Sunday, June 11, 2017

Observations and Sample of Recent Trades (LXP)-6/11/17

Trump The Truth Teller

Nixon would have nothing to worry about if he had the current crop of republican politicians. 

And, it is crystal clear to me that the republicans will not use the same criteria to evaluate a possible Trump impeachment that they wielded against Clinton for lying about having sex with Monica.     

As expected, republicans continue to defend Trump and will continue doing so IMO.  

Analysis | Republicans close ranks around Trump during Comey testimony

Trump Under Investigation for Obstruction of Justice, James Comey Says in Testimony: Newsweek

What Is Obstruction of Justice? How Comey Testimony Could Land Trump in Impeachment Trouble  

It is also easily predictable that the Fake News Media, meaning Rush Limbaugh, Sean Hannity and legions of the same ilk, will create a false narrative of Comey's testimony that will be believed by the living dead. A Pro-Trump Conspiracy Theorist, a False Tweet and a Runaway Story

Paul Ryan offered what I will call the "doufus" defense for Trump: 

"The president is new at this, he is new to government, and so he probably wasn't steeped in the long running protocols that establish the relationships between DOJ, FBI, and White Houses," Ryan told reporters at a news conference Thursday. "He is just new to this. And so I think, what I got out of that testimony is we now know why he was so frustrated when the FBI director told him three times there is no investigation of him yet that speculation was allowed to continue." Paul Ryan's Defense of Trump: He's New to the Job - NBC News

Senator Graham offered what I will call the "bullshit" defense, meaning simply that everything coming out of his mouth is just a bunch of B.S. and is not to be taken seriously except by the living brain dead: 

"Half of what Trump does is not OK. If you're trying to convict him fro being a bull in a China shop, crude and rude, you'd win. A lot of stuff troubles me, but it is not a crime". 

Graham: Trump's contact with Comey isn't obstruction of justice - POLITICO

Instead of focusing on Comey's testimony, Graham made this totally specious argument:

"What prosecutor in their right mind would allow their star witness to go out before the Senate panel of 20 senators and get beat up if he really believed he had a case? This is the best evidence yet that in the mind of the special counsel, there is no obstruction of justice case to be made against President Trump. All in all, it's a pretty good day for President Trump."

Graham on Comey testimony: CNN 

Rubio defends Trump in Comey questioning - The Washington Post

Comey Testimony: Republican Senators Dining, Meeting With Trump Two Days Before FBI Director's Testimony: Newsweek (Senator Tom Cotton (R-Ark), who is also a member of the Senate Intelligence, was also at this dinner); 

After damning James Comey testimony, Miami’s Sen. Marco Rubio defends Trump | Miami Herald

Rubio did say that Trump's interactions with Comey may have not been appropriate which seemed like a huge concession for him to make. Perhaps Mario can explain why Trump called Comey repeatedly, requested private meetings and asked the attorney general, vice-president and Kushner to leave the oval office so that Trump could talk to the FBI director in private. Where are the historical parallels for such actions in American history Mario?  

Senator John Cornyn (R-TX) said after the hearing that none of the testimony even suggested obstruction of justice: Cornyn: No testimony to suggest obstruction of justice - The Washington Post

The stock market is sensing, correctly IMO, that the congressional and senate republicans will do nothing about Trump, irrespective of the evidence that piles up against him that he committed one or more crimes or that he is unfit to be President within the meaning of the Twenty-Fifth Amendment to the U.S. Constitution.

Even if the Democrats regain control over the House, and then initiate impeachment proceedings which results in a partisan majority vote for impeachment in the House Judiciary Committee and the House, there would not be enough Senators to convict by a two-thirds vote, and consequently the entire exercise would be futile and simply divisive, even if the evidence was more than sufficient to convict Trump in a criminal trial. 

No criminal charges will be filed against Trump by the Justice Department. Their policy has been to collect evidence against a President, with the remedy being impeachment rather than criminal prosecution. 

