THIS IS NOT INVESTMENT ADVICE. IT IS A PERSONAL REFLECTION ON INVESTING. RELY ON NOTHING STATED HEREIN
This week, I switched into American Capital Agency (AGNC) from Anworth (ANH) in my agency mortgage REIT holdings. I listened to AGNC's conference call replayed last weekend and was impressed by the dedication AGNC has to asset selection which is the most important aspect of this business. This should complement my holdings in Annaly ( NLY).
As loyal readers know, I am a fan of Chimera (CIM) in the non-agency mortgage REIT area. This is a riskier place than agency mortgages (see above) because the assets are not guaranteed by Fannie or Freddy. CIM reflects this risk with a 17% nonqualified dividend. I hold several positions, some where my entry point is above $4. So when CIM issued a secondary offering this week priced at $3.85, the stock took a deep dive immediately. Having done my homework, I knew that mortgage REITs generally price large secondary offerings at book value, so I doubled down at $3.90. By Friday, CIM was back at $4.05 and will surely rise once the the new cash is put to work.
Also, this week Portugal Telecom (PT) completed a sale to Telefonica (TEF) of its 50% interest in Vivo, Brazil's largest cell service provider. This makes TEF, already the world's third largest telecom, a big player in Brazil, one of the BRIC countries and a leader in the emerging markets. I added to my position in TEF on a dip this week. I also bought some PT. It does not fit my profile since it pays a normal dividend below 5% and is not growing. However, in conjunction with the sale of Vivo, PT is planning both a year end and a special dividend in 2010 which if my math is right should yield a 30% return in two months. We will see what happens.
In addition, this week I bought some McDonalds's at Barb's request and added to my Citi common, SCCO, Citi qualified preferred and BAC qualified preferred. I also bought Statoil (STO) which like PT does not fit my profile because it currently pays only a 4.7% dividend and its major oil field is the quickly depleting North Sea. However since it is 2/3rds owned by the Norwegian government its dividend is secure, but more importantly,, it is quietly converting itself to a worldwide player in natural gas exploration. Statoil owns a major position in the Marcellus and Eagle Ford natural gas fields in the US and is in the process of becoming the first foreign company to partner with China in the exploration and extraction of China's recently discovered, huge shale gas fields. These recent discoveries could take China a long way toward energy independence, something equally available to the US if the current administration were to promote natural gas. Oh well, someday.
No comments:
Post a Comment