Observations and Sample of Recent Trades: H:CA, KPTI, VHCOX, WBSPRE

Economy:

News Release: Personal Income and Outlays

Consumers keep on spending in October, aided by rising incomes and low inflation - MarketWatch

OPEC officially announces extension of oil output-cut deal to end of 2018 - MarketWatch; OPEC, Russia agree oil cut extension to end of 2018

One in five American households have ‘zero or negative’ wealth - MarketWatch

Fed officials fret over yield curve, warn on pace of hikes: Reuters(the concern is a flattening of the yield curve as the FED hikes short term rates) 

CEOs suggest Trump tax cut may lift investors more than jobs: Reuters

Trump's Tax Promises Undercut by CEO Plans to Help Investors - Bloomberg

++++

Market Commentary: 

Portfolio managers are losing their enthusiasm for highflying tech stocks - MarketWatch

Strategist Jim Paulsen says prepare for a stock market correction in 2018: CNBC

+++

Portfolio Management:

As an investor, I have to play the hand that is dealt. 

The GOP's tax legislation will be good for corporate profits and that will result in shareholder friendly dividend increases and more stock buybacks. 

UBS estimates that a corporate tax cut to 20% will increase S & P 500 earnings by $10 next year. 

I am starting to play that hand with small incremental purchases, mostly of companies who now have an effective tax rate between 30% to 35% and/or companies who will increase shareholder returns through repatriation of foreign cash. 

Since my #1 objective is capital preservation, I will continue to be a net seller into strength, though on any given day I may be adding slightly to my stock allocation as trades. See "Market Commentary" Section in Stocks, Bonds & Politics (9/7/17 Post) Even with my reduced stock allocation, my 2017 stock market appreciation will be over $100K with close to $35K in trading gains.   

The JCT estimates that, when fully implemented, the Senate's tax plan will add about .8% to GDP over the next decade. Republican shills, including the Tax Foundation, say the tax cuts will cause much higher growth rates. Even adjusting for growth caused by the tax cuts, the JCT estimated that the GOP's plan would add $1 trillion to the deficit over the next ten years. 

I believe that all estimates  significantly overestimate the positive impact based on incorrect assumptions about trickle down economics. The individual tax cuts for the bottom 90% are simply not large enough to move the needle that much and can easily be offset by other factors for many households.   

There will be some additional positive GDP impact in the early years, but the tailwind will be more muted than predicted by the JCT due to (1) lower wage gains than anticipated; (2) a lack of any meaningful impact on most taxpayers in the bottom three quintiles even before the tax breaks expire; (3) a significant tax increase on about 10% of taxpayers; (4) more robots and machines will be purchased to replace workers due to same year expensing rather than depreciating expenses over a number of years; (5) a 10% increase every year in Obamacare premiums caused by a repeal of the individual mandate as estimated by the CBO; (6) probable higher inflation and interest rates; (7) increases in consumer debt that will be more costly to service; (8) the likelihood of at least one recession within five years and possibly two within the ten year window; (9) the incentives for hiring foreign workers and moving production overseas remain; and (10) cuts to social programs that directly impact spending by lower income households.   

The 10% increase in Obamacare premiums will more than wipe out the meagre savings afforded middle income households who are fortunate enough to receive a tax cut and have no choice but to buy health insurance. Repeal of individual mandate would increase uninsured, premiums: CBO This makes sense since young and healthy persons would cancel participation without the mandate. 

The predictions about large wage gains flowing from cuts in corporate taxes fail to explain how this happened: 

Understanding the Historic Divergence Between Productivity and a Typical Worker’s Pay: Why It Matters and Why It’s Real | Economic Policy Institute Does the preceding chart show owners sharing income with workers? 
  
If I was designing a tax plan to benefit a majority of Americans and the economy, it would be based on trickle up rather than trickle down. But I would not get the any money from the GOP's big donors to run on that platform. Republican politicians know who pays their bills, and it is not the middle class taxpayer. 

