The "Notify Me" box has started to work again this morning.
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Economy:
The first estimate for real GDP in the 2024 first quarter is 1.6%. The consensus was at 2.5%. Nominal GDP was up 4.8%. Gross Domestic Product, First Quarter 2024 (Advance Estimate) | U.S. Bureau of Economic Analysis (BEA) The second estimate will be released on 5/30. The 2023 4th real GDP growth was reported at 3.4%.
Core GDP was up 3.1%. Core GDP includes consumer spending, business fixed investment and home building, while excluding government spending, inventories and international trade.
The PCE price index increased by 3.4% with the core up 3.7%. The core PCE price index was up 2% in the 2023 4th quarter.
There is no way that the Fed will cut rates with those inflation numbers remaining anywhere close to where they were in the first quarter.
Personal consumption expenditures was then up 2.5%:
New home sales surged in March despite elevated mortgage rates: Up 8.8%
The Folly of China’s Real-Estate Boom Was Easy to See, but No One Wanted to Stop It - WSJ (subscription publication). The author notes that 50 Chinese developers have defaulted on their international debt. Approximately 20 million housing units have been left unfinished, which would cost about $440 billion to complete, and about 500,000 people have lost their jobs. Real estate and related industries accounted for about 25% of China's GDP. I have been ready articles about ghost cities for a long time. It was only a question of time before it had to come to a disastrous end.
Household Debt Service Payments as a Percent of Disposable Personal Income-St. Louis Fed
Real Disposable Personal Income: Per Capita- St. Louis Fed
Treasury Yield Curve- The trend higher in intermediate and longer terms rates is in response to the inflation reports.
I will be buying the 3 month bill at next Monday's auction. The maturity will be 8/1/24. I will consider buying the 6 month T Bill with the proceeds that will mature in 2025. That shifts the interest recognition to 2025 when the bill matures.
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Asset Allocation Shifts Discussed in this Post:
Treasury Bills Purchased at Auctions: $12,000
Corporate Bonds: $16,000 in principal amount
I cut off the discussion with corporate bonds purchased on or before last Friday, 4/19/24.
Common Stocks: +$778.36
(Consisting of $847.52 in purchase minus $69.16 in proceeds)
Stock Funds: +$851.69
Inflow Common Stocks/Stock Funds: +$1,630.05
Equity Preferred Stock: +$103.75
2024 Outflow Common Stock/Stock Funds: -$18,556.11
I will be receiving in May 2024 $103,000 in proceeds from maturing treasury bills, corporate bonds and CDs. The June 2024 total is $116,000. A constant flow of proceeds from maturing securities is how I have constructed my bond ladder. I will benefit from short term interest rates remaining near current levels or moving higher.
Profit Margins and Valuation Measures:
See My Video: The Buffett Valuation Indicator in the Context of Higher Than Normal Profit Margins for the S&P 500 - YouTube)
Net profit margin measures the percentage of profit earned by company to its revenue. How to Calculate Profit Margin It is one of the key performance indicators.
‘The best single measure’ of stock-market valuations is high and bearish - MarketWatch(subscription publication); What Warren Buffett's favorite indicator means for your money: CNBC These articles reference a valuation measure used by Buffett that measures the ratio of the stock market's total capitalization to GDP.
The current measurement is moving in a 180% to 190% range. Buffett Valuation Indicator: March 2024 - dshort - Advisor Perspectives; The Buffett Indicator: Market Cap to GDP - Updated Chart | Longtermtrends
The "Buffett" valuation metric does provide some guidance on potential long term stock returns.
Like the Shiller P/E ratio, this indicator usually has no value in predicting short term movements, but did correctly flash a sell signal during the parabolic rise in the S&P 500 and the Nasdaq in the late 1990s and 2000. This indicator hit 162.5% in 2000.
A major issue IMO for using both the Shiller P/E and the Buffett indicator is the massive change that has occurred in the last 20 years or so in profit margins, particularly for many large companies that contribute the most to the total market capitalization.
The market is no longer dominated by the likes of GM, U.S. Steel and other companies with relatively low profit margins, even during an economic expansion which then disappear or largely so during economic recessions.
The annual profit margins for many large companies today frequently exceed 20% and are far less sensitive to economic downturns which contributes to what investors are willing to pay for the stock now.
A total U.S. stock market ETF, like IYY, currently has a 25% weighting in just 6 stocks:
iShares Dow Jones U.S. ETF | IYY
Profit Margins-Sourced from YF
Microsoft: 36.27%, MSFT Valuation Measures & Financial Statistics
Apple: 26.16%, Apple Valuation Measures
Nvidia: 48.85%, NVIDIA Valuation
Meta Platforms: 28.98%, META Valuation
Alphabet 24.1% GOOGL Valuation Measures
AMZN is near 5%. AMZN Valuation Measures
Some other stocks in the top 20:
LLY (at #9): 15.36% LLY Valuation Measures (likely moving higher based on weight loss drug)
AVGO (at #11): 29.93% AVGO Valuation Measures
V (at #14): 53.92% V Valuation Measures
MA (at #16): 44.6%, MA Valuation Measures
JNJ (at # 18): 47.37%, JNJ Valuation Measures
This is not to say that the stock prices for those high profit margin companies are currently reasonable, undervalued or overvalued.
The point is simply that a much higher total market capitalization to GDP is justified, at least to some meaningful decree, by the stellar profit margins of many companies.
Compare to
United States Steel Corporation (X) at 4.96%
General Motors Company (GM) at 5.89%
DuPont de Nemours, Inc. (DD) at 3.51%
Alcoa Corporation (AA) -6.41%
Ford Motor Company (F) 2.47%
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Trump and His Orwellian Party:
RealClearPolitics - Election 2024 - General Election: Trump vs. Biden
Based on the oral arguments yesterday, it looks like the republican Supreme Justices will overrule the District Court judge and the unanimous D.C. Circuit Appellate decision and will create a judge made constitutional provision that will grant Trump, as an ex-President, immunity from criminal prosecution for "official" acts during his Presidency.
