Sunday, January 27, 2019

Observations and Sample of Recent Trades: BIZD, CHIQ, FDRR, NORW, SRET, TCRD

Economy: 


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Markets and Market Commentary: 

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Trump: 

President Trump made 8,158 false or misleading claims in his first two years - The Washington Post A majority of republicans still view him as honest and a role model for their children. 

The Mueller "witch hunt" has resulted in another indictment. Mueller indicts Roger Stone, says he was coordinating with Trump officials about WikiLeaks' stolen emails - CNN; Read the Emails: The Trump Campaign and Roger Stone - The New York Times

 Possibly, Donald has learned a lesson. A President can not effectively govern by following the advice of wingnuts like Ann Coulter and Laura Ingraham. 

 Sane leaders from both parties need to recognize that the government must never be shutdown in order to gain concessions. The only way to stop that irresponsible act is to stand fast and never offer any concessions for as long as the government remains shut. 

 Trump views himself as a winner, even though he has bankrupted six businesses. His B.S. jive of self promotion would have landed him in a used car salesman taking advantage of poor people without his father's money. 

 Since he does not want to look like the loser, I doubt that he will shutdown the government again as a means to gain concessions from the the Democrats. 

 Trump faulted for government shutdown: NBC-WSJ poll

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 There has not been much happening at the trading desk. This is partly due to bing immersed in genealogy research, which has consumed about 50 hours or so over the past week.    

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1. Small Ball-Income Generation: 

A. Added 20 TCRD at $6.2-Used Commission Free Trade: 

TCRD is one of the deservedly hated BDCs. 

 Last Discussed: Item #1.A. Added 20 TCRD at $7.67-Used Commission Free Trade (11/14/18 Post) I discussed the last earnings report in that post and have nothing to add.

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 

 Maximum Position: 100 Share Shares + shares purchased with dividends (no more shares can be purchases other than through dividend reinvestment)

 Current Position: 107+ Shares
Average Cost Per Share This Account: $7.47

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

Discount to Net Asset Value Per Share at $7.47: -26.04   

Purchase Restriction: Small Ball Rule 

 Highest Cost Lot in Fidelity Account Chain: 50 Shares at $7.88 (5/17/18)

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 $7.47 TC per share = 14.46%

 Last Ex Dividend Date: 12/13/18  

 As previously discussed, the dividend is likely to be cut at some point this year, probably no later than the third quarter. 

 B. Added 20 BIZD at $15.61-Commission Free at Vanguard: 

Quote: VanEck Vectors BDC Income ETF Overview

 Closing Price Last Friday: BIZD $15.76 +$0.15 +0.96% 

 Sponsor's Website: BIZD - VanEck Vectors BDC Income ETF | Snapshot | Income ETF- VanEck

 This ETF was subject to a small ball buying program with the last purchase being 5 shares at  $14.95 with a 100 share maximum. Item # 3.C. Bought 5 BIZD at $14.95 (1/9/19 Post) I just decided to finish it up with a 20 share buy. 

 Maximum Position: 100 shares + shares purchased with dividends

 Current Position: 103+ shares (reinvesting the dividend)   

 2018 Dividends Paid Quarterly at a Variable Rate = $1.53 per share

 Last Ex Dividend: $.4066 per share on 12/27/18

 Dividend Reinvestment: Yes 

2. Short Term Bond/CD Ladder Basket Strategy: 

 Purchases: $10K 

 I had a number of T Bills mature in this account last week. I aggregated the proceeds to buy 6 six month T Bills at auction, as noted in Item D. below. 

 A. Bought 1 Treasury 6 Month T Bill at Auction Maturing 7/19/19: 
IR = 2.526%


Auction Results: 

B. Bought 2 Kroger 2.6% SU Maturing on 2/1/21: 


Finra Page: Bond Detail (prospectus not linked)

 Prospectus

 Issuer: Kroger Co. (KR)
KR Analyst Estimates

 SEC Filings
10-Q for the Fiscal Q/E 11/10/18-SEC Earnings Press Release

 Last Bond Offering (January 2019): Prospectus

Credit Ratings:

Bought at a Total Cost of 98.583
YTM at TC Then at 3.324%
Current Yield at TC = 2.6374%

 I used part of the proceeds from $4K in Kroger bonds that matured on 1/15/19. 

 C. Bought 1 Consolidated Edison 2% SU Maturing on 5/15/21: 


I now own 2 bonds. The other bond was bought in February 2018. 

