Wednesday, July 19, 2017

Observations and Sample of Recent Trades: EBGUF, FENY, MET, XHR, XRE:CA, ZRE:CA

Economic Reports:

This is a good summary of recent economic reports: Another Bout of Deflation Ahead?

Dollar Bears' Case Grows Stronger as Wagers on Fed Hikes Fade - Bloomberg

U.S. Dollar Index (DXY) Interactive Chart
Bloomberg Dollar Spot Index 

New U.S. Subprime Boom, Same Old Sins: Auto Defaults Are Soaring - Bloomberg

OPEC Quietly Opened the Taps in June: Bloomberg

China Economic Expansion Exceeds Estimates on Factory Rebound - Bloomberg

Builder sentiment stumbles to 8-month low on higher lumber costs - MarketWatch

However, the housing starts for June, released this morning, were better than expected. Housing starts jump as construction, home buying get back on track - MarketWatch

The economic numbers so far in 2017 are no better than those reported in 2016. Yet, the S & P 500 ETF SPY has produced a 16.42% total return since 11/8/16. DRIP Returns Calculator | Dividend Channel



TrumpCare has failed in the Senate. Senator McConnell has stated hat he will try a clean repeal bill with no replacement. Trump Blames Democrats and a ‘Few Republicans’ for Health-Bill Wreck - Bloomberg There are not enough votes for a repeal bill. McConnell's New Obamacare Repeal Lacks GOP Votes to Pass - Bloomberg

The republicans had no problem in voting repeatedly for a repeal only bill when Obama was President, knowing that he would veto the legislation. It is easy to howl out the wind. I seriously doubt that a repeal bill will pass when the republicans know that Trump will sign it into law. 

And, the republicans have persistently tried to sabotage Obamacare and will likely continue doing so. 

Republicans Raised Your Health Care Premiums, Not Obamacare | Policy Dose | US News and World Report 

How the G.O.P. Sabotaged Obamacare - The New York Times

The GOP masterminds behind the Obamacare sabotage - The Washington Post

This Trump delay may push Obamacare rates 20 percent higher next year: CNBC

Health Insurers’ Next Obamacare Scare Is Just Two Days Away - Bloomberg

While the GOP could withdraw their efforts to destabilize the exchanges, a super majority of republican politicians appear willing to continue their efforts:

Trumpcare Mess Leaves Health Industry in Legislative Limbo - Bloomberg

Donald Trump just tweeted 2 totally contradictory solutions to the health care collapse - CNN

Another interest group lined up against TrumpCare shortly before its demise:  

Insurers blast Senate Cruz amendment as 'unworkable' - Jul. 15, 2017 "The Cruz amendment "is simply unworkable in any form and would undermine protections for those with pre-existing medical conditions, increase premiums and lead to widespread terminations of coverage for people currently enrolled in the individual market," wrote the CEOs of America's Health Insurance Plans and the BlueCross BlueShield Association.")

Insurance groups tear into Cruz amendment to health care bill as "unworkable" - CBS News

There is no relationship between what the GOP says will happen and what will happen. Pence recently claimed for example that no one would lose their Medicaid benefits even though funding was being slashed because the private insurance companies would compete and drive prices down sufficiently to make up for that loss in federal funding. 



So it turns out that the Russian Rinat Akhmetshin, who met with the Trump Team in NYC, is an accomplished orchestrator of email hacking efforts. Soviet Veteran Who Met With Trump Jr. Is a Master of the Dark Arts - The New York Times

The FBI needs to go full throttle investigating that guy. All document relating to that guy's activities over the past two years need to be acquired quickly.  

