Monday, July 31, 2017

Observations and Sample of Recent Trades: APLE, HTPRD, NWH.UN:CA, XRE:CA

Donald's Inability to Think Before Acting and To Learn Facts Before Forming an Opinion:   

A. North Korea: 

North Korea is just ignoring him. ‘It Won’t Happen,’ Donald Trump Says of North Korean Missile Test - The New York Times North Korea has now tested two ICBMs since Trump made that statement.

What does Trump mean exactly when he says the U.S. will not allow NK to develop an ICBM with a nuclear tip warhead capable of hitting the U.S. mainland.How to Deal With North Korea - The Atlantic Trump blamed China for North Korea. Then he changed his mind. Then he changed it again. - Vox

Russia is actually increasing its trade with North Korea and providing NK with hard currency to facilitate NK's nuclear program. Russia's boost in trade with North Korea worries U.S. So did China. China Says Its Trade With North Korea Has Increased - The New York TimesFive ways North Korea gets money to build nuclear weaponsNorth Koreans in Russia Work ‘Basically in the Situation of Slaves’ - The New York Times

China and Russia are not going to do anything sufficient to stop what the U.S. has repeatedly called an unacceptable development. So what will Donald do as NK proceeds quickly to develop a nuclear weapon capable of hitting anywhere in the U.S.? 

The market has assigned a zero risk of a major conflagration in East Asia. Scared About North Korea? You Aren't Scared Enough - Bloomberg    

I would not call Donald a thinker but someone who acts precipitously based on raw emotions and without regard to anything resembling a rational fact based analysis. He has no willingness to learn or to challenge with facts his own reality creations.  

B. Obamacare: 

Will Donald now try to work with the Democrats and a handful of Republicans willing to work with them to improve Obamacare and to stabilize the exchanges? Or will he undertake actions as early as next week to further destabilize the exchanges and to raise premiums for those who voted for him? 

And what about all of this noise Donald is making about eliminating the Senate's filibuster rule?

There is only one rule that would prevent the Democrats from passing legislation providing Medicare to all citizens. That is the Senate's filibuster rule. I am not talking about the current time but at some point in the near future. Once that program is put into effect, the GOP would never able to get rid it. 

The republicans filibustered the passage of Obamacare. It took 60 votes to overcome that filibuster. The Democrats had 60 votes then for Obamacare, but not 60 for single payer. 

If the GOP Senators decided to eliminate this rule, then a single payer system would become law within 15 years when the Democrats gain simple majorities in the Senate and House and a Democrat President willing to sign the bill. 

Trumpcare did not fail due to the filibuster rule, but due to insufficient support from GOP senators faced with a united opposition from the Democrats.  

The last vote that failed only required 50 yes votes with the Vice President casting the tie breaking vote. That bill required only 50 votes since it was being offered through the budget reconciliation process which avoids the filibuster rules.  

Trump Urges End of Filibuster to Pass Health Bill, Which Failed Without It - The New York Times

The repeal only vote did require 60 votes but only 43 senators voted for that bill which simply means of course that it would have failed even if only 50 votes plus the V-P's vote was necessary. Senate Votes Down Broad Obamacare Repeal - The New York Times Seven GOP senators voted with the Democrats. 

So far, Donald and his republican party have made it clear that they will do nothing to fix Obamacare and will do everything within their power to sabotage it knowing that will cause harm to those that voted for them.  

One area of sabotage, and probably the most important, is what Donald calls "Bailouts for Insurance Companies". 

Trump voters and probably most Americans have no idea what he means by that statement. But who is in favor of "BAILOUTS for Insurance Companies"?  

According to Ms. Conway, Donald is going to make a decision this week on whether or not to continue making those payments. 

A Demagogue like Trump knows how to sway ignorant voters with a phrase like "BAILOUTS for Insurance Companies"

Trump has not mentioned yet that several insurance companies have pulled out of Obamacare because of the GOP's efforts to end those payments. 

What is Donald referencing in that tweet? Ask a Trump voter for an answer or clarification?  

