Monday, March 19, 2018

Observations and Sample of Recent Trades: FBIO, FSIC, IRM, PG, PGNX, TD, TPVG, XOM


EU starts retaliation process against U.S. tariffs: Reuters

"Industrial production rose 1.1 percent in February following a decline of 0.3 percent in January. Manufacturing production increased 1.2 percent in February, its largest gain since October. Mining output jumped 4.3 percent, mostly reflecting strong gains in oil and gas extraction. The index for utilities fell 4.7 percent, as warmer-than-normal temperatures last month reduced the demand for heating. At 108.2 percent of its 2012 average, total industrial production in February was 4.4 percent higher than it was a year earlier. Capacity utilization for the industrial sector climbed 0.7 percentage point in February to 78.1 percent, its highest reading since January 2015 but still 1.7 percentage points below its long-run (1972–2017) average."

The Fed - Industrial Production and Capacity Utilization - G.17

Capacity Utilization: Total Industry Chart 

Industrial Production Index Chart 

Housing starts drop 7% in February, but lull likely temporary - MarketWatch

Maybe the lull is "likely temporary" but the lull may be a sign of the negative impacts flowing from (1) higher mortgage rates; (2) the recent changes in the tax laws and (3) the already high home prices in many geographic areas.

Germany says trade war could damage global recovery: Reuters

US tariffs on China: Costs to Americans: CNBC

U.S. job market tightening, inflation steadily rising: Reuters

With consumers expecting inflation, they may ramp up spending- MarketWatch (University of Michigan's consumer sentiment index hit a 14 year in March) 

The Federal Reserve is meeting tomorrow and Wednesday and is expected to increase the federal funds rate by .25%. 

Currently, the New York Fed's model is predicting 2.7% real GDP growth in the 2018 1st quarter and 2.8% for the second quarter. The first quarter estimate has been trending lower since it a high estimate at 3.45% in January. Nowcasting Report - FEDERAL RESERVE BANK of NEW YORK

The Atlanta FED's GDP forecasting model is currently at 1.8% real GDP growth in the first quarter and has been falling over time as well. GDPNow - Federal Reserve Bank of Atlanta


Market Commentary and Markets

Goldman: Not much upside left for the market here, but these ‘secular growth’ stocks should boom: CNBC (GS has a 2,850 year end price target for the S & P 500; closed at 2,752.01 last Friday. I would be pleased with a year end close at 2,850 but would prefer a 50% decline first). 

In a Barron's interview, Jeffrey Gundlach noted that it was "plausible" that the deficit would reach $1.25 trillion in the 2019 fiscal year which starts on 10/1/18, requiring the government to issue about $2 trillion in debt to finance that debt and to pay off and refinance maturing debt. 

The supply of new paper that has to be sold is a potential cause for significantly  higher interest rates. This scenario will unfold slowly.

Then the much higher rates will cause an increase in debt offerings just to pay the increased interest costs, which then drives up rates more, and so on in a vicious cycle. 

Gundlach thinks the thirty year treasury yield is the important one to watch now. If the yield breaks up 3.22%, then he argues that yield will be in a rising yield trend from a "traditional charting perspective". 

The 30 year treasury closed last Friday at a 3.08% yield. U.S. 30 Year Treasury Bond 

He added that gold was near a break out level of around $1350 or so and that the USD is now near it longterm trend line going back to 1984. If the USD breaks down from current levels, he opines that it will be a "major breakdown". 

Gold Price  24 Hour Spot Chart 

Overall, I would characterize Gundlach as being bearish or tilting in that direction on stocks, bonds and the USD and leaning toward bullish on gold.     

If the Senate's proposed revisions to Dodd-Frank becomes law, it will lower regulatory costs for regional banks. Senate votes to roll back parts of Dodd-Frank banking law

Credit Suisse Tells the Rich to Buy Stocks If They Missed the Rally - Bloomberg



After firing Steve Goldstein, who was the Under Secretary for Public Diplomacy, the 4th highest position in the State Department, Trump elevated former Fox and Friends host Heather Nauert to that position, subject to confirmation. 

There are supposed to be six Under Secretaries of State and now there is one who is about to quit. 

Goldstein was immediately fired by Trump after truthfully reporting to the press the truth about when Rex Tillerson found out that he was fired. Tillerson found out by reading Donald's tweet published early last Tuesday morning. 

Tillerson had made strong remarks about Russia the previous day and Trump was furious with those remarks. 

