Tuesday, November 19, 2013

LIM: Speaking of gambles

Added near the end of February 2015: I broke my rule and invested in a company referred to as "unprofitable." My investment, very small, disappeared completely. Oh well, it was more fun owning LIM than buying a lottery ticket but no more profitable.
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Labrador Iron Mines just continues to fall in value. Today the stock was below a quarter. Ouch! I'm damn glad I don't have a lot riding on that horse. This nag may fold before getting anywhere near the finish line.

I should have sold long ago. Foolish. I've now lost more than 75 percent of my original investment.

I have a rule: Never buy stock in a company that is not profitable. I broke my own rule and now I am sorry I did. Oh well, I didn't put a lot into LIM and so I can't lose a lot. C'est la vie.

Dundee REIT: an investment and not a gamble

O.K., all investments are to some extend gambles. No one knows the future. That said, Dundee REIT seems to me to be as safe a bet as one could hope for as long as one is in this investing game for the long haul.

I bought a few hundred shares a little while back. Those shares are up but show signs of faltering. If D.UN drops by a buck of more below my first entry point, maybe by even just half a buck, I think I may pick up another few shares equal to my first purchase. I'm still sitting on much of the cash I took out of the U.S. market and I think Dundee could give some of that money a good home.

Monday, November 18, 2013

I like to gamble - a little

I like to gamble, but just a little. I rarely buy lottery tickets. I don't see lotteries so much as gambling as simply tossing away one's money.

No, I like to gamble on penny stocks. My investments are no more than six months to a year's worth of lottery tickets and I take pleasure in watching the stock climb or tank. It can take awhile for the game to play out and during that time my need to gamble has been sated.

Labrador Iron Mines (LIM) was one of my penny stock picks. What a miss! It has dropped from around a dollar to a quarter today. I should have bailed when it had an early pop to $1.50 and above.

In the case of LIM, it is beginning to appear I might have done better with lottery tickets.

Friday, November 15, 2013

For retirement income, Fortis and Emera worth a look

According to Scotia Bank, Fortis is Canada's largest regulated distribution utility holding company. It has over 2 million retail natural gas and electricity customers plus a small portfolio of real estate holdings and stakes in 3 Caribbean regulated electricity distribution companies (Cayman, Turks, Belize). It also has a hydro-power operation in Belize.

All that is well and good but what really draws my interest is the dividend teamed with relatively low risk. Today I noticed that the dividend was at 3.9%. I try not to invest in anything that pays less than 4%. The Fortis stock price is down about a third of a percent at this moment. If it drops a wee bit more, the yield will be in my target zone.

I don't own a lot of utilities. I'd like to have some XUT, the iShares ETF based on Canadian utilities, but since very few companies compose the majority of this ETF, buying these stocks directly and not having an ongoing MER to contend with seems attractive.

I'd like to see Fortis (FTS) down at about $31 and I'd be in.

The other Canadian utility that I am giving serious consider is Emera (EMA). The Scotia Bank has this to say about Emera. Emera is a diversified utility holding company with core asset in Nova Scotia and significant investments in three other areas: two regulated electrical utilities in New England; a gas pipeline from Saint John, New Brunswick, to the Boston area; and a controlling interest in two Caribbean regulated electric utilities. It also has some smaller but growing investments all centred around utilities.

Emera has a yield of 4.9%. Like Fortis the risk is said to be low with EMA, the yield is more than acceptable and it has some upside potential. A quick look about the Net finds others who, like me, see a buying opportunity in the offing.

Thursday, November 14, 2013

Putting little bits of money to work: Maybe

I have some little bit of money sitting in couple of accounts. Little bits of money demand little investments: Penny stocks. Investments that cost less than $5 a share. B2Gold Corp (BTO) meets the criteria.

At less than $2.50, BTO is the right price. Its share price has come down over the past month. It appears to have bottomed and is now on an upward bounce. And best of all it passes the smell test. It appears to me to be a successful but undervalued little gold producer.

This morning I picked up 600 shares at $2.44. If it does well, it will give me a little extra money to do with as I please. If it does poorly, I won't lose any sleep.

And in passing, the Dundee REIT (D.UN-T) stock and the units of REM, an iShares ETF, are together enjoying a nice pop. I was up more than $400 on these two recent purchases when last I checked.

I have put some of my funds previously invested in the States to work and I continue to sit on the rest. I feel comfortable keeping some cash out of the game at the moment. It gives me the feeling that I have some wiggle room in a market that is pinching my worry nerve.

