Thursday, September 21, 2017

Observations and Sample of Recent Trades: ORKLY

Donald and North Korea

Donald threatened to obliterate North Korea when that nation threatens the U.S. or its allies. No President has gone so far as signalling the deaths of civilians in addition to military bases and regime installations. Trump Bluntly Threatens to Wipe Out North Korea in UN Debut - Bloomberg 

Prior Presidents have not made a statement this broad and strong relating to N.K. 

“The United States has great strength and patience, but if it is forced to defend itself or its allies, we will have no choice but to totally destroy North Korea. Rocket Man is on a suicide mission for himself and for his regime.” 

He called the N.K. regime a "band of criminals" and "depraved".  

Donald also intimated strongly that he will pull the U.S. out of the Iran nuclear accord. He called that agreement “one of the worst and most one-sided transactions the United States has ever entered into.”

He also singled out Russia and China: "We must reject threats to sovereignty from the Ukraine to the South China Sea". The criticism continued later in the speech: "It is an outrage that some nations would not only trade with such a regime, but would arm, supply and financially support a country that imperils the world with nuclear conflict."

Trump Threatens North Korea in UN Speech Transcript |

The stock market just shrugged it off.  I view that as being too nonchalant. 

It has always been understood that the U.S. would use nuclear weapons in response to a N.K. nuclear attack.


Federal Reserve's Balance Sheet

As expected, the FED announced yesterday that it will not be reinvesting the proceeds from maturing securities starting in October. Fed approves October reversal of historic stimulus, leaves rates unchanged: CNBC

The dot plot indicates that a majority of FED members view one more .25% increase in the Federal Funds rate as likely this year (12 to 4), with three likely next year. 

Dot Plot: 

The Fed - September 20, 2017: FOMC Projections materials

I believe that the Bond Ghouls have been underestimating for several months the likelihood of an increase next December. The odds have increased over the past month and closed yesterday at 73.4%, up 57.7% the prior day. I would put the odds at close to 90%. 

Intermediate term interest rates ticked up slightly yesterday but the yield is still well below the 2017 high of 2.62% last hit on 3/13/17. 2017 Daily Treasury Yield Curve Rates

IEF $106.94 -$0.21 -0.20% : iShares 7-10 Year Treasury Bond ETF 

TLT managed to gain: TLT $125.91 +$0.09 0.07% : iShares 20+ Year Treasury Bond ETF 

I suspect that the Bond Ghouls are also underestimating the potential for an intermediate and longer term interest rate spike within the next 6 to 12 months. Possibly one can be avoided in that timeframe, provided the ECB continues its abnormal monetary policies through yearend. The German 10 year is still stuck below .5% and that is going to keep downward pressure on the U.S. 10 year. Germany 10 Year Government Bond

Spain's 10 year government bond closed yesterday at 1.56%%.

Japan's 10 year barely clears zero.

Switzerland's 10 year closed yesterday at a negative number.

The BOJ, ECB and the Swiss National Bank are all pursuing extremely abnormal monetary policies.  Several central banks continue to have their benchmark short term rates in negative territory. 


Economic Reports

The New York Federal Reserve and the Atlanta Federal Reserve have competing models to predict GDP. 

As of  9/15/17, the NY FED model projects only a 1.34% GDP growth rate this quarter. FEDERAL RESERVE BANK of NEW YORK

The  Atlanta Federal Reserve Bank forecast had been much higher but has been falling off a cliff recently. The projection as of 9/19/17 was 2.2%: 

There are some troubling signs in automobile and housing sales.

Auto Sales - Markets Data Center 

Ford to cut production at 5 plants as demand slips - MarketWatch

New Home Sales for July 2017.pdf (down 9.4% from June 2017 and 8.9% below July 2016)

Existing-Home Sales Slide 1.3 Percent in July |

Existing-Home Sales Decline 1.7 Percent in August | (declines in 4 of the last 5 months)

New Residential Construction Starts August 2017.pdf (.8% below July and up 1.4% from July 2016)

The consumer spending numbers have generally been just okay, but the personal savings rate is falling.

Personal Saving Rate-St. Louis Fed


1. Short Term Bond/CD Ladder Basket Strategy

A. Bought 2 Bank of China 1.5% CDs Maturing on 9/20/18 (1 year CD)

B. Bought 2 Bank West San Francisco 1.4% CDs Maturing on 6/18/18 (9 month CDs)

This bank is currently rated 4 stars by Bankrate: BANK OF THE WEST Review Bank of the West has more than 600 banking offices. History

The holding company for this bank, Bankwest Corporation, is a wholly owned subsidiary of BNP Paribas S.A. Stock Quote (France: BNP)

C. Bought 3 First National Bank (Maine) 1.15% CDs (monthly interest) Maturing on 12/28/17 (3 month CDs)

Holding Company: First Bancorp Inc.  (FNLC) 

The First Bancorp Reports Record Quarterly Results

Bankrate currently has a 4 star rating: FIRST NATIONAL BANK Review 

I have bought and sold the common shares several times as part of my REGIONAL BANK BASKET, and do not currently have a position.  

D. Bought 2 Bank of China 1.15% CDs Maturing on 11/28/17 (2 month CDs)

E. Bought 1 American Express Bank 2.3% CD (semiannual interest) Maturing on 9/19/22 (5 year CD)

$10K Inflow into Short Term Bond/CD Ladder Basket 

2. Eliminated the First Mortgage Exchange Traded Bond EMP

A. Sold 50 EMP at $24.97-Used Commission Free Trade:

Profit Snapshot: +$102.92

Stocks, Bonds & Politics: Item # 2.A. Bought 50 EMP at $22.91 (purchased 4/11/17)

1 Year Chart: 

There was a small interest rate spike after the election. 

Quote: Entergy Mississippi Inc. 4.9% First Mortgage Bonds Due 2066 (EMP)

Last Discussed a Sell: Stocks, Bonds & Politics: Item # 2 Sold 50 EMP at $24.47

Par Value: $25

Maturity on 10/1/2066
Issuer Optional Call Date: on or after 10/1/21
Long Maturity and Optional Call Right creates serious asymmetric risk that favors the issuer.

B. Sold 30 EMP at $24.96

Profit Snapshot: +$64.6

Bought at $22.77 on April 19, 2017. 

3. Eliminated JPMPRG

A. Sold 50 JPMPRG at $27.06-Used Commission Free Trade

Profit Snapshot: $107.01

Update For Bond And Equity Preferred Stock Basket Strategy As Of 7/31/15 - South Gent | Seeking Alpha-Bought 50 at $24.76 

I paid the regular commission for the purchase. 

Quote: JPMorgan Chase & Co. 6.1% Non-Cumulative Preferred Series AA (JPM.PG)

Par Value: $25

Coupon: 6.1%
Maturity: Potentially Perpetual
Dividends: Qualified and Non-Cumulative
Optional Call Date: At Par Value plus accrued and unpaid dividends on or after 9/1/2020
Capital Structure: Junior to all bonds and senior only to common stock

The quarterly dividend payment on 50 shares is $19.06. I received 8 payments totalling $152.48 bringing the total return to $259.49 on a $1,245.95 outlay or 20.83%. The profit added about 4% per year to the 6.1% coupon. 

This is the kind of preferred stock that I would consider buying back after an interest rate spike in intermediate and long term interest rates similar to what happened in 2013.  

Interest rate risk, which includes the risk of lost opportunity, volatility risk and credit risk for equity preferred stocks is discussed in the Appendix section in my Update On Bond And Equity Preferred Stock Basket Strategy As Of 8/14/15 - South Gent | Seeking Alpha.

B. Sold 50 JPMPRG at $27.11-Used Commission Free Trade

Profit Snapshot: +$108.57

The total return numbers are similar to the previous lot. 

4. Long Term Bond Basket Strategy-Tennessee Municipal Bonds:

I am increasing my allocation to Tennessee Municipal Bonds in case my interest rate outlook proves to be wrong. My tax free yield on these long duration bonds is generally higher than my taxable yield from the corporate bonds that have been sold.  

A. Bought 5 City of Knoxville 3% Electric Revenue Bonds Maturing on 7/1/42


This bond is a new issue and was sold at an offering price of 95.598.  

Bought at a Total Cost of 95.892

Current Tax Free Yield = 3.1285%
YTM = 3.242%

Credit Ratings: 

Moody's at Aa2
S & P at AA+

Optional Call Date: At Par Value on or after 7/1/2025


Tax Matters: 

5. Bought Back 100 ORKLY at $10.05

Orkla website


USD Priced ADR:  Orkla ASA ADR (U.S.: OTC)

Ordinary Shares Priced in Norwegian Krone: Orkla ASA (Norway: Oslo)
1 ADR = 1 Ordinary Share 

Orkla is based in Norway. The company is primarily a consumer products company that sells foodconfectionery & snacks and personal care items.

Closing Price in NOKs = KR 79.35 up KR 1.15%

Currency Chart. Norwegian Krone to US Dollar Rates

Dividend Tax Issues

I sold 150 shares held in my Interactive Brokers ("IB") account after receiving the annual dividend payment and noticing that IB refused to make any effort to claim my right tax treaty right to a 15% withholding rate. Stocks, Bonds & Politics: Item # 3.A. That problem is commonplace among U.S. brokers. 