Tillerson: Poison used on ex-spy 'came from Russia' 

WH Fires State Dept. Official for Contradicting Trump on How Tillerson Was FiredRex Tillerson's ouster: How it unfolded - CBS NewsTrump axes Tillerson: AP

US diplomats confused, told not to tweet or post on Tillerson's firing - CNN (consistent with Trump's authoritarian personality)

Retired Four Star General McCaffrey: Trump is a serious threat to national security:

A significant number of republican politicians have adopted Putin's talking points.  

Felix Sater on Trump: Video (Trump associate says that Trump was trying to secure a hotel deal in Russia during campaign); How A Player In The Trump-Russia Scandal Led A Double Life As An American Spy

Trump boasts about making up facts about trade deficit to Trudeau - MarketWatch (at least he admitted to ignorance and creating his own reality for the first time. 

Nothing will stop Trump from lying. It is just unfortunate for the Nation's future that tens of millions actually believe him. 

Canada | United States Trade Representative ("U.S. goods and services trade with Canada totaled an estimated $627.8 billion in 2016. Exports were $320.1 billion; imports were $307.6 billion. The U.S. goods and services trade surplus with Canada was $12.5 billion in 2016.")

Trump's America actually has a trade surplus with Canada -

After Admitting Uncertainty Over Trade Figure, Trump Repeats False Claim About Canada - The New York Times

Trump seems to hint he could pull US troops out of South Korea if he doesn't get his way on trade: CNBC ("We have a very big trade deficit with them, and we protect them. We lose money on trade, and we lose money on the military. We have right now 32,000 soldiers between North and South Korea. Let's see what happens.")  

Trump apparently threatens to withdraw US troops from South Korea over trade - CNN 

Mueller Subpoenas Trump Organization, Demanding Documents About Russia

The TV personality Larry Kudlow, who does not have an economics decree, will replace Gary Cohn as Trump's Director of the National Economic Counsel. Larry Kudlow’s history of bad economic calls - MarketWatch6 of Larry Kudlow’s Not-So-on-the-Money Predictions - The New York Times 

Kudlow has a B.A. decree in history from the University of  Rochester. 

I wonder whether Devin Nunes and Mike Conaway will now have the House Intelligence Committee investigate Mueller and Hillary, or focus their attention on this government report: Russian Government Cyber Activity Targeting Energy and Other Critical Infrastructure Sectors | US-CERT (now that is scary) 

Conaway (R-TX) claims that Russia did not favor Trump in the election. POLITICO (House Republicans concluded contrary to all evidence that Russia did not interfere to help Trump) At least Conaway and Nunes are consistent in preferring their reality creations to hard facts. Maybe it is just easier to go through life making everything up as you go along.    

Excerpt From Intelligence Report-ICA_2017_01.pdf:

Former FBI Deputy Director Andrew McCabe's statement on his firing- CNN (McCabe was fired by Sessions 26 hours before his retirement in order to deprive him of hundreds of thousands in pension benefits that he had earned for his 22 years of service to the country)

Former CIA chief to Trump on McCabe firing: 'America will triumph over you' - CNN

Trump called McCabe's firing a victory for U.S. Democracy. 

Trump had been attacking McCabe for months and clearly wanted to harm him as much as he could using his presidential powers. 

It remains to be determined whether the primary motivation was to punish McCabe for cooperating with Mueller or for being "less than candid" as claimed by DOJ in response to questions about his contact with a reporter. 

Mueller has McCabe memos documenting conversations with Trump - CNN 

McCabe denies the allegations made against him in strong terms. 

The timing of the firing 26 hours before his scheduled retirement, and the known financial injury to McCabe and his family resulting therefrom, strongly suggests political retribution directed by Trump, where Sessions and the allegedly independent Michael Horowitz are merely bit players. 

That motivation, consisting of both a political punishment and a signal to other FBI agents flowing therefrom, would be the case even if the firing 26 hours before his retirement had some arguable factual justification. In my opinion, a firing within hours of retirement would require a most egregious act as a justification. 

The firing is consistent with Trump being a mean spirited and vindictive bully with no positive personality attributes and a strong affinity for Putin and other dictators.  

Trump's lawyer used the firing of McCabe to request that Mueller be fired as well; and that is probably the bottom line in this chain of events.  

Trump lawyer calls for end of Mueller probe - CNN (John Dowd: "I pray that Acting Attorney General Rosenstein will follow the brilliant and courageous example of the FBI Office of Professional Responsibility and Attorney General Jeff Sessions and bring an end to alleged Russia collusion investigation manufactured by McCabe's boss James Comey based upon a fraudulent and corrupt dossier") 

Trump keeps up attacks on Mueller, McCabe, Comey - CNN 

It is certainly possible that the firing of McCabe in order to inflict substantial financial on him will be shown to be just an another act in Trump's ongoing obstruction of justice that was aided and abetted in this particular instance by high ranking DOJ officials including but not limited to Sessions.  

