Monday, February 19, 2018

Observations and Sample of Recent Trades: APLE, COTY, PG, OHI, SIR, STWD, XOM

Economy

The New York Fed's underlying inflation gauge rose to 3% in January. Underlying Inflation Gauge (UIG) - FEDERAL RESERVE BANK of NEW YORK 


U.S. wholesale prices also reflect higher inflation in January-MarketWatchProducer Price Index News Release summary ("
For the 12 months ended in January, prices for final demand less foods, energy, and trade services moved up 2.5 percent, the largest rise since 12-month percent change data were available in August 2014.")

China Vows to Strike Back as U.S. Signals High Tariffs on Chinese Steel and Aluminium - TheStreet


China Warns It May Retaliate If U.S. Imposes Metal Tariffs - Bloomberg


+++++

Market Commentary and Markets

Section 232 Reports | Department of Commerce


Commerce Dept calls for steep tariffs or quotas on steel, aluminum


Rates are ‘extreme.' Expect a rally in bonds, utilities, says trader: CNBC 


A rally can occur at anytime in bonds and bond like stocks. I would call the current interest rates extremely low by historical standards given the current and reasonably expected U.S. economic conditions. The dominant trend in interest rates, however, remains up. 


A modest rise in interest costs resulting from the expected .75% increase in the FF rate would devour the tax cut benefits for most U.S. households. 


A 25 cent rise in the federal gasoline tax, which has not been raised since 1993, would "wipe out 60% of the benefit of the tax cuts to individuals". Sourced: The Ghost of Inflation Reappears - Barron's 


Why Trump might be open to a 25-cents-a-gallon increase in the federal gas tax - MarketWatch (increase needed to help fund infrastructure build)  

Randall Forsyth in his Barron's column this week notes that the unrounded January CPI number was .54% which the BLS rounded down to .5%. The Core CPI was actually .349% which the BLC rounded down to .3%. Just a little nudge higher and the numbers become .6% and .4% for core CPI. Headline CPI increased at a 4.4% annualized rate over the three month period ending in January, with CORE CPI up 2.9% annualized.  


Prices for services are up 2.6% over the past year. 


Brian Westbury Blog CPI for January 2018.PDF 


Currently, the Bond Ghouls are assigning a 83.1% probability that the FED will raise the federal funds rate by .25% at its March 2018 meeting. Countdown to FOMC: CME FedWatch Tool I would place the odds at 100%. It would be dereliction of duty to keep rates at current levels. 


JPMorgan Says Inflation, Rising Wages Actually Good for Stocks - Bloomberg


Goldman Sachs raises a red flag over U.S. government spending - MarketWatch

While large tax cuts and $1 trillion dollar deficits will increase U.S. GDP over the short term, this is a toxic mixture for the long term and will accelerate by several years the Day of Reckoning for the U.S. when there will be no options other than dire ones.  

+++++++

Trump

There was a time when republicans would have no trouble believing the conclusion reached by all relevant U.S. intelligence agencies that Russia interfered in the U.S. election on behalf of Trump. Those days are in the past. In the modern day GOP, remade in Trump's image, facts do not matter. Special counsel Mueller indicts 13 Russians for election interference - The Washington Post 


Their general approach now is to attack the intelligence agencies that bring them facts that they do not like and to disparage the character of Chris Steele, who brought the matter to the FBI's attention, with false accusations (e.g. Senators Graham and Grassley) 


National (US) Poll - January 18, 2018 - Helping Dreamers Can't Get U.S | Quinnipiac University Connecticut (83% of republicans describe the Russian investigation as a witch hunt-question 40); Where Is Public Opinion On The Russia Investigation?


McMaster says evidence of Russian meddling is "incontrovertible"-The Washington Post Donald chided McMaster in a tweet for not repeating Donald's alternate reality information.  


‘Go Donald!’: Inside the Russian shadow campaign to elect Trump


Excerpts From Indictment: 






This indictment is incredibly detailed and indicates that the FBI knows a great deal more than I previously suspected. 


Trump basically told his acolytes that none of this really involved him, even though his name is mentioned throughout the indictment which clearly states over and over again that the Russia was trying to help him win the election. His reasoning was that the indictment mentioned that Russia started its efforts in 2014 before he became a candidate.  




