THIS IS NOT INVESTMENT OR TAX ADVICE. IT IS A PERSONAL REFLECTION ON INVESTING. RELY ON NOTHING STATED HEREIN
This was a week of ups and downs. Big up, big down, big up, smaller down, smaller down.
I sold my 5/18/17 AIG 5.45% bonds for $100.82 having purchased them in June, 2010 for $91.16. With interest, I made nearly 12% in
6 months, but had reached a point of diminishing return. I only wish I had bought more in June.
Bank of America (BAC) settled a huge overhanging mortgage buy back claim against BAC's subsidiary Countrywide Mortgage. Moreover, it appears that BAC has reserved sufficiently to resolve the remaining
claims by private purchasers of similar mortgages. This news resulted in a pop in my BAC preferred shares only to be met late Friday with news that BAC and other mortgage holders may have even more problems in foreclosing mortgages at least in Massachusetts. Despite my vow to do so, I have not reduced my position in BAC, a bank that just can't seem to get out of its self created messes.
Speaking of messes, I bought some more BP earlier in the week on the news that Ken Feinberg, the oil spill claims administrator, believes that $10 billion should be sufficient to resolve all of the private BP claims. You may recall that BP set up a $20 billion fund for this. It is my belief that absent more bad news, BP should trade at a PE ratio similar to other big oil companies---about 30% higher--once it reinstitutes its dividend. Any hope of that occurring soon, however, was dampened by the report on Friday that it is highly likely that the US will bring criminal charges against BP with the threat of billions in fines. I don't see a dividend until that is resolved.
I've been buying ARY, the recently issued investment grade senior notes of Ares Capital, whenever they dip below $24. At par ($25), ARY still pays 7.75% and is over 8% at its 24.05 close on Friday. It think it is a good buy. Its low price may be due to tracking sites (e.g. Yahoo Finance, Google Finance, etc.) showing it at 6.5% , apparently not appreciating that the first interest payment was for less than a full quarter.
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