Jan 27nd Trades
By Todd Johnson on 27-Jan-2016

I bought the following 4 securities with the following 4-individual yields: 1) 6.4%; 2) 11.34%; 3) 15%, and 4) 13.33%.


I have 4-names to buy with protective puts. 3 of the 4 positions are yielding 11.34% or higher. Each the the potential to net much more with capital gains. The mREITs are selling at a discount to book value.  I will have an update on The Big Deal – but the markets are so volatile it is difficult to time everything just right. Please read the buying of calls and puts appropriately.

I focused upon increasing the portfolio’s high yield. This provides an ample start to having a positive net return on each stock’s performance.

$SNR’s payment structure is different than another REIT we own, Senior Housing Properties Trust (SNH) with a 10.44% yield. The timing of this $SNR purchase is because of the 11.34% yield. $SNR is a private pay assisted living entity.

Trade 1A: Buy 600-Shares New Senior Housing (SNR) for $9.33 each.

Trade 1B: Buy 6-Protective Puts: Strike $7.50 SNR Aug 2016 7.500 put (SNR160819P00007500)

August Expiration:  option priceis $600 Debit. The last trade is $300. I am moving my price to $35-per-put so you can move the option price up. We are adding to our position.

Stock PriceNow: $9.33. 500 x $9.33 = $9,330 Debit + $210 = $5,743-net Debit.

Trade 2A & 2B: Buy 200-Shares of MPLX (MPLX):

MPLX.2

Net $5,859 Debit.  Net Yield: 6.4%

$MPLX bought $MWE in 2015. The cost was $78 in stock and cash. The shares are now $29 so $MPLX shareholders did experience significant pain too. $MPLX has the benefit of being able to raise their quarterly distribution.  I have the protective put listed in the order document above.


Trade 3A. Buy 600-Shares of Western Asset Mortgage Capital Corporation (WMC): $WMC is a REIT trading at a 30% discount to book value.  $5,640 Debit

Trade 3B. Buy 6 WMC Apr 2016 7.500 put (WMC160415P00007500). Net $180 Debit. [Total = $5,640 + $180 = $5,820 Debit].  Management can earn a significant amount of earnings simply by buying back stock.

[Total = $5,640 + $180 = $5,820 Debit]. Net 15% – $19% yield.

Trade 4A. Buy 1,000-Shares of MFA Financial, Inc. (MFA) for $6,000.  

The discount to book value is above 16%. The last dividend was 20-cents or $80/annually. The stock will cost $6,000 or $6,000  Debit.

Trade 4B. The July-expiry; $6.00-expiration; puts are $30 or a net $300 Debit. for 10-puts WMC MFA Jul 2016 6.000 put (MFA160715P00006000). Net $300 Debit.

The net debit is $6,000 Debit

Net net debit is $6,300 stocks and put options) .  Yield is 13.33%


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Todd

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