Sunday, April 23, 2017

Observations and Sample of Recent Trades: 4/23/17 (BDGE, AKBA, SGY:CA )

The U.S. stock futures are reacting positively to France's election, viewing the centrist candidate Macron as easily beating Le Pen in the runoff election: 

E-Mini S&P 500 Future Jun 2017 Price= 2,368.75 +21 or .89% as of 6:04 C.S.T on 4/23/17.   

The Euro is gaining ground against the USD as EU disintegration fears subside. 

EUR/USD  1.0877 0.0152 1.42% 

Euro Gaps Sharply Higher as Le Pen, Macron Advance in French Vote

This sigh of relief may not last long.

A partial U.S. government shutdown is looming by week's end.

The White House Seems Excited to Shut Down the Government - The New Yorker

11 Quick Facts About A Potential Government Shutdown: Forbes

Government shutdown? Here's who keeps working and who doesn't: CNBC

Trump and his aides take hard line on border wall, as threat of government shutdown looms - The Washington Post

I suspect that a continuing resolution will be passed extending the deadline to 9/30/17, the end of the government's current fiscal year.


1. Intermediate Term Bond Ladder Basket Strategy

A. Bought 1 Shell International 1.875% Senior Unsecured Bond Maturing on 5/10/21

FINRA Page: Bond Detail (prospectus linked)
Credit Ratings: 

YTM at Total Cost (98.074 )= 2.37%

B. Bought 2 Microsoft 2% Senior Unsecured Bonds Maturing on 8/8/23:

This bond was bought in a Roth IRA account. This bond was sold to the public back in August 2016.

Issuer: Microsoft Corp. (MSFT)

MSFT Microsoft Corp Page at Morningstar
Finra Page: Bond Detail (prospectus is not linked)
Credit Ratings:
Moody's at AAA
S & P at AAA

YTM at Total Cost (96.305) = 2.636%

Earnings Report for the Q/E 12/31/16

MSFT SEC Filings
MSFT Analyst Estimates

Microsoft sold $17B in senior unsecured notes last January:


C. Bought 1 Public Service of Colorado 2.9% First Mortgage Bond Maturing on 5/15/25:

Issuer: Wholly Owned Subsidiary of Xcel Energy Inc.  (XEL:NYSE)

Finra Page: Bond Detail (prospectus linked)
XEL Xcel Energy Inc Page at Morningstar
Credit Ratings:
Moody's at A1
S & P at A
Fitch at A+
Fitch Rates Public Service Co. of Colorado's FMBs 'A+'
Moody's affirms Public Service Company of Colorado
Credit Ratings | Xcel Energy

YTM at Total Cost (99.697) = 2.942%

XEL 2016 Annual Report

D. Bought 1 Public Service E & G 2% First Mortgage Bond Maturing 8/15/2019-ROTH IRA Account:

Issuer: Operating Electric Utility wholly owned by Public Service Enterprise Group Inc (PEG)

PEG Public Service Enterprise Group Inc Page at Morningstar
FINRA Page: Bond Detail (prospectus linked)
Credit Ratings:
Moody's at A1
S & P at A
Fitch at A+

YTM at Total Cost (100.138 ) = 1.938%

PEG 2016 Annual Report (Public Service Electric and Gas "distributes electric energy and gas to customers within a designated service territory running diagonally across New Jersey where approximately 6.2 million people, or about 70% of New Jersey’s population resides.")

E. Bought 2 Corporate Office Properties 3.6% Senior Unsecured Bonds Maturing on 5/15/23:

Issuer: Corporate Office Properties Trust (OFC:NYSE)-A REIT

OFC Corporate Office Properties Trust Page at Morningstar
FINRA Page:  Bond Detail (prospectus linked)
Credit Ratings:
Moody's at Baa3
Moody's affirms the ratings of Corporate Office Properties; outlook stable
S & P at BBB-

YTM at Total Cost (98.264) = 3.922%

OFC SEC Filings

OFC Analyst Estimates
2016 Annual Report (debt summary starts at page F-41)
2016 4th Quarter Report
Corporate Office Properties Trust website

I have never owned the OFC common stock. I did rent one of its equity preferred stocks for a brief period:  Bought: 50 FPOPRA at $24.25, 50 OFCPRL at $24.04, 50 STK at $14.38 /Added to Vanguard Wellington (VWELX) and the Permanent Portfolio (PRPFX)/Added 50 KWN at $23.79 -Roth IRA (1/6/14 Post)

2. Continued to Pare Non-REIT Stock Allocation:

A. Sold 50+ BDGE Shares at $35.03:

Profit Snapshot: +$372.06

Quote: Bridge Bancorp Inc. (BDGE)

BDGE Analyst Estimates
BDGE Bridge Bancorp Inc page at Morningstar
2016 Annual Report 
2016 4th Quarter Earnings Report (core efficiency ratio at 53.57%; NPL Ratio at .05%; NPA Ratio at .03%; Total Capital Ratio at 15%; Operating expense as a percentage of average assets at 1.88%; NIM at 3.41%; ROTE at 13.6%; coverage ratio at 2,087.35%; net charge-offs for 2016 at $400,000)

This 50 share lot was purchased at $27.65, using a commission free trade, on 10/26/16.  I briefly mentioned that purchase here and discussed the bank in more detail shortly after that discussion.

I am selling regional bank stocks that have rallied after the election based on the herd opinion that Trump would cause inflation through liberal doses of stimulus. For awhile, the Bond Ghouls bought into that narrative and I mentioned the narrative as a catalyst for regional banks on 11/9/16:  South Gent's Comment Blog # 4: 

The consensus narrative was in vogue until mid-March, when the 10 year treasury yield closed at a 2.62% yield. The trend since that time has been for lower intermediate and long term rates as short term interest rates rise in response to the FED increasing the FF rate. The consensus opinion that net interest margin would expand under a Trump Presidency was met with the hard reality that the yield was not expanding, but was contracting again. 

The SPDR S&P Regional Banking ETF (KRE) closed at $43.97 on 11/8/16 and at $59.36 on 3/1/17, a gain of 35% unadjusted by dividend payments. After intermediate and long term interest rates turn back down, so did KRE. Reality was undermining the consensus opinion. 

I have a favorable view of this bank and will continue to hold a 109+ share stake with an average cost per share basis of $19.05. 

I will consider buying back shares somewhere south of $27.65.  


Realized BDGE Gains To Date: $729.91 (see snapshots in Gateway Post for this topic)

One major problem for me is that the quarterly dividend has remained at $.23 per share since 2005 (payout ratio shown at 46%).

The shares are also pricey IMO at over $30 based on the consensus analyst E.P.S. estimates of $2.02 and $2.29 for 2017 and 2018 respectively. BDGE Analyst Estimates 

3. Small Cap Biotech Lottery Ticket Basket Strategy:

A. Bought 30 AKBA at $9.17-Used Commission Free Trade:

Quote:  Akebia Therapeutics Inc. (AKBA)

To emphasize again, I am flying by the seat of my pants and acting with my gut when selecting Lotto Tickets in the small cap biotech area. I have zero training in medicine and science. 

The furthest along compound is called Vadadustat, "an oral hypoxia-inducible factor (HIF) stabilizer currently in Phase 3 development for the treatment of anemia related to chronic kidney disease. Vadadustat exploits the same mechanism of action used by the body to adapt naturally to lower oxygen availability associated with a moderate increase in altitude. At higher altitudes, the body responds to lower oxygen availability with increased production of HIF, which coordinates the interdependent processes of iron mobilization and erythropoietin production to increase red blood cell production and, ultimately, improve oxygen delivery." I had to quote that information since I would not be capable of explaining it better. 


So this stock will succeed or fail based on this compound.   

AKBA_Presentation at the_Needham_Conference: April_2017.pdf

Akebia Announces Fourth Quarter and Full-Year 2016 Financial Results ("The company ended 2016 with cash, cash equivalents and available for sale securities of $260.3 million. The company expects cash resources, together with the timing of amounts expected to be received from collaborators, including a $33.8 million payment from Otsuka received in March of 2017, to fund the current operating plan into mid-2018.")

Akebia Announces Publication of Phase 2a Results for Vadadustat in Patients with Anemia Related to Chronic Kidney Disease (3/28/17 Press Release)

Q4 2016 Results - Earnings Call Transcript | Seeking Alpha

Akebia and Otsuka Pharmaceutical Announce Collaboration to Develop and Commercialize Vadadustat in the U.S. (December 20, 2016 Press Release)("Akebia will receive $265 million in committed funds plus development and commercial milestones, representing a total transaction value that could exceed $1 billion. The companies intend to contribute equally to commercialization efforts and share equally all costs and revenue in the U.S., where sales of erythropoiesis stimulating agents (ESAs), the current standard of care, are estimated to be $3.5 billion. Akebia will continue to lead the ongoing global Phase 3 development program for vadadustat."

2016 Annual Report (clinical trials described starting at page 4)

Why Akebia Therapeutics Inc. Tanked Today (3/7/17 Motley Fool Article)

The stock traded at over $24 back in 2014, but has been range bound near $10 since 2014: Akebia Therapeutics The market cap is about $352+M at $9 per share.

4. Small Cap Canadian E & P Lottery Ticket Basket Strategy:

A. Added 100 of SGY:CA at C$2.61 (C$1 commission):

Quote: Surge Energy Inc. (SGY:TOR)

Pink Sheet Market Quote Priced in USDs: ZPTAF

I discussed two others Surge Energy stock purchase in Item # 3A: Stocks, Bonds & Politics: Observations and Sample of Recent Trades (SGY:CA-ZPTAF, VWELX, BIREF): 2/24/17/GOP and Healthcare/ Economic Nationalism = Nihilistic Protectionism

I bought the U.S. pink sheet listed ordinary shares at $2.13 using a commission free trade and the CAD priced ordinary shares at C$2.81 using my IB account where I was charged a C$1 commission. 

I am buying a bundle of small cap Canadian energy E & P stocks as a speculation. 

Surge does pay a monthly dividend. Surge Energy Inc. Announces Intended 15 Percent Increase to its Dividend - On Growing Production Volumes and Free Funds Flow - Feb 8, 2017

Surge Energy Inc.

Surge March 2017 Corporate Presentation.pdf

Surge Energy Inc. Announces Q4 and Year End 2016 Results; Exceeds 2016 Production Exit Rate Target; Cash Flow Per Share Up 43 Percent; Confirms March 2017 Dividend - Mar 15, 2017

I now own 300 shares. Of that number, 100 shares were bought using USDs on the U.S. pink sheet exchange. The symbol is ZPTAF. The price will generally reflect the ordinary shares price in CADs as converted into USDs. Stocks that have symbols ending in "F" are ordinary shares rather than an ADR. There is no difference between ZPTAF and and SGY:TOR other than the currency in which the shares are bought and sold. SGY will also be far more liquid than the US pink sheet traded shares. 

SGY Stock Interactive Stock Charts 

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. My European stocks are performing better today than my U.S. stocks.

    VIVHY, based in France, is up 6.39%.
    $20.19+1.24 (+6.54%)
    As of 9:39AM EDT

    Part of that gain is due to the Euro's rise against the Dollar. The price gain in the Euro priced shares is 5.44% as of the same time. I own 130 shares of the ADR.

    For 2017, there will be an annual dividend cut from €1 per share to €.4:

    That cut substantially reduced the dividend yield.

    I sold my shares into today's rally.

    I own over 100 shares of VGK which is a low cost European Stock ETF:

    Vanguard FTSE Europe ETF (VGK)
    $53.13+1.69 (+3.28%)
    As of 9:57AM EDT.

    I did sell my GLD position down to 15 shares after the price approached $123. I trade the PM ETFs and hold the bullion long term.

    Gold and bonds are down today.


    I place far more importance on what investors are doing rather than what a few of them say in response to survey questions.

    Margin debt has hit an all time record at $528B.

  2. ALDX: This micro cap biotech continues to decline after announcing that the FDA had "granted Aldeyra's novel compound ADX-102 orphan drug designation for the treatment of congenital ichthyosis, a severe skin disease characteristic of Sjögren-Larsson Syndrome (SLS). There are no FDA-approved therapies specifically indicated for the treatment of SLS, and ADX-102 is believed to be the only potential SLS therapy in clinical development."

    I have found this decline puzzling. The company said the phase 3 trial for this indication "is expected to begin later this year". Maybe that has something to do with it. Why is the company waiting to start enrollment. Funding for the trial may be an issue for this small micro cap. Whatever the reason or reasons may be, the stock has become weaker after this announcement and remains under selling pressure:

    $4.15-0.25 (-5.68%)
    As of 12:22PM EDT.
    Day's Range 3.98 - 4.45
    52 Week Range 3.98 - 8.19
    Market Cap 62.8M
    Volume 100,551

  3. "Becton Dickinson buying C.R. Bard in $24 billion medical-supply merger"

    C.R. Bard Inc
    $302.41 +$49.34 +19.50% Apr 24, 2017

    I own only two C.R. Bard senior unsecured bonds maturing on 1/15/18 which I will hold until maturity.

