Silicon Investor - The Aristocrats(tm): Market Dogs

[sense] I've been engaged in a discussion of FTR with a couple of others over on IHub. ...

sense — 3/6/2012 12:37:42 PM

I've been engaged in a discussion of FTR with a couple of others over on IHub. The process is useful, and has led me to a couple of additional realizations about the company and its markets that give me serious pause.

Each of them do tend to show FTR management... sort of bumbling into the future blindly... at a point in time where an apparent lack of vision is likely to become a cash cow killer...

Not least among them is that there is a discussion occurring in Congress now about universal access and making telecom linkage a "right" of sorts. The reason Verizon is shedding rural focus and concentrating on urban areas appears it is a conscious element of decision in focus... tied to making choices about what "problems" they want to have.

In the rural areas, delivering copper wires to everyone who wants one... is expensive. That expense may become significantly more onerous when or if there is a requirement imposed that alters the relationship that exists now between supply and demand for services delivered over wires. You might think the political advantage in the Senate related to representation of rural areas vs. urban might provide some cover... but, look at the history of telecom provisioning in rural areas in relation to the rural political interest... and what you come away with is not exactly a vision of a free market utopia. If they can require "free" services and require companies that deliver them to pay for them instead of others.. they will. And that will dramatically alter the cost/benefit of providing services in rural vs. urban areas.

Verizon is making the choice on purpose... to choose to have the problem of bandwidth limits in urban areas... that might be resolved by an expanded use of copper wires in an already densely wired grid... while shedding the inverse problem of being forced to generate a more densely populated wire grid in what is, and will remain relative to urban areas, a very widely dispersed and sparsely populated grid.

FTR management appear to be wholly blind to the competitive imperatives... living quarter to quarter... hoping to make up for shrinkage in the customer base... by adding more and more of what Verizon desperately wants to get rid of over time. That model is one that masks the problems... and can succeed in masking them... right up until the model collapses on itself due to its own weight.

That likely means that the primary market support you see for FTR... is coming from Verizon... who clearly stand to benefit more than anyone else from preserving the blind sink into which they're disposing of the crap they don't want...

[CusterInvestor] Just found your board.Thoughts on FTR--since one of your parameters is: 1. Can ...

CusterInvestor — 3/5/2012 1:35:48 PM

Just found your board.Thoughts on FTR--since one of your parameters is:
1. Can you trust management ?
Ceo said dividend was safe for 2 years--so I decided to bail

[sense] New pick to add to the board... Among the telecom's I've looked at recently... ...

sense — 2/28/2012 10:08:57 PM

New pick to add to the board...

Among the telecom's I've looked at recently... T, VZ, VOD, NTT... are reverse pinchers...

Those few I've looked at more favorably are positive pinchers: ALSK and FTR... They're OK as short term traders, and I've traded them well the last few weeks... but, the charts are "weak"...

Have a look at S... Sprint by far the strongest chart among the telecoms, now...

Haven't even looked at the yield... given the pinch on the weekly chart suggests the sort of yield I'll care most about in the short term...

[sense] Couple of additions to the site links in the original post that followers might ...

sense — 2/26/2012 5:22:26 PM

Couple of additions to the site links in the original post that followers might want to check out.

The Yield Hunter
Wall Street News Network
Value Forum
DividendInvestor.ca

[sense] List of U.S. Royalty Trusts from The Yield Hunter (or dividendyieldhunter.com) ...

sense — 2/26/2012 4:59:28 PM

List of U.S. Royalty Trusts from The Yield Hunter (or dividendyieldhunter.com)

U.S. Royalty Trust List

[sense] List of U.S. Royalty Trusts from Bloomberg: Looks incomplete, to me, and has li...

sense — 2/26/2012 4:43:15 PM

List of U.S. Royalty Trusts from Bloomberg:

Looks incomplete, to me, and has little info other than the tickers:

Oil-US Royalty Trusts Companies

[sense] "ARR also has 32,500,000 warrants outstanding (NYSE/AMEX: ARR/WS) with a convers...

sense — 2/6/2012 11:14:21 PM

"ARR also has 32,500,000 warrants outstanding (NYSE/AMEX: ARR/WS) with a conversion price of $11.00 that expire on November 7, 2013."

