Sunday, May 3, 2009
Economy will be a focus at Berkshire meeting
The CEO of Berkshire Hathaway subsidiary Business Wire, Cathy Baron Tamraz, spoke earlier today with CNBC's Becky Quick at the annual shareholders meeting in Omaha.
She expects Warren Buffett and Charlie Munger will have a "calming influence" when they speak to shareholders tomorrow.
Here's a clip you'll only see here on CNBC.com's Warren Buffett Watch.
3 More banks gone with the wind, Expect Many more before the smoke clears
We have a hat trick tonight. Here are the links.
American West Bank, Layton, Utah
Citizens Community Bank, Ridgewood, New Jersey
Silverton Bank N.A., Atlanta, Georgia
A couple things worth noting here.
First, there was no buyer found for American West Bank. That’s the second bank to fail in Utah for which no buyer emerged. (Update: My Bad. This bank was acquired by another institution. In too much of a hurry this evening).
Silverton Bank is big. It operates as a bankers bank, in other words it provides back office support, clearing services, credit card processing and other services to smaller community banks in the Southeast. It also originated loans and sold them off participations to those same banks. Many of these banks are also investors in Silverton.
From the WSJ:
The Federal Deposit Insurance Corp. estimated the Atlanta bank’s failure would cost its deposit insurance fund $1.3 billion. Silverton’s condition was so poor that the FDIC couldn’t find a buyer.
With $4.1 billion in assets, Silverton is the fifth-largest bank to fail since the financial crisis intensified in 2008. The bank provides services to one of every five banks in the country, and its customers, depositors and investors are all banks. It didn’t take deposits from the general public or make loans to consumers.
The FDIC said loan losses caused Silverton’s failure, as charge-offs for bad loans went from $4 million in 2007 to $69 million in 2008.
Walt Moeling, Silverton’s counsel and an attorney with Bryan Cave LLP in Atlanta, said problems tie back to Silverton’s exposure to the Southeast and Georgia, not its recent expansion across the country into many business lines: “If their core business had stayed strong they wouldn’t have failed.”
Some Georgia bankers argued to FDIC officials that the bank was “too big to fail” because its collapse could take down at least eight to 12 others.
Federal regulators were “not sympathetic” to the argument that a Silverton failure had to be averted, Mr. Moeling said. “The argument tends to be that ‘You guys got yourself into this mess, don’t look for us to come fix it. Don’t look for us to bail you out, because you are not Citigroup.’”
Banks that invested in Silverton will likely incur a loss, FDIC officials said. But regulators played down the possibility that the failure would cause major problems for shareholder banks. The typical bank’s Silverton exposure is “very small” when compared with its overall investment portfolio, said Pam Farwig, associate director of the FDIC’s division of resolutions and receivership.
Banks also stand to lose money on loan participations arranged by Silverton that allowed smaller banks to team up on large multimillion-dollar hotel and real-estate deals, many backed by poor-performing residential real estate. The FDIC will attempt to sell those packages for cents on the dollar, Mr. Moeling said. Also, banks with holding company loans from Silverton may have to scramble to replenish these funds, said Christopher Marinac of FIG Partners in Atlanta.
Federal regulators worried about how to handle the bank’s collapse because Silverton is so interconnected in the Southeast. Chartered in 1984, Silverton used to be known as the Bankers Bank until last year.
Silverton may be the canary in the coal mine. It’s loan portfolio is going to be mirrored at a number of banks so it’s reasonable to assume that there will be follow-on failures. It appears as if its problems may be closely tied to poor performing commercial real estate. This is the asset class that’s going to cause the next wave of failures and it will most likely be a tsunami.
Disclosure None
Occidental Petroleum(OXY) boosts dividend 3% to O.33 per share
Occidental Petroleum Corporation (NYSE: OXY) announced today that its Board of Directors has increased the company's quarterly dividend from $0.32 per share to $0.33 per share for an annual rate of $1.32 per share, compared to the previous annual rate of $1.28 per share.
The dividend will be payable on July 15, 2009, to stockholders of record as of June 10, 2009. Current Yield is 2.19%.
Disclosure None
The dividend will be payable on July 15, 2009, to stockholders of record as of June 10, 2009. Current Yield is 2.19%.
Disclosure None
Black & Decker(BDK) cuts quarterly dividend by 71%
The Black & Decker Corporation (NYSE: BDK - News) announced that its Board of Directors declared a quarterly cash dividend of $0.12 per share of the Corporation's outstanding common stock payable June 26, 2009, to stockholders of record at the close of business on June 12, 2009. This represents a reduction from the $0.42 quarterly dividend paid by the Corporation since 2007.
Disclosure None
Disclosure None
Simon Property earnings up 15%, slashes dividend 0.30 cents a share
Simon Property Group (SPG) said Friday that first-quarter earnings were $107 million, or 45 cents a share, compared to $88 million, or 39 cents a share, in the same period a year ago. Revenue was $918 million compared to $895 million.
Analysts polled by FactSet Research estimated, on average, earnings per share of 25 cents and sales of $886 million. Funds from operations for the quarter increased 13.5% to $477 million from $420 million in the first quarter of 2008. Simon sees FFO in a range of $6.05 to $6.20 per share for the year, and income in a range of $1.45 to $1.60 per share.
Analysts polled by FactSet Research estimated, on average, earnings per share of 25 cents and sales of $886 million. Funds from operations for the quarter increased 13.5% to $477 million from $420 million in the first quarter of 2008. Simon sees FFO in a range of $6.05 to $6.20 per share for the year, and income in a range of $1.45 to $1.60 per share.
Simon reduced its quarterly dividend to 60 cents a share in cash and stock from 90 cents per share, but raised the cash component of the dividend by 3 cents per share.
Last quarter, Simon said it would pay its formerly all-cash dividend in the form of cash and stock, disappointing many real estate investment trust investors who are attracted to steady cash yields.
"Capital still remains quite precious," said Sandler O'Neill Partners analyst Alexander Goldfarb. "This reduction is not terribly surprising.
The new level represents 100 percent of its taxable income.
"MORE CLARITY"
"It's our desire to get to as much cash dividend as we feel comfortable to pay," Chief Executive David Simon said during a conference call with analysts. "I think we'll continue this strategy for '09. As soon as we get more and more clarity in the capital markets ... we're optimistic that we'll reinstate the full cash dividend."
Disclosure None
Aqua America Declares June 2009 Dividend
The Board of Directors of Aqua America, Inc. (NYSE: WTR - News) today declared a quarterly cash dividend payment of $0.135 per share payable on June 1, 2009, to all shareholders of record on May 18, 2009.
The June dividend payment of $0.135 per share is eight percent higher than the dividend the company paid in June 2008 of $0.125 per share. Aqua has paid a consecutive quarterly dividend for more than 60 years.
Aqua America is a publicly traded water and waste water utility holding company with operating subsidiaries serving approximately three million people in Pennsylvania, Ohio, North Carolina, Illinois, Texas, New Jersey, New York, Florida, Indiana, Virginia, Maine, Missouri and South Carolina. Aqua America is listed on the New York Stock Exchange under the ticker symbol WTR.
Disclosure None
Ryder (R) annouces $0.23 cent per share quarterly dividend
Ryder System, Inc. (NYSE: R) declared a regular quarterly cash dividend of $0.23 per share of common stock, to be paid on June 12, 2009, to shareholders of record on May 18, 2009.
This is Ryder's 131st consecutive quarterly cash dividend -- marking more than 32 years of dividend payments. Current annual Yield
Disclosure None
New Mortgage ETF Buys Stocks, Not Bonds
Anticipating a return in U.S. mortgage markets, State Street Global Advisors launched Thursday an exchange-traded fund focusing on companies involved in that corner of the market.
