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March 31, 2010, 6:33 am

Primerica IPO Today!

by: The Financial Blogger    Category: Investment, Market and Risk,Primerica Series,Trading

As you might already know, a heated debate about Primerica has raged on this blog for quite some time now. This is why I am actually covering this IPO (since I usually leave stock picks to our other blog; Intelligent Speculator). So if you want a stake in Primerica, the controversial but surely profitable company, their stock is going to be offered to the public this morning!

A few numbers on the Primerica IPO

Shares are deemed to be offered at a price range between $12 to $14 at the beginning.

At the middle of this price range, Primerica stocks would sell at 6.74 times earnings.

The US median is 9.52 times, so it’s 29% less.

Its per share income as of 2009 would be $1.93.

Primerica (owned by Citigroup) hopes to raise 252M$ today with its first IPO since they were bought by Citi.

Primerica is selling 24% of the company today. So the control will remain in the hands of Citigroup.

Primerica reported an income of 495M$ in 2009 as its revenue rebounded after taking a plunge of 72% back in 2008.

My Opinion on Primerica, the stock, not the business opportunity

I actually think that Primerica will sell at the opening for a very reasonable price and it could be interesting to see how the stock will fluctuate throughout the year. At $13, I would have probably considered it for our 2010 stock picking contest (update tomorrow!).

It seems to be a solid company based on a huge, humongous, incredibly large number of salesmen (more than 100,000!). Since people will always need insurance, good or bad, insurance reps should continue to make a  good buck down the road.

How can I buy Primerica Stock?

Well, first you need a brokerage account and then, you need to know what the Primerica ticker is… drum roll……

Primerica Ticker: PRI

That’s it! You are set to buy a few shares of Primerica!

Will you buy Primerica stock?

Hey, I want to know if you want to jump in the boat with me? I am seriously thinking of giving it a try, any thoughts?

Looking to trade other stocks ? Try these introduction videos about:

How to trade Crude

How to trade Futures

How to trade Stock

How to trade Forex

How to trade Gold

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March 1, 2010, 5:00 am

TSX 60 Dividend Yield and Ex-Dividend Date for March

by: The Financial Blogger    Category: Trading

I am waking up this morning with a big smile as Team Canada just won the Gold Medal for both Men and Women! Congrats to them! YOU ROCK!!!!

As we do every month, here is the TSX 60 dividend yield and ex-dividend date for March:

TickerNamePriceDividend YieldEx-date
YLO-UYellow Pages Income Fund5.8513.682053/29/2010
ERF-UEnerplus Resources Fund23.589.1603063/8/2010
PWT-UPenn West Energy Trust21.578.3449243/29/2010
BCEBCE Inc29.25.9589043/11/2010
TTELUS Corp34.535.5024623/9/2010
AET-UARC Energy Trust21.955.4669713/29/2010
TATransAlta Corp21.945.2871475/26/2010
COS-UCanadian Oil Sands Trust27.955.0089445/7/2010
BMOBank of Montreal5654/28/2010
CMCanadian Imperial Bank of Commerce/Canada70.014.9707183/25/2010
SLFSun Life Financial Inc304.85/25/2010
TRPTransCanada Corp34.784.6003453/29/2010
HSEHusky Energy Inc26.924.4576525/19/2010
SJR/BShaw Communications Inc19.974.406593/11/2010
NANational Bank of Canada60.254.1161833/23/2010
FTSFortis Inc/Canada27.274.1070775/5/2010
BNSBank of Nova Scotia47.84.1004183/26/2010
POWPower Corp of Canada/Canada29.073.9903683/19/2010
RCI/BRogers Communications Inc34.673.6919533/3/2010
ENBEnbridge Inc46.643.644945/12/2010
TDToronto-Dominion Bank/The67.243.6287923/31/2010
RYRoyal Bank of Canada56.813.5205074/21/2010
TRIThomson Reuters Corp36.523.3624753/4/2010
CVECenovus Energy Inc25.73.1128413/11/2010
MFCManulife Financial Corp19.312.6929055/14/2010
ECAEnCana Corp34.492.4554363/11/2010
BVFBiovail Corp15.572.447633/4/2010
LLoblaw Cos Ltd36.92.2764233/11/2010
BAM/ABrookfield Asset Management Inc24.982.2036514/28/2010
WNGeorge Weston Ltd68.942.0887733/11/2010
SCShoppers Drug Mart Corp442.0454543/29/2010
CNRCanadian National Railway Co55.31.9529843/8/2010
CPCanadian Pacific Railway Ltd50.791.9492033/24/2010
SAPSaputo Inc30.051.9301163/4/2010
BBD/BBombardier Inc5.691.7574694/14/2010
MRU/AMetro Inc40.771.6678935/17/2010
THITim Hortons Inc31.941.6280533/4/2010
CTC/ACanadian Tire Corp Ltd52.551.5984784/28/2010
SUSuncor Energy Inc30.411.3153573/3/2010
SNCSNC-Lavalin Group Inc49.251.2182743/17/2010
TLMTalisman Energy Inc19.231.1700476/2/2010
ABXBarrick Gold Corp39.651.0709715/26/2010
IMOImperial Oil Ltd38.751.0322586/2/2010
CCOCameco Corp28.90.96885813/29/2010
NXYNexen Inc23.750.84210533/8/2010
CNQCanadian Natural Resources Ltd70.880.59255083/10/2010
KKinross Gold Corp19.070.55511273/22/2010
GGoldcorp Inc39.820.48322453/9/2010
IMGIAMGOLD Corp15.480.409263612/20/2010
YRIYamana Gold Inc11.110.37497753/29/2010
POTPotash Corp of Saskatchewan Inc1160.36503454/13/2010
IMNInmet Mining Corp57.360.3486755/25/2010
AEMAgnico-Eagle Mines Ltd60.760.31360763/10/2010
FMFirst Quantum Minerals Ltd820.19512194/7/2010
AGUAgrium Inc68.140.16906816/9/2010
TCK/BTeck Resources Ltd38.700
MG/AMagna International Inc6003/10/2010
ELDEldorado Gold Corp13.290
GILGildan Activewear Inc24.810
RIMResearch In Motion Ltd74.550

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February 1, 2010, 5:00 am

TSX 60 Dividend Yield and Ex-Dividend Date for February

by: The Financial Blogger    Category: Investment, Market and Risk,Trading

After a bad month of January, it is now time to look at what happened with the TSX 60 dividend yield. Since most stocks went down during the last month, we can find great opportunities with high paying Canadian dividend stocks.

Dividends issued by Canadian Banks should be used to cover the inflation, most bank stocks offer a much interesting dividend yield than inflation! We have CIBC (CM: 5.45%) and BMO (BMO: 5.38%) offering over 5% and National Bank (NA: 4.39%) and Scotia Bank (BNS: 4.37%) offering more than 4%. Those picks would be great if you are trying to build a dividend portfolio ;-).

Even after a dividend cut in late 2009, Manulife still offers a 2.66% dividend yield. I wish they can pick up in 2010 so it can help me with my 2010 best stock picks contest ;-).

So here is the chart of the TSX 60 dividend yield and ex-dividend date:

TickerNamePRICEDIVIDEND YIELDEX-DATE
YLO-UYellow Pages Income Fund5.2515.252/24/2010
PWT-UPenn West Energy Trust17.6110.222/24/2010
ERF-UEnerplus Resources Fund22.699.522/8/2010
BCEBCE Inc27.476.333/11/2010
AET-UARC Energy Trust19.86.062/24/2010
TTELUS Corp33.135.733/9/2010
CMCanadian Imperial Bank of Commerce/Canad63.95.453/24/2010
BMOBank of Montreal525.384/28/2010
TATransAlta Corp22.265.212/25/2010
COS-UCanadian Oil Sands Trust27.745.052/16/2010
SLFSun Life Financial Inc31.234.612/22/2010
HSEHusky Energy Inc26.64.512/24/2010
TRPTransCanada Corp34.174.453/24/2010
SJR/BShaw Communications Inc19.94.422/10/2010
NANational Bank of Canada56.514.393/23/2010
BNSBank of Nova Scotia44.834.373/26/2010
POWPower Corp of Canada/Canada28.064.133/19/2010
FTSFortis Inc/Canada27.74.042/3/2010
TDToronto-Dominion Bank/The633.873/31/2010
RYRoyal Bank of Canada52.283.834/21/2010
ENBEnbridge Inc46.413.662/10/2010
RCI/BRogers Communications Inc33.363.483/2/2010
CVECenovus Energy Inc24.713.47***
TRIThomson Reuters Corp35.713.303/3/2010
MFCManulife Financial Corp19.542.662/19/2010
ECAEnCana Corp32.72.623/12/2010
BAM/ABrookfield Asset Management Inc21.552.574/28/2010
BVFBiovail Corp15.62.443/8/2010
LLoblaw Cos Ltd35.092.393/12/2010
WNGeorge Weston Ltd68.92.093/12/2010
SAPSaputo Inc28.552.033/4/2010
CNRCanadian National Railway Co53.322.033/8/2010
SCShoppers Drug Mart Corp42.552.023/24/2010
BBD/BBombardier Inc5.041.984/14/2010
CPCanadian Pacific Railway Ltd50.481.963/24/2010
MRU/AMetro Inc39.071.742/10/2010
CTC/ACanadian Tire Corp Ltd53.481.574/28/2010
THITim Hortons Inc30.771.303/1/2010
TLMTalisman Energy Inc17.691.276/2/2010
SNCSNC-Lavalin Group Inc48.971.233/17/2010
SUSuncor Energy Inc33.761.182/26/2010
ABXBarrick Gold Corp37.121.145/26/2010
IMOImperial Oil Ltd38.441.042/24/2010
NXYNexen Inc23.410.853/3/2010
CCOCameco Corp28.90.833/29/2010
KKinross Gold Corp17.310.623/19/2010
CNQCanadian Natural Resources Ltd68.250.623/10/2010
GGoldcorp Inc36.240.522/9/2010
IMGIAMGOLD Corp14.090.4512/20/2010
POTPotash Corp of Saskatchewan Inc105.920.404/13/2010
YRIYamana Gold Inc10.770.393/29/2010
IMNInmet Mining Corp54.150.375/25/2010
AEMAgnico-Eagle Mines Ltd54.050.363/10/2010
FMFirst Quantum Minerals Ltd77.550.214/7/2010
AGUAgrium Inc60.140.196/9/2010
MG/AMagna International Inc58.82-
TCK/BTeck Resources Ltd35.01-
ELDEldorado Gold Corp12.7-
GILGildan Activewear Inc22.93-
RIMResearch In Motion Ltd67.47-

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January 28, 2010, 9:11 am

Options Strategy #2: Protective Put

by: The Financial Blogger    Category: Trading

Last week, I did a brief introduction to an options strategy that can be used to get additional returns with little downside risk. Today, I will take the time to look at another very popular strategy, the protective put. As discussed in the introduction to options, these derivative instruments can be used in most portfolios if they are used in a smart and disciplined way. Like almost any product, if options are used without a clear and disciplined plan, things can go awry.

What is a protective put?

This strategy involves holding shares of a specific company, index or basket of stocks and also holding a put option on the underlying position. This put option will make money if the stock(s) lose value and becomes a ‘hedge’, that will be able to offset a loss on the holding. It is in fact a type of insurance in case of a declrease in value for your position.

When can it be used?

It can be used in many circumstances. The general reasoning is that the investor wants to keep his stock and is concerned about a possible decline in the stock. There could be a few reasons behind this situation. Here are some examples:

  • Belief that the market will rise but that there is a smaller probability of a major decline from which he wants to be protected
  • The investor believes there is a good chance that the stock will decline but does not want to sell them because it will create capital gain and thus important tax implication.
  • The investor wants to keep the income flow from dividends without assuming too much risk if the stock price declines
  • An investor holds some stock that he believes in but he determines a maximum amount he can afford or is willing to lose given a decline.
  • An investor wants to protect against downside risk without selling his entire portfolio of stock (thus incurring major transaction costs)

In all of these cases, the protective put would be a very good strategy for the investor involved.

How do I determine what put to buy?

If you want to implement this strategy on a specific stock or portfolio, then you can simply buy a put option with that underlying stock. However, if you hold many stocks in your portfolio, it might be more effective (although imperfect) to hedge through one or two puts. For example, if your portfolio is heavily invested in financials as well as in the general stock market, you could buy put options on XLF (financials) and SPY (S&P500).  This would give you protection on these broader indices.

Positive impacts

Depending on the reason behind your trade, the protective put can give you upside potential if your stocks climb and a limited loss if the stocks decline.

Negative impacts & risk involved

Like any other insurance, there is a cost associated to this strategy. The cost of course is the premium that you are paying when buying this insurance.

Earlier, I also discussed how you could hedge your entire portfolio with one or two put options. The risk involved is mainly if something “exceptional” happens to one of those stocks in your portfolio. If the company was involved in a fraud or had negative earnings while the industry in generally was still performing, the ‘protective put’ would not be of much help.

Conclusion

I believe that as a portfolio grows, the potential use of a protective put becomes greater as there are many different uses for it. There are many different aspects to consider before entering into this strategy but it can be a very effective and cost efficient way of hedging downside risk for a limited period of time.

Please feel free to ask any questions regarding this strategy or options in general:)

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January 21, 2010, 5:00 am

A look into options strategies: Covered call

by: The Financial Blogger    Category: Investment, Market and Risk,Trading


Equity options are products that are used increasingly because they add more flexibility to a portfolio. We gave a brief crash course for options and one of the discussed strategies is covered calls. For many investors, this can add a few percentage points to your net return on an annual basis. The most important thing to remember is to remain disciplined (as most trading strategies would call for) and not get greedy.

How it works

If you own a typical portfolio, you probably own several stocks. In our example, we will look at someone who owns Royal Bank of Canada (RY) stock. As I write, it trades at $55.20CAD. Imagine an investor who owns 1000 shares of RY and does not intend on selling these shares for the moment.

In a covered call strategy, this investor will sell 10 contracts which are currently worth $0.65 (each option contract is equivalent to 100 shares). This will entitle the buyer of the options to buy shares at the strike of the option.

A covered call is basically selling the right to buy your stocks to someone else. We will take a look at APRIL 60 CALLS. This gives the buyer the right to buy RBC stocks at $60 on expiry. And so the investor might have to sell his stock at $60. For this option sold, you receive $0.65 x 10 (contracts) x 100 (options multiplier) = $650

-If RBC is worth $58 at expiry, you will have received the $650 and the options will become worthless to the buyer – you can restart the strategy.
-If RBC is worth $60 at expiry, it will be the exact same thing.
-If RBC is worth $62 at expiry, you will have received $650 and will be forced to sell your shares at 60$.


As you can see, as long as you select a “low strike”, you will end up getting more money than if you only had your stock position.

Even if your shares do climb a lot and you miss out on some of it, you will have profited.

Upside and downside

The upside is that if you select the correct strikes, you will add cash flow to your portfolio. You can do this 3-4 times per year on most positions and make a few thousand bucks.

The main downside is that if the stock goes up by a lot very quickly, you will lose out on some of the rise. For example, if the stock goes up 15% in 3 months, you could end up making only 7-8%… Which is not that bad is it? That is why this is called a covered call. You do not have much risk besides losing out on potential gains, which are extraordinary. I know of many managers who are able to get big returns every month thanks to this method.

Risk involved

One of the main risks of this strategy is becoming greedy. If you want to collect too much, you will trade lower strikes and by doing that you:

-increase your payout (interesting)

-Increase the chances your option will be called (and that you will lose on potential gains) – less interesting.

Overall, this is a very safe strategy because it has so little downside risk. It must be used with caution like any other trading strategy.

Payoff

Here is a graph of the covered call payoff strategy:


Please feel free to ask questions, I know this is not straightforward but used with caution, it can make a big difference to your returns.

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