ARMOUR RESIDENTIAL REIT, Inc. Company Update January 19, 2012

Warrants have been outperforming shares, recently, which is interesting.

Other info in there... the divvie rate for 2012 Q1 is $0.11 per share per month, with the record date always on the 15th of the month, and the payment dates at the end of the month, between the 27th and the 30th.

[sense] ARR data on Yahoo is... not quite correct... There is more current data availab...

sense — 2/6/2012 11:02:00 PM

ARR data on Yahoo is... not quite correct...

There is more current data available on the company website (including that the company HAS a website which Yahoo doesn't list). The last couple of PR's lay things out pretty well, including the shares that have been sold, those that may be yet, given over-allotments, along with the current OS and the uses they're planning for the money in the recent raises: armourreit.com

The yield and the monthly divvie payments are OK, and mean it probably won't hurt much to hold on to this for a little while, but IMO the primary play at this point isn't as much a play on the future yield as it is a bet on two things:

First, the Fed is (for a reason) advertising long term sustained low interest rates for a long enough period of time to make rising interest rates not much of a concern. One reason they're doing that... is that they wan to use Fed discussion of the long term policy outlook to influence investors choices. The investor choices they most want to influence, are probably those related to investors continued willingness to buy Treasuries, which is funding the Fed's bail out of the global economy following the financial crisis. As a secondary but still important concern, they'd also like to see REAL rates come down... meaning not the rates that matter in the discussions between the Fed, the banks and investors, but the rates that matter in the discussions between the banks and borrowers. Nominally low rates being charged banks... are not "trickling down" into the economy as low rates being charged to businesses and consumers. As banks (hopefully) become more sound in basic practices and in terms of basic solvency, and less "askeert" that they'll screw things up, again, if they lend money... that should begin to change. The "catch-22" is that... mortgage rates still have to come down more to resolve both the banks balance sheet problems, and their willingness to lend against "shrinking" asset values... which will stop shrinking only if real vs. nominal rates come down more. So, having (real) mortgage rates coming down, instead of having government continue paying the banks bail, will solve a lot of problems.

The problem is how to get there.

The banks don't appear to mind borrowing at low rates and using the spread to fatten their bonus pools without bothering themselves about doing much to compete in the lending business... and that situation is paired with the banks expectations, still increasing, that banking should be an enormously lucrative business for bankers, while they profit from transferring risks they shouldn't ever take to others... which is a business model that can't last. How is that realization going to occur ? A different topic, I think...

The second potential for ARR is that QE Next will include a component focused on trying to lower mortgage rates, in general, and specifically, as a result of a focus on Fed purchases of MBS... which makes ARR and the other mortgage REIT's a bet on the value of MBS increasing as a function of demand for them increasing... and the Fed buying MBS will force MBS prices up, and, thus, MBS interest rates down... making borrowing money in mortgages cheaper. The Fed's said recently they don't think they'll actually do that... unless things get worse... but, that still has them erecting a solid backstop behind this trade.

If that shift in the value of MBS I expect does happen... ARR will either make short term trading profits by selling MBS they bought at lower prices, or they'll actually have higher real future yields as a benefit for those who buy ARR now at current share prices, although, then, rising share prices and increasing demand should also tend to lower the actual % yields ? If ARR share prices go up, because the value of their MBS holdings go up, and the yields (computed against then current prices) go down... you can still see YOUR real returns in yields increasing, because you bought at lower prices than others. So, higher prices, lower % yields, and higher real $ yields... is what you should get if that plays out that way. Of course, if, against expectation, (real) interest rates do rise instead of falling some more from here, then you'll tend to get the opposite result.

FWIW, the guys at ARR have been selling quite a few shares... raising money to buy more securities... so, the current and future yields are still an more or less open question... as more shares out will tend to lower the yield... unless... what they're buying with the $ has a return equal to or better than what they already owned ???