That is just more Fake News from Donald that is intended to mislead those who are uninterested in accurate information and/or are easily misled by him. This form of information takes one piece of accurate information out of context and then deliberately misleads the reader as to its meaning. 


The Russians have probably started their efforts to meddle in the 2020 Presidential election through an information gathering operation, as they did in 2014 for the 2016 election, without deciding yet who they will support as President. 


Early activities for the 2016 election included obtaining stolen identifies and creating false personas; using "computer infrastructure" to "hide their Russian origin" which included setting up "virtual private networks" in the U.S; opening PayPal accounts; traveling to the U.S. to gather intelligence; and surreptitious money movement to fund their 2016 election meddling. 


The intelligence services have stated repeatedly and recently that Russia's meddling is ongoing.  


The indictment does not make any specific claim that the Trump campaign cooperated or colluded with the indicted Russians. 


Instead, the allegation is that members of the Trump campaign and Trump supporters did unwittingly "communicate" with them (see the last sentence in "6." above). The persons who received those communications in the Trump campaign are not identified. They may be at the highest level or nobodies in the campaign's hierarchy.  


I would treat with some skepticism the use of the words "unwitting" and "communicate" in paragraph 6.  


For now, it is more important just to know that the indicted Russians had contacts with Trump campaign members and leave it for further investigation by an impartial entity whether those contacts were accurately described in the indictment as nothing more than mere unwitting communications.   


Internet Research Agency Indictment


Trump, who has been unwilling to admit that the Russian's interfered on his behalf, claimed that the indictments cleared him of any wrongdoing, which is not the case. Just more Fake News from Donald: 




The indictment does not exonerate Trump, or more importantly perhaps, members of his campaign by not charging them as co-defendants with the Russians.  


Trump's Russia narrative upended by Mueller indictments - NBC News


Trump’s ‘Russia hoax’ turns out to be real - The Washington Post ("The hackers, he suggested, may have been Chinese. Or some 400-pound guy sitting on his bed. Again and again, he insisted, Russian interference was a hoax — a fiction created by Democrats as an excuse for losing an election they should have won." Just more Fake News from Donald)


Trump repeatedly casts doubt on Russia probe: CNBC (lists Trump hoax and witch hunt type comments)


Mueller Deflates Trump's Claim That Russia Meddling Was Hoax- Bloomberg


Trump Criticizes Everyone But Russia for 2016 Election Meddling - Bloomberg


Top U.S. officials tell the world to ignore Trump’s tweets (As the U.S. President, Trump is the primary mover of U.S. foreign policy. Foreign leaders have no choice but to take Trump's tweets seriously)


In another outrageous tweet over the weekend, Trump claimed without an iota of proof that the FBI missed the warning about the Florida shooter since it was spending too much time on the Russia investigation. Trump: FBI missed signs on Florida shooting due to Russia probe: Reuters Just another example of Fake News being spewed regularly out of Donald's mouth. Donald and other republicans unfairly and routinely attack the FBI now for political purposes. 


Donald also falsely claims that the indictment proves there was no collusion, citing the statement made by Deputy Attorney Rosenstein that there is no allegation in the indictment that an American knowingly cooperated with the indicted Russians. The key words, Donald, are "in this indictment". Rosenstein was careful to limit his comments to the four corners of the indictment against the Russians named therein.  


Donald and Pence have both falsely claimed that the intelligence agencies  have concluded that Russia's meddling on his behalf did not swing the election to Trump. 
Pence Repeats Debunked Russia Talking Point - FactCheck.org


Just more Fake News from Donald and Mike Pence. 

This is what the intelligence agencies actually said:   

“We did not make an assessment of the impact that Russian activities had on the outcome of the 2016 election The U.S. intelligence community is charged with monitoring and assessing the intentions, capabilities, and actions of foreign actors; it does not analyze U.S. political processes or U.S. public opinion.” (emphasis added) Intelligence Community Assessment: "Background to Assessing Russian Activities and Intentions in Recent US Elections (released by the Director of National Intelligence) 


I doubt that it could be proven to an impartial fact finder whether the Russian meddling caused a change in the election results one way or the other, yes or no. It could have possibly have made a difference in a few states where Trump's margin of victory was extremely slim.  