Obamacare contained cost-sharing provisions that reduced premiums for low and middle income households. "The ACA’s cost-sharing reductions (CSRs) mean lower copayments and deductibles for people in households earning between 100 percent and 250 percent of the federal poverty level (about $12,000 to $30,000 for an individual, and about $24,000 to $60,750 for a family of four). The federal government reimburses insurers for providing the subsidies, which in 2016 totaled $7 billion." Eliminating Cost-Sharing Reductions in ACA - The Commonwealth Fund 

Obamacare 101-What's the big debate over health insurance cost-sharing subsidies?-LA Times

Trump administration pays June ObamaCare subsidies to insurers | TheHill

The Effects of Ending the Affordable Care Act’s Cost-Sharing Reduction Payments | The Henry J. Kaiser Family Foundation

The GOP has been engaged in trying to eliminate funding for that cost sharing program for several years now in a variety of ways. 

First, the GOP has refused to pass funding for it. 

Second, Obama got around the funding problem, but the GOP then sued the government arguing that Obamacare legislation did not specifically provide for a funding mechanism for this cost sharing and Obama's actions were therefore unconstitutional since only Congress can appropriate the funds.  

The GOP found a republican District Court judge, Rosemary Collyer, who agreed with their position: 

Decision in United States House of Representatives (that is, the GOP) v. Sylvia Matthews Burwell in her official capacity of  Secretary of the U.S. Department of Human Services, et. al (that is, Obama) 

Judge Backs House Challenge to a Key Part of Health Law - The New York Times

After Trump was elected, the named defendant became Trump's Human Services Secretary, Tom Price, so the litigation now, in essence, became Trump vs. Trump.  

This is just one of the many lawsuits filed to disrupt and to sabotage Obamacare.  

The District Court enjoined the Obama Administration from funding that cost sharing but stayed the injunction pending an appeal to the U.S. Court of Appeals for the Fourth Circuit.

Trump has successfully delayed a decision by that appellate court by agreeing with the GOP (the other party to the suit) that more time is needed to reach a legislative resolution. Motion.pdf 

That appeal has become farcical now since the GOP is in effect both the plaintiff and the defendant. The interests of those impacted by the GOP's efforts to sabotage Obamacare are not represented by a party to the litigation. 

As a result of that decision, the GOP and their Leader have taken the position that the President can withhold those payments and that is what Trump has been threatening to do. Those threats alone have caused several insurance companies to abandon Obamacare.  

What Trump could do to make Obamacare ‘implode’ - MarketWatch

What Trump can do to undermine Obamacare, now that the GOP health bill has failed - MarketWatch

Obamacare can be made to work for American families who need it, but the GOP will not allow that to happen. It is just that simple. 

Consensus Is Health Law Can Be Fixed. Now the Hard Part. - The New York Times

Loss of Cost-Sharing Reductions in the ACA Marketplace: Impact on Consumers and Insurer Participation - The Commonwealth Fund

Why Are So Many insurers Leaving Obamacare? - The Atlantic


Trump is the Embodiment of the Modern Republican Party

Over 80% of republicans support Trump at the moment which highlights an important point. There is no meaningful daylight between Trump and the republican party. 

Republicans running for the Senate are hugging Trump and lashing out at anyone who has dared to criticize him. 

GOP Senate candidates race to align with Trump | TheHill


Economic Reports and Articles:

Housing, Manufacturing Won't Save Economy This Year

The Shifting Tides of World Growth ("the key takeaway is that U.S. growth remains relatively anemic while the rest of the world does slightly better. In fact, U.S. growth would look modestly worse if not for rising exports and basically flat imports.")


1. Stocks, Bonds & Politics: Gateway Post: Equity REIT Common and Preferred Stock Basket Strategy:

A. Sold 1000 out of 1300 Northwest Healthcare Properties REIT at C$10.68

The 1000 unit lot was held in my Fidelity account. I am transitioning, as noted in prior posts, from Fidelity to Interactive Brokers to conduct trades on foreign exchanges. Consequently, whenever I sell a foreign security held in my Fidelity account and priced in a foreign currency, I will immediately convert the proceeds into USDs. I am trying to wait for USD weakness before making the currency conversion decision. 

