Tuesday, November 3, 2009

Buying more PGF

Bought even more PowerShares Financial Preferred Portfolio (PGF) today. I'm almost sure that market is still going down, but "almost sure" is not "certain" and discipline dictates that I have to start buying on the way down. Besides, this ETF was down too much today compared to banks preferred shares.

Full disclosure: at the time of publication author had a long position in PGF. Positions can change any time.

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Anonymous said...

why the bullishness on PGF? can you explain your rationale in more detail. I've been watching it but havent pulled the trigger. Thank you.

Alex Filonov said...

I'm bullish on PGF because I'm bullish on US banking system. PGF is an ETF which is invested in preferred shares of banks. Banks issue preferred shares, which are more like bonds, but trade like stocks. Face value of preferreds is usually $25, and that's what I expect PGF eventually to come to. And while waiting, I'm collecting 9% dividend, paid montly.
The risk is that a lot of banks might fail, and their preferreds, which are not first in line in case of bank closure by FDIC, get cancelled. If you don't believe in something like 500+ banks failing in the nearest 12 months, this ETF is underpriced.