The focus would have to be on swing states, like Wisconsin, Michigan and Pennsylvania, where Donald's margin of victory was small. Wisconsin Election Results 2016Pennsylvania Election Results 2016Michigan Election Results 2016 

The result of thorough and comprehensive investigation into this matter would likely result in a less than clear result, even if a large sample of Trump voters in those states were interviewed and asked a long list of questions about why they voted for Trump and whether or not they saw any of the Russian generated Fake News.  


Fact checking Trump's error-filled tweetstorm about the Russia investigation (While the use of "error" is correct, the more appropriate term is lying. Trump is incapable of telling the truth. One reason for that serious and permanent personality defect is that he enjoys IMO misleading millions who are so easily misled with false claims. He is being encouraged and shield in those efforts by virtually all republican politicians.)


Trump Falsely Claims, ‘I Never Said Russia Did Not Meddle’ - The New York Times


One thing is for certain and is clearly established in U.S. law. 


If substantial and reliable evidence reveals that Trump cooperated with the Russians, a hostile foreign power, to win the election and take control over the U.S. executive branch, that would be a textbook case of treason. Is Donald Trump a Traitor?   


To date, I have not seen that evidence-yet. It may or may not exist. At most, the only reliable evidence is that members of the Trump campaign were eager to receive dirt on Hillary from the Russians and that is not subject to dispute. Donald Trump Junior's email prove that to be case. The evidence so far is far stronger that Trump has engaged in an active obstruction of justice effort to impede and derail the Russian investigation. Why? 


Another piece of Trump's daily Fake News program is his assertions that the Russians were trying to help Hillary win because the DNC and Clinton campaign hired Fusion who hired Christopher Steele who used his Russian sources developed at MI-6 to discover that Putin had decided to help Trump win the election. That argument is not aimed only at those who believe Trump is being straight with them. It also requires an extremely weak mind to accept that train of reasoning.  


LA Times: Former Trump aide Gates to testify against Man - CNN 


Former Trump aide Richard Gates to plead guilty; agrees to testify against Manafort, sources say


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Americans Love Their AR-15s:


America's rifle: Why so many people love the AR-15-NBC News (Americans own an estimated 15 million AR-15s). 


We can thank the GOP for that statistic.  

Republicans are in the NRA's pocket. That is a factual statement that is not subject to any honest disagreement. No republican in Congress would ever vote to ban civilian access to assault weapons. And to be sure, a number of Democrats would not want to even vote on such a measure.  


It is impossible to even pass legislation requiring universal mandatory background checks due to GOP opposition.  


There will never be any sensible federal gun regulations for as long as the GOP has 41 votes in the Senate, control over the House or the Presidency.  


The AR-15s provide a feeling of empowerment and importance for some people that is produced simply by unloading an AR-15 magazine which feeling is only enhanced with a bump stock like the one used by the Las Vegas shooter. That is when they really can get their rocks off.  


What have the republicans and the Trump administration done about the bump stocks? Nothing. After Las Vegas massacre, Congress has failed to act on 'bump stocks.' But states and cities are taking the lead Will the GOP ever do anything about bump stocks-of course not.  


To the extent the AR-15 lovers have arguments for civilian access to those military assault weapons, meaning reasons other than the aforementioned problematic emotional ones, the arguments boil down to the alleged need for protection against the U.S. government taking away their liberties, home protection, and/or hunting with a weapon that would tear an animal into an unrecognizable piece of blood splattered goo assuming a spray with multiple rounds.  Any hunter that needs to spray bullets at an animal sucks at hunting.  


A handgun or shotgun is sufficient for personal protection. I simply have a Louisville slugger signed by Frank Robinson as my household weapon, which I have never had to actually swing. 


As to the need for AR-15s to defend their liberties, that argument just highlights delusional thinking. 



