Another Nice Bounce?

Always nice to have your stocks mentioned favorably in Barron's.  Over the weekend, the magazine wrote that SAI has the potential to rise by 30%.  Of course those of you reading this blog ;) already knew that, if you read my MFI Diary: Taking Stock of My Stocks - Top 10.  Here is the link for the Barron's Article (Arm Your Portfolio With SAIC).

Hitting The Wall?

I do not know about everyone else, but I am feeling like my portfolio is hitting the wall.  It has been trickling down since a high on March 15th.  Part of it is that we have had a terrific run.  The other part is that I wonder if things are not quite as good as we think. I continue to hold a lot of cash.  I did buy a speculative position in FSYS last week.

I am tempted, almost daily, to sell my speculative positions.  Primarily FSYS and GTAT.  I just feel I bought GTAT at such a cheap price.  I have turned off a few of my dividend stocks.  I will not reinvest some of the dividends for a bit, until I have more comfort.  I have made this move not only because I think the market is extended, but for Closed End Funds that are trading at a premium to NAV.

Interesting Approach on TC

I have been keeping score on my stocks in great detail since 2002.  One item I have is how much money I have made or lost in aggregate by stock. Here are my top 10:

Row Labels	Sum of Gain
IST	61,405
SBS	56,549
VR	45,857
PVD	37,277
TC	36,711
RNR-C	33,480
ENH-A	33,076
PM	30,776
CSQ	29,476
PRE	28,050

You will note that TC (Thompson Creek) is one of my best stocks ever.  So I always keep an eye on them as they have a warm place in my heart.  Ed (of Ed's Talking Stock) pointed out a security yesterday (TC-PT) that is quite interesting. This is a convertible preferred stock associated with TC.  They pay a quarterly dividend of 40 cents (works out to about a 10% yield).

They are convertible to equity in May 2015.  Here are the conversion rates per Seeking Alpha:

• If TC is less than or equal to $4.64, the tMED holder receives 5.3879 shares.
• If TC is between $4.64 and $5.45, the tMED holder receives an amount of shares equal to $25 divided by the weighted average price (i.e., at $5, 5 shares are distributed)
• If TC trades above $5.45, the tMED holder receives 4.5855 shares. (As a side note, contracts can be settled early for 4.5855 shares; if TC were to double, a tMED investor could take profits by settling and selling TC common shares.)

Doing some simple math, you could buy them today for $16.40.  You could convert them immediately (rule 3) and the average price of TC would be $3.57.  TC right now is at $3.07.    If TC stayed flat until May 2015, you would have collected $2.80 in dividends and you could convert per rule 1, which is $3.05.  So you would have a 10% return per annum.   So what this does is it protects you if things are flat, slightly down or slightly up. You actually do ok.  If things go way up, you do not share exactly, but you still do well.  So if TC doubled by May 2015, you would get a 70% gain before consideration of the 10% dividend per year.

Hmmm, looks interesting.