The GOP's plan will ultimately cause far more harm than good, but that is in the future. It may become more apparent to many in about three or four years when the deficits are exploding upward, the wealth gap goes even more parabolic, and most middle class families can clearly see that they are not any better off than they were before the 2016 election and many will be noticeably worse off. 

For the present, what is here and now is more important to investors. And, the here and now is that increases in corporate profits will be shared with those who own a lot of stocks. 

The most serious negative impact will be moving forward the Day of Reckoning by several years, which I define as a massive U.S. government fiscal crisis evidenced first by a series of failed treasury auctions and a black hole developing in the U.S. stock market.  

It will not be that long before the interest payments on the debt will exceed $1 trillion per year, more than the total debt in 1979 since the nation's inception. 

And when interest rates normalize or go higher than normal levels, and they will, interest costs will spiral up, soaking up more federal revenue and causing the incurrence of more debt to service the interest payments-an inevitable train wreck in the making.   

The incentive remains to hire foreign workers, who will accept lower pay  and work in countries with fewer regulations including those that protect workers and the environment. 

U.S. workers are hired when the growth in the business justifies additional hires. In a consumer led economy, that growth is fueled by those who receive the least under the GOP's tax plan. That observation will factor into my asset allocations decisions.

For publicly traded companies, the increase in corporate tax savings will be used largely to increase dividends, to buyback stock, to increase executive compensation and to buy other companies that will result in layoffs. Those corporations who repatriated the most money from overseas during a previous tax holiday had net layoffs during an economic expansion.  

Trickle down economics does not lift the economy longer term, but does increase the amount of national income held by the top 1% who can then spend hundreds of millions supporting GOP candidates. The top .1% now control almost as much wealth as the bottom 90%. Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data; US wealth inequality - top 0.1% worth as much as the bottom 90% 

Ray Dalio: Our Biggest Economic, Social, And Political Issue | Seeking Alpha 

Politically, the question becomes how do republican politicians convince those in the bottom 90% that tax legislation designed to benefit the super rich helps them. The simple answer is that you throw a few trinkets to those taxpayers and then lie about who actually benefits and then repeat the lie over and over again. The GOP then brings forward a few economists who are paid to defend the trickle down and who claim, contrary to all past evidence, that the benefits to the rich will be shared with be shared meaningfully with them. 

Lying works just fine for them, so why change? 

Senator McConnell stated over the weekend, for example, that the tax bill will not add to the nation's debt woes and will be "revenue neutral." He further claimed that he hasn't "run into anybody during this whole tax discussion who's very successful who thinks they're benefiting from it."  

And, the republicans claim that the individual tax cuts will be extended when they expire even though the government's fiscal situation will then be much worse than now- a little gain now for a lot more pain later will be what actually comes to pass. 

The only reason for republicans to change their spiel is that the lie no longer works and actually becomes harmful to them politically. That will happen when millions, who are now uninformed become informed and aggravated whenever one of those political propaganda commercials airs on TV, funded by "Americans for Prosperity" and similar organizations funded by far right billionaires seeking to convince mom and pops to support a policy that makes the rich even richer.  

‘Dark Money,’ by Jane Mayer - The New York Times 

The more appropriate name for that organization is "Increase the Koch Brother's Prosperity" which would not work as well as "Americans for Prosperity" when the name of the sponsor is spoken at the end. A net worth of $97B is just not enough for them. The Koch Brothers: America's 2nd Wealthiest Family Maybe $500B will make them happy, but I doubt it. Too much is never enough, and more is always better for that ilk.   

Only nominal amounts of additional cash will flow to the lower and middle class taxpayers as a result of the GOP's tax reform, with many ending up paying more in taxes initially and then over time. Those meager benefits are likely to be short lived and taken away with cuts to social programs and higher health insurance costs, leaving most households worse off.  That opinion based on available facts enters into my asset allocation decisions.  

