Monday, July 10, 2017

CURRENT Exchange Traded Bonds and Preferred Stocks Basket:

This basket has been downsized some, primarily as a result of profit taking, since I last updated the table back in August 2016. Update For Exchange Traded Bond And Preferred Stock Basket Strategy As Of 8/25/16 - South Gent | Seeking Alpha

Stocks, Bonds & Politics: Exchange Traded Bonds: New Gateway Post

Table as of 7/10/17:

Value: +$102,705.67
Up +$110.6 Today

I include several bond ETFs in the preceding table for comparison purposes. I do not currently own any bond ETFs.  The lot value number for Canadian reset preferred stocks are in USDs but the closing prices are in CADs.  

Most of the profit taking has occurred in Canadian reset equity preferred stocks. Those securities are classified in my allocation strategies with U.S. equity preferred floating rate stocks. 

Profits in Equity Preferred Floaters: $22,252.79 (snapshots at the end of the preceding linked post)

The realized gains in Canadian reset equity preferred stocks since August 2016 are as follows:  

Profit Is In Canadian Dollars: 

50 CFPRC:   $50.5
50PPLPRE:  $58
50 FFHPRG:  $112
100 PWTPRT:  $46.5
100 VSNPRC:  $792
50 FTSPRM: $75
50 CPXPRC: $225
50 EMAPRE:  $429
50 MFCPRN: $108
300 ENBPRP: $1,468.25
100 PWFPRT: $190.5
50 MFCPRM: $113
50 CFPRC: $173.5
100 DCPRD: $50.5
50 FFHPRG: $168.5
100 RYPRZ: $367
100 TRPPRH: $393
100 PPLPRG: $507
100 TRPPRE: $476.5
200 ENBPRP: $963
100 FTSPRI: $479
100 PPLPRC: $496

Total: +C$7,741.75

I still own several Canadian reset equity preferred stocks with significant unrealized gains.

In the U.S. equity preferred floater category, I lost 30 shares of AHLPRA to an issuer redemption, realizing a $50 gain and harvested $290.96 in profits from SCEPRJ and USBPRH. 

In the baby bonds category, I reduced my credit risks by eliminating RFT, RFTA, TANNL and TANNZ.

The issuer of TANNL and TANNZ, TravelCenters of America, had a dismal first quarter report that caused its exchange traded bonds to decline materially in price. 

I lost the baby bond HTGZ to an issuer redemption. 

I also engaged in routine trading that generated small profits in the following baby bonds: 

Trading Profits Baby Bonds Category Since 2008 = $9,360.02 

In the long dated maturities, interest rate risk is asymmetric between the issuer and the bond owner. The lopsided assignment of that risk is in favor of the issuer. If interest rates rise, the issuer will allow the owners to keep the low coupon bonds as they decline in value. If interest rates fall, which has been the case for a long time now, the issuer will redeem the bond at par value when it is able to do so, leaving the bond owners with less desirable alternatives for income replacement. The issuer only assumes the interest rate risk associated with a decline in rates within a few years after issuance so that it has to pay more in interest until it has the option to redeem at par value and refinance at a lower rate.    

I prefer buying $1K par value bonds in the bond market that have make whole provisions triggered by an issuer's optional redemption. Exchange traded bonds generally permit the issuer to redeem at par value at anytime five years after the IPO.  

There has been some light paring in fixed coupon equity preferred stock category since August 2016. I pared some positions shown in the August 2016 table, sometimes adding and then paring. 

The fixed coupon equity preferred category includes mostly REIT preferred stocks and some bank preferred. 

Realized Gains in Fixed Coupon Equity Preferred Stocks Since 2008: $9,744.31

I sold shares in the following since August 2016: 



Other:  GNEPRA

Regarding the trust certificate category of exchange traded bonds, few of those securities remain due to early redemptions by their respective call warrant owners. Stocks, Bonds & Politics: Trust Certificates: New Gateway Post

I have added recently to my synthetic floaters which are in the Trust Certificate legal form of ownership. Since August 2016,  I did eliminate GJO and PYT and pared GYC and GYB.

Trust Certificates Realized Gains = $29,798.17

I currently have no position in ING hybrids: Stocks, Bonds & Politics: ING Hybrids: Links in one Post
Realized Gains ING Hybrids = $2,117.96

Since August 2016,  I did nibble on the Aegon hybrids AEB and AEH.  

Bought 50 AEB at $21.69-South Gent's Comment Blog # 7
Bought 30 AEH at $24.81South Gent's Comment Blog # 6:

Stocks, Bonds & Politics: Aegon Hybrids: Gateway Post
Realized Gains Aegon Hybrids = $4,512.81

There has been no activity in Trust Preferred securities: TRUST PREFERRED SECURITIES - South Gent | Seeking Alpha
Realized Gains Trust Preferred: $4,169.25

Overall, I remained concern about interest rate risk for potentially perpetual equity preferred stocks and potentially long duration exchange traded bonds. Both categories will react badly to a material rise in interest rates.