The contours of that judge created immunity doctrine for criminal acts will be expressed in the ruling overturning the lower court opinions.
The republican Justices, who are deeply reactionary rather than conservatives, were unconcerned about the case before them or just deciding what Trump did was undeserving of immunity.
The republican Justices instead will create a rule for the ages, as claimed by Justice Gorsuch, that will place the U.S. President above the law and unawersable to anyone provided the criminal acts are arguably official actions within the scope of Article II Presidential powers.
As Trump once said, he can do anything that he wants under Article II of the Constitution. All the times Trump said the constitution let's him do whatever he wants - YouTube; Analyzing the Supreme Court hearing on Trump’s presidential immunity claim | PBS NewsHour
Justice Alito made this comment:
Alito will not focus on what Trump actually did to remain in power after losing an election, but on what may happen in the future that has never happened in the past since the nation's founding.
Republican judges and Justices will make sure that Trump is not prosecuted for alleged federal crimes before the election.
The Republican Justices will go beyond delaying the D.C. insurrection case until well after the election but will gut it as well through newly created judge made constitutional laws. ‘They should move Supreme Court to RNC headquarters’: Top Dem slams GOPer justices protecting Trump - YouTube And, in so doing, the Republican Justices will elevate the Presidency to a status far too similar to a dictator who is unaccountable for criminal acts including subverting election results in order to remain in power.
What He Means - YouTube As noted in that video, Trump asked his supporters how "many Corrupt, Biased, Crooked Joe Biden - "Protection Agency" New York Judges do I have to endure before somebody steps in". This statement is an iteration of what King Henry II told his knights who then went to Canterbury Cathedral and murdered the "troublesome" Archbishop Thomas Becket in 1170. Since then, the phrase and its many iterations are understood to mean that a leader can covertly order violence while maintaining a plausible deniability that the order was ever given.
The Republicans Who Want American Carnage - The Atlantic
Meadows, Giuliani among indicted in Arizona in latest 2020 election subversion case
DJT: Trump set to 36 million more Trump Media shares as an "earnout"; DJT Stock Is Down. What Trump’s Share Award Means for the Truth-Social Parent. - Barron's (subscription publication)(the "earnout" is based on DJT remaining above $17.50 for 20 out of 30 days after the SPAC merger, which was met on 4/23)
It is my understanding that Trump has a zero cost basis in his shares. The "earnout" is an Orwellian derived word in this context. The 36 million shares given to Trump was not based on any financial metric like earnings or revenues. Instead, Trump in essence gave himself 36 million more shares based on the stock price remaining above a low bar shortly after the SPAC merger. He will unload his shares to his True Believers in true grifter style. A prospectus has already been filed with the SEC covering Trump's potential sales. SEC Form S-1 It looks like the True Believers will keep the price well above fair value until Trump can unload shares on them.
How Trump’s tabloid ally pecked holes in his case
Trump brushed off warnings he’d be charged in documents case: Unsealed filings Trump was told that he had to produce the documents marked as classified in response to a grand jury subpoena. He failed to do so. When the FBI searched his office, documents with classification marking were found in his desk.
Trump co-defendant was told he'd be pardoned, notes from FBI interview show - YouTube; Trump co-defendant in classified documents case was told he’d be pardoned in a second term, notes in FBI interview say
My video: Possible Subornation of Perjury in the Documents Case - YouTube
AI Trump: Odor In The Court! - YouTube
The Tragic Reality Of MAGA's Blind Loyalty - YouTube It was interesting to see a Trump supporter recognize that Trump has hit rock bottom on the moral character issue, but she will vote for him nonetheless.
“All Timer” - YouTube I am glad that I do not have "All Timers". If I had it, I might be able to understand what Trumpsters are saying and that would be too much brain pollution for such an aged brain.
The Good Liars at the Greensboro Trump Rally - YouTube
Mitt Romney: You don't pay someone $130,000 not to have sex with you - YouTube
Rudy Giuliani Compares His Trial to Hitler's Nazi Germany
No, Trump’s Plan to Deploy 100,000 Poll Workers Isn’t About “Election Integrity” | Vanity Fair
Citadel Securities blasts Trump Media CEO over DJT short sale letter
The WSJ asked Devin Nunes, a former republican congressman who is now the CEO of DJT, when might Trump sell DJT shares. Nunes replied that that the question was "part of a whole galaxy of conspiracy theories and fake news attacks". Nunes has no qualifications to run a social media company. His qualification is that he was an avid Trump defender in Congress and has like his mentor repeatedly filed defamation lawsuits. Defamation: Devin Nunes Archives - First Amendment Watch
I have heard Trumpsters support the trial and execution of those who they believe stole the 2020 election from Trump. This is just one of the more recent examples: YouTube Whenever I hear those statements, I am reminded of the Sinclair Lewis novel "It Can't Happen Here". (My video: Trump Similarities to Buzz Windrip in the Sinclair Lewis Novel "It Can't Happen Here" - YouTube)
Trump calls on his supporters to protest in NYC, but he's not getting the circus he wants - YouTube Trump falsely claimed that his supporters have been prevented from protesting at or near the courthouse. 5 protestors were found in front of the courthouse. MASSIVE Crowd of Trump Supporters Outside the Trump Trial - YouTube (sarcastic title)
Klepper's Wildest Moments With Trumpers in 2023 | The Daily Show - YouTube
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Putin and His Orwellian and Violent Dictatorship:
Two Drones Hit Oil Facility at Kardymovsky, Smolensk - YouTube Putin is not defending this kind of facility. Slow moving drones can hit their targets at will.
Satellite Imagery of Dzhankoi Airbase After ATACMS Strike! S-400 Battery Destroyed - YouTube
Russian Ship Kommuna Hit by Neptune Missile at Sevastopol! - YouTube
HIMARS Destroys S-300VM Radar - YouTube
What role can US long-range ATACMS play in Ukraine's military campaign? | DW News - YouTube Able to hit targets 300 kilometers away.
