A Word to the Wise, and The Sweat Smell of Nat Gas Yielding 6 Percent

Sandra Ward's interview in Barrons' of head hedge fund honcho Ray Dalio, of Bridgewater Associates, just up the Merritt Parkway, leaves one a little cold about chasing high yields. It's worth picking up or logging on for his forward view of high yield. After all, when a guy who trades 160 billion in other people's money speaks, it might mean something. He suggests trouble for high yield 2 years out, so it may be a good time to review exit strategies (stop loss orders) because it's important to begin with the end in sight, as they say.

Nevertheless, speaking of natural gas, we find Markwest's yield (symbol MWE), and other measures almost TGTBT. At a price of 2.4 times price to sales, a modest P/E of 16.81, a very low Beta, an above par operating margins 17.60 against its competitors at 10, and an estimated 56% five year forward growth rate, MWE's 6 percent yield has the sweat smell of say, a natural gas partnership.

Put another way: "MarkWest Energy Partners, L.P. engages in the gathering, transportation, and processing of natural gas in the United States. It also transports natural gas liquids (NGLs), as well as engages in the gathering and transportation of crude oil. The company primarily operates in east Texas, Oklahoma, Gulf Coast, Appalachia, other southwest, and Michigan. MarkWest Energy GP, L.L.C. serves as the general partner of the company. The company was founded in 1988 and is based in Denver, Colorado."

Although it trades well above its 200 day moving average right now, its trading a lot closer to its lower Bollenger band than its upper band, suggesting a good time to plough in for a little greater gain.

However, further inquiries may be in order on, based on MWE's look against its competitors, DYN, WMP and DPM. MWE is showing an over sized PEG ratio (4+).

Get 9% from Small and Mid Cap Financings

Capital Source, symbol CSE, is offering 9 percent form certain middle market financing activities that include the upscale chain coffee-pastry shop, Au Ban Pain (or "Urban Pain", as we used to say), JC Penny store, a child photography business, vacation club membership business, and a few prime Chicago hotels to name a few. To see more, click their recent transactions. They described as offering:

Corporate Finance, Healthcare and Specialty Finance, and Structured Finance. The Corporate Finance division provides senior and mezzanine loans to businesses backed by private equity sponsors. The Healthcare and Specialty Finance division offers asset-based revolving lines of credit, first mortgage loans, and senior and mezzanine loans to healthcare businesses and other companies. The Structured Finance division provides commercial and residential real estate lending, and asset-based lending to finance companies.

CSE trades at a low P/E vs. it's growth, or .62 by recent count, which seems almost TGTBT and may well be, so it's best to look before a leap; but Zacks appears to like it too.

Right now, it trades at it's 200 day moving average, which would suggest a good point to plough in for a little high yield with good growth prospects, something you won't get from most bonds.

More Talk About Dividends, and Those Hit Canadian Drugs Yielding 6.10 Percent

According to the lead story in Barrons' this week, dividend yield is being talked about among the opinion class:

"I call it libertarian capitalism," says Jim Tisch, the company's CEO. "The shareholder has the ability to decide. If the shareholder is in favor of a share repurchase, he can use the dividend to purchase shares -- in which case he would be in essentially the same position as if the company bought in shares." If a shareholder wants cash, he or she can just bank the dividend.
Tisch also is CEO of Loews, the New York conglomerate controlled by the Tisch family. Loews owns 50% of Diamond Offshore.

University of Pennsylvania professor Jeremy Siegel notes that special annual dividends were common among cyclical companies in 1950s and 1960s: "General Motors used to do it all the time. It was like a Christmas present to shareholders."

Despite the benefits of dividends, the stock-repurchase habit is tough to break. But in the long run, companies that kick it may do more for their shareholders than any buyback can accomplish.

Meanwhile, there's the little matter of a Canadian drug company that kicks off 6% from the sale of a host of household drug names. Biovail, symbol: BVF, is responsible for the following parade of potions that offer relief from many conditions. These include:

It offers Zovirax Cream, an antiviral medication, for the treatment of herpes labialis; Wellbutrin XL to cure depression in adults; Ultram ER, an extended-release formulation of ramadol hydrochloride (HCl), used in the treatment of chronic pain in adults; and Cardizem LA, an extended release formulation of diltiazem HCl that provides blood pressure control. Biovail also provides Tiazac, a calcium channel blocker (CCB) for treating hypertension and angina; Wellbutrin SR used in the treatment of depression; Monocor, a cardio-selective beta-blocker for treating mild to moderate hypertension and congestive heart failure; Retavase, a tissue plasminogen activator used in thrombolytic therapy; and Glumetza to control hyperglycemia in adult patients with non-insulin dependent and mature onset diabetes. Its legacy products comprise Cardizem branded products, which are medications in the CCB category of cardiovascular drugs; Ativan for the management of anxiety disorders, short-term relief of anxiety, or anxiety associated with symptoms of depression; Vasotec and Vaseretic for the treatment of hypertension, symptomatic congestive heart failure, and asymptomatic left ventricular dysfunction; Tiazac; and Isordil, a coronary vasodilator, to treat prophylaxis of ischemic heart pain associated with coronary insufficiency. The company's generic products consist of bioequivalent formulations of Cardizem CD, Adalat CC, Procardia XL, Tiazac, Voltaren XR, and Trental.

In spite of some major headline risk, as it's found faces investigation for his personal trading and the company faces an investigation for its reporting, BVF trades well above it's 200 day moving average, but within it's Bollinger bands, with a price for earnings multiple topping 17, but in light of the choice for yield paying companies, one could do worse. BVF's chart has a slow and steady look about it since it's drop off in Sept. 2006. A pullback based on the company's more recent reporting issues should present and even better payout as long as the dividend is not cut. Six percent is a good starting point to look for profits from pills.