The SPDR KBW Mortgage Finance ETF (KME) takes a different approach than other financial-focused funds on the market. It holds banks dominated with mortgage loans on their books as well as related service providers. The biggest of those names in the fund's index heading into the launch were Hudson City Bancorp (HCBK), New York Community Bancorp (NYB) and NewAlliance Bancshares (NAL).
But the new ETF also includes a healthy dose of title insurers and claims managers such as Fidelity National and Lender Processing.
If that isn't diversified enough, home builders also are well-represented in the index with stocks from D.R. Horton (DHI), Centex (CTX) and Lennar (LEN), to name just a few.
The ETF, which comes with an expense ratio of 0.35%, uses a benchmark created by investment banker and asset manager Keefe, Bruyette & Woods. The new ETF joins four other SPDRs using KBW indexes to slice financials into different subsectors.
Disclosure None
Teleflex (TFX) Announces $0.34 Quarterly Dividend
Teleflex Incorporated (NYSE: TFX - News) announced today that its Board of Directors declared a quarterly cash dividend of $0.34 cents per share of common stock. The dividend is payable June 15, 2009 to shareholders of record at the close of business on May 15, 2009.
Also reports Q1 EPS of $0.76, 13 cents better than the analyst estimate of $0.63. Revenue for the quarter was $469.7 million, versus the consensus of $533.91 million. Core revenue decline by segment was Medical 4%, Aerospace 27%, and Commercial 13%. Affirms its Fiscal Year 2009 outlook.
Disclosure I am long TFX shares.
Also reports Q1 EPS of $0.76, 13 cents better than the analyst estimate of $0.63. Revenue for the quarter was $469.7 million, versus the consensus of $533.91 million. Core revenue decline by segment was Medical 4%, Aerospace 27%, and Commercial 13%. Affirms its Fiscal Year 2009 outlook.
Disclosure I am long TFX shares.
Main Street Capital Announces Monthly Dividends for April, May and June 2009 of $0.125 Per Share
Confirms Projected Dividend Range of $1.50 to $1.65 Per Share for 2009
Main Street Capital Corporation (Nasdaq: MAIN - News; "Main Street") announced today that its Board of Directors declared monthly dividends of $0.125 per share for April, May and June 2009. These monthly dividends, which will be payable pursuant to the table below, equate to a total of $0.375 per share for the second quarter of 2009. The dividends declared for the second quarter of 2009 represent a 7.1% increase from the dividends per share paid in the second quarter of 2008. The dividends per share for the second quarter of 2009 also equate to an approximate annualized yield of 16.5% based on Main Street's current share price.
Main Street Capital Corporation (Nasdaq: MAIN - News; "Main Street") announced today that its Board of Directors declared monthly dividends of $0.125 per share for April, May and June 2009. These monthly dividends, which will be payable pursuant to the table below, equate to a total of $0.375 per share for the second quarter of 2009. The dividends declared for the second quarter of 2009 represent a 7.1% increase from the dividends per share paid in the second quarter of 2008. The dividends per share for the second quarter of 2009 also equate to an approximate annualized yield of 16.5% based on Main Street's current share price.
Summary of Second Quarter 2009 Monthly Dividends
Declared Ex-Dividend Date Record Date Payment Date Amount Per Share
-------- ---------------- ----------- ------------ ----------------
3/4/09 3/18/09 3/20/09 4/15/09 $0.125
3/4/09 4/17/09 4/21/09 5/15/09 $0.125
3/4/09 5/19/09 5/21/09 6/15/09 $0.125
------
Total for Second Quarter 2009: $0.375
Main Street also confirmed its projected dividend range of $1.50 to $1.65 per share for calendar year 2009. The estimated range for total 2009 dividends was determined based upon projections of 2009 taxable income, anticipated 2009 portfolio activity, and the estimated amount of undistributed 2008 taxable income (or "spillover income") which will be utilized to pay dividends during 2009. Main Street will continue to provide quarterly updates to its 2009 dividend guidance based upon actual 2009 taxable income and portfolio activity.