Could getting Andrew McCabe fired come back to bite Trump?

Exclusive: Comey to come out hot on book tour, correct lies-Axios

Trump Ramps Up Criticism of Russia Probe, Derides Comey as Liar - Bloomberg

Trump has made history. He is the first President to be sued by a porn star.  

James Mattis, U.S. Defense Secretary, is linked to a massive corporate fraud and nobody wants to talk about it: CNBC

Exclusive: Sources contradict Sessions' testimony he opposed Russia outreach: Reuters

A voter profiling firm hired by Trump likely grabbed data for tens of millions of Facebook users - The Washington Post ("Facebook revealed on Friday that a voter profiling firm hired by Donald Trump and other Republicans had improperly used data from 270,000 users of the social media platform. But what Facebook didn’t say may be more important: The number of people affected by this aggressive form of data grabbing likely numbered in the tens of millions.")

Facebook knew of Cambridge Analytica user profile harvesting for 2 years, never acted-CBS News

Facebook suspends data firm with Trump ties - CNN 

Gorilla named Louis walks like a human at Philadelphia Zoo


1. Eliminated TD-Sold Remaining 53+ Shares at $58.51-Used Commission Free Trade:

Quote: Toronto-Dominion Bank (TD)

TD Analyst Estimates

Profit Snapshot: $910.82

I previously sold a 50 share lot bought at $43.37 and my highest cost share bought with dividends:

Item 4.A. Sold 54+ TD at $56.97  (11/4/17 Post)(profit snapshot= $718.78)-Dividend Growth And Large Cap Valuation Strategies: Bought Toronto Dominion Bank (TD) - South Gent | Seeking Alpha

Total Realized Gains TD Trades = $1,629.6

I view the total return as satisfactory given my current financial objectives. My primary motive for selling was simply profit taking. A secondary reason was growing concerns that the Trump Administration will undertake measures to harm Canada's economy. 

Closing Price Last Friday (3/16/18): TD 58.03 -$0.25 -0.43% 

2. Small Ball-BDCs, Equity REITs and MREITs:

A. Bought 20 FSIC at $7.38 and 50 at $7.33-Used Commission Free Trades:

Fidelity Account (new "10 share buying program")
I will average down in the Fidelity account until I hit 50 shares. I will reinvest the dividend in this account. The next buy will need to be somewhere in the $6.8 to $7.1 range. That range may occur on or shortly after the ex dividend date. 

The other lot was bought in my Schwab account, where I will not reinvest the dividends or buy more shares: 

Prior to these purchases, I have never owned FSIC shares. 

Quote:  FS Investment Corp. (FSIC) 

Website: Home | FS Investment Corporation

FS Investments KKR Partnering

FS Investment Corporation 2017 Annual Report (risk factor summary starts at page 29 and ends at page 57)

Net Asset Value per share as of 12/31/17 = $9.3

Discount to 12/31/17 NAV Per Share = -21.07%  (at $7.34 TC)

Dividend: Quarterly at $.19 per share or $.76 annually. 

Dividend yield at $7.34: 10.35%

Both the dividend amount and dividend yield exclude any future special dividends. The last special dividend was paid in 2014. Dividend Information | FS Investment Corporation

Ex Dividend Date: Tuesday, 3/20/18 (after purchases)

Management: External 

Last Earnings Report: Q/E 12/31/17

Debt to equity ratio: 75%

FSIC Reports Fourth Quarter and Annual 2017 Financial Results and Declares Regular Distribution for First Quarter

Historical Net Asset Value Per Share Numbers

12/31/17: $ 9.3

12/31/16: $ 9.41
12/31/15: $ 9.1
12/31/14: $ 9.83
12/31/13: $10.18
12/31/12: $ 9.97

Total Return Since Closing Price First Day of Trading (4/16/14): +4.07%.

Average Annual Total Return Same Period: +1.03%. (through date of purchase)

The initial offering was earlier in May 2012, but the shares did not trade on the stock exchange until 4/16/14 which is the date that I use in the previous calculation. The company elected to remain private before April 2014. Pages 2-3--Form 10-K

Closing Price on 3/16/18:   FSIC $7.25 +0.05 +0.69% 

B. Added 10 TPVG at $11.6-Used Commission Free Trade:

Fidelity Account "10 Share Buying Program"
Total Shares in this Account: 20
Average Total Cost Per share= $11.81

As with other 10 share buy programs, I will only average down at price lower than my previous purchases. That may occur on or shortly after the next quarterly ex dividend date.

