Economy:
U.S. consumer sentiment rebounds modestly in September- MarketWatch (reading of 92 in September, up from 89.8 in August which was a 3 year low)
Saudi Arabia shuts down about half its oil output after drone strikes spark fires - MarketWatch; Iran denies carrying out crippling attacks on Saudi oil facilities Iran would certainly be the most likely ultimate source for the attack. Saudi Oil Attack Photos Implicate Iran, U.S. Says; Trump Hints at Military Action
Oil infrastructure facilities in the Middle East are susceptible to destruction in asymmetric warfare. The attack on Saudi's largest oil processing site at Abqaiq was carried out by a few drones and/or missiles. Even if Saudi Arabia is able to restore production and processing in a few days, the vulnerability of oil infrastructure facilities to drone attacks remains.
Longer term, the vulnerability of crude oil supplies sourced from the Middle East will likely have critical U.S. economic and national security implications.
U.S. official says Washington believes Saudi attacks came from southwest Iran - Reuters
Oil ends sharply lower as Saudis project early return to normal for damaged facilities - MarketWatch
Oil supply fully back by end of Sept, Aramco IPO on track, Saudis say
Oil infrastructure facilities in the Middle East are susceptible to destruction in asymmetric warfare. The attack on Saudi's largest oil processing site at Abqaiq was carried out by a few drones and/or missiles. Even if Saudi Arabia is able to restore production and processing in a few days, the vulnerability of oil infrastructure facilities to drone attacks remains.
Longer term, the vulnerability of crude oil supplies sourced from the Middle East will likely have critical U.S. economic and national security implications.
U.S. official says Washington believes Saudi attacks came from southwest Iran - Reuters
Oil ends sharply lower as Saudis project early return to normal for damaged facilities - MarketWatch
Oil supply fully back by end of Sept, Aramco IPO on track, Saudis say
Fascinating to watch: U.S. National Debt Clock-Real Time (federal government debt per taxpayer is now over $183K)
In Coal Country, the Mines Shut Down, the Women Went to Work and the World Quietly Changed
Does anyone recall Donald promising to vastly increase the number of coal industry jobs?
Bureau of Labor Statistics Data
Trump says "coal is back," but use of the rock at a 41-year low - CBS News
Coal miner union president: 'Coal's not back. Nobody saved the coal industry.' - CNN
EPA rolls back Obama-era plan limiting coal emissions The pro-pollution party wants to increase global warming even if the result is almost no new jobs in the coal industry.
Empire State factory index remains barely above zero in September - MarketWatch-Empire State Manufacturing Survey (overview) - FEDERAL RESERVE BANK of NEW YORK
+++++
Does anyone recall Donald promising to vastly increase the number of coal industry jobs?
Bureau of Labor Statistics Data
Trump says "coal is back," but use of the rock at a 41-year low - CBS News
Coal miner union president: 'Coal's not back. Nobody saved the coal industry.' - CNN
EPA rolls back Obama-era plan limiting coal emissions The pro-pollution party wants to increase global warming even if the result is almost no new jobs in the coal industry.
Empire State factory index remains barely above zero in September - MarketWatch-Empire State Manufacturing Survey (overview) - FEDERAL RESERVE BANK of NEW YORK
+++++
Markets and Market Commentary:
The attack on the Saudi energy facilities did contribute to a reversal of the rise in intermediate and longer term treasury yields.
The S&P 500 should be 13% lower because a recession is coming, warns Deutsche Bank - MarketWatch This call comes from Binky Chadha, Deutsche Bank’s chief global strategist. The Stock Jocks are accentuating the positives and eliminating the negatives. ACCENTUATE THE POSITIVE ~ Johnny Mercer & The Pied Pipers (1945) - YouTube
The attack on the Saudi energy facilities did contribute to a reversal of the rise in intermediate and longer term treasury yields.
'The most important chart in the world' offers a warning sign
Apple says $14 billion EU tax order 'defies reality and common sense' - Reuters
Brent crude oil spikes the most in history after Saudi attacks
How low interest rates can discourage competition, leading to slower growth - MarketWatch; How low interest rates can hurt competition, and the economy-Chicago Booth Review (The paper can be downloaded here)
The consensus opinion now is that lower interest rates will produce GDP growth. Context matters when analyzing this issue.
When central banks lower interest rates in response to a recession (e.g. the U.S. federal reserve going from a 4% federal funds rate to zero) and/or engages in other abnormal monetary policies like QE, there will likely be a positive stimulus impact. I am assuming here that those monetary policies are temporary and do not last 11 years with no end in sight which is what has happened since 2008. I view it as important that the central banks are telegraphing that those policies will continue indefinitely.
The consensus opinion has not been reconsidered based on what has actually happened in Europe and Japan over the past decade.
Even if negative nominal rates fail to work as contemplated for another decade, I doubt that the consensus opinion will change since it is so firmly embedded in group think now.
Some ideas and opinions are just impossible to kill with facts, like the GOP's representation that their tax cuts will pay for themselves or the widespread belief among republicans that global warming is not a problem.
When interest rates are manipulated for an extended period to abnormally low levels (negative real returns before taxes), the end result is not economic growth resulting from the low rates but the creation of an unnecessary disinflationary force which can combine with other growth headwinds to produce anemic GDP growth and low inflation.
Stephen Williamson: New Monetarist Economics: Neo Fisherism: Look, it Works!
++++++
Apple says $14 billion EU tax order 'defies reality and common sense' - Reuters
Brent crude oil spikes the most in history after Saudi attacks
How low interest rates can discourage competition, leading to slower growth - MarketWatch; How low interest rates can hurt competition, and the economy-Chicago Booth Review (The paper can be downloaded here)
The consensus opinion now is that lower interest rates will produce GDP growth. Context matters when analyzing this issue.
When central banks lower interest rates in response to a recession (e.g. the U.S. federal reserve going from a 4% federal funds rate to zero) and/or engages in other abnormal monetary policies like QE, there will likely be a positive stimulus impact. I am assuming here that those monetary policies are temporary and do not last 11 years with no end in sight which is what has happened since 2008. I view it as important that the central banks are telegraphing that those policies will continue indefinitely.
The consensus opinion has not been reconsidered based on what has actually happened in Europe and Japan over the past decade.
Even if negative nominal rates fail to work as contemplated for another decade, I doubt that the consensus opinion will change since it is so firmly embedded in group think now.
Some ideas and opinions are just impossible to kill with facts, like the GOP's representation that their tax cuts will pay for themselves or the widespread belief among republicans that global warming is not a problem.
When interest rates are manipulated for an extended period to abnormally low levels (negative real returns before taxes), the end result is not economic growth resulting from the low rates but the creation of an unnecessary disinflationary force which can combine with other growth headwinds to produce anemic GDP growth and low inflation.
Stephen Williamson: New Monetarist Economics: Neo Fisherism: Look, it Works!
++++++
Trump:
Kellyanne Conway Suggests Trump Is Better Because He Doesn't 'Study' Situations Before Making Decisions Donald proudly relies on his gut when making decisions. Trump says his 'gut' can tell him more than 'anybody else's brain can ever tell me' That may very well be true for someone with a reptilian brain who actively avoids facts and knowledge.
Donald says that he is "locked and loaded" for a military response, but was waiting for Saudi Arabia to tell him "under what terms we would proceed".
When Iran shot down a U.S. drone, Donald let it be known that he was "cocked and loaded":
I do not know whether "cocked and loaded" is different from "locked and loaded".
Of course, threatening a war via a tweet is reckless and juvenile. Since Donald makes these threats without resorting to military action, the natural response for countries targeted with Donald's bluster is to ignore him as just a loud mouth paper tiger, which can lead to miscalculations.
I doubt that Donald will respond with a military strike against Iran, even if there is no doubt that Iran was responsible for the attack against Saudi Arabia, as noted in my comment published yesterday.
If Donald wanted to make a case that Iran was responsible, there will be widespread skepticism since he has no credibility except among Trumpsters (about 90% of republicans).
One question is why would the U.S. respond with proportional military strikes for an attack on Saudi Arabia? If the SA wants to attack Iranian installations, let them do it. Maybe Donald needs to read his 2014 tweet on this subject:
Before the SA attack, the Fake News President lambasted the media for reporting that he would meet with Iran with no pre-conditions:
Donald will lie even where there is a tape proving that he is lying and will frequently repeat the lie over and over notwithstanding that incontrovertible proof.
During a recent Meet the Press interview with Chuck Todd, Donald stated that he would meet with "No preconditions". Trump lashed out at the media for reporting he would meet with Iran with ‘no conditions.’ He’s said as much on camera twice. - The Washington Post
This is statement made by the Secretary of State last week: "The president has made very clear he is prepared to meet with no preconditions," Trump denies reports he's willing to meet with Iran with 'no conditions' | TheHill
Kellyanne Conway Suggests Trump Is Better Because He Doesn't 'Study' Situations Before Making Decisions Donald proudly relies on his gut when making decisions. Trump says his 'gut' can tell him more than 'anybody else's brain can ever tell me' That may very well be true for someone with a reptilian brain who actively avoids facts and knowledge.
Donald says that he is "locked and loaded" for a military response, but was waiting for Saudi Arabia to tell him "under what terms we would proceed".
When Iran shot down a U.S. drone, Donald let it be known that he was "cocked and loaded":
Of course, threatening a war via a tweet is reckless and juvenile. Since Donald makes these threats without resorting to military action, the natural response for countries targeted with Donald's bluster is to ignore him as just a loud mouth paper tiger, which can lead to miscalculations.
I doubt that Donald will respond with a military strike against Iran, even if there is no doubt that Iran was responsible for the attack against Saudi Arabia, as noted in my comment published yesterday.
If Donald wanted to make a case that Iran was responsible, there will be widespread skepticism since he has no credibility except among Trumpsters (about 90% of republicans).
One question is why would the U.S. respond with proportional military strikes for an attack on Saudi Arabia? If the SA wants to attack Iranian installations, let them do it. Maybe Donald needs to read his 2014 tweet on this subject:
Before the SA attack, the Fake News President lambasted the media for reporting that he would meet with Iran with no pre-conditions:
During a recent Meet the Press interview with Chuck Todd, Donald stated that he would meet with "No preconditions". Trump lashed out at the media for reporting he would meet with Iran with ‘no conditions.’ He’s said as much on camera twice. - The Washington Post
This is statement made by the Secretary of State last week: "The president has made very clear he is prepared to meet with no preconditions," Trump denies reports he's willing to meet with Iran with 'no conditions' | TheHill
Is "Very Stable Genius" a downgrade from "Extremely Stable Genius"?
Appeals court revives foreign corruption suit against Trump - POLITICO
8 Years of Trump Tax Returns Are Subpoenaed by Manhattan D.A.
Clueless Don continued to attack the Federal Reserve with this rant:
Donald may want to mention to his cult members that Germany has a budget surplus while the U.S. is generating around a trillion dollars per year in budget deficits. There are reasons other than central bank policies that contribute to lower interest rates in Germany.
8 Years of Trump Tax Returns Are Subpoenaed by Manhattan D.A.
Clueless Don continued to attack the Federal Reserve with this rant:
+++++++
1. Elimination:
A. Sold 52+ TERP at $16.96-Used Commission Free Trade:
Quote: TerraForm Power Inc. Cl A (TERP)
Closing Price Yesterday: TERP $17.58 +$0.68 +4.02%
Website: TerraForm Power
TERP SEC Filings
2018 Annual Report
Profit Snapshot: +$316.21
Item 1.A. Bought 100 TERP at $11.19 and Sold 50 at $11.5)-Used Fidelity Commission Free Trades
The reportable profit will increase when TERP classifies the dividend payments for tax purposes. The dividends paid in 2019 are likely to classified as ROC, which will reduce my cost basis and increase the profit shown in the preceding snapshot.
Dividend: Quarterly at $.2014 per share (the entire 2018 dividend was classified as ROC)
TerraForm Power | Investors | Distribution Information
Last Ex Dividend Date: 8/30/19 (after sell)
Last Earnings Report: TerraForm Power Reports Second Quarter 2019 Results | Terraform Power, Inc.
Prior Round Trip: Item # 3.B. Pared TERP-Sold 51+ at $13.63 (4/27/19 Post)-(profit snapshot = $138.51, likely to be increased when dividends are classified during tax season)- Item # 1.A. Bought 50 TERP at $11.18-Used Schwab Commission Free Trade (9/16/2018 Post)
TERP Profits to Date (before 2019 ROC adjustment to tax cost basis) = $454.72
2. Small Ball-Income Generation and Trading Using Small Ball Rules (all commission free trades):
A. Bought 100 NMFC at $13.37:
Quote: New Mountain Finance Corp. (NMFC)
Website: New Mountain Finance Corporation
Closing Price Yesterday: NMFC $13.51 -$0.06 -0.44%
SEC Filings
Dividend: Quarterly at $.34 per share ($1.44 annually)
Dividend Yield at $13.37 Total Cost Per Share = 10.77%
Last Ex Dividend Date: 9/12/19 (after purchase):
Goal: Total Return in Excess of the Dividend yield.
Sell Discussions:
Item # 1.B. Eliminated NMFC-Sold 60 at $13.96 and 50 at $13.94 (2/9/19 Post)(profit snapshots = $42.77); Item # 1 A. Sold 50 NMFC at $14.06 (8/19/18 Post)(profit snapshot = $61.44); Item # 1 Sold Remaining 50 Shares of NMFC at $14.63 (11/1/14 Post)($5.88 profit on the shares); Sold 100 of 150 NMFC at $14.4773 (10/23/14 Post)($3.79 profit on the shares + 7 dividend payments); Item # 8 Sold Highest Cost NMFC Lot at $15.37 (9/14/2014 Post)($2.99 profit on the shares + 7 quarterly dividend payments/sold lot on 9/11/14)
I have exited all prior position by selling the shares profitably, but that has been difficult.
NMFC Trading Profits to Date: $116.87
Most Recent Buy Discussions: Item # 1.C. Added 10 NMFC at $12.6 Used Commission Free Trade (1/13/19 Post); Item # 1.A. Bought 50 NMFC at $12.84 (3/5/18 Post)
Net Asset Value Per Share History:
6/30/19: $13.41 10/Q at page 4
12/31/18: $13.22
6/30/18: $13.57
3/31/18: $13.60 10-Q at page 3
12/31/17: $13.63
12/31/16 $13.46
9/30/15 $13.73
12/31/14 $13.83
9/30/14 $14.33
12/31/13 $14.38
6/30/13 $14.32
12/31/12 $14.06 Sourced from 10-Qs
IPO Price: $13.75 Prospectus (filed 5/23/11)
Recent Stock Offering: "On July 11, 2019, the Company completed a public offering of 6,900,000 shares of the Company’s common stock at a public offering price of $13.68 per share. The Company’s Investment Adviser paid a $0.39 per share portion of the $0.42 per share underwriters' sales load such that the Company received net proceeds of $13.65 per share in this offering. All payments made by the Company’s Investment Adviser are not subject to reimbursement by the Company. The Company received total net proceeds of approximately $94.2 million in connection with this offering."
5 Year Annual Average Total Return (9/4/19) = 7.35%
DRIP Returns Calculator | Dividend Channel
Whenever I see an annual average total return well below the dividend yield, that fact suggests that a trading strategy needs to be used if the investor does not want to lose part of the dividend's value.
Last Earnings Report (Q/E 6/30/19): SEC Filed Press Release
Net income income was reported at .35 per share.
"As of June 30, 2019, all investments in our portfolio had an investment rating of “1” or “2” with the exception of one portfolio company that had an investment rating of “4”. The Company’s investment in this portfolio company had an aggregate cost basis of approximately $1.5 million and an aggregate fair value of approximately less than $0.1 million."
I am still concerned about the level of non-first lien debt:
B. Pared Highest Cost AT & T Shares-Sold 20 at $35.47:
Quote: AT&T Inc. (T)
Investor Relations | AT&T
T | AT&T Inc. E.P.S. Analyst Estimates (as of 9/4/19):
2019: $3.55
2020: $3.62
Closing Price Yesterday: T $37.16 -$0.15 -0.40%
This is typical small ball trading. I kept averaging down with the lowest price lot bought at $26.95.
With the recent surge in price, I sold my highest cost lots profitably which reduces my average cost per share and increases my dividend yield.
I included in this sell the 1+ share bought with the last dividend, which was the highest cost lot bought with a dividend.
Subsequent to this pare, Elliott Management released sent a letter to AT & T outlining several potential changes that could cause the stock to rise 65%. Elliott Management Sends Letter to Board of Directors of AT&T | Business Wire
Profit Snapshot = $17.47
Item # 1.B. Bought 10 AT & T at $35.82 and 2 at $34.66-Used Commission Free Trades (4/2/18 Post); Item # 2.A. Bought 8 T at $33.44 (5/3/18 Post)
Position Before Pare: Average Cost Per Share = $31.26
Position After Pare: Average Cost Per Share = $30.19
Dividend: Quarterly at $.51 per share ($2.04 annually), raised from $.5 effective for the 2018 4th quarter payment
AT&T Increases Quarterly Dividend
Dividend Yield at $30.19 Total Cost Per Share = 6.76%
Last Ex Dividend: 7/9/19
10 Year Chart: Uninspiring (indicates trading will probably be necessary to secure a 2+% total return in excess of the dividend yield unless purchases are timed almost perfectly)
5 Year Annual Average Return Through 9/3/19= 5.89%
DRIP Returns Calculator | Dividend Channel
This calculation assumes that dividends are used to buy additional shares. The 5.89% annual average total return was slightly less than the aggregate dividends.
Last Earnings Report (Q/E 6/30/19):
Last Discussions (all commission free trades): The purchases reflect the small ball purchase restriction with one inadvertent exception. Item # 4.A. Bought 5 T at $27.7 and 10 at $26.95-Used Commission Free Trades(1/16/19 Post; Item # 1.C. Bought 3 AT & T at $29.23-Used Commission Free Trade (11/18/18 Post); Item # 1.B. Bought 5 AT & T at $31.14 (7/25/18 Post); Item # 4.B. Bought 10 AT& T at $30.17-Used Commission Free Trade (7/29/18 Post); Item # 1.B. Bought 5 AT & T at $31.14 (7/25/18 Post); Item # 2.A. Bought 10 T at $32.8; 2 at $32.29 and 3 at $31.97 (5/3/18 Post)
Lowest Cost Lot in Chain: 10 shares at $26.95 (12/26/19)
Current Position: 54+ shares
Maximum Position: 100 shares + shares purchased with dividends
Purchase Restriction: Small Ball Rule
C. Bought 10 KBWY at $29.72:
Quote: KBWY | Invesco KBW Premium Yield Equity REIT ETF Overview
Closing Price Yesterday: KBWY $30.99 $0.00 0.00%
Sponsor's Website: Invesco (recent shareholder reports are linked)
This deservedly out of favor ETF can be bought commission free by Vanguard and Fidelity customers. This is my first purchase. This purchase is a dumpster dive.
Category: Lottery Ticket Basket
Morningstar: Currently rated at 1 Star which is deserved IMO
Info Day of Purchase (9/5/19):
I would emphasize the 52 week decline of -15+%
Compare that return with the Vanguard REIT ETF: Vanguard Real Estate ETF (VNQ) Performance (1 year total return through 9/5/19 at +16.47%) I have emphasized in the past that investors need to look at total return for high yield investments, where price depreciation frequently wipes out the value of dividends.
Dividends: Monthly at a variable rate
Last Ex Dividend: 8/19/19
Next Ex Dividend: 9/23/19
Invesco KBW Premium Yield Equity REIT ETF (KBWY) Dividend History | Nasdaq
Holdings: This ETF owns high yielding equity REITs which include many high risk names.
The largest position as of 9/4/19 was Washington Prime Group Inc. (WPG) which I have never owned and have yet to be tempted to buy a Lottery Ticket even with the devastation already reflected in this chart:
Some of the holdings have been doing well as of late including BRG, IRT and OHI, but the performance has been weighted down by disasters like WPG; Pennsylvania Real Estate Investment Trust (PIE); Senior Housing Properties Trust (SNH) and the hotel REITs.
Goal: Harvest several monthly distributions and sell the shares at a profit
Current Position: 10 shares
Maximum Position: 30 Shares
Purchase Restriction: Small Ball Rule (each purchase, other than through dividend reinvestment, has to be at the lowest price in the chain)
3. Short Term Bond/CD Basket Ladder Strategy:
A. Sold 1 Deere Capital 2.55% SU Maturing on 1/8/21-In an IRA Account:
Profit Snapshot: $19.34
Item # 3.B. Bought 1 Deere Capital 2.55% 2021 SU at a TC of 98.739-In a Roth IRA Account (11/18/18 Post) YTM was then at 3.16%.
Finra Page: Bond Detail
A. Sold 52+ TERP at $16.96-Used Commission Free Trade:
Quote: TerraForm Power Inc. Cl A (TERP)
Closing Price Yesterday: TERP $17.58 +$0.68 +4.02%
Website: TerraForm Power
TERP SEC Filings
2018 Annual Report
Profit Snapshot: +$316.21
Item 1.A. Bought 100 TERP at $11.19 and Sold 50 at $11.5)-Used Fidelity Commission Free Trades
The reportable profit will increase when TERP classifies the dividend payments for tax purposes. The dividends paid in 2019 are likely to classified as ROC, which will reduce my cost basis and increase the profit shown in the preceding snapshot.
Dividend: Quarterly at $.2014 per share (the entire 2018 dividend was classified as ROC)
TerraForm Power | Investors | Distribution Information
Last Ex Dividend Date: 8/30/19 (after sell)
Last Earnings Report: TerraForm Power Reports Second Quarter 2019 Results | Terraform Power, Inc.
Prior Round Trip: Item # 3.B. Pared TERP-Sold 51+ at $13.63 (4/27/19 Post)-(profit snapshot = $138.51, likely to be increased when dividends are classified during tax season)- Item # 1.A. Bought 50 TERP at $11.18-Used Schwab Commission Free Trade (9/16/2018 Post)
TERP Profits to Date (before 2019 ROC adjustment to tax cost basis) = $454.72
2. Small Ball-Income Generation and Trading Using Small Ball Rules (all commission free trades):
A. Bought 100 NMFC at $13.37:
Quote: New Mountain Finance Corp. (NMFC)
Website: New Mountain Finance Corporation
Closing Price Yesterday: NMFC $13.51 -$0.06 -0.44%
SEC Filings
Dividend: Quarterly at $.34 per share ($1.44 annually)
Dividend Yield at $13.37 Total Cost Per Share = 10.77%
Last Ex Dividend Date: 9/12/19 (after purchase):
Goal: Total Return in Excess of the Dividend yield.
Sell Discussions:
Item # 1.B. Eliminated NMFC-Sold 60 at $13.96 and 50 at $13.94 (2/9/19 Post)(profit snapshots = $42.77); Item # 1 A. Sold 50 NMFC at $14.06 (8/19/18 Post)(profit snapshot = $61.44); Item # 1 Sold Remaining 50 Shares of NMFC at $14.63 (11/1/14 Post)($5.88 profit on the shares); Sold 100 of 150 NMFC at $14.4773 (10/23/14 Post)($3.79 profit on the shares + 7 dividend payments); Item # 8 Sold Highest Cost NMFC Lot at $15.37 (9/14/2014 Post)($2.99 profit on the shares + 7 quarterly dividend payments/sold lot on 9/11/14)
I have exited all prior position by selling the shares profitably, but that has been difficult.
NMFC Trading Profits to Date: $116.87
Most Recent Buy Discussions: Item # 1.C. Added 10 NMFC at $12.6 Used Commission Free Trade (1/13/19 Post); Item # 1.A. Bought 50 NMFC at $12.84 (3/5/18 Post)
Net Asset Value Per Share History:
6/30/19: $13.41 10/Q at page 4
12/31/18: $13.22
6/30/18: $13.57
3/31/18: $13.60 10-Q at page 3
12/31/17: $13.63
12/31/16 $13.46
9/30/15 $13.73
12/31/14 $13.83
9/30/14 $14.33
12/31/13 $14.38
6/30/13 $14.32
12/31/12 $14.06 Sourced from 10-Qs
IPO Price: $13.75 Prospectus (filed 5/23/11)
Recent Stock Offering: "On July 11, 2019, the Company completed a public offering of 6,900,000 shares of the Company’s common stock at a public offering price of $13.68 per share. The Company’s Investment Adviser paid a $0.39 per share portion of the $0.42 per share underwriters' sales load such that the Company received net proceeds of $13.65 per share in this offering. All payments made by the Company’s Investment Adviser are not subject to reimbursement by the Company. The Company received total net proceeds of approximately $94.2 million in connection with this offering."
5 Year Annual Average Total Return (9/4/19) = 7.35%
DRIP Returns Calculator | Dividend Channel
Whenever I see an annual average total return well below the dividend yield, that fact suggests that a trading strategy needs to be used if the investor does not want to lose part of the dividend's value.
Last Earnings Report (Q/E 6/30/19): SEC Filed Press Release
Net income income was reported at .35 per share.
"As of June 30, 2019, all investments in our portfolio had an investment rating of “1” or “2” with the exception of one portfolio company that had an investment rating of “4”. The Company’s investment in this portfolio company had an aggregate cost basis of approximately $1.5 million and an aggregate fair value of approximately less than $0.1 million."
I am still concerned about the level of non-first lien debt:
B. Pared Highest Cost AT & T Shares-Sold 20 at $35.47:
Quote: AT&T Inc. (T)
Investor Relations | AT&T
T | AT&T Inc. E.P.S. Analyst Estimates (as of 9/4/19):
2019: $3.55
2020: $3.62
Closing Price Yesterday: T $37.16 -$0.15 -0.40%
This is typical small ball trading. I kept averaging down with the lowest price lot bought at $26.95.
With the recent surge in price, I sold my highest cost lots profitably which reduces my average cost per share and increases my dividend yield.
I included in this sell the 1+ share bought with the last dividend, which was the highest cost lot bought with a dividend.
Subsequent to this pare, Elliott Management released sent a letter to AT & T outlining several potential changes that could cause the stock to rise 65%. Elliott Management Sends Letter to Board of Directors of AT&T | Business Wire
Profit Snapshot = $17.47
Item # 1.B. Bought 10 AT & T at $35.82 and 2 at $34.66-Used Commission Free Trades (4/2/18 Post); Item # 2.A. Bought 8 T at $33.44 (5/3/18 Post)
Position Before Pare: Average Cost Per Share = $31.26
Position After Pare: Average Cost Per Share = $30.19
Dividend: Quarterly at $.51 per share ($2.04 annually), raised from $.5 effective for the 2018 4th quarter payment
AT&T Increases Quarterly Dividend
Dividend Yield at $30.19 Total Cost Per Share = 6.76%
Last Ex Dividend: 7/9/19
10 Year Chart: Uninspiring (indicates trading will probably be necessary to secure a 2+% total return in excess of the dividend yield unless purchases are timed almost perfectly)
5 Year Annual Average Return Through 9/3/19= 5.89%
DRIP Returns Calculator | Dividend Channel
This calculation assumes that dividends are used to buy additional shares. The 5.89% annual average total return was slightly less than the aggregate dividends.
Last Earnings Report (Q/E 6/30/19):
Last Discussions (all commission free trades): The purchases reflect the small ball purchase restriction with one inadvertent exception. Item # 4.A. Bought 5 T at $27.7 and 10 at $26.95-Used Commission Free Trades(1/16/19 Post; Item # 1.C. Bought 3 AT & T at $29.23-Used Commission Free Trade (11/18/18 Post); Item # 1.B. Bought 5 AT & T at $31.14 (7/25/18 Post); Item # 4.B. Bought 10 AT& T at $30.17-Used Commission Free Trade (7/29/18 Post); Item # 1.B. Bought 5 AT & T at $31.14 (7/25/18 Post); Item # 2.A. Bought 10 T at $32.8; 2 at $32.29 and 3 at $31.97 (5/3/18 Post)
Lowest Cost Lot in Chain: 10 shares at $26.95 (12/26/19)
Current Position: 54+ shares
Maximum Position: 100 shares + shares purchased with dividends
Purchase Restriction: Small Ball Rule
C. Bought 10 KBWY at $29.72:
Quote: KBWY | Invesco KBW Premium Yield Equity REIT ETF Overview
Closing Price Yesterday: KBWY $30.99 $0.00 0.00%
Sponsor's Website: Invesco (recent shareholder reports are linked)
This deservedly out of favor ETF can be bought commission free by Vanguard and Fidelity customers. This is my first purchase. This purchase is a dumpster dive.
Category: Lottery Ticket Basket
Morningstar: Currently rated at 1 Star which is deserved IMO
Info Day of Purchase (9/5/19):
Compare that return with the Vanguard REIT ETF: Vanguard Real Estate ETF (VNQ) Performance (1 year total return through 9/5/19 at +16.47%) I have emphasized in the past that investors need to look at total return for high yield investments, where price depreciation frequently wipes out the value of dividends.
Dividends: Monthly at a variable rate
Last Ex Dividend: 8/19/19
Next Ex Dividend: 9/23/19
Invesco KBW Premium Yield Equity REIT ETF (KBWY) Dividend History | Nasdaq
Holdings: This ETF owns high yielding equity REITs which include many high risk names.
The largest position as of 9/4/19 was Washington Prime Group Inc. (WPG) which I have never owned and have yet to be tempted to buy a Lottery Ticket even with the devastation already reflected in this chart:
Some of the holdings have been doing well as of late including BRG, IRT and OHI, but the performance has been weighted down by disasters like WPG; Pennsylvania Real Estate Investment Trust (PIE); Senior Housing Properties Trust (SNH) and the hotel REITs.
Goal: Harvest several monthly distributions and sell the shares at a profit
Current Position: 10 shares
Maximum Position: 30 Shares
Purchase Restriction: Small Ball Rule (each purchase, other than through dividend reinvestment, has to be at the lowest price in the chain)
3. Short Term Bond/CD Basket Ladder Strategy:
A. Sold 1 Deere Capital 2.55% SU Maturing on 1/8/21-In an IRA Account:
Profit Snapshot: $19.34
Item # 3.B. Bought 1 Deere Capital 2.55% 2021 SU at a TC of 98.739-In a Roth IRA Account (11/18/18 Post) YTM was then at 3.16%.
Finra Page: Bond Detail
Issuer: Wholly owned subsidiary of Deere & Co. (DE) who does not guarantee the notes.
Sold at 100.733
YTM at = 1.972%
Proceeds at 100.633 (after $1 commission)
B. Sold 1 Wisconsin Electric Power 2.95% SU Maturing on 9/15/21:
Profit Snapshot: +$18.07
FINRA Page: Bond Detail (prospectus linked)
Issuer: Wholly owned subsidiary of WEC Energy Group Inc. (WEC)
WEC Analyst Estimates
WEC SEC Filings
Sold at 101.7
YTM at 101.7 = 1.99%
Proceeds at 101.6 (after $1 commission)
I still own 1 bond in a Roth IRA account which I will keep until maturity or early optional redemption by the issuer Item # 2.B. Bought 1 Wisconsin Electric Power 2021 SU at a TC of 99.303 -In A Roth IRA Account (10/14/18 Post)
C. Bought at Auction 5 Treasury 56 Day Bills Maturing on 11/5/19:
1.999%IR
Auction Results:
4. Intermediate Term Bond Basket Strategy:
A. Sold 1 Ventas 3.5% SU Maturing one 2/1/25:
Profit Snapshot: +$72.99
FINRA Page: Bond Detail (prospectus linked)
Issuer: Operating entity for Ventas (VTR) who guarantees the notes
Sold at 104.958
YTM at 104.958 = 2.496%
Proceeds at 104.858 after $1 IB commission
B. Sold 1 Ventas 4.125% SU Maturing on 1/15/26:
FINRA PAGE: Bond Detail (prospectus linked)
Sold at 108.08
YTM at 108.08 = 2.69%
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.
FedEx Corp.
ReplyDelete$149.53 -$23.77 -13.72%
Last Updated: Sep 18, 2019 at 11:40 a.m. EDT
https://www.marketwatch.com/investing/stock/fdx
The FDX earnings report and lowered earnings guidance has cast a pall over the market so far today.
https://www.marketwatch.com/story/fedexs-stock-plunges-toward-worst-day-since-financial-crisis-2019-09-18?mod=mw_quote_news
""The attack on the Saudi energy facilities did contribute to a reversal of the rise in intermediate and longer term treasury yields. ""
ReplyDeleteI'd postulated that something would be tweeted or announced or done by someone to keep rates from being cut back. This is much farther than I expected so maybe totally coincidence.
Fedex used world slowing as it's excuse. I haven't heard of what internal problems it could have been instead.
For a pall, this is barely a sunshade umbrella movement down. Exuberance is still keynote. It was near top of a trading range, so really had an excuse to go down a bit.
Land: I do not own FDX, and have only traded its bonds. FDX did lose Amazon as a customer, but the company also pointed to the ongoing trade wars as a cause, which was echoed by AT & T's President yesterday as well.
Deletehttps://www.cnbc.com/2019/09/18/cramer-says-fedex-call-was-extremely-dispiriting-about-the-economy.html
Losing Amazon is big. I imagine a lot of companies will use the trade wars as explanation, because it gives them an out.
DeleteWonder what UPS will report? That could be interesting.
.25% drop. The market didn't like it. Why? It's what the market wanted.
ReplyDeleteWas it the Fed statement of the tariffs having an impact?
I have to put on MSNBC or Bloomberg and see what they are "bothered" by.
Now the question is - will this see a pullback that can be bought into. Or be just more time in no where in particular...
Land: The Stock Jocks are addicted to abnormally low interest rates. The Fed's statement today was mostly upbeat about the economy which calls into question whether more rate cuts will happen without a material negative change in the U.S. economy.
DeleteAs far as the real economy goes, the rate cut announced today is IMO a net negative.
There are a variety of reasons supporting that opinion.
For example, most households spend their disposable income and fill in the spending gaps by increasing their borrowings. The reduction in yields on risk free savings results in lower disposable income and even more borrowed money to fund spending.
Due to robust stock gains and the use of no risk options to reward managers, companies are incentivized to allocate cash into stock buybacks and dividend increases which juices the stock price but has negligible impact on the real economy as gains are concentrated among the top 10% who do not need more disposable income to spend. Cash is used to engage in financial engineering rather than to make investments that positively impact the real economy.
Positive impacts from lower rates are mitigated due to a variety of factors. For example, housing prices have moved up so much that the average median income household can not afford a median price home in many localities, even with 30 year mortgage rates already at or near historical lows.
There also seems oddly to be a hoarding of cash among many households as interest rates decline. You can see that happening in the tremendous percentage increases in saving accounts balances when interest rates were near zero:
https://fred.stlouisfed.org/series/SAVINGS
Lowering interest rates also sends a signal that all is not well which will restrain some spending.
I cited a report in this blog that claims that lower rates increase industry concentration that contribute to less growth.
Almost free money also keeps inefficient firms alive which creates excess supply and disinflation in their products.
I do not view the decline so far today as being a buying opportunity. Personally, I would be fine with a 50% decline in SPX. I did increase my double short position a tad earlier this week. I am stock specific on my adds.
The market did it's thing when it moves opposite it's first move and gets happy.
DeleteToday turned out to be a non-event day based on the closing major index levels.
ReplyDeleteS&P 500 Index 3,006.73 +1.03 +0.03%
Crude oil is declining in price which flashes a consensus opinion that there will not be a military retaliation against Iran which is IMO the most likely prediction but who knows with Donald at the helm. His first instinct was to hit back but his generals are probably talking him down off that ledge.
No broad conclusions were drawn by the Stock Jocks from the FDX warning which resulted in a 12.92% decline in that stock today. FDX lost its Amazon business, but that was known and presumably baked into the analyst estimates before FDX released its earnings report today.
My take on the FED is that it is reluctantly rejoining other central banks in perpetuating extremely abnormal monetary policies indefinitely. Those policies are not going to foster GDP growth and inflation and will leave the CBs with few meaningful tools to combat the next recession.
The purpose for those policies, at least in significant part, is to respond to competitive currency devaluations caused by extremely abnormal policies.
The FED gave other central banks an umbrella to raise their benchmark rates in tandem with the FED but alas none of the major offenders followed their lead.
