Observations and Sample of Recent Trades (ARRY, MNRPRC, MFCPRM, MFCPRN)

The Orange King claimed that the election was rigged in the event Hillary won. 

One of his sources was a fake news story that claimed Hillary partisans had already stuffed some ballots for Hillary before the election in Ohio. 

The Ohio Secretary of State denied that such an event occurred, but the Orange King was certain that it was true. 

The source of the story was after all a website called the ChristianTimesNewspaper.com. 

The NYT just exposed the writer of that blog as a 23 year old Donald Trump supporter who blogs from his parent's house. From Headline to Photograph, a Fake News Masterpiece - The New York Times All of the assertions made by that Trump supporter were false and were known to be false.

I certainly can understand how the fake news story could be taken as true, provided the person is both stupid and ignorant.

Lying works in politics for the reasons just mentioned in the prior sentence. So why tell the truth or be accurate with information conveyed to the public when the constant repetition of false facts works so very well? Telling the truth or being realistic about campaign proposals are prescriptions for defeat in a U.S. election.

During the campaign, Donald was clocked as lying every three minutes during his speeches, far more than Ms. Hillary, yet the Ms. was successfully tagged and branded by the Orange King as both a crook and a liar judging from the exit polls. Donald Trump’s Week of Misrepresentations, Exaggerations and Half-Truths - POLITICO Magazine.

That article does not use the word lie in the title which has a mens rea  requirement, but I have no such reservation about that word's use given the number and repetitiveness of the easily proven "Misrepresentations, Exaggerations and Half-Truths."

Toronto Star compiles list of almost 500 Trump lies during campaign, Donald Trump's file | PolitiFact, The Whoppers of 2016.

 

When politicians lie as much as the Orange King, and he set a record in a presidential election and won by the way, it is important to demonize and belittle a free press that points out the constant parade of knowingly false statements.

In the minds of millions of voters, the "mainstream press" is nothing other than a propaganda machine for the left-wing, viewed as anyone to the left of Rush Limbaugh, Sean Hannity and Ann Coulter. Their articles can consequently be ignored in their entirety.

In the unlikely event the True Believer hears about an article published in the "mainstream" media, its content, which is probably being misrepresented by the speaker, can be readily dismissed as being false simply by being inconsistent with the True Believer's false information that is fervently believed to be true, their reality creations, or just plain ole fake news spread over the internet for the gullible and easily manipulated to absorb without exercising even the smallest decree of common sense and intelligence.

As I have said in the past, I was not pleased with the choices but I am rarely pleased anyway. I was just more displeased with my choices in 2016 than in prior elections going back 1972 when my choice was either Tricky Dick or Clueless George who was a much better person, though a few managed to have their eyes opened to that observation by subsequent events.  

I am a fiscal conservative and believe the nation is on an irreversible path to a fiscal meltdown due to the efforts made by both political tribes and their supporters. Trump will continue along that path.

I do not approve of lying and pie-in-the sky campaign promises, particularly when those proposals accelerate the nation's day of reckoning, which I estimate to be somewhere in the 15 to 20 year time period from now, possibly sooner rather than later depending on near and intermediate term future events.

I view Trump's main attribute to be his unquestionable success at self-promotion that has resulted in a successful business of licensing his name on just about everything, including the structures that are built with other peoples' money. Donald Trump's Real Secret To Riches: Create A Brand And License it: Forbes Magazine

Before building the Trump brand as the successful business, Trump managed to lose $916 Million, a legally dubious loss, that gave him a free ride on paying taxes for many years to come, which was another main source of his success along with what he inherited from his Daddy.

Some of name licensing businesses did not work out too well either: Trump University Cases; Former Trump University Workers Call the School a ‘Lie’ and a ‘Scheme’ in Testimony - The New York Times. When confronted with accurate reporting of an event, it is necessary to demonize the press and to convince everyone susceptible that the Orange King is the only source of truth and everyone else, except possibly Ann, Rush or Sean, is a source of fake news created for a bad ulterior motive by the left-wing mainstream media.

Why is the foregoing relevant to investing?  The herd consensus now is that Trump will lead the U.S. to economic nirvana. A more realistic assessment of the man based on his history is that there is more potential now for economic chaos than with any other U.S. President.

So a certain level of caution rather than exuberance will probably end up being the best investment strategy over the next 4 years, particularly after the stock market's run up after the election based on the herd consensus opinion about the impact of future policy changes.

1. Small Cap Biotech Lottery Ticket Basket Strategy

A. SOLD ARRY AT $11.25

This lot was bought at $4.1 on 8/3/16.

Profit Snapshot: +$355.48

Quote: Array BioPharma Inc. (ARRY) 

The market cap at $11.25 is about 1.9 billion.  

The 173% percentage gain was too good for the Old Geezer to leave alone. 

Calculate Percent Increase: Use Online Calculator To Find Percentage Increase, Decrease And Difference

I bought my 50 share lotto ticket before ARRY announced a drug failure in a late stage trial. 

Shortly after I bought my 50 share lot, ARRY reported that a Phase 3 trial of selumetinib in combination "with docetaxel chemotherapy as 2nd-line treatment in patients with KRAS mutation-positive (KRASm) locally-advanced or metastatic non-small cell lung cancer" failed to meet its "primary endpoint of progression-free survival (PFS), and selumetinib did not have a significant effect on overall survival (OS)." AstraZeneca Provides Update On Phase III Trial Of Selumetinib In Non-Small Cell Lung Cancer (8/9/16 Press Release). That failure result in a price slide on the day of its announcement: Array BioPharma shares fall 11% premarket after lung cancer drug trial fails to meet goals - MarketWatch

Failures will be more plentiful than successes in this sector. Cancer in particular is just hard. 

Array sold over 21 million shares in October at $6.5. Array BioPharma Announces Closing of Public Offering and Full Exercise of Option to Purchase

In between my purchase and now, there have been some positive developments on other compounds which led to the price almost tripling from my initial $4.1 purchase increase.

I do not have any expertise to evaluate whether ARRY will ultimately hit pay dirt. I do know that I harvested a $355.48 profit on a $206 investment in about 5 months. That is all that I really know.

Array BioPharma and Pierre Fabre Announce COLUMBUS Phase 3 Study of Encorafenib plus Binimetinib (9/26/16 Press Release)

Array BioPharma Announces Phase 3 BEACON CRC SPA Agreement with FDA (9/14/16 Press Release)

Array BioPharma and Pierre Fabre Announce COLUMBUS Phase 3 Study of Encorafenib plus Binimetinib (9/26/16 Press Release)

Array BioPharma Announces FDA Acceptance of Binimetinib NDA for Patients with Advanced NRAS-Mutant (9/1/16 Press Release)

Array Presents Data from Cardiovascular Trial with ARRY-797 at the European Society of Cardiology (8/30/16 Press Release)

2. Intermediate Term Bond Ladder Strategy 

Just in case I am wrong about the future course of interest rates, I have increased my weighting slightly in the intermediate term bond ladder, focusing on 2020-2022 maturities. The overall investment in the intermediate term ladder will be about 10% of the short term bond/CD ladder until I can secure significantly better rates than now. 

The abnormal monetary policies of the ECB, BOJ, and other European central banks doe provide a major headwind for increases in U.S. intermediate and long term interest rates.   

A. Bought 1 Shell 2.375% Senior Unsecured Bond Maturing on 8/21/2022

FINRA PAGE: Bond Detail

Credit Ratings: 

Moody's Rating	Aa2 (04/08/2016)
Standard & Poor's Rating	—
Fitch Rating	AA- (11/07/2016)

YTM at Total Cost (98.850)=  2.597%

Link to Moody's 4/8/16 Report: Downgrades Royal Dutch Shell to Aa2; negative outlook

B. Bought 2 Verizon 1.75% Senior Unsecured Bond Maturing on 8/15/21

FINRA Page: Bond Detail

Moody's Rating	Baa1 (07/27/2016)
Standard & Poor's Rating	BBB+ (07/28/2016)
Fitch Rating	A- (07/27/2016)

YTM at Total Cost (96.274) = 2.62%

Moody's rates Verizon's new notes Baa1 (10/26/16 report); 

Link to FITCH 7/27/16 report 

Verizon SEC Filings 

2016 Third Quarter Earnings Report 

VZ Analyst E.P.S. Estimates  

3. Short Term Bond/CD Ladder

A. Added 1 Nextera 1.649% Senior Unsecured Bond Maturing on 9/1/18 (total now at 3)

FINRA Page: Bond Detail (bond prospectus linked at the FINRA Page)

Moody's Rating	Baa1 (08/26/2016)
Standard & Poor's Rating	BBB+ (08/26/2016)
Fitch Rating	A- (08/01/2016)

YTM at Total Cost (99.994) = 1.684%

Common Stock Quote: NextEra Energy Inc.  (NEE) 

2016 Third Quarter Results ("reported third-quarter 2016 net income attributable to NextEra Energy on a GAAP basis of $753 million, or $1.62 per share, compared to $879 million, or $1.93 per share, in the third quarter of 2015. On an adjusted basis, NextEra Energy’s third-quarter 2016 earnings were $809 million, or $1.74 per share, compared to $730 million, or $1.60 per share, in the third quarter of 2015.")

NEE SEC Filings 

Link To Moody's Report Dated 7/29/16: affirms NextEra Energy (Baa1 stable) 

Fitch Affirms NextEra's Ratings Following EFH's Acquisition Announcement; Outlook Stable 

NEE Analyst Estimates 

B. Added 1 Diageo 1.125% Senior Unsecured Bond Maturing on 4/29/18

FINRA Page: Bond Detail

Moody's Rating	A3 (12/15/2016)
Standard & Poor's Rating	—
Fitch Rating	A- (11/03/2016)

YTM at Total Cost (99.725) = 1.343%

Diageo Website: Credit Ratings;

Link to Moody's Report Dated 12/15/16 

Diageo Brands

SEC Filed Annual Report For the Period Ending 6/30/16: 20-F

DEO Analyst Estimates

C. Bought 1 Shell 1.125% Senior Unsecured Bond Maturing on 8/21/17

FINRA Page:  Bond Detail

Moody's Rating	Aa2 (04/08/2016)
Standard & Poor's Rating	—
Fitch Rating	AA- (11/07/2016)

YTM at Total Cost (99.999) = 1.126%

D. Bought 2 Bank of India U.S. .95% CDs Maturing on 10/25/2017: Bank of India - USA- about

E. Bought 1 Bank of China N.Y. .85% CD Maturing on 10/30/2017 

F. Bought 2 WFC 1.75% CDs (monthly interest payments) Maturing on 1/20/20 (OUTER LIMIT OF SHORT TERM BOND LADDER PERIOD)

All of the CD purchases are FDIC insured. 

I am now several thousand over a $200K allocation in this basket and do not know when I will stop adding to it.

Yellen appears to be moving closer to supporting gradual increases in the FF rate. FRB: Speech--Yellen, The Goals of Monetary Policy and How We Pursue Them--January 18, 2017

4. Paring Canadian Reset Equity Preferred Stocks: Trade snapshots for this category are located in this post: Advantages and Disadvantages of Equity Preferred Floating Rate Securities (net profit as of 1/19/17= +$19,055.3).


A. Sold 50 MFCPRM at C$20.51:

Profit Snapshot: C$113 

Quote:  Manulife Financial Corp. Non-Cumulative Preferred Series 17 (MFC.PR.M:TOR)

MFCPRM pays non-cumulative dividends at the current fixed coupon rate of 3.9% on a C$25 par value. That translates into about a 5.36% current yield at a total cost per share of C$18.2. The quick profit on the shares is more attractive to me than the dividend yield. I received only one quarterly dividend payment. For 50 shares, the annual dividend payment at the 3.9% fixed coupon rate is $48.75. It would take more than two years for those dividend payments to exceed the realized gain taken now.     

MFCPRM is another reset preferred. The fixed coupon will be paid through 12/19/19 whereupon the coupon will reset at a 2.36% spread to the five year Canadian Government Bond for five years and so on. If the Canadian five year is then higher than 1.54%, the coupon will increase compared to the current 3.9% fixed rate and decrease if the rate is less than 1.54%.  A potential coupon cut is a risk in this preferred stock sector. Resets at lower than the fixed rate coupon rates over the past few years caused prices to decline and created attractive entry points for many Canadian reset equity preferred stocks.  

MFC's preferred shares have a BBB+ rating from S & P, BBB- from Fitch and Pfd-2 from DBRS. The DBRS rating is equivalent to a BBB. Credit Ratings

At a 3% five year when the reset occurs late in December 2019, the coupon would be 5.36% or 7.69% at a constant total cost per share of C$18.2.

If the five year was then only .5%, the current yield would drop to about 3.93% on the reset date.

B. Sold 50 MFCPRN: +C$108 Profit

That lot was bought in November 2016 at C$18.7 and was discussed here.

MFCPRN pays a fixed coupon of 3.8% until March 2020 when it resets, unless redeemed by Manulife then at par value, at a 2.3% spread to the 5 year Canadian Bond.

5. Paring U.S. Fixed Coupon Equity Preferred Stocks:

A. Sold 100 MNRPRC at $24.85

Profit Snapshot: $71.93

Quote: Monmouth Real Estate Investment Corp. 6.125% Cumulative Preferred Series C Stock (MNR.PC) 

I discussed buy this REIT cumulative equity preferred stock in my SA Comment Blog.  

MNRPRC pays non-qualified and cumulative dividends at the fixed coupon rate of 6.125% on a $25 par value. Prospectus

This preferred stock was sold to the public in early September 2016.

Interest rates had started to rise in July. Shortly after the IPO, the price sank to as low as $23 in response to a continue rise in rates: MNR.PC Stock Chart

I did receive one dividend payment on the first 50 share lot bought ($16.59), bringing the total return for 100 shares up to $88.52.

The quarterly ex dividend date is on 2/13/16.

I  doubt that I would buy back even 50 shares now above $23.5. At a total cost of $23.5 per share, the yield would be about 6.49%. In part, the next nibble will take into consideration interest rate and inflation trends, including changes in the break-even spreads for the intermediate term TIPs which have been rising. If the ten year treasury rises to 3%, I may need at least a 7% yield on an equity preferred stock before buying when the prior trend line is up for both inflation and inflation expectations.      

Monmouth SEC Filings 

2016 3rd Quarter Earnings Report 

Again, I am selling recently bought and potentially long duration fixed income securities based on an anticipation that the securities can be repurchased at lower prices and higher yields. This is just an example of small ball. Clip a dividend or two and sell for a quick profit.  
Stocks, Bonds & Politics: Advantages and Disadvantages of Equity REIT Cumulative Equity Preferred Stocks


6. Paring Recently Bought, Potentially Long Duration Exchange Traded Bonds:

A. Sold 100 SOJB

Profit Snapshot: +$93.37

Quote:  Southern Co. 5.25% Junior Subordinated Notes (SOJB)

SOJB is a junior bond that matures on 10/1/2076 unless redeemed early at the issuer's option. In short, this bond has interest rate risk coming out of the wazoo for the owner and a minimal amount for the issuer who can redeem at par value on or after 10/1/21.


Prospectus 

I discussed buying the two fifty share lots in my SA Comment Blog and noted there that SOJB was on one short leash. I did harvest one quarterly interest payment on the first 50 share lot purchase. The amount was $19.32 and was paid on 1/3/17. 

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.