Observations and Sample of Recent Trades: BPOPRP, JCAP, XOM

Economy: 

U.S. economic growth slows to 2.1% in the spring as businesses retrench, GDP shows - MarketWatch This is only the first estimate and was better than the consensus forecast of +1.9%. Personal consumption expenditures rebounded sharply to a 4.3% annual rate, up from 1.1% in the first quarter. Residential investment decreased 1.5%. 

"The price index for gross domestic purchases increased 2.2 percent in the second quarter, compared with an increase of 0.8 percent in the first quarter (table 4). The PCE price index increased 2.3 percent, compared with an increase of 0.4 percent. Excluding food and energy prices, the PCE price index increased 1.8 percent, compared with an increase of 1.1 percent." Gross Domestic Product, Second Quarter 2019 (Advance Estimate) and Annual Update | U.S. Bureau of Economic Analysis (BEA)

IMF lowers its global economic growth forecast again as risks remain to the 'downside' The global forecast was lowered just .1% to +3.2% this year. 

Opinion: US can yield to China or hike tariffs, pave way for Fed easing  

Fed could worsen the next recession with a July rate cut, says Mizuho economist - MarketWatch

European Central Bank signals its ready to cut rates, opens door to renewed QE - MarketWatch

Durable-goods orders rebound for first gain in three months, investment also picks up - MarketWatch However, the May decline was revised to -2.3% from -1.3%. Business investment has risen only 1% over the past year.   

Plan to save truckers' and miners' pensions is running out of time  Pension plans, already struggling with unfunded liabilities, have been adversely impacted by over 11 years of abnormally low interest rates, which aggravates the already existing underfunding problem. The problem goes far beyond corporate pension plans and includes most state and local government pension plans as well. Public Pension Crisis: Who Will Cover the $4 Trillion Shortfall? 

Ford stock falls after earnings, revenue miss - MarketWatch

Trump threatens French wine after France passes digital tax; Trump vows 'substantial reciprocal action' against France over tax targeting tech giants

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Markets and Market Commentary: 

CEO of one of Switzerland’s largest banks-UBS- says lofty asset prices are a ‘very dangerous development’ in markets - MarketWatch

These 5 technical indicators are sending warning signals for the stock market - MarketWatch

This ‘long-neglected’ commodity is ready to roar, says Commerzbank - MarketWatch The analyst is referring to silver.

Your 5-point plan for surviving the coming stock-market downturn - MarketWatch

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Optional Redemptions by Issuer: 

Since my last post, I received a notice that FedEx will redeem on 8/21/19 its 2.3% SU bond that would have matured on 2/1/20. I own 5 bonds. 

I own 2 bonds in my Fidelity taxable account: 

 Those 2 bonds were bought in January 2018: Item # 3.H. (2/8/18 Post)

I bought 3 bonds earlier this year in my IB account: Item # 2.A. Bought 3 FDX 2.3% SU Maturing on 2/1/20 at a TC of 99.598 per bond (3/20/19 Post) The YTM was then at 2.75%.

I believe there will be a tiny make whole payment. These redemption notices for the most part do not specify the make whole payment amount for an optional redemption. 

Make Whole Provision in FDX 2020 Bond Prospectus: 

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Trump: 

Amazon has 'destroyed the retail industry,' deserves scrutiny: Mnuchin That statement by Mnuchin is hyperbole. 

Trump's animosity to Amazon is well known. Donald hates the Washington Post, which is owned by Jeff Bezos, for its accurate reporting and treats Amazon and the WP as one entity in his frequent attack tweets.

E.G. 

Referring to the last tweet above, Amazon was collecting sales taxes in all 50 states before the Supreme Court rendered its decision. Trump levels false attacks against The Post and Amazon in a pair of tweets - The Washington Post  

Donald attacked as Fake News the WP report that he had talking points in his hand when talking about the Squad. 