I had two Consolidated Edison bonds mature on the prior day and explained my thought process in using 1/2 of the proceeds to buy this 2021 bond here.

 FINRA Page: Bond Detail (prospectus linked)

 Issuer: Consolidated Edison Inc. (ED)
ED Analyst Estimates

 SEC Filings
10-Q for the Q/E 9/30/18
SEC Filed Earnings Press Release for Q/E 9/30/18

 Con Edison Announces Pricing of Common Share Offering (11/14/18)

 Credit Quality: 

Bought at a Total Cost of 97.186
YTM at TC Then at 3.266%
Current Yield at TC = 2.0579%

 Treasury Yield at the Time of Purchase for Same Maturity Date: 

D. Bought 6 Treasury Bills 6 Month at Auction Maturing on 7/25/2019: 
IR = 2.515% 

Auction Results (1/22/19): 

I am fluid when reallocating proceeds from maturing short term securities. Corporate bonds maturing in 2019 look relatively unattractive at current yield spreads to treasury bills. Consequently, I am buying more short term treasuries maturing within one year, using part of the proceeds from maturing securities. 

 I am also starting to redirect some proceeds into intermediate term bond purchases. 

3. Small Ball-Commission Free ETFs:

 A. Added 10 NORW at $11.6-Commission Free for Vanguard Customers:

Quote:  Global X MSCI Norway ETF Overview

 Closing Price Last Friday: NORW $12.27 _+$0.01 +0.08% 

Last Discussed: Item # 5.A. (12/23/18 Post) I have nothing to add to that discussion. 

Current Position: 83+ Shares

Maximum Position: 100 Shares + Shares Purchased With Dividends

Purchase Restriction: Small Ball Rule using only commission free trades at Vanguard
Sponsor's Page: MSCI Norway ETF (expense ratio = .5%)

 Dividends: Annually at a variable rate

Last Ex Dividend Date: 12/28/18

 Dividend Reinvestment: Yes

 The annual dividend was paid on 1/8/19: 

B. Added 10 CHIQ at $12.8-Commission Free for Vanguard Customers: 
Quote Global X MSCI China Consumer Discretionary ETF Overview 

 Closing Price Last Friday: CHIQ $14.61 +$ 0.41 +2.89% 

 Current Position: 71+ Shares 

 Maximum Position: 200 Shares 

 Purchase Restriction: Small Ball Rule 

 This is my first discussion of this China stock ETF. 

 Sponsor's Page: MSCI China Consumer Discretionary ETF (.65% expense ratio)

 Dividend: Annually at a variable rate

 Last Ex Dividend: 12/28/18 (60 shares participated)

 Dividend Reinvestment: Yes 

 Top 10 Holdings as of 1/3/19: 

Performance Numbers: The average total returns have been abysmal which is standard for China stock funds. 

As previously discussed in connection with the Matthews China Dividend Fund (MCDFX) recent purchases, the general idea for China stock funds is to catch a wave and then exit. Sooner or later, an uptrend will be more than a trading opportunity and may work as a long term hold.  

 Recent problems include a slowdown in growth and the trade spat with the U.S. 

 C. Bought 50 SRET at $13.88 In a Roth IRA Account-Commission Free For Vanguard Customers: 
Quote: Global X SuperDividend REIT ETF

 Closing Price Last Friday: SRET $14.83 +$0.15 +1.02% 

 Last Substantive Discussion: Item # 1. B. Bought 50 SRET at $14.8-Used Fidelity Commission Free Trade (5/17/18)

I will no longer use my Fidelity commission free trades to buy this ETF, or any other ETF which is not commission free to all Fidelity customers.  

 Vanguard now offers over 1800 ETFs on a commission free basis. 

 Sponsor's Website: SuperDividend® REIT ETF (expense ratio= .58%)

 Dividends: Monthly at a Variable Rate (Trending up in 2018) 

Last Ex Dividend Date: 12/28/18

 RISK NUMBERS: 

D. Bought 10 FDRR at $29.5-Commission Free in my Fidelity Accounts: 


Quote: Fidelity Dividend ETF for Rising Rates (FDRR)

 Closing Price Last Friday: FDRR $30.06 +$0.17 +0.57% 

 I am not sure why I just bought 10 shares to start other to note that I am in my bunker and disinclined to take much risk. 

