For 2009 I will be tracking a real portfolio created this quarter in scary times, when everyone is second guessing themselves, the market, and the economy. Last week I wrote Chasing Value: Annaly Capital Mgmt -- from watch list to buy noting that Annaly Capital Management (NYSE: NLY) was acquired, for among other things its 15% yield and basic stability. It trounced the market in 2008, but the yield by itself was very rewarding and I expect that to continue.

Yesterday General Electric (NYSE: GE) dropped over 8% from $17.39 to $15.96. This triggered a buy order I had in at $16.00, after a negative outlook by rating agency Standard & Poors suggested that there was the potential that GE could lose its prized AAA rating sometime in the next two years based on stress it was feeling on its balance sheet related to its financial services division, and GE's uncertainty in other businesses.

Continue reading Chasing Value: Add General Electric to the list

Chasing Value: Add General Electric to the list originally appeared on BloggingStocks on Fri, 19 Dec 2008 15:08:00 EST. Please see our terms for use of feeds.

"Annaly Capital (NYSE: NLY) is in the sweet spot," says Steve Sjuggerud in Daily Wealth. He says, "It borrows money at a low interest rate and invests it at a higher rate -- and earns the 'spread'."

"The cost of money is historically low, and it's headed lower. Meanwhile, relative to the cost of money, the return on money is higher than it's ever been.

"The ultimate way trade on this historic discrepancy, for high-returns with very low risk, is through shares of companies like Annaly, which is now s now paying a 16% dividend.

"In the latest-reported quarter, the company borrowed money at 3.5%. (The credit markets have calmed down a bit, so its cost of borrowing should be even lower next quarter.)

"It invests the money in government-guaranteed bonds. You remember how the Treasury bailed out Fannie Mae and Freddie Mac? It wiped out shareholders. But it explicitly guaranteed the bonds.

"In the latest-reported quarter, Annaly earned 5.6% interest on these risk-free bonds. Therefore, it earned a 2.1% spread. If the company uses seven times leverage, a 2.1% spread means a 14.7% return on its money.

"Analysts estimate the company will earn $2.50 per share next year. It pays out essentially all of its earnings in dividends. So that'll be a dividend yield of about 19%. This is ridiculous. An opportunity like this only appears during market turmoil like we're experiencing now.

"This is a historic moment. The difference between the cost of money and the return on money relative to that cost is at the most extreme levels I've seen in my career. Take advantage, and buy stocks like Annaly today."

Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.

Annaly Capital (NLY): 'In the sweet spot for historic yields' originally appeared on BloggingStocks on Fri, 21 Nov 2008 15:39:00 EST. Please see our terms for use of feeds.

MOST NOTEWORTHY:

• Wachovia upgraded shares of Sprint Nextel Corporation (NYSE: S) to Outperform from Market Perform as they believe the company is within six months of reaching a sustainable turnaround in subscriber growth and that investor expectations can not get much lower.
• CIBC upgraded shares of Safeway Stores Inc (NYSE: SWY) to Sector Outperformer from Sector Performer after the company's strong quarter in a challenging environment.
• Jefferies raised its rating on PharmaNet Development Group Inc (NASDAQ: PDGI) to Buy from Hold as they believe the company should achieve leverage in margins after executing its turnaround.
• Millennium Pharmaceuticals Inc (NASDAQ: MLNM) was upgraded to Outperform from Neutral at Baird. The firm said expectations for Millennium and Velcade are low and would be buyers for the quarter given the ASH meeting and downstream pipeline visibility.
  
• Telefonica SA (NYSE: TEF) was upgraded to Buy from Hold at Citigroup following the company's earnings growth guidance.

• Centene Corporation (NYSE: CNC) was upgraded to Overweight from Equal Weight at Lehman Brothers.
• UBS upgraded NII Holdings Inc (NASDAQ: NIHD) to Buy from Neutral.
• Goldman Sachs added Knight Capital Group Inc (NASDAQ: NITE) to its Conviction Buy List.
• RBC Capital upgraded Annaly Capital Management (NYSE: NLY) to Outperform from Market Perform.

Analyst upgrades: S, SWY, PDGI, MLNM and TEF originally appeared on BloggingStocks on Fri, 12 Oct 2007 11:00:00 EST. Please see our terms for use of feeds.