The reporter took a photo of those talking points that Donald denied having: 

To summarize, there is a long history of Donald expressing hatred for Amazon due to Bezos owning the Washington Post, even though he does not exercise any influence on the WP's reporting. Donald will IMO use the power of the Presidency to punish his political opponents. 

The new antitrust investigations of AMZN, FB, APLE and GOOG are arguably entirely politically motivated since those organizations and their employees are generally far more supportive of democrats.

The Daily 202: Trump’s threats against Big Tech create the appearance that a new DOJ antitrust probe is political - The Washington Post

The frivolous antitrust case brought by Trump's DOJ against the AT & T's acquisition of Time Warner was probably politically motivated by Donald's animosity toward CNN.    

I would agree with Thomas Friedman that most democrat candidates for President have drifted too far left, which will make a Trump second term more likely. Opinion | ‘Trump’s Going to Get Re-elected, Isn’t He?’ - The New York Times; Opinion | Donald Trump, and Other Readers, Had a Lot to Say About Friedman’s Column - The New York Times   

Donald responded to Friedman's column in his usual vicious, uninformed, immature and elementary school yard way: 

Friedman replied that he always tried to be respectful in his conversations.

AP FACT CHECK: Trump falsely claims Mueller exonerated him Donald has probably told more lies for widespread public distribution than anyone over the past 100 years. I do not think the tally would be close. Demagogue Don has IMO told more lies in public than all prior Presidents combined.

Mueller's words twisted by Trump and more

He Wasn’t Seeking to Kill a Mob Boss. He Was Trying to Help Trump, His Lawyer Says.

Compare GOP senators block bills to protect elections hours after Mueller warns of Russian interference and Republicans Block Fourth Election Security Bill Despite Mueller's Warning Russia is Interfering 'As We Sit Here' with Russia Targeted Elections Systems in All 50 States, Report Finds - The New York Times

Doctored presidential seal? President Trump stood in front of fake U.S. presidential seal altered to resemble Russian coat of arms - CBS News; Senate Intelligence report: “extensive” Russia 2016 election meddling - Vox

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1. Canadian Reset Equity Preferred Stocks: 

A. Bought 50 BPOPRP at C$15.95: 

Quote: Brookfield Office Properties Inc. Cl AAA Pfd. Series P Overview 

Preferred Share Prospectus Links: Preferred Shares – Brookfield Office Properties

In June 2014, Brookfield Property Partners L.P. (NYSE: BPY) completed its acquisition of Brookfield Office Properties.

Website: Brookfield Properties

Parent Website: Brookfield Property Partners
Brookfield Property: Hot Property, Cool Price (Barron's article published in February 2019, subscription publication)

Reset: The coupon reset in March 2017 at a 3% spread to the 5 year Canadian bond yield. This resulted in a coupon decrease to 4.161% from the fixed rate coupon in effect during the initial period. 

The coupon will reset in March 2022 at a 3% spread to the then existing 5 year Canadian bond. For example, if the Canadian 5 year bond was at 4% on the reset date, the new coupon would be 7% which would produce a dividend yield of 10.97% based on a constant total cost of C$15.95 per share.  (.07% x. C$25 par value = C$1.75 annually per share ÷ C$15.95 cost per share= 10.97% yield)

On each five year reset date, the issuer has the right to redeem at par value. The owner has the right to convert to another preferred stock that resets quarterly at a 3% spread to the Canadian 3 month bill subject to a condition that at least 1 million shares are tendered for the conversion. The shares tendered during the last reset date failed to hit that minimum number.  

Dividends: Cumulative

Par Value: C$25

Dividend yield at a TC of C$15.95 = 6.52%  

Canada 5 Year Government Bond Overview That bond closed at a a 1.53% yield on my day of purchase. 

I will probably average down with another 50 share purchase.  

