
“Before I saw
your book, I was resigned to putting my longer term money into
CD's and government agency debt. Now I buy preferreds from the
CDx3 Bargain Table and set my profit target via the CDx3
Seller's Calendar...In the interim, I collect the dividends.
It's a perfect fit!” -
Carl J.
Welcome to all of the
new CDx3 Newsletter readers who signed up during January. This is your first issue of the CDx3 Newsletter, a free monthly newsletter devoted
to the interests of CDx3 Preferred Stock investors.
To be sure
that you continue to receive the CDx3 Newsletter each
month, please remember to add the following email address to
your email address book safe sender list:
CDx3NotificationService@us.emaildirect.com.
As compelling and historic as the
events going on within our financial industry are, do not forget
that there are some real bargains waiting to be had with
preferred stocks issued by non-banks. The turmoil in the
financial industry has pushed the market prices for the highest
quality preferred stocks ("CDx3 Preferred Stocks") from
non-banks down as well, creating some spectacular
diversification opportunities for buyers. In the Last
Month's CDx3 Investor Results article I provide you with an
update on the performance of the CDx3 Preferred Stocks issued by
The Protected Fifteen banks (down from sixteen due to January's
bank mergers) - now up 35% since the TARP program began. But I
also break down the various non-bank industries that are
represented by CDx3 Preferred Stocks - the highest quality
preferred stocks available with annual yields over 11%.
In the
Special Announcement article I identify the three options
that, according to Reuters, the government is pursuing for TARP
2. This initiative will shape the marketplace for preferred
stock investors going forward. I will be sending you an update
later this month once the details of TARP 2 are announced.
The CDx3 Company Spotlight
article this month is on AMB, one of the many non-bank issuers
of CDx3 Preferred Stocks that I have spotlighted for you over
the last several months. While not a household name, it is
almost a certainty that each of us has something in our homes
that has spent time in an AMB facility. An interesting company
that has helped integrate the world's economies with their
high-tech facilities.
When dividend rates come back down
from their current historic high of 8.95%, and market prices
head back up accordingly (this is the Rule of Rate/Price
Opposition from my book Preferred Stock Investing) the
marketplace for CDx3 Preferred Stocks will return to a "seller's
market." This month's CDx3
Question Of The Month article describes the Target Sell
Price and answers the question "...at what price am I better off
by selling, rather than holding onto my CDx3 Preferred Stock
shares and collecting more dividend income?"
The Free Special Offer
article below provides you with a download link to what could be
the most important document you will read during this global
credit crisis. As a reader of this monthly CDx3
Newsletter, you obviously have an interest in preferred
stock investing. This newly published report is titled "Quick
Guide To Preferred Stock Investing During A Global Credit Crisis"
and is available to my readers for free (see the link in the Free
Special Offer article below).
While we're all anxious to hear
the details on TARP 2 later this month, do not let the
opportunity that this credit crisis has created with non-bank
CDx3 Preferred Stocks pass you by. Subscribers to the
CDx3 Notification Service
receive a report every month that identifies non-bank
CDx3 Preferred Stocks that are at a point in time that, the
research shows, tends to favor buyers.
Once TARP 2 is unveiled later this
month, I will report back to you regarding how I see the
program's provisions affecting the marketplace for CDx3
Preferred Stocks.
|
 |
CDx3 Bank
Preferreds Up 35% While Others Languish
CDx3 Preferred Stocks From
Non-Banks Benefit From Down Economy- Apartments, Self-Storage
We’ll know more
about TARP 2 within the next couple of weeks,
but it is looking like the government is going
to use TARP funds to shelter banks from the
toxic mortgage-backed investments that are
preventing normal lending.
While we do not
know, as I’m writing this, what form TARP 2 is
going to take, I can tell you that the market
prices of the CDx3 Preferred Stocks* involved in
TARP 1 have now risen an average of 35% since the
day before TARP 1 was announced last October 6.
Here’s an updated
chart from the one I showed you last month (see
last month’s chart).
Notice that, due to January’s merger activities,
The Protected Sixteen banks from last month have
now become The Protected Fifteen.
Media reports over
the last few weeks have pointed out that the
common stock market prices of many TARP banks
have fallen since receiving TARP funds.