As previously noted, those initially experiencing a tax increase will be concentrated in the upper middle class in higher tax states. My advice would be to consider moving to Middle Tennessee where the property taxes are much lower, and there is no state income tax other than a small tax on dividends and income that is currently being phased out. There is also no estate tax. Maybe large number of those taxpayers will let the GOP know in the next election their views on this "tax reform" bill. 

Over time, and assuming the GOP tax plan remains largely in place, there will be a substantial increase in migration from high tax states to states with no income tax. 

Those who can move will move, or at least think seriously about doing so, just waiting for an opportunity. This ongoing migration will leave lower income households to support state and local governments in the high tax states. That will cause taxes to rise further in those states which causes more higher income households to leave and so on until there are massive debt defaults (think Detroit and San Bernardino type bankruptcies becoming commonplace) The GOP is also making it harder for state and local governments to fund necessary projects which will raise their interest costs and who pays for that in higher property and sales taxes. Muni Bond Issuers May Set a Record In Rush to Beat Tax Reform Changes - Bloomberg 

It is not going to get any better in states like New Jersey, New York, Illinois, California, etc. I have more confidence in the AAA rating of Tennessee than the rating of U.S. government debt. I live in Williamson County Tennessee whose bonds are rated  AAA and in a city with AAA rated bonds. Two cities in the County, Brentwood and Franklin, have AAA ratings.

The GOP may have not thought through this process of forcing more migration to states like Tennessee longer term since they are about to accelerate this migration. 

If moderate to liberal voters move to Tennessee, for example, and that process is well underway now with mostly younger and more progressive people moving to the larger population centers, Tennessee will flip back to a blue state. Clinton carried Tennessee in 1992 and 1996. Nashville is already strongly blue and becoming more so, as is Memphis. Hamilton County (Chattanooga) is a light shade of red and has recently elected a Democrat as mayor. The republicans could easily lose Corker's senate seat in 2018 if they nominate Marsha Blackburn and Phil Bredesen, a centrist business oriented Democrat and two term governor, runs against her. He won in 2006 with 68.6% of the vote. I voted for Bredesen twice and his successor Bill Haslam (R) twice. 
   
The Cities Americans Are Thronging To And Fleeing 

At the start of 2017, I had a zero allocation to Tennessee Municipal Bonds. I now own $270K in principal amount which generates about $8K in annual tax free income. That income is also exempt from Tennessee's tax on certain dividend and interest income which is being phased out now. 

Over $100K of the funds used for those purchases came from selling investment grade corporate bonds maturing between 2020 through 2027. Generally, those bonds had current taxable yields between 2% to 3.5% compared to a weighted average tax free yield of 3% for the Tennessee municipal bonds. 

With the Tennessee municipal bonds, I assume more interest rate risk in exchange for higher current after tax income and less credit risk IMO compared to the investment grade corporate bonds  that have been sold. 

The municipal bonds pay interest semi-annually. The payments are made on the 1st day of the month. 

The following is a list of tax free interest payments received in one account on 12/1/17: 

$516.88 in tax free income

The municipal bonds, however, are far less liquid than the corporate bonds due mostly to the small principal amounts outstanding. I am planning to keep all of them until maturity or early redemption.   

For the short term CD/Bond purchases, I am simply recycling proceeds from maturing short term bonds and CDs. 

Over the past few days, I have had the following instruments mature: 

2 Bank of China 1.15% CDs 11/28/17
1 Berkshire Bank 1.1% CD 11/28/17
2 Bank of Baroda 1.1% CDs 11/29.17
2 Trustmark 1.1% CDs 11/29/17
2 Synovus 1.1% CDs 11/30/17
2 Live Oak Banking 1.1% CDs 11/30/17 MI
6 U.S.T. .625% 11/30/17
2 Blue Hill Bank 1.2% 11/30/17
2 Potash 3.25% 12/1/17

2 AT & T 1.4% (YTM at 1.491%) Senior Unsecured Maturing Due 12/1/17

2 Disney 1.1% (1.043% YTM) Senior Unsecured Maturing 12/1/17

In my view, the short term basket strategy is working in that I am picking up more current yield as these instruments mature. 