Immediate Exchange of CAD Proceeds into USDs: 

Profit Snapshot: USD+$606.31

Quote: NWH.UN Stock Price - Northwest Healthcare Properties Real Estate Investment Trust Stock Quote (Canada: Toronto)

Home - NorthWest Healthcare Properties

Of the remaining 300 shares, I bought 200 using CADs on the Toronto exchange. I bought 100 ordinary shares USDs on the U.S. Grey Market. Stocks, Bonds & Politics: Item # 5.A. Bought 100 NWHUF at USD$7.72 (1/27/17 Post) The ordinary shares priced in USDs have outperformed the same shares priced in CADs since early May by approximately 10% due to rise in the CAD/USD exchange rate.

Dividends (more appropriately called distributions): Northwest is currently paying a monthly dividend of C$.06667 per share or C$.80 annually. At a total cost per share of C$10.15, the dividend yield would be about 7.89%. The dividend yield for the NWHUF owners before taxes will depend on the conversion rate into USDs.   

Some prior discussions about this security can be found in these posts: 

Item # 1. Added 100 NWN.UN at C$9.58Update For Equity REIT Basket Strategy As Of 5/5/16 - South Gent | Seeking Alpha

Bought 300 NWN.UN at C$ 7.68 Update For Equity REIT Basket Strategy As Of 7/24/15 - South Gent | Seeking Alpha

I also discussed a purchase in my Comment Blog # 6 (on 12/4/2016 at 11:06 A.M. discussing a purchase at C$9.6).  

Northwest recently completed the purchase of the Australian REIT Generation Healthcare which I owned for a few days earlier this year. Northwest Healthcare Properties REIT Successfully Completes Acquisition of Generation HealthcareStocks, Bonds & Politics: Item # 2.A. -Stocks, Bonds & Politics: Item # 4.A. Bought 700 GHC:AU at A$1.91. 

Other recent news: 

Northwest Healthcare Properties Real Estate Investment Trust Releases First Quarter 2017 Results

NorthWest Healthcare Properties Real Estate Investment Trust Announces $85 Million Bought Deal of Trust Units at C$10.65 (3/28/17)

NorthWest Healthcare Properties REIT announces successful completion of $70 million offering of convertible debentures (12/15/16)

I will be looking for opportunities to buy Northwest at lower prices, using CADs already owned in my IB account. The prevailing price throughout most of November and December 2016 was less than C$10: NWH-UN.TO Historical Prices

I view the 100 share purchase of NWHUF to be a short term trade, representing an attempt to play a rise in CAD/USD which has so far been successful.  

B. Bought 50 Apple Hospitality at $18.15 ($1 Commission-IB Account):

Closing Price Day of Trade (7/24/17): APLE $18.15 -$0.13  -.7122% : Apple Hospitality REIT, Inc.

Apple Hospitality REIT Website: The portfolio includes 230 "upscale" hotels with approximately 30,000 rooms.

Hotel Map - Apple Hospitality Reit

This is another REIT that is frequently traded for small gains.

Apple Hospitality pays monthly dividends at $.10 per share. The stock went ex dividend for its monthly distribution on 8/1/17: Apple Hospitality REIT Inc. (APLE)Apple Hospitality REIT Announces August 2017 Distribution

In 2016, 24% of the total annual dividend or $.29 per share was classified as a return of capital that reduced the cost basis by the same amount. IRS Form.PDF Supporting a dividend with ROC is not unusual for equity REITs since their payouts frequently exceed GAAP net income even though the payout is supported by cash flow.

At an $18.15 total cost per share, the dividend yield is about 6.61%.

My most recent transaction was to buy 50 shares at $18.58 using a Schwab commission free trade: Stocks, Bonds & Politics: Item # 3.A. (4/1/2017 Post)

I have sold shares at $19.75 (12/12/16); at $20.24 (1/4/17), and at $19.42 (4/26/17).

My last discussion, which included a review of APLE's 2017 first quarter earnings report, can be found in Items # 2.B and 2.C. (sold 100 APLE at $19.43; Bought 50 APLE at $18.3).

