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Old 05-24-2016, 03:43 PM   #461
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The lower price is because the yield to maturity should be about the same on the two issues. You'll get ~$0.50 extra when the OSM is redeemed in about a year (versus market price today). You'll get ~$1 when ISM is redeemed in two years. Coupon is about the same.
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Old 05-24-2016, 06:18 PM   #462
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Right, thanks.

So about 4% real yield (inflation plus 2% coupon, about 2% on principal), wow !
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Old 01-08-2017, 05:31 PM   #463
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Dunno if anyone here still owns or cares about these (since OSM maturing very soon, ISM in a year). But the 2016 dividend payments look too low to me. Anyone care to check my math ? Left hand column is per/share payment I computed, right-hand is what I received (for Jan thru Dec):

$0.042760 $0.042713
$0.047149 $0.047027
$0.050686 $0.050553
$0.059017 $0.058867
$0.070337 $0.070140
$0.065138 $0.064966
$0.059641 $0.059490
$0.067417 $0.067228
$0.065233 $0.065048
$0.062789 $0.062621
$0.061259 $0.061090
$0.063998 $0.063834

Not much, amounting over all of 2016 to about a $2.70 shortfall on my 1500 share position. Still, makes me wonder if something fishy is going on. Reminds me of a friend of friend who was working on GIS systems in school, and thought he'd determined that highway contractors were very slightly, but consistently, over-billing the state for miles of road work. (Dunno what ever became of that).

Only thing I can figure is that month-to-month inflation from Sep'14 to Sep'15, which would determine Jan'16 interest payment, was negative, and somehow I'm not allowing for how that might propagate over the remaining of 2016's payments properly. I don't think so though: unless the month-to-month is more negative than the bond's real interest rate (2.05% for ISM), its negativity don't signify).

BTW, I have a huge sense of deja-vu on this, so if I've had this issue before, and was set straight, please be gentle.
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ISM/OSM yet again
Old 01-08-2017, 08:12 PM   #464
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ISM/OSM yet again

Rusty, I own almost 3,000 shares of PFK, which is a very similar type issue from Prudential. It is CPI, Y over Y plus 2.4% kicker, so it will pay fractionally better. It is now in an up cycle. 6 plus cents two months ago, 7 plus cents last month, and went over 8 cents this divi payable 1/10. This trend should continue due to falling base CPI comparison number for the next several months. Since PFK trails by 3 months , I already know CPI rate will be 25 basis points higher in 2 months than this past divi payment. So yield will modestly continue higher.
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Old 01-08-2017, 08:34 PM   #465
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Quote:
Originally Posted by RustyShackleford View Post
Dunno if anyone here still owns or cares about these (since OSM maturing very soon, ISM in a year). But the 2016 dividend payments look too low to me. Anyone care to check my math ? Left hand column is per/share payment I computed, right-hand is what I received (for Jan thru Dec):

$0.042760 $0.042713
$0.047149 $0.047027
$0.050686 $0.050553
$0.059017 $0.058867
$0.070337 $0.070140
$0.065138 $0.064966
$0.059641 $0.059490
$0.067417 $0.067228
$0.065233 $0.065048
$0.062789 $0.062621
$0.061259 $0.061090
$0.063998 $0.063834

Not much, amounting over all of 2016 to about a $2.70 shortfall on my 1500 share position. Still, makes me wonder if something fishy is going on. Reminds me of a friend of friend who was working on GIS systems in school, and thought he'd determined that highway contractors were very slightly, but consistently, over-billing the state for miles of road work. (Dunno what ever became of that).

Only thing I can figure is that month-to-month inflation from Sep'14 to Sep'15, which would determine Jan'16 interest payment, was negative, and somehow I'm not allowing for how that might propagate over the remaining of 2016's payments properly. I don't think so though: unless the month-to-month is more negative than the bond's real interest rate (2.05% for ISM), its negativity don't signify).

BTW, I have a huge sense of deja-vu on this, so if I've had this issue before, and was set straight, please be gentle.


