Economy:
Powell says he’s optimistic about economy as he notes concerns from abroad - MarketWatch
Cramer says CEOs are telling him off the record the economy has cooled
CPI for October 2018:
Consumer Price Index Summary
At an annual inflation rate of 2.4%, there is no real wage growth currently.
My favorite category in the government's inflation report is health insurance costs: Table 2. Consumer Price Index for All Urban Consumers (CPI-U): U. S. city average, by detailed expenditure category The Y-O-Y increase in that item is shown at 2%.
Washing machines, dishwashers are more expensive after Trump tariffs - MarketWatch
U.S. Said to Hold Off on Car Tariffs After Trade Meeting - Bloomberg
Powell says he’s optimistic about economy as he notes concerns from abroad - MarketWatch
Cramer says CEOs are telling him off the record the economy has cooled
CPI for October 2018:
At an annual inflation rate of 2.4%, there is no real wage growth currently.
My favorite category in the government's inflation report is health insurance costs: Table 2. Consumer Price Index for All Urban Consumers (CPI-U): U. S. city average, by detailed expenditure category The Y-O-Y increase in that item is shown at 2%.
Washing machines, dishwashers are more expensive after Trump tariffs - MarketWatch
U.S. Said to Hold Off on Car Tariffs After Trade Meeting - Bloomberg
Trump aides clash: Kudlow says Navarro's China comments are 'way off base'
Prior to the election, Donald made a number of optimistic comments about a trade deal with China which had the effect of breaking a stock market slide. The Stock Jocks accepted Donald's representations for reasons that are hard to fathom.
I noted that the Duck's optimism could easily be divorced from the actual state of affairs and intended only to improve republican chances in the mid-term elections.
Donald made similar optimistic comments last Friday. Then VP Pence sung a different tune in comments at the Asia Pacific Economic Cooperation summit. Pence-Xi Showdown at APEC Shows U.S.-China Divide Only Widening - Bloomberg
Prior to the election, Donald made a number of optimistic comments about a trade deal with China which had the effect of breaking a stock market slide. The Stock Jocks accepted Donald's representations for reasons that are hard to fathom.
I noted that the Duck's optimism could easily be divorced from the actual state of affairs and intended only to improve republican chances in the mid-term elections.
Donald made similar optimistic comments last Friday. Then VP Pence sung a different tune in comments at the Asia Pacific Economic Cooperation summit. Pence-Xi Showdown at APEC Shows U.S.-China Divide Only Widening - Bloomberg
++++++
Markets and Market Commentary:
Natural-gas prices just booked the largest daily percentage gain in 14 years, up 18% - MarketWatch (11/14/18)
Natural-gas prices just booked the largest daily percentage gain in 14 years, up 18% - MarketWatch (11/14/18)
Calculated Risk: Update: For Fun, Stock Market as Barometer of Policy Success
Amazon tax incentives in New York City, Virginia and Nashville
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Fidelity Third Party Bond Pricings:
Brokers do not use bond closing prices to value their customers bonds. Instead, they use a third party that will, for whatever reason, undervalue virtually every bond in the investor's portfolio.
One of the more absurd examples is the current price shown for a Total Capital bond, rated Aa3, that matures on 1/10/2019:
Fidelity's third party service prices this high quality bond, maturing in less than two months, at 93.88.
If the third party service used by Fidelity was paying any attention whatsoever to market prices when establishing its mark, it would see several weeks of trades a slither under 100 or a slither over 100. ($1,000 par value per bond/bond pricing at 1/10th)
In fact, the FINRA chart shows no trade since the bond was issued back in January 2014 at below 99. Bond Detail
When I sent the preceding snapshot to Fidelity and a link to the preceding linked FINRA page, I received a response telling me how to find the FINRA trades at the Fidelity website.
Fidelity will finally get the value of this bond right when Total pays off the bond on 1/9/19 and the broker has to recognize the value at 100.
Amazon tax incentives in New York City, Virginia and Nashville
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Fidelity Third Party Bond Pricings:
Brokers do not use bond closing prices to value their customers bonds. Instead, they use a third party that will, for whatever reason, undervalue virtually every bond in the investor's portfolio.
One of the more absurd examples is the current price shown for a Total Capital bond, rated Aa3, that matures on 1/10/2019:
Fidelity's third party service prices this high quality bond, maturing in less than two months, at 93.88.
If the third party service used by Fidelity was paying any attention whatsoever to market prices when establishing its mark, it would see several weeks of trades a slither under 100 or a slither over 100. ($1,000 par value per bond/bond pricing at 1/10th)
In fact, the FINRA chart shows no trade since the bond was issued back in January 2014 at below 99. Bond Detail
When I sent the preceding snapshot to Fidelity and a link to the preceding linked FINRA page, I received a response telling me how to find the FINRA trades at the Fidelity website.
Fidelity will finally get the value of this bond right when Total pays off the bond on 1/9/19 and the broker has to recognize the value at 100.
++++++++
Trump:
One of the most conservative bastions in the U.S., the epicenter of conservatism, was Orange County, California. That county has 7 congressional seats. All of the remaining 4 republican incumbents lost their congressional seats in the last election. Orange County goes blue, as Democrats complete historic sweep of its seven congressional seats Donald asserted that, as a result of his tireless campaigning, the republicans enjoyed a "tremendous success".
Deep-Sixing the EPA:
It is no secret that Trump and the republicans have done everything possible to emasculate the Environmental Protection Agency including appointing officials to subvert environment laws and enforcement.
One of the pro-pollution Trump appointees was Trey Glen, who was selected to lead the EPA Region # 4 that covers the southeastern U.S.
Glen was the Alabama Environmental Management Commissioner before being elevated by Donald to head up Region # 4.