Tuesday, November 12, 2013

Thoughts on REM

The iShares Mortgage Real Estate Capped Fund or REM was originally a $50 U.S. ETF. It didn't hold that value for long. It almost immediately began a slow and steady slide to the fifteen dollar level. At the worst of the market crash, REM never dipped below $10 U.S. If you put any faith in these past numbers, you might think REM is coasting along at the bottom. Today it is selling in the $11.50 U.S. range.

REM is composed of a number of companies in the mREIT business in the States. I have simplified their business model to the extreme when I say that they borrow money at one interest rate and lend it out at a higher one. The spread is their profit. As a REIT they move massive amounts of their profits straight through to their investors.

Today REM is paying a dividend of better than 16 percent. This worries me. This payment falls into the "too-good-to-be-true" camp. Still I have owned REM for some time now, I was lucky and bought my shares of REM near the bottom. It has proven to be a wonderful addition to my portfolio.

I bought about 800 shares of REM yesterday at $11.50 U.S. and added this to my previous holdings. Will I buy more? Maybe. But unless it drops below $10 or I read something incredibly positive that I trust, I probably won't.

REM is a strong spice in my portfolio. It gives my income a much needed kick. Or, you might say REM is the high risk but high reward end of my barbell investment strategy. I've looked at the major players who make up the bulk of the REM holdings and they are all fair to excellent investments on their own. Not a one looked to be a poor choice.

Often ETFs have a few holdings one might personally consider dogs. I have a few ETFs like that. REM does not appear to be like this, although there might be some small holdings of which I am unaware.

Today, holding REM makes my life easier. It provides me with much needed income in retirement. And in the small amount that I hold, it does not give me pause to worry. I can handle the loss if it should come. C'est la vie.

I wrote a follow up to this, REM might have further to fall, in Jan. 2014.


Monday, November 11, 2013

Took the plunge: Bought some D-UN and REM

I took the plunge and bought some Dundee REIT and REM, the iShare mREIT ETF. I got the D-UN at $28.11 and the REM at $11.50 U.S.

I have watched both of these investments for some time and both were hitting what seemed like good entry points. Even if they drop a little, both of these investments pay a handsome dividend. These two have the muscle to dig themselves out of a hole, a small hole, if it should become necessary.

The REM purchase felt especially good. I have a goal for REM in my portfolio. Although REM commands only a very small portion of my overall investment allocation, this ETF punches well above its weight when it comes to delivering dividend income. I bought a little more than I should have according to my investment plan with hopes it would climb in value and allow me to sell some for a small profit.

I'll revisit these moves in the future and let you know how all this is playing out for me.

Friday, November 8, 2013

Looking for income and a little profit

REM, the U.S. iShares mREIT ETF, has dropped back to the very bottom of its long term range. The last time it dropped this low, I increased my holdings. If it drops again Monday, I think I'll may add to my position with a little extra with a eye to a small, quick profit after the little bump to the upside makes its appearance.

The other investment that has my eye is Dundee REIT (D.UN-T). This investment seems to be a little out of favour with many of the analysts at the moment. When it comes to Dundee I'm sitting with the contrarians. Come Monday, I'm going to try and pick up some up in the $28 range.

If REM climbs to $12.50 U.S., I'll take some profits. If Dundee hits $31, I'll do the same. I'll keep a little of both in my portfolio to enjoy the dividends.

Penn West fears were grounded in reality

Yesterday Penn West Exploration (PWT) announced plans to shrink the company to grow the company. When I heard this I was elated. For years I have felt PWT was a bloated behemoth which had grown to an immense size thanks to an appetite for overpriced resources in western Canada.

Trimming this company sounds good to me -- I believe, up to 2 billion in assets are on the block. A check around the Web shows lots of support for PWT's new direction. And yet, despite all the good vibes surrounding the move, some analysts are calling for a target price of of less than 50-cents above today trading price of about $9.00.

I figure, if you've got PWT, keep it. This is a hold. For me, this is not the time to buy. I may be wrong. I may be too conservative but I want to watch how all this plays out or unravels.

If you bought PWT when it was a high flying income trust, you have my sympathies. I fear PWT may never trade in the high twenties again. Certainly those days will not return for many years. If you bought shares recently, you may be O.K. You may yet recoup your losses. Let's keep out fingers crossed that the dividend does not have to be cut, that the assets sales bring in the envisioned cash and that a rebound, at least a little one, will be in place by 2016.

It's a long time to keep one's fingers crossed.