If the Fed doesn't buy MBS and force their prices higher ? Well, then, you'll be stuck holding ARR with a trailing 20% yield, that is paid out monthly... but, that ARR is apparently having no difficulty at all selling shares and raising capital right now to buy more MBS ? Well, it looks to me like that is saying that whether the Fed ever buys MBS or not, investors are buying them now, just like those buying ARR shares are stepping up to the plate to buy them anyway... so, the Fed policy is already working whether the Fed ever buys a single MBS or not ?

The moral of that part of the story: don't fight the Fed.

So, if you're buying ARR shares you're both participating in initiating that "virtuous cycle" that needs to happen to help fix the economy... and you're making a reasonable bet that the Fed's jawboning policy will work... or, the alternative to jawboning will work if jawboning doesn't, thus lowering mortgage rates and increasing the investment value of MBS... making ARR a good bet.

If, like me, you're also a believer in the potential that all the money that's been pumped out into the economy will eventually start sloshing around a bit too much, causing a big problem with inflation... a couple of things...

First, it will... but it will do that, "eventually"... and, at that point interest rates will have to begin rising. For now the problem is that the vast quantities of money being pumped into the economy aren't sloshing around at all... not even a little... not enough to make a ripple, or to get things remotely wet enough to be slippery enough that a well lubricated economic floor will allow those things that should be moving, that aren't moving... to move around a bit more easily than they are.

So, that distant rumbling you feel isn't going to build into a tsunami, here, just yet. Deploy warning sensors. Monitor them. Expect they'll work, and quit worrying about it. So, the trade in ARR is also a bet against rapidly rising inflation and a bet against rapidly rising precious metals prices... in the short term. That future inflation tsunami event I expect is far enough off, now, that spending a day at the beach right now is no problem. Seeing it now... before the landscape is altered.. may even be a good idea. That doesn't mean you should go to the beach now without a plan to reach higher ground quickly at some point in the future...

Second, the current yield on most gold and silver holdings isn't all that hot. Given significant rates of inflation will happen eventually, but aren't likely to happen "really soon"... buying ARR and using the monthly divvie payments to dollar cost average while you buy gold and silver, or gold and silver mining shares ? Particularly if gold and silver get cheaper, that should help to assuage your guilty conscious.

Really, though, you shouldn't even bother to feel guilty about it... first, because you really do need inflation to kick in, and not deflation, to have the trade in gold and silver work (eventually)... so, you might as well help it along and make a nice profit from giving it the kick it needs to happen (eventually). And, doing that above... hedging your bets that way... should also provide a reasonable bit of downside protection in case this idea doesn't work? And, if it does work... by the time the inflation does kick in, you'll own a whole lot of gold and silver shares with a lot of them bought at the lows. And, of course, the risks are another reason a monthly divvie payer is a good idea in this environment, as you won't ever need to feel you're getting stuck waiting for too long to get the next divvie, when you're not comfortable holding for that long. When the effort monitoring the sensors for rising inflation does pay off, sell the ARR and buy more gold and silver, or gold and silver shares, with the profits.

[sense] An unflattering mention of ARR along with other REIT's High Yielding Mortgage ...

sense — 2/6/2012 8:29:10 PM

An unflattering mention of ARR along with other REIT's

High Yielding Mortgage REIT's

[sense] FTR in the news. "Piper Jaffray initiated coverage on shares of Frontier Commun...

sense — 2/6/2012 6:21:04 PM

FTR in the news.

"Piper Jaffray initiated coverage on shares of Frontier Communications (FTR) and Windstream (WIN) with neutral ratings. Piper set a $5 price target on shares of Frontier and noted that the dividend may not be sustainable at these levels"... Forbes

How you come up with "neutral", and a price target that is 10% higher than where the issue trades (as the chart pattern shows it, ah, ummm, you know... that price staying below the descending 50/60 MA... while also noting that the dividend may not be sustainable ? The hope for the dividend is probably the only thing still keeping this issue as high as it is. Tell me the new divvie... and I'll give you a new target price... but, won't be in the least bit surprised if it's something pretty near to what I've already outlined...

[sense] Dividend Death List High Risk Market Underperformers Underperforming the marke...

sense — 2/5/2012 5:54:03 PM

Dividend Death List

High Risk Market Underperformers

Underperforming the market by more than 10% recently, the risk to the dividend appears to have these stocks on sale, making them worth watching for the plunge when they do cut the divvie... or otherwise, for chart bottoms.