What an AR-15 Can Do to the Human Body | WIRED 

When a Bullet Enters a Body: Gun Violence as Seen by a Trauma Surgeon )("But the worst is a wound from an AR-15 or AK-47 — high-muzzle velocity weapons, which impart a tremendous amount of kinetic energy into the body.. . .You’re looking at a wound that, externally, is two, three, four times bigger than any handgun wound. . . .When a bullet from a high-muzzle velocity weapon hits the intestines, it’s like an explosion . . . a high-muzzle weapon shatters that bone into hundreds of microscopic pieces, in a way that cannot be repaired. You need to essentially clean out the bone that has been struck and remove it from the body; it’s now a worthless tissue")


List of Mass Shooting with Assault Rifles: Why the AR-15 keeps appearing at America's deadliest mass shootings: USA Today 


Doing whatever we can to reduce mass shootings with these assault weapons is not a GOP concern.  There is far more evidence of that lack of concern than just their gun policies.


For example, Trump's proposed budget cuts back substantially on federal funds for counseling troubled students.  


And, Trump wants to cut back federal funds that would be used for school safety measures. 


School safety money would be slashed in Trump budget ("President Donald Trump's budget would eliminate altogether a $400 million grant program that districts can use, for example, to prevent bullying or provide mental health assistance") 


How do republicans respond to Trump's budget proposal that substantially cuts federal funding for public school safety and mental health counseling which may reduce mass shootings? 


The primary way is simply to be unaware of the GOP's priorities and policies through willful ignorance. If a voter has been trained to trust only Donald's tweets, Sean Hannity and similar ilk, the primary sources of "Fake News" in the U.S., then this piece of information is not going to be delivered to them and they are consequently unaware of its existence. You certainly will never see it mentioned in a Trump tweet.    


I would add that the GOP's budget plan was released shortly before the latest massacre in a public school using an AR-15. 


Trump vows mental health care fix. He also wants to slash coverage: NBC 


Trump Signs Bill Revoking Obama-Era Gun Checks for People With Mental Illnesses - NBC (the NRA and republicans said that check interferes with the mentally ill's Second Amendment rights)


Hospital costs for those with gun injuries approach $100,000 per patient - MarketWatch


National Association for College Admission Counseling- NACAC Opposes Trump Budget Proposal


President Trump's Budget Proposal Calls For Deep Cuts To Education: NPR Ed : NPR


I heard some pundit make the following statement on TV: Republicans love their assault weapons more than America's children. Readers can react to that comment in whatever manner they are so inclined to do. For many Americans who are not True Believers in Trump's New America, the answer is an obvious one.   


++++++++

1. Small Ball in Disfavored Securities-BDCs and MREITs


A. Added 5 STWD at $19.96-Used Commission Free Trade:




This brings me up to 25 shares in my Fidelity account and 75 shares altogether.  


Quote: Starwood Property Trust Inc.  (STWD)

Website: Starwood Property Trust 

Dividend: Quarterly at $.48


Starwood Property Trust Announces Tax Reporting Information for 2017 Dividends


Last Ex Date: 12/28/17


Fidelity "Buying Program" Buys:


Item # 1.C. Bought 10 STWD at $21,19 and 10 at $20.9 (1/11/18 Post)


Total Cost Per Share of Current 25 Shares in Fidelity Account = $20.83


Dividend Yield Fidelity Shares: 9.22%


Prior Purchase-Still Own:


Item # 3.A. Bought 50 STWD at $21.93 (8/13/17 Post)(IB Account)(I am not reinvesting the dividend in this account)


I have nothing to add to those prior discussions. 


2. Microscopic Crumbs Basket Strategy:


This strategy will last only as long as I have commission free trades and nothing better to do with them. I may send Fidelity more money to secure more free trades when the current ones expire this August. I will not be sending Schwab more money for that purpose. 


A. Bought 10 XOM at $77.5, 1 at $76.31 and 2 at $75.48:




Left Brain is a stickler for its rules. To buy more shares, the price has to fall below the last purchase price which was $75.48. I am not likely to hold onto any shares at a price greater than $80.   


Exxon went ex dividend for its quarterly distribution on 2/9/18. Dividend information | ExxonMobil


Dividend: Quarterly at $.77

Average Cost Per Share $77.71
Dividend Yield at AC = 3.96%

Historical Dividend Information





I will reinvest the dividend and will bring the position up to a maximum of 30 shares provided my strict purchasing guidelines are met.  