As a U.S. citizen, I am entitled to a 15% tax rate under article 8 of the U.S. tax treaty with Norway. An author of the following linked article incorrectly claims that there is no tax treaty between Norway and the U.S. Orkla Sells Aluminum Division And Offers Special Dividend - Orkla ASA ADR (OTCMKTS:ORKLY) | Seeking Alpha Possibly that author uses IB or some other broker that does not bother to claim the treaty tax rate for their U.S. citizen customers.

Through IB's inaction, Norway treated me like a stateless person and withheld 25%.  I had similar failures to claim treaty rights for other stocks held in mt, and all were subsequently sold since I will not tolerate that unwillingness to perform that simple task for customers. I decided that I would no longer use IB for purchases of non-Canadian ADRs where the host country levies a dividend tax. 

In the past Fidelity has claimed tax treaty rights for dividends paid by Orkla, so I bought this 100 share lot in this account. Orkla is one of the foreign ADRs that I will periodically buy, harvest the annual dividend and hopefully sell for a profit thereafter. 

Dividend History 

Prior Trades:

Sold 100 ORKLY-Update On Portfolio Positioning And Management - South Gent | Seeking Alpha August 2015 (+$51.08)- Bought Back 100 Orkla (ORKLY) At $7.285 - South Gent | Seeking Alpha December 2014

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) 

Total ORKLY Trading Profit: $239.01 

Last Earnings Report

Continued growth for Orkla

Sourced: Page 9.pdf


I mentioned above that Orka was primarily a consumer products company. An issue is that the company is also a conglomerate that owns interest in unrelated businesses that has probably contributed to a conglomerate discount in the share price. 

One of those businesses is a 50% interest in SAPA. a leading producer of extruded aluminum profiles. The other 50% owner is Norsk Hydro. I view it as a positive development that Orkla has agreed to sell its interest to Norsk Hydro for NOK 27 billion subject to adjustments based on SAPA's financial position on the closing date. Orkla will pay a special dividend of 5 NOKs upon completion. Orkla to sell its interest in Sapa to Hydro 

The other businesses include a 42.5% interest in a paint company called Jotun, Orkla Real Estate, a power plant in Sarpsfoss and an 85% interest in the Saudefaldene hydro plants, and other financial investments. Orkla Investments

Sourced Page 13-14: 2016 Annual Report.pdf

6. Intermediate Term Bond/CD Ladder Basket Strategy:

Continued to pare.

A. Sold 2 Northeast Utilities 2.8% SU Bonds Maturing on 5/1/23-ROTH IRA:

I have been building up my cash allocation in this Vanguard Roth IRA account, hoping to redeploy within six months in better total return securities. One consideration underlying this cash raise is that Vanguard's Prime fund was then yielding 1.11%, so I am not sacrificing that much in current yield by eliminating into strength some low coupon bonds. 

Profit Snapshot: +$17.82

Northeast Utilities is now known as Eversource

Eversource Energy (ES)
ES Analyst Estimates

FINRA Page: Bond Detail

Sold at 101.047

YTM Then at 2.69%
Current Yield at 2.77%

Bought at a Total Cost of 99.852

Stocks, Bonds & Politics: Item 1.D. 
YTM Then at 2.808%
Current Yield at 2.8042%

B. Sold 1 McDonalds 2.2% SU Bond Maturing on 5/26/20-Roth IRA

Profit Snapshot: +$7.57

FINRA PAGE: Bond Detail

Sold at 100.918

YTM Then at 1.838%
Current Yield at 2.18%

Bought at a Total Cost of 99.961

Stocks, Bonds & Politics: Item # 1.D. 
YTM Then at 2.213%
Current Yield at 2.2%

I will consider buying this bond back at less than 99.  

$3K Outflow from Intermediate Term Bond/CD Ladder Basket

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.

Monday, September 18, 2017

Observations and Sample of Recent Trades: AAV, AHTPRD, HTPRD, T

Portfolio Management

I have reduced my allocation to investment grade corporate bonds maturing in the 2020 to 2027 time frame. Those funds were reallocated primarily to short term term CDs and secondarily to longer term Tennessee municipal bonds. 

I am playing my forecast that interest will trend up in the 4th quarter and into 2018.  

I have reduced my interest rate risk component that I call the "risk of lost opportunity". If interest rates rise for intermediate term bonds, I would lose the opportunity to receive higher current yields and yields to maturity by having money tied up in the bonds that I have sold.  

My thinking on this reallocation includes the following: 

1. When I bought those bonds, I had the capability of holding all of them to their respective maturities and that is an important consideration. 

2. For my purchases when made, I received a meaningful spread to the then existing money market rates for cash held in my brokerage accounts. 

3. The yield spread between my Vanguard and Fidelity MM funds and these low coupon bonds has narrowed. 

4. Given the low yields of the corporate bonds, it does not make much difference what I do with them. 

5. I have sold a significant number of bonds at small profits and received interest payments from the dates of purchases to the day that I sold them that was significantly higher than the alternative MM funds used as a source of funds. 

6. I have a realistic possibility of buying those bonds back gradually with maturing short term bonds and CDs at current yields and YTMs that will be higher than when I made my earlier purchases. The general marker is more than  2 points below the prior purchase (e.g. a bond bought at a total cost of 99 could be bought back closer to maturity at a total cost less than 97).  

Interest rates have started to trend up after the ten year treasury bottomed at 2.05% on 9/7/17:

It remains to be seen whether that upward trend will continue, but I am betting that it will. If I am wrong, I will not lose much since the yields from the bonds sold are so low nominally and lower after reasonably anticipated inflation and taxes compared to historical nominal and real yields.  

I am also slashing my exposure to exchange traded bonds and preferred stocks. 

I will simply wait for an interest rate spike before considering repurchases at much lower prices than those prevailing now. I find them unappealing at current prices and have repeatedly seen how poorly they react to interest rate spikes, even the minor one that started after the election and reversed course starting in March 2017. 

The probability that the FED will increase the FF range by a quarter point on or prior to the December meeting has been creeping up. 

Countdown to FOMC: CME FedWatch Tool

However, short term CD rates have been trending down. 

The FED will soon cease reinvesting the proceeds of maturing securities as part of its baby steps toward less abnormal monetary policies. It is certainly possible that the Bond Ghouls will react by driving rates up. Remember the 2013 Taper Tantrum. The FED continued its QE3 program thereafter and was reinvesting the proceeds from maturing securities. Now, it has already ceased buying new securities and will soon stop reinvesting the proceeds. IMO there is too much interest rate risk now for the paltry yields. 

Fed to take historic leap into the unknown - MarketWatch

Will the Fed’s balance sheet reduction avoid another taper tantrum? | FT Alphaville


Economic Reports

U.S. retail sales slump near end of summer - MarketWatch

Sourced from  Government Report.pdf

Gasoline sales rose 2.5% but that was due to price increases. 

Over the past 12 months through August, sales have increased 3.2% based on relatively solid numbers from September 2016 through January 2017 except for November 2016. Sales have been sluggish so far this year using the government's seasonally adjusted numbers.   

Hurricane Harvey slams industrial output in August - MarketWatch

The Fed - Industrial Production and Capacity Utilization - G.17 ("Industrial production declined 0.9 percent in August following six consecutive monthly gains. Hurricane Harvey, which hit the Gulf Coast of Texas in late August, is estimated to have reduced the rate of change in total output by roughly 3/4 percentage point. The index for manufacturing decreased 0.3 percent; storm-related effects appear to have reduced the rate of change in factory output in August about 3/4 percentage point. The manufacturing industries with the largest estimated storm-related effects were petroleum refining, organic chemicals, and plastics materials and resins.")

Hurricane Harvey made landfall in the U.S. on August 25th. Major Hurricane Harvey - August 25-29, 2017 There would have been impact before landfall particularly in energy production in the Gulf of Mexico.


North Korea

NK is going to remain background noise for a long time as viewed by the Stock Jocks. 

For now, the Stock Jocks are ignoring the possibility of a military conflagration that engulfs the Korean peninsula, Japan and possibly China. 

Typical of this kind of assessment is presented in this article, where Oxford Economics places the odds at less than 1% for a destructive military conflict. That firm places an 80% chance on NK continuing its current path with no military response from the U.S.; and both China and Russia vetoing further sanctions and failing to fully comply with the current sanctions. That may be the most probable scenario, but the odds are probably significantly less 80%. The odds of a destructive military conflict are in the 10% to 15% range IMO, and the odds are higher that sanctions will result in KIM's overthrow.  

North Korea launched another missile over Japan last Thursday. 

NK threatened to "sink" Japan and turn the U.S. into "ask and darkness" after the U.N. Security Council approved additional sanctions. North Korea threatens to 'sink' Japan, reduce US to 'ashes and darkness' That is simply not tolerable language from an emerging nuclear threat.  

I believe that Kim is currently miscalculating the odds of his own demise, either from internal or external forces. 

Since the armistice was signed that ended the Korean War in 1953, the U.S. has been unwilling to respond militarily to North Korea's many provocations including N.K.'s seizure of the USS Pueblo, the destruction of a U.S EC-121 aircraft over the Sea of Japan, firing missiles over Japan's territory, and developing a nuclear weapon's capability. The concern about SK civilian deaths and the destruction of Seoul has kept the U.S. on the sidelines until now  The U.S. considered a massive retaliation in response to the Pueblo seizure, but ended up taking no military action. The Time the U.S. Nearly Nuked North Korea Over a Highjacked Spy Ship-Smithsonian The ability to strike the U.S. with nuclear bombs is an entirely different matter than the seizure of a spy ship in international waters. 

New Romanian Evidence on the Blue House Raid and the USS Pueblo Incident | Wilson Center

Nickey Haley stated last Friday that there is only so much the Security Council can do "when you cut 90 percent of the trade and 30 percent of the oil".  She then added that she has no "problem kicking it to General Mattis because I think he has plenty of options". 

Some have suggested a U.S. navy blockade. Most of North Korea's trade occurs using the "Friendship Bridge" over the Yalu River. Tanker traffic will increase as a means to avoid sanctions: Russian smugglers supply North Korea as it faces harsh sanctions - Chicago Tribune And, the U.S. navy is not going to forcibly stop a Russian or Chinese tanker in international waters anyway. 

It does not appear likely that NK will be willing to give up its nuclear program. North Korea Vows to Complete Nuclear Weapons Program - NBC News 

Instead, that country will probably continue an accelerated development of nuclear weapons capable of hitting the U.S. mainland. Then, and only then will it negotiate the terms of its blackmail with all take and no give.  

China's diplomats say the U.S. needs to negotiate with N.K. which sounds reasonable until one confronts reality. The terms of the negotiation would be an acceptance of NK as a nuclear power with a first strike nuclear capability against the U.S., the withdrawal of sanctions, U.S. diplomatic recognition of NK, the end of joint military maneuvers by the U.S. and SK military, billions of financial aid for NK and possibly the removal of U.S. troops from SK.  In exchange, NK promises to be nice and behave.  That kind of negotiation is destined to go nowhere. 

The danger of a military solution is growing since the U.S. views North Korea's ability to hit the U.S. with nuclear weapons to be unacceptable, and NK is unwilling to give up that program. Just that simple IMO. Inappropriate analogies are being made to the past when judging the likelihood of a shooting war. The nuclear threat is an entirely new ballgame. 

Possibly, the only non-military solution will have to be the internal overthrow of Kim Jong-un and his closest allies that results in an agreement to abandon the nuclear program under U.N. inspection in exchange for diplomatic recognition by the U.S., a non-aggression pact, greater economic ties between the two Koreas, and the end of the sanctions.  

For now, sanctions need to be given time to work. China trade with North Korea dries up in July as sanctions bite: CNBC 

If they fail to work in the coming months, as demonstrated by more missile launches, nuclear tests, and threats to annihilate the U.S. and its allies once NK achieves its first strike nuclear capabilities, then the risk of a military solution that will result in North Korea's annihilation will become acute.  

When and if a war commences, the stock market will not like it, which is an understatement of course, at least until it becomes apparent that N.K. will cease to exist and China will stay out of the conflict.    

Why Russia Won't Help More on North Korea - The Atlantic

And this is a related risk  for the stock market: Mnuchin Threatens More Sanctions on China Over North Korea - Bloomberg



I have owned Equifax bonds in the past and have no current positions. I will not buy either the common stock or the bonds since this corporation has proven that it does not deserve to exist. 

The stock closed at $142.72 on 9/7/17 and at $92.8 last Friday. I seriously doubt that the bottom is close. EFX Stock Price 

Equifax hired Susan Mauldin, a music major with a MFA degree (Master of Fine Arts) as its chief technology officer. Someone has been busy scrubbing her identity from the Internet. Equifax hired a music major as chief security officer and she has just retired - MarketWatch She has now "retired" from Equifax. 

The security flaw, called Apache Struts CVE-2017-5638, was recognized by experts in March 2017 and a patch was available on the same day. Two months later according to media reports, hackers gained access to personal financial information on 143M people because Equifax did not install the patch. Equifax data breach: Hackers exploited flaw experts flagged in March: USA TodayThe Equifax Breach Was Entirely Preventable | WIRED The company admits that the intrusion occurred from May 13, 2017 through July 2017: 
Cybersecurity Incident & Important Consumer Information | Equifax

The only conclusion IMO is that this company can never be trusted with personal information.

I assume that companies like Equifax will be careless and negligent in protecting my personal financial information, including my address, SSN, birth date, driver's license number,  and credit card numbers. 

Shortly before Equifax publicly confessed, I was notified that a new credit card would be issued to me because of an undisclosed security breach. 

I am not going to put a freeze on my credit reports which is what the experts recommend. 
Were you impacted by the Equifax breach? You risk financial chaos by doing nothing - MarketWatch

I did check, using this Equifax, link whether it was likely that my data was stolen. This is the response: 

Thanks for the clarity, using the words "believe" and "may. Worthless. 

I was then given a link to enroll in Equifax's TrustedID Premier, which I declined to do, since I do not trust this company and want no customer relationship with it whatsoever. 3 reasons breach victims might not want Equifax credit monitoring After all, it was Equfax's computers that were easily breached by hackers due to EFX's negligence.  

Instead, I have been using Experian for years to monitor my credit reports for any changes. I receive a notice of any change by email. That service has no bells or whistles and costs $4.99 per month. The current program costs $4.99 for the first month and then $19.99 and has more benefits than mere credit monitoring. 

A few years ago, I received a notice from Experian that
my address had changed to Eau Claire, Wisconsin. I looked at Google Maps and the address appeared to be a vacant lot in a dilapidated neighborhood. 

Someone had secured my credit card number, the three digit code found on the back, and my SSN number. 

On the first day of a new monthly credit cycle, the thief ordered online an expensive product from WMT using my credit card number and used the Eau Claire address. The key to the theft was ordering online and then picking up this item at the store, without anyone asking for the credit card which was in Tennessee.  

I was notified of the change of address a day after that transaction and found out that someone had gone online to change my account login name and password using the stolen information and then changed the address to Eau Claire Wisconsin near the WMT store. Possibly the address change was necessary to avoid detection.  

Given the timing of the first purchase, it was apparent that the thief was going to spend the next 30 days or so exhausting my credit limit. The card was canceled with just that one fraudulent purchase. 

My response was to lower my credit limit from $30K to $2K. 

I also receive now an email notice from the bank whenever that card is used which occurs within seconds after I use it to buy something online. 

The credit card is simply a necessity for online orders. I have never carried any debt on a credit card.    

I also created a separate bank account for my debit card, keeping the balance low and adding a few hundred to it when and as needed.  

Free credit report from each of the three agencies can be acquired annually a Annual Credit least theoretically. 

I tried doing so this weekend, but no information was ever loaded after I successfully completed the questions. Instead, I was told after about ten minutes to contact Equifax by mail. I found this website to be worthless. I have no explanation why that website directed my request for the three credit reports to Equifax rather than Experian or Transunion. Equifax is not responding very well to much of anything at the current time.

The site seems to be designed to cause the maximum amount of frustration and consternation.   I then ordered the three credit reports from Experian and received them instantly. 


1. Intermediate Term Bond/CD Ladder Basket Strategy

A. Sold 2 AT & T 3.4% SU Bonds Maturing on 5/15/2025

Profit Snapshot: +$44.34

FINRA Page: Bond Detail

Issuer: AT&T Inc. (T) 

Sold at 100
YTM then at 3.4%
Current Yield at 3.4%

Bought at a Total Cost of 97.683
YTM Then at 3.786%
Current Yield at 3.48% 

I used some of the proceeds to buy 30 shares of the common stock as discussed in Item #  7 below. 

B. Sold 1 Shell 2.375% SU Bond Maturing on 8/21/22

Profit Snapshot: +$22.25

FINRA Page: Bond Detail (prospectus linked)

Sold at 101.2

YTM Then at 2.118%
Current Yield at 2.347%
Net at 101.1 (after $1 Commission)

Bought at a Total Cost of 98.85

Stocks, Bonds & Politics: Item # 2.A. 
YTM Then at 2.597%
Current Yield at 2.4%

C.  Sold 2 Sysco 2.5% SU Bonds Maturing 7/15/21

Profit Snapshot: +$30.8

FINRA Page: Bond Detail

Issuer:  Sysco Corp. (SYY)

SYY Analyst Estimates
Sysco Reports Fourth Quarter and Fiscal Year 2017 Results

Sold at 101.5

YTM Then at 2.083%
Current Yield at 2.46%

Bought at a total cost of 99.86

Stocks, Bonds & Politics: Item # 2D. 
YTM Then at 2.553%
Current yield at 2.5%

D. Bought 1 American Express Bank 2.2% CD (semi-annual interest payments) Maturing on 9/13/21 (4 year CD):

With this CD, I am picking up a slightly higher YTM than the Sysco referenced above, but will monthly interest vs. semi-annual interest payments. The CD discussed below, maturing two days earlier, has a .1% higher coupon, but makes semi-annual payments. 

$4K Outflow from Intermediate Term Bond/CD Ladder Basket

2. Sold 150 HTPRD (in three 50 share lots)

Stocks, Bonds & Politics: Gateway Post: Equity REIT Common and Preferred Stock Basket Strategy

Stocks, Bonds & Politics: Advantages and Disadvantages of Equity REIT Cumulative Equity Preferred Stocks

I still own 50 shares in a Roth IRA bought on 6/5/17:  Stocks, Bonds & Politics: Item # 3.A. Bought 50 HTPRD at $24.95 

I sold my remaining shares held in taxable accounts at $25.8, which I thought was a good price given my capital preservation objectives and the potential downside risks. 

Quote Hersha Hospitality Trust 6.5% Cumulative Preferred Series D

Par value is $25. 

Optional Call Date: On or After 5/31/21
Dividends: Cumulative and Non-Qualified (pass through entity)
Final Prospectus Supplement

Issuer: Hersha Hospitality Trust Cl A (HT)-a Hotel REIT

Last Discussed: Stocks, Bonds & Politics: Item 1.C.

The IPO for this security was in May 2016. When interest rates started to tick up in late Fall, HTPRD declined to $22 and change. HT.PD Stock Chart 

A. Sold 50 at $25.8-Used Fidelity Commission Free Trade:

This lot was bought at $22.88 during the minor, post election interest rate spike. I placed the purchase price in bold print just to highlight how a minor interest rate spike can impact the price. The shares closed at $24.82 on 11/8/16. The ten year treasury closed that day at 1.88% and closed 2016 2.45%.

Profit Snapshot: +$146.02 

B. Sold 50 HTPRD at $25.8-Used Schwab Commission Free Trade:  

Profit Snapshot: $44.98

C. Sold 50 HTPRD at $25.8 (IB Account $1 Commission)

Profit Snapshot: +$46.46

This lot was bought on 6/7/17 after selling another 50 share lot at $25.65: Stocks, Bonds & Politics: Item 3.B. Bought 50 Shares HTPRD at $24.95 

Total HTPRD Trading Profits To Date: +$282.52 (includes 3 other transaction) 

3. Sold 41 AHTPRD at $25.71 (remaining 9 shares were called by the issuer on 9/15/17)

Profit Snapshot: +$36.69

This lot was recently bought at $24.85 (6/7/17). 

Quote: Ashford Hospitality Trust Inc. 8.45% Cumulative Preferred Series D 

Par Value: $25

Dividends: Cumulative and Non-Qualified (pass through entity)
Optional Call: At Anytime Now

Ashford Trust Reports Second Quarter 2017 Results

On 9/5/17, Ashford announced that an additional 379,036 shares of AHTPRD would be redeemed at par plus an accrued and unpaid dividend of $.551598 per share. Ashford Trust Announces Partial Redemption Of Series D Preferred Stock I was not aware of that notice when I sold 41 shares on 9/6/17. I may have to buy a few shares back to meet that redemption.  IB  is slower than Fidelity in sorting out this kind of issue. IB is still showing, for example, my 9 AHLPRD shares still waiting for redemption while a family member's account at Fidelity shows the redemption proceeds as having been received and credited to the account.   

4. Short Term Bond/CD Ladder Basket Strategy

A. Bought 2 MBank 1.25% CDs (monthly interest) Maturing on 3/20/18 (6 month CD)

B. Bought 2 American Express Bank 1.9% CDs (semi-annual interest payments) Maturing on 3/12/2020 (30 month CDs):

C. Bought 2 Comenity 1.95% CDs (monthly interest) Maturing on 9/15/20 (borderline short term)(3 year CDs)

D. Bought 1 Discover Bank 1.95% CD Maturing on 9/14/2020 (3 Year CD)

The recent decline in rates has caused me to tip toe into longer term CDs, but I will keep my exposure minimal for now. 

I would prefer owning a 1.95% FDIC insured CD maturing in 2020 than an investment grade bond with the same or even slightly higher yield. While I am not currently concerned about credit risk for my investment grade bonds, credit conditions can change, sometimes rapidly as they did in 2008. 

E. Bought 2 Bank of China 1.1% CDs Maturing on 11/20/17 (2 month CDs)

$9K Inflow into Short Term Bond/CD Ladder Basket

6. Small Cap Canadian E & P Lottery Ticket Basket Strategy

A. Added 50 AAV at $6.2-Used Commission Free Trade at Schwab


USD Priced Shares: Advantage Oil & Gas Ltd. (U.S.: NYSE) 

CAD Priced Shares: Advantage Oil & Gas Ltd. (Canada: Toronto) 

Website: Advantage Oil & Gas LTD.

Operations | Advantage Oil & Gas LTD. ("The company is focused primarily on development and delineation of its world class Montney natural gas and liquids resource at Glacier, Alberta. Since 2008, production has grown to approximately 235 mmcfe/d (39,167 boe/d) and 2P reserves have increased to 2.2 Tcfe at December 31, 2016. . . .  The total thickness of the Montney at Glacier is approximately 300 metres and lends itself to multiple layers of development which contributes to an inventory of >1,100 future well locations within this resource play. This is sufficient to maintain production of 245 mmcfe/d for approximately 50 years." emphasis added)

The USD priced shares will be influenced by the CAD/USD conversion rate. 

This was an average down from a $6.45 purchase, using a commission free trade, that was made on 1/13/17. I did not discuss the prior trade. 

I bought the USD priced ordinary shares that trade on the NYSE. 

The ordinary shares priced in CADs declined on my day of purchase as the CAD rose in value. 

Closing Price 9/6/17:  AAV.TO C$7.60 -0.30 -3.80% 

At the time of purchase, a C$7.6 converted into USD$6.21.  

I did not see any specific news to account for the decline. E & P companies were mostly up on the day of purchase. 

IEO $53.55 +0.79 1.50%: iShares U.S. Oil & Gas Exploration ETF 

Advantage Announces Second Quarter 2017 Operating & Financial Results - Aug 3, 2017 ("The results include a 32% increase in cash flow to $49 million with a 30% increase in cash flow per share to $0.26/share.  Production increased 10% on a per share basis to 232 mmcfe/d (38,739 boe/d) with total corporate cash costs (including natural gas and liquids transportation) of $0.98/mcfe, inclusive of $0.27/mcfe of operating costs.  The Corporation's balance sheet has been further strengthened by $17 million of surplus cash (cash flow less capital expenditures) generated from our operations during the first half of 2017, in addition to the $39 million of surplus cash generated in 2016.  This has reduced Advantage's total debt by $52 million and lowered the Corporation's total debt to trailing cash flow ratio to 0.7 at the end of the second quarter of 2017 as compared to 1.5 at June 30, 2016." emphasis added)


5 year Chart USD Priced Shares: 

5 Year  Comparison Chart USD and CAD Priced Shares Shown in Blue Line: 

The CAD priced shares have noticeably outperformed the USD priced shares due to the decline in the CAD/USD exchange rate over this five year period. 

A 3 month chart shows the USD priced shares outperforming due to the rise in the CAD/USD exchange rate (Canadian dollar has increased in value against the USD): 

7. Bought 30 AT & T at $35.95

I discussed some of my trading history in this post which also expresses some reservations about this company. Bought Back In An IRA AT & T At $32.52 In The Context Of A Total Return Investment Strategy - South Gent | Seeking Alpha (that lot was held for less than two months and was sold at $34.61). 

The current quarterly dividend is $.49 per share. The yield would be about 5.462% at $35.95 or about 2% higher than the YTM of the 2025 AT & T bonds that were sold and discussed above in Item # 2.A. AT&T Historical Dividends

I will evaluate whether bond yields are higher or lower than the common stock dividend yield from the same issuer when making allocation decisions. See, e.g Comment on Comparing AT & T bond and stock yields (4/13/2015); Item # 6 Common Stock Dividend Growth vs. Long Term Investment Grade Bonds (3/22/2010 Post)

I noted in that blog selling shares at $38.03 on 2/4 2008. Starting on 2/4/2008 and through 9/11/17, when I bought that 30 share lot, the average annual total return (dividends reinvested) of this stock was 4.85%. DRIP Returns Calculator The average annual total return of SPY, an ETF for the S & P 500, was 8.54% over the same period.  

The largest sell transaction since 2007 was this one made on 11/2/2010: 

2010 AT & T 202+ Shares +$750.6
The main issues IMO are minimal E.P.S. growth, a high dividend payout ratio, serious and increasing amounts of long term debt, poor overall total return, cut throat competition in the wireless space, and high capital and employee costs.  

Since I sold those 202+ shares in 2010, I have merely dabbled in this stock. 

While there was some temporary enthusiasm after AT & T released its second quarter results, the stock quickly gave up most of its gains. 

Sourced: SEC Filed Press Release

AT&T earnings Q2 2017: CNBC

Note the number of declining items:

Subscriber Data:

SEC Filed Selected Financial Data

In a report dated July 27. 2017, Argus has a buy rating and a $48 price target which is aggressive IMO. That report is available to Schwab customers. Argus maintained a 2017 E.P.S. estimate of $2.95 but reduced its 2018 estimate to $3.01 from $3.05. That is of course anemic growth.  

In a report dated 6/6/17, Morningstar ranked this stock at 3 stars with a $40 price target which is possible IMO within the next 12 months. This report is also available to Schwab customers.

In a report dated 8/25/17, S & P rated AT & T stock at 4 stars with a $42 price target.

I doubt that I will own any shares when and if the price hits $42. S & P reports are available at most brokers.  I will consider buying more shares in the $33 to $35 range. 

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.