As they become more at risk, even without the cut happening, the pricing will discount the dividend cut before it occurs. In those with a big payout, the best play might be getting the last divvie prior to the cut... if the price has already discounted the cut...

A couple of these tickers have shown up here before, which makes sense, given the focus.

[sense] High-Divvie Chinese Stocks Traded on U.S. Exchanges Here's a list of stocks base...

sense — 2/5/2012 3:44:09 PM

High-Divvie Chinese Stocks Traded on U.S. Exchanges
Here's a list of stocks based in China that are traded on U.S. exchanges and are paying significant dividends.

[sense] ARR is a monthly divvie payer, currently yielding around 18%... Chart looks lik...

sense — 2/3/2012 3:56:51 PM

ARR is a monthly divvie payer, currently yielding around 18%...

Chart looks like it just went ex-div... but, that doesn't actually happen until the end of the month.

Instead, they've recently announced a raise... and, it looks like the market just priced it. The current OS is 84 million, and they're selling another 22... which is pretty close to the volume traded today at 1 pm...

They're a residential real estate REIT, so, its a play focused on interest rates and what QE Next is likely to look like.. carrying lots and lots of debt... so, the low rate environment for stability for now isn't the play... as much as the potential that QE Next will involve buying mortgage debt... leveraging ARR's position nicely in the bargain.

This is clearly not a low risk play... in spite of the apparent stability in the chart... given the focus.

[sense] NKA and NRGY both sustaining a lot of volatility... good for traders if not hold...

sense — 2/1/2012 12:56:58 PM

NKA and NRGY both sustaining a lot of volatility... good for traders if not holders, now... although NKA looks like its bottomed and the patterns are working on creating a trend higher, while NRGY is "working on it"... but not convincing many, yet.

ALSK and FTR seem they are a mirrored pair in that relationship, only in telecom vs. the midstream... FTR still good as a day trader, but I'm not convinced it's seen the bottom yet, and the recent downgrades might do more than it appears now. The downgrades are noting what should have been apparent for a while, that FTR's internals are ugly... and while the internal trends were overcome for a while by the introduction of new data from their last acquisition... as that is absorbed more over time, what you're seeing is a larger mass adopting FTR's ugly internals. They have something wrong in the business that has them shrinking from the inside out at a pace that is probably not sustainable... and they've been ignoring the problem by focusing on acquisitions... making the problem larger over time. Makes the right question one of what point they'll reach before they're forced to "fix it"... with something other than layering over larger distractions. When you see FTR find a way to stop the internal hemorrhaging from losses in the customer counts... and finds a way to generate customer loyalty, and take customers away from competitors, rather than supply competitors with customers... that's when FTR will bottom.

It does look like ALSK might finally bottom... but, I'm not betting on it here given there isn't much enthusiasm for it in the market. Probably will find it on sale at $2.60 on a bad day in the market, and, for now, seeing no reason to pay more for it.

DHT doing well enough... chart says its going higher, probably this week, as the upward moving bollies catch up to it and gives it a bit of a boost... ? I'm not buying most of the public chatter re the stock being supported by the dividend... which is $0.03 quarterly now... when the swing in the daily trade is much larger than that. The ex-dividend date is being used as a distraction in the trade... and traders should ignore it and focus on the chart. DHT is the only play worth playing in the tanker space, for now, IMO, and it is one well worth holding for a while, as the market is beginning to work on correcting its recent downside excesses.

CPY... has been marking time relative to DHT, but the lower bolly is starting to move up on the daily chart... and we're maybe a few days away from seeing the ADX7 bottoming and crossing over, while the ATR is making a major new secondary low... just an amazing chart. Weekly charts show a nice secondary pinch on top of the massive prior pinch, with the MACD now turning positive out of the pinch on the weekly charts... just this week. Wound tight... this thing looks set to explode "soon".

[sense] NKA has had a pretty nice breakout on the upside from a descending triangle... ...

sense — 1/30/2012 8:14:08 PM

NKA has had a pretty nice breakout on the upside from a descending triangle...

