October 2nd, 2008 by StockGumshoe
A big part of the advertising that comes out for Carla Pasternak’s High Income Investing is by way of their writeups on the “income security of the month” — I’ve looked at a few of these in the past, but it’s been a while, so now seems like as good a time as any to dig in again.
We’re told that she has for us a “Hybrid Security [that] Provides Stable, Legally-Bound Monthly Payments and a 10.1% Yield.”
Sounds pretty nice, no? 10% seems to be a magic number — that’s what Warren Buffett is getting for the preferred stock he bought from GE and Goldman Sachs in recent weeks, so why shouldn’t it be good enough for us mortals?
In this case it’s also a preferred stock, though a convertible one. A convertible preferred stock is Read the rest of this entry »
July 2nd, 2008 by StockGumshoe
Let me just warn you up front — this is a rerun. But I calls ‘em like I sees ‘em, and Carla Pasternak runs this same exact ad so often that I get questions about it once every few months. This is no exception — she’s been calling this particular Closed End Fund (CEF) her “Income Security of the Month” about every third or fourth month since last year. Now she’s selling it as an investment with a 24.9% yield, so the numbers change each time but precious little else does (and be careful if you’re counting on that yield going forward — it ain’t exactly a promised dividend).
This secret teaser investment remains the Korea Fund, for those who are interested, and I won’t delve into trying to analyze it again, since I’ve done that a few times and my opinion hasn’t changed (though the South Korean market has tumbled alongside the other Asian markets recently … which means that any capital gains disbursed by this fund as dividends at the end of the year are likely to be much lower than last year’s payout).
If you look at the chart and get the willies, do note that the huge precipitous fall wasn’t nearly as bad as some charts make it look — November of last year was when the special dividend of realized capital gains was paid out, which is why the price fell by about $16 on November 29. The price certainly has fallen, too, but not as badly as it looks if you don’t discount for the dividend.
But in case you missed it in November, and in February, here it is. I’ve made no edits below, but Warren Buffett is still an enthusiastic investor in South Korea (particularly in Posco), the fund does still trade at roughly a 6% discount to NAV, and, for full disclosure, I don’t currently own KF, the EWY ETF for South Korea, or any individual South Korean stocks.
So without further ado … here’s the rerun:
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