An eighth person has been identified as attending this meeting, Ike Laveladze, who has had a prior history of laundering Russian money. ("A congressional inquiry into money-laundering by foreigners using shell companies led to a report by the Government Accountability Office that found Kaveladze had established 2000 U.S. corporations and accounts that moved $1.4 billion through American banks." Ike Kaveladze Named as Eighth Person in Trump Meeting - NBC News)

Trump Jr.’s Russia meeting sure sounds like a Russian intelligence operation - The Washington Post (article written by Rolf Larssen who worked for 23 years as a CIA intelligence officer) 

Trump, Putin Had Second, Previously Undisclosed Meeting at G-20 Summit - NBC News (only Russia's interpreter joined the meeting)

Bipartisan Group That Shares Voter Data Shames Trump Panel - NBC News
Despite Trump promises, White House falling short in opioid fight - CBS News

ERIC (Electronic Registration Information Center)

How many Trump products were made overseas? Here’s the complete list. - The Washington Post


1. Minor Changes in Extremely Underweighted Energy Sector Allocation:

I discussed some reasons for adding gingerly to my energy allocation in this post: Item # 4 Bought Back AMU at $17.58-Stocks, Bonds & Politics: Observations and Sample of Recent Trades: (AMU)

The general thesis is that the market may be surprised by the growth in demand outpacing the growth in production.

Current EIA Projections:

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

Global crude oil balances expected to tighten through 2018-U.S. Energy Information Administration (EIA)

In this week's Barron's, Andrew Bary discussed the production problem and particularly the urge to drill for more oil with no positive returns on capital. 8 Great Energy Stocks at Bargain Prices - Barron's The 8 recommendations are Exxon, Chevron, Suncor, Canadian Natural Resources, Apache, EOG Resources, Cabot and Range Resources. Perhaps the most convincing case was made for Chevron based on its Gorgon natural gas field off of Australia's cost, the Australia Wheatstone Project and a good land position in the U.S. Permian Basin. I may buy a few shares. 

It is insane for E & P companies to spend billions on uneconomical production hoping that crude oil will soon return to $70 to $140 a barrel rather than being range bound between $40 to $60 for several years.

One analyst mentioned in the article claims that the big five have incurred $1.2 trillion in capital spending over the past decade, adding $200B in debt to their balance sheets, and have not increased production.

A. Bought Back 50 FENY at $17.85 (commission free ETF at Fidelity)

Trade Snapshot: 

Holdings as of 6/26/17-Greater Than a 1% Weighting: 

FENY | ETF Snapshot - Fidelity (Expense ratio .084%) 

Item # 5 Sold 50 FENY at $27.81 (8/6/14 Post)(profit snapshot=$115.96)-Item # 2 Bought 50 FENY at $25.49 (3/10/14 Post) 

B. Added 15 PEO at $18.69 (used commission free trade)

Quote: Adams Natural Resources Fund (PEO)

Adams Natural Resources is an unleveraged CEF that owns natural resource stocks. Commodity stocks have been a sector to avoid for about three years now. The three year annualized total return of this fund through 7/12 was -10.81% based on net asset value per share and -9.54% based on price.  Adams Natural Resources Fund (PEO) Total Returns

Those numbers are slightly better than the Energy Select Sector SPDR® Fund (XLE) and close to the total negative returns of  iShares North American Natural Resources ETF (IGE).

Data Date of Trade (7/12/17)

Closing Net Asset Value Per Share  $21.61
Closing Market Price $18.71
Market Price Discount to NAV Per Share = -13.43%
PEO Adams Natural Resources-CEF Connect 

Expense Ratio .79%

PEO 2016 Annual Report  (net unrealized appreciation as of 12/31/16 was at $188.273+M)

PEO is currently rated 4 stars by Morningstar.

I eliminated my PEO position in 2013 and have gradually been reacquiring shares and reinvesting the dividends. Item # 1 Sold 104+ PEO at $27.06 (8/10/13 Post)(total return 14.24%/one year holding period)

I now own 168+ PEO shares.

The fund is currently committed to an annual distribution of at least 6%.

C. Sold 100 EBGUF at $25.51 After Previously Adding to ENF:CA

EBGUF is the USD priced ordinary shares that trade in the U.S. Grey Market. I still own the ordinary shares priced in CADs and have recently added to that position. 