Glen has now been indicted for conspiring with others to prevent an EPA cleanup of a black neighborhoods. Trump’s southeast regional EPA administrator indicted on Alabama ethics charges | al.com; EPA administrator, former environmental commissioner booked into jail | al.com
Glen also reported receiving fees from a company called Blue Sky Environmental that brought into Alabama the now infamous poop train. EPA director paid by 'poop train' conductor | AL.com ("Trey Glenn, the Trump-appointed EPA director for the region, has more ties to that poop train and its dumping ground than the railroad track it ran on. All the Charmin in the world can't wipe it away. . . Ain't enough scrubbing bubbles in the world to clean the stain."); Alabama town terrorized by 'poop train' gets free Febreze samples | Fox News; Who is Trey Glenn? Trump EPA administrator indicted in Alabama has history of ethics issues | al.com
Some republicans argue that Alabama needs to be the depository of poop generated in NYC since it creates a couple of "high paying" jobs. Residents who smell the poop, described as the odor of rotting dead people, tend to disagree.
One of the most conservative bastions in the U.S., the epicenter of conservatism, was Orange County, California. That county has 7 congressional seats. All of the remaining 4 republican incumbents lost their congressional seats in the last election. Orange County goes blue, as Democrats complete historic sweep of its seven congressional seats Donald asserted that, as a result of his tireless campaigning, the republicans enjoyed a "tremendous success".
Deep-Sixing the EPA:
It is no secret that Trump and the republicans have done everything possible to emasculate the Environmental Protection Agency including appointing officials to subvert environment laws and enforcement.
One of the pro-pollution Trump appointees was Trey Glen, who was selected to lead the EPA Region # 4 that covers the southeastern U.S.
Glen was the Alabama Environmental Management Commissioner before being elevated by Donald to head up Region # 4.
Glen has now been indicted for conspiring with others to prevent an EPA cleanup of a black neighborhoods. Trump’s southeast regional EPA administrator indicted on Alabama ethics charges | al.com; EPA administrator, former environmental commissioner booked into jail | al.com
Glen also reported receiving fees from a company called Blue Sky Environmental that brought into Alabama the now infamous poop train. EPA director paid by 'poop train' conductor | AL.com ("Trey Glenn, the Trump-appointed EPA director for the region, has more ties to that poop train and its dumping ground than the railroad track it ran on. All the Charmin in the world can't wipe it away. . . Ain't enough scrubbing bubbles in the world to clean the stain."); Alabama town terrorized by 'poop train' gets free Febreze samples | Fox News; Who is Trey Glenn? Trump EPA administrator indicted in Alabama has history of ethics issues | al.com
Some republicans argue that Alabama needs to be the depository of poop generated in NYC since it creates a couple of "high paying" jobs. Residents who smell the poop, described as the odor of rotting dead people, tend to disagree.
Opinion | The Assault Against Science Continues at the E.P.A. - The New York Times (written by Christopher S. Zarba who "was the staff director of the Scientific Advisory Board at the Environmental Protection Agency until February.")
+++++
Donald's Complaints Against the FED:
Prior to winning the election, Donald tried to appeal to voters by castigating the FED for keeping rates too low.Trump says Fed chief Yellen should be ashamed Needless to say, short term rates had in fact deprived savers of a fair interest rate and amounted to forced confiscation engineered by the FED.
I took a snapshot of the annual total return numbers for the Fidelity Treasury MM fund over the past ten years:
Trump says Federal Reserve is 'out of control' - YouTube The Duck's comments are terribly incoherent and ignorant.
Trump Bashes Fed for Interest Rate Policy He Once Supported
He is no longer concerned about savers earning a return, but how the Stock Jocks will react to a continuation of rising rates, even though the current yield on the three month treasury bill still produces a negative real yield.
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Whitaker Is Donald's Kind of Guy:
‘He was yelling’: Whitaker pushed back against early fraud complaints about company he advised - The Washington Post
"Whitaker has said through a Justice Department spokeswoman that he was unaware of allegedly fraudulent activities at Miami-based World Patent Marketing."
Just deny everything just as the Duck likes to do.
One person, Ed Magedson, stated that his online site published comments critical of that company. Whitaker called Magedson and "threatened" him "using foul language.” Check another Trump box there. Threatening to bury someone exercising their First Amendment rights is a standard MO for the Duck.
"As a member of the company’s advisory board, Whitaker had been told of complaints about the company’s practices, according to two people familiar with the FTC investigation."
Just call that Fake News, check another Trump box.
Whitaker ignored an FTC subpoena requesting information about his involvement. Federal investigators scrutinized Whitaker’s role in patent company accused of fraud, according to people with knowledge of case - The Washington Post Screw subpoenas.
The company shut down last May after paying $26M fine to the FTC. Just more Fake News from one of the "enemies of the people".
Yes, Whitaker checks all of the boxes for Donald.
Look how quickly Teflon Don transitioned from Whitaker's appointment to the Mueller investigation:
This is reminiscent of when Trump told Lester Holt that he was thinking of the Russia investigation when he fired Comey. Trump has now admitted he fired Comey because of the Russia investigation - Vox
Children can learn a lot from the Duck.
In that interview with the Daily Caller, Don the Professor claimed that a voter ID was required to buy a box of cereal. Who knew?
By watching Donald, children can also learn to lie repeatedly while looking earnest: Fact-checking President Trump’s wild Daily Caller interview - The Washington Post; Do you need an ID to buy a box of cereal, as Donald Trump said? Of course not | PolitiFact
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Donald Continues to Trash America's Oldest Ally:
For several days last week, Donald has been spewing his venom at France. His invective only shows his lack of stability and inability to engage in thoughtful dialogue.
