Sunday, July 22, 2018

Observations and Sample of Recent Trades: HOPE, MLNT, ORKLY, VOD

Economy

+++++

Markets and Market Commentary

The bond market is ‘coiling’ for a violent yield surge, says BMO strategist - MarketWatch I certainly hope so. I would like to redirect some funds from maturing short term bonds and CDs into intermediate term bonds with meaningfully higher yields than now. 



CEO of world’s largest asset manager says tariff clash could knock 10% to 15% off the stock market - MarketWatch (the signal sent so far by the Stock Jocks is that an acceleration of the tariff war is a risk on event) 

We’re in a ‘buying stampede,’ so get ready for new highs, says veteran strategist - MarketWatch


Fund managers say trade spat is the biggest risk stocks have faced in years - MarketWatch


Moody's upgrades Canadian banks' long-term ratings on methodology update - Bank of Montreal (NYSE:BMO) | Seeking Alpha


Trade war puts the hoof into U.S. pig part exports to China | Reuters (so U.S. hog farmers can no longer sell their pig parts to their largest customers which are in China. I doubt their is much of a U.S. market for those parts which include hearts, tongues, stomachs, entrails. I know my stomach started to heave some just writing that sentence.)  


How Trump’s tariffs on Mexico are taking jobs from U.S. workers - The Washington Post


IBM earnings beat fueled by mainframe sales, but that strength may not last long - MarketWatchSEC Filed Earnings Press Release for the Q/E 6/30/18


More evidence the U.S. economy is growing strongly is shown in June’s leading index - MarketWatch


++++++

Trump

FBI Chief Dismisses Putin Offer for Investigation Cooperation (Trump thought this was an incredibly favorable offer, possibly it was when viewed from the perspective of Russian security interests)

Trump and Nato

Donald questioned whether the U.S. would come to the defense of a small NATO country like Montenegro, asking rhetorically why would the U.S. send troops to defend such a small country. Trump says defending tiny NATO ally Montenegro could lead to World War III This is a message to Russia that the U.S. would not intervene in a Crimea style Russian invasion in the Baltic countries of Latvia, Estonia and Lithuania in addition to other small NATO countries on Russia's border. Trump's comments would make no sense based on the predicate that the small country would start a war with Russia. Trump's contact with Montenegro's pro-Western President Dusko Markovic was to shove him out of the way during a photo op so Donald could be front and center.  Watch President Trump push a prime minister aside - CNN 


Trump Questions the Core of NATO: Mutual Defense - The New York Times


Putin would want Donald to cast doubt on U.S. commitment to the NATO alliance which Donald does regularly. 


Таким образом, Дональд и Путин согласны с тем, что США должны игнорировать свои обязательства в отношении обязательств по договорам НАТО.


Trump and Russia



68% of republicans approved of Donald's performance in Helsinki, and 42% of republicans assert, as does Putin, that there was no Russian interference in the 2016 election.  Poll-CBS News


The percentage of republicans with a favorable view of Putin had doubled since 2015.   


More Fake News I reckon: Indictment (7/13/18).pdfInternet Research Agency Indictment (2/16/18)Senate Intelligence Committee BiPartisan Report on Russia's Election Interference 7/3/18Joint U.S. Intelligence Agencies Report Assessing Russian Activities and Intention in Recent U.S. Elections 1/6/17.pdf


Donald continued his effusive praise for his soul brother Putin claiming that there will be tangible results flowing from his one-on-one two hour meeting with the Russian Czar. Of course, Donald can say whatever he wants without fear of being contradicted since his adult supervisors were not allowed to attend. 

According to the Duck, people w
ith the "higher ends of intelligence" loved his press conference with the Russian dictator: 




So in TrumpWorld, the alternatives are to get into a boxing match with Vlad or to lick his shoes as submissively as humanly possible.  


A similar stark choice was presented in this tweet: 




In this last version, the alternatives in TrumpWorld are to lick Putin's shoes or go to war with Russia, so Donald chose the former naturally and we all need to be grateful rather than critical of that decision. 


And, if anyone makes a factual criticism of the Duck's performance, they are deranged and hate that Donald was so servile and groveling in front of the Russian dictator. 


Again this is what Donald said in front of a world audience in response to a question that would have allowed him to stand up to Putin's election interference using measured tones: 






79% of Republicans support Trump's press conference with Putin - Axios

Poll: GOP Backs Trump's Putin Press Conference 

Now, the Duck could have just something like the following at the press conference: 

"The U.S. has clear and convincing evidence that Russia meddled in the 2016 election. I told the Russian President in the strongest terms to quit meddling in our election process." That was simple and straightforward. 


Instead, what you will find is deference to Putin's denial and Russian propaganda as well as some of the Dog Whistles that Trump uses that effectively manipulates his supporters. 