I bought this lot in my IB account where I paid a $1 commission. The price declined on the date of purchase more than enough to cover that cost.


The price cascaded down into the close after my purchase which was late in the trading day at the then existing market price.  

Closing Price Day of Trade: XOM $76.94 -$1.41 -1.80%


XOM has reacted badly to the 2017 4th quarter earnings report. The closing price on 1/1/2018 was $89.07. My 10 share lot was purchased on the 4th trading day after that close.


I doubt that I will buy more than 30 shares. My next 10 share add would be in the $73-$75 range with another at <$70. 


My last purchase was probably this one made in December 2009: Item # 4 Bought 50 XOM at $67.81 (12/18/09 Post)


On 11/8/2010, I sold that lot at $70.22Item # 4 Sold 102 XOM at $70.22 (10/10/2010 Post) There have been no stock splits since that disposition. If I had bought shares at the 11/8/2010, reinvested all dividends, my total annual average total return through 2/9/18 would have been 5.42% compared to 13.91% for SPY. That is a lot of moola to give up every year for the past 7+ years. 


I am not a XOM fan. 


The basic problems are systemic. 


Higher energy prices cause more drilling and production that then drives down prices. Exxon has high capital and labor costs and is involved primarily in mega projects that are high cost endeavors.  


The recent earnings report, released before the market opened on 2/2/18, missed the consensus estimates, and that caused investors to sell big time. 




The dollar value of the price decline shown in that table is huge considering the number of shares outstanding. 


ExxonMobil Earns $19.7 Billion in 2017; $8.4 Billion in Fourth Quarter - MarketWatch


"Fourth quarter 2017 earnings were $8.4 billion. Earnings excluding U.S. tax reform and impairments were $3.7 billion, or $0.88 per share assuming dilution, in the fourth quarter 2017, down 2 percent compared with the prior-year quarter."


Earnings estimates for Exxon and other majors are subject to wide analyst predictions and are not predictable within a narrow range like many other companies. So I would not pay much attention to whether Exxon beat or missed a consensus estimate. 


The problem is that earnings are just not good compared to other companies that are growing earnings consistently. And, importantly, there is no consistency: 





B. ADDED 2 PG at $80.5-Used Commission Free Trade:




Closing Price Day of Trade: PG $80.22 -$1.62 -1.98%

PG shares hit an air pocket after its earnings release. 


I was going to go with a "buying program" using commission free trades when I first bought 10 shares at $86.99: Item # 4.B. Bought 10 PG at $86.99 (10/30/17 Post) The shares then popped to a level where I had no interest in owning them, irrespective of how many I owned, and I sold that lot at $91.59 Item # 1.B. (1/28/18 Post) 


I then made what may be an incorrect assumption about how investors were then reacting to PG's earnings report and bought back that 10 share lot at $88.3 (Item # 1.C. Same Post). That buy was timed perfectly for the ensuing market meltdown which started shortly thereafter. 


The new "buying program", which is my own laughable description for what I am doing, has now taken me up to 23 shares. My last buy was just 1 shares on 2/9/18 at $79.24. The next buy would have to be below that price.   


The stock did recover some last week, closing a $82.60 last Friday. 


The stock went ex dividend on 1/18/18. 

    

C. Sold 10 COTY at $21.46-Used Commission Free Trade


Profit Snapshot: +$45.41




I just bought this lot. Item #  5.A. Bought 10 COTY at $16.92 (2/15/18 Post)


There is only so far I can go with a 10 share lot. I previously bought 20 shares below $17 and sold them at $20.89. Item 1.D. Sold 20 COTY at  $20.89 (1/28/18 POST)


There was a quick re-entry then for 10 shares at $16.92. I was going to buy another 10 when and if the price sunk below $16.78 which I did not see happen. The "buying program" would have continued at lower prices. At $21+, I have zero interest in owning the shares. 


3. SMALL BALL- Equity REIT Common and Preferred Stock Basket Strategy:


A. BOUGHT 10 SIR at $19.5-Used Fidelity Commission Free Trade:




Quote:  Select Income REIT (SIR)

Closing Price Day of Trade: SIR $20.11 -$0.29 -1.42%


I now own 85 shares (75 Schwab where I may buy up to 100 shares using commission free trades; and 10 in Fidelity where I may buy up to 50 shares:


Dividend: Quarterly at $.51 per share

Last Ex Dividend = 1/26/18
Dividend Yield at $19.5 = 10.46%

This is yet another buy of a stock that I do not like. 


Last Substantive Discussion: 
Item 1.B. (1/21/18 Post) 


Last Round-Trip: Item 6.A. Sold 50 SIR at $25.28 (11/20/17 Post)-Item # 6.A. Bought 50 SIR at $22.95  (9/11/17 Post)


Total SIR Trading Profits to Date= $276.06 (only two 50 lot trades)


B. Added 5 APLE at $17.7-Used Commission Free Trade




Quote: Apple Hospitality REIT Inc.  (APLE)


Sell Discussions: Item # 5.A. Sold 50 APLE at $19.6 (12/18/17 Post)Item # 6.B. Sold Highest Cost Lot in Schwab at $19.22 (10/19/17 Post)Item 2.B.  Sold 100 APLE at $19.43(5/25/17 Post)


Buy Discussions-Shares Currently Owned: Item # 2.B. Bought 50 APLE at $17.92-Schwab Account (8/29/17 Post)Item #2.C. Bought 50 APLE at $18.3- A Roth IRA Account (5/25/17 Post)Item 2.C. Bought 50 APLE at $18.22-Fidelity Account-Used Commission Free Trade (7/31/17 Post)


Dividend: Monthly at $.1 per share.


Total Shares Owned: 161


The lowest average cost per share basis is in my Schwab account at $17.94, where I am reinvesting the dividend currently. 


Position in Fidelity Account (reinvesting dividend): 
56+ Shares

Total Average Cost Per Share in Fidelity Account= $18.17
Dividend Yield at AC = 6.6%

Closing Price Day of Trade: APLE $17.69 -$0.42 -2.32%


Apple Hospitality REIT Announces February 2018 Distribution 


Recent News Releases


Apple Hospitality REIT Acquires Hampton Inn & Suites by Hilton Atlanta-Downtown and Hampton Inn & Suites by Hilton Memphis-Beale Street "combined purchase price of $63 million, or approximately $240,000 per key. . . Following these acquisitions, the Apple Hospitality portfolio includes 241 hotels, with more than 30,500 guest rooms, geographically diversified throughout 34 states.")



Apple Hospitality REIT Acquires Home2 Suites by Hilton in Anchorage (12/4/2017 Press Release)("135-room Home2 Suites by Hilton ® in anchorage, Alaska, for a purchase price of approximately $24 million, or $178,000 per key.")

APLE is scheduled to release its 2017 4th quarter report on Thursday 2/22. I will discuss that report when I make my next trade. Prior discussions can be found in the links above. 

Trading Profits to Date: $233.48


C. Added 5 OHI at $25.62-Used Schwab Commission Free Trade




Quote: Omega Healthcare Investors Inc. (OHI)


Last Discussed: Stocks, Bonds & Politics: Item # 1.B. Bought 5 OHI at $26.6-Used Commission Free Trade (11/26/17 Post) 


Total Shares Owned: 56+

Average Total Cost Per Share:$27.97
Dividend Quarterly at $.66
Dividend Yield at AC = 9.44%

Trading Profits To Date: $1,346.79


After this purchase, OHI reported 4th quarter results: Omega Announces Fourth Quarter 2017 Financial Results 

"The Company reported for the three-month period ended December 31, 2017 net income of $65.2 million or $0.31 per common share. The Company also reported Funds From Operations (“FFO”) for the quarter of $159.2 million or $0.77 per common share, Adjusted Funds From Operations (“AFFO” or “Adjusted FFO”) of $163.7 million or $0.79 per common share, and Funds Available For Distribution (“FAD”) of $149.0 million." 


Those numbers were in line with the consensus estimate. Note that the quarterly FAD number is $10.2M below the AFFO number. 