Apple Hospitality REIT Reports Results of Operations for First Quarter 201710-Q for the Q/E 3/31/17 (list of owned hotels starts at page 23)

2016 Annual Report (debt discussed starting at page 71)

I am churning my position in an attempt to harvest some stock profits by selling my highest cost shares, buying back shares at lower prices, and collecting a stream of monthly dividend payments.

C. Bought 50 APLE at $18.22-Fidelity Account-Used Commission Free Trade

See previous discussion 

D. Pared HTPRD in Schwab Account (Used Commission Free Trade)-Sold 100 at $25.45

History Schwab Account: 

I am keeping for now the 50 shares bought at $24.9 (6/12/17). 

Profit +$16.09

Quote: Hersha Hospitality Trust 6.5% Cumulative Preferred Series D  Stock (HTPRD)
Issuer:  Hersha Hospitality Trust Cl A  (HT)

With fixed coupon equity preferred stocks bought near their $25 par values, the goal is simply to harvest a few dividends, sell the higher cost shares for whatever profit may be available, and hopefully buy shares back at much lower prices during an interest rate spike.  

Hershey issued what I would consider a suboptimal second quarter report that reflected weakness in several hotel markets: 

Hersha Hospitality Trust Announces Second Quarter 2017 Results 

Revenue Per Available Room - RevPAR

Q2 2017 Results - Earnings Call Transcript | Seeking Alpha

I recently discussed several transactions in this security in Item # 3.A., where I transitioned to lower cost lots after selling the higher cost ones (6/29/17 POST).

The lowest cost lot is owned in my Fidelity account and was bought at $22.88 last December, which highlights why I am doing what I have just done.  HTPRD was sold to the public at $25 in early May 2016 and crested at $25.54 (8/28/16), and then started to fall until bottoming at slightly over $22 last December. HT.PD Stock Chart

The last major decline in the exchange traded bonds and equity preferred stocks categories occurred in 2013 when the ten year treasury yield spiked from 1.66% (5/2/13) to 3.04% (12/31/13). 2013 Daily Treasury Yield Curve Rates That moved caused most of those securities to fall somewhere between 10% to 20% in a waterfall type decline, with some falling more than 20%.  Fortunately for investors in those securities, interest rates started to meaningfully decline in 2014.  2014 Daily Treasury Yield Curve Rates The ten year treasury yield went below the May 3, 2013 low for an extended period in 2016: 2016 Daily Treasury Yield Curve Rates

E. Added 50 of XRE:CA at C$16.04:

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

XRE is a Canadian ETF that owns Canadian REITs. Since I have recently sold some individual Canadian REIT positions, I plowed some of the proceeds into Canadian REIT ETFs. 

I recently discussed this ETF in my 7/19/17 Post. The previous buy was 100 shares at C$16.39. As with many other Canadian ETFs, dividends are paid monthly.  

2. Short Term Bond/CD Ladder Basket Strategy

A. Bought 3 Morgan Stanley Bank 1.25% CDs Maturing on 10/27/17 (3 month CD)


B. Bought 2 Bank of China 1.25% CDs Maturing on 10/30/17 (3 month CD):

C. Bought 2 Bank of China 1.4% CDs Maturing on 1/29/18 (6 month CD):

D. Bought 3 Enterprise Bank & Trust 1.3% CDs (monthly interest) Maturing on 1/29/18 (6 month CD):

Bank Holding Company for Enterprise Bank & Trust: Enterprise Financial Services Corp. (EFSC)


E. Bought 3 Bank of Baroda 1.05% CDs Maturing on 8/31/17 (1 month CD):

$13K into Short Term Bond/CD Ladder Basket

3. Intermediate Bond/CD Ladder Basket Strategy:

A. Sold 2 Apple 2.4% SU Bonds Maturing on 5/2/23:

Profit Snapshot: $24.72

FINRA Page: Bond Detail

Sold at 100.2

YTM Then At 2.362%

Bought at a Total Cost of 98.864

YTM Then at 2.43%
Item # 1.B. 