That may be,
but I think this chart makes it pretty clear
that these particular CDx3 banks - The Protected
Fifteen and their 31 CDx3 Preferred Stocks* -
are receiving much more favorable treatment from
The Market. And the CDx3 Selection Criteria*
have picked them out of the pile of several
hundred pretenders.

By the way, the
yellow highlighted bars are issues from
Citigroup and Bank of America. These two banks
had a very tough January, primarily Citigroup.
But did you notice
that Citi’s January 16 announcement that they
were going to be separating their toxic assets
into a separate company and the government’s
announcement of forming a “bad bank”
within which to hold toxic assets from banks
were made simultaneously? Coincidence? I don’t
think so.
If
TARP 1 pushed the average market price of these
31 CDx3 Preferred Stocks* up 35% in just four
months, what do you think is going to happen
once TARP 2 is implemented?
We’ll have to see
what restrictions TARP 2 places on these banks.
But the program has the potential to go a long
way toward stabilizing our financial system.
In the meantime,
preferred stock investors may also want to
consider high-quality preferred stocks issued by
non-banks.
Diversification:
One way to avoid the turmoil related to banks is
to look at non-bank CDx3 Preferred Stocks*. CDx3
Preferred Stocks are issued by a wide variety of
businesses; in fact, during all of 2003 and 2004
(pre-credit crisis) there were no CDx3 Preferred
Stocks issued by banks at all for over two
years. |
By considering
non-bank CDx3 Preferred Stocks*, you receive all
of the risk-lowering benefits of the ten CDx3
Selection Criteria without investing in banks.
Remember, the CDx3 Selection Criteria (Preferred
Stock Investing, Chapter 1) have
successfully filtered out every failed bank
since this credit crisis began. All dividends
have been paid to CDx3 Investors on time and in
full.

Don’t forget that,
as nasty as a down economic cycle can be, there
are those that benefit. This housing-fueled
recession in particular has benefited apartments
and self-storage businesses, for example. When
the economic pendulum swings to the up side,
retail shopping, hotels and shipping businesses
benefit from the uptick (which means that there
may be bargains available in these areas right
now).
Every month,
subscriber’s to the
CDx3 Notification Service
receive the “CDx3 Bargain Table” (what’s
this?) that
identifies CDx3 Preferred Stocks* from a variety
of industries that are at a point in time when,
research shows, their market price will tend to
favor buyers. We do the research and work for
you and provide you with a list of CDx3 purchase
candidates each month for your consideration.
Several non-bank
CDx3 Preferred Stocks* are featured on the
current CDx3 Bargain Table. If you are looking
to diversify your investments into the highest
quality preferred stocks issued by non-banks,
please consider subscribing to the CDx3
Notification Service (see pricing).
* CDx3 Preferred
Stocks: CDx3 Investors are only
interested in the highest quality preferred
stocks and there are lots of pretenders to weed
out. Applying the CDx3 Selection Criteria (Preferred
Stock Investing, Chapter 1) will eliminate
about 90% of the regular preferred stocks
trading on today's stock market.
For example, here
are three of the ten CDx3 Selection Criteria
that regular preferred stocks must meet to be
considered "CDx3 Preferred Stocks:"
1. be issued by a
company with a perfect record of never
having suspended a dividend on a preferred
stock;
2. have the "cumulative"
dividend requirement, which means that in the
unlikely event that the issuing company misses a
dividend payment to you (which I have never seen
happen with a CDx3 Preferred Stock), they have
to make it up to you later; they still owe you
the money; and
3. be rated "investment
grade" by Moodys Investors Service.
Having specific and
consistently applied selection criteria takes
the emotion out of your investing decisions and
leaves you with the highest quality preferred
stocks - "CDx3 Preferred Stocks." |
|
 |
Mid-February TARP Update To Be Published - Watch For
It
TARP 2 Is Just Too Important To
Ignore, Unfortunately
You are going to be
hearing from me again in the middle of February.
As tired as we all are of
reading (and writing) about banks and the government’s
efforts to unlock the gridlock in the credit markets,
the fact is that our economy is not going to pull itself
out of this mess until banks start lending again.