No impeachment proceedings will be started in the House Judiciary Committee. To date, there has not been a single republican member of the House Judiciary Committee who has even suggested the possibility that an impeachment inquiry is now warranted. 

The Comey testimony is certainly evidence that Trump obstructed justice and would be sufficient for the special prosecutor to initiate a thorough investigation. More evidence would be needed to convict, including corroborative testimony IMO.  

Trump says that he is willing to testify under oath. I would not hold your breath waiting for that to happen. 

When asked about whether tapes existed last Friday, a simple question capable of being answered by any honest person succinctly, Trump was clearly evasive: "I'll tell you about that maybe sometime in the very near future. You're going to be very disappointed when you hear the answer, don't worry", later adding that he was "not hinting at anything".  

If the tapes exist and will exonerate Donald, assuming no alternation, then why not release them so that we all can determine who is telling the truth? Maybe the tapes existed and no longer exist. Maybe the Dark Force could resurrect Rose Mary Woods to perform her magic disappearing routine on White House tapes: Cracking Watergate's Infamous 18 1/2 Minute Gap

Trump denied telling Comey to drop his investigation of Flynn, but added that it would have been lawful for him to do so. Say What? 

While it is true that Trump could have pardoned Flynn, thereby ending the FBI's criminal investigation, Trump did not choose that path for a number of obvious reasons. Instead, Trump elected to pursue a different path that raises obstruction of justice problems for him. 

Comey did not testify that he was directed by Trump to stop the investigation using those words, as in "Stop the Flynn investigation or I will fire you". Even Donald is more subtle, though not by much. 

Instead, Comey claimed that Trump made the following statement:  "I hope you can see your way clear to letting this go, to letting Flynn go. He is a good guy. I hope you can let this go." The overall context was that Comey needed to stop the Flynn investigation to keep his job. Comey testified that he understood the President as giving him a directive"

Q.   “When a president of the United States in the Oval Office says something like ‘I hope’ or ‘I suggest’ or ‘Would you?’ do you take that as a directive?” 

COMEY: “Yes, it rings in my ear as kind of, ‘Will no one rid me of this meddlesome priest?’ ”

“Why did he kick everybody out of the Oval Office? That to me, as an investigator, is a very significant fact.”

Q. RISCH: No; he said ‘I hope.’ ... Do you know of any case where a person has been charged for obstruction of justice — or for that matter, any other criminal offense — where they said or thought they hoped for an outcome?

COMEY: I don't know well enough to answer. And the reason I keep saying 'his words' is, I took it as a direction. I mean, this is the president of the United States, with me alone, saying 'I hope this.' I took it as this is what he wants me to do. I didn't obey that, but that's the way I took it.
If Coats confirmed that Trump asked him to intervene in the FBI's investigation,  that would be powerful corroborative evidence. The GOP could care less.   

Comey testified that he discussed contemporaneously with seven high ranking federal employees what Trump had told him. It is consequently idiotic to suggest, as one former GOP congressman did in a WP opinion column, that Comey can be dismissed as a disgruntled employee. Comey' prepared his memos of his meetings and phone conversations with Trump and discussed those meetings prior to Trump firing Comey. Comey is a disgruntled ex-employee, and that’s how the Senate should view his testimony - The Washington Post   

The only court for Trump and the republicans will ultimately be the Court of Public Opinion as expressed in the 2018 and 2020 elections. If anyone disagrees with what the republicans are doing on this and other matters, then all republicans need to be held accountable at the polls. There is no daylight between republican politicians and Donald who is the embodiment of what the modern day GOP is and represents.  

Timeline of Russia Investigation -


Trump is a Serial Liar

Comey called Trump a liar. 