I also own 50 shares in my Schwab account where I will not be buying more shares except through dividend reinvestment.

Dividends: Quarterly at $.36 per share 

Dividend Yield at TC in this Account = 12.19% (assumes continuation of existing payout which I would not assume)

Last Substantive DiscussionItems 1.B. and 1.C. (2/26/18 Post)

Last Earnings Report: This report was released after my purchase at $11.6.

TriplePoint Venture Growth BDC Corp. Announces Fourth Quarter and Fiscal Year 2017 Financial Results 

The fund raised a meaningful amount of capital during the 4th quarter by selling $21.6M in shares to investment funds managed by GS at $13.54 per share and by recycling repayments and prepayments. A number of new investments were made during the quarter. 

TPVG also announced that Amazon was going to acquire Ring, Inc, one of TPVG's portfolio companies.

I found two substantive references to RING in TPVG's annual report. The first lists three outstanding loans in the principal amount of $50M, with a $49.434M cost basis and an estimated market value as of 12/31/17 of $49.479. 

Page 91 10-K

At page 92, there is a list of "warrant" investments and the type of warrant. The RING "warrant" is shown to be 288,350 preferred shares valued as of 12/31/17 at $753K with a $525K cost basis. I suspect, but do not know, that this "warrant" is a convertible preferred stock; and is in effect an equity interest in RING.

Amazon Agrees to Buy Smart-Doorbell Startup Ring - Bloomberg

Amazon buys Ring, the smart doorbell maker backed through Alexa Fund (financial terms were not disclosed but Reuters claims that the value was in excess of $1B)

TPVG would not disclose during its earnings call whether the value of its RING equity investment was materially above or below its last mark due to a lack of information on the buyout price. Page 7 Q4 2017 Results - Earnings Call Transcript | Seeking Alpha

The company had $.06 in spillover income from its 2017 earnings that could be used to support a dividend payment in 2018. 

Net investment income for the 4th quarter was $5.149M or $.298 per share excluding a realized capital gain of $2.187M or $.1265 per share. 

The Board declared the regular quarterly dividend of $.36 per share. 

Closing Price Last Friday (3/16/18): TPVG $12.12 -$0.04 -0.33% 

C. Bought 10 IRM at $32.69 And 10 at $31.95-Used Commission Free Trades:

The first lot was bought just prior to the quarterly ex-dividend date.

Quote: Iron Mountain Inc. (IRM)

Website: Data & Records Management | Shredding | Iron Mountain

2017 Annual Report (risk factor summary starts at page 15)

In a report dated 2/16/18, IRM is rated 4 stars by Morningstar with a fair value estimate of $40. The Morningstar report is available to Charles Schwab customers. 

S & P rates the stock at 3 stars with a $37 price target. S & P trimmed its price target by $4 after IRM's last earnings  report. The S & P analyst trimmed the estimate by $.05 to $2.3 and introduced an 2019 FFO estimate at $2.49. The Morningstar analyst viewed the report favorably. S & P reports to customers of several U.S. brokerage firms.  

Chart: Bear Trend but possible bottom in February

Iron Mountain Inc. Interactive Chart

On 11/24/17, IRM closed at $41.44. The percentage decline from that price to $32.69 is 21.1%.

Dividend: Quarterly at $.5875 per share or $2.35 annually

Iron Mountain Declares First Quarter 2018 Dividend

I am going to reinvest the dividend until the share price goes over $35. The average cost per share does not yet include the fractional shares purchased with the last quarterly dividend payment. 

Dividend Yield at Total Cost (20 share) of $32.32: 7.27%

Ex Dividend Date: 3/14/18 (shortly after my first purchase and shortly before my second purchase last Friday) 

Last Earnings Report: Q/E 12/31/17

Iron Mountain Reports Fourth Quarter and Full Year 2017 Results

Earnings Presentation

2018 Guidance:

Recent News:

Iron Mountain Opens Secure Federal Storage Facility Near Joint Base Andrews

Iron Mountain Closes Acquisition of IO Data Centers U.S. Operations ("With the transaction, Iron Mountain acquired the land and buildings associated with four state-of-the-art data centers in Phoenix and Scottsdale, ArizonaEdison, New Jersey; and Columbus, Ohio. The existing data center space in the four owned facilities totals 728,000 square feet, providing 62 megawatts (MW) of capacity with expansion potential of an additional 77 MW in Arizona and New Jersey." The acquisition price was approximately $1.3 Billion)

Iron Mountain Incorporated Prices Debt Offering (12/12/17)($825M of 5.25% SU notes due in 2028) This was a private offering: 
SEC Form 8-K 

Iron Mountain Incorporated Prices Common Stock Offering (12/12/17)(14.5M shares, plus greenshoe of 2.175M shares, at $37 per share); 
Stock Offering Prospectus 

The debt and share offerings referenced above were necessary to finance the IO Data Centers acquisition. 