4. Continued Small Changes in an Extremely Underweighted Allocation to Energy Stocks

A. Bought 30 Chevron at $103.82 (used commission free trade):

In my 7/19/17 post, I mentioned that I might buy some shares, which I did a few hours after publishing that post. 
Stocks, Bonds & Politics: Item # 1 I mentioned there some projects that looked like they would contribute to production growth for many years to come. That is about the extent of my reasoning. I can not predict the future price of crude oil, natural gas and natural gas liquids with anything resembling accuracy. My best guess at the moment is that crude oil demand will start to exceed production in 2018.

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

Those projects are GorgonWheatstone and Permian Basin. The first two projects, both located in Australia, are also important since production can be sold in East Asia at higher prices than prevailing in the U.S.

Subsequent to my purchase, CVX declared its regular quarterly dividend of $1.08 per share.

The company also announced second quarter earnings that the market viewed favorably.

Closing Price on Earnings Release Day (Friday 7/29/17): CVX $108.12 2.01 1.89%

Exxon also released earnings on the same day: XOM $79.60 -$1.23 -1.52%

Exxon's production declined by 3.9M barrels a day, whereas CVX rose by 250,000 barrels a day. Exxon also missed the consensus E.P.S. estimate by 6 cents, while CVX best the ex-item estimate by 4 cents.

CVX SEC Filed Press Release 

XOM SEC Filed Press Release 

Note the substantial reduction in Exxon's capital expenditures Y-O-Y: 

The same trend applies to Chevron: 

Sooner or later, the much lower capital expenditure numbers will contribute to production falling behind demand, and that is when prices may find a new, higher ranged bound level compared to the current $40 to $55 range for WTI. 

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. South Gent,

    DVAX trades at $15.85, up 71%, as of 12 noon today. But its all time high was $106.6 back in 2006. It has its ups and downs and went through a 1 for 10 reverse split in 2014. This just shows how precarious the small cap biotech sector is.

    The performance of individual stocks in my small cap biotech lotto ticket basket goes from -82% (AVGR) to +267% (DVAX). The basket is still up 10% this year after the disposition of 3 stocks with profit. I am very glad that I took the basket approach.

    1. Y: I looked into buying DVAX last week but passed on it for reasons that I do not remember or have chosen to forget.

  2. IMDZ (Own 60 Shares Small Cap Biotech Lottery Ticket Basket)

    I just wanted to make an observation about this bungee jumper. Early this morning, I noticed that IMDZ was down about a $1 per share. I looked again a few minutes ago, and the stock was up $1.05 or+ 9.57%.

    Immune Design Corp. (IMDZ)
    12.60+1.10 (+9.57%)
    Day's Range $9.55 - $12.60
    Volume 182,332
    Avg. Volume 159,969
    Market Cap 320.92M
    As of 12:50PM EDT

    I have seen no news to account for either movement.

  3. Apparently the Mooch lasted only 10 days as Trump's Communications Director:

    I suspect that the new Chief of Staff Kelly, a former 4 star Marine General, made that his first order of business.

  4. Asaleo Care: For the third time, I bought 1000 shares of AHY:AU. Usually, as in more often than not, the third time is not a charm for me, so I wish that it was possible to go from a second round trip transaction to the 4th.

    I bought at A$1.35 and paid IB an AUD$6 commission. The share price has declined meaningfully over the past few days.

    Dividends are paid semi-annually. The past two dividends totaled A$.1 which results in about a 7.41% yield at A$1.35.

    My last purchase was at the same level.

    Asaleo is a personal products company. The Essity company based in Sweden owns about 37.1% of the stock based on a recent Australian security filing. Essity was recently spun out of Svenka Cellulosa Aktiebolget which I have also owned in the past.

    I may discuss this company some in a subsequent post.

    Results in the first half of fiscal 2016 torched the stock as more fully explained in the "2016 Full Results-Presentation" that can be downloaded at the company's website:



    Hello southgent,

    I wanted to get your take on the above article. As you know and been well aware, investors like myself, self-directed, have been struggling with the conundrum of lightening up. As you remember I have been investing in dividend stocks to supplement my pension and Social Security.

    I know you have been selling slowly as you often do into strength. I also know you have been shortening your bond duration.