With their balance sheets
bogged down by these mortgage-related toxic assets
(investment instruments backed by homes that have lost
their value and mortgages that borrowers have defaulted
on), banks absolutely cannot take on any more risk – not
one pinch.
Put another way, they
cannot issue any new loans except under the very safest
of terms to the very best of borrowers. Otherwise, no
more loans.
And that's where we've
been at since June 2007.
The TARP program was
originally supposed to get these toxic assets off of the
balance sheets of these banks, freeing the banks up to
take on new risk (i.e. make new loans).
But, in the 11th hour last
fall, Treasury changed course and injected cash into
these banks by purchasing custom-made preferred stocks
from them instead.
With TARP 2 now upon us,
it appears that we are heading back to Treasury’s
original proposal for TARP funds – use the money to
isolate the banks from these toxic assets in order to
free up lending.
TARP 2 has the potential
to deal with many of the issues facing our economy.
While its provisions are still unknown, the government
has been pretty clear about their objectives. |
According to a February 2nd
Reuters article, citing a source familiar with the
administration’s thinking, there are three options under
consideration (note that the word 'nationalization' does
not appear anywhere):
1.
creating a "bad bank" that could take toxic assets off
the balance sheets of banks in the hope of reviving
lending;
2.
government insurance on troubled assets to help shield
banks from future losses (ala the Bank of America
model); and
3.
further capital injections by the government into banks,
although with new requirements on the usage of such
funds (ala TARP 1).
The bad bank scenario is
getting a lot of mention, especially since the other two
options have already been tried in one form or another.
Like it or not, TARP 2 and
the other programs that will come along with it, is
driving the preferred stock market right now. As one
interested in preferred stock investing, you should pay
close attention to what happens with respect to the
government’s plans for TARP 2 later this month.
You know I will be. As
important as this is to preferred stock investors,
please expect an update to this issue of the CDx3
Newsletter from me in a couple of weeks.
Have questions?
Subscribers to the
CDx3 Notification Service have direct
access to me and my ongoing preferred stock research by
using my special email address. If you are serious about
preferred stock investing, please consider subscribing
to the
CDx3 Notification Service. |
|
 |
Who Are
These Companies That Issue CDx3 Preferred
Stocks?
AMB Property Corporation
(NYSE: AMB)
If
your local mini-storage operator
does not have enough storage
space for your stuff, you might
try calling AMB Property
Corporation, headquartered at
Pier 1 in San Francisco,
California.
AMB, founded in 1983, is a $1.6
billion company that specializes
in the ownership and operation
of industrial distribution and
storage facilities - 160 million
square feet of it, spread across
about 1,200 buildings in 15
countries.
AMB's facilities are
specifically located in cities
throughout the world that are,
or are near, major
transportation centers.
AMB builds high-tech facilities
with a specific emphasis on
quick-in, quick-out handling of
high volume cargo near airports,
seaports and ground
transportation centers.
|
AMB's facilities were 95.1%
occupied as of December 31, 2008
with an average occupancy of
94.9% throughout 2008.
From AMB's January 29, 2009
results press release:
"During the fourth quarter of
2008, the company leased more
than 2.2 million square feet of
its development pipeline,
bringing the full-year total to
a new annual leasing record of
approximately 8.3 million square
feet compared to approximately
8.2 million square feet of
development leasing in 2007.
Customers that initiated and
expanded their relationships
with AMB in 2008 range from
global consumer brands to third
party logistics and air freight
forwarder companies and include:
3M, DHL, Dorel, KLM, Kuehne +
Nagel, Pepsico Canada, Schenker
and Wincanton."
Click here to learn more
about AMB Property Corporation,
issuer of CDx3 Preferred Stock.
|
|
 |
What is the Target Sell Price
and how do I use it? - Paula
G.
The Target Sell Price, as
explained throughout Chapter 6
of Preferred Stock Investing,
helps answer the question: “am I
better off selling my preferred
stock now for a capital gain or
holding onto my shares longer
and collecting more dividend
income?”
The answer, of course, depends
on the price that you can sell
your shares for. But at what
market price are you better off
by selling rather than holding?
For those who haven’t had to
make this calculation since high
school, answering that question
can be a real hair-puller.