    There is a 2026 Bard bond that I have on my monitor list:

    The price of that bond rose today. Bard has a Baa1 rating from Moody's. Becton Dickinson debt is rated Baa2:

  4. CAD/USD: The Canadian Dollar renewed a downtrend yesterday after the U.S. announced a tariff averaging 20% on imports of Canadian soft lumber into the U.S.

    "A Commerce Department fact sheet on the pending announcement seen by Reuters shows that West Fraser Mills will pay the highest duties at 24.12 percent, followed by Canfor Corp at 20.26 percent."

    This looks aggressive to me.

    The CAD/USD was at 74.55 yesterday morning and is now at .7353:

    CAD/USD 0.7353-0.0045 (-0.61%)
    As of 2:05PM BST.

  5. Vanguard Prime Money Market: I checked the yield on this MM fund today. It was .93% as of yesterday.

    The spread between that yield and some low coupon bonds is likely to narrow further, so I did a nip and tuck this morning and profitably sold 4 bonds owned in my Vanguard taxable account.

    I do not have the same issue in other brokerage accounts where the sweep account yields are either non-existent (IB account) or are much lower. Schwab is near zero. The Fidelity Government MM fund has risen some to .4%.

    One thing to keep in mind with IB's low commission rate is the return on idle cash. IB is making money off that cash and is paying me zero. Buying a bond in that account makes more sense than in the Vanguard taxable account where the commission is also $1 per bond higher.

    France's election results from Sunday makes it more likely that the FED will raise the FF rate in June or July. The FED paused after the Brexit vote. The stock market's robust rally since the election also makes a .25% rate increase more likely in June or July IMO. I don't think the Stocks Jocks would care at this point.

    The odds for a June increase now stand at slightly over 70%:

    The odds of an increase on or before the 7/26/17 are only slightly higher so June will probably be the month. The odds of two more .25% increases on or before the December 2017 meeting are close to 50/50. The odds have increased since France's election. The market would be shocked if Le Pen beats Macron. The NYT is reporting today that the Russian intelligence service is engaged in hacking and other efforts in an attempt to elect Le Pen.

    The fact that investors expect a FED rate increase soon is another reason for the FED to go ahead and do it.

  6. South Gent,

    I was reading this SA article, “the Perfect Portfolio – For Retirees”, which is a variation of “Lazy Portfolio”.

    What piqued my interest was the thought of overlaying the concept of dynamic asset allocation to a Lazy Portfolio. Take the example of the above-mentioned “Perfect Portfolio”, TLT should be bought when RSP is viewed overvalued and vice versa. However, TLT will lose value fast in the current environment of rising interest(or in a secular bear bond market). In a way I think all models have some flaws and there is NO perfect portfolio.

    After studying various models over the years I think the only sensible investing strategy for a retiree is value investing with a risk mitigation discipline, of which you have been so generously sharing in your blog. I just need to find a way to simplify it as we all are getting older each day and it will be very difficult to keep up when the portfolio reaches “a mile long and an inch deep”.

  7. Y: The problem with backtesting a portfolio using TLT as a bond anchor is that it will work because it is the past.

    The bond market has been in a secular long term bull market for 35 years. The 30 year treasury started this bull run at over a 15% yield and is now at less than 3%.

    Back in 2010, I noted that TLT would likely be a drag on portfolio performance in the decades to come.

    I then created a randomly selected 5 stock portfolio out of 10 stocks. The 5 stocks were selected based on throwing wads of paper with the symbols up end the air and choosing the five that landed near my big toe. I wanted to compare the returns with TLT and started with $50K in each portfolio.

    I ended up with two dogs in that stock portfolio: GE and IBM.

    Without taking into account the distributions, which would favor the stocks anyway, the TLT position is currently worth $57,329.12. The stocks are worth $91,108.88.

    August 23, 2010 Post:

    And see discussion in this May 2009 blog:

    For the five year period ending yesterday:

    Total Annual Average Returns:

    TLT 3.68%

    With a modest uptick in rates for TLT's long duration, the number could easily turn negative.

    TLT Duration: 17.41 years
    1% Rise in Interest Rates at that Duration= About a 17.41% loss in value

    SPY Annual Average Total Return for 5 Years: 13.88%

    The next five years may not be so hot.

  8. Surge Energy: I did not catch this press release issued on 4/19/17:

    "As a result of Surge's successful drilling and waterflood activities in the Company's three primary operating areas, together with the core Sparky area asset Acquisition referred to herein, Surge will now be delivering production growth of more than 24 percent from Q2/16 to the end of Q4/17. With current core production of more than 745 boepd (97 percent oil), and an annual decline of less than 12 percent, the Assets provide Surge with substantial free funds flow. Surge's Board of Directors will look to increase the Company's dividend by 11.8 percent from $0.085 per year ($0.00708 per month) to $0.095 per year to ($0.00792 per month).

    That would be the second dividend increase this year.

    I did reference the news release from February in the post which increased the dividend by 15%:

  9. AKEBIA (AKBA): I discussed this small cap biotech in this post.

    After Hours Trading:
    $10.53 +$1.16 (12.38%)
    After hours: 3:10PM

    The news development, announced after the close, can be found here:

    "Under the terms of this collaboration agreement, Akebia will receive $208 million or more in committed capital from Otsuka, including $73 million upon signing and $135 million or more of development funding. In addition, Akebia is eligible to receive up to $657 million in milestone payments, representing a total transaction value of approximately $865 million. Otsuka will also make tiered, double-digit royalty payments of up to 30% on net sales of vadadustat in Otsuka’s territory, which includes Europe, Russia, China, Canada, Australia and the Middle East, but excludes Latin America and other previously licensed countries. In the five major markets in the European Union, sales of erythropoiesis stimulating agents (ESAs), the current standard of care for the treatment of renal anaemia, were approximately $1.5 billion."

    1. Akebia Therapeutics Inc.
      $12.00 +$2.63 +28.07%
      Last Updated: Apr 25, 2017 at 4:46 p.m. EDT
      After Hours Volume: 249.4K

  10. PETX (own small cap biotech lottery ticket basket):

    Aratana Therapeutics, Inc. (PETX)
    $6.50 +$0.46 (7.62%)
    After hours: 6:44PM EDT 4/25/17

    Aratana Therapeutics "recently met with the U.S. Food and Drug Administration Center for Veterinary Medicine (CVM) regarding the proposed manufacturing transfer of ENTYCE® (capromorelin oral solution).

    Aratana believes that it is in agreement with CVM on how to proceed. Aratana intends to resubmit the required prior approval submission in the coming weeks. If the submission is approved, Aratana believes it would be able to make ENTYCE commercially available by the fall of 2017."

    The previous statement on the manufacturing delay for this approved product was "late-2017."

    This product was approved by the FDA back in May 2016. The launch was delayed due to contract manufacturer being unable to produce commercial quantities. When that was announced last February, the market was caught by surprise, having no previous indication of a problem. A number of class action lawsuits were filed against the company. It remains to be seen whether the company has a good excuse for delaying that announcement.

    Whatever happens, this chain of events points out one of the many risks inherent in small cap biotech stocks. In this case, it is going to take almost 18 months to start manufacturing after a drug approval, plus the failure to communicate adequately to the market generated a bevy of class action lawsuits from the usual leeches whose concept of investigation involves reading a press release with bad news.

    PETX had three products approved for dogs last year.

    My only blog discussion was back in July 2016:

    2. Bought 50 PETX at $6.43:

    I currently own 130 shares.

  11. I have published a new post:

  12. First Trust Cloud Computing ETF (SKYY)

    In my 4/18/17 post, I briefly mentioned buying shares of SKYY and ROBO, two high beta ETFs.

    For me, those kind of purchases are view as gambling. Both have risen in value since my purchase, with ROBO doing better than SKYY, and both are viewed as trades.

    I will be curious to see how SKYY does tomorrow. The fund owns both Amazon and Google:

    Alphabet Inc. (GOOGL)
    $926.50 +$35.06 (3.93%)
    After hours: 5:38PM EDT, Inc. (AMZN)
    $952.10 +$33.72 (3.67%)
    After hours: 5:40PM EDT

    I bought back yesterday, again as a trade, the ETF TDIV.

    First Trust NASDAQ Technology Dividend ETF (TDIV)


    As long time readers know, I trade a lot. Sometimes, I am able to buy shares back at a lower price. Sometimes, I buy back at a higher price than where I sold. The later is the case for TDIV.

    My buys were between $19-$20 which is good. The sell prices were less than optimal:

    Item # 5. Sold 50 TDIV at $22.26 Roth IRA

    TDIV: Sold 100 at $25.63

    TDIV has been held back some due to owning some cats like IBM. (no longer will use the word "dog" to describe a poor performing stock)

    TDIV has a 3 star rating from Morningstar:

    The three year annualized total return is 11.55% which is slightly better than SPY's 10.8%.