I discuss the issue of asymmetric interest rate risk here: Update For Bond And Preferred Stock Basket Strategy As Of 9/10/15 - South Gent | Seeking Alpha

I discussed the interest rate risk and other material topics here: Update On Bond And Equity Preferred Stock Basket Strategy As Of 8/14/15 - South Gent | Seeking Alpha (scroll to following titles in the Appendix section: Interest Rate and Lost Opportunity Risks for Fixed Rate Coupon Equity Preferred Stocks; Credit Risks; Volatility Risk for Equity Preferred Stocks)

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. Trump and the Russians: The NYT published a story this evening that may turn into the biggest bombshell yet in the Trump-Russia collusion investigation.

    " Trump Jr. Was Told in Email of Russian Effort to Aid Campaign"

    " Before arranging a meeting with a Kremlin-connected Russian lawyer he believed would offer him compromising information about Hillary Clinton, Donald Trump Jr. was informed in an email that the material was part of a Russian government effort to aid his father’s candidacy, according to three people with knowledge of the email."

    The email indicated the source of the damaging information about Clinton was the Russian government.

    The meeting that is referenced is the recently disclosed one with the Kremlin's lawyer Natalia Veselnitskaya who is clearly an agent of the Russian government. Trump Jr. has now hired a criminal lawyer.

    The Russians are of course denying everything. Putin has created an alternate reality universe that is slightly deeper than the one created by Donald and his allies.

    Shortly after this meeting, the Russian intellegence started to dump the hacked DNC emails through Guccifer 2.

    1. Appropriately enough, but on an unrelated matter, Chelsea Clinton tweets Donald Trump: "Were you giving our country away? Hoping not." (One of the best comebacks I've ever heard.)

  2. South Gent,

    Thank you for the update. One can use it to create a watch list in preparation for when and if the prices drop again like what happened during the financial crisis of 2008.

    You mentioned GOV and TAHO in your recent blog. Both companies suffered a significant drop in their market value. With a quick search on the news wires there are no less than 12 law firms wanting to suit TAHO on behalf of the stockholders; however, only 1 law firm is investigating GOV for a potential law suit. Does that indicate to you that there is less a case for GOV, i.e., the drop was just part of the business?

    1. The short answer is no. I would not judge the merit of a claim by the number of law firms investigating a company.

      Those firms are leeches IMO.

      In the case of Tahoe Resources, there was adequate disclosure of the lawsuit that resulted in a suspension of the mining permit in Guatemala. I would view Tahoe as the victim of what is frequently ridiculous governmental actions and court decisions throughout Central and South America. Tahoe was also hurt by the recent abrupt decline in silver and gold prices.

      In many cases those class action lawsuits are settled for their nuisance value with the law firms taking a huge cut of the settlement with some crumbs falling to the shareholders, many of whom never bother to fill out the form necessary to make a claim knowing that it is simply not worthwhile for the money.

      In the case of GOV, that company discloses the conflict between the external manager and the shareholders in its SEC filings. The external managers are paid based on the assets under management, so the incentive is to add to those assets irrespective of whether the price paid is beneficial to shareholders or whether it makes any sense to acquire those assets. There is no good reason for GOV to have bought a large stake in SIR other than to cement the external manager's control over both REITs, nor was there a good reason for SIR to pay top dollar for the Cole acquisition.

      Brad Thomas wrote an article summarizing the essential problems with GOV back in June 2015:

      This will not prevent me from buying a small lot as a trade which I did twice in 2012.

      Moody's issued the following report on GOV after it announced the FPO acquisition:

  3. South Gent,

    As an afterthought to my previous comment about the watch list do you think the stocks that you use for trades can be included in the list?

    1. Y: Anything that I buy now is viewed as a trade other than Tennessee Municipal bonds. That is based on my belief that both stocks and bonds are richly priced.

      My trades are all small lots and generally do not exceed 100 shares, with a large number being less 100 shares.

      There are a lot of them throughout the year. Last year, I had a net short term trading gain of $18K which I simply view as a supplement to dividend and interest income. I am on track to exceed that number this year.

      The general rule of thumb is that the stock needs to be within what I consider a fair value range, using traditional valuation criteria, before I will consider it for a purchase.

      Then, a judgment is made, based on a variety of factors including what I call a "trading channel" shown by a two or three year chart, that selling is overdone. I will consider buying stocks that are hated or unloved. Frequently, I would view the position to be unworthy of a long term hold.

      For example, I do not like CPB and view it as a dog with an infestation of fleas. Nonetheless, I bought 30 shares yesterday at $51 using a Schwab commission free trade. The stock is ex dividend today and fell yesterday by more than the per share value of that dividend, so I was not buying in that respect a tax event.

      In that same account, I sold my entire position earlier this year, 30 shares, at $62.86:

      Item # 3.B

      The profit was +$237.15 but then I did not take on much risk either.

      I discussed the purchase here:

      CPB and other packaged food companies like GIS have been shellacked recently for a variety of reasons. I waited for the CPB price to fall below my last purchase price and then it became a question of feel. The end result was a purchase more than $4 per share below my last buy.

      I could also buy back GIS significantly lower than my last elimination price.