A dog whistle is a word or phrase that provokes a negative response among Trump supporters without discussing the underlying factual basis of claim. The underlying basis for the claim is generally a knowing misrepresentation or is otherwise insufficient to support the conclusion expressed in the Dog Whistle. 

+++ 


More on Trump and the Ongoing Russian Election Interference:  


House GOP refuses to renew election security funding as Democrats fume over Russian interference - The Washington Post (The GOP assures everyone that they are doing everything possible to insure the integrity of American elections.) 


Dan Coats, a former republican senator from Indiana that Trump appointed to be his Director of National Intelligence, made it clear last week that Russia was continuing its effort to interfere in the U.S. election process: 


“These actions are persistent. They’re pervasive, and they are meant to undermine America’s democracy on a daily basis, regardless of whether it is election time or not.” 

Shortly after Coats made that statement, the Duck assured us that Russia was no longer targeting U.S. elections Trump says Russia is no longer targeting the U.S., contradicting statement from U.S. intelligence chief - The Washington Post


This was the exchange with the reporter:



Sarah Sanders then claimed that Trump was saying "no" only to answering any questions rather than "no" to the actual question of whether Russia is still targeting the U.S. 

Make up your own mind. 

He was clearly answering the question asked by the reporter and his answer was no because he has such a good relationship with Putin. It is crystal clear. 

When Trump speaks spontaneously, rather than just reading from prepared remarks, he is far more likely to say what he really believes.  


In TrumpWorld, words do not convey their ordinary meaning. The word "would" means "wouldn't" and  "no" really means "yes" or possibly "no" to a question that was not asked rather than than to the one that was.


Trump would not allow his Secretary of State or National Security Advisor to attend his 2 hour one-on-one meeting with Putin which is strange since there is clear evidence that Putin personally ordered Russian operatives to help Trump win the 2016 election. 
In January 2017, Trump was shown evidence that Putin personally ordered his intelligence agencies to interfere in the 2016 election. From the Start, Trump Has Muddied a Clear Message: Putin Interfered - The New York TimesTrump saw evidence Putin ordered election swayed in early 2017: CNBC

Putin looked Trump in the eye and lied. Negotiate with Russia at our peril (guess who wrote that analysis? Answer: Trump's National Security Advisor John Bolton) Who said recently that Russia is a hostile power seeking to "stick it to America"? Answer: Trump's Secretary of State Mike Pompeo. The View from Langley.doc 


Talking and reaching verbal agreements in a one-on-one conversation  with Russia's dictator must never happen with any President, let alone one that is as ignorant and ill-prepared as Donald (not to mention potentially compromised and so easily manipulated with effusive praise). 


The Duck can now say whatever he wants about what was said at the meeting.


Russia is claiming that verbal agreements were reached with Donald which is most worrisome:  


As Russians describe ‘verbal agreements’ at summit, U.S. officials scramble for clarity


US offers no details as Russia claims Trump and Putin reached military agreements - CNN 


Russia has sent written agreements to Trump based on what it considers agreements reached in the one-on-one meeting with Putin. Russia continues to shape narrative of Helsinki summit - The Washington Post

Several days after the summit meeting, Trump's Director of National Intelligence has no idea what happened: U.S. intelligence chief: I don't know what happened at Trump-Putin meeting | Reuters  


Of course, the Trumpsters are thrilled that Donald, the master of negotiation and good judgment as proven by his six bankruptcies, reached verbal agreements with Putin, whatever they may be, during the one-on-one meeting. Perhaps, the U.S. still has the keys to the Pentagon and the CIA. There is no reason to worry since Donald is a stable genius according to Donald himself.    


The U.S. interpreter is not going to speak publicly about anything discussed in that private meeting; and she is not going to be subpoenaed by Congress to testify, nor should she be.


++


Putin, Trump and Bill Browder 


Vlad had an interesting revelation at his news conference with Donald. Russia does not like Bill Browder since the Russian state's murder of his lawyer Sergei Magnitsky led to the passage of the Magnitsky Act and Browder was disclosing through Magnitsky massive corruption in Putin's regime. Putin and his fellow Kleptocrats did not appreciate this public disclosure.

  
Amnesty International called Russia's allegations against Browder "a whole new chapter in Russia's worsening human rights record" and a "sinister attempt to deflect attention from those who committed the crimes Magnitsky exposed" Russia set for posthumous Magnitsky trial | The Independent

Putin asked Donald to extradite Browder even though the guy is not even a U.S. citizen and lives in the U.K. 


Putin also wanted Donald to turn over the former U.S. Ambassador Michael McFaul for questioning by Russia in connection with Browder's purported crimes.  Vlad would like to stick McFaul's head on a pole as the English Kings use to do as well as Vlad's real namesake, Vlad the Impaler


Oddly, the Kremlin wants the U.S. to turn over the same number of people for questioning as the number of Russian intelligence officers indicted for U.S. election interference. This is what passes for false equivalency in Moscow. The only question is whether there will ever be another U.S. President idiotic enough to view that as an "incredible" offer and otherwise willing to play footsie with Putin on such issues. 


Putin's charges against Browder are totally bogus as explained fully in this WP article: Putin’s push to interrogate U.S. officials Russia accuses of crimes, explained - The Washington Post I say Putin since the Russian prosecutors and judiciary are controlled by Vlad on this kind of issue. There is zero independence. 


The gist of Putin's charge is that Magnitsky discovered a $230M tax scam involving Putin associates and made the huge mistake of reporting it to the authorities. Those involved in the scam had him arrested and then murdered while in a Russian gulag on 11/16/09. The officials involved in the matter received awards and promotions; and Magnitsky was sentenced to prison after he died in true Kafkaesque fashion. Russia will never change. What would you expect when Vlad awarded a medal to the Russian pilot who shot down an unarmed Korean passenger jet. 

The "crime" committed by Magnitsky was to report the criminal activity of others. Browder's "crime" was to use the foregoing egregious actions by Putin and associates to convince Congress to pass the Magnitsky Act. Kafkaesque trial denies justice even after death | Amnesty International


What was the WH initial response about turning over a former U.S. ambassador who has been critical of both Putin and Trump? "The president’s going to meet with his team and we’ll let you know when we have an announcement on that.” Outrage erupts over Trump-Putin ‘conversation’ about letting Russia interrogate ex-U.S. diplomat Michael McFaul - The Washington Post 


Some of the other Americans that Putin wanted turned over included a former aid to Senator McCain who received the Steele dossier and turned it over to the FBI. That is a crime in Putin's world.  

The Senate voted 98 to 0 to rebuke Trump for considering this "incredible offer": Senate Rebuffs Russia Interviews of Americans in Rebuke to Trump - Bloomberg


After 4 days of outrage by what I will call Real Americans, as distinguished from the pretend ones so in vogue now in TrumpWorld, Donald thought that it would not be prudent this time to bow to Putin's "sincere" request or demand, depending on how one looks at those matters now. Trump rejects Putin's 'incredible offer' to help Russia interrogate Americans: CNBCTrump opposes Putin’s request to interview current and former American officials-The Washington Post The response was made a few minutes before the Senate started to vote. 


The fact that Trump referred to this Putin plan as an "incredible offer" indicates just how easy it is for Putin to manipulate one so ignorant and ill-prepared to negotiate. 

And what would the U.S. obtain in return by questioning the GRU agents other than denials and an effort to learn more about what U.S. intelligence knows about Russian interference in U.S. elections.  

Ambassador McFaul released this statement in response to what Trump called an incredible offer from Putin: 


“What they’re doing is allowing a moral equivalency between a legitimate indictment of 12 Russian military intelligence officers for interfering in our election with a cockamamie, crazy story that it sounds like Putin spun to our president in Helsinki.”


Putin appears to be targeting U.S. officials who worked on Russia sanctions - The Washington Post


Bill Browder fires back at Putin after press conference | Fox News
Bill Browder: Vladimir Putin Would ‘Like to Kill Me Like He Killed My Lawyer Sergei Magnitsky’


One thing that will lead to your demise in Russia is to point out facts and to provide proof relating to Putin's Kleptocracy. Magnitsky certainly paid that ultimate price. How He and His Cronies Stole Russia | by Anne Applebaum | The New York Review of Books  The Magnitsky Act needs to remain in force for at least one more decade and applied over the next several years to more Russians who are involved in Putin's Kleptocracy.    


The meeting between top Trump campaign officials and Russian operatives at Trump Tower before the election was part of Russia's effort to repeal the Magnitsky Act. Read the Talking Points Shared With the Kremlin - The New York Times
Sanctions law behind Putin's request to Trump for former U.S. officials | ReutersPutin & Trump: Russian President Is the Cat That Swallowed the Canary | National Review


Putin stated at the press conference that Browder
and his associates contributed $400 million dollars to Hillary's campaign, when Browder actually contributed nothing. He can not contribute as a U.K. citizen. So facts are as irrelevant to Putin as Trump, which does not give me a cozy feeling. 


And, Putin claimed that all of that money was moved illegally out of Russia. All of the foregoing egregiously false statements are now facts in TrumpWorld, being spread as gospel by the non-Fake News outlets like Alex Jones' Infowars. 