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1. Restarted SWZ - Bought 100 at $7.7:
Quote: Swiss Helvetia Fund Inc. Overview - Stock CEF
The fund owns stocks of companies based in Switzerland whose ordinary shares are priced in Swiss Francs.
Cost $770
Sponsor's website: Schroders | SWZ "The Fund's equity investments are denominated in Swiss francs. The cash and short-term investments are generally held in Swiss francs as well. The investment policy of the Fund is not to hedge the exposure to the Swiss Franc. . . The Fund benefits if the U.S. dollar weakens against the Swiss franc because the Fund's Net Asset Value (NAV) increases once translated (daily) into U.S. dollars."
2023 SEC Filed Annual Report (cost of common stock investments = $81.16+M, valued as of 12/31/23 at $124+M)
Top 10 Holdings as of 3/31/24:
Roche has been a poor performer for a few years now. I eliminated my ADR position, traded on the U.S. pink sheet exchange, back in 2022. Item # 2.F. Eliminated RHHBY - Sold 10 at $43.24 (6/9/2022 Post)(noted total realized gain from RHHBY at $570.87 with trade discussion links provided therein); Roche Holding AG ADR (RHHBY) RHHBY closed at $30.02 yesterday.
Data as of 4/23/24 Trade Date:
Closing Net Asset Value Per share: $9.2
Closing Market Price: $7.7
Discount: -16.3%
Average 3 year discount: -14.29% (Click "Pricing Information" tab)
Sourced: SWZ - CEF Connect
Dividends: Managed Distribution - Paid Quarterly
2. Small Ball Buys:
A. Added to LXP - Bought 10 at $8.48 - Schwab Account:
Quote: LXP Industrial Trust (LXP) - Internally Managed REIT
Cost: $84.75
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Website: LXP Industrial Trust - Preeminent single-tenant U.S. industrial REIT
Properties | LXP Industrial Trust
New average cost per share: $8.64 (80 shares)
Dividend: Quarterly at $.13 per share ($.52 annually)
Yield at New AC = 6.02%, rounded up.
Last Ex Dividend: 3/27/24 (owned 70 as of)
Last Discussed: Item # 3.E. Added 20 LXP at $8.79 (3/28/24 Post) I discussed the last earnings report in that post. SEC Filed Press Release and SEC Filed Supplemental
Sell Discussions: Item # 1.D. Eliminated LXP - Sold 20+ at $11.57 (2/13/23 Post)(profit snapshot = $33.37); Item # 1.C. Sold 137+ LXP at $9.08 and 53 at $9.06 In 2 Separate Roth IRA Accounts (9/12/18 Post)(profit snapshot = $914.11); Sold 100 LXP in Fidelity Roth IRA at $11.15 (1/6/17 comment- profit of $271.9 referenced with no snapshot)(snapshot in Gateway Post for Equity REITs); Item # 2 Sold 250 LXP on Ex-Dividend Date in Two Taxable Accounts-Update For Equity REIT Basket Strategy As Of 4/6/16 - South Gent | Seeking Alpha (profit snapshot = $224.65); Item # 1.B. Eliminated LXP - Sold 155+ at $9.46 (6/26/19 Post)(profit snapshot = $6.37); Item # 1.B. Sold 108+ LXP at $9.45-Used Commission Free Trade (2/6/19 Post)(profit snapshot = $79.9);; Item # 1 Sold 150 LXP in Vanguard Roth IRA-Update For Equity REIT Basket Strategy As Of 6/24/16 - South Gent | Seeking Alpha (profit snapshot = $80.19); Item # 1. Sold 54 LXP at $11.44 Vanguard Roth IRA (1/27/15 Post)(profit snapshot = $64.4); Item # 1 Sold 101+ LXP at $10.65 (10/28/14)(profit snapshot = $51.76)
B. Added to NSA - Bought 5 at $35.25 - Fidelity Account:
Quote: National Storage Affiliates Trust (NSA) - Internally Managed Storage REIT
Cost: $176.25
NSA wholly owns 809 storage properties and has an ownership interest in 241 properties that are part of joint ventures. Those properties are "located in 42 states and Puerto Rico with approximately 68.6 million rentable square feet, which excludes 39 self storage properties classified as held for sale to be sold to a third party. NSA is one of the largest owners and operators of self storage properties among public and private companies in the United States."
Website: Item # 1.D. Added 5 NSA at $36.63 (2/9/2024 Post)
Last Discussed: Item # 1.B. Added to NSA - Bought 5 at $35.65 (2/23/24 Post)
Average cost per share after add: $36.87 (30) shares
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| Snapshot Intraday 4/19/24 after add |
Dividend: Quarterly at $.56 per share ($2.24 annually), last raised from $.55 effective for the 2023 second quarter payment.
Dividend History-National Storage Affiliates Trust (NSA)
Yield at $36.87 AC = 6.08%, rounded up.
Last Ex Dividend: 3/14/24 (owned 25 as of)
Last Earnings Report (Q/E 12/21/24): SEC Filed Report
"Net income increased $57.7 million for the fourth quarter of 2023 and increased by $53.2 million for the year ended December 31, 2023 ("year-to-date") as compared to the same periods in 2022. The increases resulted primarily from a gain on the sale of 32 self storage properties during the fourth quarter of 2023 and additional NOI generated from the 20 wholly-owned self storage properties acquired during the year ended December 31, 2023, partially offset by increases in interest expense."