By using the Target Sell Price
from Preferred Stock
Investing, the calculation
is done for you. All you have to
do is, on a certain date when
the market price of a CDx3
Preferred Stock is likely to
favor sellers (explained in
Chapter 6 of Preferred Stock
Investing), check the market
price of your CDx3 Preferred
Stock. If the market price is
greater than the Target Sell
Price on that day you should
consider selling.
I’d like you to keep the
following question in mind as
you read the rest of this
article: if I were to offer you
$1.50 now or give it to you nine
months from now (no strings
attached), would you rather have
the money now or later?
Let me give you an idea of how
the Target Sell Price works.
Let’s say that you own a CDx3
Preferred Stock that pays an 8%
annual dividend. Since CDx3
Preferred Stocks always base
your dividend payments on a
value of $25.00 per share
(regardless of the current
market price and regardless of
what you actually paid to buy
it), you are going to earn $2.00
per year on this CDx3 Preferred
Stock for every share that you
own. For this example let’s say
that you purchased this 8% CDx3
Preferred Stock for $25.00 per
share.
Since CDx3 Preferred Stocks pay
dividends quarterly, you are
going to receive a check for
$0.50 per share every quarter
for your 8% CDx3 Preferred
Stock.
Another thing we know about the
market price behavior of CDx3
Preferred Stocks is what
Preferred Stock Investing
refers to as the Rule of
Rate/Price Opposition. As the
dividend rate being offered by
new CDx3 Preferred Stocks
increases, the market price of
older lower dividend payers will
tend to decrease. And the
opposite is equally true – when
new issues are offering lower
dividend rates, the market price
of older higher payers will tend
to go up. Rates up, prices down
and vice versa – the Rule of
Rate/Price Opposition.
So, as dividend rates on newly
issued CDx3 Preferred Stocks go
up and down over time, their
market prices fluctuate
accordingly.
During a “seller’s market” for
CDx3 Preferred Stocks, when
dividend rates are decreasing
and market prices are
increasing, it would be very
unusual if the market price of
your 8% CDx3 Preferred Stock did
not far exceed its par value
($25.00) as dividend rates fell
below 8%.
For example, if dividend rates
were to fall to, say a more
normal 7%, your 8%-er is going
to be a hot ticket, and its
market price will tend to go up
accordingly.
So the question becomes this: if
the market price of your 8% CDx3
Preferred Stock rose from the
$25 per share that you
originally paid for it to, say,
$26 per share, would you sell
it?
|
If you did, you would make a
$1.00 per share capital gain.
Remember, your 8% CDx3 Preferred
Stock pays you $0.50 per
quarter, so selling for a $1.00
capital gain is equivalent to
two quarters worth of dividend
income – and you’ll receive it
all at once, the moment you
sell. You won’t have to wait for
two quarters in order to get
your money.
What if the market price went to
$26.50? You would make a $1.50
profit for every share. That’s
three quarter’s worth of
dividend income right now; no
waiting another nine months to
receive the same amount. Would
you sell for $26.50? This is the
question I asked you earlier –
would you rather have $1.50 now
or $1.50 later?
CDx3 Investors use the Target
Sell Price as a guide during a
seller’s market (characterized
by high market prices and low
dividend rates).
The Target Sell Price
calculation, as
presented in Chapter 6 of
Preferred Stock Investing,
results in a value
that CDx3 Investors use to help
answer the question “…am I
better off selling now for a
capital gain or holding onto my
shares and collecting more
dividend income.”
In cases where the market price
of your CDx3 Preferred Stock
exceeds the Target Sell Price
(on the specific date that is
explained in Chapter 6 of
Preferred Stock Investing)
CDx3 Investors consider selling.
Preferred Stock Investing
teaches you how to purchase your
CDx3 Preferred Stocks for a
market price below $25.00 per
share. If you would have used
the Target Sell Price as a
selling guide for every CDx3
Preferred Stock issued since
January 2001, here are the
average market prices that you
would have sold your shares for:

Note that we have been in a
"buyer's market" since June 2007
when the current credit crisis
set in. Selling 2007 and 2008
CDx3 Preferred Stocks will come
later once dividend rates come
back down and, correspondingly,
market prices come back up.
The individual CDx3 Preferred
Stocks issued since January 2001
used for this chart are
itemized, along with the sell
date, sell price and effective
annual return that you would
have earned, in Chapter 9 of
Preferred Stock Investing.
Thanks to Paula G. for the great
question. You will receive a
free copy of the CDx3 Special
Report "Dividend Accounting."
Submit your question.
|
|
 |
Free Copy
Of
"Preferred Stock Investing During A Global
Credit Crisis"
Thank You For Your Interest In Preferred
Stock Investing And The CDx3 Income Engine

Many
CDx3 Newsletter readers have been with me for
quite some time. And from the email that I receive I
know that many of you have read Preferred Stock
Investing and have implemented the CDx3 Income
Engine on your own (the book includes all of the
resources needed to do so without the
CDx3 Notification Service).
The 18-month long credit crisis has shaken our financial
system and everyone who is invested in it (which is just
about everyone). Even though the CDx3 Selection
Criteria, day after day, have successfully filtered out
every failed bank for over a year now, and even
though there has not been so much as a missed dividend
for those who have invested in CDx3 Preferred Stocks,
there's still some anxiety.
And that's what concerns me the most. As a researcher, I
have an enormous volume of data regarding the market
price behavior of CDx3 Preferred Stocks.
|
I can not only explain this market price behavior but I
have the data needed to support my observations. Chapter
9 of Preferred Stock Investing includes the
investment results, using the CDx3 Income Engine, for
every qualifying preferred stock issued since January
2001.
Whether market prices are driven down by uncertainty
related to war (2002) or by a global credit crisis
(2007/08...), the market prices of CDx3 Preferred Stocks
behave in certain ways at certain times.
To thank you for your interest, and to provide you with
some very timely insights, I have published a "Quick
Guide To Preferred Stock Investing During A Global
Credit Crisis"
(PDF,
download now).
This is an important and timely document that all who
are interest in using the highest quality preferred
stocks to benefit from this credit crisis should read.
Understanding the CDx3 Income Engine is more important
now than ever.
Enjoy reading the
Quick Guide and thanks again for your
interest in my preferred stock research. |
|
 |
The Next Milestone: TARP 2 Directly Ahead
Non-Bank Preferred Stocks Offer Historic Opportunity Right
Now
The market prices of the 31 CDx3
Preferred Stocks issued by The Protected
Fifteen TARP banks that I have been
identifying for you over the last few
months are now up 35% since the TARP
program was announced. While these CDx3
Preferred Stocks are obviously thought
of more highly by The Market than
others, the next big milestone for these
high quality preferred stocks will come
later this month when the details of
TARP 2 are announced.
In the meantime, preferred stock investors should
not become so focused on the historic events within
our financial sector that they ignore what is now an
equally historic opportunity to diversify your
portfolio with the highest quality non-bank
preferred stocks.
The current yield being offered by CDx3 Preferred
Stocks from non-banks is over 11% and there are
plenty to pick from (see the pie chart in the Last
Month's CDx3 Investor Results article at the top
of this newsletter).
You will hear back from me later this month once the
government formalizes TARP 2 and its affect on the
marketplace for CDx3 Preferred Stocks becomes more
clear.
|

Remember, I'm not a stock broker;
I'm not trying to sell preferred
stocks to you; and I don't sell
investment advice. I'm an
investment researcher with an
economics and statistics
background who has developed a
simple way to earn a respectable
return at acceptable risk. And I've
written it down in
Preferred Stock Investing.
I'm hopeful that you find these
monthly CDx3
Newsletters interesting, and
will consider learning more by
purchasing my book, Preferred
Stock Investing or by subscribing to
the
CDx3 Notification Service.
Please
take a look at
www.PreferredStockInvesting.com. And don't forget
about my
FREE SPECIAL OFFER.
Know
someone who might be interested in simple,
low-risk investing for non-investment
experts? Have them send an email
message to
CDx3Newsletter@PreferredStockInvesting.com and
they will automatically
begin receiving this monthly CDx3
Newsletter
next month (plus a
CDx3 Special Report) - all FREE.
Many Happy Returns,
Doug K. Le Du
|
|