During "the fourth quarter, the Company recorded approximately $63.5 million of impairments on real estate properties to reduce the net book value of 32 facilities to their estimated fair value or expected selling price. The fourth quarter impairments included a charge of $13.2 million related to a facility destroyed in a fire. The Company expects to receive insurance proceeds in 2018."


The CEO announced in that press release that there will be no dividend increases in 2018 which is the prudent course given the current operational problems.


Adjusted FFO guidance for the current year is currently at $2.96-$3.06 using the following assumptions which could change for the better or worse:




During the conference call, OHI guided 2918 funds available for distribution ("FAD") between $2.64 to $2.74. 


Since the company has a meaningful non-cash revenue component included in its adjusted FFO number created by the straight line rent accounting convention, I view the FAD number to be more important for determining the safety of the current quarterly dividend rate. 


The annual dividend rate per share at the current level is $2.64 per share. That estimated projection at least calls into question the sustainability of the current dividend and that would be no additional major tenant problems.


My next purchase will have to be at less than $25. As previously discussed, my sell range has been lowered over the past two years and now stands at $30+. I may eliminate the entire position when and if that target sell price is reached. 


Prior Sells


Sold 101+ OHI at $37.52 on 9/6/16



+$887.91

Item # 6 Sold 100 OHI at $37.28-Update For Equity REIT Basket Strategy As Of 8/27/16 - South Gent | Seeking Alpha


Stocks, Bonds & Politics: Item 2.A. Sold 52+ OHI at $33.6-Eliminated Position in Roth IRA account  (5/8/17 Post)


Stocks, Bonds & Politics: Item #5.A. Sold 107 OHI at $34.55 (7/15/17 Post)


Stocks, Bonds & Politics: Item # 6 Sold 39 Shares at $32.56  (10/5/17 POST)


The lower sell targets highlights the changes being made in my risk/reward balance.  


I would not dismiss as one-off events the problems that arose with OHI tenants last year. 


Those kind of problems are to be expected with nursing home operators going bankrupt or being unable to make timely rent payments. 


In a recent SA article which will soon be behind SeekingAlpha's new paywall, Brad Thomas continues to rate OHI a strong buy and makes what I would call an unsuccessful effort to minimize OHI's problem with two top ten tenants (#3 Signature and #5 Orianna) and two others including one that has filed for bankruptcy (Daybreak and Preferred Care). Omega Delivers Alpha, But No Dividend Growth In 2018 - Omega Healthcare Investors, Inc (NYSE:OHI) | Seeking Alpha


His approach is that OHI is over those hurdles, or soon will be , with some damage to cash flow but nothing really to worry about. That may end up being true for those four tenants. The problems of four tenants arising over the past year indicates a systemic problem in the industry and at least raises concerns about OHI's managers in selecting tenants. Just as a reminder, OHI acquire 31 SNF facilities late in 2016 for $337M and leased the properties to Signature. Omega Acquires 31-Property SNF Portfolio for $337 Million - Senior Housing News


D. Added 10 BRG at $7.19-Used Fidelity Commission Free Trade




Quote: Bluerock Residential Growth REIT Inc. (BRG)


Trading Profits to Date = $963.77


Total Shares Owned: 60

Average Cost Per Share= $7.53
Dividend: Quarterly at $.1625 per share ($.65 annually)
Dividend Yield at AC = 8.63%

I recently discussed a 50 share purchase: Item # 2.A. Bought 50 BRG at $7.6 (2/12/18 Post) 


News Releases Since Last Discussion:


Bluerock Residential Growth REIT Announces Share Repurchase Plan ("its Board of Directors has authorized the repurchase of up to $25 million of its outstanding shares of Class A common stock over a period of one year.") 


Bluerock Residential Growth REIT Announces Fourth Quarter and Full Year 2017 Results ("Based on the Company's current outlook and market conditions, the Company anticipates 2018 AFFO in the range of $0.65 to $0.70 per share.") 


BRG is another REIT that I do not like. However, there is a price where I will at least attempt a profitable trade enhanced by an above average dividend yield. The same is true of OHI discussed above which I dislike more than BRG. 


Closing Price Day of Trade (2/12/18) BRG $7.36 +$0.03 +0.41%


4. Short Term Bond/CD Ladder Basket Strategy

A. Bought 2 Live Oak Banking 1.75% CDs (monthly interest payments) Maturing on 11/9/18


Holding Company: Live Oak Bancshares Inc. (LOB) 


B. Bought 2 Time Warner 2.1% SU Bonds Maturing on 6/1/2019:




FINRA Page: Bond Detail


Credit Ratings:




Bought at a Total Cost of 99.679

YTM at TC Then at 2.342%
Current Yield at 2.1068

Time Warner may be acquired by AT & T but the parties are now in litigation with the DOJ who is trying to block the merger.  


C. Bought 2 Abbott Labs 2.35% SU Bonds Maturing on 11/22/19




FINRA Page: Bond Detail (prospectus linked)


Issuer: Abbott Laboratories (ABT) 

ABT Analyst Estimates 

Credit Ratings:




Subsequent to my purchase, Moody's upgraded its rating to Baa2. 




Moody's upgrades Abbott Laboratories to Baa2, positive outlook (2/12/18 report) 


Bought at a Total Cost of 99.85

YTM at TC Then at 2.434%
Current Yield at TC =  2.3535%

D. Bought 2 Abbott Labs 2% SU Bonds Maturing on 3/15/2020-A Roth IRA Account





Finra Page: Bond Detail (prospectus)

Bought at a Total Cost of 99.152 (with $4 Vanguard Commission)

YTM at TC Then at 2.411%
Current Yield at TC = 2.0171%

E. Added 1 Wisconsin Public Service 1.65% SU Bond Maturing on 12/4/18




FINRA Page: Bond Detail (prospectus linked)


Issuer: Wisconsin Public Service, a wholly owned subsidiary of WEC Energy Group (WEC)

WEC Analyst Estimates
WEC Energy Group

Credit Ratings: 




Moody's downgrades WEPCO, Wisconsin Gas and WPS to A2 from A1, stable outlook; changes outlooks of WEC and Integrys to negative 


Bought at a Total Cost of 99.797

YTM at TC Then at 1.892%
Current yield at TC = 1.6534%

I currently own 4 bonds. 


F. Bought 1 First N.A. 1.6% CD (monthly interest payments) Maturing on 8/15/18 (six month CD)




Holding Company: First Bancorp Inc. (FNLC)


G. Added 1 Caterpillar Financial Services 1.9% SU Bond Maturing on 3/22/2019:




I now own 2 bonds.


FINRA PAGE: Bond Detail (prospectus linked)


Credit Ratings:





Bought at a Total Cost of 99.723 (bought at 99.623)

YTM at TC Then at 2.146%
Current Yield at TC = 1.9053%

On the day of this purchase, I had a one 1% one year CD mature which was issued by the Bank of China. One year interest rates have just about doubled since that CD was bought on 1/30/17.


I have 2 Caterpillar Financial 1.3% SU bonds maturing on 3/1/2018.


I may buy more of the 1.9% SU bond provided the price continues to drift lower as short term rates rise.


5. Intermediate Term Bond/CD Ladder Basket Strategy


After noticing that European sovereign debt yields were falling Friday morning, and taking the U.S. ten year yield with them, I decided to nibble on a 2022 maturity that falls within my intermediate term range that runs from 3 to 10 years after a purchase. I dumped somewhere around 70% to 80% of my intermediate term corporate bonds last year, mostly in the June through October time frame. I noticed in real time a directional change in the ten year treasury yield in early September 2017. 


A. Bought 2 Amgen 2.65% SU Bonds Maturing on 5/1/22-In A Roth IRA Account




At least the yield is tax free in that Roth IRA account. 


Finra Page: Bond Detail (prospectus linked)


Issuer: Amgen Inc. (AMGN) 

AMGN Analyst Estimates
Amgen Reports Fourth Quarter And Full Year 2017 Financial Results

Credit Ratings: 




Moody's affirms Amgen at Baa1; outlook stable (2/2/18 report)


Bought at a Total Cost of 97.871 (paid 97.671, TC per bond includes a $4 commission cost)

YTM at TC Then at 3.192% (YTM in snapshot is always at TC)
Current Yield at 2.7076%

DisclaimerI 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.