    I wondered what you thought of the above article and more specifically how serious the Fed is shrinking its balance sheet and how quickly inflation will come back to the world economy.

    I wanted to know whether you think the big enemy of investors in stocks is really inflation or just balance sheet contraction by the Fed and the central banks across the world.

    I know these are not questions that have easy answers and are only guesstimates. Since I have been investing in dividend stocks, I have been lucky enough to have them at fairly low prices with capital gains on paper.

    My major goal however is to collect the dividends, so I have tried to buy what I consider investment-grade large companies that hopefully will survive. I do understand the risks of modernization and changing tastes in the world. I do follow cash flow and revenue growth. And understand the risk in something like General Mills.

    So any help in managing a portfolio like this would be appreciated.

    I understand clearly this is only your interpretation and this is only data collection for me to make my own decisions. I know you have stated that you are not willing to undergo another long-term secular bear market in your lifetime.


    1. Sam: Greenspan is relying on the Fed Model to justify stock prices at current levels. In the event inflation and interest rates normalize to normal levels, then stocks lose their primary support for their current valuations using that Model:

      Quote from Article:

      "Stocks, in particular, will suffer with bonds, as surging real interest rates will challenge one of the few remaining valuation cases that looks more gently upon U.S. equity prices, Greenspan argues. While hardly universally accepted, the theory underpinning his view, known as the Fed Model, holds that as long as bonds are rallying faster than stocks, investors are justified in sticking with the less-inflated asset.

      Right now, the model shows U.S. stocks at one of the most compelling levels ever relative to bonds. Using Greenspan’s reference of 10-year inflation-adjusted bond yields, currently around 0.47 percent, the gap with the S&P 500’s earnings yield at around 4.7 percent, is 21 percent higher than the 20-year average. That justifies records in major equity benchmarks and P/E ratios near the highest since the financial crisis."

      The gist of that argument is that stocks are less inflated in price than bonds given the current low interest rate and inflation environment.

      I have mentioned in the past that one danger for stock investors is a persistent rise in inflation and interest rates which has yet to occur.

      That threat exists primarily due the rich valuations in stocks measured by historical standard. Many investors have been buying stocks and continue to do so for the simple reasons that they are going up in price and there is no where else to go.

      There are a multitude of other events that could cause a major correction.

      For example, there has not been a recession in the U.S. since the last one ended in June 2009 which is already one of the longest periods in without a recession. Several quarters of negative real GDP growth could easily cause a 20%+ decline.

      Another factor is a market event that causes a stampede for the exits. People fear losing their profits and hit the sell button so that a 5% decline turns into a 10% or higher fairly quickly. The higher this market goes now IMO the harder it is going to fall. The market invariably will go down far faster than it goes up.

      Currently, the market internals, including those relevant to my Vix Asset Allocation Model, do not indicate that a major decline is likely to occur presently. And, while there are several nascent events that could potentially trigger a long term bear market, they appear to be slowly developing but could erupt without a long lead time (e.g. trade wars).

  6. The government's Personal Income and Outlays report for June, released earlier today, continues to print anemic consumer spending.

    Personal consumption expenditures rose just .1% in June and at zero adjusted for inflation. Real disposable income declined by .1%. The PCE Price Index was up 1.4% Y-O-Y.

    The numbers for the first six months of 2017 are notably weaker than the last six months of 2016:

    See Table 13, Line 17:

    % Change from preceding period-Real PCE
    June to December
    2016: +.4%, +.2%, +.1%, +.5%, +.1%, +.3%, +.4%
    2017: -.1%, 0, .7%, .1%. .2%, 0

    The non-inflation adjusted numbers can be found in line 13.

    The Bond Ghouls have noted the sluggishness even if the Stock Jocks continue to celebrate.

    S&P 500
    2,476.56+6.26 (+0.25%)
    As of 2:19PM EDT

    iShares Trust - iShares 20+ Year Treasury Bond ETF (TLT)
    $124.53 +1.03 (+0.83%)
    As of 2:19PM EDT

    Construction spending declined by 1.3% last month.

    Other numbers released today can be found here, which is a site worth a bookmark:

  7. I have published a new post: