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Biotech / Medical : Biotech Valuation -- Ignore unavailable to you. Want to Upgrade?

To: tuck who wrote (31883)	7/28/2009 6:10:29 PM
From: mopgcw	1 Recommendation Read Replies (1) \| Respond to of 52153

OT: NLY, MFA etc. I am still very nervous about anything that relies on short-term debt to survive -- and MFA's recent branching out to Non-agency, exposes them to credit risk that is quite difficult to gauge these days. good luck.

To: tuck who wrote (31883)	7/28/2009 6:22:21 PM
From: IRWIN JAMES FRANKEL	1 Recommendation Read Replies (1) \| Respond to of 52153

OT - HY My two favorites right now among the BDC's are ARCC and PSEC. Both with yields around 16%. IF yields on these two move to the range of the yield of BKCC and GLAD then the stocks double. ARCC seems the better operator and has cured their defaults and refinanced. PSEC is a puzzle. By my calculation they have raised more money than their entire debt and have a new and substantial credit facility. I think the RIC laws prevent them buying another RIC. But there is no reason they could not buy portfolio loans at a nice discount to produce fine returns. There are plenty of firms that need the capital that the sales will free up. They will have to do something like that to maintain the payout. I also like PCAP but it dropped the dividend. It is not clear how they will get the ship righted but it too looks like a double and it may come in a buyout if they do not get the lending facilities restored. The rise in GLAD and BKCC together with these other opportunities has caused me to move to these higher yield ops. I do not really understand NLY but have parked some funds there too. The credit markets remain a mess, IMO though there is some improvement. One year CD's earning 70 bps and one year TB at 42 bps is nuts. It seems to me that if the credit markets are to normalize that the appetite for yield will force funds to longer and riskier investments. This is already happening in the high quality corporates. But there is a long way for rates of the riskier investments to come down if the economy is to avoid a second dip in the recession. My bet is that the economy rolls over and GDP drops further as employment continues to drop, hours are cut and pay rates are reduced. ij

To: tuck who wrote (31883)	7/28/2009 6:23:19 PM
From: Biomaven	1 Recommendation Read Replies (2) \| Respond to of 52153

For a taxable account you can still get some decent returns on financial preferred stocks - for example BACPRL still yields around 9% and is currently taxed at only 15%. Looking ahead a few years, SLMPRB might be a good buy - it's floating rate based on 3-months LIBOR plus 70 basis points, so right now its yield is very low, but the yield is scheduled to step up to 3-months LIBOR plus 170 basis points in two years. Because the preferred is trading at a big discount, you have to multiply these figures by about 3.8 to get the actual yield. So in 2 years the yield will be about 5.75% plus 3.8*LIBOR. I have to figure that LIBOR will not stay near-zero forever, so longer-term this might be very attractive if we start getting into a more inflationary environment with higher interest rates. (Of course there is some credit risk here). (Please check my numbers before you buy this one!) I also own some much less speculative tax-advantaged preferreds - yields here are around 6.5%. Peter