2. Intermediate Term Bond Ladder Basket Strategy: 

A. Sold 1 Laboratory Corporation 3.6% SU Maturing on 2/1/2025: 

Profit Snapshot: +$45.54

Item # 1.B. Bought 1 LH 2025 SU at a TC of 98.088 (3/22/17 Post) 

FINRA Page: Bond Detail

Issuer: Laboratory Corp. of America Holdings (LH) 

LH | Laboratory Corp. of America Holdings Analyst Estimates 

Sold at 103.340

YTM at 103.340 = 2.919%

Proceeds at 103.140 (after $2 commission)

B. Sold 1 of 2 Northern States Power 2.6% First Mortgage Bond Maturing on 5/15/23: 

Profit Snapshot: +$12.88

I sold the bond bought in 2017. Item # 1.B. ( 5/15/17 Post)

FINRA Page: Bond Detail

Issuer: Wholly owned subsidiary of Xcel Energy Inc. who does not guarantee the notes

Sold at 101.004

YTM at 101.004 = 2.35%

Proceeds at 100.904 (after $1 IB commission)

I previously sold 1 bond that was bought at a total cost of 99.915 at slightly over par value: Item # 1. A. (2/13/17 Post) 

Sept. 2017: Sold 1 Northern States 2023 FM +$4.85

3. Bought 50 JCAP at 19.83-Used Commission Free Trade: 

Quote: Jernigan Capital Inc. (JCAP)

Closing Price Last Friday: JCAP $19.83 -$0.02 -0.10% 

Website: Jernigan Capital

SEC Filings

Jernigan Capital (JCAP) June 2019 Investor Presentation - Slideshow-Seeking Alpha

10-Q for the Q/E 3/31/19

JCAP "provides debt and equity capital to private developers, owners, and operators of self-storage facilities with a view to eventual outright ownership of facilities it financed. Its mission is to maximize shareholder value by accumulating a multi-billion-dollar investment portfolio consisting of the newest, most attractive and best located self-storage facilities in the United States".

JCAP's business is unusual. The primary focus is to lend money to self-storage developers, to retain when possible a profit interest in the development as part of that financing (generally at 49.9%), and to acquire self storage facilities through a right of first refusal or in negotiated transactions with the developers. The loans are generally secured and at a 6.9% per annum rate. 

As of 3/31/19, JCAP wholly owned 8 storage facilities and had 47 properties in its development program with a profits interest ("22 of which are secured by facilities in lease-up and 25 of which are secured by facilities under construction"). 

In addition JCAP owned 10% of a joint venture that has seven development property investments with a profits interest  . . . (all of which are secured by facilities in lease-up), four self-storage facilities wholly-owned . . . and five bridge investments secured by facilities that are all in lease-up."

Wholly Owned Properties: 

  
Dividend: Quarterly at $.35 per share ($1.4 annually)

JCAP has paid quarterly dividend at $.35 per share since its 2015 IPO

The company has elected to be taxed as a REIT.

Dividend Yield at $19.83 = 7.06%

Last Ex Dividend Date: 6/27/19

Book Value Per Share: $19.13 as of 3/31/19

Book value per common share increased to $19.02 as of March 31, 2019 from $18.35 at March 31, 2018.

Preferred Stock: $25 par value. Jernigan Capital Inc. 7% Cum. Redeem. Perp. Pfd. Series B Overview This preferred stock closed at $25.95 on 7/22/19 creating at that price about a 6.74% current yield. Prospectus 

(Prospectus for ATM offering of this preferred stock)

There is also a series A preferred stock that was privately placed. Pages 27-30

Management: External, see pages 15-17 of 2018 Annual Report There is a internalization process spelled out in the management agreement and is summarized in JCAP's SEC filings. The first negotiation on internalization must commence no later than 180 prior to the end of the initial term which ends on 3/21/20.

If the independent directors and the external management company can agree on a price, it will be paid in operating units. I do not have any data to form an opinion on how long it will take for the management expense savings to recoup the internalization cost/dilution to shareholders. 

Financial Summary Data Since 2015 IPO:

IPO Prospectus: The offering price was $20 per share. Proceeds to JCAP after the underwriters' discount was at $18.6.