France strikes back against Trump, emphasizing a lack of ‘common decency’ - The Washington Post ("Responding to President Trump’s attacks on his French counterpart, France’s government struck back Wednesday, accusing Trump of lacking “common decency” by spewing invective on the same day the country was commemorating the victims of a major 2015 terrorist attack.")
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Donald's Caravan "Invasion" and his made up Urgent National Emergency:
Donald has sent the military to man the barricades.
Those soldiers will miss thanksgiving weekend with their families and have no real mission after stringing barb wire for a couple of days. They are living in tents without electricity and eating MRE rations.
Apparently, there is no contractor in Texas who knows how to string barb wire.
Donald, on the other hand, will be spending Thanksgiving at Mar-a-Lago, feasting on a 24-dish extravaganza.
Donald deployed the troops mostly in eastern Texas near Hidalgo, while the caravan is moving toward the western most part of the Mexican border with the U.S. near Tijuana. Migrant caravan: Some are at border. Most are in Mexico, far from U.S.; Deployed Inside the United States: The Military Waits for the Migrant Caravan - The New York Times The costs of Donald's election stunt will likely run over $200M. Trump's border deployment could cost between $200M and $300M Donald did arrange for a photo op showing the military stringing some barbed wire which could have been installed years ago, or at any time, by a contractor or the border patrol rather than regular army troops, if relevant to border security.
The military is resisting Trump’s controversial border requests - Vox
Since the election, Donald has been mostly silent on this imminent threat to national security.
++++
Trump and the First Amendment:
Trump argues in court filing that he can limit journalists' access to White House
The DOJ's lawyer, James Burnham, argued that Donald can bar reporters from major news organization based on his dislike for them, while permitting access only to reporters who praise him slavishly, ask only soft ball questions and never question the administration's talking points and narratives as being false, misleading or unsupported by facts or reason. Perhaps Burnham needs to move to Moscow and join Putin's legal team.
Kellyanne Conway can always be counted on to generate some laughter. Ms. Conway asserted that Donald is "very pro-press". CBS News What an asinine contention. Conway was the one who came up with the "Alternate Facts" label. Conway: Trump White House offered 'alternative facts' on crowd size
The Trump appointed Federal District Court Judge found that Donald had likely violated Acosta's Due Process rights by ejecting him from the White House. CNN-Trump lawsuit hearing: Judge orders White House to return Jim Acosta's press pass The Judge criticized the administration for its false claim that Acosta had placed his hands on a White House intern, calling it “likely untrue and at least partly based on evidence of questionable accuracy.” The ruling leaves the First Amendment issues for another day.
Trump earlier tried to bar people, who were critical of his policies, from leaving comments to his twitter feed. That was found to be unconstitutional. Knight - Memorandum and Order
Donald is at his core authoritarian.
In an interview last week with the far right Daily Caller, Donald continued to attack the voting process, making the following made up and false assertions:
“The Republicans don’t win and that’s because of potentially illegal votes. When people get in line that have absolutely no right to vote and they go around in circles. Sometimes they go to their car, put on a different hat, put on a different shirt, come in and vote again. Nobody takes anything. It’s really a disgrace what’s going on.” Trump’s latest make-believe about voter fraud: Dems change shirts and vote twice - Vox
So that is how the Democrats vote illegally. They vote and then go their car, where they put on a hat and change clothes, and vote again and then rinse and repeat.
+++++
2020 Senate Elections:
Senate elections: Doug Jones (D-AL) and Cory Gardner (R-CO) most likely to lose in 2020 I would agree with that list which has 2 Democrats and 4 Republicans. It is hard to see a path to victory for Doug Jones.
After two more years of Trump, I would probably take the Democrat Senator from New Hampshire off that list and add 3 republicans provided the Democrats field a strong candidate: Cotton (ARK); Roberts (KAN); and Perdue (GA).
Stacy Abrams may run for Perdue's seat after barely losing the Governor's race to the Neanderthal Brian Kemp, who would need a 50 point boost in his IQ to become an idiot.
Cotton is a far right Trumpster in a state that leans more toward the center.
Kansas is becoming slightly more unpredictable.
There is an outside chance that Lindsay Graham (R-SC), who has become a 100% pure Trumpster could be sent packing.
The South Carolina congressional districts are gerrymandered in favor of republican candidates. This is accomplished by drawing a map aggregating as many Democrat precincts as possible into the 6th Congressional District.
Whenever you see such an oddly shaped district, it has been gerrymandered to produce an election result that favors the party drawing the lines.
For those familiar with South Carolina, that congressional district contains a large number of African Americans and is currently represented by Jim Clyburn (D-SC) who was first elected to that seat in 1992. Prior the the last election, Clyburn was the only Democrat in South Carolina's congressional delegation.
The republican legislature ran out of Democrats to put in that district so a few can be found in other districts. The 1st congressional district was carved out along the coast and was previously thought to be safe for the republican candidate. Mark Sanford easily carried that district in 2016:
A Democrat beat the Trumpster in the 2018 election:
The republican state legislature can not gerrymander a state race for the U.S. senate.
Unlike Tennessee, South Carolina is not hopeless for a centrist and competent Democrat. (see Fritz Hollings' 'long view of America' resonates 50 years later | Commentary | postandcourier.com; Finally, Pure Honesty From A Politician - Fritz Hollings Interview - YouTube)
+++++
1. Eliminations:
A. Eliminated PG-Sold Remaining 18+ Shares at $91.66-Used Commission Free Trade:
Quote Procter & Gamble Co. (PG)
PG Analyst Estimates
Profit Snapshot: $309.1
2018 Total = +$435.29
I took the last quarterly dividend in cash: $30.62
Rationale: Profit Taking
I will consider restarting a position at less than $80.