IRM's senior unsecured bonds are rated deep into junk territory: 

Moody's changes Iron Mountain's outlook to negative (12/12/17) 

I am occasionally monitoring the IRM  5.75% SU bond maturing in 2024, but want at least a 7% yield before buying. If I was able to secure that yield on a SU bond, I would sell the common stock if I still own shares. I view IRM's leverage as creating risks that I am not willing to assume except in small bits. So I would be looking at no more than a 2 bond purchase.   

Iron Mountain Incorporated Prices U.K. Debt Offering (10/31/17)(£400M 3.875% GBP SU notes maturing in 2025-used to fund the redemption along with other funds of the £400M in 6.125% GBP notes due in 2022).

Iron Mountain Increases Quarterly Dividend per Share by 7% (10/24/17)

Prior Trades:

Item # 3 Sold 50 IRM at $33.82-Update For Equity REIT Basket Strategy As Of 4/6/16 - South Gent | Seeking Alpha (profit snapshot= +$398.06)-Item # 3. Bought 50 IRM at $25.7Update For Equity REIT Basket Strategy As Of 1/11/16 - South Gent | Seeking Alpha

The following trade was made before IRM became a REIT: Item # 2 Bought 50 IRM at $21.76 (9/29/2010 Post)

Closing Price Last Friday (3/16/18): IRM $32.52 -$0.37 -1.12% 

3. More Small Ball Using Commission Free Trades:

A. Added 2 Exxon at 74.37 and 1 at $73.83-Same Day Purchases on 3/7/18:

March 7th was a bad day for Exxon shareholders, who reacted negatively to a company presentation that it would substantially increase its capital spending and made no mention of continuing its share buybacks. 

With crude prices near current levels, the increased spending would drive profits---in Exxon's opinion---to $31B in 2025. Exxon tries to sell Wall Street on growth plan, but shares drop: Reuters 

I would support a modest increase in the dividend ever year with no share repurchases, and Exxon's spending plans that will drive future growth, net income and eventually provide sufficient funds to engage in massive share repurchases. The problem with that approval is that the promised land lies in the future. Stock Jocks need instant gratification that is fed to them on a continuing basis. 

On 3/15/18, XOM was upgraded from reduce to buy at HSBC, with the target priced raised from $70 to $82.5 at that firm.  Exxon upgraded to Buy at HSBC-Seeking Alpha

Closing Price on 3/7/18:  XOM $74.26 -$1.92 -2.52%

Day's Range: $73.56 to $75.24
52 Week Range as of 3/7/18: $73.56 (new low) to $89.3

The 52 week high of $89.3 was hit intra-day on 1/29/18.

Exxon has turned into a falling knife since it reported 2017 4th quarter earnings that disappointed investors.

Last Substantive DiscussionITEM # 2.A. (2/19/18 Post)

I do not view Exxon favorably.

As noted in that prior post, I sold XOM at $70.02 on 11/8/2010.

There have been no stock splits between then and now.

If I had bought XOM at the closing price on 11/8/2010, and reinvested the dividends, the total annual average total return through 3/7/18, the day of my last purchases, would be about 4.2% (starting price at $70.31, dividends reinvested at $18.88 per share).

The average total return would be slightly above the average annual dividend yield over a 7.3 year period.

The average annual total return of SPY over the same period was 14.21%.

Exxon has underperformed that S & P 500 ETF by about 10% per year over that 7.3 year period! That is not going to work for most investors using a buy and hold strategy.

Sourced: DRIP Returns Calculator | Dividend Channel

Maybe the future will be in favor of Exxon's stock compared to SPY or maybe it will be worse for Exxon shareholders. At the current XOM price, Exxon's shares at least have a chance IMO to outperform SPY over a time frame loosely measured as being 3 to 7 years from now. Still, I lack conviction in that opinion.

Current Position: 16 shares working my way up to 30

Average Total Cost Per Share (16 Shares) = $77.05

Dividend: Quarterly at $.77 per share

Dividend information | ExxonMobil

Dividend Yield at ATC = 3.79%

This author argues that XOM is going to be the next GE. This popular Dow stock looks ready to join GE on the discard pile - MarketWatch The author is making a valid point about the rising costs to replace production that is generating current income. The conclusion is not supported by that observation IMO since there are too many unknown variables that will impact profits, including the future price of crude over the long term,
which is not knowable, and the overall performances over Exxon's other businesses. 

Closing Price Last Friday: XOM $75.12 +$0.70 +0.94% 

B. Added 2 PG at $78.91 and 1 at $78.68-Same Day-Used Commission Free Trades:

Quote:  Procter & Gamble Co

PG Analyst Estimates

2017 PG Fact Sheet.PDF

Our Brands | P&G

Dividend: Quarterly at $.6896 currently 

Splits & Dividend History | P&G

Morningstar calculates that the payout ratio for the F/Y ending 6/30/17 was 74.8%, up from 50.1 in the F/Y ending 6/30/11. That increase in a payout ratio is fairly typical for consumer product companies as their earnings growth has failed to keep pace with their percentage increases in dividends. 

It is not uncommon for large consumer staple companies now to spend more  share buybacks and stock dividends than their free cash flow. 

Free Cash Flow F/Y 6/30/17 = $9.527B

Common Stock Purchases = $5.204B Cash Flow for PG
Dividends = $7.236B

Unlike some other consumer staples, PG's long term debt has decreased since 2013. Balance Sheet That is due to asset sales. 

Last Earnings Report: Q/E 12/31/17 P&G Announces Second Quarter Earnings

Note the decline in revenues in two important categories: Grooming and Baby/Feminine/Family Care: 
Impact of Tax Reform:

F/Y 2018 Guidance

"P&G said it is raising its core earnings per share growth outlook from five to seven percent to five to eight percent versus fiscal 2017 Core EPS of $3.92. It is raising the upper-end of the guidance range to reflect the potential benefit from the Tax Act. GAAP earnings per share are expected to decrease 30% to 32% versus fiscal year 2017 GAAP EPS of $5.59, which included the significant benefit from the Beauty Brands transaction that was completed in October 2016. The fiscal 2018 GAAP EPS estimate includes approximately $0.10 per share of non-core restructuring costs and $0.24 per share of non-core charges related to the Tax Act."

Last Substantive Discussions

Item # 4.B. Bought 10 PG at $86.99 (10/30/17 Post)

I sold that lot at $91.59:  Item # 1.B. (1/28/18 Post)

I am now up to 28 shares. My next purchase has to be below $79.68. 

Closing Price on 3/16/18: PG $78.97 +$0.30 +0.38% 

4. Small Ball-Small Cap Biotech Basket Strategy

A. Sold Highest Cost FBIO Lot at $4.96-Used Commission Free Trade

Profit Snapshot: $20.29

Item # 3.B. Bought 50 FBIO at $4.55 (7/25/17 Post)

I am keeping the 50 shares bought at $3.33. Item # 5.A. Bought 50 FBIO at $3.33(1/4/18 Post) 

Subsequent to this sale, FBIO released its 4th quarter "earnings". Fortress Biotech Reports Fourth Quarter and Full-Year 2017 Financial Results and Recent Corporate Highlights  As shown by that press release, there is a lot going on, but generating a profit is not one of those things. 

"Fortress' consolidated cash, cash equivalents, short-term investments (certificates of deposit), cash deposits with clearing organizations and restricted cash totaled $168.3 million."

Closing Price Last Friday: FBIO $5.16 +0.10 +1.98%

B. Pared PGNX: Sold 30 out of 80 at $8.24

Profit Snapshot: $12.14

For PGNX shareholders, there is an extremely important event that is about to occur. The FDA has until 4/30/18 to act on Progenics' NDA application for Azedra. 

Azedra information

That drug is for the "patients with malignant, recurrent, and/or unresectable pheochromocytoma and paraganglioma, rare neuroendocrine tumors for which there are currently no approved treatment options in the U.S." The number of patients is relatively small and this will be a very high priced drug when and if approved by the FDA. 

PGNX is already taken steps to self launch this drug in the U.S. If the FDA fails to approve Azedra, I will regret holding onto my 50 share lot. 

The second event that will impact the stock price is the third quarter release of Phase 3 trial data on Progenics' cancer imaging agent 1404. 

Progenics Pharmaceuticals Completes Enrollment in Phase 3 Study of PSMA-Targeted Imaging Agent 1404 

This imaging agent, if approved, will help doctors and patients to make more informed decisions about whether prostrate cancer is aggressive and consequently requires surgery and other treatments rather than just watching and waiting. Many prostrate cancers grow so slowly that a man is more likely to die with prostrate cancer than to die from it.  The PSA test is not particularly helpful in making a diagnosis and cancer biopsies frequently lead to unnecessary removals of the prostrate gland that may lead to incontinence and impotence. Final Recommendation Statement: Prostate Cancer: Screening - US Preventive Services Task Force In short, any man making a decision about removing the prostrate gland would want more information on whether watchful waiting or surgery is the best option.  