EBGUF Stock Price - Enbridge Income Fund Holdings Inc.  (U.S.: OTC) 

ENF Stock Price - Enbridge Income Fund Holdings Inc. (Canada: Toronto) 

Overview - Enbridge Income Fund

I bought this lot as a trade, primarily to play an upswing in the CAD/USD and to collect a few dividends. I mentioned in a recent comment buying a number of USD priced Canadian stocks as short term trades. 

Profit: $53

On the date of purchase (4/19/17), EBGUF closed a $24.88 and ENF:CA closed at $33.6

Yesterday, ENF:CA closed at C$32.21, down 4.14% from its 4/19 close.

EBGUF closed yesterday at $25.51, up 2.53% from its 4/19.

The difference in performance is due solely to the CAD rising in value against the USD. Ideally, I would have wanted a Twofer, where the CAD gains in value against the USD and the ordinary shares priced in CADs also increase.

My last discussion of a ENF:CA purchase was in a comment. My last purchase of the CAD priced shares was at C$32.25 (6/9/17)

The last blog discussions of this company were several years ago:

Item # 1 Sold 100 ENF:CA at C$27.65 (8/2/14 Post)Bought: 100 ENF:CA at C$23, 50 SLGPRI at $22.69 (11/6/13 Post)

Dividends are paid monthly.

2. Equity REIT Common and Preferred Stock Basket Strategy:

A. Bought 100 XRE:CA at C$16.39 (C$1 commission):

Quote: XRE Fund - iShares S&P/TSX Capped REIT Index ETF Overview

Sponsor's Page: iShares S&P/TSX Capped REIT Index ETF | XRE

Dividends: Monthly at C$.06847

B. Bought 100 ZRE:CA at C$19.82 (C$1 Commission)

Quote:  BMO Equal Weight Canadian REITs Index ETF (ZRE:CA)

This ETF will have dramatically different weightings than XRE discussed above. 

ETF Products- BMO Asset Management Inc.

All Canadian REITs pay monthly distributions. 

This ETF pays a monthly dividend of C$.088 or C$1.056 annually. The yield is about 5.33% at C$19.82. 

Of the securities owned by this ETF, I own individually Artis, Cominar, Dream Global, Dream Office, and Northwest Healthcare. My largest position is 1,300 shares/units of Northwest Healthcare. 

C. Sold 50+ XHR Shares-Used Commission Free Trade

XHR Stock Price - Xenia Hotels & Resorts Inc. 

I sold on the ex dividend date. I harvested two quarterly dividend payments. One payment was used to buy shares and the other will be taken in cash. 

Trade Snapshot: 

Profit Snapshot: +$171.95

Recent News: 

Xenia Hotels & Resorts Completes $163 Million, 5-Hotel Portfolio Sale to Summit Hotel Properties

Xenia Hotels & Resorts Acquires Hyatt Regency Grand Cypress In Orlando For $205.5 Million

3. Short Term Bond/CD Ladder Basket Strategy:

A. Bought 2 Bank of Baroda 1.1% CDs Maturing on 8/30/17 (2 month Term):

B. Bought 2 Centerstate Bank 1.4% CDs 1/30/18 (monthly interest):

Holding Company:  Centerstate Banks Inc.  (CSFL)

C. Bought 2 Bank of India 1.2% CDs Maturing on 10/11/17 (3 month term):

4. Intermediate Bond/CD Basket Ladder Strategy:

A. Sold 2 Alabama Power 2.45% SU Bonds Maturing on 3/30/22:

Trade Snapshot:

Profit Snapshot: +$18.76

Finra Page: Bond Detail

Sold at 100.442

YTM Then at 2.349%
Current Yield at 2.44%
Net Proceeds = 100.342

Bought at a Total Cost of 99.403

Item # 1.D. 
YTM Then at 2.577%
Current Yield at 2.46%

B. Sold 2 CIGNA 3.25% SU Bonds Maturing on 4/15/25:

Profit Snapshot: +$17.32

Issuer: Cigna Corp. (CI)