 I would also note that bought and sold 10 shares previously, earning more than enough to fill up my 11+ year old Saturn Aura with regular gas but probably not enough for the premium gas guzzled by my 1987 Mercedes. 

Item # 1.C. Sold 10 FDRR at$31.16 (7/25/18 Post)(+$35.67)

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.
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30 comments:

  1. TENNINDEPENDENTJanuary 28, 2019 at 8:21 AM

    I received an email alert this morning that my 3 Southern Company 2.15% SU bonds maturing on 9/1/19 will be fully redeemed. I checked SO's new releases which contained more information:

    https://www.prnewswire.com/news-releases/southern-company-announces-expiration-of-cash-tender-offers-for-any-and-all-of-certain-outstanding-debt-securities-300783448.html

    SO first conducted a tender offer at slightly less than par value. The press release announced the results of that tender, indicating that 51.2% of the owners accepted the offer.

    SO will now "redeem any Fixed Rate Notes not purchased pursuant to the Tender Offers in accordance with the indenture governing such Fixed Rate Notes, which currently provides for a make-whole redemption price, plus accrued and unpaid interest to, but not including, the redemption date."

    The make whole provision will probably not add anything to the $1000 par value given the short time to maturity and low treasury rates. I consequently expect to receive the $3K par value within 30 or so days.

    SO will pay accrued interest up to but not including the redemption date.

    My last purchase was on 1/8/19 at a total cost of 99.45 which I was scheduled to mention in my next post.

    +++

    CAT earnings disappointed and that will be sufficient to cause a downdraft when the market opens.

    https://www.reuters.com/article/us-caterpillar-results/caterpillar-profit-forecast-fall-short-of-estimates-shares-tumble-idUSKCN1PM1CL

    Nvidia also issued an earnings warning:

    https://www.marketwatch.com/story/nvidia-stock-tumbles-after-company-says-fourth-quarter-results-will-fall-far-short-of-estimates-2019-01-28

    As previously discussed I anticipate far more earnings warnings this year compared to last year. If that proves a prescient prediction, there will be more daily negative reactions whenever a major firm issues the warning, with today being just an example.

    At a minimum, the percentage SPX earnings growth will decelerate Y-O-Y (2019 vs. 2018) compared to 2018/2017 due to the added juice last year from lower corporate tax rates.

    ReplyDelete
  2. Land of Milk and HoneyJanuary 28, 2019 at 2:09 PM

    Are you in the camp of expecting a re-test of Dec's lows? Or a smaller pullback before the next upward move? FG quoted a stat that 80% of the time the retest is back to the lows. That leaves 20% of the time it's not. But beyond that, anything give indicators of what's likely?

    I have been baffled by media's handling of Stone's indictment. They act like the big topic is whether Trump is linked to Russia & gave Russia something in return, and the lying is the indication.

    The facts though are (alleged, i.e. in indictment)... Stone was go between the campaign and wikileaks. Wikileaks released emails known to be stolen by Russia (by US intel, & prior Special Council indictments.)

    So we know have that the campaign coordinated on the release of material stolen by Russia that impacted our election. That's a huge reveal and crime.

    But media's going on like the focus is that we have to show this with smoke and mirrors of the lying, that there are hints of crime by the campaign. When we can look straight at the object itself, no mirror.

    The only piece missing is indictment level evidence that Russia was intended to be paid off with sanctions relief which we've watch edges of that happen. That's a nice addition.......

    BUT...But ... why are they ignoring that a huge crime arrangement was presented in indictment. Namely Trump's campaign coordinated on stolen emails to influence an American election? That should be THE topic. There's language in there about timing for best effect, so it can't be claimed that it's mere dropping of wiki material. It was designed to influence an election.

    One more comment/gripe on it. They've reverted back to saying often "but maybe they all lie to not make Trump feel badly that it could make his election LOOK non-legitimate." Geez. It MAKES IT NON-legit! not just "LOOK non-legit." Why are they afraid to say "they lied because it would reveal that Trump's election is not legit and that would tick off Trump?"

    I don't think I"m missing anything. But media is completely baffling on this.

    On TCRD, I still have my shares I bought before it started tanking. Lessons learned on BDCs. Too late to sell sooner when the NAV was slipping. But at 55% loss, what would you do with shares? I also have TCAP from the same time with a similar loss.