The following will mature this month: 

2 Southeast BK 1.15% CDs  12/4/17
2 GNB Bank 1.1% 12/5/17 MI
2 Chevron 1.104%  SU 12/5/17
2 Citizens Bank 1.1% CDs 12/6/17
2 Bank of East Asia 1.1% CDs 12/6/17
1 Bank of China 1.2% CD 12/7/17
2 Towne Bank 1.1% CDs 12/7/17

2 Ecolab 1.45% SU 12/8/17

2 Legacy Bank of Texas .8% CDs 12/9/17
1 Bank of Baroda .85% CD 12/11/17
2 ZB Bank 1.1% CDs 12/12/17
2 ConocoPhillips 1.05%  SU 12/15/17

1 Costco 1.125% SU 12/15/17

2 Sherwin Williams  1.35% SU 12/15/17

3 Northpointe 1.2% CDs 12/18/17
2 Bank of China 1.1% CDS 12/18/17
2 Bank of China 1.15% CDs 12/20/17
3 First National 1.15% CDs 12/28/17 MI
3 Citizens Bank 1.25% CDs 12/28/17
2 Bank of China 1.25% CDs 12/28/17
2 Bank of India 1.25% 12/28/17 
2 Whitney Bank 1.25% CDs 12/29/17
2 ZB National 1.2% CDs 12/29/17
2 People's National 1.1% CDs 12/29/17
4 U.S. Treasury .75%  12/31/17 

$52K 

Many of the preceding listed CDs had 1, 2 or 3 month maturities. 

+++++++++

Issuer Early Redemption of Kennedy Wilson 7.75% SU Bond Maturing in 2042 (former symbol KWN): 

One problem with exchange traded bonds is that the issuer reserves the right to redeem at par value. 

The option to redeem at par value usually comes into being five years after the IPO and creates asymmetric interest rate risk that favors the issuer. 

Bond Ghouls would rarely, if ever, accept a 2042 maturity for a $1K par value bond without a make whole provision contained in the prospectus that penalizes the issuer for an early redemption. 

The mom and pop investors who buy exchange traded bonds and preferred stocks are not so picky. 

Kennedy Wilson redeemed this bond on 12/1/2017, the very first day possible. Prospectus Supplement ("at any time and from time to time on or after December 1, 2017, Kennedy-Wilson may redeem the notes, in whole or in part, at a redemption price equal to 100% of their principal amount, plus accrued and unpaid interest, if any, to the redemption date.") 

I did squeeze out a profit on the shares plus the 7.75% coupon payments. I owned shares in three accounts including a Roth IRA where the taxable interest payments become tax free: 

Roth IRA Account +$53.5

I previously sold 50 shares in a Roth IRA at $26: Item # 1 Update For Exchange Traded Bonds And Preferred Stocks Basket Strategy As Of 3/11/16 - South Gent | Seeking Alpha (profit snapshot =$43.46)

I classify this security as an Exchange Traded Baby Bond given its $25 par value. 

I exclude from that category other exchange traded bonds where the owner does not directly own the bond (e.g. trust preferred and trust certificates), European hybrids and principal protected exchange traded notes. Stocks, Bonds & Politics: Exchange Traded Baby Bonds (trading snapshots);Baby Bonds - South Gent | Seeking Alpha (trading snapshots); Stocks, Bonds & Politics: Exchange Traded Bonds In the Baby Bond category, my realized gains now stand at $11,495.18.  

Profits on most exchange traded bonds have been difficult to achieve over the past several years since so many of them sell at premiums to par value and are being redeemed at par value by their issuers.  

