Bought RIG

Newest Dividend Stock

I bought Transocean yesterday at $52.65 for my dividend portfolio. This (of course) is the much-hated driller for their part in the Deepwater oil spill in 2010.  I think it is time to move on.  They have paid their fines and made changes as necessary.  I always felt BP was the ultimate party at fault.

RIG is an interesting stock. They are still depressed due to the cloud around the GOM oil spill.  They trade at under 10x forward earnings.  They are growing and are in an industry that is in demand.  The stock was around $90 pre-DW.  I think they can get back there again.  One of my favorite things to do is buy stocks that have bad news from what is most-likely a one-time event.  There is often a fine, but then things move on. JPM is another great example of this.

They are being pressured by Carl Icahn to pay a $4 dividend (Icahn-Affiliated Funds Seek $4 Dividend at Transocean).  They are offering a $2.24 compromise, which is a 4.2% yield (Transocean board recommends $2.24 dividend) and will fit nicely in my dividend portfolio.  RIG is a Swiss company, so any dividends will have to be approved by Shareholders at their annual meeting.

Icahn does strike me as a bit of a bully, but I'd rather him be my bully.  I read a piece the other day that commented on how stocks have performed where he as been an activist (Can Investors Win By Following Icahn Into Battle?).  It does not even mention some that I wish I had bought or held, such as OSK and CVI.

Warrant Update

I did a bit of digging and have found 7 companies that issued warrants post the TARP fiasco.  It is not all banks and includes GM and HIG.  I created a watch list.  It seems I am not the only one thinking about them, as the group went up 1.97% yesterday.  I do like to buy esoteric securities like this, so long as I understand them.  I did very well with some lightly traded preferred stocks in 2008/2009 that were yielding as high as 16%.  I will almost certainly buy a basket of these in the next material pullback.  But I can be patient.

Portfolio Update

My portfolio did not do as well Monday as I expected giving positive news over the weekend. I did out perform the indices.  But I thought with GNW (up 6.6%) and CIM (up 2.9%) it would be a blow out day.  But GTAT was down 4%, HFC was down 2.7% and NSU was down a disturbing 11%.