    Back to politics and news... do you have a handle on who the various bleached blonds on FOX are and what their issues are? I figure I should start to figure that out. Coulter, Ingram, there's more I think. Judge Judy's think is to make stuff up (and she's not blond.) I know Hannity and Tucker. But not the tall, light haired women. Are there degrees of worse and better among them?

    ReplyDelete
    Replies
    1. TENNINDEPENDENTJanuary 28, 2019 at 3:18 PM

      L: I would modify FG's observation some. When there are significant and sharp declines that are followed by significant and sharp rallies, the market will, more often than not, retest the lows or churn within a lower range than the previous parabolic high.

      A common reaction is to retrace about 40% to 60% of the decline and then turn back down or run in place.

      My current best guess is that SPX will be volatile this year but will settle into a trading range between the low and 2700, with a lot of chop up and down within that range providing traders with opportunities. This forecast could change of course based on subsequent developments. Fluid is the operative word. Certainty on such matters is consistent with a delusionary state.

      I suspect investors will be disappointed by earnings growth this year.

      The Stock Jocks tend to be overly optimistic as a general rule and can turn on the market rapidly when a mountain of cold water drowns their blue skies into eternity forecast.

      Optimism works just fine until the worm turns in a non-temporary manner. I am referencing what I call a long term secular bear market where many years will pass when the SPX total return (dividends reinvested), adjusted for inflation, will be at an average annual negative rate.

      The longest such period in my lifetime occurred between 1/1/1966 through July 1982 when the real SPX annual average return was -1.813%:

      On an inflation adjusted basis, the SPX total return that extended period was a -61.765%. The reinvestment of the dividends reduce the real loss to -26.055%:

      https://dqydj.com/sp-500-return-calculator/

      I don't think that we are there yet. But IMO, we have an ignorant demagogue as President and, as such, he has the capacity to cause significant and unnecessary harm to the economy.

      Fox is famous for elevating unnatural blonds to anchor positions as a marketing tool to capture the attention of middle age white man who would like to do a wife swap.

      Coulter is a regular guest while Ingraham has her own show. None of them have anything worthwhile to say. The worst anchors are probably Ingraham and Jeanne Pirro. They have learned to make a good living appealing to the prejudices, fears and fact challenged Trumpsters.

      A number of Trump associates have plead guilty to lying under oath and several more have been charged and not yet convicted. I suspect more will be charged in the coming weeks. Trump is a liar and has surrounded himself with liars and charlatans.

      Delete
    2. TENNINDEPENDENTJanuary 28, 2019 at 3:40 PM

      First Hawaiian Inc. (FHB)
      At the Close: $26.45 +$0.46 +1.77%
      https://www.marketwatch.com/investing/stock/fhb

      FHB has performing well since hitting an intra-day bottom at $21.79 (12/24/18).

      https://finance.yahoo.com/quote/FHB/history?p=FHB

      The stock responded well to its last earning's report released on 1/24/19.

      https://www.nasdaq.com/press-release/first-hawaiian-inc-reports-fourth-quarter-and-full-year-2018-financial-results-and-increases-20190124-01095

      That is at least partly due to a 8.3% increase in the quarterly dividend.

      FHB is one of many corporations who are sourcing increased dividends from tax savings.

      I own shares in two taxable accounts.

      Delete
  3. TENNINDEPENDENTJanuary 28, 2019 at 3:57 PM

    When I publish my next post on Wednesday, there will be no discussion of stock or stock ETF purchases since I have none. I will discuss two eliminations.

    I did buy at auction $7K of 3 month treasury bills funded entirely by proceeds from maturing treasury bills.

    The investment rate yield is trending down but is still superior to 3 month CD yields.

    The IR was at 2.423%, down from last Tuesday's IR of 2.423%.

    The after tax yield is close to inflation rate. I do not view and have not viewed treasury bills as an option for households that have to grow their capital on an inflation adjusted, after tax basis. It is simply an alternative for capital preservation.

    I did experience a record today. Since I started to buy and discuss bonds in this blog, I have never had two issuers elect to redeem their bonds early before I even had a chance to discuss the purchases. And, I would note that I am not that far behind in discussing bond purchases.

    Abbott issued a notice of its intent to redeem early the 2.8% SU bond maturing on 9/15/20, which I bought on 1/11/19 at a total cost of 99.5.

    The other notice was for the three Southern Company bonds discussed above.

    This kind of activity suggests that many CFOs believe that rates will decline over the short term; or there is now or will be soon an opportunity to lock in a similar rate longer term given the flat yield curve.

    It is becoming more difficult to find acceptable yields for intermediate term bonds. I may end up shifting some proceeds into equity preferred stocks where I can still pick up 6% to 8% yields. I do not view most equity preferred stocks as consistent with a risk off approach however.

    ReplyDelete
  4. TENNINDEPENDENTJanuary 28, 2019 at 4:06 PM

    Land of Milk and Honey: I really do not have an opinion about whether you should sell or hold TCRD.

    I have a long standing opinion that BDCs need to be classified as a disfavored asset class, subject to strict trading rules that have the objective of earning a total return in excess of the dividend yield-no matter how small. That requires trading for most of them since the managers are adept at incinerating capital while earning compensation that would make sense only with superlative total returns.

    TCRD is trash IMO. As I said, it is deservedly hated. My inclination is to hold until I can sell my highest cost lot profitably. I am reinvesting the dividend to buy more shares.

    I have been buying BDCs in small lots using my small ball trading rules. I have lost interest in them after their recent rally off their late 2018 lows. My next move will probably be to lighten up some by selling some of my highest cost shares profitably. The highest cost TCRD lots will not be included in those pares since they are under water and are expected to remain so until better results are reported. A dividend cut is coming, possibly down to a quarterly rate of $.21 to $.23 from the current $.27.

    ReplyDelete
  5. Land of Milk and HoneyJanuary 29, 2019 at 10:27 PM

    Thank you!

    So your adjustment to FG's expectations is that this retracement will settle in and not in short order result in a higher run up -- based on past patterns. (Past doesn't predict future...)

    On whether it's likely to retouch lows or settle in here, you have no opinion.

    So that's who Coulter is. And Ingram. I came across another name today, that I wonder about. I can't ask because it they don't stick in my head. Which just speaks nicely of my head.

    Tonight I heard on car radio that Apple had tanked 10% on it's early Jan news of lower year over year cellphone sales (a first lower YOY)... but that today's report got them a regain of that loss and new highs from before that.

    I didn't know what to make of that. Disappointment is okay, if you have time to get used to it? Or they were setting up themselves to make money off a better report than they pre-announced.

    I expected this to be part of the disappointed earnings picture. It wasn't so far.

    But in general, I read, the earnings and revenue beats are lower than usual.

    But will the market think hearings that impact trump matter to it? So far they don't care about politics. Will the market get nervous that Harris has already said the tax bill will be repealed? (Or was the Warren?)

    There are a lot of hints that Jr could be next up for indictment. That could change Trump's behavior a lot (in the worse direction). Or it could not matter to him, since it's not him. I hope that tells how the market's going to react to all of this.


    ReplyDelete
    Replies
    1. TENNINDEPENDENTJanuary 30, 2019 at 10:36 AM

      Land: The Democrats may control the government after the 2020 election. Trump may take the GOP down with him as Nixon did in the 1974 mid-term and 1976 general elections. That may be due in part to more unfavorable revelations about Trump but the major problem would be that GOP politicians do not challenge him on anything. For many voters, they will not see any daylight between their incumbent republican representative and Donald.

      That outcome could result in a corporate tax increase. The GOP's "tax reform" package was passed in a way that avoided the senate's filibuster rule, so 50 votes with the V-P as tie-breaker in the Senate can change the tax rates.

      As to Apple's earnings, I discussed my opinion in the blog published today.

      Delete
    2. Land of Milk and HoneyJanuary 30, 2019 at 11:13 AM

      I hadn't been expecting that impact on the market, until hearing Warren and Harris talk about taxes. And repealing the bill. It was a bad bill (handwritten scribbles). But I expect as time continues the market will see them as viable (or other DNC) as competitive in the campaign and a risk to the corporate tax rate. (Funny thing is Clinton had planned to push for a corporate tax cut.) Yep, you've got a good point there. Thanks for pointing it out.

      I expect enough to show up this year on Donald that is not good, to require actual assessment by Congress. I get the impression the market and a lot of people aren't thinking this yet. At least media isn't. Wish I knew of a survey on the market investors which asked what they are thinking... so it's possible to see what they are baking in by now.

      Delete
  6. Land of Milk and HoneyJanuary 29, 2019 at 10:31 PM

    My excitement is for turning 18, I'm opening a vanguard account for my niece. I've written up advice, and basic investment plan. Buy ETFs, rebalance 2x a year. Hold forever. She can decide to learn to do more, but that's a good core plan.