PGNX does not one drug on the market, Relistor, that has been licensed to Valeant. PGNX receives royalties and Relistor sales have been picking up. Progenics Pharmaceuticals Announces Fourth Quarter and Full-Year 2017 Financial Results and Business Update

There is no way that those royalties will justify the current market capitalization IMO. 


Realized PGNX Trading Gains: $342.75

Closing Price Last Friday (3/16/18): PGNX $8.44 +$0.14 +1.69% 
5. Short Term Bond/CD Ladder Basket Strategy

April Maturities: 

Several of these securities were bought about a year ago. 

As usual, the low coupon treasuries were bought at a discount to par value, so that the YTM is much higher than the coupon rate. 

Some CDs and bonds were bought 13-16 months ago when rates were far lower, so I am glad to see them mature. An example would be the 1.1% Wells Fargo CD maturing on 4/2/18 which is a 14 month CD. The best available rate for a similar term now is more than twice as much. 

I recently added some one month CDs to take me through the next FED meeting rather than leaving proceeds from some maturing securities in my Schwab sweep account: 

SU: Senior Unsecured Bonds
MI: Monthly Interest Payments

2 Coca Cola 1.15% SU 4/1/18 (bought in December 2016)
2 Medtronic 1.375% SU 4/1/18 (bought in December 2016)
2 Stryker  1.3% SU 4/1/18 (bought in December 2016)
2 Wells Fargo 1.1% CDs MI 4/2/18 (14 month CDs)
2 Bank of Hapoalim 1.35% CDs 4/3/18 (7 month CDs)
2 Bank of India 1.45% CDs  4/3/18 (3 month CDs)
2 Bank Of Baroda 1.45% CDs 4/9/18 (one month) 
2 Bank of Montreal 1.4% SU 4/10/18 (bought December 2016)
2 Bank of India 1.45% SU 4/11/18 (2 month CDs)
3 Treasury .75% 4/15/18
2 Bank of China 1.5% CDs 4/16/18 (3 month CDs)
2 Compass 1.5% CDs 4/19/18 (3 month CDs)
3 First Republic Bank 1.4% CDs 4/23/18 (2 month CDs)
2 Bank of Nova Scotia 1.45% SU 4/25/18 (Bought December 2016)
1 Mountain BK 1.4% CD MI 4/17/18
2 Merchants BK 1.45 CD 4/27/18 (one month CD)
2 Citigroup 1.7% SU 4/27/18 (Bought 12/16 and 1/17)
2 Wells Fargo 1.25% CDs MI 4/30/18 (13 month CD)
2 Bank of Baroda 1.45% CDs 4/30/18 (2 month CDs)
2 Toronto Dominion 1.4% SU 4/30/18 (Bought December 2016) 
1 Treasury .625% 4/30/18
1 Treasury .75% 4/30/18


A. Bought 2 Stryker 2.625% SU Bonds Maturing on 3/15/21:

The maturity is right on my 3 year borderline for short term, as is the Xcel bond discussed in Item B. below.

FINRA PAGE: Bond Detail

Credit Ratings:

Bought at a Total Cost of 99.156 (with $4 Vanguard Commission)
YTM at TC Then at 2.919%
Current Yield at TC = 2.6473%

At the time of my purchase, the three year treasury note was trading at a 2.4% yield.

I have two Stryker 1.3% SU bonds maturing on 4/1/18 that were bought on 12/30/16.

I also own 2 Stryker 2% SU bonds maturing on 3/8/19.

B. Bought 1 Xcel 2.4% SU Bond Maturing on 3/15/21:

Finra Page: Bond Detail

Issuer: Xcel Energy Inc. (XEL)

XEL Analyst Estimates
Xcel Energy 2017 Year End Earnings Report

2017 Annual Report SEC Form 10-K (debt listed and discussed starting at page 91)

Xcel's debt is presented on a consolidated basis with its operating subsidiaries including Northern States Power and Public Service of Colorado who issue first mortgage bonds. I own several of those senior secured bonds. 

Credit Ratings:

Bought at a Total Cost of 98.696

YTM at TC Then at 2.854%
Current Yield at 2.4317%

The only bond issued by Xcel that I previously owned was the 3.3% SU bond maturing on 6/1/25 that was sold on 10/6/17 at 100.755. When and if the YTM goes over 4%, I will consider buying that one back.