Disclosure I am long Main shares
Saturday, May 2, 2009
PowerShares Acting Responsibly; Closing 19 ETFs
Invesco PowerShares announced today that it plans to close 19 of its exchange traded funds (ETFs). The affected funds represent less than 1% of Invesco PowerShares’ total assets.
This type of action isn’t new to the ETF world as Claymore closed 11 ETFs last year representing less than 4% of their collective assets. Every ETF that comes to market, although well thought out, doesn’t always get traction. At one point the economics of keeping smaller funds open no longer makes sense.
I just got off the phone with Bruce Bond, president and CEO of Invesco PowerShares. “After carefully evaluating numerous factors including shareholder considerations, length of time on the market, asset levels and the potential for future growth, we proposed closing certain portfolios that have not gained sufficient acceptance with investors,” said Bond. “We remain fully committed to the ETF industry and expect to offer new, exciting products in the months ahead.”
As before, I’d expect the media to point to this event as a chink in the ETF industry’s armor. But the fact is, ETFs continue to show strength even during these trouble economic times and challenging market conditions. ETFs experienced $178 billion in net inflows in 2008 while conventional mutual funds had outflows in excess of $300 billion.
Bond expects the ETF industry to come out of this market and economic funk stronger than it was when it started. I look at this move by PowerShares as merely trimming the sails. With $4 trillion on the sideline, ETFs are poised to get more than their share of inflows when investor confidence comes back to the marketplace.
Here are the affected ETFs:
| Name | Ticker Symbol |
| PowerShares Dynamic Aggressive Growth Portfolio | PGZ |
| PowerShares Dynamic Asia Pacific Portfolio | PUA |
| PowerShares Dynamic Deep Value Portfolio | PVM |
| PowerShares Dynamic Europe Portfolio | PEH |
| PowerShares Dynamic Hardware & Consumer Electronics Portfolio | PHW |
| PowerShares FTSE RAFI Asia Pacific ex-Japan Small-Mid Portfolio | PDQ |
| PowerShares FTSE RAFI Basic Materials Sector Portfolio | PRFM |
| PowerShares FTSE RAFI Consumer Goods Sector Portfolio | PRFG |
| PowerShares FTSE RAFI Consumer Services Sector Portfolio | PRFS |
| PowerShares FTSE RAFI Energy Sector Portfolio | PRFE |
| PowerShares FTSE RAFI Europe Small-Mid Portfolio | PWD |
| PowerShares FTSE RAFI Financials Sector Portfolio | PRFF |
| PowerShares FTSE RAFI Health Care Sector Portfolio | PRFH |
| PowerShares FTSE RAFI Industrials Sector Portfolio | PRFN |
| PowerShares FTSE RAFI International Real Estate Portfolio | PRY |
| PowerShares FTSE RAFI Telecommunications & Technology Sector Portfolio | PRFQ |
| PowerShares FTSE RAFI Utilities Sector Portfolio | PRFU |
| PowerShares High Growth Rate Dividend Achievers Portfolio | PHJ |
| PowerShares International Listed Private Equity Portfolio | PFP |
In early May 2009, the Funds will begin the process of closing down and liquidating their respective portfolios. This process will cause each Fund’s holdings to deviate from the securities included in its underlying index and each Fund to increase its cash holdings, which may lead to increased tracking error. May 18th will be the final day of trading for the affected funds.
Shareholders may sell their holdings prior to May 19, 2009, and may incur typical transaction fees from their broker-dealer. Shareholders of record on the close of business on May 18, 2009 will receive cash equal to the amount of the net asset value of their shares as of May 22, 2009, which will include any capital gains and dividends, in the cash portion of their brokerage accountsDisclosure None
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