Total KWN Profits= $101.16

+++++++

Trump and the GOP's Race to Make Their Donors Even Richer: 

I am going to refrain from discussing the tax bills at length until there is a final product. 

(*) News about #GOPTaxScam on Twitter

The Senate passed a bill over the weekend that was 479 pages long, with handwritten provisions that were ineligible and scratch outs. The bill was given to the Democrats about two hours before the vote. Lobbyists saw the provisions before the Democrats. There were never any hearings on the bill. A Hasty, Hand-Scribbled Tax Bill Sets Off an Outcry-The New York Times 

E.G.: 

Senator Corker was the only republican to vote against the bill. No Democrat voted for it. Senate passes sweeping GOP tax plan in early hours of Saturday morning-CNN 

The lack of any support from Democrats means that there is no long life to this legislation. 

The Democrats can do whatever they want to the tax code through the same budget reconciliation process to avoid the Senate's filibuster rule when they regain control over Congress and the Presidency which may happen as soon as 2020. I view this constant push and pull between the two political tribes, with no in between compromises, as unproductive and harmful to the nation. I view the foregoing as important to keep in mind when valuing companies now based on the 20% top corporate tax rate.  

Tax Bill Offers Last-Minute Breaks for Developers, Banks and Oil Industry-The New York Times

The GOP's rush to tax cuts was brainless (opinion): Jeffrey Sachs

AARP Opposes Senate Tax Bill:AARP; Senate Tax Bill Would Trigger Medicare Cuts: AARP

How an unequal tax cut grew more unequal-The Washington Post

New Evidence the GOP Tax Bills Tilt Toward the Wealthy-Bloomberg

Republicans' fiscal hypocrisy is fully on display in the tax bill (the GOP will now become fiscal hawks as they make an effort to cut social program spending-GOP eyes post-tax-cut changes to welfare, Medicare and Social Security-The Washington Post) The GOP will call their efforts "reform", probably the most misused word by politicians, when the goal is simply to take away government benefits for the lower and middle income households. The clearest case was their effort in 2011 to change Medicare into a voucher system for private insurance plans, doubling the premium cost to their victims compared to traditional Medicare, and to slash spending on other social programs as well, while giving their wealthy donors huge tax cuts. Nothing could be plainer about their true intentions.  

Trump Sells Tax Plan With False Claims

Senate strikes amendment from tax bill that would have benefited Betsy DeVos’s alma mater - MarketWatch

After a high-drama vote, here's what the Senate tax bill means for schools, parents and students

The Biggest Sticking Points Between Senate and House Tax Bills-Bloomberg

Don’t benefit from estate-tax repeal? Sen. Chuck Grassley says you probably blow all your money on women, booze and movies - MarketWatch

Senator Grassley is as confused and clueless about Average Americans as Gary Cohn who stated that a family could remodel their kitchen with $1K in tax savings. Gary Cohn says $1,000 in tax savings can buy a family a car and renovate a kitchen  

++++

Trump and Russia: 

Emails Dispute White House Claims That Flynn Acted Independently on Russia - The New York Times

Trump transition advisor says Russia threw US election to him: CNBC ( "If there is a tit-for-tat escalation, Trump will have difficulty improving relations with Russia, which has just thrown U.S.A. election to him,"  K.T. McFarland); Warner calls for McFarland to testify - CNN 

Trump Pressed Top Republicans to End Senate Russia Inquiry-The New York Times

Trump tells confidants that a government shutdown might be good for him-The Washington Post  

Exclusive: Mideast nuclear plan backers bragged of support of top Trump aide Flynn: Reuters

Jared Kushner is 'very senior' Trump official who directed Flynn: NBC

Trump says he fired Flynn because he lied to Pence, FBI, insists there's "nothing to hide"-CBS NewsTrump tweet suggests he knew Flynn had lied to FBI at time of firing - NBC News 

The problem with this new Trump admission is that he asked Mueller to dinner on 2/14/17 after firing Flynn on 2/13, requested at the dinner that Mueller go easy on Flynn and then fired Mueller for continuing the investigation. Another problem is that it was not until 2/16 that the WP was first to report that Flynn had made false statements in an 1/24/17 interview with the FBI. Did Trump’s tweet about Michael Flynn’s guilty plea just admit something it shouldn’t have?-The Washington Post; Michael Flynn’s guilty plea: A comprehensive timeline-The Washington Post

Subsequent to the tweet, sources claimed that Trump's lawyer, John Dowd, was the principal wordsmith for this tweet incriminating his client. 