James Comey has called Donald Trump a liar 5 times today. The White House says he isn't. - CNN

James Comey: President Trump's a liar: U.S. Today 

Comey, unplugged: Trump is a lying liar who lied - The Washington Post

James Comey repeatedly accused President Trump of being a liar - NY Daily News 

Sarah Huckabee says that Trump is not a liar so everyone can quit raising the subject now. 

“I can definitively say the president is not a liar”: Sarah Huckabee 

And Trump has called Comey a liar.  

The Stock Jocks view that contest to be nothing more than a he-said, he-said situation. James B. Comey v. President Trump, a case of he-said, he-said That opinion assumes no corroborative testimony emerges. I would just emphasize that Trump does not control Mueller. Trump can only fire him. 

It is unique in our Nation's history to have a former FBI Director call a sitting President a liar once, let alone multiple times. It is unique for a President to ask for a closed door meeting with the FBI Director who is investigating the President's campaign and other maters for malfeasance. 

My views about Trump are known. He has zero credibility in my book. He lies far easier than he breathes.  

The WP has collected 623 false and misleading statements made by Donald since his inauguration and through 6/5/17: The Fact Checker’s tally of Trump’s false claims since becoming president - Washington Post 

One news service clocked Trump telling a lie about every 3 1/2 minutes prior to the election. Donald Trump’s Week of Misrepresentations, Exaggerations and Half-Truths - POLITICO MagazineTrump’s Lies vs. Your Brain - POLITICO Magazine  

Facts do not matter to tens of millions who live firmly enveloped in their own alternate reality universe. Reality creations are the real facts; false is true; true is false; Hannity and Limbaugh are seen by millions as fact tellers; uttering cliches is viewed as thought; and communication by tweets is viewed as providing substantive information. Democracy will not work well in that environment. Democracy will ultimately depend on an informed citizenry making sound judgments based on facts. 

Trump tweeted that Comey completely vindicated him.  

We shall see in the fullness of time.

I will wait anxiously for the production of an unaltered tape, and Trump's testimony being given under oath.

A competent Trump lawyer would cringe big time by the thought of Trump testifying under oath. 

In addition to possible obstruction of justice, perjury could come into play. The Democrats would welcome the opportunity to put Donald under oath. 

Lying to an FBI agent would be a felony as well, 18 U.S. Code § 1001

Trump volunteered to be interviewed by Mueller and maybe Donald needs to go for the trifecta (obstruction of justice, perjured testimony and lying to a federal investigator). Trump is the kind of witness who will tell so many lies under oath that a competent examiner taking his deposition would want him to keep talking for as long as he wants to talk even if he ventures far afield from the question. 

The republicans did an excellent job getting Bill Clinton to testify under oath so that a question could be asked about having "sex with that woman". He would of course lie when responding to questions about such matters and to take other alleged measures to cover his extramarital infidelities. 

And this is the brilliant part of the GOP Clinton's strategy. 

Once Clinton lied
 under oath about having sex with Monica, or other women who are not Hillary,  then beat him over the head with a partisan impeachment vote for lying when asked about having sex with other women.  The Democrats will most likely be far less competent in getting Donald to testify under oath about everything connected to the Russia investigation or the alleged history of sexual assaults. 

I am still waiting for Donald to sue all of those women who claimed Donald had sexually assaulted them.  Donald Trump Says He Will Sue Sexual Misconduct Accusers |  The Trump True Believers probably still believe that those suits will be flying in the "near future". 


Karen Handel:

Democrats pounce on Karen Handel for 'livable wage' remark -

Ms. Handel is the republican candidate running against the Democrat Jon Ossoff in the June 20 special election. This congressional seat, 
Georgia's 6th congressional districthas been held for 40 years by a republican. Newt Gingrich represented this district for 20 years. The race is still too close to call. 

During her debate with Ossoff, Handel made the following comment in response to a question about the minimum wage:

"This is an example of a fundamental difference between a liberal and a conservative. I do not support a livable wage".

