Whole Dollar Jinx

December 29, 2009

OK, I admit it.

I fell for the penny wise / pound foolish curse of picking a round number to buy in.  This morning ANH continued to slide down in a minitrend that got going when it went ex-dividend last week.

I sat there and confidently entered my order to buy some more stock at $6.99.  I even relented, and decided I could live with a price (including commissions) above $7, and raised my bid by a penny.

Of course, the low tick for the day was $7.01.

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Santa Rally Stock?

December 29, 2009

Early readers may recall my strategy of getting paid to buy highly volatile stocks by selling covered calls.  In particular, I cited the testing-stage small pharma companies as a group that throws off very high “synthetic dividends” due to their option volatility.

Today I added another one to the stable, even though I’m not finished researching it.  I just felt lucky as we struggle to maintain day 7 of the Santa Claus rally (Dow Industrials only).

The reason (and I know this is silly) is the symbol – SNTA.  What could be more appropriate for the season?

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Pattern Recognition

December 28, 2009

I can’t be sure if it’s an artifact of what I sometimes call the “mosaic mind” or truly unusual, but today I noticed something I don’t think I’ve seen in all my years of watching the yield curve.

It also seems to show again the heavy gravitational attraction of “round numbers.”  After the jump, I’ll post a picture of the Bloomberg screen most long-time bond pros watch to see “the market.”

Sometimes there are genuine economic forces at work that push markets toward round numbers.  Most easily seen are the prices of stocks, commodities or even indices on option expiration day.  If there is enough open interest in those options, the final bit of trading tends to push the price of the underlying to the point where huge numbers of options (both puts and calls) expire worthless.

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Launching the QE2

December 28, 2009

No, it’s not another luxury liner.  There are enough of those floating all-you-can-eat buffets already.

I’m talking about the successor to Quantitative Enhancement.

This is big for amREITs, and warrants an alert.

The higher the premium at which they own their portfolios, the more risk to principal the amREITs are about to feel.

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Practice Looking Surprised

December 27, 2009

As I pointed out in my post on the Citicorp secondary stock offering, driving the price below half of the Q3 book value may put all those poor abused bankers that have to take stock instead of cash into the multi-generational kind of money in the future.

The clue sitting right in front of you is that the most senior crew at Goldman is taking 100% of their bonus in stock, even though the stock never had its final plunge, and even though it is already doubled from the bottom.

Of course, the individuals won’t pay any current tax on that part of their annual compensation, and the company will be able to deduct those “phantom” compensation expenses before doing anything rash like paying dividends or taxes.

Oh, the beauty of it all.

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Phoenix or Zombie?

December 27, 2009

An announcement by a former high-flier of the mREIT business almost slipped by on Christmas Eve.

Although I’ve mentioned a couple of mREITs that aren’t exclusively Agency MBS holders, and a couple of others that were formed to invest in the “private label” (non-Agency) MBS arena, those (CIM and IVR) came after the fall, and weren’t in the business of buying or creating new MBS.

The older company that filed notice with the SEC on December 24th of its upcoming listing on the AMEX was Impac Mortgage (new symbol IMPM), with tentative first trading date December 29th.

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The Not-So-Big ‘C’

December 26, 2009

No, it’s not Cancer.

Nor, as the date might imply, Christmas.

Not even Chrysler, as it was for so many decades on Wall Street.  The not-so-big C is Citicorp, which was reduced to raising equity capital last week at a price so low that even the Federal government acting on behalf of taxpayers said “no thanks”, and held onto their stock.

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