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American Capital Agency Corp. Message Board

  • saltynacho saltynacho Mar 20, 2013 1:58 AM Flag

    OT - Doc

    Hey Doc -

    I have been "lurking" on and off for a while now, and some of the posts by Jtrader & Walrus in the Topic "TWO" (3/18 - initiated by Faaqcee) got me to start wondering. Once and a while my brain still functions, even after a few Dark and Stormys :-)

    Both Jtrader and Walrus made it a point of identifying several of your favorite high divvy investments that have recently announced SPOs' B4 the XDIV date. So........... two things came to mind.

    1) If I remember correctly, you use to question why any of them would pay out the extra dividend ($$$) to the owners of the new SPO shares, because if it was you managing the investment, you couldn't justify doing that. Is my memory serving me correctly?

    2) With this fairly recent sequence of events, where the SPOs' are in fact prior to the XDIV date, wouldn't that make your "tactical" plan(s) (i.e. GLAD) based on a couple of years of history no longer as valid as they once were?

    Perhaps these investments have sufficient retained earnings to cover this new sequence of events, without having to lower their divvys?

    As Always,
    The Best Of Everything -
    Salty

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    • Greetings Salty!

      Yes, I did use to question the wisdom of pre-EX SPO's. If you really glean the inner workings of the plethora of my posts you will find my answer with GLAD as I did address this issue. To wit, on ARR which is the main stock with pre-EX spos, the Rules include doubling down on all spos which are X-6 or prior. That does not take into account those spos which are closer, which have occurred. The recent examples are:

      8/03/12
      7/10/12
      3/09/12
      2/03/12
      7/01/11
      4/08/11

      You will note that if the trade(buy) had been placed on each of those cycle's X+2 as instructed in the ARR trading Rules, each would have been winners though, except two, which lost 10 cents and 1 cent. The others won quite a bit.

      Therefore based upon this fairly large sample size I did not foresee any great problem with the ARR trade. The other 5 stocks in the SS have much fewer spos which mostly occur pre X-6. I have taken into account at least 24 cycles and in most cases over 33 cycles and have tried to find worse case examples. They are so few(less than 10%) and are small in damage that I have to bet heavily on the side of GLAD/3%.

      There will be drawdowns, but as in Vegas, the House wins in the end. We are a little different in that we are putting up the front money on the bets but in the end if history actually happened and is a predictor of the future(my thinking) then in the end we win.

      Cheers,

      DocReits

      • 2 Replies to reits_r_us
      • Hey Doc -

        RE: KMP Bull Put Spread(Apr87.50/85)@ .90 credit.

        I believe each person should have the strength in their own convictions.

        BUT - and there is always a but, isn't there :-) I personally would prefer to place one bet each year on KMP, during the historic summer lows.
        The size of the bet would be 4 times the size of a quarterly bet.

        Then wait for the historic high during the divvy run-up in January. Ca-Ching.............

        Much like Ray & X, I like the excitement of the high risk high rate of return :-)

        Having said that, I still believe you'll do well................

        GLTA - GO AGNC

        Salty

      • Hey Doc -

        Thanks for your prompt response.

        It sounds like you have a great deal of confidence in your "Analytics for Success".
        So I therefore wish you (and all that follow your guidelines) the very best.

        Having said that, I was expecting and/or hoping for Jess to chime in, much like Ephort has chimed in in the past, as a sounding boarding for some of your past option trades.
        BTW - What has happen to Ephort, anyway? Ummmm........... :-)

        All The Best,
        Salty

        PS - It would appear (to me at least) that KMP remains very strong, and I am personally staying away until some time this summer.

        PPS - Also surprised that you didn't post that you were jumping on the MTGE bandwagon as well.
        Do you have a bet in place for MTGE?

 
AGNC
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