Slowly Scalping Aluminum in China for 9.90%

For all the talk about BRIC, and demand for metals, China was a net exporter of steel last year according to Barrons this week. What this says for world supply and demand (prices) will have us all watching the tape as the Chinese "B shares" market climbs and climbs.

Meanwhile, the Aluminum Corporation of China (or "Chalco" as it's called in China) symbol: ACH, quietly kicks out more than 9%, while trading at a P/E of less than 3 as an American Depository Receipt on the NYSE, which certainly has the look of something TGTBT.

Chalco was listed on the NYSE in December of 2001 at just 17 dollars per share, making it the first Chinese company listed abroad, according the the People's Daily (see, here). Its market capitalization is about 1/10 of Alcoa at 3 billion, but double Kaiser.

Of course, it does trade well above its 200 day moving average, and has just popped 7%, which is price movement that lends itself to parabolic buyer's "premorse" to coin a phrase to describe the feeling one gets looking at some of these charts since April.

But that 2.47 P/E appears to offer room to breath. And there are a few other measures that stand out for ACH, apart from taking the top yielding spot. ACH is an industry leader for its:

• 5 year growth rate,


• this quarter's EPS Growth (year over year), and


• this quarter's revenue growth (year over year)

ACH looks good for a slow motion yield scalping where you collect more than 9 percent with a tight stop loss order to prevent the kind of blow back that eats into the price you paid to buy in. Some sap could surely suffer worse than getting paid 9% to wait with ACH. But it may be best to consider using one of those "good 'til cancelled", "trailing stop loss" orders that the E-Brokers all offer to limit possible losses in the event that Barrons' editor is correct, and a glut in basic materials kicks in to erode prices and the value of a bet on ACH shares while you are out that wine tasting or cooking class at the community college, or maybe upgrading your half bathroom for the UPS driver, near your front door. Have a look, it's okay to use a fork.

Spring Ahead at 7 percent

Here's a riddle: what is it that "sells its products primarily in the Central and Southern Plains and Corn Belt regions of the United States. It's customers include dealers, national farm retail chains, distributors, and other fertilizer producers and traders. The company was founded in 1991 and is based in Sioux City, Iowa"

Why it's Terra Nitrogen (symbol: TNH) of course, a limited partnership that kicks more than 7 percent most days. TNH is one of a cadre of companies that enjoy great gains from the Beltway's current push to kill two birds with one stone, which is to:

• To make Ethanol a viable alternative energy source to meet America's power needs, and




• To make the folks who make ethanol happy with higher prices for their corn by the time the Iowa caucus comes to around

TNH sells nitrogen that makes fertilizer, which is a big part of this simple plan to run our cars on corn. TNH is part of the plan for a renewable energy that diverts some of the food supply to the gas tank. Companies that make things that help the farming of corn are in this group. Tractors (DE), stainless steel pipe (ATI), grains (ADM) should all do well over the next few years, as oil prices remain high, and climate change drives people to makes some major changes to the way things are done in the hope the weather will stop freaking us all out.

TNH pays investors a whopping TGTBT 7.70% (strike that-- make it 7.01% since we started this post on May 10, 2007!) right now to wait for "Operation: Children of the Corn" to kick in; but don't wait too long, as the chart is getting that parabolic look that gives one that sinking feeling that maybe the parade has passed.

At 7% or more, we are thinking that George Eliot's quote may apply: "it's never too late to be what you might have been".

Speechless, as the Tail Wags the Dogs of the Dow

For a long time, we've maintained that it's a good time to put most of one's assets in cash like vehicles, and to set aside some (10, 20, 30%) for certain growth ops, which for us amounts to big liquid stocks trading at a discount to their NAV, with some event or "catalyst" on the horizon that could cause the stock price to gain significantly. We've maintained that call and put options are the way to participate with this smaller allocation of assets. It's worked well, but never as well as this last stretch of time from the new year. And so we are speechless as we watch cash flows wash around the market causing giant waves of buying in stocks like TSO, MA, DJ, to name just a few.

And the point here is remind ourselves and our 3 readers to be a rabbit, not a deer in headlights. Nevermind the Pigs vs. the Hogs. Be a rabbit like the rabbit in Pink Floyd's "Breath", and you'll have a theme song to remind you, as you take profit and roll back into cash-like positions that yield something, and you can sing along:

Run, rabbit run
Dig that hole, forget the sun
And when at last the work is done
Don't sit down It's time to dig another one

For long you live and high you fly
But only if you ride the tide
And balanced on the biggest wave
You race towards an early grave

The point is, it all adds up. Sure, it's great to plough into something hot and sexy like GOOG Jan 08's at the money, and watch them trade every 11 minutes on your Blackberry; but at what price is the stress? By the way, Skechers are listed as LEAPS today.

• 07-366 Skechers U.S.A., Inc. ("SKX/KHJ/XJP")

Nevertheless, back to the fields (hopefully with some of those trading gains) wherein we find a company that reminds us of ACAS, funding middle market companies, and offering a yield that looks almost TGTBT. The stock is MCG Corporation, symbol MCGC, which recently had a few run-ups, but now trades below its 200 day moving average, and a P/E of around 9. Moreover, it's yielding around 10%.

I know, I know-- "four letters"; but its leadership looks to have pedigree (no CEO felonies or major flame outs). Something to think about is all.