My original plan was to buy every TARP warrant available. I could get my hands on only 12 of the warrants. I will hold on to those TARP warrants until they expire.
My experience has been mixed. The best performers have returned an above average profit. They are Boston Private, Capital One, Lincoln National, Wells Fargo, and Wintrust. I am treading water with The Hartford (which recently came alive), and PNC.
I am keeping my eye on The Hartford because its bond portfolio should benefit from any rise in interest rates. A substantial percent of its bond portfolio matures each year and is replaced by newly issued bonds. These new bonds will have a higher rate than the bonds maturing bonds. So bond income on the income statement will show a gain, as will the value of the bond portfolio on the asset side of the balance sheet. This general trend will be shared by all insurance companies, so Lincoln National will benefit, too.
The disappointments are Bank America B warrants, and JP Morgan Chase. I have 2 different Comerica warrants, and both are losers. TCF Financial of Minnesota cannot suck enough; I believe there is a leadership issue there. For some reason they have not healed after their balance sheet received the same balm and medicine as the other TARP banks.
As an aside, I own Goldman Sachs bonds. I would never own the stock because Goldman treats its customers dishonestly. Anyway, Goldman is calling in some of my bonds at over par. Any Goldman bonds maturing within 20 years, trading under par will be partially called in at over par while Goldman is making money. So these bonds are a buy at under par. Goldman is making buckets of money this year. |
