|ALSK||Alaska Communications Systems Group||20.38%||4.22||0.86||9/28||10/19|
|AGNC||American Capital Agency||19.34%||28.96||5.60||12/20||1/27|
|AINV||Apollo Investment Corporation||18.70%||5.99||1.12||12/13||1/4|
|SFL||Ship Finance International||18.01%||8.66||1.56||12/9||12/29|
|IVR||Invesco Mortgage Capital||17.72%||14.67||2.60||12/20||1/27|
|VOC||VOC Energy Trust||16.74%||20.55||3.44||10/27||11/15|
|CPLP||Capital Product Partners L.P.||16.06%||5.79||0.93||11/3||11/15|
|CYS||Cypress Sharpridge Investments, Inc.||15.47%||12.93||2.00||12/15||12/28|
|SDT||SandRidge Mississippian Trust||15.43%||27.68||4.27||11/10||11/30|
|BFR||BBVA Banco Frances S.A.||15.02%||4.81||0.72||4/20||5/6|
|PER||Sandridge Permian Trust||14.82%||19.50||2.89||11/10||11/30|
|MFA||MFA Mortgage Investments||14.58%||6.86||1.00||12/28||1/31|
1. If these were such great deals, why are the stock prices so low? In this market, a 5% return on investment is considered stellar. Why wouldn't the stock price of say, Teekay Tankers be bid up to the point where the rate of return was lower?
2. What is the stock history of the company? Is it trending down, and why? Teekay Tankers has "tanked" from a high of $25 a share to $3.48 a share today (yielding a fantastic 32.76% dividend ratio, and in this instance, I am using the term "fantastic" in the sense of "unbelievable" or "probably not going to happen").
3. What is the history of the company's market? What is going on the industry which would cause the share price to tank? In this instance, if we search online for Teekay Tankers yields some pretty expected data. Shipping companies are going bankrupt, and the market is nervous that the same could happen to TeeKay. Many shipping companies (like cruise companies) laid the keels on new ships before the market crashed. Now these ships are launched, the loan payments are due (often a Billion dollars or more) and the shipping market has dropped out. Overcapacity, just as in the housing industry.
4. It is possible this stock is a bargain? The Seeking Alpha guy seems to think so. He notes that TNK leases natural gas tankers, which are a specialty market and are leased for 3-5 year leases. Thus, even though shipping is down, the lease income is steady. For 3-5 years, anyway. What happens when these leases expire? For a ship launched in 2007, when does that lease expire (very shortly)!
5. Are you buying steady income or just gambling on a stock? You can gamble on a stock and win big. Buying Avis for 75 cents a share and selling for $10 a share is great - if you win. Most times you lose. Bear in mind with an example like TNK, it will still take three years to earn your money back. If they declare bankruptcy before then, well, you lost money on the deal - assuming they still pay these great dividends.