"Sources told CBS News that Dowd meant to convey that Flynn was fired for lying to Pence and other White House officials about his conversations with Kislyak, and "now we know" that he lied to the FBI, according to the sources. But Dowd bungled the tweet and created confusion around Mr. Trump's knowledge of events." CBS News (emphasis added) Really? Dowd just did not understand what he allegedly wrote in clear, simple and unmistakable language, rather than divulging relevant and truthful information that he knew from his client Trump and his own investigation into the facts. Donald will never tell the truth but maybe his lawyer just did in that tweet.  

Trump's lawyer claims responsibility for president's problematic tweet - NBC News (if true, maybe Trump needs to find a lawyer who will not incriminate him). 

Feinstein: Senate Russia probe building obstruction case against Trump - NBC News

+++

FactChecking Trump's Business Boasts-FactCheck.org

Trump Bragged: ‘Nothing in the World Like First-Rate P**sy’ (now that did not happen unless Trump admits that he happened which he would never do, so it did not happen)

71% of Alabama republicans have concluded that Roy Moore is telling the truth and the women accusing him of sexual misconduct are liars who are merely doing the bidding of Democrats and other fiendish satanic creatures who are trying to put worms in their heads and turn them away from Jesus. 

If the same charges were made against the Democrat running against Moore, close to 100% of the Alabama republicans would believe the women. CBS News poll: Alabama Republicans call allegations against Roy Moore false - CBS News

When Trump launched missiles against Syria after its use of chemical weapons, 86% of republicans approved of Trump's decision. However, when Obama did the same for the exact same reason, 22% of republicans approved of his decision. The number of Democrats who approved was relatively constant for both decisions at 37% and 38% approval numbers. GOP Voters Love Same Attack on Syria They Hated Under Obama  

++++

A republican congresswoman, Ann Wagner, has come to my attention. Ms. Wagner represents Missouri's 2nd congressional district that includes suburbs south and west of St. Louis. Ms. Wagner claims that Satanists have joined the ACLU and Planned Parenthood of Missouri to take away the right of the unborn. Satanic Temple has not 'teamed up' with Planned Parenthood or ACLU 

Todd Akin vacated that congressional seat to run for the U.S. Senate. Todd is also knowledgeable about these issues, noting in one of his more informed comments that a woman's body knows how to shut down a pregnancy if the rape is legitimate. A year after 'legitimate rape,' the money's still trickling in for Akin-stltoday.com Todd defined liberalism as "a hatred for God and a belief that government should replace God".

Senator Cotton's False Insurance Assurance - FactCheck.org

Roy Moore blames 'malicious' allegations on gays, liberals and socialists

+++++

1. Small Cap Lottery Ticket Basket Strategy: 

A. Sold 30 KPTI at $11.36:

Quote: Karyopharm Therapeutics Inc. (KPTI)

Profit Snapshot: $+54.99

Stocks, Bonds & Politics: Item # 3.A. Bought 30 KPTI at $9.46

KPTI Trading Profits To Date: +$316.13 ($261.14 in prior trades)

Prior Trades: My purchases have been in 30 share lots. 

My first purchase was a 30 share lot bought at $7.11: Item # 2 Update For Healthcare Basket Strategy As Of 8/12/16 - South Gent | Seeking Alpha I later added 30 at $6.82 and sold that lot at $10.67, using Schwab commission free trades. South Gent's Comment Blog # 8

I sold the 30 share lot bought at $7.11 earlier this year at $12.04: Item # 3.C. Stocks, Bonds & Politics: Observations and Sample of Recent Trades: 3/13/17

2. Eliminated WBSPRE: 

A. Sold 100 at $25.53: 

Profit Snapshot: +$3.94

As previously discussed, I expected that this preferred stock would be called on 12/15/17. Stocks, Bonds & Politics: Item # 4 Sold 50 WBSPRE at $25.32 (10/16/17 Post)

The issuer will redeem at the $25 par value on 12/15: 8-K

History in this Account:  

3. Canadian Dollar Income Strategy: 

A. Bought 100 Hydro One at C$22.39: 

Quote: Hydro One Ltd. Stock Quote (Canada: Toronto)

The ordinary shares can be purchased using USDs on the dark U.S. Grey Market where volume is thin. HRNNF Chart

This is a low expectation buy. The goal is simply to harvest eventually a 5% to 10% profit on the shares plus some quarterly dividends. Even after selling over C$20K when the CAD/USD creeped over .80, I still have CADs earning nothing primarily in my IB account. The goal of the Canadian Dollar Income Strategy is buy income generating securities that pay dividends in Canadian Dollars, hopefully selling those securities profitably down the line, and then to harvest profits in my CAD positions at opportune times by converting the CADs back into USDs.   

Company Profile:

Hydro is one of the largest electric utility companies in North America. It does not own any generation. The company owns a transmission network in Ontario that covers 98% of that province and distributes power to about 25% of the customers in Ontario.

Sourced Page 3: Investor Update

The company was wholly owned by the Province of Ontario who sold shares to the public in a 2015 IPO. The public offering price was C$20.5 per share:

The privatization objective was for Ontario to divest majority ownership which was been completed with a secondary offering last May priced at C$23.25 per share:

Avista Acquisition:

The company is in the process of acquiring Avista, a U.S. electric utility that services territories in the Northwest:

The deal requires Hydro to pay US$53 in cash for each Avista share and to assume Avista's debt. The total enterprise value for Avista, including the debt assumption, is approximately US$5.3B. 

Avista is involved in the production, transmission and distribution of energy as well as other energy-related businesses. 

Its operating division, Avista Utilities "provides electric service to 379,000 customers and natural gas to 342,000 customers. Its service territory covers 30,000 square miles in eastern Washington, northern Idaho and parts of southern and eastern Oregon, with a population of 1.6 million. Alaska Energy and Resources Company is an Avista subsidiary that provides retail electric service in the city and borough of Juneau, Alaska, through its subsidiary".

Avista shareholders approve acquisition by Hydro One Limited

Hydro One and Avista File Applications for Regulatory Approval of Merger (the acquisition is currently expected to close in the 2018 second half)

Hydro One to Acquire Avista to Create Growing North American Utility Leader  

Debt: 

Other Acquisitions:  

Hydro One completes acquisition of Great Lakes Power Electricity Transmission business

Hydro One to Acquire Orillia Power Distribution from City of Orillia

Dividends: Hydro is currently paying a quarterly dividend of C$.22 per share, up from the C$.21 paid in the 2017 first quarter. Dividend Information

At the current rate, the dividend yield is about 3.93% at C$22.39. 

Hydro One Limited Declares Common Share Dividend

Recent Earnings Report: Third quarter earnings were negatively impacted by milder weather.  Hydro One Reports Third Quarter Results

4. Short Term Bond/CD Ladder Basket Strategy:

A. Sold 2 Xerox 2.75% SU Bonds Maturing on 9/1/20: 

FINRA PAGE: Bond Detail

This was primarily a credit risk decision given my strong capital preservation objectives. I am not that concerned about Xerox but I do believe the credit risk has increased some after the company split into two. Xerox Completes Separation of Conduent, Begins New Chapter as Focused Industry Leader in Digital Print Technology One company is called Xerox which focuses on digital print services. 

The new company is called Conduent Inc. (CNDT) which provides "business process services with expertise in transaction-intensive processing, analytics and automation." 

This bond remains an obligation of the old Xerox. 

"Conduent mad a cash distribution of approximately $1.8 billion to Xerox in the fourth quarter 2016. Xerox used a portion of the cash distribution proceeds to repay its $1.0 billion Senior Unsecured Term Facility in January 2017." Page 24 10-Q 

Moody's downgraded Xerox's debt to Baa3 based on this split. Moody's downgrades Xerox's ratings to Baa3 on post-split capitalization announcement; outlook negative Personally, I would be slightly more concerned longer term than indicated by the Baa3 rating. 

Profit Snapshot: +$7.96

Sold at 98.918
YTM Then at 3.235%
Current Yield at 2.78%

Bought at a Total Cost of 98.32
Current Yield at 2.78%

B. Bought 1 MBANK 1.55% CD (monthly interest) Maturing on 11/30/18 (1 YEAR CD): 

Holding Company: Mackinac Financial Corp. (MFNC)
Mackinac Financial Corporation Announces Third Quarter 2017 Results

C. Bought 1 Treasury 1% Coupon Maturing on 5/15/2018: YTM at 1.306%

I now own 2. The first buy was at 99.976+ on 1/3/17.

D. Bought 1 Treasury .875% Coupon Maturing on 7/15/18: YTM at 1.41864%:

5. Intermediate Term Bond/CD Ladder Basket Strategy:

A. Bought 2 Verizon 2.45% SU Bonds Maturing on 11/1/22:

I recently sold this bond in a taxable account. Stocks, Bonds & Politics:  Item # 5.A. Sold 2 VZ 2022 SU Bonds at 98.99 (profit snapshot= $31.6)(10/30/17 Post)

This last buy was in a Roth IRA account where I turn taxable interest payments into tax free ones.

FINRA Page: Bond Detail

Bought at 98.735
YTM Then at 2.735% (2.681% at total cost of 98.935)
Current Yield at Total Cost = 2.426%

6. Sold VHCOX Shares Bought With Dividends: 

Vanguard Capital Opportunity Fund (VHCOX) 

Position Before Pare: 

Closing Price 11/30/17: VHCOX $69.04 +$0.58 0.85%
S & P 500 2,647.58 +21.51 +0.82% 
IWM $153.65 +0.28 +0.18% : iShares Russell 2000 ETF 
Nasdaq Composite 6,873.97 +49.58 +0.73% 
MDY 345.91 +1.98 +0.58% : SPDR MidCap ETF 

Morningstar classifies VHCOX in the large cap growth category.

A large cap growth ETF, which can be bought by Schwab customers commission free, is the Schwab U.S. Large-Cap Growth ETF (SCHG), rated at 4 stars by Morningstar. Through 11/30/17, that ETF had a YTD total return of 26.71% and a three year average annual total return of 11.64%. Over the same period, VHCOX had a 27.18% YTD total return and a 12.91% three year annual average TR. The average annual TR over five years was 20.04% for VHCOX compared to 16.86% for the Schwab ETF SCHG. That 3+% annual average difference adds up over time.

Profit Snapshot: +$222.86 

This fund pays annually. I sold the shares purchased with the dividends paid in December 2013, 2014, 2015, and 2016. 

In one of the GOP "tax reform" bills, the specific identification method is eliminated as an option for tax reporting. That takes away an option that I like to use. 

The VHCOX transaction is an example where I use specific share identification to sell only shares purchased with dividends, a process that enhances the value of the dividend by harvesting the dividend payment plus a profit on the shares. 

A more frequent use of specific identification is to sell my highest cost lots, which reduces my cost basis in the remaining lots, increases my dividend yield while being tax efficient. That last purpose, "tax efficiency", is  the option that Congress wants to eliminate for individual taxpayers.  

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.