I am curious why Ms. Handel believes that her position was the Conservative one. Do true conservatives, rather than the far more common pretend, pseudo-conservatives, want people to have a non-livable wage?  

I am also trying to figure out why rejecting climate science is a conservative position. When asked about climate change, Ms. Handel responded that she is not a scientist.
GOP's new refrain: 'Not a scientist' | TheHill

There needs to be a fundamental rethink about the nature and meaning of conservatism. The GOP is not a conservative party.  

Stocks, Bonds & Politics: What is the Appropriate Political Label (1/3/2009)

Item # 3 Strom Thurmond and Rush Limbaugh-Rhetorical Flourish for the Brain Impaired and Uninformed: Stocks, Bonds & Politics (11/5/2009 Post)

Stocks, Bonds & Politics: Paul Ryan is a Reactionary (Not a Conservative)-An Advocate of a Gilded Age Political Philosophy (August 15.2012 Post)

Stocks, Bonds & Politics: Modern Day GOP: No Longer A Conservative Party (7/19/2011 Post)

Stocks, Bonds & Politics:  Going to War Decisions: Conservative or Liberal vs. Competent or Incompetent? (12/25/2008 Post)

Stocks, Bonds & Politics: The Most Abused Word: Reform/Buys of IR at $11.82 & DD at $16.68/Santayana: An Inability to Remember History or Just Creating Your Own Reality to Fit an Ideology (3/7/2009 Post)

Stocks, Bonds & Politics:  Conservative or Delusional Reactionaries? (Item # 3, 3/3/2010 Post)

Stocks, Bonds & Politics: Is the Failure to Learn from History Consistent with Conservatism? (2/4/2009 Post)

I quit calling racists, bigots, misogynists, wingnuts, conspiracy theorists and reactionaries "conservative" no later than the 9th grade. I was in the Alabama public school system at the time.

Conservative is what they want to call themselves since it sounds a whole lot better than a more appropriate description.


1. Long Term Bond Basket Strategy (Primarily Tennessee Municipal Bonds:

The funding sources for the municipal bond purchases discussed below are from the following maturing short term bonds and CDs. 

1 WFC  1.4% SU 9/8/17
2 Sterling Bank .75% CDs 9/11/17
1 Dominion Resources 1.4% SU 9/15/17 
2 First N.A. .65% CDs 9/15/17  
1 Bank of China .75% CD 9/15/17
1 Vodafone 1.25% SU 9/26/17
2 Citizens Bank .95% CDs 9/29/17
5 USTs .625% 9/30/17 
2 Bank of India 1% CDs 10/4/17
2 Toyota Motor Credit 1.25% SUs 10/5/17
1 Royal Bank of Canada 1.4% SU 10/13/17
2 Pepsico 1% SUs 10/13/172 Air Products 1.2% SUs 10/15/17
1 Bank of China .9% CD 10/19/17

Total $25K 

I am reallocating the proceeds from most maturing short term bonds and CDs to purchase long term Tennessee municipal bonds. 

The proceeds were not yet received when I bought the municipal bonds but soon will be. 

As those short term securities actually mature, I will build up my cash allocation until I find more favorable buying opportunities. Possibly, some of the proceeds will be used to buy very short term CDs depending on their yield advantage over a broker's sweep account. I am not likely to invest any meaningful sum in stocks now. 

The total reallocation out of MM cash into short term securities into Tennessee Municipal bonds totals $165K. It will be another three weeks or so before I discuss all of those purchases. 

I started buying Tennessee Municipal Bonds a few weeks ago. The first purchases were discussed in this post: Stocks, Bonds & Politics: Tennessee Municipal Bonds (5/2/17 Post)

As of Date of This Post's Publication

Par Value Totals/ Cost Numbers/Estimated Annual Tax Free Income:

Fidelity:    $85K / $85.133K/ $2,395.08
Schwab:    $70K/ $69.773K/ $2,302.5
Vanguard:  $10K /$9.565K / $312.5

Total Principal Amount $165K

Total Cost: $164.491
Total Annual Income: $5.01K
Current Tax Free Yield Based on Cost= 3.046%

The YTM would be slightly higher than the current yield number since my total cost number is below the total principal amount.  