    Any advice or thoughts?

    I'm giving her a small starter of around 200. And thinking we'll buy 1 share VV and 1 VYM. Together it's around $200. VTI is the other option for the VV.

    ReplyDelete
    Replies
    1. TENNINDEPENDENTJanuary 30, 2019 at 10:20 AM

      Land: I would view the purchase of broad based and low cost ETFs which can be bought commission free are the best plan for most investors. VTI is the broadest of those ETFs and shareholders gain access to the entire U.S. stock market including growth companies that pay no dividends. To keep things simple, I would use VTI only. I have owned VV and VTI in the past.

      VTI page at Morningstar:

      https://www.morningstar.com/etfs/arcx/vti/quote.html

      The 10 year annual average total return through yesterday was 14.64% (click performance tab)

      The ten year average annual total return of VV is 14.5%:
      http://performance.morningstar.com/funds/etf/total-returns.action?t=VV

      The ten year annual average total return for VYM was 14.04%:

      http://performance.morningstar.com/funds/etf/total-returns.action?t=VYM

      There will be periods of time when small and mid size companies will outperform the large caps and when growth will outperform value.

      Delete
    2. Land of Milk and HoneyJanuary 30, 2019 at 11:20 AM

      Does Total Return mean divs are included in the return? I can't find a comment on the site about that.

      I had that concern about VYM, it's sector specific - large & value. But it has a nice div.

      My reasoning is that I'd like to get her 2 shares. And couldn't find for around $200-$220, 2 shares under $100 each that made sense. Therefore adding VYM as one since it's only $81 right now. Anything come to mind off the top? I looked down Vang's list and didn't spot anything enticing. VUG was too high.

      I want her to be able to see more than one thing, compare them. It's more exciting than 1 stock by itself.

      She should be building her rainy day fund, so I don't want to encourage her to put her own savings into stocks quite yet.

      Delete
    3. TENNINDEPENDENTJanuary 30, 2019 at 12:34 PM

      Land: Total return includes dividend reinvestment. For most people, it is important to start young, never sell into a panic, add when there is a catastrophic event, reinvest the dividends and keep it simple. Most stock funds will underperform VTI over the long term and many of those by a wide margin.

      There is nothing simple about my portfolio but I am simply trying to earn a few bucks and to preserve capital. The general idea is to remove most of the volatility, earn a constant flow of income and to take far less stock risk than I did when I was in the capital accumulation phase. My stock allocation is around 11% of brokerage fund assets now and most of those stocks are low P/E stocks with higher dividend yields than VYM and equity REITs which have been doing well as of late.

      Delete
    4. TENNINDEPENDENTJanuary 30, 2019 at 12:43 PM

      When it comes to gifts for my nephews, I will do the following.

      I will buy a common stock in one of my taxable accounts. I will then make a Christmas gift of the profit realized but the nephew has to decide when to sell, thereby taking the risk that there will not be a profit, or the unrealized profit will be lost, or that the profit will be realized to soon. In other words, they control the amount of the gift.

      I just pay the tax on the profit that is included in my 1099 after giving the amount of the proof as a Christmas gift and assume the risk that the buy will incinerate my deployed capital deployed. I also keep the dividends.

      This has resulted in several gifts over $300 with the last one being over $500+ for my oldest nephew.

      This year, I bought 1000 shares of Surge Energy (SGY:CA), using my CADs, which forces the gift recipient to think and learn about how exchange rates impact return. The gift will be the USD values at the time of purchase and sell.

      Delete
    5. Land of Milk and HoneyFebruary 2, 2019 at 10:37 PM

      That's a cool idea. I don't have enough individual stock skills to be a teacher on it. I'll keep it in mind! I thought it might even learn better/more if I'm doing it talking with her, or to answer questions.

      First step I want to teach her to hold, rebalance, and hold through ups and downs.

      My niece asked wise questions about how does she get money into it? I realized I need to help her get Mutual Funds, not ETFs. Since she will be contributing $10 every month or whatever babysitting provides. Since Vang uses $3000 mins, but you can then withdraw any amount, I'll float it to open a fund for her. That way she can contribute any time she wants. Rebalancing is easy too.

      She was very excited. Her math teacher had given them compound interest calculators to play with. She'd noticed the one element that matters is starting early. It also felt substantial to her for it to be part of an adult, taking responsibility for herself, activity.

      I started looking up mutual funds. I forgot so much. How does it ooze out? I haven't figured out how a MF can have a premium or discount to NAV when it's price is set at NAV every night.

      Delete
    6. Land of Milk and HoneyFebruary 2, 2019 at 10:40 PM

      I could do that idea of profits to her, by buying an index ETF... or some very obviously growing stocks. So she doesn't have to invest her own funds. Hum.

      Delete
    7. TENNINDEPENDENTFebruary 3, 2019 at 9:06 AM

      Land: The commission free ETFs at Vanguard would be an alternative for those who have less than the $3,000 buy-in.

      I did not realize that Vanguard had reduced the subsequent minimum investment to $1. That is apparently a response to Schwab where that practice has been in existence for awhile. That is better for those who want to add in amounts less than required to buy 1 share of an ETF.

      Vanguard does have at least one mutual fund that requires a $1000 initial investment. I am referring to the Vanguard Star fund which I have owned it in the past. Subsequent purchases can be for as low as $1.

      The advantage of that fund is its built in diversification. It is a fund that owns other Vanguard funds but does not charge a fee in addition to those charged by the owned funds.

      https://investor.vanguard.com/mutual-funds/profile/VGSTX

      My largest ever Vanguard mutual fund position was the
      Vanguard Equity Income Fund Admiral Shares (VEIRX) which I liquidated last year after paring the position several times.
      https://investor.vanguard.com/mutual-funds/profile/veirx

      The largest Vanguard mutual fund positions that I have now are the Vanguard Health Care Fund Investor Shares (VGHCX) and the Vanguard Capital Opportunity Fund Investor Shares (VHCOX) which is closed to new investors.

      VGHCX has had an extremely good long term record. The average annual total return since inception in 1984 was 15.99% through 12/31/18:

      https://investor.vanguard.com/mutual-funds/profile/performance/vghcx

      Delete
  7. Land of Milk and HoneyJanuary 29, 2019 at 10:34 PM

    So for TCRD, I've got to assess the chance of div cut, and when if any time to get out before. Take the loss. And decide where is better for those funds.

    I know my F which is down 55% too. At least I feel reasonable holding that for another 10 years waiting for a price recovery.

    If TCRD cuts divs my 55% loss will go to 80%.

    ReplyDelete
    Replies
    1. TENNINDEPENDENTJanuary 30, 2019 at 10:09 AM

      Land: I believe that the dividend cut is priced into the stock, though there may be a short term dip after the announcement since many individual investors are not finely tuned to such events and they dominate trading in small cap BDCs.

      Delete
    2. Land of Milk and HoneyJanuary 30, 2019 at 11:22 AM

      Do you have any sense when the cut became an evident possiblity? If the price started sinking around then... then it's a way to see how much it's built in.

      I still need to understand how to assess a stock price vs. it's fundamentals much better than I do. So I can figure out what it's worth, and compare that to price.

      Delete
    3. TENNINDEPENDENTJanuary 30, 2019 at 12:27 PM

      The dividend has been supported in part by the external manager's waiving their incentive fee which of course they do not deserve but have a contractual right to receive. That waiver ends as I recall in the second quarter. So I would anticipate a quarterly cut of about 4 or 5 cents no later than the third quarter.

      Since my memory is not what it is use to be, I looked for a source and found it here:

      https://seekingalpha.com/article/4220014-thl-credit-inc-tcrd-ceo-chris-flynn-q3-2018-results-earnings-call-transcript?part=single

      The CEO said that the fee waiver will last through June and will then be reevaluated.

      Lee Cooperman asked the following question:

      Thank you very much. What would the $0.26 of net investment income be if you accrued your normal fee which you've been very gracious and foregoing?

      Chris Flynn

      It's around $0.21 or $0.22, Lee"

      The dividend now is at $.27.

      I am factoring in a 1 to 2 cent per share improvement in NII due to portfolio repositioning. If that is not achieved then the cut could be 6 to 8 cents, worse if more non-performing loans pop up.

      I have traded this one at a higher price level than today. My opinion now is based on its history since I first bought shares.