In calculating funds from operations, depreciation expense will be added to net income ($.44 per share) while gains from property sales ($.52) would be deducted:
FFO Per Share: $.68
2023 FFO per share: $2.67
Wholly Owned Store Data: Occupancy at 85.3%
Debt: Weighted average at 4.4%
I have a small ball position in a NSA equity preferred which I last discussed in this post: Item # 3.C. Added to NSAPRA - Bought 5 at $22.05; 5 at $21.05 (4/19/24 Post)
C. Added to TGNA - Bought 5 at $13.3- Fidelity Account:
Quote: TEGNA Inc. (TGNA)
Cost: $66.5
"With 64 television stations in 51 U.S. markets, TEGNA is the largest owner of top 4 network affiliates in the top 25 markets among independent station groups, reaching approximately 39 percent of all television households nationwide. TEGNA also owns leading multicast networks True Crime Network and Quest. TEGNA offers innovative solutions to help businesses reach consumers across television, digital and over-the-top (OTT) platforms, including Premion, TEGNA’s OTT advertising service."
Ad revenues will fluctuate and will generally be much higher during presidential election years and then fall off in the next year.
Advertising revenues during election years will also be dependent on how many stations are located in swing states for the senate and presidential elections. Some elevated revenue will occur when stations are located in market where there is heavy spending on a congressional race.
TEGNA Inc. (TGNA) Valuation Measures & Financial Statistics
TGNA Key Metrics Page at Reuters (click valuation tab)
2023 SEC Filed Annual Report (For the locations of TEGNA owned TV stations, see pages 20-21. I counted 10 states in states that I would classify as up for grabs in the presidential election: Arizona, Georgia, Michigan, North Carolina, and Pennsylvania. TEGNA has 13 stations in Texas which may see elevated spending since the democrats have a Colin Allred, a congressman, that has a chance of beating the much disliked Ted Cruz. Texas -U.S. Senate-2024 Polls | FiveThirtyEight I expect Cruz to win but the race could end up being very close.
TEGNA Inc. Analyst Estimates | MarketWatch
Investor Relations | TEGNA Inc.
New Average cost per share: $14.11 (35 shares)
Dividend: Quarterly at $.1175 per share ($.455 annually), last raised from $.095 effective for the 2023 4th quarter payment.
TGNA Dividend History | Nasdaq
Yield at $14.11 AC = 3.22%
Last Discussed: Item # 1.G. Added to TGNA - Bought 5 at $14.15; 5 at $13.7 (3/1/24 Post) I discussed the 2023 4th quarter earnings report in that post and have nothing further to add here. SEC Filed Press Release
D. Added to ORKLY - Bought 10 at $6.56 - Fidelity Account:
Quotes:
USDs: Orkla ASA ADR (ORKLY) - Pink Sheet Exchange
Ordinary Shares in NOKs: Orkla ASA (Norway: Oslo)
ADR Ratio: 1 to 1
Norwegian Krone to US Dollar Exchange Rate Chart | Xe
I bought this lost on the annual ex dividend day. The dividend was US$.399341.
Cost: $65.68
Website: Orkla.com
Orkla is primarily a food, personal care (broadly defined) and snack company but has interests in other businesses including a 42.6% in Jotun, a global manufacturer of paints and coatings, Pierre Robert Group (clothing); Hydro Power, and Orkla Real Estate.
Portfolio divisions include:
Orkla Foods Europe – Orkla.com
Orkla Confectionery & Snacks – Orkla.com
Orkla Home and Personal Care – Orkla.com
Orkla Food Ingredients – Orkla.com
Orkla announced on 10/26/23 that it has sold a 40% interest in Okla Food Ingredients. Orkla announces OFI partnership with Rhône The deal prices the enterprise value of Orkla Ingredients at $15.5B NOKs or about US$1.38B and a net equity value of 6.5B NOK. The share price closed at 81.16 NOK on 10/25 and at 74.78 on 10/26, indicating significant disappointment in the valuation. As far as I can tell this transaction has not yet closed.
Last Discussed: Item # 2.D. Added to ORKLY - Bought 5 at (11/11/23 Post) I discussed the 2023 third quarter report in that post.
Average cost per share: $8.08 (190 shares)
Dividends: The last dividend was 6 NOKs per share. The regular dividend was 3 NOKs per share and additional 3 NOKs was paid in connection with the pending sale mentioned above.
The dividend is paid annually in Norwegian Krone and converted to USDs for owners of ORKLY. A special dividend has sometimes been paid out of profits realized from selling a business. That occurred in 2017 and in 2024.
Dividends in USDs: Orkla ASA ADR (ORKLY) Dividend History | Nasdaq
Last Ex Dividend: 4/14/24
Foreign Dividend Tax: A U.S. citizen is entitled to no more than a 15% withholding tax by a tax treaty, but a broker is required to claim that treaty right at the source. Otherwise, Norway will withhold 25%. Fidelity did not make that claim for the last annual dividend payment made in 2023 and consequently a 25% tax was withheld.
Recovery of that foreign tax, in whole or in part, is through claiming a foreign tax credit. Claiming Foreign Taxes: Credit or Deduction? | Charles Schwab
Last Earnings Report (Q/E 12/31/23): Q4-2023-External-report.pdf
Data in Norwegian Krone (NOKs)
Adjusted Earnings per share flat at 1.31.
Operating margin in Jotun increased 83%. The report noted that the Jotun's Board had recommended a 2.2B NOK dividend for fiscal 2023. Orkla owns 42.7% share amounts to NOK 948M, up from 583M in fiscal 2022.
Operating Revenues by Segment and Adjusted EBIT:
Sell Discussions: I have eliminated my duplicate position formerly held in my Schwab and Vanguard Accounts. That broker will charge a commission for U.S. pink sheet traded foreign ADRs ($6.95 is my recollection without checking again), which is not yet the case for Fidelity. Vanguard will no longer allow new buy orders for pink sheet traded ADRs. Item # 2.D. Eliminated ORKLY in Vanguard Account- Sold 10 at $9.53 and Eliminated in Schwab Account -Sold 10 at $9.53 -Consolidating Position in Fidelity Account (12/22/21 Post)(profit snapshots = $10.37); Item # 1- Sold 100 ORKLY at $10.33 (5/23/21 Post): Item # 1.A. Eliminated ORKLY in Schwab Account-Sold 120 at $9.47 and Item # 1.B. Sold 10 of 110 in Fidelity Account at $9.47 (8/15/20 Post)(profit snapshots = $65.61; also contains snapshots of 2017 round-trips with a total realized gain of $65.45); Item # 4.B. Sold 100 ORKLY at $10.1 (1/5/20 Post)(profit snapshot = $4.97); Sold 100 ORKLY-Update On Portfolio Positioning And Management -South Gent | Seeking Alpha August 2015 (profit snapshot =$51.08); Item # 4 Sold 100 ORKLY at $9 (9/6/14 Post)(profit snapshot = $122.48)- Item # 2 Bought 100 ORKLY at $7.61 (1/13/14 Post)
The main problem with Orkla is that it started an acquisition spree several years ago, possibly paying too much to acquire businesses but certainly adding substantially to its debt load that now has to be refinanced at much higher interest rates.
Most of the businesses were acquired just in time for the input cost inflation spiral caused by the pandemic which squeezed margins. Those factors explain the poor stock performance. The past may or may not be prologue for the future. A lot of bad news is baked into the current stock price.
Quote: Broadstone Net Lease Inc. (BNL) - Internally Managed Equity REIT
Cost: $72.83
"BNL is an industrial-focused, diversified net lease REIT that invests in primarily single-tenant commercial real estate properties that are net leased on a long-term basis to a diversified group of tenants. Utilizing an investment strategy underpinned by strong fundamental credit analysis and prudent real estate underwriting, as of March 31, 2024, BNL’s diversified portfolio consisted of 759 individual net leased commercial properties with 752 properties located in 44 U.S. states and seven properties located in four Canadian provinces across the industrial, restaurant, healthcare, retail, and office property types."
"Substantially all of our leases are net, meaning our tenants are generally obligated to pay all expenses associated with the leased property (such as real estate taxes, insurance, maintenance, repairs, and capital costs). In scenarios where we lease multiple properties to a single tenant (multi-site tenants), we seek to use master lease structures on an all-or-none basis." (p. 10 Annual Report) The company is describing what is known as a triple net lease. Net Lease Definition and Types—Single, Double, Triple
BNL is owned by the NETLease Corporate Real Estate ETF (NETL)
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Property Types:
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| Page 7 Annual Report |
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| Page 8 Annual Report |
New Average Cost per share: $14.99 (106+ shares)
Dividend: Quarterly at $.285 (annually at $1.14)
BNL Dividend History | Seeking Alpha
Yield at $14.99 AC = 7.6%
Last Ex Dividend: 3/27/24 (owned 100+ as of)
Item # 1.I. Added to BNL - Bought 2 at $14.86 (3/1/24 Post) I discussed the 2023 4th quarter report in that post. SEC Filed Press Release and SEC Filed Press Release As discussed in that post, BNL is selling healthcare properties, and there will be a short term hit to funds available for distribution due to the lag in using the proceeds to acquire other properties.
Quote: Prospect Capital Corp. (PSEC) - Externally Managed BDC
Cost: $81.24
I view PSEC as a deservedly disfavored PSEC. It has been difficult over the year to achieve my goal for BDC purchases which is any total return in excess of the dividend payments.
Selling the stock for a 1 cent gain is acceptable given the dividend yield.
PSEC is also IMO the most complicated BDC. The last filed quarterly report (10-Q) was 158 single spaced pages.
Investment Category: Monthly Income Generation
Annual Report for the F/Y 6/30/23 (Risk factor summary starts at page 30 and ends at page 77)
Website: Prospect Capital Corporation
Last Discussed: Item # 1.I. Added to PSEC - Bought 10 at $5.06 (11/4/23 Post)
New Average cost per share: $5.606
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| Snapshot Intraday on 4/22/24 after add |
PSEC Stock Dividend History & Date
Dividend History: Unfavorable with several dividend cuts.
Yield at AC = 12.84%
Last Ex Dividend: 4/25/24 (owned all as of)
Net Asset Value per share history:
12/31/23: $8.92
6/30/23: $9.24
3/31/23: $9.48 10-Q at page 4
12/31/22: $9.94
12/31/21: $10.01
Last Earnings Report (Q/E 12/31/23): SEC Filing and 10-Q (summary of loans and investments starts at page 8)
This report was released on 2/8/24 after the close. The stock closed at $5.81 on 2/8/24 and at $5.41 on 2/9/24. PSEC Historical Prices & Data
Net Investment Income: $96.927M
NII per share: $.24, down from $.31 in the Q/E 9/30/23 and $.27 for the Q/E 12/31/22. This is an unfavorable trend, but $.24 is still above the $.18 per share quarterly dividend paid in monthly installments of $.06 per share.
Portfolio Information:
Interest Rate Sensitivity - Company Estimates:
 |
| P.144, 10-Q |
Generally, a BDC with a lot of floating rate loans will benefit from a rise in interest rates, provided the increase does not cause a material increase in defaults.
Refinancing costs have been increasing. Prospectus (4/24)
These notes are sold primarily to retail investors through brokers like Fidelity. The total that is sold for each note is relatively small making them illiquid in case the investor wants to sell them.
Some Prior Sell Discussions: Item # 2.F. Eliminated PSEC in Two Taxable Accounts - Sold 20 at $7.39; 20 at $7.4 ( Post)(profit snapshot = $95.56, contains snapshots of trades that were not discussed); Item # 1.G. Sold 5 PSEC at $8.12 (9/24/21 Post)(profit snapshot = $13.71); Item #1.P. Multiple Small Ball Purchases of PSEC-Sold 105 and Kept 42+ (2/27/21 Post)(profit snapshot = $38.88); Item # 1.N. Sold All PSEC Shares Purchased with dividends at $7.8 (4/17/21 Post)(profit snapshot = $46.97); Item # 7. Sold 100 PSEC at $10.65 -RI Account_(9/6/14 Post)(profit snapshot = $30.99); Item # 2 Sold 100 PSEC at $10.83-RI Account (6/1/12 Post)(profit snapshot = $60.47); Item # 1. Sold 100 PSEC at $11.36 - Regular IRA Account (6/19/12 Post)(profit snapshot = $39.6); Item # 2 Sold 50 PSEC at $11.5-IRA Account (1/14/11 Post (no profit snapshot); Item # 2. Sold 50 PSEC In IRA at $12.16 (3/8/2010 Post)( net profit = $68.04) Two transactions in retirement accounts netted +$128.51 and were not discussed.
Goal: Any total return before any ROC adjustment to the tax cost basis in excess of the dividends paid.
Duplicate Position: I have a duplicate position in PSEC with a lower average cost per share number. I will probably eliminate that position when and if the price moves into at $5.75 to $6.25 range.
SU Bond Ownership: I own 1 PSEC 3.706% SU that matures on 1/22/26. Bond Page | FINRA.org That bond was purchased at 90.885 creating then at that total cost a YTM of 7.89+%. Item # 5.E. (8/19/23 Post)
G. Added 20 AMCR at $9:
Cost: $179.9
AMCR Analyst Estimates | MarketWatch (as of 4/25, the consensus E.P.S. for 2024 is at $.69 and at $.74 for 2025)
Amcor is based in Australia but reports in USDs.
Website: Global Packaging Solutions | Amcor
Last Discussed: Item # 1.B. Added to AMCR - Bought 5 at $8.95; 5 at $8.75; 5 at $8.59 (10/21/23 Post)
Last Elimination: Item # 5. Eliminated AMCR in 2 Taxable Accounts - Sold 20 at $12.05 and 10+ at $12.03 (1/23/23 Post)
New Average cost per share: $10.86 (150 shares)
The higher cost shares were bought prior to the pandemic. Input cost inflation arising therefrom squeezed profits. Price increases made in response negatively impacted demand. So the timing of my first purchases was less than optimal.
Dividend: Quarterly at $.125 per share ($.49 annually)
AMCR Dividend History | Seeking Alpha
Yield at New AC of $10.86 = 4.51%
Yield at $9: 5.44%
Last Ex Dividend: 2/27/24
Last Earnings Report (Q/E 12/31/23):
10-Q and SEC Filed Earnings Press Release
All amounts are in USDs.
This is the second fiscal quarter.
GAAP E.P.S. of $.092, adjusted to $.157
"Net sales of $3,251 million were 11% lower than last year on a reported basis, including a favorable impact of 2% related to movements in foreign exchange rates, an unfavorable impact of 2% related to items affecting comparability and an unfavorable impact of 1% related to the pass through of lower raw material costs of approximately $30 million. Net sales on a comparable constant currency basis were 10% lower than last year, reflecting 10% lower volumes. . . As expected, volume weakness experienced in the first quarter continued in the December quarter with broad based lower market and customer demand and destocking, including an anticipated acceleration of inventory reductions in the global healthcare category. Destocking also accelerated more broadly in the month of December."
6 months Data and Fiscal 2024 Guidance:
Analyst Report (available to Schwab Customers) :
Morningstar (3/25/24): 4 stars with a fair value of $17 AUD and a narrow moat rating. Using a .65 AUD to USD, that is about US$11.05. The analyst notes that AMCR has a cost advantage in that it locates its plants near it major customers. Transportation costs are consequently reduced allowing for lower prices and customer stickiness. Packaging has a low value to weight ratio making it relatively expensive to ship over long distances.
H. Added to RYLD - Bought 5 at $16.34 - Schwab Account:
Quote: Global X Russell 2000 Covered Call ETF - Buy/Write ETF
Cost: $81.69
"The Global X Russell 2000 Covered Call ETF (RYLD) follows a “covered call” or “buy-write” strategy, in which the Fund buys the stocks in the Russell 2000 Index (at times by exposure to the Vanguard Russell 2000 ETF), and “writes” or “sells” corresponding call options on the Russell 2000 Index."
Investment Strategy: Monthly Income Generation
Last Discussed: Item # 1.E. Added to RYLD - Bought 5 at $16.34 -Schwab Account (1/26/24 Post)
Sponsor's website: Russell 2000 Covered Call ETF (RYLD)
Expense Ratio: .6%
New Average cost per share: $17.41 (67+ shares)
Dividend: Monthly at a variable rate
Last 12 Dividends: $2.025 per share
Yield at $17.41 and Using $2.025 Annual: 11.63%Last Ex Dividend: 4/22/24 (owned 62+ as of)
I. Added 1 VZ at $38.78- Schwab Account:
Quote: Verizon Communications Inc.
VZ Analyst Estimates | MarketWatch
I generally have a negative opinion about VZ due generally to its high capital and labor costs, high levels of debt and competition from other wireless phone companies.
Investment Category: Bond Substitute. When so characterized, the goal is simply to harvest the dividend + a 2% annual gain on the stock. The dividend yield is higher and tax advantaged compared to VZ bonds but lack the safety inherent in senior unsecured debt. The common share dividend may be cut, which can not happen with a bond, and there is no promise to repay me what I originally invested in the stock.
Last Discussed: Item # 6.K. Added to VZ in Schwab Account - Bought 1 at $35.09 (11/1/22 Post); Item # 5.M. Added to VZ in Schwab Taxable Account - Bought 1 at $38.65; 1 at $36.76; 1 at $35.73 (10/18/22 Post)
New Average cost per share: $39.98 (30+ shares)
The purchase range for these shares is from $30.31 to $54.23.
Dividend: Quarterly at $.665 per share ($2.66 annually), last raised from $.6525 effective for the 2023 4th quarter payment.
Stock Dividend History for Investors-Verizon
Yield at new AC: 6.65%
Last Ex Dividend: 4/9/24
Last Earnings Report (Q/E 3/31/24): The stock responded negatively to this report, declining 4.1%.
Consumer Wireless Postpaid Loss at a net of 158,000
Verizon Business Wireless Postpaid Gain of 90,000
Net Loss of Monthly Bill Payers: 68,000, better than the -100,000 consensus
Comparisons are to the 2023 first quarter.
GAAP E.P.S. $1.09, down from $1.17
Non-GAAP E.P.S. $1.15, down from $1.2
Consensus Non-GAAP at $1.12
Revenues: $32.981B, up from $32.912B
Total Debt: $151.698B, down from $152.853B
GAAP to Non-GAAP Reconciliation
Free Cash Flow: $2.708B, up from $2.331B
Guides 2024 to Non-GAAP E.P.S. of $4.5 to $4.7
3. Small Ball Sells:
A. Pared SCM - Sold Highest Cost 5 Share Lot at $13.83- Fidelity Account:
Quote: Stellus Capital Investment Corp. (SCM) - Externally Managed BDC
Proceeds: $69.16
Unlike PSEC discussed above, I have had no trouble so far in generating profits from my SCM trades.
SEC Filed 2023 Annual Report (Risk factor summary starts at page 34 and ends at page 69; summary of investments starts at page 103)
Website: Stellus Capital Management
Last Discussed Item # 2.B. Eliminated SCM in Vanguard Taxable Account Sold 30 at $15.36 and Item # 2.C. Eliminated SCM ins Schwab Account - Sold 10 at $15.55 (2/20/23 Post)(profit snapshots = $310.14)
Last Substantive Buy Discussions: Item # 1.E. Bought 5 SCM at $7.41 in Fidelity Account (8/15/20 Post); Item # 3.J. Added 10 SCM at $7.85; 5 at $7.65; 10 at $7.5 (7/18/20 Post); Item # 2.B. Added 10 SCM at $7.8; 2 at $6.26, 3 at $5.30; 5 at $7.53 (5/9/20 Post) A BDC's stock will crash in price during a recession.
Profit Snapshot: $30.92
New Average Cost per share: $7.07 (30 shares)
 |
| Snapshot Intraday after pare on 4/19/22 |
Dividend: Monthly at $.1333 per share ($1.6 annually)
Yield at New AC: 22.625%
Next Ex Dividend: 4/29/24
Net Asset Value per share history:
12/31/23: $13.26
12/31/22: $14.02
9/30/22: $14.18 10-Q for the Q/E 9/30/22 at page 1
6/30/22: $14.32 10-Q for the Q/E 6/30/22
12/31/21: $14.61
9/30/21: $14.15
6/30/21: $14.07
3/31/21: $14.03 10-Q for the Q/E 3/31/21 at page 3
12/31/20: $14.03 10-K at page 74
12/31/19: $14.14
12/31/18: $14.09
12/31/17: $13.81
12/31/16 $13.69
12/31/15: $13.19
12/31/14: $13.94
12/31/13: $14.54
November 2012: IPO at $15 ($14.46 after underwriters discount)
Last Earnings Report (Q/E 12/31/23): SCM Press Release
GAAP Net Investment Income per share: $.49
Core NII per share: $.50
Yield on loan portfolio: 11.9%
Company Assessment of Loan Quality:
 |
| Pages 81-82, Annual Report |
A second lien loan in the principal amount of $20M is one of those loans, with the value written down to zero:
During 2023, Stellus sold 4,458,873 shares under its ATM program. The weighted average price was $14.1.
Other Sell Discussions:
Item # 3.C. Pared SCM in Fidelity Account - Sold 5 at $13.89 (8/23/22 Post)(profit snapshot = $28.69); Item 2.L. Pared SCM in Fidelity Taxable Account - Sold 5 at $14 (12/3/21 Post)(profit snapshot = $30.75); Item # 2.B. Sold 8.558 SCM shares at $13.19 (8/27/21 Post)(profit snapshot = $45.73); Item # 2.G. Pared SCM in Vanguard Taxable-Sold 10 at $13.2 (6/19/21 Post)(profit snapshot = $11.33); Item # 1.C. Pared SCM in Fidelity Taxable -Sold 13 at $12.46 and 13+ at $13.25 (4/17/21 Post)(profit snapshot = $69.04); Item # 1.F. Pared SCM in Fidelity Taxable-Sold 20 at $11.08 and Item #1.G. Pared SCM in Vanguard Taxable-Sold 20 at $11.17 (12/19/20 Post)(profit snapshots = $14.23); Item # 3 Sold 50 SCM at $13.72 (9/21/19 Post)(eliminating position as of that date; profit snapshot = $3.75); Item # 1.I. Sold 20 SCM at $7.61 (8/22/20 Post)(contains snapshots of prior trades; profit snapshot = $10.84); Item # 1.B. Sold 32+ SCM at $14.22-Used Commission Free Trade (2/2/19 Post)(profit snapshot = $78.09); Item # 1.A. Sold Highest Cost Lot-50 Shares at $12.63 (5/3/18 Post)(profit snapshot = $34.24); Item 2.B. Sold 100 SCM at $14.23 (2/27/17 Post)(profit snapshot=$285.96); Item # 2 Sold 100 SCM at $13.02 (1/12/17 Post)(profit snapshot= $141.96)
SCM Realized Gains to Date: $1,095.57
Goal: Any total return in excess of the dividends paid.
4. Corporate Bonds:
Of the $16,000 in principal amount, $9,000 of the corporate bonds will mature within 1 year and the remainder mature between 6/15/25 and 1/29/26, a 1 bond purchase on that maturity date.
A. Bought 2 Sabine Pass Liquefaction LLC 5.625% First Mortgage Bond Maturing on 3/1/25 at a Total Cost of 99.982 (Vanguard Account):
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Issuer: Indirect Wholly Owned Subsidiary of Cheniere Energy Inc. (LNG)
Finra Page: Bond Page | FINRA.org
Sabine Pass 2023 SEC Filed Annual Report
Collateral:
Credit Ratings: Baa2/BBB+
YTM at Total Cost: 5.637%
Current Yield at TC = 5.626%
B. Bought 2 Evergy Kansas 3.25% First Mortgage Bonds Maturing on 12/1/25 at a Total Cost of 96.579 (Fidelity Account):
%203.25%25%20.png)
Issuer: Operating subsidiary of a Evergy Inc. (EVRG)
 |
| Evergy Kansas Results: Page 80 Annual Report |
This 2025 first mortgage bond is the next one to mature, see page 131.
Finra Page: Bond Page | FINRA.org
Credit Ratings: A2/A
YTM at Total Cost: 5.5%
Current Yield at TC: 3.365%
Last Bond Offering (11/2023): Prospectus for $300 5.9% FM 2033
C. Bought 2 Fifth Third Bancorp 2.375% SU Maturing on 1/28/25 at a Total Cost of 97.61 (Vanguard Account):
%202.375%25%201:28:25.png)
So far this year I have
Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa1/BBB+
YTM at Total Cost = 5.61%
Current yield at TC = 2.43%
D. Bought 2 HCA 5.375% SU Maturing on 2/1/25 at a Total Cost of 99.708 (Fidelity Account):
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Issuer: HCA Healthcare Inc. (HCA)
Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa3/BBB-
YTM at Total Cost: 5.754%
Current Yield at TC: 5.39%
E. Bought 2 Flextronics 4.75% SU Maturing on 6/15/25 at a Total Cost of 98.761 (Fidelity Account):
%204.75%25%206:15:25%20.png)
Issuer: Flex Ltd. (FLEX) previously known as Flextronics.
FLEX Analyst Estimates | MarketWatch
Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa3/BBB-
YTM at Total Cost: 5.87%
Current Yield at TC = 4.81%
G. Bought 2 Conagra 4.6% SU Maturing on 11/1/25 at a Total Cost of 98.44 (Fidelity Account):
%204.6%25%2011:1:25.png)
Issuer: Conagra Brands Inc. (CAG)
I have a common stock position I currently 60 shares with an average cost of $28.44 per share. The dividend yield at that AC is 4.92%.
CAG Analyst Estimates | MarketWatch
Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa3/BBB-
YTM at Total Cost: 5.68%
Current Yield at TC = 4.67%
I have 2 Conagra 4.3% SU bonds that mature on 5/1/24.
H. Bought 2 Lazard 3.75% SU Maturing on 2/13/25 at a Total Cost of 98.33 (Fidelity Account):
%203.75%25%202:13:2025.png)
Issuer: Lazard Inc. (LAZ)
LAZ Analyst Estimates | MarketWatch
Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa2/BBB+
YTM at Total Cost: 5.87%
Current Yield at TC = 3.81%
I now own 4 bonds.
I. Bought 1 WEC Energy 4.75% SU Maturing on 1/29/26 at a Total Cost of 98.782 (IB Account):
%204.75%25%201:9:26%20.png)
Issuer: WEC Energy Group Inc. (WEC)
WEC Analyst Estimates | MarketWatch
Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa1/BBB+
YTM at Total Cost: 5.5%
Current Yield at TC = 4.81%
J. Bought 1 Laboratory Corporation 3.6% SU Maturing on 2/1/25 at a Total Cost of 98.373 (Interactive Brokers Account):
Issuer: Laboratory Corp. of America Holdings (LH)
Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa2/BBB
YTM at Total Cost = 5.776%
Current Yield at TC = 3.66%
I now own 2 bonds.
5. Treasuries Purchased at Auction:
A. Bought 5 Treasury Bills at the 4/22/24 Auction:
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182 Day Bill
Matures on 10/24/24
Interest: $130.43
Investment Rate: 5.372%
B. Bought 2 Treasury Notes at the 4/23/24 Auction:
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Coupon: 4.875%
Matures on 4/30/26
Purchased at 99.956684
High Yield: 4.898%
The high yield includes the 4.875% and factors in the slight discount to par value. The difference between par value and the purchase price will be classified as an original issue discount ($.87) and will be taxed as interest.
C. Bought 5 Treasury Bills at the 4/24/24 Auction:
%208:27:24%20.png){kind=small}
119 Day Bill
Matures on 8/27/24
Interest: $86.61
Investment Rate: 5.406%
6. U.S. REIT Equity Preferred Stock:
A. Added 5 REXRPRC at $20.75 - Schwab Account:
Cost: $103.75
Issuer: Rexford Industrial Realty (REXR) - An Industrial Equity REIT
This is a different preferred stock issued by Rexford Reality than I discussed in my last post. Item # 3.A. Added 5 REXRPRB at $21.58 - Fidelity Account (4/19/24 Post)
SEC Filed Earnings Press Release for the Q/E 12/31/23
Investment Category: Advantages and Disadvantages of Equity REIT Cumulative Preferred Stocks
Discussed:Item # 2.A. Added to REXRPRC - Bought 10 at $21.8 (2/9/24 Post); Item # 4.D. Bought 5 REXPRC at $20.1 (10/21/23 Post)
Coupon: 5.625% paid on a $25 par value.
Dividends: Paid Quarterly and Cumulative
Average cost per share: $21.11 (20 shares)
Yield at $21.11 AC = 6.662%
Stopper Clause: Standard.
Issuer Optional Call: On or after 9/20/24
Maturity: None, potentially perpetual.
I previously owned REXRPRA which has been called at par value.
Disclaimer: I am not a financial advisor, but simply an individual investor who has been managing my own money since I was a teenager. In this post, I am acting solely as a financial journalist focusing on my own investments. The information contained in this post is not intended to be a complete description or summary of all available data relevant to making an investment decision. Instead, I am merely expressing some of the reasons underlying the purchase or sale of securities. Nothing in this post is intended to constitute investment or legal advice or a recommendation to buy or to sell. All investors need to perform their own due diligence before making any financial decision which requires at a minimum reading original source material available at the SEC and elsewhere. A failure to perform due diligence only increases what I call "error creep". Stocks, Bonds & Politics: ERROR CREEP and the INVESTING PROCESS Each investor needs to assess a potential investment taking into account their personal risk tolerances, goals, and situational risks. I can only make that kind of assessment for myself and my family members.