B. Eliminated HRZN-Sold 30 at $11.8-Used Commission Free Trade:
Quote: Horizon Technology Finance Corp. (HRZN)
Website: Horizon Technology Finance
Closing Price Last Friday: HRZN $11.62 -$0.27 -2.27%
Profit Snapshot: +$53.09
Item # 1.B. Bought 30 HRZN at $10.03 (5/31/18 Post)
Dividends: Monthly at $.10 per share
Horizon Technology Finance Announces Monthly Distributions for January, February and March 2019 Totaling $0.30 Per Share
Dividend History
Rationale: The market price went over net asset value per share. I was not impressed with the last earnings report that excited others, as I discussed in a prior .
The stock suffered a major decline after being downgraded by Keefe, Bruyette and Woods to underperform. The analyst at that firm also lowered the price target to $10.
All of the decline was retraced when I elected to exist the position.
I collected 5 monthly dividend payments.
Selling a BDC for a profit after collecting one or more dividends is viewed as a victory and consistent with my objective when purchasing one.
This is my first round-trip in this BDC.
Last Earnings Report: Q/E 9/30/18
Horizon Technology Finance Announces Third Quarter 2018 Financial Results
NII: $.3 (equal to the dividend penny rate for a quarter)
Net Asset Value Per Share: $11.66 (sold shares at a premium)
1. Eliminations:
A. Eliminated PG-Sold Remaining 18+ Shares at $91.66-Used Commission Free Trade:
Quote Procter & Gamble Co. (PG)
PG Analyst Estimates
Profit Snapshot: $309.1
2018 Total = +$435.29
I took the last quarterly dividend in cash: $30.62
Rationale: Profit Taking
I will consider restarting a position at less than $80.
B. Eliminated HRZN-Sold 30 at $11.8-Used Commission Free Trade:
Quote: Horizon Technology Finance Corp. (HRZN)
Website: Horizon Technology Finance
Closing Price Last Friday: HRZN $11.62 -$0.27 -2.27%
Profit Snapshot: +$53.09
Item # 1.B. Bought 30 HRZN at $10.03 (5/31/18 Post)
Dividends: Monthly at $.10 per share
Horizon Technology Finance Announces Monthly Distributions for January, February and March 2019 Totaling $0.30 Per Share
Dividend History
Rationale: The market price went over net asset value per share. I was not impressed with the last earnings report that excited others, as I discussed in a prior .
The stock suffered a major decline after being downgraded by Keefe, Bruyette and Woods to underperform. The analyst at that firm also lowered the price target to $10.
All of the decline was retraced when I elected to exist the position.
I collected 5 monthly dividend payments.
Selling a BDC for a profit after collecting one or more dividends is viewed as a victory and consistent with my objective when purchasing one.
This is my first round-trip in this BDC.
Last Earnings Report: Q/E 9/30/18
Horizon Technology Finance Announces Third Quarter 2018 Financial Results
NII: $.3 (equal to the dividend penny rate for a quarter)
Net Asset Value Per Share: $11.66 (sold shares at a premium)
2. Small Ball- Income Generation:
A. Bought 50 CPTA at $7.99-Used Commission Free Trade:
Quote: Capitala Finance Corp. (CPTA)
Closing Price Last Friday: CPTA $8.06 +$0.02 +0.25%
This was my last commission free trade in my Schwab account.
Closing Price Last Friday: CPTA $8.06 +$0.02 +0.25%
This was my last commission free trade in my Schwab account.
2017 Annual Report (risk summary starts at page 31 and ends at page 62)
Last Substantive Discussion: Item # 1.A. Bought 50 CPTA at $8.69 (8/29/18 Post)
Current Position: 100+ Shares
Maximum Position: 100 shares + shares purchased with dividends
Average Cost Per Share: $8.34
Dividend: Monthly at $.0833 per share ($1 annually)
Dividend Yield at TC = 11.99%
Dividend Reinvestment: Yes, starting with the last monthly dividend payment.
Next Ex Dividend Date: 11/20
Last Reported Net Asset Value Per Share: $12.71
Discount to NAV Per Share at TC of $8.34 = -34.38%
Last Reported Net Asset Value Per Share: $12.71
Discount to NAV Per Share at TC of $8.34 = -34.38%
Recent Earnings Report: Q/E 9/30/18 (released after purchase):
Capitala Finance Corp. Reports Third Quarter 2018 Results
10-Q for the Q/E 9/30/18
CPTA is a deservedly hated nano cap BDC that has been cleaning up its portfolio and changing its investment focus due to earlier mishaps.
This transition from asset incineration to a hopefully better future was summarized by the company in the press release:
"Since early 2016 when we changed the investment strategy to focus on senior secured loans, we have been working diligently on rebalancing the investment portfolio. While our NAV per share has declined during that time, our non-performing assets have declined from a high of 10.4% at June 30, 2017, to 2.9% at September 30, 2018. In addition, senior secured loans are 51.1% of the portfolio at September 30, 2018, up from 36.2% at March 31, 2016. We are on a path to fully rebalance the portfolio over the next several quarters to achieve our 2016 strategic direction of moving from a primarily mezzanine investment strategy to a predominantly senior debt investment strategy." (emphasis added) The 10.4% NPA as of 9/30/17 was at Master of Disaster levels.
Equity investments represented 13.1% of the portfolio as of 9/30/18. The weighted average yield on our debt portfolio was 12.0% at September 30, 2018, compared to 11.4% at June 30, 2018.
NAV per share was reported at $12.71 as of 9/30/18, down from $13.91 as of 12/31/17 or a 9 month decline of 8.63%. The NAV per share was at $13.71 as of 6/30/18.
NII was reported at $.24 per share. The company did have a $.39 per share capital gain, representing a "$9.8 million gain on its equity investment in Western Windows Systems, LLC, partially offset by a $3.7 million loss on its first lien debt investment to Kelle's Transport Service, LLC." I discussed those investments in a prior post.
There may be a legitimate explanation. I do not not know of one and could only guess. Without an explanation, the alternative IMO is to cease trusting management's marks. I will not invest more money.
Capitala Finance Corp. Reports Third Quarter 2018 Results
10-Q for the Q/E 9/30/18
CPTA is a deservedly hated nano cap BDC that has been cleaning up its portfolio and changing its investment focus due to earlier mishaps.
This transition from asset incineration to a hopefully better future was summarized by the company in the press release:
"Since early 2016 when we changed the investment strategy to focus on senior secured loans, we have been working diligently on rebalancing the investment portfolio. While our NAV per share has declined during that time, our non-performing assets have declined from a high of 10.4% at June 30, 2017, to 2.9% at September 30, 2018. In addition, senior secured loans are 51.1% of the portfolio at September 30, 2018, up from 36.2% at March 31, 2016. We are on a path to fully rebalance the portfolio over the next several quarters to achieve our 2016 strategic direction of moving from a primarily mezzanine investment strategy to a predominantly senior debt investment strategy." (emphasis added) The 10.4% NPA as of 9/30/17 was at Master of Disaster levels.
Equity investments represented 13.1% of the portfolio as of 9/30/18. The weighted average yield on our debt portfolio was 12.0% at September 30, 2018, compared to 11.4% at June 30, 2018.
NAV per share was reported at $12.71 as of 9/30/18, down from $13.91 as of 12/31/17 or a 9 month decline of 8.63%. The NAV per share was at $13.71 as of 6/30/18.
NII was reported at $.24 per share. The company did have a $.39 per share capital gain, representing a "$9.8 million gain on its equity investment in Western Windows Systems, LLC, partially offset by a $3.7 million loss on its first lien debt investment to Kelle's Transport Service, LLC." I discussed those investments in a prior post.
There was a hit in the CPTA's investment in On Site Fuel Services, Inc. during the quarter which was a total wipe out.
The first lien debt shown in the previous snapshot apparently originated from a subordinated debt issue, as shown at page 19, that had a value of $11.588M as of 12/31/17 which was then 5.2% of assets. The value of the first lien debt was $12.134M as of 6/30/18, page 13 or 5.5% of assets. Needless to say, that mark was way off and highly suspect if the 9/30/18 mark of zero is valid.
During the conference call, management claimed there was some reason that it could not discuss that explains the write-down to zero. Capitala Finance Corp's (CPTA) CEO Joe Alala on Q3 2018 Results - Earnings Call Transcript | Seeking Alpha
During the conference call, management claimed there was some reason that it could not discuss that explains the write-down to zero. Capitala Finance Corp's (CPTA) CEO Joe Alala on Q3 2018 Results - Earnings Call Transcript | Seeking Alpha
"On October 29, 2019, Hibbett Sports, Inc. announced that it signed a definitive agreement to acquire City Gear, LLC, a portfolio company of Capitala. The transaction is scheduled to close during the fourth quarter of 2018."
 |
| City Gear as of 9/30/18 Cost $9.5M, MV = $15.31M |
Investment Ratings:
B. Bought 10 SDIV at $18.89-Used Commission Free Trade:
 |
| Page 58 10-Q |
B. Bought 10 SDIV at $18.89-Used Commission Free Trade:
Quote: SDIV Fund - Global X SuperDividend ETF Overview
Closing Price Last Friday: SDIV $19.06 +$0.09 +0.47%
Closing Price Last Friday: SDIV $19.06 +$0.09 +0.47%
Sponsor's Website: ETF (expense ratio = .58%)
Last Substantive Discussion: Item 3.A. Bought 30 SDIV at $20.41 (8/15/18 Post)
Dividend: Monthly
Last Ex Dividend Date: 11/5/18
The next scheduled ex dividend date is on 12/5/18.
The next scheduled ex dividend date is on 12/5/18.
Maximum Position: 100 shares + Shares purchased with dividends
Current Position: 40+ shares
Purchase Restriction: Small Ball Ball
Purchase Restriction: Small Ball Ball
Average Cost Per Share = $20.02
Highest Cost Lot in Current Chain: 30 shares at a TC of $20.41 (8/13/18)
Highest Cost Lot in Current Chain: 30 shares at a TC of $20.41 (8/13/18)
Prior Elimination: Item # 2 Sold 105+ SDIV at $22.54 (8/3/13 Post)
C. Bought 3 Shares of AT & T at $29.23-Used Commission Free Trade:
Quote: AT&T Inc. Stock Quote
Consensus E.P.S. Estimates on Date of Purchase:
2018 = $3.5
2019= $3.6
P/E at $3.6 and $29.25 = 8.125
Closing Price Last Friday: T $30.29 +$0.17 +0.56%
I doubt that the Stock Jocks will award me a Medal of Honor for sticking my neck out for AT & T.
Free cash flow comfortably exceeds the dividend and share buyback numbers. Last year, AT & T reported $17.6B in free cash flow and paid out $12.04B in dividends and bought back $433M in stock.
Free cash flow = cash from operating activities minus capital expenditures
Chart: Bear Trend Since Double TOP in Early 2017
Closing Price Last Friday: T $30.29 +$0.17 +0.56%
I doubt that the Stock Jocks will award me a Medal of Honor for sticking my neck out for AT & T.
Free cash flow comfortably exceeds the dividend and share buyback numbers. Last year, AT & T reported $17.6B in free cash flow and paid out $12.04B in dividends and bought back $433M in stock.
Free cash flow = cash from operating activities minus capital expenditures
Chart: Bear Trend Since Double TOP in Early 2017
Average Cost Per Share: $32.47
Highest Cost Lot in Chain (will be sold when and if the price exceeds $35.5 using a commission free trade): 10 shares at $35.42
I have decided that purchases over $33 will no longer be made, other than through dividend reinvestment.
I have decided that purchases over $33 will no longer be made, other than through dividend reinvestment.
Maximum Position: 100 shares + Shares bought with dividends
Purchase Restriction: Small Ball Rule
Last Substantive Buy Discussion: Item # 1.B. Bought 5 AT & T at $31.14 (7/25/18 Post)
Dividend: Quarterly at $.50 per share
If AT & T raises the dividend penny rate, it will generally do so in the first quarter. The last quarterly increase was $.01 per share effective for the 2018 first quarter. The prior quarterly increase was also $.01 per share and was effective for the 2017 first quarter.
I anticipate a 1 cent increase in the quarterly penny rate effective for the 2019 first quarter. Over the past five years, the compounded annual dividend growth rate is about 2%.
Free Cash Flow Dividend Payout Ratio:
Dividend Yield at TC per share = 6.16%
I anticipate a 1 cent increase in the quarterly penny rate effective for the 2019 first quarter. Over the past five years, the compounded annual dividend growth rate is about 2%.
Free Cash Flow Dividend Payout Ratio:
Dividend Yield at TC per share = 6.16%
Last Ex Dividend Date: 10/9/2018
Dividend Reinvestment: Yes at below $35
Recent Earnings Report: Q/E 9/30/18
AT&T Reports Third-Quarter Results
The adjusted E.P.S. of $.9 missed the consensus estimate by 4 cents. The adjusted number includes 4 cents per share from the Time Warner acquisition and excludes $.25 per share in merger and integration costs.
I would emphasize the free cash flow number of $6.5B, up 16.6%, and 2018 guidance for $21B in free cash flow.
The U.S. is a saturated market in the U.S. that is subject to increasing price competition.
AT & T reported postpaid subscriber losses after Verizon reported a strong gain. There was a net gain of 570,000 prepaid net adds, which are generally viewed as less profitable.
Page 40 10-Q for the Q/E 9/30/18
The DirectTV business is losing its highest paying customers who are migrating to cheaper alternatives. DirectTV lost 346K traditional video service customers during the last quarter. The internet video service, DirectTV Now, added 49K new customers, which was down sharply from prior quarters.
Since AT & T's $63B acquisition of DirectTV back in 2015, AT & T has lost about 9% of DirectTV's traditional television customers with the losses accelerating recently. AT&T Completes Acquisition of DIRECTV | AT&T
As of 9/30/18, total debt was at $183.4B. The credit rating agencies downgraded the senior unsecured debt one notch in response to the Time Warner acquisition.
Effective Tax Rate: AT & T is benefiting from the lower federal income tax rate:
"Income taxes decreased in the third quarter of 2018 and for the first nine months of 2018. Our effective tax rate was 22.4% in the third quarter and 22.5% for the first nine months of 2018, as compared to 37.2% for the third quarter and 34.8% for the first nine months of 2017. The standalone effective tax rate of WarnerMedia was approximately 21.5% for the third quarter and the 108-day period ended September 30, 2018. The decreases in income tax expense and our effective tax rates were primarily due to the December 2017 enactment of U.S. corporate tax reform, which reduced the federal tax rate from 35% to 21%. Partially offsetting the decreased tax rates were higher earnings. We continue to expect our effective tax rate, including WarnerMedia, to be approximately 23%." Page 36 10-Q
AT&T (T) Q3 2018 Results - Earnings Call Transcript | Seeking Alpha
The DOJ has appealed the Federal District Court decision which gave the green light to the Time Warner acquisition. Oral arguments in the appellate court are scheduled for early December. I would anticipate a decision within six months thereafter. In the meantime, AT & T has agreed to keep the Time Warner as a separate subsidiary pending a final decision.
Last Wednesday, AT & T reiterated guidance for 2018, noting that free cash flow would be at the high end of the $21B range. John Stephens, AT&T Chief Financial Officer, Provides Update at Morgan Stanley Conference
AT&T Reports Third-Quarter Results
The adjusted E.P.S. of $.9 missed the consensus estimate by 4 cents. The adjusted number includes 4 cents per share from the Time Warner acquisition and excludes $.25 per share in merger and integration costs.
I would emphasize the free cash flow number of $6.5B, up 16.6%, and 2018 guidance for $21B in free cash flow.
The U.S. is a saturated market in the U.S. that is subject to increasing price competition.
AT & T reported postpaid subscriber losses after Verizon reported a strong gain. There was a net gain of 570,000 prepaid net adds, which are generally viewed as less profitable.
The DirectTV business is losing its highest paying customers who are migrating to cheaper alternatives. DirectTV lost 346K traditional video service customers during the last quarter. The internet video service, DirectTV Now, added 49K new customers, which was down sharply from prior quarters.
 |
| Page 42 10-Q |
As of 9/30/18, total debt was at $183.4B. The credit rating agencies downgraded the senior unsecured debt one notch in response to the Time Warner acquisition.
Effective Tax Rate: AT & T is benefiting from the lower federal income tax rate:
"Income taxes decreased in the third quarter of 2018 and for the first nine months of 2018. Our effective tax rate was 22.4% in the third quarter and 22.5% for the first nine months of 2018, as compared to 37.2% for the third quarter and 34.8% for the first nine months of 2017. The standalone effective tax rate of WarnerMedia was approximately 21.5% for the third quarter and the 108-day period ended September 30, 2018. The decreases in income tax expense and our effective tax rates were primarily due to the December 2017 enactment of U.S. corporate tax reform, which reduced the federal tax rate from 35% to 21%. Partially offsetting the decreased tax rates were higher earnings. We continue to expect our effective tax rate, including WarnerMedia, to be approximately 23%." Page 36 10-Q
AT&T (T) Q3 2018 Results - Earnings Call Transcript | Seeking Alpha
The DOJ has appealed the Federal District Court decision which gave the green light to the Time Warner acquisition. Oral arguments in the appellate court are scheduled for early December. I would anticipate a decision within six months thereafter. In the meantime, AT & T has agreed to keep the Time Warner as a separate subsidiary pending a final decision.
Last Wednesday, AT & T reiterated guidance for 2018, noting that free cash flow would be at the high end of the $21B range. John Stephens, AT&T Chief Financial Officer, Provides Update at Morgan Stanley Conference
3. Short Term Bond/CD Ladder Basket Strategy:
A. Bought 1 Treasury 2% Coupon Maturing on 1/31/20:
YTM = 2.812%:
B. Bought 1 DEERE Capital 2.55% SU Bond Maturing on 1/8/21-In a Roth IRA Account:
FINRA Page: Bond Detail (prospectus not linked)
Issuer: Wholly owned subsidiary of Deere & Co. (DE) who does not guarantee the notes
DE Analyst Estimates
Deere Announces Third-Quarter Net Income of $910 Million
Credit Ratings:
Bought at a Total Cost of 98.739
YTM at TC Then at 3.16%
Current Yield at TC = 2.5826%
C. Bought 1 UBS Bank 3.1% CD (monthly interest payments) Maturing on 11/23/20:
YTM = 2.812%:
B. Bought 1 DEERE Capital 2.55% SU Bond Maturing on 1/8/21-In a Roth IRA Account:
FINRA Page: Bond Detail (prospectus not linked)
Issuer: Wholly owned subsidiary of Deere & Co. (DE) who does not guarantee the notes
DE Analyst Estimates
Deere Announces Third-Quarter Net Income of $910 Million
Credit Ratings:
Bought at a Total Cost of 98.739
YTM at TC Then at 3.16%
Current Yield at TC = 2.5826%
C. Bought 1 UBS Bank 3.1% CD (monthly interest payments) Maturing on 11/23/20:
4. Small Ball-Commission Free ETF Buys:
A. Bought 5 DES at $26.75-Commission Free for Vanguard Brokerage Customers:
Quote: WisdomTree U.S. SmallCap Dividend Fund Overview
Closing Price Last Friday: DES $27.74 +$0.02 +0.07%
Sponsor's Website: WisdomTree U.S. SmallCap Dividend Fund
Current Position: 50+ shares
Average Cost Per Share: $28.79
Maximum Position: 300 shares
Purchase Restriction: Small Ball Rule
Morningstar currently rates this ETF at 4 stars.
WisdomTree U.S. SmallCap Dividend Fund (DES) Total Returns
Expense Ratio: .38%
Dividends: Monthly at variable rate
B. Bought 5 VWO at $39.52 (commission free for Vanguard customers):
Quote: Vanguard FTSE Emerging Markets ETF Overview
Closing Price Last Friday: VWO $39.59 +$0.14 +0.35%
Sponsor's Website: VWO - Vanguard FTSE Emerging Markets ETF
Expense Ratio: .14%
Holdings as of 9/30/18: 4,634 stocks
Top 10 Holdings as of 9/30/18:
Current Position: 5 shares
Maximum Position: 50 shares
Purchase Restriction: Small Ball Rule
Sell Discussions: Item # 3 Eliminated VWO: Sold 25 at $43.69 -Roth IRA (4/15/15 Post)(profit snapshot +$70.27); Item # 3 Sold 65 VWO at $41.75 (10/11/13 Post)(profit snapshot $113.36) ; Item # 2. Sold: 100 of the Stock ETF VWO at $50.22 (4/12/11 Post)(profit snapshot =$129.55)
Earlier this year, I eliminated a larger position in the T. Rowe Price Emerging Markets mutual fund. Item # 1 Eliminated PRMSX (4/19/18 Post)(profit snapshot = $1,522.22)
Trading Profits to Date: $313.63 (better than a loss which would have been easy to realize by holding onto the shares first bought in 2011)
Fund Performance Numbers: Horrible
Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) Total Returns (rated 3 stars by Morningstar at time of purchase)
I do not view emerging market ETFs as long term holds. The general idea has been to catch a wave, surf it for awhile and then leave.
Quote: WisdomTree U.S. SmallCap Dividend Fund Overview
Closing Price Last Friday: DES $27.74 +$0.02 +0.07%
Sponsor's Website: WisdomTree U.S. SmallCap Dividend Fund
Current Position: 50+ shares
Average Cost Per Share: $28.79
Maximum Position: 300 shares
Purchase Restriction: Small Ball Rule
Morningstar currently rates this ETF at 4 stars.
WisdomTree U.S. SmallCap Dividend Fund (DES) Total Returns
Expense Ratio: .38%
Dividends: Monthly at variable rate
B. Bought 5 VWO at $39.52 (commission free for Vanguard customers):
Quote: Vanguard FTSE Emerging Markets ETF Overview
Closing Price Last Friday: VWO $39.59 +$0.14 +0.35%
Sponsor's Website: VWO - Vanguard FTSE Emerging Markets ETF
Expense Ratio: .14%
Holdings as of 9/30/18: 4,634 stocks
Top 10 Holdings as of 9/30/18:
Maximum Position: 50 shares
Purchase Restriction: Small Ball Rule
Sell Discussions: Item # 3 Eliminated VWO: Sold 25 at $43.69 -Roth IRA (4/15/15 Post)(profit snapshot +$70.27); Item # 3 Sold 65 VWO at $41.75 (10/11/13 Post)(profit snapshot $113.36) ; Item # 2. Sold: 100 of the Stock ETF VWO at $50.22 (4/12/11 Post)(profit snapshot =$129.55)
Earlier this year, I eliminated a larger position in the T. Rowe Price Emerging Markets mutual fund. Item # 1 Eliminated PRMSX (4/19/18 Post)(profit snapshot = $1,522.22)
Trading Profits to Date: $313.63 (better than a loss which would have been easy to realize by holding onto the shares first bought in 2011)
Fund Performance Numbers: Horrible
Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) Total Returns (rated 3 stars by Morningstar at time of purchase)
I do not view emerging market ETFs as long term holds. The general idea has been to catch a wave, surf it for awhile and then leave.