A. Bought 5 Nashville-Davidson County Metropolitan Government 4% GO Bonds Maturing on 7/1/34

YTM at Total Cost (107.14) =  3.17%

Current Tax Free Yield: 3.73%

Davidson County - Google Maps

In 1963, Davidson County and the City of Nashville combined into a single government, the first city-county government consolidation in the U.S. 


Credit Ratings: 
Moody's at Aa2
S & P at AA

Security: Note the legal issue discussed in the following snapshot 

Optional Redemption: AT PAR on or after 7/1/27

 Offering Statement.pdf

B. Bought 5 City of Knoxville Tennessee 3% Water Revenue Bonds Maturing on 3/1/44:

YTM at Total Cost =  3.82

Current Yield = 3.28%


Credit Ratings:
Moody's at Aa1
S & P at AAA


Optional Redemption: AT PAR on or after 7/1/23

Tax Matters: 

Offering Statements

C. Bought 5 Shelby County 3.375% Health Revenue Bonds Maturing on 5/1/32:

YTM at Total Cost (98.882) = 3.471%

Current Yield = 3.41%


Credit Ratings:
Moody's at A1
Moody's Assigns A1 to Methodist Le Bonheur Healthcare's (TN) Series 2017A; Outlook Stable
S & P at AA-

Hospital revenues bonds are issued by a governmental entity who then loans the proceeds from their sale to one or more hospital entities under a master indenture, usually at the same rate as the bond. A security interest is granted in gross revenues. The government entity that issues the bonds has no liability for bond payments.

Optional Redemption: AT Par on or after 5/1/27.

Offering Statement.pdf (risks summarized starting at page 16)

I personally view this kind of hospital revenue bond to have more credit risk than one secured by utility revenues and certainly a GO bond. There is just a lot more that can go wrong as noted in the long risk summary noted above.  I will keep my overall hospital revenue bond exposure to no more than $20K with a limit of $5k per issuer. I currently own only this hospital revenue bond. 

D. Bought 5 Maury County 2.375% GO Bonds Maturing on 4/1/35:

YTM at Total Cost (84.645) = 3.541%

Current Yield = 2.81%


Credit Rating:
Moody's at Aa2


Tax Matters:

Optional Redemption: AT PAR on or after 4/1/24

Offering Statement.pdf

E. Bought 5 Johnson City, Tennessee 3.375% GO Bonds Maturing 6/1/38:

YTM At Total Cost (100.099) = 3.348%

Current Tax Free Yield =  3.37%


Credit Ratings:

Moody's at Aa2


Tax Matters:

Optional Redemption: AT PAR on or after 6/1/21 (this could end up being a 4 year bond maturity)

Offering Statement.pdf

2. Equity REIT Common and Preferred Stock Basket Strategy:

A. Added 50 LXP at $9.45-Used Commission Free Trade:

Quote: LXP Stock Price - Lexington Realty Trust 

Dividend: Quarterly at $.175 per share

Yield at $9.45 Total Cost Per Share = 7.41%

Last Ex-Dividend Date: 3/29/17

My last two buys were made in my IB account: a 100  share  bought at $10.05 before the 3/29/17 ex-dividend date,  Item # 2, and a 50 share lot bought at $9.6 on 5/10/17. 

I also own 1 LXP senior unsecured bond: Item # 1.D.

