Monday, March 6, 2017

Observations and Sample of Recent Trades 3/6/17 (TCRZ, FNB. CSCO, GHC:AU, ADXS)/Trump the Unhinged/GOP's Tax Credit For Child Care


Trump's child care plan is gift to the rich, report says - Feb. 28, 2017

Trump and the GOP claim that their tax credit plan is designed to help working parents with child care expenses. As usual, the primary benefit is for the well off with chicken bones thrown to the middle class.

The problem is that tax credits work best for those who pay a significant amount of federal income taxes. About 70% of the benefits from the GOP's tax credit plan would go to households making more than $100,000.

Trump’s Childcare Tax Breaks Would Mostly Benefit Families Who Need Them the Least | Tax Policy Center

The GOP's healthcare plan will apparently use tax credits in lieu of Obamacare's subsidies, which curtails the benefits to those who families who pay no or minimal federal income tax.

The GOP will sell their plans as primarily benefiting the middle class however.


Trump's Potential Response to North Korea Remains a Major Stock Market Risk:

North Korea's missile launch shows program is speeding up, experts say -
North Korea launches more missiles; 3 land in Japanese waters - The Washington Post

Trump stated earlier that he will not allow North Korea to develop an ICBM: ‘It Won’t Happen,’ Donald Trump Says of North Korean Missile Test - The New York Times

How is he going to prevent that from happening? Launch a massive first strike on all North Korea military installations including suspected underground missile locations?


Trump the Unhinged

I have of course already concluded that the President of the United States is suffering from a severe, mental illness that makes him unfit to be President. If I am correct, then the risks to stock investors can arise in many unpredictable ways over the next four years.

At a minimum, Trump is a pathological liar and has a narcissistic personality disorder: Narcissistic Personality Quiz | Psych Central;  Narcissistic personality disorder Symptoms - Mayo Clinic

Inside Trump’s fury: The president rages at leaks, setbacks and accusations - The Washington Post

FBI asked Justice Department to refute Trump's wiretapping claim - CNN 

Trump Asks Congress to Investigate Wiretap Conspiracy Theory-New Yorker

Of course, Donald could just call Jeff Sessions and inquire whether the Justice Department requested the alleged wiretap authorization from a court during the Obama Administration. Obama has no authority to order a wiretap except in Donald's Alternate Reality Universe.

Perhaps, Donald is just confused again about the limits of Presidential powers or maybe he just forgot that he was the President as suggested by the former CIA Director under George Bush. Ex-CIA director on wiretap claim: Trump apparently ‘forgot that he was president’Former Intelligence Chiefs Dispute Trump Wiretap Allegations - BloombergMichael Hayden: Obama Would Not Have Been Involved in Wiretap Order


Crude Oil: Supply and Demand Balance

IEA warns of potential shortage of global oil supplies in 3 years - MarketWatch

Short-Term Energy Outlook - U.S. Energy Information Administration (EIA)


1. Intermediate Term Bond Ladder Basket Strategy 

A. Bought 2 Kellogg 2.65% Senior Unsecured Bonds Maturing on 12/1/2023:

FINRA Page: Bond Detail
Moody's at Baa2
S & P at BBB
YTM at Total Cost (98.261)= 2.935%

B. Bought 2 CSX 2.6% Senior Unsecured Bonds Maturing on 12/1/26

Issuer: CSX Corp. (CSX) 
CSX Analyst Estimates                               
FINRA Page: Bond Detail (prospectus linked at FINRA Page)
Moody's at Baa1
S & P at BBB+
YTM at Total Cost (94.597) = 3.255%

A redemption within 3 months of maturity is not subject to the make whole provision. 

C. Bought 1 American Water Works 3% Senior Unsecured Bond Maturing on 12/1/26:


Issuer: American Water Works Capital- Guaranteed by American Water Works
AWK Analyst Estimates
FINRA Page: Bond Detail (prospectus linked at Finra Page)
Moody's at A3
S & P at A
Yield at Total Cost (98.785) = 3.145% 

A redemption within 3 months of maturity is not subject to the make whole provision. 

D. Bought 1 WFC 2.1% Senior Unsecured Bond Maturing on 7/26/21-Roth IRA:


Issuer: Wells Fargo & Co.  (WFC)
WFC Analyst Estimates
FINRA Page: Bond Detail
YTM at Total Cost (98.189 ) =  2.536%

E. Bought 1 Johnson & Johnson 2.4% Senior Unsecured Bond Maturing on 3/1/26

JNJ Analyst Estimates
FINRA Page: Bond Detail
Moody's at AAA
S & P at AAA
YTM at Total Cost (96.881) = 2.845%

JNJ Analyst Estimates 

F. Sold 50 of 100 TCRZ Lot at $25.68

THL Credit Inc. 6.75% Notes Due 12/30/22 (TCRZ:NYSE)


Profit Snapshot: +$44.47

This lot was bought at $24.77 on 12/30/15.  Item # 2. Bought 50 TCRZ at $24.75: Update For Exchange Traded Bonds And Preferred Stocks Basket Strategy As Of 1/5/16 - South Gent | Seeking Alpha That lot was sold last year. 

This security is a senior unsecured note issued by the BDC THL Credit that makes quarterly interest payments at the fixed coupon rate of 6.75% per annum on a $25 par value. Prospectus

I view this bond as risky and I am paring risk now. 

I still own 50 shares bought last December at $25.25 that I discussed here. I am satisfied with the total return of the lot bought at $24.77. 

2.   Short Term Bond/CD Ladder Basket Ladder Strategy:

A. Bought 2 Legacy Bank of Texas .8% (monthly interest) CDs Maturing on 12/8/17:

Issuer: Bank Subsidiary of Legacy Texas Financial Group Inc. (LTXB) 


3. Continued Paring Stock Allocations

A. Sold 50+ Shares of FNB at $15.53 (used commission free trade)


Profit Snapshot: $182.4:

This leaves me with 50 shares bought at $7.8: Item # 5 Added 50 FNB at $7.8 (7/20/2010 Post) 

FNB Trading Profits: $553.35

I last discussed FNB in a post here: Item # 1. Sold 50 FNB-Recently Bought in a Roth IRA Account: Update For Regional Bank Basket Strategy As Of 3/17/16 - South Gent | Seeking Alpha

F.N.B. slashed its quarterly dividend by 50% back in 2009 and has not raised it since that slash.

I will flip this stock. I will generally consider purchasing a small lot when the price sinks below $12. The dividend history is a major negative. Earnings growth has been less than satisfactory.     

B. Sold 30 of 80 CISCO at $34.14


Profit Snapshot: +$330.37

2017 CSCO 30 SHARES +$330.37
This is the highest price that I have sold CSCO stock in at least 18 years. 

Some of the previous buys were discussed in these posts: 

Cisco did raise its quarterly dividend to $.29 from $.26 when announcing the last quarter's earnings. 

I intend to keep the other 50 shares given the recent dividend growth history. 

I will consider selling that lot when Cisco fails to increase the dividend within 12 months after the last increase.  

A. Bought 700 GHC:AU at A$1.91:


QUOTE:  Generation Healthcare REIT (GHC:ASX)

I came across this Australian REIT due to my ownership of Northwest Healthcare Properties Real Estate Investment Trust (NWH.UN:TOR).

Northwest has a 22.9% ownership position in Generation Healthcare: NorthWest Healthcare Properties REIT Provides Portfolio Update Reflecting Continued International Growth I own 1300 units of Northwest.

GHC owns healthcare properties in Australia and has a market capitalization of about A$438 at a A$2 per share price. 

The company owns "16 high quality healthcare properties, located in Victoria, Queensland and New South Wales." Property portfolio

Dividends are paid semi-annually: Distribution and tax information

Results for the Six Month Period Ending 12/31/2016:

Generation Healthcare REIT ASX Announcement

GHC Results Presentation

5. Small Cap Biotech Lottery Ticket Basket Strategy:

A. Added 30 ADXS at $8.9:

I now own 120 shares. This last purchase was in my IB account where I bought 40 shares at $7.9 last July and discussed that purchase in Item # 1 here.

In the comment section to that post, I noted that the price skyrocketed shortly after my purchase, more than doubling in value at the apex.

The moonshot was due to a collaboration agreement announced with Amgen:

"Under the terms of the agreement, Amgen receives exclusive worldwide rights to develop and commercialize ADXS-NEO. Amgen will make an upfront payment to Advaxis of $40 million and purchase $25 million of Advaxis common stock. Amgen will be fully responsible for funding clinical and commercial activities. Advaxis will lead the clinical development of ADXS-NEO through proof-of-concept, retain manufacturing responsibilities, and receive development, regulatory and sales milestone payments of up to $475 million and potential high single digit to mid-double digit royalty payments based on worldwide sales."

Amgen And Advaxis Enter Global Cancer Immunotherapies Collaboration

After crossing above $16 shortly after my purchase, the price then meandered back down, eventually falling below my first purchase price late in December.

ADXS Stock Chart

Before the market opened last Monday, ADXS announced that the FDA had approved the New Drug Application for the first compound developed under the Amgen agreement which permits a Phase 1 trial to proceed.

Advaxis Announces FDA Acceptance of IND for Groundbreaking Personalized Neoepitope Immunotherapy, ADXS-NEO 

Needless to say, there is a very long road ahead and it is too early to know whether this approach to cancer treatment will even work or is safe.

Recent News Releases:

Advaxis and SELLAS Announce Licensing Agreement for Development of WT1 Antigen-Targeting

Advaxis Announces First Patient Dosed in Global Phase 3 AIM2CERV Trial for High-risk, Locally Advanced Cervical Cancer 

Advaxis Provides 2017 Business Outlook 

Advaxis to Present Data at ImVacS-Immunization and Vaccine Summit on Use of Detoxified Listeriolysin O (dtLLO) as an Effective Adjuvant in Vaccine Formulations 


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.


  1. While Comey denied Trump's wiretap claims, Trump does not accept that denial:

    "A White House spokeswoman, Sarah Huckabee Sanders, was asked early Monday on ABC’s “Good Morning America” whether Mr. Trump accepted Mr. Comey’s contention. “I don’t think he does,” she said."

    The Alternate Fact Guy, Sean Spicer, stated today that "There's no question that something happened. The question is it, is it surveillance, is it a wiretap or whatever?"

    Spicer declined to provide any proof of course.

    As I mentioned in this post, Donald can find out himself as President whether his claims have any basis in fact by picking up the phone and calling his boy at the Justice Department, Jeff Sessions or having his National Security Advisor make the necessary contacts in the intelligence community. I would have to ask why he wants his boy in the House "Intelligence" Committee, Devin Nunes, to investigate for him.

  2. "The President helped build a hotel in Azerbaijan that appears to be a corrupt operation engineered by oligarchs tied to Iran’s Revolutionary Guard."

    Possible violation of the Foreign Corrupt Practices Act.

  3. Regarding Trump the Unhinged:
    Key figures in the White House see themselves locked in a battle with the "deep state" — a term they're using, as my colleagues explained, to describe "a group of Obama-aligned critics, federal bureaucrats and intelligence figures" as well as the media. Stephen K. Bannon, the White House chief strategist who once ran far-right publication Breitbart, has reportedly spoken "at length" with President Trump about his view that the "deep state" is undermining Trump's presidency.

  4. The ADP jobs released earlier today guarantees that the FED will raise the FF rate range by .25% next week and increases the likelihood that three .25% increases will happen this year.

    According to ADP, the private sector added 298K jobs in February:

    The GOP is finding out that howling at the moon is easier than governing. It remains to be seen whether any meaningful tax or healthcare legislation can secure enough republican votes to overcome what will likely be unanimous opposition from the Democrats.

    The GOP healthcare plan will not receive a single Democrat vote and faces serious republican opposition.

    No one has seen the new tax plan which is in hiding.

    The economy has momentum even without additional stimulus. Too much stimulus now may cause the FED to raise rates faster than most investors currently expect. The impact of a faster rate increase cycle on the stock market is a risk given current multiples.

    iShares 7-10 Year Treasury Bond ETF
    $103.94 Change -0.61 -0.58%
    Volume 1.59m
    Mar 8, 2017 9:36 a.m.

    iShares 20+ Year Treasury Bond ETF
    $117.31 Change -1.11 -0.94%
    Volume 374,608
    Mar 8, 2017 9:37 a.m.

    I view it as a positive for the economy that U.S. households will start to receive additional disposable income on risk free savings.

    The amount held in savings accounts alone is currently near $9 Trillion:

    Table 4:

    1. hello southgent,

      I wondered as the Fed will probably raise at least three times this year, if the regional banks will do better than most people expect.

      I do see that some of the banking indexes/ETF's have hit new highs recently.

      Thank you

    2. SAM: In the aggregate, regional bank stocks have already skyrocketed in price since the election.

      The SPDR S&P Regional Banking ETF (KRE) is currently at $57.55 and closed at $43.97 on 11/8/16 or about a 31% increase.

      The rise in short term rates will cause deposits to reprice at higher rates. The question then is how much will loan yields go up.

      Ideally, the bank would want loan yields to go up at a faster pace than deposit costs but that is still an open question as to how intermediate and longer term rates will react to a less leisurely increase in FF rate increases.

      The value of fixed income investments held by banks will go down as interest rates rise, but then new bonds can be bought at higher yields as the vintage ones mature.

      A healthy economy which results in more loans and fewer loan losses is a plus, but those favorable conditions have been mostly in place for a few years now. Profits derived from selling fixed coupon securities start to dry up and then disappear as rates rise. I have already started to see in 4th quarter reports a major slowdown Y-O-Y in profits derived from selling owned securities.

      So there are positives and negatives about interest rates rising.

      Charge-off rates are already as low now as they have been historically.

      One of the regional banks that I own has barely participated in the rally and that is NYCB. The current price is $14.53, and the stock closed at $13.92 on 11/8 and at $14.8 on 11/9. Analysts are negative on the bank since it had to abandon its acquisition of Astoria Financial due to regulatory concerns about branch consolidation in the NYC market. NYCB would be a beneficiary of an expanding NIM, less regulations and a lower tax rate.

  5. DLRPRF:

    "Digital Realty Announces Redemption of 6.625% Series F Preferred Stock"

    This stock will go ex dividend for its last quarterly distribution on 3/13 (about $.41 per share).

    On the 4/5/17 redemption date, there will be also an accrued dividend payment of $0.0184 per share.

    I bought 50 shares at $24.85 last December using a commission free trade:

    I will just let the issuer take it away from me rather than selling now at $25.4.

  6. U.S. field crude production is back over 9 million barrels per day, up from a low of days of 8.428 as of 7/1/16:

    The EIA reported that crude oil inventories rose 8.2M to 528.4M barrels for the W/E 3/3/17, described by the EIA as above the average range for this time of year.

    Crude oil had a bad day today.

    REITs also had a bad day as intermediate term interest rates continued to rise.

    Vanguard REIT ETF (VNQ)
    At close $81.89-1.54 (-1.85%)

    During the interest rate spike last year which started in the summer, the ten year treasury yield topped out at a 2.6% yield on 12/15-16/16 and then started to drift back down.

    2016 Treasury Rates By Day

    The downdraft ended on 1/12/17 at a 2.36% yield and has been trending up since that low.

    2017 Daily Yields

    The close today was at 2.57%, up from 2.52% yesterday. While the 10 year yield is back near its high yield hit last December, potentially long duration exchange traded bonds and preferred stocks are generally at much higher prices than prevailing at the apex of last year's interest rate spike.

    I am continuing to lighten up on preferred stocks and exchange traded bonds that were bought toward the end of the 2016 spike.

    I eliminated SWJ today.

    I noticed today that short U.S. treasuries have a higher YTM than most of the CDs offered at Fidelity and Schwab. Consequently, I switched from buying CDs to U.S. treasuries.

  7. ADXS, discussed in Item # 5 in this post, has the mo for one day and has now sunk below my last purchase price, closing today at $8.62. I guess the big money is not to impressed by recent developments.

    I did have some decent gainers in the small cap biotech basket on 3/8/17:

    Cytokinetics, Incorporated (CYTK)
    $12.35+0.85 (+7.39%)

    Heron Therapeutics, Inc. (HRTX)
    $14.60+1.25 (+9.36%)

    Nektar Therapeutics (NKTR)
    $15.24+0.98 (+6.87%)

  8. I published a new post:

  9. CNQ (own): Canadian Natural Resources' stock has responded favorably to this news released yesterday morning:

    "Canadian Natural Resources Limited Announces the Acquisition of Working Interest in the Athabasca Oil Sands Project and Other Oil Sands Assets"

    CNQ shares closed at $32.05 yesterday, up $2.83 from the $29.22 close on 3/8.

    The shares are up more in early trading today:

    Canadian Natural Resources Ltd
    $32.87 Change +0.82 +2.54%
    Volume 455,307
    Mar 10, 2017 9:47 a.m.

    I also own a CNQ senior unsecured bond maturing in a few months:

    I will be monitoring whether the CNQ intermediate bonds drift down in price since a lot more debt will have to be issued to pay for Shell's oil sand assets.

    CNQ is also owned by Canadian energy ETFs like the USD priced ENY:

    Weighted at 5.03% as of 3/9/17:

    The weighting would be higher in ETFs that exclude energy infrastructure companies like the Canadian ETF XEG:CA where the weighting is currently at 18.95%:

    I move in and out of those two ETFs and currently have small positions in both.