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.
The 3 month treasury bill was auctioned at a 2.392% investment rate ("IR") this morning, with the 6 month producing a 2.455% IR.
ReplyDeleteI bought 3 of both and will not be participating tomorrow in the 1 and 2 month bill auctions.
I am slightly increasing the duration of fixed income portfolio based on recent data.
The CME FED tool is showing a gradual lowering of expectations for FED rate increases.
https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
The probability of a .25% increase next month has gone down to 68.9% from 75.8% a week ago and 78.4% a month ago.
The odds of two .25% increases in the FF rate on or before the December 2019 is barely more probable than not at 59.4%.
There is a faction of the Bond Ghouls who are arguing that Chairman Powell blinked in a recent speech:
https://www.marketwatch.com/story/markets-think-powell-blinked-in-dallas-2018-11-19
There is also some economic data pointing to a worldwide slowdown.
The juggernaut of the EU had negative GDP growth in the third quarter compared to the prior quarter:
https://www.cnbc.com/2018/11/14/german-economy-shrinks-in-q3.html
Thank you for this update on Treasuries yield. I think this is a good article from zerohedge
ReplyDeletehttps://preview.tinyurl.com/ybfzqj6s
As I have been saying, revenues, after stripping-out corporate tax benefits are a ruse, phantom numbers. Only 7% of tax cut for corporations went to workers. That's all you need to know in so much as where the USA is headed.
This is a good article, the numbers don't lie, that tax cuts NEVER pay for themselves. Here's source>
ReplyDeletehttps://realinvestmentadvice.com/the-end-of-the-tax-cut-boost/
Thank you for update on Treasury auctions, I have $102K bought thru Fidelity, maturing 12-13-2018
ReplyDeleteUNITED STATES TREAS BILLS ZERO CPN 0.00000% 12/13/2018 Auto Roll # 912796QN2
I paid $101,455.97 so I need to compare my yield before this matures. I have $45K that I am just auto-rolling in 1-month Treasury auction also. I am not surprised that 10-year yield has gone down, because when the National Small Biz survey is at all-time high optimism, that is a contrarian indicator. Most small businesses are DUMB AS ROCKS. They don't have a clue regarding consumer's debt load and the macro factors , like interest rates going up. Tell me how just a 1% increase in mortgage rates killed the housing market! I am all ears. If (subprime loans) auto sales are in the toilet and only 1% increase affected housing, of course, there might be factors like in China, they curtailed cash going into our home-sales, still, this economy has one foot in the grave, and I maintain that the over-leveraged economy has hit a wall, in the words of Mike Shedlock, " what can't be paid back won't be"
Target (TGT) and other retailers released earnings reports that suggest that consumers are not spending as much as previously anticipated by the Stock Jocks.
ReplyDeleteTarget Corp. $69.83 -$7.31 -9.48%
Last Updated: Nov 20, 2018 at 10:31 a.m. EST
https://www.marketwatch.com/investing/stock/tgt
https://www.marketwatch.com/story/retail-sector-stocks-tumble-to-extend-long-losing-streaks-after-disappointing-earnings-reports-2018-11-20
All of the FAANG stocks were in bear market territory earlier today.
I decided to participate in the two month treasury bill auction today in my Schwab account, which has been building up cash as CDs mature and that account has a .3% yield in its sweep account. The two month T Bill auctions were recently started by the treasury and none of them so far have been two months. The auction today is for a 53 day period:
https://www.treasurydirect.gov/instit/annceresult/press/preanre/2018/A_20181119_1.pdf
When deciding between a CD or treasury bill purchase maturing in 1 year or less, I am going with the higher yielding T Bills.
I am starting to see some psychological stress selling in preferred stocks which are more like bonds than equity.
I have noted in the past that stressful stock market events can cause waves of individual investor selling in exchange traded bonds and preferred stocks, even when interest rates are falling.
I documented one day of wild action several years ago to illustrate that point:
Tuesday, August 9, 2011
1. Enhanced Price Volatility in CEFs, European Hybrids, and Equity Preferred Stocks During Periods of Fear:
https://tennesseeindependent.blogspot.com/2011/08/sold-hnz-at-5010probable-formation.html
One sector being hit harder than most others is the floating rate equity preferred stocks that pay the higher of a minimum coupon or a spread above the 3 month Libor rate. The selling now is probably related primarily to the recent price declines and to concerns that the Libor rate will not rise sufficiently to trigger a coupon increase. An example, which I have owned in the past, is METPRA:
MetLife Inc. Floating Rate Non-Cum. Pfd. Series A
$22.56 -0.31 -1.36%
52 WEEK RANGE 22.26 - 25.80
METPRA is one of the better ones in this niche category based on the investment grade rating and the terms. The 3 month Libor spread is 1% with the minimum coupon at 4%.
https://tennesseeindependent.blogspot.com/2009/05/advantages-and-disadvantages-of-equity.html
I had previously sold almost all of my Canadian reset equity preferred stocks, as shown in snapshots in the previously linked post.
I am starting to look at those again after recent price declines.I buy those in my IB account (C$1 commission for 100 shares) using CADs on the Toronto exchange.
I have published a new post:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2018/11/observations-and-sample-of-recent_21.html