CI Analyst Estimates

FINRA Page: Bond Detail

Sold at 100.423

YTM Then at 3.186%
Current Yield at 3.236%
Net at 100.323 (after $2 brokerage commission)

Bought at a Total Cost of  99.457

ITEM # 1.D.
YTM Then at 3.328%
Current Yield at 3.268%

D. Equity Residential Operating Partnership

I own several different Equity Residential senior unsecured bonds. Moody's raised the credit rating to A3 from Baa1.  Moody's upgrades Equity Residential to A3 and revises rating outlook to stable

Stocks, Bonds & Politics: Items 1.A. and 1.B
Stocks, Bonds & Politics: Item 1.D.

5. Continued to Pare Stock Allocation:

A. Sold 106+ MET Shares at $55.13: Eliminated Position:

Profit Snapshot: +$502.7

MET Stock Price - MetLife Inc. Stock Quote

MetLife Board of Directors Approves Spin-Off of Brighthouse Financial ("MetLife common shareholders will receive a distribution of one share of Brighthouse Financial common stock for every 11 shares of MetLife common stock they own as of the close of business on the July 19 record date. Following completion of the distribution, the price of shares of MetLife, Inc. common stock on the New York Stock Exchange will reflect the distribution of Brighthouse Financial, Inc. shares, and as a result may be lower than before the distribution.")

I did not want 11 shares of Brighthouse Financial and a lower MET stock price. I will evaluate later whether I will own either MET or Brighthouse, or neither.  

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. NVS (own):

    NVS popped yesterday (7/18) based on a better then expected earnings report and is adding to those gains today:

    Novartis AG (NVS)
    $85.20 +$0.43 (+0.51%)
    As of 1:05PM EDT. 7/19/17

    One of the problems, the Alcon unit, reported a 3% revenue increase to $1.5B based on constant currencies.

    The generic business, Sandoz, suffered a 4% decline in revenues, primarily due to U.S. pricing pressures.

    Free cash flow rose 28% Y-O-Y to USD$3.2B.

  2. I'm paying 19 CAD each way when trading CA stock through Fidelity and they claim that's one of the best deals around. C$1 commission?

    1. Interactive Brokers charges C$1 for 100 shares. Their charge for currency conversions is substantially less than the 1% charged by Fidelity. I am gradually liquidating my CAD priced Canadian securities, converting the proceeds into USDs simultaneously. All future purchases on international exchanges will be through IB and zero from Fidelity.

  3. BBT (own stock and SU bonds):

    BBT reacted positively today to a better than expected second quarter earnings report:

    BB&T Corporation (BBT)
    $46.26 +$1.50 (+3.35%)
    At close: 4:01PM EDT

    "Net income available to common shareholders was a record $631 million, up 16.6 percent from the second quarter of 2016. Earnings per diluted common share were $0.77 for the second quarter of 2017. Excluding pre-tax merger-related and restructuring charges of $10 million ($6 million after tax), net income available to common shareholders was $637 million, or $0.78 per diluted share."

    Net Interest Margin 3.47%
    Return on average assets 1.22%
    Return on average tangible common shareholders' equity (1) 15.60%

    Nonperforming loans and leases as a percentage of loans
    and leases held for investment 0.43%

    Nonperforming assets as a percentage of total assets 0.31%

    Net charge-offs as a percentage of average loans and leases, annualized 0.37%

    My last common stock transaction was to sell my highest cost 50 shares at $47.24, reducing my position to 121+ shares:

    Item # 3.A.
    Profit Snapshot: +$586.45

  4. GE gave me a confirmation today that my previously expressed negative opinion was the correct one.

    "GE’s stock falls as Jeff Immelt’s 64th and last quarter is another disappointment"

  5. I have published a new post: