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Old 08-01-2008, 01:19 PM   #1
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Join Date: Mar 2004
Location: Dallas
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Hi to all,

I recently sold my modest position in KRE (Regional Banking Index) and
bought National City Corp preferred series F. This stock pays 9.875%
fixed rate until 2/1/2013 when it switches to 3 month LIBOR plus
6.33%. The stock has no maturity date and first call is 2/1/2013 at $25.
It was rated BBB+ on 2/08/2008. The market price is around $22 which
makes the current yield about 11.2%. The yield to call would be roughly
about 14%.

This looked like a sweet deal to me as it beats my equity return goal
of at least 10% with bond like risk.

I would appreciate any comments you care to make .... especially from
Brew. I would like to buy more if the consensusl is favorable.



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Old 08-01-2008, 01:52 PM   #2
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I own NCC stock. It is highly speculative position. I suspect that the high return on the preferred stock reflects the feeling that they are undercapitalized so you are assuming a higher risk.

Angels danced on the day that you were born.
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Old 08-01-2008, 04:30 PM   #3
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I have been writing NCC options recently (to take advantage of the tremendous volatility) and a few years ago owned the stock briefly.

Charlie as I am sure you know there is a real chance that NCC might fail, if the Ohio real estate market continues to worsen. I'd be interested in Brewer's comments also, but I think it would be worth while to look at Country Wide and IndyMac bonds and preferred to get an idea what your stock maybe worth in the event NCC goes under.

I've been looking at a similar security from a far more secure bank. JP Morgan (JPM-Z) preferred 8% coupon until 2013 than switches to 3 month LIBOR + 4.12% it is currently trading a bit over par ~$26, so current yield is around 7.7% Obviously a big difference in current yield and YTM. If the credit market returns to normal the NCC preferred has 220 basis advantage on the other hand I prefer JP Morgan's balance sheet to NCC's
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Old 08-01-2008, 04:32 PM   #4
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Originally Posted by clifp View Post
My we are colorful today, aren't we?

EDIT: On second thought, maybe not...
Numbers is hard.

Retired in 2005 at age 58, no pension

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Old 08-01-2008, 04:33 PM   #5
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Ya hit submit while in spell check mode
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Old 08-02-2008, 09:14 AM   #6
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I think what you're getting there is equity like returns with equity like risk Charlie.

Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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