Trading Profits To Date in the Common Shares = $697.94

The chart indicates to me that this company is held in disfavor by institutional investors IMO:  LXP Interactive Stock Chart

Individual investors will frequently assert that this stock is undervalued by the market given its low FFO multiple. (e.g. Property REIT Yields 6.7%, Attractive Valuation, 137% Dividend Coverage - Lexington Realty Trust (NYSE:LXP) | Seeking AlphaLexington Realty Trust: A Strong Buy - Lexington Realty Trust (NYSE:LXP) | Seeking Alpha)

The best recent SA article was one published on 4/17/17 and written by Brad Thomas: It's Time To Cash In My Lexington Realty Chips - Lexington Realty Trust (NYSE:LXP) | Seeking Alpha The concern expressed in that article involves LXP's office buildings:

Page 22

In Brad's prior articles, he expressly far too much optimism about this REIT IMO. Lexington Realty Is A Value Stock, Not A Value Trap - Lexington Realty Trust (NYSE:LXP) | Seeking Alpha

My pet peeve with most discussions about LXP is the failure to emphasize the non-cash revenue component of LXP's FFO and AFFO numbers.

This snapshot taken from the 2017 first quarter report highlights this issue, and the fact that the non-cash revenue component has fallen significantly over the past year based on certain property disposals ("straight-line adjustments" column):

2017 First Quarter Report

The accounting profession creates non-cash revenues that are included in both LXP's FFO and AFFO numbers. Those non-cash revenues are then deducted from AFFO to arrive at Funds Available for Distribution. Some non-cash charges are additions to AFFO in the FAD calculation as shown above.

Y-O-Y, non-cash revenues decreased from $11.139M to $2.909M due to certain property disposals. The decrease in cash flow "was primarily attributable to 2017 and 2016 property sales, particularly the sale of the New York City land investments in 2016, and lease expirations, partially offset by revenue generated from property acquisitions and new leases."

The company forecasted in that earnings release AFFO per share of $.95 to $.98.

"As of March 31, 2017, Lexington's portfolio was 96.2% leased, excluding any property subject to a mortgage loan in default".

"In the first quarter of 2017, Lexington issued 1,593,603 common shares at an average price of $10.89 per share under its ATM offering program."

Acquisitions, Completed Build to Suit Projects and On-Going Build to Suit: 2017 First Quarter

One tenant, Physicians Choice Laboratory Services, went out of business during the 2016 4th quarter. This company occupied a 104,500 square foot property owned by LXP at 854 Paragon Way since 2013. LXP purchased that building for $24.35M that year and later built an addition. After looking at the property and its location on google maps, the purchase looks like an obvious mistake. The property is now vacant, see page p. 35 of the 2016 Annual Report which also lists 4 other vacant industrial properties. It is unclear to me which Gander Mountain stores will be closed after Camping World bought the assets.  

The 2016 Annual Report lists some retail properties starting a page 36. Some of those properties are leased to K Mart/Sears and to a company called Gander Mountain which has declared bankruptcy (pages 36 and 38).  The assets of Gander Mountain were acquired by Camping World owned by Marcus Lermonis. It is unclear to me whether the new owner will close the LXP properties located at 100 Gander Way in Palm Beach Gardens, Florida and in Albany, Georgia. Those locations were not on the initial list of store closures shown on a map published by USA Today last March. Gander Mountain not closing all stores, owner says; liquidation sales underway |

With LXP, I will average down and will sell the highest cost lots on price pops. 

In addition to the lot recently purchased at $10.05, which will be the next lot sold, I own 100 shares in a Roth IRA account plus shares purchased with the dividends. A fifty share bought at $7.6 is still owned in a Vanguard Roth IRA account: Item # 1. Sold 100 LXP at 150 in Vanguard Roth IRA Account: Update For Equity REIT Basket Strategy As Of 6/24/16 - South Gent | Seeking Alpha 

The Fidelity Roth IRA is down to a 50 share lot bought at a total cost of $7.89 (1/8/16) and 75+ shares bought with reinvested dividends, mostly generated from a much larger share count in the past.    

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 comment:

  1. I have published a new post that discusses some Tennessee Municipal Bond purchases.