Vlad may have been thinking of an investor in Browder's hedge fund, Ziff Brother's Investments and members of the immediate Ziff family, who did donate over several years $35,000 to various Clinton campaign committees. In short, I hope that I do not become an enemy of the Russian state by pointing out that $35K is less than $400M. Who Is Bill Browder, Kremlin Foe Singled Out in Putin’s Offer? - The New York Times More money, $315K, was given to the DNC. Since 1980, the Ziff family member have donated a total of $5M dollars to campaigns of republicans and democrats. 


Ziff family fortune: Forbes 


Needless to say, if Putin cared about facts, and he has the same regard for accurate information as Donald, he would recognize that the Ziff family could fund those contributions out of petty cash and would not need to use some money allegedly invested at some time in a Browder hedge fund.  


Putin added for good measure that Russia had evidence that some U.S. intelligence operatives were behind this imagined scheme to funnel money illegally out of Russia to Hillary.  




Putin is referring to the former American ambassador and other officials. 


Politifact gave Putin's statement a pants on fire rating: Putin's Pants-on-Fire claim about $400 million donation to Clinton from Bill Browder partners | PolitiFact  


Trump raises $90 million for his reelection bid and the Republican Party, with less going to legal fees - The Washington Post


Former CIA Chief Leon Panetta: Russia Must Have Something On Trump (the republicans will shield Donald from any inquiry that would get to the truth of the matter which would start by requiring Donald to release his personal and business tax returns) 


Donald Trump makes false claim about Queen Elizabeth's review of honor guard


+++++++

The GOP "Conservatives" and Mariia Butina


More Loop Back to The Americans (TV Series 2013–2018)


Maria Butina, Suspected Secret Agent, Used Sex in Covert Plan, Prosecutors Say - The New York Times


The co-conspirator has been identified by several press outlets as a Trump supporter and republican activist. Accused Russian agent Mariia Butina, deemed flight risk, jailed: USA TodayAccused Russian spy Maria Butina offered sex in exchange for US job, prosecutors say | Fox News


Mariia Butina, Who Sought ‘Back Channel’ Meeting for Trump and Putin, Is Charged as Russian Agent - The New York Times;  


Russian National Charged in Conspiracy to Act as an Agent of the Russian Federation Within the United States | OPA | Department of JusticeSigned Affidavit in Support of Criminal Complaint.pdf


‘She was like a novelty’: How alleged Russian agent Maria Butina gained access to elite conservative circles


What Was Maria Butina Doing at the National Prayer Breakfast? - The New York Times (Putin has been hailed as a hero by evangelists like Franklin Graham and Bryan Fischer, who admire his efforts against gays and being in the words of Fischer "a lion of Christianity". I would classify Putin as being the same kind of Christian as Donald).


+++

Former GOP congressman Joe Walsh (R-ILL) explains how Sacha Baron Cohen tricked him into supporting arming toddlers with guns - The Washington Post


Republicans target elections with more deficit-boosting tax cuts | Reuters


I view the effort being made by Mark Meadows (R-NC) and Jim Jordan (R-OH), discussed in the following linked article, to be part of their campaign to shield Trump and to interfere as much as possible with Mueller's Russia investigation. Freedom Caucus leaders want Rosenstein investigated for alleged threats - The Washington Post7.16.18-Letter-from-Meadows-and-Jordan-to-OIG-Horowitz.pdf 


Rosenstein denied under oath making any such threats, but that is not sufficient for these two "Freedom Caucus" Trump sycophants. 


Former wrestlers sue Ohio State University, saying school ignored abuse by Dr. Strauss (Jim Jorden, a family values republican from Ohio, has been accused by several students of ignoring reports of sexual abuse)


Erdogan has centralized power in Turkey to give him authority of all levels of life with no practical checks on his power. The world is moving in that direction. Erdogan, Flush With Victory, Seizes New Powers in Turkey - The New York Times When Erdogan won a disputed referendum that gave him dictatorial power last April, Trump congratulated him, the only leader of a western democracy to do so. Trump Congratulates Erdogan on Turkey Vote Cementing His Rule - The New York TimesTrump's congratulatory call to Erdogan is revealing-CNN Donald is an authoritarian to his rotten core.

  

+++++++


1. Small Ball

A. Bought 30 MLNT at $6.1-Used Commission Free Trade




This is a buy in my nano/small cap biotech lottery ticket basket. Given the small exposure and probable long lead time to profitability, this is going to be a buy and forget position. 


Closing Price Last Friday: MLNT $5.95 -$0.10 -1.65% 


The market cap at $5.95 is about $333+M.

This stock had a bad day on my date of purchase, as did several other small/nano cap drug company stocks: MLNT $6.05 -$0.40 -6.20% I did not see any publicly released news to account for that drop. The market cap at $6.05 is about $338.86M.


Quote: Melinta Therapeutics Inc. (MLNT) 


Website: Home - Melinta Therapeutics


SEC FILINGS 


MLNT Analyst Estimates (Losses anticipate in 2018 and 2019) 


I recently read a couple of SeekingAlpha articles discussing this company. One was written by Bret Jensen and is now behind SA's paywall who recommended a small stake within a well diversified "seems warranted at current trading levels." Jensen's article was published on 7/5/18. The stock closed at $6.55 that day. 


Melinta is an antibiotics drug company, a disfavored category currently among institutional investors. That conclusion is based simply on the share price declines experienced by several small companies that focus their drug development in this category. I recently discussed purchasing PRTK and NBRV, two companies developing antibiotics, whose stock prices have seen better days. 


Generally, it is my layman's understanding that the potential approval of a new antibiotic drug is judged by its non-inferiority and side effects compared to an existing antibiotic, a path that indicates that the cheaper antibiotic, usually a generic, would be used first and the newer one would be tried only after an existing cheaper antibiotic proves unsuccessful. 


While resistance is growing to existing antibiotics, a trend likely to continue based on a cursory examination of the literature, use is still limited by cost and secondary applications, as well as a number of me too new products entering the marketplace. 


So I would not view this category of drug company to be a pathway to riches, but more of a trade where the hope and prayer is for a meaningful share price pop when a new product is approved for marketing or some major change in reimbursements that encourages more frequent use.  


A number of MLNT's products were acquired in a recent acquisition from the Medicines Company which tells me that even small drug companies do not want to fool with these products anymore. Melinta Therapeutics Completes Acquisition of The Medicines Company’s Infectious Disease Portfolio ("The close of the acquisition solidifies Melinta’s position as the world’s largest pure-play antibiotics company, and expands upon the company’s existing product Baxdela® (delafloxacin) by adding three additional marketed products to its portfolio: Vabomere™ (meropenem and vaborbactam), Orbactiv® (oritavancin), and Minocin® (minocycline) for Injection. Melinta’s existing portfolio of approved medicines has peak combined sales potential of more than $1 billion. ") 


I am assuming without looking further that the terms were unchanged from the initial press release: The Medicines Company Announces Definitive Agreement to Sell its Infectious Disease Business Unit to Melinta Therapeutics ("The Medicines Company (NASDAQ: MDCO) today announced that it has entered into a definitive agreement to sell its infectious disease business unit to Melinta Therapeutics, Inc.(NASDAQ: MLNT) for $270 million in upfront consideration and guaranteed payments ($215 million of guaranteed cash and $55 million of Melinta common stock), tiered royalty payments of 5% to 25% on worldwide net sales of Vabomere™, Orbactiv® and Minocin IV, and the assumption by Melinta of all royalty, milestone and other payment obligations relating to those products." emphasis added) There is only so much research that I will do for Lotto purchase which involves an investment light years below immaterial. 


I noted that Novartis just shut down most of its infectious disease program, laying off 400 workers in that division. Despite looming resistance crisis, Novartis ducks out of antibiotics research | FierceBiotech  (700K people die each year now due to infectious diseases that are resistant to existing antibiotics). That confirms my observation above, as do similar abandonments from other large drug companies mentioned in the previously linked article. 


It is hard to say when the worm will turn in favor of the new antibiotics. Regulatory changes (e.g. Text-H.R.6294) and more liberal reimbursement plans for their use may help when and if they come into being.


On the positive side, compared to my of my lotto ticket biotech stocks, Melinta at least has products that it can sell. Products-Melinta Therapeutics


Pipeline - Melinta Therapeutics


Baxdela (delafloxacin) is approved for one Serious Skin Infections and is being tested in trials for Serious Community-Acquired Bacterial Pneumonia (CABP) and Complicated Urinary Tract Infections (cUTI).


Melinta Therapeutics Announces Pricing of Public Offering of Common Stock (sold 22M shares at $5 plus greenshoe). 


Melinta Therapeutics Reports First Quarter 2018 Financial Results 


B. Bought 20 ORKLY at $8.15-Used Commission Free Trade




This one has gone south on me and that movement pick up steam after Orkla reported first quarter results on 7/13/18 which cause the shares to dive about 10%. 
ORKLY Historical Prices 


Closing Price Last Friday: ORKLY $8.285 $+ $.08 +0.98% 

NOK Priced Ordinary Shares (Oslo exchange): ORK.OL 

Investor Relations - Orkla.com


Current Position: 140 Shares


Average Cost Per Share: $9.65


Maximum Position: 200 Shares (possibly more if the shares continue to decline materially in price)


Dividend: Annually (paid in NOKs and converted into USDs for ORKLY owners) Dividend and treasury shares - Orkla.com


Currency Risk: The ordinary shares are priced in Norwegian Krone ("NOK") and traded on the Oslo stock exchange. ORKLY is an ADR priced in USDs that is traded on the U.S. Pink Sheet Exchange. OTC Markets | ORKLY 


The NOK has declined recently in value against the U.S.D. and that would cause the ADR to underperform the shares traded in Oslo. XE: NOK / USD Currency Chart. Norwegian Krone to US Dollar Rates 

Businesses:

I have discussed this company in several posts over several years. My overall opinion is that it is well managed but has too many businesses unrelated to its core consumer staple products and has been hit recently by two negative events beyond its control.




About Orkla - Orkla.com


Orkla Foods - Orkla.com

Orkla Confectionery & Snacks - Orkla.com
Orkla Care - Orkla.com
Orkla Food Ingredients - Orkla.com

One of the two negative events was the decision made by Wrigley to take over the distribution from Orkla of Wrigley products in Norway. Mars Norge terminates "Wrigley contract"Orkla's (ORKLY) CEO Peter Ruzicka on Q1 2018 Results - Earnings Call Transcript | Seeking Alpha (see page 1: "Orkla had approximately NOK250 million in sales from the regular distribution agreement."). 


The other was Norway's passage of a 83% increase in its sugar tax that has hurt sales of confectionary products in that country. 


Revenues and earnings were lower Y-O-Y due to Orkla selling its interest in Sapa, an extruded aluminum manufacturer. Agreement regarding sale of Orkla’s interest in Sapa to Hydro completed - Orkla.com (10/2/2017). That company is now entirely owned by Hydro: Sapa Extrusions is now part of the Hydro Family   


Orkla shared some of the proceeds with its shareholders in a special dividend. The amount was NOK5 per share that was paid last November. I received that dividend on a 100 share lot then owned. Orkla ASA: Orkla to sell its interest in Sapa to Hydro Sapa was a successful investment for Orkla. 


Some proceeds have been used to expand Orkla's consumer stable businesses: 




Orkla still has significant investments in unrelated businesses to its core operations: Orkla Investments - Orkla.com


I do not have a problem with these investments being kept: Hydro Power - Orkla.com and Financial Investments - Orkla.com



I do have a problem with keeping its 42.6% stake in the paint and powder coating manufacturer Jotun. Management seems intent on keeping this stake.

Corporate Identity | Jotun


Recent Earnings ReportOrkla First half 2018




The market had a negative reaction to this report. My reaction was negative but negative to the 2% to 3% decline in share price range rather than 10+%. And, I am more sympathetic on the reasons for anemic revenue growth and see more opportunities for growth through acquisitions outside of Norway as noted in a previous snapshot.


Orkla announced on 7/16 that it authorized the purchase of up to 10 million shares. Orkla initiates share buyback program Given Orkla's financial condition and the stock price, this is a grossly inadequate share buyback program IMO.


Prior Round-Trips:


Sold 100 ORKLY-Update On Portfolio Positioning And Management - South Gent | Seeking Alpha August 2015 (+$51.08)- Bought Back 100 Orkla (ORKLY) At $7.285 - South Gent | Seeking Alpha December 2014


Item # 4  Sold 100 ORKLY at $9 (9/6/14 Post)(profit snapshot $122.48)-Item # 2. Bought 100 ORKLY at $7.61 (1/13/14 Post) 


Total ORKLY Trading Profit: $239.01 


Last DiscussedItem # 1.A.  (5/7/18 Post)


The first quarter earnings report also caused a significant decline in the share price:


4/24/18 $10.22

4/25/18 $  9.37

Historical Prices


C. BOUGHT  5 VOD at $23.69 and 10 at $23.26-Used Commission Free Trade







Quote:  Vodafone Group PLC ADR


Closing Price 7/20/18: VOD $23.45 +$0.17 +0.73% 

Last Substantive DiscussionItem 1.B. Bought 20 VOD at $26.57 (5/24/18 Post)

Highest Cost Lot in Chain: 20 shares at $26.57

Morningstar: Fair Value at $33.5, rated 4 stars as of 6/11/18

S & P: 4 stars with a $31 twelve month price target as of 7/14/18

Argus: Buy with a $30 twelve month price target as of 6/12/18

Current Position: 60 shares 


Average Cost Per Share: $25.22


Maximum Position: 100 Shares


Purchase Restriction: Small Ball Rule (each purchase has to be at the lowest price in the chain)


I have changed my average down share purchase from 5 shares to 10 shares. 


VOD Stock ChartBear Trend Since January 2018


Dividend Reinvestment: Yes


Last Dividend: $1.22+ per share


Last Ex Dividend Date (semi-annual): 6/7/18


Vodafone Group Plc (VOD) Dividend Date & History - NASDAQ.com


Vodafone pays a dividend semi-annually. The last dividend will be the larger of the two. The pay date for this last dividend will be on 8/3/18. The U.K. does not withhold a dividend tax. 


Dividend Reinvestment: Yes


Last Substantive DiscussionItem 1.B. Bought 20 VOD at $26.57 (5/24/18 Post)


Highest Cost Lot: 20 shares at $26.57


Last SellItem 1.A. Sold 51+ VOD at $30.21 (11/30/17 Post)



2. REGIONAL BANK BASKET STRATEGY:


As previously discussed, I have knocked down my regional bank basket by harvesting profits that exceed $500.


The purchase of 50 Hope Bancorp shares was a mistake. I thought that I was in a family member's account, where there was not a position, and instead bought the lot in my account. I now own 130+ shares after buying another 10 in my Schwab account after Hope's earnings report discussed below. 


I am going to blame the Trumpsters for this brain malfunction. And why not since Donald blames Obama for Russia's election interference and invasion of Crimea?


Besides, I have a much better case against the Trumpsters than the Duck has against Obama.


My brain has been scrambled, perhaps in an irreparable way, by my ceaseless efforts to understand how the Trumpsters reason.


I attempted to cure this malady by sticking my head in the toilet and hoping that I could flush out the impurities, but alas that failed to cure the brain malfunctions. Now, I am at a loss about what to do.


My Mexican yard crew wanted to add some thoughts on this matter. Since I do not speak Mexican as well as I do Russian, perhaps I speak neither except in my own reality creations, I am at a loss about their meaning here:


El camarada Southgent necesita ser retirado al hogar del anciano, donde no puede causar daños a su cartera. Ayúdanos antes de que sea demasiado tarde. Por favor. 


A. Bought 50 HOPE at $17.65 and 10 at $17.03-Used Commission Free Trades:



10 Shares Schwab Account
50 Fidelity Account
Quote: Hope Bancorp Inc. (HOPE)

HOPE Analyst Estimates


Closing Price 7/20/18: HOPE $17.39 +$0.18 +1.05% 

2018: $1.52

2019: $1.59 P/E at $17.65= 11.1

Dividend: Quarterly at $.14 per share


HOPE increased the quarter dividend by 1 cent to $.14 last week. Hope Bancorp Increases Quarterly Cash Dividend to $0.14 per Share


Dividend Yield at $17.65 =  3.173%


Dividend Reinvestment: Yes


Last Purchase Discussions:


Stocks, Bonds & Politics:Item # 5.B (4/23/18 Post)Observations and Sample of Recent Trades: AROW, EPRPRC, HOPE, HT, WELL


Item # 2.A. Bought 50 HOPE at $18.04-Used Commission Free Trade (1/11/18 Post)


Last Sell Discussion:


Item 1.A. Sold  50 HOPE at $19 (11/4/17 Post)-Item 1.B. Bough 50 HOPE at $15.6 (9/14/17 Post)


Last Earnings Report: Q/E 6/30/18


Net income per share was reported at $.36, down from $.38 in the prior quarter but all from $.30 in the year ago quarter. The consensus estimate was for $.37. 


ROA is above average while the ROE number is slightly below average. 


The efficiency ratio is good. 


NIM is being impacted by purchase loan accretion as explained more fully in the press release.  




"The net interest margin (net interest income divided by average interest earning assets) for the 2018 second quarter declined 5 basis points to 3.61% from 3.66% in the preceding 2018 first quarter, of which 4 basis points of the decline is attributed to the convertible debt interest expense."


Effective Tax Rate (includes state taxes)


"The effective tax rate for the 2018 second quarter was 25.9%, compared with 25.7% in the preceding 2018 first quarter and 38.5% in the 2017 second quarter. The 2018 effective tax rates reflect the enactment of the Tax Cuts and Jobs Act on December 22, 2017, which lowered the corporate federal tax rate from 35% to 21% effective January 1, 2018."


HOPE operates primarily in California, which is of course one of the high state income tax states and is further unlikely to reduce its corporate income tax rates. BranchesTaxes in California for Small Business: The Basics Banks will use a variety of means to shield some income from taxes which would include various tax credits, accelerated depreciation, and investments in securities that can not be taxed by the state and/or the federal government. A state can not tax interest received from the federal government for example. The federal government will not tax interest from tax free municipal bonds. 


Capital ratios are okay: 




There is some deposit growth: 


"Total deposits at June 30, 2018 amounted to $11.73 billion, up 2% from $11.51 at March 31, 2018 and up 7% from $10.96 billion at June 30, 2017. Noninterest bearing demand deposits accounted for 25.9%, 26.5% and 27.5% of total deposits as of June 30, 2018, March 31, 2018 and June 30, 2017, respectively."


Nonperforming loans did fall some: 


"Nonperforming assets, including nonperforming loans and OREO, totaled $129.1 million at June 30, 2018, compared with $137.9 million at March 31, 2018 and $124.3 millionJune 30, 2017.  As a percentage of total assets, nonperforming assets declined to 0.87% at June 30, 2018 from 0.95% at March 31, 2018 and 0.90% at June 30, 2017."


There was no charge off but a net recovery of $1.1M


Hope Bancorp Reports 2018 Second Quarter Financial Results 


I discussed the 1st quarter report here: Item # 5.A. 


One of the problems for regional banks is that their deposit costs are rising which is contributing to stagnant net interest margins. Banks that depend on brokered deposits generally pay more. I have seen HOPE raise capital through CDs issued through Schwab and Fidelity who charge the bank for access to their customers. There is also an issue when deposit rates are rising and the bank has lent out 100% or more of its deposits as loans (loan to deposit ratio). The loan to deposit ratio for Bank of Hope was 99.46% as of 6/30/18: Financial Highlights > Bank of Hope This can restrain loan growth unless the bank can meaningfully grow deposits organically. If that is not done, then the bank has to utilize higher cost brokered deposits to fund loan growth which can crimps the net interest margin depending on the loan pricings. 

The bank made this comment in its press release on this subject:  

“Loan originations of $792 million were strong again this quarter, and we continued to see a more balanced mix with commercial real estate loans accounting for 41%, C&I 36% and consumer 23% of new loan production.  Loans receivable increased by 13% on an annualized basis, and all of the growth came in our C&I and consumer portfolios. While deposit pricing continues to be a challenge in the current environment, the strong loan growth and higher average loan yields largely offset the impact of rising deposit costs. This contributed to a relatively stable net interest margin, excluding the impact of the recently issued convertible debt interest expense."

3. Short Term Bond/CD Ladder Basket Strategy

 A. Bought 2 Target 2.3% SU Bonds Maturing on 6/26/19:


FINRA PAGE: Bond Detail (prospectus linked)


Credit Ratings:


Bought at a TC of 99.887
YTM at TC Then at 2.42%
Current Yield at TC = 2.3026%

The YTM for this Target bond was at a slight premium over the 2.34% 1 year treasury bill yield at the time of purchase with a 15 day earlier maturity. I am not concerned about Target paying off this bond at maturity. This bond fills a small gap in my short term bond/CD ladder which currently has 2 bonds maturing 6/24 and 4 CDs maturing on 6/28.

B. Bought 1 Treasury 1.625% Coupon Maturing on 6/30/19:
YTM: 2.319%


I lose some yield compared to large lot trades by buying just 1 bond. This treasury was bought on the same day as the Target bond. This was also my first U.S. treasury purchase in the secondary market that matures in June 2019. Over the next several months, I will gradually add more. 

C. Bought 2 Gilead 2.05% SU Bonds Maturing on 4/1/2019:


FINRA Page: Bond Detail (prospectus linked)



2017 Annual Report (debt listed and discussed starting at page 86)

Credit Ratings:


Bought at a Total Cost of 99.713
YTM at TC Then at 2.459%
Current Yield at TC = 2.0559%

D. Bought 2 Emera U.S. Finance 2.15% SU Bonds Maturing on 6/15/19:
I now own 4.

Finra Page: Bond Detail (prospectus linked)

Issuer: A wholly owned and indirect subsidiary of Emera Inc. (Canada: Toronto) who guarantees the notes







Credit Ratings: See Trade Snapshot

Bought at a Total Cost of  (99.45 (with $4 Vanguard brokerage commission)
YTM at TC Then at 2.762%
Current Yield at TC = 2.1679%

Emera is a Canadian utility that bought TECO Electric, a U.S. electric utility that owned Tampa Electric. The financing for that purchase came from bonds issued by this entity. Corporate Profile | EmeraEmera Closes Acquisition of TECO Energy 

Most of my brokerage account cash is now sitting in the Vanguard Prime Money Market fund which explains why I am buying some bonds in that account and paying a $2 per bond commission rather than the $1 per bond charged by Fidelity and Interactive Broker. Schwab's bond commission is also $1 but has a $10 minimum commission which makes that broker uncompetitive for small lot bond trades. I am considering buy 10 bonds in one order in my Schwab account as proceeds pile up from maturing CDs. 

E. Bought 1 Treasury 1.625% Coupon Maturing on 4/30/19
YTM  = 2.265%


I now own 2. 

Yields for CDs Maturing in April at Time of Purchase: 

Highest Rate at 2.25%-Interest Paid at Maturity 
F. Bought 2 Bank of India 1.8% CDs Maturing on 8/29/18 (1 Month CD):



DisclaimerI 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.