after a big drop in March and then a big rally since, the market's slightly higher than it was for the last post. the rally has been running out of steam, though.
i recommend buying some PFH (JC Penney Asset Trst 7.625% CABCO Trust). it's actually "subordinated notes", which is some type of junior debt. it's lower in the capital structure than senior debt, but higher than preferred stock and common stock, making it safer than them. these notes pay out a juicy 95.3 cents twice a year, well into the future. that's currently an 11.20% yield. bottom line is, i don't think the shares will go to zero or the payments will stop, unless JC Penney goes out of business. i don't see that happening, though i'm no retail expert. now, the payout is fixed, so if you think we'll have some ginormous spike in interest rates where 11+ percent is no longer impressive, then PFH might not be for you.
i first read about this on the JCP Yahoo Messageboard (the boards on Yahoo are largely crap, but you'll find the occasional diamond in the rough). i'd previously owned the JCP common stock and sold it for a profit a couple times, but it skyrocketed and got too pricey for my tastes. the notes were trading around $11 to $11.50 then, which put the yield at over 16% (it even got into the 20s in early March and in October!) . unfortunately, Scottrade doesn't let PFH be traded online (probably because the volume is so thin); you have to call in. i dawdled on the calling, so i didn't buy it until $16.13. still not bad, but i missed a better opportunity.
it's currently at $17.02. it bounces around a bit, so if you're interested in buying it, i'd try to pick some up under $16.50, then buy more on the way down if it falls (unless you think JC Penney's going to croak).
you can read up on these notes and preferred shares by punching in the symbol at
http://www.quantumonline.com/anybody wanna be grisly and predict where unemployment tops out? it's at 9.4% now. i think it'll just crack 11%.
Show Posts