For you SLV fans, THAT is what one looks like...

[sense] FTR charts after lunch say "more of the same" tomorrow... Maybe we'll get to th...

sense — 1/27/2012 2:42:01 PM

FTR charts after lunch say "more of the same" tomorrow...

Maybe we'll get to that $2.50 target sooner than I expected...

[sense] FTR ? Wowsers... or, bow wow!!! Serious ugliness there out the gate this morni...

sense — 1/27/2012 1:05:46 PM

FTR ? Wowsers... or, bow wow!!!

Serious ugliness there out the gate this morning...

The charts from the last two days trading are very similar in pattern, only with todays' chart pushing the bloodletting to the open, and amplifying the scale by about 3X...

The chart is shaping up as fairly similar to what happened in ALSK back in December...

I'm still thinking these waters aren't going to prove ready to calm down until its down around $2.50...

Good trading for the nimble... but, most should avoid the "catch a falling knife" game...

[sense] FTR making the new lows today with a vicious move down... Glad I didn't pull th...

sense — 1/26/2012 2:11:32 PM

FTR making the new lows today with a vicious move down...

Glad I didn't pull the trigger on it yesterday... but, still would have left the room early if I had, so no worries...

Given the repeated failure to hold support... I think the right chart to look at on FTR now is the 10 year weekly...

Look at the pattern that shows you for the last half of 2011... and that is one remarkably straight line...

The "price target indicators" I use to try to pick bottoms... don't work all that well in a stock that doesn't actually have a trading dynamic... and that straight line pattern ends up having those "bottom alert" targets sliding down the hill right along with the stock price... Each day and each week it looks like "this is the bottom"... and the next day and the next week... you're still right there... with that pattern sliding down the chart right along with the price.

I hardly expect that is coincidence...

So, for now... it's a falling knife trade... Look at a 2 or 3 minute daily chart. By 10:30 this morning, the chart was showing you $4.47 as a downside target... and it hit that by 12:30.. Good trading... if you have the nerves for it... but, not what I'm looking for as a potential to include in a Market Dogs portfolio...

Just interesting for Market Dogs to watch it, at this point...

[sense] A couple of links from the Yahoo page on CPY... The first is a pretty good comp...

sense — 1/26/2012 1:24:20 PM

A couple of links from the Yahoo page on CPY...

The first is a pretty good compilation piece... well worth noting for what it tries to do re analysis of risk in the dogs of the dogs strategy genre...

Not surprisingly, the other one from an analyst with TheStreet.com just loves AT&T trading on the top bolly... but dislikes the ugly pincher chart with CPY trading along on the bottom bolly...

But, is the risk you have to worry about most that in the company and its business... or that in the stock chart ?

Sizing Up Dividend Dog Indices, Lists, And Sectors

2 High-Yield Stocks to Own, 2 to Avoid

[sense] Looking at the FTR chart, I think you might profitably hope for a couple of real...

sense — 1/25/2012 5:59:54 PM

Looking at the FTR chart, I think you might profitably hope for a couple of really bad days in the market... as that might help to eliminate the indecision and make the call for you.

Timing is everything, of course... and the move lower the last three weeks has been worth waiting out. FTR hit $4.71 today, which looked like a decent entry price on the charts... and the chart looks like a really nice pincher...

Unfortunately, the last five days trading lower have already forced MACD to roll over and head lower, with a move likely to continue in the coming sessions, so, maybe heading lower again, at a point where its already missed breaking out higher from the descending triangles it been painting, and has instead broken out of the last one with a solid move lower... now two days old.

A couple bad days in the market might solidly confirm that move lower... and then maybe we'll see FTR trading lower into new territory... that might take it down below the current level by a good margin.

It's also sitting right at long term support right now, though... so, the next few days to two weeks should be interesting...

I'll not be uncomfortable buying it at $4.71 or below tomorrow, or a bit lower than that over the next few days... and won't mind seeing it drift sideways and a little lower off the $4.75 close today before moving higher... but, if it breaks down below $4.70 and holds lower and trends lower... I'll pull the trade and wait for it to hit $2.50...

Otherwise, I'll think $4.71 at the low today was a good buy...

