Rock, I don’t agree with Occupy Wall Street but I understand them. Apparently they don’t have a cohesive issue. I think I have one for them.

*”Let ‘Em Dangle” is an awesome, creepy Elvis Costello song about a conviction and execution by hanging. It’s on the album “Spike”. If anyone has seen my copy, please return it.

Well…enough darkness…maybe this week’s three lil’ piggies can brighten things up…

“You might get some in your stocking…”

Oxford Resource Partners (OXF)
Recent Price: 16.32
P/E: NA
Current Yield: 10.72%

The Skinny
I haven’t been real piggish on energy MLP’s for a while. Mainly because everyone wanted them. Now that they’ve gotten clobbered, I’m changing my tune a bit. OXF fits that bill as units currently trade at a 40% discount to the 52 week high thus bumping the yield way up there. The numbers are encouraging. 2001 EPS will come in at a loss of around 45 cents. The forecast for next year is $1.17...a possible 300%+ increase. Despite the loss, things aren’t all bad. Assets (the stuff in the ground) have increased by 18% over the year and since the U.S. is the Saudi Arabia of coal, if regulatory attitudes change for the better, OXF could be an interesting position.

The Danger
Coal, like just about all commodities (except for oil…WTF?) have been beaten like a rented mule. In fact, some of the punditry talks of the commodity trade being dead. Finis. Maybe. Maybe not. While OXF units look cheap, a buyer could be walking into a classic value trap. Also, no one really has to rehash the current, hostile regulatory environment. The jury’s still out on a global slowdown. If there is one on the horizon, rest assured coal exports will slow.

“Hey now…you’re an all star…”

BlackRock Enhanced Dividend Achievers (BDJ)
Recent Price: 7.15
P/E: NA
Current Yield: 9.51%

The Skinny
If dividend stocks are all the rage (you’re reading this…aren’t you?), this closed end fund is on steroids. Historically, the fund chose stocks based on the Dividend Achievers Index, although that has changed (more in the next paragraph). In addition to selecting companies who have been growing their dividends consistently, the fund uses a covered call option writing strategy to enhance the yield. The fund does this rather than employing leverage which is a plus. Shares trade at a 10% discount to NAV which is a pretty good bargain. All in all, not a bad lookin’ little CEF.

The Danger
The fund changed managers and strategies last year. Apparently, it wasn’t a smooth transition. The fund gave up 10% last year and is off the same this year. Thank God for the huge yield, eh? Speaking of the yield, it seems a little high. Hopefully they can keep it up, but as yields on everything continue to shrink, prepare for a cut. Lastly, covered call options are an awesome protective, income tool, but, you always cap your upside.

“Go fly a kite…”

Kite Realty Group Trust (KRG)
Recent Price: 4.10
P/E: NA
Current Yield: 5.85%

The Skinny
KRG is a smallish ($265 million market cap) Midwestern retail REIT . The firm is vertically integrated with about 9.3 million square feet in it’s portfolio. Their current FFO (funds from operation) trend is good growing at a decent 6.3% clip which ain‘t bad considering that commercial real-estate is basically in a bonafide depression. Shares trade at 22% discount to their book value and the low, single digit share price is tempting if you’re still trying to bottom fish REIT reef.

The Danger
Commercial real estate still sucks and will continue to suck for a few years. Be prepared to wait. While KRG has some great, big box anchor tenants (Publix), it does manage a lot of smaller space geared towards small businesses. Again…depression conditions. Small shop occupancy declined last quarter by 60 bps. And for a deeply discounted security, the yield actually feels a little chincy. There are higher yielding REIT’s out there.

Hey kids!! Join the hundreds…yes HUNDREDS of followers that drink our Kool Aid from the Twitters. @Yieldpig

Yieldpig, Copyright © 2011 All rights reserved. No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned. While we believe the sources of information to be reliable, we in no way represent or guarantee the accuracy of the statements made herein. Yieldpig does not provide individual investment counseling, act as an investment advisor, or individually advocate the purchase or sale of any security or investment Communications from Yieldpig are intended solely for informational purposes. Statements made by various authors, advertisers, sponsors and other contributors do not necessarily reflect the opinions of Yieldpig, and should not be construed as an endorsement by Yieldpig, either expressed or implied. Yieldpig is not responsible for typographic errors or other inaccuracies in the content. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided "AS IS" without any warranty of any kind. Past results are not indicative of future results. s should not view this publication as offering personalized legal or investment counseling. Investments recommended in this publication should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company in question

Toga! Toga! Toga! 2 Nov 2011 6:51 PM (13 years ago)

It finally dawned on me. The very best analogy for the whole European mess would be the basic plot line of the classic comedy “Animal House”.

Greece is the party hardy Delta house. Failing grades, dilapidated facilities, garbage everywhere thanks to a general strike. Germany and France are the combined evil forces of the snooty Omega house and Dean Wormer. I’m not sure who’s who. Nevertheless, they conspire to assert control over the mythical Faber College, forcing everyone to conform and do it their way.

The austerity measures being dictated to Greece sound a lot like Dean Wormer’s “double secret probation”. Nobody is really sure what the hell it is and, in the back of their minds, they know it probably won’t reign in the rogue Greeks anyway.

Greece’s attitude, especially now with their threatened referendum on the bailout totally reminds me of Otter’s speech after they’ve completely trashed Flounder’s brother’s Lincoln. Here’s the clip:

http://youtu.be/zOXtWxhlsUg

In the end, the Delta’s get expelled. But, as a last hurrah, they cause complete chaos and completely dismantle the homecoming parade.

http://youtu.be/pX71mALOPKs

I genuinely hope that a Greek expulsion or withdrawal doesn’t cause create chaos in Europe. Unfortunately, it probably will and rest assured we’ll get a dose over here as well. But I’m afraid everyone is following the script fairly accurately.

Well, it wasn’t over when the Germans bombed Pearl Harbor and it’s not over till we meet this week’s three lil’ piggies.

To find out more...subscribe to YielpigPremium only on Amazon Kindle

http://www.amazon.com/s/ref=nb_sb_ss_i_0_6/183-1895632-5263909?url=search-alias%3Daps&field-keywords=yieldpig&sprefix=yieldp

Yieldpig View RSS