C. Bought 2 Duke Florida 1.85% First Mortgage Bonds Maturing on 1/15/2020-In A Roth IRA Account:

I now own 4 bonds, and two of those are in a taxable account.

FINRA Page: Bond Detail (prospectus linked)

Issuer: Duke Energy Florida LLC, an indirect wholly owned subsidiary of  Duke Energy (DUK) 

"Duke Energy Florida is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of Florida. Duke Energy Florida’s service area covers approximately 13,000 square miles and supplies electric service to approximately 1.8 million residential, commercial and industrial customers."

Page 21 Duke Energy 2017 Annual Report

Duke Florida Results page 59
The total property, plant and equipment is stated at $16.434B at page 187 before depreciation. As with other utility first mortgage bonds, the lien attaches to "substantially all" of the assets.

Credit Ratings:

Bought at a Total Cost of 98.869 (with $4 Vanguard commission)

YTM at TC Then at 2.479%
Current Yield at TC = 1.8712%

D. Bought 1 Ventas 2.7% SU Bond Maturing on 4/1/20:

FINRA Page: Bond Detail (prospectus linked)

Issuer: Operating Entity of Ventas Inc. (VTR) which guarantees the notes (see prospectus)

Credit Ratings:

Bought at a Total Cost of 99.721

YTM at TC Then at 2.84%
Current Yield at TC = 2.7076%

E. Added 1 Nextera Capital 1.649% SU Bond Maturing on 9/1/18:

I now own 9 bonds. I am going to receive one more semi-annual interest payment. Since the bond just made a semi-annual payment, I only had to pay $.50 in accrued interest to the seller. I am not concerned about receiving my $9K in principal amount on 9/1/18. All of the these bonds have been bought at below par value.

Finra Page: Bond Detail (prospectus)

Bought at a Total Cost of 99.695

YTM at TC Then at 2.305%
Current Yield at TC = 1.654%

F. Bought 1 Treasury 1.5% Coupon Maturing on 8/31/18:

YTM = 1.803%

I now own 4.

G. Bought 1 Treasury .75% Coupon Maturing on 10/31/18:

YTM at 1.912%

On the same day, I have 3 other treasury bonds maturing: 1.75% coupon (1) which was bought last month with a 1.844% YTM and a 1.25% coupon (2). 

H. Bought 2 Merchant's Bank of Indiana 1.45% CDs Maturing on 4/27/18 (1 month CD)(discussed out of time of purchase order):

4. Intermediate Term Bond/CD Ladder Basket Strategy:

A. Bought 2 Verizon 3.125% SU Bond Maturing on 3/16/22

FINRA Page: Bond Detail (prospectus linked)

Credit Ratings: 

Bought at a Total Cost of 99.772 (with $4 commission)
YTM at TC Then at 3.186%
Current Yield at 3.1321%

B. Bought 1 Boston Properties LP 3.125% SU Bond Maturing on 9/1/23:

FINRA Page: Bond Detail (prospectus linked)

This bond was bought in a taxable account. I own 1 bond in a Roth IRA account that was bought in March 2017. I am content to hold that one since the interest is tax free in that account. Annual interest for 1 bond is $31.26 or 3.1341% at my total cost.

Issuer: Operating Entity for Boston Properties Inc. (BXP)-A Office REIT
Website: Boston Properties
Boston Properties Announces Fourth Quarter 2017 Results

BXP would generally be considered one of the highest quality office REITs. Still, from a bond owner's perspective, you do not like seeing all that money flying out the door to the common shareholders, which is a problem inherent in the REIT tax structure that requires at least 90% of net income to be paid out in common share dividends.

Credit Ratings:

Moody's upgrades Boston Properties' rating to Baa1; outlook is stable (2/16/18)

Fitch Rates Boston Properties' Senior Unsecured Notes 'BBB+' (11/20/17)

Bought at a Total Cost of 99.031

YTM at TC Then at 3.32%
Current Yield at TC = 3.1556%

I previously eliminated this bond when trimming my weighting in intermediate term bonds.

My last sell was last December: Item 2.A. Sold 1 BXP 2023 SU at 101 (1/8/18 Post)-Item # 1.F. Bought at a TC of 99.088 (3/28/17 Post)

I am even less enthusiastic about buying back the 2.75% BXP SU bond maturing in 2026 that I sold at 95.095 Item 2.E (10/11/2017 Post)ITEM # 1.A. Bought at 92.563. I would want a 4%+ YTM to buy just one of those bonds now. 2026 Bond Detail I mentioned in another post, when discussing a sell at 95.275 that I would want a price below 90 to repurchase that 2026 BXP bond. Item 1.B. (10/5/2017 Post)

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 sell 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 family members.