RSG called away early

EDIT: RSG was called away a day earlier than I thought; the sale posted to my account on the 29th, but was executed on the 28th. Since the shares were called before the ex-dividend date, the dividend went with them.

In June, I sold 5 $25 October calls on my RSG stock; the stock is now trading at $26 and change, so imagine my surprise when the shares were called away yesterday on no news! They were called away on the ex-dividend date, so the buyer chose to call the shares on the very first day they wouldn't get the dividend. I'm baffled, but I'm happy to keep the dividend; it's a nice 2.87% yield at the current price of $26.50. I bought the shares at $19.11, so my yield is higher.

The dividend is $0.76 per share. The yield is the dividend divided by the current share price; this is the money you get in dividends for every dollar you spend.

$0.76/$26.50 = 2.87%

So for every hundred dollars I spend on RSG, I'll get $2.87 back this year.

However, I bought RSG at a lower price. My shares increased in value, but I'm paid the same dividend as all the other common shareholders.

My dividend yield is:

$0.76/$19.11 = 3.98%

For every hundred dollars of my original investment, I'm getting $3.98 per year.

This is why I like dividend bearing stocks, and why I keep a close eye on them.

Helpful links on dividends:
the SEC: http://www.sec.gov/answers/dividen.htm
Investopedia: http://www.investopedia.com/articles/02/110802.asp

Sold SSCJQ, MCK

I sold the rest of my McKesson stock at $57.86 (the majority was called away last month at $45 strike + $2.10 premium).

I also sold the remains of my Smurfitt-Stone preferred stock at $7.00, my first (and, hopefully, the last) OTC trade. Smurfitt-Stone was bought at $20.50, declared bankruptcy in January of this year, and even the preferred stock has dropped as low as $0.10 a share. The common shareholders have fared far worse. Now that the position has increased to a mere 65.8% loss, I'm selling.

Smurfitt-Stone's bankruptcy was the final factor in my decision to manage my own portfolio. Before, I'd managed about 10% myself, and left the rest in the care of my (expensive) Merrill Lynch advisor. The bankruptcy filing made me realize that no matter how much I paid my advisor, no one would care as much about my portfolio as I do. I now manage my portfolio myself.

Closed OTM puts

Today I closed October puts on FLS and TUP which were way out of the money, for $0.10 a share. All other things being equal, I'd let the puts go until expiration. With the current market drop, I want the cash ready to reinvest in discounted stocks.

Bought WAT

I bought a partial position (4%) in WAT today; I also have Nov $50 puts outstanding. WAT has been moving steadily upward since I opened my options position, and I am not sanguine about having the shares put to me. If WAT drops to my $50 strike price or below, it will be 5.3% of my portfolio (including the shares I just bought outright). If it stays above $50, at least I'll have my 4% and can later write more puts to hopefully fill the 5% target at a better price.

Bought ORCL

Today I put 3% of my portfolio in ORCL @ $21.50; I plan to add another 2% later, hopefully at a lower price.

A bunch of puts expired unexercised over the weekend;

4 $20 KCI, $2.20 premium
6 $15 JKHY, $0.65 premium
1100 $10 GTI, $1.60 premium
1 $65 PCP, $3.10 premium

for a total of $3,340 in income. I still want all these stocks, so I plan to write puts again to buy at a more desirable price. The exception is PCP; my targeted position in this stock is already partially filled, and it has increased dramatically in price since my initial purchase and I am reluctant to buy more at these prices.

Sold more MOS puts

Today I sold 3 MOS $50 puts for $3.80/share. My previous $45 MOS puts expired un-exercised last month. I still want MOS, since I like the company and I no longer have an agriculture position since I sold Agrium also last month). I compared MOS and AGU as long term investments.

AGU:
P/E ratio | 10.22
revenue / employee | $ 1.18 million
dividend yield | 0.21%
price / tangible book | 1.996
price / sales | 0.8293
price / free cash flow | 15.46
return on equity | 19%
return on assets | 16.89%
leverage | 2.166
current ratio | 1.953
debt / capital | 0.2679
net profit margin | 9.05%
Annualized 5Y revenue growth | 31%
YOY Revenue growth | 90%
Gross margin | 26%
EBITA margin | 9.5%
cash/share 2.29


MOS:
P/E ratio | 10.98
revenue / employee | $ 1.428 million
dividend yield | 0.28%
price / tangible book | 3.032
price / sales | 1.946
price / free cash flow | 19.05
return on equity | 30.87%
return on assets | 19.19%
leverage | 1.493
current ratio | 3.273
debt / capital | 0.1289
net profit margin | 9.22%
Annualized 5Y revenue growth | 34%
YOY Revenue growth | 4.9%
Gross margin |30%
EBITA margin | 28.3%
Cash/Share | 6.08

The two companies have very similar numbers, and either would make a good investment. For me, the deciding factor was the cash reserves held by MOS. MOS has a better current ratio, more cash per share, and is less leveraged. This cash hoard gives MOS more flexibility in its response to changing market conditions; it can afford to expand, buy a distressed rival, or hunker down in lean times.

In the ag space, I also really like Terra Nitrogen. However, I'm still trying wrap my head around their M.C. Escher business model Terra is both TRA (selling nitrogen products) and TNH (which owns a nitrogen manufacturing facility). Here's an excerpt from their website which attempts to clarify the relationship:

"[TRA]directly or indirectly holds approximately 75% of the outstanding common units of [TNH], which are traded on the New York Stock Exchange, and the remaining 25% of [TNH]’s units are held by the public. In addition to operating the [TNH] manufacturing facility in Verdigris, [TRA] also owns and operates five other North American manufacturing facilities, and has a 50% interest in an ammonia facility in Trinidad and 50% interest in GrowHow UK Ltd., a United Kingdom joint venture. [TRA] also has a deep-water terminal in Donaldsonville, Louisiana, and 50% interest in Houston Ammonia Terminal near Pasadena, Texas. "

TRA and TNH both have great management; ROE is 38% and 152% (!) respectively. However, while I can keep an eye on them, what about these little private companies? If GrowHow UK Ltd. accidentally vents ammonia gas, TRA will also be sued, whether or not they're actually responsible. Are these shipping arrangements in LA and TX bringing in income or are they just an expense? What if TRA decides to raise capital by selling it's 75% stake in TNH?

Bought ADBE

Adobe, a fabulous company, is trying to buy Omniture, another fabulous company which I already own. I still believe in OMTR, and the ADBE offer is for straight-up cash (not a cash + shares deal), so I put 3% of my portfolio in ADBE, which has dropped 6% on the news. If/when the offer is finalized in November, I plan to put the cash from the purchase into ADBE, which should complete my targeted 5% stake in ADBE.

I'm buying ADBE now due to the dip from news of the OMTR deal. The P/E is high, but justified by the company's other numbers:

Current ratio: 5.0
ROE: 19%
Total Debt/Equity: 0.1
Gross Margin: 95%
Net Margin: 18%
EBITDA(Earnings Before Interest, Taxes, Depreciation, and Amortization: 26%
Revenue/Employee: $455,600
Revenue Growth, annualized over 5 years: 18%
YOY Revenue Growth: 13%

Much of this information comes from WolframAlpha, a free data search engine which I use and recommend.