      I went into a period where I would trade the exchange traded senior unsecured bond rather than fooling with the stock:


      4. Sold 50 TCRX at $25.55
      https://seekingalpha.com/instablog/434935-south-gent/4887859-update-exchange-traded-bond-preferred-stock-basket-strategy-6-17-16

      Bought TCRZ (subsequently sold):
      https://seekingalpha.com/instablog/434935-south-gent/4939799-south-gents-comment-blog-7-reits-preferred-stocks-bonds-regional-banks-healthcare-and#comment-73895692

      Delete
    4. Land of Milk and HoneyFebruary 2, 2019 at 10:20 PM

      """supported in part by the external manager's waiving their incentive fee ""'

      VERY helpful. I do remember that fee waver. The time for it to expire crept up on me.

      I wonder if there is a good chance the waver will be renewed?

      I'm trying to understand your calculations. Div is .27 / quarter at the moment.

      If the investment income is .26 why are they paying out a .01 more than they are taking in? I thought they were required to pay out 95% or something like that? (I know this is a very naive question.)

      So if income is .26 and would be .21-22, that's a drop of .04 or.05.

      If they reposition and manage better income by .01-2, then the drop would be reduced?
      To .04 less .02 =.02
      and .05 less .01 =.04

      So new range of .02 to .04 less if they improve the income. If non-performing loans then worse.

      So where are you calculating .06-.08 if they improve .01-2?

      Bottomline, there's trouble. A little less if waver is renewed and the lack of it is built in. A little more trouble if it's not renewed and the economy slows causing defaults, or rising rates that only some of their loans float up to.

      Hum. Nothing solves that my shares are underwater. But a good place to start assessing what makes sense to do with this.

      Then there's TCap too. Sigh.

      Delete
  8. TENNINDEPENDENTJanuary 30, 2019 at 8:29 AM

    I have published a new post:

    https://tennesseeindependent.blogspot.com/2019/01/observations-and-sample-of-recent_30.html

    ReplyDelete
  9. Land of Milk and HoneyJanuary 30, 2019 at 8:32 AM

    I wrote three comments last night. Did they show up?

    ReplyDelete
    Replies
    1. TENNINDEPENDENTJanuary 30, 2019 at 10:08 AM

      Land: I have to approve comments before they appear here. Otherwise the readers will be bombarded with spam and comments by trolls.

      Delete
    2. Land of Milk and HoneyJanuary 30, 2019 at 11:23 AM

      Well I'm all for less spam and trolls.

      I have been known to post this to trolls:
      https://www.psychologytoday.com/us/blog/your-online-secrets/201409/internet-trolls-are-narcissists-psychopaths-and-sadists

      Delete
    3. TENNINDEPENDENTJanuary 30, 2019 at 12:06 PM

      I have read that article. Many suffer from the same mental order as Donald, which is the narcissistic personality disorder. Donald checks all of the boxes on that one.

      https://www.psychologytoday.com/us/blog/the-human-beast/201608/does-trump-suffer-narcissistic-personality-disorder

      Delete
    4. Land of Milk and HoneyFebruary 2, 2019 at 9:51 PM

      Yep. Trump is far on the continuum so he's in the malignant narc range. Not that that's reassuring.

      Delete
    5. Land of Milk and HoneyFebruary 2, 2019 at 10:41 PM

      I read the new blog a week ago... time to move to it!

      Delete
  10. Land of Milk and HoneyFebruary 3, 2019 at 4:05 PM

    I'll have to look at all of these when I sit down with her. I'd only used straight stock with various caps and value vs growth in the past.

    The settlement fund offers 2.3% interest which is not bad at all.

    I'll see her in the spring and she suggested it was okay to take time to buy maybe until we can sit down together. (And she has tests right now. Plus that big "which school do I go to" problem.) I had been hesitant to buy right now because of the politics. She needs to learn to hold during downs and wisdom is to just start buying, but I was glad she was willing to wait to get in. I know better than to time, but I can't help it in this political environment.

    My favorite disconcerting article of today. The journalist is Bernstein & he's using his sources:
    "Mueller Draft Report Says Trump 'Helped Putin Destabilize the United States', Watergate Journalist Says"
    https://www.newsweek.com/mueller-report-trump-helped-putin-destabilize-us-watergate-journalist-1289541?fbclid=IwAR3nw7HZJnBaIwO7fZm2SK4lmaDkY-C24nXdTSOGGyi1tVui4YBRoAx85Uo

    I think I mentioned that I was looking at AMGN. I see why it's coming down just a little. Some pipeline is rolling off and margins are narrowing. I still think it's a strong buy -- when there's a market pullback again. It never got all that low in the last one. Vang's may be my better choice.

    ReplyDelete

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