Are you saying that the total you received was short by $2.70

One possibility is that it is probably 12 30 day months... or a total of 360 days....
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Old 01-08-2017, 09:02 PM   #466
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Rusty, Did you apply the formula that is used in the prospectus? Also, are you using correct base month comparisons when doing computations? OSM is like PFK it trails 3 months... So Jan divi would be based off Oct to Oct CPI index change, plus the monthly fractional payout of the 2% kicker.
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Old 01-08-2017, 11:08 PM   #467
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Are you saying that the total you received was short by $2.70
Yes, short $2.70 in interest payments for all of 2016, for a position of $37,500 face value. Fairly ridiculous to be concerned, really. But if they're doing something fishy, it'd be nice to know.
Quote:
One possibility is that it is probably 12 30 day months... or a total of 360 days....
I wrote a spreadsheet years ago, to compute interest payments for ISM/OSM and some various individual TIPS issues. All I have to do is to enter each month's CPI-U figure. I'm pretty sure my inflation numbers are correct, because it gets the TIPS coupon payments correct to the penny.

For ISM, it's always been off by a penny or two on each month's interest payment (for my entire 1500 share holding), but if I add up over a whole year, the total is still only off by a few pennies - not a few dollars. IOW, a penny too big one month and too small the next, some nuance of how it computes each month's amount (maybe the twelve 30-day month thing). All I can think is, somehow they started doing the months differently, so it's weighing the months with smaller year-to-year inflation amounts a little higher. I guess I could play with the spreadsheet and see if I can match the numbers I'm being paid.
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Old 01-08-2017, 11:33 PM   #468
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Whoa, this is weird. I changed the spreadsheet to assume 12 equal length months, and now the total (for all 1500 shares over the whole of 2016) is only off by 35 cents (instead of $2.71). However ... the difference between computed and actual payments for individual months are now much larger (like a buck or so, whereas before, the actual payments were fairly consistently about 20-25 cents smaller than the computed ones).

I also checked 2015 numbers, and the computed and actual payments never differed by more than $0.02, usually just a penny, and the year's total was off by a penny. Maybe somehting do with ISM now showing up as owned by BNPP instead of SLM, whatever BNPP is and whenever that happened.
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Old 01-09-2017, 12:41 AM   #469
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Whoa, this is weird. I changed the spreadsheet to assume 12 equal length months, and now the total (for all 1500 shares over the whole of 2016) is only off by 35 cents (instead of $2.71). However ... the difference between computed and actual payments for individual months are now much larger (like a buck or so, whereas before, the actual payments were fairly consistently about 20-25 cents smaller than the computed ones).

I also checked 2015 numbers, and the computed and actual payments never differed by more than $0.02, usually just a penny, and the year's total was off by a penny. Maybe somehting do with ISM now showing up as owned by BNPP instead of SLM, whatever BNPP is and whenever that happened.

Whoever 'owns' it does not matter... there is a trust instrument that has to be followed...

What I would look at is if the trustee changed... it should not matter, but if there is a new trustee because the owner changed they might not be using the correct numbers from prior years...

Look to see if it is 30 day months... and also look to see when the calculation is supposed to be made... do they publish the rates (they should)... check yours against the trustee....

BTW, you can call the trustee and ask them questions... sometimes it might be a bit hard to get the correct one, but they should be available for questions...
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Old 01-09-2017, 01:53 AM   #470
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BTW, you can call the trustee and ask them questions...
Yeah, hardly worth the trouble for $2+/year, and only for one more year. Curious though.
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Old 01-13-2017, 02:34 PM   #471
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Dunno. I sold all my ISM when it hit par. Too bad I didn't wait till it was selling for $0.70 over par!
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Old 03-17-2017, 07:02 AM   #472
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Well, OSM matured at par ($25) on Wednesday. I still have a fairly sizeable position in ISM which matures in January. For those who have held onto these securities through the ups and downs, they have turned out to be a pretty good investment. Even though still rated below investment grade, they never missed an interest payment. My thanks to Brewer for pointing these out 10 years ago.
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Old 03-17-2017, 09:57 PM   #473
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That ISM is trading above par if you're interested in selling for a quick ~2% profit.
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Old 04-16-2017, 11:28 PM   #474
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Yikes:

https://www.nytimes.com/2017/04/09/b...-students.html
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Old 04-17-2017, 01:44 PM   #475
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Don't see to have hurt the trade value though.
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Old 04-18-2017, 06:14 AM   #476
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Nothing new here. By the time the NYT writes an article like this, the news has been known for quite a while.

A couple of things to keep an eye on if you plan to hold ISM until it matures in January:

NAVI reports Q1 after the market close today. The consensus EPS forecast is 0.42, 2.6 times the current dividend payout of 0.16. So long as the common stock is paying a dividend, there's little reason to worry about receiving interest payments.

More importantly IMO, JSM, the fixed-rate note which has the same bond rating as ISM but doesn't mature until 2043 is trading only about 5% below its par of 25. If holders of JSM aren't worried, I certainly am not worried about ISM
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