      In short, there are just too many stocks used as trading vehicles for me to have a list. There are included in Y.F. monitor portfolios that generally have anywhere from 100 to 200 stocks in them arranged by topics.

  4. FOLD (own as part of small cap biotech lottery ticket basket strategy):

    Amicus Therapeutics, Inc. (FOLD)
    $13.18 +2.92 (+28.46%)
    As of 11:04AM EDT


    1. FOLD: My position is 50 shares bought at $5.72 almost one year ago:

      2. Bought 50 FOLD at $5.72:

    2. Cathie: Fortunately, it does not matter what I do with any of my Lotto Tickets. And, I really do not know enough to make an informed judgment anyway on what to do with these small cap biotech stocks that jump all over the place.

      There are a lot of FOLD sellers and buyers today Volume is already at 15.85+M (shortly after 11 A.M. CST) vs. the 3 month average daily volume of 2.6+M.

      I am also getting a lot of recent upside action in IMDZ:

      Immune Design Corp. (IMDZ)
      $9.50+0.50 (+5.56%)
      As of 12:06PM EDT

      That one is a bungee jumper:

      IMDZ is much further away from receiving approval than FOLD, but the IMDZ market cap at a $9.5 per share price is only $242+M vs. $1.83+B for FOLD which already prices at least some benefits flowing from drug approvals. IMDZ is still a pure Lotto. Hard to say whether it will succeed or fail at this point.

      But, if it succeeds with one or two compounds now in Phase 2, there is a lot of upside room to run. I own 60 shares so I may sell 30 which is what I did recently with OMER. I also sold some NKTR when it popped and kept a few shares to see what happens:

      Nektar Therapeutics (NKTR)
      $20.27 +$0.76 (+3.90%)
      As of 12:18PM ED

      If I own more than 50 shares, which is not the case with FOLD, I may sell 1/2 into a pop which I call my ADXS lesson, where I failed to sell on a 100%+ pop soon after purchase and now have a an unrealized loss.

      I sold CARA too soon, having bought at total of 110 shares at less than $6, but the stock has collapsed recently going from $27 in late June to $12.57 now.

      Bottom line. There is no way for me to know what to do with these clinical stage small biotech stocks. I can only guess.

  5. IMGN: This bungee jumper declined over 50% after my first purchase. I bought three 50 share lots at different intervals in my IB account.

    There was a piece of good news, and the stock gained back that 50% and more, and I sold 100 of my 150 shares at $3.55.

    I kept a 50 share lot bought at $1.79 (12/12/16).

    IMGN is down today, with the last trade at $6.76:

    ImmunoGen, Inc. (IMGN)
    $6.76 -$0.61 (-8.22%)
    As of 12:37PM EDT.

    Still, after a 8.22% intra-day decline today, the remaining 50 shares are up 277.65% in about 7 months.

    Who knows what will happen? The next big move may be down below my purchase price or much higher.

  6. SGP:AX: Last night, I bought 500 shares of SGP:AX at AUD$4.25. IB charged an AUD$6 commission.

    Stockland Corporation Limited (SGP.AX)
    A$4.25 -0.03 (-0.70%)
    At close: 4:10PM AEST

    Stockland is a multi-category Australian REIT, owning, managing and developing shopping centers, logistic centers and business parks, retirement living villages, residential communities and office buildings.

    FFO was AUD$.31 per share in F/Y 2016, up 11.1%. The fiscal years end on 6/30.

    For the first half of the current fiscal year, FFO increased 7.8% Y-O-Y.

    S & P has a A- rating.

    I trade Australian REITs. Their dividends are generally paid semi-annually.

    My prior Stockland trade was to buy 600 at A$4.52 (1/3/17) and to sell 600 at A$4.71 (4/6/17), realizing an AUD$ profit of $99. I did not hold those shares long enough to capture the A$.129 per unit semi-annual distribution whose ex date was 6/29/17, but I am better off selling when I did and buying most of the shares back at a lower price.

    SGP was one of three Australian REIT trades made together earlier this year. One of the three was acquired by the Canadian REIT Northwest Healthcare, a 1300 unit/share position for me.

    I am just trying to earn some income on my AUD position as I wait patiently for the AUD/USD exchange rate to go up. The AUD/USD has been moving up as of late:

    My AUD total cost number is somewhere near 73, and I have a net realized gain trading the currency so far this year. I am not selling AUDs to buy USDs which may happen at much higher conversion rates than prevailing now. Instead, I have to sell AUDs, which have their own individual USD cost basis, to buy Australian securities on the Australian stock exchange. Then when I sell the security, I buy AUDs at the then current exchange rate with the proceeds, which are then are assigned a USD cost basis and so on.

    I sold two of the Australian REITs on 4/6/17 and another one on 4/9.:

    Item # 2.A.

    The AUD/USD was close to where it is now on 4/6 but closer to .75 on 4/9.

    The most recent peak was near 1.1 in July 2011 ($1 AUD bought USD $1.1, now 1 AUD buys slightly more than 76 U.S. cents.)

  7. I have published a new post: