Observations and Sample of Recent Trades: AGNC, FSIC, IRM, MPW, TCRD, VNQ

Economy: 

U.S. budget deficit widens to $100 billion in October - MarketWatch

Global growth will slow from here, say Nomura’s economists - MarketWatch

Small-business sentiment declines in October to four-month low, NFIB says - MarketWatch

Frozen Out of China, American Farmers Refuse to Sell Their Soy

+++++++++

Markets and Market Commentary: 

The White House probably won’t be tweeting this Trump-vs.-Obama chart - MarketWatch (during a comparable time in the Obama and Trump administrations, stocks have performed better under Obama)

OPEC and allies warn surging oil output may create oversupply in 2019

OPEC report shows output from Russia, cartel offsets loss from Iranian sanctions - MarketWatch

Weekly U.S. Field Production of Crude Oil (Thousand Barrels per Day)

Crude is continuing to collapse in price. US crude plunges to one-year low, extending record losing streak

Bank of America's Paul Ciana sees buy signals in bond markets

Apple stock slides after supplier Lumentum cuts outlook (Monday, 11/12)

Lumentum Updates Outlook For Fiscal Second Quarter 2019 ("We recently received a request from one of our largest Industrial and Consumer customers for laser diodes for 3D sensing to materially reduce shipments to them during our fiscal second quarter for previously placed orders that were originally scheduled for delivery during the quarter.") 

Goldman Sachs cuts Apple iPhone estimates on negative supplier outlook

Malaysia Seeking `Full Refund' From Goldman for 1MDB Deals - Bloomberg

CEO Larry Culp: GE will reduce leverage through asset sales 

I gave up on GE last year. Item # 1 Sold Remaining GE at $18.25 (11/20/17 Post)(profit snapshot = $774.4; trading profits 2007 to date = $4,353.8) ). I now view the stock as a Lotto ticket, where I will consider restarting a position using my small ball purchase rules. I have not made a decision on when I will start and at what price. Note that I have not bought a single GE or GE Capital bond. I do have concerns about GE hitting a liquidity crisis that could spiral into a bankruptcy, though a recession may be necessary to increase that possibility meaningfully.

Funds Keep Dumping Blocks of GE Shares at Exceedingly Rapid Pace - Bloomberg

Comcast shares slip after Trump alleges company 'routinely violates antitrust laws' Donald does not have a clue and his opinion on such matters is worse than worthless. 

Just more nonsense from the Duck: President says stock market is rattled by prospect of Democratic ‘harassment’ - MarketWatch The market could care less that the House democrats will launch investigations. 

CNBC’s Jim Cramer says stock market is in ‘a very serious correction’ — and there’s nowhere to hide - MarketWatch

Bank of America says the 'big low' for the stock market isn't in yet

++++

Trump: 

Trump does know Matt Whitaker, Kellyanne Conway says - The Washington Post Last week Donald stated clearly that he did not know Mr. Whitaker. 

Trump once again engaged in a false narrative about California's wildfires. 

Most of the state's forests are managed by the federal government: Trump draws ire from firefighters, celebrities for tweet about California fires; Trump tweet on California wildfires 'demeaning' and 'Ill-informed,' firefighters union boss says | Fox News; In a strikingly ignorant tweet, Trump gets almost everything about California wildfires wrong

Trump involved in 'nearly every step' of hush-money payments to Stormy Daniels and Karen McDougal: WSJ; WSJ: Draft indictment detailed Trump's role in hush money scheme - CNN

Trump administration weakens Obamacare birth control coverage mandate 

Trump and CNN: 

Trump threatens more reporters’ credentials as he slams ‘stupid’ questioning - MarketWatch A "stupid question" is one that Trump does not like. An example of a brilliant question would be something like this one: "Mr. President, I think that you are the greatest leader in U.S. history and have accomplished more in less than two years than all of your predecessor's combined multiplied by hundreds of trillion, why doesn't the Fake News media acknowledge  that?"  

CNN sues President Trump and top White House aides for barring Jim Acosta - CNN

While relying on a doctored video as a justification for banning a reporter from White House briefings is fine with the Trumpsters, even reactionary republican judges, who view the First Amendment as an inconvenience, would find it difficult to use that doctored video as the justification for barring a reporter from White House press briefings. 

As it has become more apparent that the White House was relying on a doctored video manufactured  by the conspiracy website Infowars, Trump and Sarah changed their  justification for banning Acosta. Sarah Sanders shares fake Infowars video to justify banning CNN’s Jim Acosta - Vox

While Sarah and Donald may get their daily briefings from Alex Jones, there are those who are still suspicious of Infowars as an information source: Alex Jones: Rise and fall of Infowars conspiracy-theory pusher Jones has made the following outlandish claims: (1) the massacre of children at Sandy Hook was a staged event, (2) 9-11 was an inside job, (3) Robert Mueller is a pedophile, (4) chemicals in the water are turning people gay; and (5) Hillary ran a child sex ring out of a pizza parlor. Alex Jones: 5 most disturbing and ridiculous conspiracy theories I can understand how Jones appeals to Sarah and Donald.  

The alleged reason now, other than the real reason of extreme hostility to CNN which is easily proven, is that Acosta did not turn over the microphone as requested. The White House is changing its tune on why it yanked Jim Acosta’s press pass ("The alleged assault simply isn’t there, and the fact that the White House needed to use sped-up video — what only be called propaganda— to bolster its point shows how shaky the foundations of the decision were."; Sarah Sanders promotes an altered video of CNN reporter, sparking allegations of visual propaganda - The Washington Post)  

Video of Acosta incident posted by White House press secretary Sarah Sanders contains extra frames - MarketWatch

The end result will likely be a court order finding that Trump and his minions violated the First Amendment. Generally, a President would avoid that kind of ruling. Trump will defend CNN's legal action "vigorously" and refers to the case as grandstanding. 

A republican federal district court judge appointed by Trump, Timothy J. Kelly, will first hear the case. I would not be surprised to see Judge Kelly side with Trump, but the D.C. Appellate Court would shred an opinion favoring Donald. 

{Judge Kelly has already ruled in favor of a Trump's position in a case  English v. Trump, 279 F. Supp. 3d 307; Judge denies injunction to remove Mick Mulvaney as consumer bureau's acting director-Los Angeles Times Before the D.C. Circuit could issue an opinion on appeal, Ms. English resigned her position, rendering the case moot. English v. Trump | Constitutional Accountability Center} 

Trump has nothing but contempt for the free press, which can easily be proven in a court of law. His hostility toward CNN and their news content  are easily proven facts as well. That hostility is also reflected in the undoctured tape of the last encounter with Acosta.     


GOP Fraudulent Claims about Voting Fraud: 

Donald was too busy tweeting his conspiracy claims and bashing America's oldest ally to attend the memorial service for veterans at Arlington last Monday. Trump, Pence miss Veterans Day observance at Arlington Cemetery | Fox News; Trump's rain check on honoring Americans killed in WWI prompts backlash-ABC News; Critics pile on after Trump cancels visit to U.S. military cemetery outside Paris, citing weather  

Donald has not offered any factual basis for the following claim, which is part of Donald's efforts to interfere with vote tabulations that may go in the wrong direction:   

Trump is telling Florida to ignore military ballots. Happy Veterans Day. - The Washington Post

Trump calls for halting recounts in Florida races for governor and Senate

Trump attacks Florida recount, wild claims 'missing or forged' ballots

While both Trump and Rick Scott, who are just a couple of con artists working their grifts, are claiming fraud since they are afraid of losing a recount, neither offer any evidence to justify their claims. Recounts usually do not change the result, so any politician interested in democracy would have just kept their mouth shut and let the process proceed with the lawyers for each side doing their usual legal maneuvers in courts.   

Trump, Scott and Rubio push voter fraud with no evidence | Miami Herald; State elections monitors say no criminal activity in Broward | Miami Herald

When pressed to provide details of the alleged fraud, Scott referred to Bill Nelson's lawsuit requesting a federal district court to order to reexamine ballots discarded due to a signature issue. And, how is that fraud to seek a court order exactly? Any lawyer making an accusation of fraud based on that kind of claim needs to be disciplined by both the court and bar.  

The other example cited by Scott was a single objection to a signal ballot made by someone who was not authorized by the Nelson campaign to make objections. 

Previously, the GOP mob had pointed to a box that allegedly contained ballots found at a school. The chants of "Lock her Up" soon followed, referring to an election official in Broward county. The right wing media immediately went into a frenzy claiming voter fraud, but alas those boxes actually just contained supplies. No, those ballot boxes found in Broward don’t contain votes, officials say. | Miami Herald

Another fraudulent claim made by the GOP relates to 266 mailed ballots in Miami-Dade County, a Democrat stronghold (Nov. 6, 2018 Miami-Dade County election results), that arrived after the deadline due to a delay at the post office sorting facility where the pipe bombs were found earlier which is what caused the delivery delay. The votes were not counted which would be disadvantageous for the Democrat candidate. Uncounted Ballots, Overvoted Ballots: Why Is the Governor Claiming Fraud in Florida’s Election? - The New York Times 

When the con artists Rick and Don had to present proof of voter fraud, they came up with nothing as held by a republican appointed judge. Florida judge says no evidence of voter fraud in Broward County - Axios; Florida judge rejects Rick Scott’s evidence-free allegations of ‘voter fraud’ – ThinkProgress  

So what was the factual basis for Scott to claim "rampant fraud"? 

Scott's claim of rampant fraud was the fraud. 

He had no proof when it came time to put up or shut up. He just wanted to have the state police under his control to seize the voting machines and ballots, a purely authoritarian ploy.   

Scott is certainly familiar with fraud claims.

Scott had to resign as HCA's President after the government found widespread fraudulent billing that ended up costing HCA a $1.7B fine. Rick Scott 'oversaw the largest Medicare fraud' in U.S. history, Florida Democratic Party says | PolitiFact Florida In the modern day GOP, that is a recommendation for high office. The people who voted for Scott knew of that history which is common knowledge in Florida.   

Two incumbent republican congressman, currently under indictment for multiple felonies, won their races. One was indicted for insider trading and the other for spending campaign money to pay personal bills. Evidence of their guilt is strong and publicly available to anyone willing to look. The republicans could really care less.  

+++

Arizona Senate Race: 

Democrat Kyrsten Sinema wins Arizona Senate race after nail-biter against Martha McSally A worrisome development for republicans is that Ms. Sinema carried the former republican stronghold Maricopa County. 

The Arizona republicans have to defend a vacant seat in 2020. I suspect that the Arizona governor will appoint Martha McSally to fill the remaining term of John McCain. That would be the strategic course of action since she is probably the best candidate the GOP has to hold onto that seat even though she lost to Sinema. Jon Kyle, a former republican senator, came briefly out of retirement to replace McCain, but he has no intention of running in the next election.   

++

North Korea and Donald: 

In North Korea, Missile Bases Suggest a Great Deception - The New York Times; Newly revealed North Korean missile bases cast doubt on value of Trump’s summit with Kim Jong Un - The Washington Post As world leaders have already learned, Donald can be easily manipulated by effusive praise.

Undeclared North Korea: Missile Operating Bases Revealed - Beyond Parallel

++++++

1. Small Ball-Income Generation BDCs and MREITs: 

A. Added 20 TCRD at $7.67-Used Commission Free Trade: 

Quote: THL Credit Inc. (TCRD)

Closing Price Yesterday: TCRD $7.15 +$0.02 +0.28% 

TCRD SEC Filings

Investor resources | THL Credit, Inc.

THL is a deservedly hated micro cap BDC that is externally managed. See Five Year Financial History at Page 69 Annual Report for 2017

Current Position in this Account: 84+ shares 

Maximum Position in this Account: 100 shares + shares bought with dividends  

Only 20 more shares can be purchased.

Average Cost Per Share This Account: $7.83

Net Asset Value Per Share as of 9/30/18 = $10.1

Discount to Net Asset Value Per Share at $7.83: -22.48%  

Purchase Restriction: Small Ball Rule 

Last Substantive Discussion: Item # 1.B Bought 50 TCRD at $7.81-Used Schwab Commission Free Trade (5/28/18 Post)(Schwab account commission free purchase) 

Dividend: Quarterly at $.27 per share ($1.08 annually)

Dividend Yield at $7.83 TC per share = 13.79%

Last Earnings Report: Q/E 9/30/18

This report was released after this last purchase: 

THL Credit Reports Third Quarter 2018 Financial Results and Declares a Dividend of $0.27 Per Share 

10-Q for the Q/E 9/30/18 

That is a decrease of 3.9% from the 12/31/17 NAV per share of $10.51.  Net asset value destruction has been a problem. NII coverage of the current quarterly rate is another problem. 

NII per share = $.26 per share (1 cent lower than the quarterly dividend and 8 cents below the 2017 third quarter number of $.34) 

"The decrease in net investment income between the three month periods is primarily attributable to a decrease in interest income on debt and other income-producing investments due to portfolio contraction offset by lower borrowing costs and base management fees."

"THL Credit's investment portfolio at fair value was allocated 64 percent in first lien senior secured debt (including unitranche investments), 16 percent in the Logan JV, 5 percent in second lien debt, 1 percent in subordinated debt, 3 percent in other income-producing securities and 11 percent in equity securities and warrants. The weighted average yield on debt and Logan JV investments made in the third quarter of 2018 was 9.5 percent."

"As of September 30, 2018, THL Credit had loans on non-accrual status with an aggregate amortized cost of $14.4 million and fair value of $7.8 million, or 2.7 percent and 1.5 percent of the portfolio's amortized cost and fair value, respectively."

"As of September 30, 2018, 96 percent of THL Credit's debt investments bore interest based on floating rates, which may be subject to interest rate floors, such as London Interbank offer rate, or LIBOR, or Canadian Dollar offer rate, or CDOR, and 4 percent of its debt investments bore interest at fixed rates." (emphasis added) 

THL Credit, Inc. (TCRD) CEO Chris Flynn on Q3 2018 Results - Earnings Call Transcript | Seeking Alpha (based on what management said, I believe there will be a dividend cut sometime during the 2019 first half. The external manager is waiving its incentive fee through the second quarter of 2019 which is nice of them. My question, which I have repeatedly raised on incentive fees paid to external managers, is why are they being paid an incentive fee at all given their performance?  Without that waiver, NII would have been $.21 to $.22 in the last quarter rather than $.26, see page 5 The management team says that they have learned from their mistakes.) 

Maxim Group Sticks to Its Hold Rating for THL Credit (TCRD)(the analyst expects the dividend to remain unchanged through 2019)  

B. Bought Back 50 AGNC at $17.63-Used Schwab Commission Free Trade:

Two Year History This Account:

Quote: AGNC Investment Corp.

Closing Price Yesterday: AGNC $17.88 +$0.12 +0.68% 

I am in a small ball trading mode for this MREIT which has been a lackluster long term hold for investors.

The emphasis needs to be on total return rather than the shiny object of dividend yield.

The total annual average return over the five year period ending on 10/23/18 was 6.43%, indicating that the share price decline during that period ate up almost half of the dividend. DRIP Returns Calculator | Dividend Channel

Maximum Position: 50 Shares + shares purchased with dividends 

Tangible book value is accelerating to the downside (see discussion below) 

Current Position: 50+ shares (one monthly dividend reinvestment so far)

Dividend: Monthly at $.18 per share ($2.16 annually)

AGNC Investment Corp. Declares Monthly Common Stock Dividend of $0.18 per Common Share for October 2018

Dividend Yield at $17.63 TC per share = 12.25%

Last Ex Dividend Date: 10/30/18 (shortly after purchase)

Dividend Reinvestment: Yes

SEC Filings

2017 Annual Report (risk factor discussions starts at page 7 and ends at page 22)

This company engages in far too many stock offerings in my opinion. The last one occurred in early August when the company sold 38M shares, plus the greenshoe of 5.7M shares, at $18.69 per share. Prospectus A 30M share offering, plus a greenshoe of 4.5M, was sold at $18.36 in May 2018. Prospectus The underwriters fully exercised their greenshoe options in both offerings.

The goal with all MREIT purchases is simply to sell shares at whatever profit may be available after harvesting one or more monthly dividend payments.

Both my sell and buy entry prices for AGNC have been trending down, as shown my the preceding snapshots.

Tangible book value per share is trending down which sets the parameters of my entry and exist points.

Tangible book value per share was at $18 as of 9/30/18, down from $18.41 as of 6/30/18 and $18.63 as of 3/31/18.  

Tangible book value per share was at $19.69 as of 12/31/17: Page 27 Annual Report

I do not pay attention to the book value number that includes intangible assets like goodwill. That number has been trending down as well, going from $25.74 as of 12/31/14 to $19.68 as of 6/30/18: SEC Filed Earnings Press Release for the Q/E 6/30/18

This last reentry price of $17.63 was the lowest in my historical trading chain. That price represents a -4.24% discount to the tangible book value per share as of 6/30/18.

While the last sell occurred at $19.37, the target price for the next elimination would likely be in the $18 to $18.5 range.

Prior Sell Discussions:

ITEM # 3 Sold 50+ AGNC at $19.37 (9/2/2018 POST)

Item 1.B. Sold 71+ AGNC at $19.03 (5/3/18 Post)

Item 3.A. Sold 54+ AGNC at $20.71- Vanguard Roth IRA Account and Item 3.B. Sold 53+ AGNC at $20.71-Schwab Taxable Account (5/23/17 Post)

Item # 4 Sold AGNC at $30.14 (2/15/12 Post)

Prior Buy Discussions:

Item 1.B. Bought 10 AGNC at $18.15 (3/15/18 Post)
Item 1.D. Added 10 AGNC at $18.57 (2/26/18 Post)
Item # 6 Bought 50 AGNC at $18.72-Used Commission Free Trade (2/1/18 Post)

AGNC Realized Profits to Date: $348.44

Given the dividend yield, any profit number is viewed as a win.

Recent Earnings Report: Q/E 9/30/18

This report was released after my purchase.

There was another major slide in tangible book value per share. That number declined by $.41 to $18. "The decline was primarily a function of higher interest rates, as Agency MBS spreads to benchmark interest rates were largely unchanged to slightly wider for the quarter."

Net income per share of $.45 was below the $.54 quarterly rate based on monthly payments of $.18 per share. 

AGNC Investment Corp. Announces Third Quarter 2018 Financial Results

AGNC Investment Corp. (AGNC) CEO Gary Kain on Q3 2018 Results - Earnings Call Transcript | Seeking Alpha

Subsequent to that earning's press release, AGNC declared a monthly dividend of $.18 per share and estimated its tangible book value per share at $16.94 as of 10/31/18, down from $18 as of 9/30/18.  AGNC Investment Corp. Declares Monthly Common Stock Dividend of $0.18 per Common Share for November 2018 and Announces Estimated Tangible Net Book Value of $16.94 per Common Share as of October 31, 2018 (emphasis added) That decline in tangible book value per share over a one month period caused me to limit my exposure to 50 shares plus shares purchased with the dividends. 

C. Added 10 FSIC at $6.4-Used Fidelity Commission Free Trade:

Quote: FS Investment Corp. (FSIC)

Closing Price Yesterday: FSIC $6.34 -$0.03 -0.39% 

This is another deservedly hated and externally managed BDC.

Website: Home | FS Investment Corporation

Current Position this Account: 66+ Shares

Average Cost Per Share = $6.94

Maximum Position: 100 Shares

I can buy up to 40 more shares. I will wait until the shares go ex dividend for the upcoming special and regular dividends before buying more shares. I will then buy shares only when the price, adjusted down for the dividend, is lower than the closing market price the day before the ex dividend date.  

Purchase Restriction: Small Ball Rule

Dividends: Quarterly at $.19 per share ($.72 per share annually)

Management: External 

FS Investment Corporation 2017 Annual Report (risk summary starts at page 29 and ends at page 57)

Last Substantive Discussion: Item # 1.A. Bought 50 FSIC at (10/14/18 Post) That lot was bought in my Schwab taxable account where I do not intend on making any additional purchases other than through reinvestment of the dividends.

Net Asset Value ("NAV") Per Share History-Recent Trend Unfavorable:

9/30/18:  $8.64

6/30/18:  $8.87

3/31/18:   $9.16

12/31/17: $ 9.3

12/31/16: $ 9.41

12/31/15: $ 9.1

12/31/14: $ 9.83

12/31/13: $10.18

12/31/12: $ 9.97

Discount to NAV Per Share at TC of $6.94 (using 9/30/18 data)= -19.68%

Recent Earnings Report:

FSIC Reports Third Quarter 2018 Financial Results and Declares Special and Regular Distribution for Fourth Quarter

This report was released after this last purchase. 

"Net investment income of $0.23 per share, compared to $0.21 per share for the quarter ended September 30, 2017" 


"Net asset value of $8.64 per share, compared to $8.87 per share as of June 30, 2018"

"Total net realized gain of $0.12 per share and total net change in unrealized depreciation of $0.41 per share"

"FSIC's board of directors has declared a special cash distribution of $0.09 per share and a regular cash distribution for the fourth quarter of $0.19 per share. The special cash distribution will be paid on or about December 3, 2018 to stockholders of record as of the close of business on November 19, 2018. The regular cash distribution will be paid on or about January 2, 2019 to stockholders of record as of the close of business on December 12, 2018." (emphasis added)

"Approximately 2.7% of investments were on non-accrual based on fair value"

FS Investment Corporation (FSIC) CEO Michael Forman on Q3 2018 Results - Earnings Call Transcript | Seeking Alpha ("I want to start off by saying we are disappointed with the company's recent performance and the effect that it's having on the stock price. So vast majority of our NAV volatility has been driven by certain older vintage investments that are weighing on our fund's performance . . We expect this process will take some time before we fully turn the corner. So we are making good progress.") 

Okay, I see the light. 

The managers are now going to make good investments rather than the bad ones that they have made in the past. What a relief. 

2. Short Term Bond/CD Ladder Basket Strategy:

I am sticking with my strategy of plowing some redemption proceeds into short term bonds and CDs maturing within 2 years with the highest weighting in 1 to 3 month treasury bills bought at auction. 

A. Bought 1 Nextera Capital 2.4% SU Bond Maturing on 9/15/19-In a Roth IRA Account: 

I now own 2 bonds. 

Finra Page: Bond Detail (prospectus linked)

Issuer: Wholly owned subsidiary of NextEra Energy Inc. (NEE) who guarantees the notes

NEE Analyst Estimates 

Credit Ratings: 

Bought at a Total Cost of 99.55
YTM at TC Then at 2.938%
Current Yield at TC = 2.4108%

I also own 2 Nextera 2.7% SU bonds maturing on the same day. Bond Detail

With the proceeds from maturing Nextera Capital bonds, I am continuously redeploying proceeds into more bonds issued by Nextera. I had 9 Nextera bonds mature on 9/1/2018. The next scheduled maturity is on 4/1/2019, when I have 4 Nextera Capital 2.3% bonds mature. Bond Detail  

B. Bought 1 Treasury 2.5% Coupon Maturing on 5/31/20: 
YTM = 2.889% 

I now own 2 bonds. 

C. Bought 5 Treasury 1 Month Bills Maturing on 12/11/18 (bought at auction):
IR  = 2.234%

Auction Results: 

Today's Auction Results  

3.  Equity REIT Common and Preferred Stock Basket Strategy:

A. Restarted Small Ball Buying Program in VNQ-Bought 5 at $77.71 (Commission free for Vanguard Customers):

Quote: Vanguard Real Estate ETF Overview - MarketWatch

Closing Price Yesterday: VNQ $80.65 -$0.11 -0.14% 

Sponsor's Website: Vanguard (expense ratio .12%; number of stocks 184)

Distributions: Quarterly

Last Eliminations:  Item #2.A Sold 10 VNQ at $81.08 (7/5/18 Post); Item # 1.D Sold 10 VNQ at $79.89 and 10 at $80.06 (6/14/18 Post); Item # 3 Sold at $83.36 Update For Equity REIT Basket Strategy As Of 3/21/16 - South Gent | Seeking Alpha; Item # 3 Sold 10 VNQ at $80.74: Update For Equity REIT Basket Strategy As Of 11/5/15 - South Gent | Seeking Alpha

2018 VNQ Trading Profits (30+ shares) = $134.35

Total VNQ Trading Profits (50+ shares total) = $272.37

2016 10 Shares +$72.63

2015 10 Shares +$65.39

Last Buy Discussions: Item # 2.D. Added 5 VNQ at $72.4 (2/15/18 Post)

Current Position: 5 shares

Maximum Position: 50 shares (never hit before eliminating position)

I prefer owning individual REIT stocks.

Purchase Restriction: Small Ball Rule

Major Holdings at Time of Purchase:

B. Added 5 IRM at $30.65 and 5 at $30.3-Used Commission Free Trades (same day purchases):

Closing Price Day of Purchase (10/26/18): IRM $30.48 -$2.22 -6.79%

Closing Price Yesterday: IRM $32.88 +$0.21 +0.64% 

Most of that decline can probably be attributed to the Stifel analyst downgrading the stock from buy to hold and cutting the price target to $34 from $39. I do not have a copy of that report. Stifel steps to sidelines on Iron Mountain-Iron Mountain Inc. (NYSE:IRM) | Seeking Alpha

The downgrade was apparently caused by the third quarter earnings report released the prior day. I did review the earnings report, the third quarter earnings transcript and an SEC filed earnings presentation before buying a few shares.

I had some concerns about volume growth in the storage business but was otherwise comfortable with the report. Revenue in the storage segment rose due to price increases. I am more concerned about the debt level which I view as excessive and that concern explains the small position and small ball buys. This stock is held in disfavor by brokerage analysts.

Prior to the downgrade, I believe the Stifel analyst was only one of two that had a buy rating on the stock. The other was the Goldman Sachs analyst.  

I say "most of the decline" was probably attributable to that decline. Stocks were weak on 10/26 and equity REITs were weaker than the SPX that day.

Closing Price 10/26/18: VNQ $77.20 -$1.90 -2.40%: VANGUARD REIT INDEX ETF 

Quote: Iron Mountain Inc. (IRM)

Website: Data & Records Management | Shredding | Iron Mountain

SEC Filings

IRM is an equity REIT.

Q3-2018-Earnings-Press-Release-Earnings-Call-Slides-and-Supplemental.pdf

Last Substantive Discussion: Item 2.C. Bought 10 IRM at $32.69 and 10 at $31.95-Used Commission Free Trades  (3/19/18 Post)

Prior Buy in Small Ball Purchase Chain: Item  # 1.A. Bought 5 IRM at $30.93 (4/5/18 Post)

Current Position: 35+ shares

Average Cost Per Share: $31.63

Maximum Position: 100 shares

Dividend: Quarterly at $.611 per share or $2.444 annually (Raised 4% and announced in 2018  third quarter report, the day prior to the shellacking)

Dividend Yield at Average Total Cost = 7.73%

Reinvestment: Yes at below $33

I doubt that I will sell any shares before I hit a 100 share position unless something happens that gives the Old Geezer the shakes.

Last Earnings Report--Q/E 9/30/18 (released the day before my purchase): 

"Based upon continued demonstration of growth and durability of cash flows, the company's board of directors declared a quarterly cash dividend of $0.611 per share for the fourth quarter for shareholders of record on December 17, 2018, up 4% from the third-quarter dividend per share of $0.5875 per share."

"FFO (Normalized) per share was $0.55 for the third quarter, flat compared with $0.55 in 2017. Year to date, FFO (Normalized) per share was $1.60, compared with $1.58 in 2017."

"AFFO was $229 million for the third quarter compared with $210 million in 2017, an increase of 8.8%. Year to date, AFFO was $680 million, compared with $598 million in 2017."

"The company revised its 2018 full-year constant dollar guidance, including Revenue growth of 9% to 11% from the previous range of 7% to 9% and increased AFFO growth guidance to 13% to 16% from the previous range of 5% to 13% for full year 2018."

Iron Mountain Reports Third-Quarter 2018 Results

Iron Mountain (IRM) Q3 2018 Results - Earnings Call Transcript | Seeking Alpha ("total revenue growth of 12% on a constant dollar basis, solid growth in adjusted EBITDA with an 80 basis point increase in EBITDA margins, continued durability of our storage business with total internal revenue growth of 2.3%, strong internal service revenue growth of 7.1% for the quarter, good progress on integrating our data center acquisitions illustrated by strong data center portfolio utilization of 91.1% and continued organic expansion of our global data center platform.")

Last Common Stock Offering: 14.5M Shares + Greenshoe at $37 (December 2017)

Bond Rating: Junk

B2 for Junior unsecured bond
Ba3 for Senior unsecured bond

Last Sell Discussions:

Item # 3 Sold 50 IRM at $33.82-Update For Equity REIT Basket Strategy As Of 4/6/16 - South Gent | Seeking Alpha (profit snapshot= +$398.06)-Item # 3. Bought 50 IRM at $25.7: Update For Equity REIT Basket Strategy As Of 1/11/16 - South Gent | Seeking Alpha

The following trade was made before IRM became a REIT: Item # 2 Bought 50 IRM at $21.76 (9/29/2010 Post)

C. Eliminated MPW-Sold 63+ at $15.55+: 

Quote: Medical Properties Trust Inc. (MPW)

Two Year History This Account: 

I have traded MPW in other accounts as well.  

Profit Snapshot: $187.01

Item 2.C. Added 10 MPW at $12-Used Commission Free Trade (2/12/18 Post); Item # 5.A. Reinitiated Position in MPW with a 50 Share Buy at $12.85 (8/3/2017 Post) 

MPW Realized Gains To Date = $1,582.21 ($1,395.2 in prior trades)

Since I started trading MPW, the company has been in an empire building mode that makes me uncomfortable. In the earnings announcement for the third quarter, MPW stated it was in position for  $2.0 billion of accretive and low levered acquisitions. 

Debt has increased substantially. Common stock offerings have become commonplace.   

In the past, I have sold shares when the price exceeded $14. I waited this time until the price exceeded $15.5 based in large part on a successful sale of real estate. Medical Properties Trust Completes Joint Venture of 71 German Hospitals | Medical Properties Trust I am not likely to buy back any shares north of $13. 

Recent Earnings Report: Q.E. 9/30/18

Medical Properties Trust, Inc. Reports Third Quarter Results 

"NFFO for the third quarter of 2018 increased to $127.2 million compared with $120.6 million in the third quarter of 2017. Per share NFFO increased by 6.1% to $0.35 per diluted share in the third quarter of 2018, compared with $0.33 per diluted share in the third quarter of 2017."

I would use the AFFO number which excludes pretend revenue generated by the accounting profession: 

The net income from the quarter included a net gain of $647.2+M from the sale of real estate. 

The AFFO number is still comfortably above the quarterly dividend of $.25 per share. 

Some Prior Discussion Links: 

Item 1.A. Sold 50 MPW at $14.05 (12/30/17 Post)

Item # 4. Added 50 MPW at $9.84-Satellite Taxable Account: UPDATE For Equity REIT Basket Strategy As Of 2/12/16 - South Gent | Seeking Alpha

Item # 3. Averaged Down: Bought 100 MPW at $10.42: Update For Equity REIT Basket Strategy As Of 1/21/16 - South Gent | Seeking Alpha

Item # 3. Averaged Down: Bought 50 MPW at $11.4-Satellite Taxable: Update For REIT Basket Strategy As Of 9/8/15 - South Gent | Seeking Alpha

Item # 3 Sold 50 MPW at $13.93 (5/15/17 Post)

Item # 3. Sold 52 MPW-Highest Remaining Cost Lot in a Satellite Taxable Account: Update For Equity REIT Basket Strategy As Of 6/24/16 - South Gent | Seeking Alpha

Item # 1. Sold 250 of Remaining 550 MPW: Update For Equity REIT Basket Strategy As Of 5/19/16 - South Gent | Seeking Alpha

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.