Last Stock Offering (June 2018): $18.5 to the public Prospectus

Ongoing ATM Stock Sales:

Bad Loan: There was one loan in default as of 3/31/19, a $17.7M development loan secured by a first priority mortgage. Page 43 10-Q The loan is valued at $17.M. Foreclosure proceedings have been started.

Last Earnings Report: Q/E 3/31/19

Jernigan Capital Reports First Quarter Earnings per Share and Adjusted Earnings per Share Above High End of Guidance Range 

Jernigan Capital, Inc. (JCAP) CEO John Good on Q1 2019 Results - Earnings Call Transcript | Seeking Alpha

I will consider adding another 50 shares somewhere below $19.

4. Small Ball: 

A. Initiated XOM Position-Bought 10 at $74.78 (used Commission Free Trade): 

Quote: Exxon Mobil Corp. (XOM)
XOM | Exxon Mobil Corp. Analyst Estimates | MarketWatch

SEC Filings
10-Q for the Q/E 3/31/19

5 Year Financial History:

2018 Annual Report at page 37

I am not a fan. I will play small ball with this stock, starting a "purchase program" in the $70 to $78 range.

Dividend: Quarterly at $.87 ($3.48 per share annually)

Dividend information | ExxonMobil

The quarterly penny rate was raised from $.82 per share effective for the 2019 quarter.

Dividend Growth:

Dividend Yield at $74.78 = 4.64%

Last Ex Dividend Date: 5/10/19

Current Position: 10 Shares

Maximum Position: 30 shares

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

I suspect that the Stock Jocks will not like XOM's second quarter results. The last earnings report was a stinker. I will consider buying the next 10 share lot near $70. 

Last Elimination: Item # 1.A. Sold 18 XOM at $81.33-Used Commission Free Trade (6/18/18 Post) 

Last Substantive Discussions: Item 3.A (3/19/18 Post); ITEM # 2.A. (2/19/18 Post)

5 and 10 YEAR Annual Average Total Returns = -2.95% and +3.46% respectively (starting point was at $104.37 for the five year period and $72.75 for the 10 year year period)

This return suggests that a trading strategy needs to be followed. The stock has a lot of up and down chop.  

DRIP Returns Calculator | Dividend Channel

5 Year Chart Roller Coaster with downside bias. The trading channel over the past 4 years has mostly been between $70 to $85.

Last Reviewed Broker Reports (available to Schwab customers) :

S & P (4/2019): 3 Stars with an $80 price target

Argus (4/2019): Buy with $104 price target

Morningstar (5/2019): 4 stars with a $90 FV

Credit Suisse (7/2019): Neutral with a $79 price target (notes likely weak second quarter)

Updates to broker reports will generally occur after a earnings report. 

Goal: Victory is defined as a realized annualized total return of greater than 7%. Given the stock's history, expectations have to be restrained considerably. 

The main reasons for buying are the current dividend yield, the history of dividend growth, a price near the bottom of its dominant 4 year range, and financial stability. All of those factors combine to make it more likely that I can achieve that modest return objective.   

Last Earnings Report (Q/E 3/31/19):

XOM reported adjusted net earnings of $2.35B or $55 per share, down from $4.655B or $1.09 per share in the 2018 first quarter. Earnings IMO are not predictable within a reasonable range.   

"Cash flow from operations and asset sales was $8.4 billion, including proceeds associated with asset sales of $107 million. During the quarter, the company distributed $3.5 billion in dividends to shareholders. Capital and exploration expenditures were $6.9 billion, up 42 percent from the prior year, reflecting key investments in the U.S. Permian Basin. Oil‑equivalent production was 4 million barrels per day, up 2 percent from the first quarter of 2018. Excluding entitlement effects and divestments, oil‑equivalent production was up 3 percent from the first quarter of 2018. Upstream liquids production grew by 5 percent compared with the first quarter of 2018, driven by Permian unconventional growth of nearly 140 percent."

SEC Filed Press Release 

Senior Unsecured Debt Ratings:

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.