[sense] Also pegged the call on FTR... It dropped like a rock at the open... and is tra...

sense — 1/24/2012 12:26:37 PM

Also pegged the call on FTR...

It dropped like a rock at the open... and is trading steady a dime lower than yesterday.

FTR has begun forming a new pinch... but, it has a long way to go before it will make a bottom in that pattern... probably only 1/3 of the way or less, so far, on the way to making a new low...

It's trading below where it was in 1990... maybe going to test the $2.50 low it made in 2002... The low in March of 2009 was $5.32 and we're cruising lower way past that already...

[sense] Pegged the call on DHT... It gapped higher at the open, from where it traded ye...

sense — 1/24/2012 12:18:37 PM

Pegged the call on DHT...

It gapped higher at the open, from where it traded yesterday, at $0.78 to a high around $0.91 and has then traded lower...

6:17AM DHT beats by $0.01, misses on revs ( DHT) 0.80 : Reports Q4 (Dec) earnings of $0.06 per share, $0.01 better than the Capital IQ Consensus Estimate of $0.05; revenues rose 10.5% year/year to $25.31 mln vs the $26.46 mln consensus.

That they are an oil shipping stock, in a field of peers that are rapidly going BK, when they have revenues that are increasing, in this market, while beating expectations on earnings ? Wow... or, bow wow... gotta love them doggie dogs. They've also set the dividend for Feb at $0.03 to give it a $0.12 annual at a rate of 15.4%... which isn't close to the trailing $0.33 and 41.3%... but, who expected they'd sustain that ?

Here's more on the details: DHT Holdings, Inc. Reports Fourth Quarter 2011 Results and Declares Quarterly Dividend of $0.03 Per Share

[sense] Have a couple of doggie dogs well worth watching, here... ALSK... forward yield...

sense — 1/23/2012 7:31:21 PM

Have a couple of doggie dogs well worth watching, here...

ALSK... forward yield 7%... should have bought it before the Dec 28 exDiv date to get $0.70 vs the $0.20 forward, which would have been a nice 24% buyers bonus...

CPY... forward yield probably won't match the 55% trailing... but, it's looking WAY oversold... and note the chart from 2008/2009 ? The outstanding here is small... a whole lot smaller than can support the number of shares being traded right now, and there are FTDs... making this a pretty good candidate to duplicate its Jan 2009 performance. The sales now are more than double what they were in 2008... and the loss on larger sales is only half of what it was back then. Consumer sentiment, which drives their sales more than others, was really ugly at the end of 2011... but is looking a lot better in 2012... pair that with a warm winter at the end of December, and colder weather in January... and CPY could significantly outperform in Q1...

DHT... forward yield at 15.4%... and earnings will be out before the bell tomorrow morning... Looks set to make a nice move higher if the numbers don't disappoint, although I don't think anyone is looking for good numbers... so, one to watch early tomorrow...

FTR... 15.4%... and one ugly chart... that looks to me like it's about to be pushed off a cliff, again... after having already suffered a number of 10% miniplunges in the last three months...

[sense] Nice write up on ALSK Are You Watching This Trend at Alaska Communications Syst...

sense — 1/19/2012 4:48:53 PM

Nice write up on ALSK

Are You Watching This Trend at Alaska Communications Systems Group?

[sense] Doggie Dogs... Dogs Of The Sectors Index: 2011 Recap

sense — 1/17/2012 7:14:59 PM

[sense] High risk mortgage plays on QE Next... Operation Twist's Impact On Mortgage CEF...

sense — 1/15/2012 7:08:21 PM

High risk mortgage plays on QE Next...

Operation Twist's Impact On Mortgage CEFs: BKT Vs. JLS

[sense] A nice list of stocks by industry group, among other dogs... Epsilon's Articles

sense — 1/15/2012 7:04:56 PM

[sense] Micro Cap, High Dividend Stocks: Waiting for Payback

sense — 1/5/2012 1:25:03 AM

[sense] Services Sector Dogs Vs. December Dogs Of The Dow

sense — 1/5/2012 1:23:16 AM

[sense] Trading Strategy: 2012 Dogs of the Dow

sense — 1/5/2012 1:21:40 AM