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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: Giordano Bruno who wrote (85283)	8/18/2007 4:41:48 PM
From: Joe Stocks	Read Replies (2) of 110194

>>Why not just buy a AAA, insured, tax free muni at 5%?<< In comparison to CFCpA isn't that like asking why not buy apples instead of oranges? One offers a non-taxable yield of 5%. The other offers a yield of 11% plus the potential of share price appreciation from the current $16 to this preferred trust's face value of $25 if CFC's problems are behind them 2-4 years from now. Let's say CFC's problems are behind them 3 years from now and the preferred shares are selling for $24. CFCpA holders would have received $5.07 in divs, and $9 in share price apprciation. Total of $14.07 or 88% return on your investment. For the same $16 invested in muni's at %5 you would have about a 22% total return adjusting for taxes. Of course one has little risk and the other is priced for much risk. Both serve different investment strategies. Fortunately most of my CFCpA was bought between 11.05 and 11.50. I will probably be taking profits on some Monday.

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