In fact, those CBs continued to have negative nominal benchmark rates. And, the ECB just went from a negative .4% deposit rate to a -.5% and restarted its QE program after a brief hiatus.
""FDX lost its Amazon business, but that was known and presumably baked into the analyst estimates""
ReplyDeleteI forgot about the baked in part.
Some more drop often happens on bad news even when known. But 13% is a lot.
Today was a non-event too. On bloomberg radio some guest was talking about fear and how it's so big now that up is the next direction.
ReplyDeleteThat's not true, FG index is at 63 greed. Not maxed out, but definitely not fear.
https://money.cnn.com/data/fear-and-greed/
Land: I am doing some light buying of the unloved and left for dead stocks with decent dividend yields. So far, that has been working out. I am finding more foreign stocks that fit the criteria that I want now (e.g. UBS buy discussed in the last post) Dividend yields are generally over 4% with the stocks having awful charts.
DeleteLiquid alternatives to stocks for real total returns after taxes are practically non-existent which provides buying support.
One problem is that the lack of alternatives will not prevent a stock or market valuation reset based on less than hoped for earnings, and those resets can be painful.
I do not see anything on the near horizon that could cause a major anxiety attack other than a devastating military conflict involving Iran and Saudi Arabia where both sides take out each other's energy assets, in whole or in significant part. That would not be rational but rational actions are not humans' strong suit.
Iran has been testing Donald with increasingly militaristic actions without provoking a meaningful response.
One Iranian commentator said Donald was not a lion as he made out to be but a scurrying jack rabbit.
Donald is certainly capable of making a snap and emotional decision to strike Iran's energy infrastructure and then threaten IRAN with annihilation if it responds. The market is not anticipating that this will happen which would make it a huge and negative surprise now.
Your buys are regional and bigger bank stocks?
DeleteI'm not that comfortable with banks, since I have no skill to assess them. But maybe should diversify and get some. Plus see if I can spot any downtrodden stocks that seem solid.
Turned on the TV. It's a canceled China Farm visit. I didn't know someone was going to visit a farm in China.
DeleteStill Trump's tweet about ending some tariffs and feeling confident should have offset that.
Land: I have been selling U.S. regional bank stocks and have reduced my holding to less than $8K.
DeleteUBS has investment banking operations but is primarily an asset manager now. I have discussed in several recent posts small purchases of non-financial institution stocks.
As to the China trade negotiations, all I know is what I read in news articles. A deputy level meeting on trade started yesterday and apparently was cut short with China's delegation returning home. China also cancelled a meeting with farmers, previously scheduled to be held in Montana, which would have been on their way home.
At about the same time, Donald said he did not need a trade deal before the election and did not want a partial deal.
https://www.cnbc.com/2019/09/20/trump-says-he-doesnt-need-a-trade-deal-with-china-before-the-2020-election.html
When you put those near in time events together, the assumption is that the meeting did not go well with China's trade negotiators which in turn caused the Stock Jocks to reconsider their Happy Days Are Here Again group think about the trade war but that reconsideration is so muted as to be almost undetectable.
The exemptions granted to some China exports today are not important IMO and do not indicate one way or the other that a trade deal is near.
I do believe that the Stock Jocks are too optimistic about a trade deal happening.
I'll look for those non-bank stock buys. I probably saw some but not all, and didn't register into long term storage. Either the storage is defunct, or it didn't seem like something I'd be good at buying.
DeleteThe defunct seems to have taken over on the regional bank buying because I remember your explanation of why they are weak and you were selling here...
I think I usually do better at storing. A good nap seems in order.
"reconsideration is so muted "
DeleteTrue, it's been noticeable that even 'big slide" only made it to .30-.40% on Dow & SnP.
Land: My buys are generally very small. Some of the non-bank buys discussed over the past three months include:
DeleteStocks:
Apple Hospitality (APLE); BlackRock TCP Capital (TCPC), Brandywine Realty (BDN), Centerpoint Energy (CNP), Chatham Lodging (CLDT), Corus Entertainment (CJREF), Dominion Energy (D), Duke Energy (DUK), Exxon (XOM), HealthTrust of America (HTA), Hersha Hospitality (HT), Husky (HUSKF), Jernigan Capital (JCAP), Kellogg (K), Kroger (bought & sold), Macy's (M), Manulife (MFC), New Mountain (NMFC), New Residential (NRZ), Ryder (R), Schlumberger (SLB), Suncor (SU), TransAlta Renewables (RNW:CA) and VICI Properties (VICI)
ETFs, ETNs and CEFs
AMU, DPG, CHIQ, ECON, FIE:CA, IGR, JRI, KBWY, NORW, REET, RMT & VEU
I averaged down on SKT in one account and sold 50 SKT in my IB account when it popped.
My discussions can be found by click on the symbols in the column to the right.
I will be discussing two nibbles in deservedly hated BDCs in my next post.
A list of stocks! I did see some of these buys. I missed others.
DeleteI'll go back and see how you decide things.
Thanks!
I still have TCRD and TCAP. No better or worse returns than before. But with recession coming...
Market's puzzling today. It's going down because Trump lifted tariffs as part of saying things are going well and he wants a complete deal?
ReplyDeleteDid they suddenly decide to stop believing him?
http://feeds.reuters.com/~r/reuters/businessNews/~3/LGaAtQDgSzw/u-s-lifts-tariffs-on-400-chinese-products-trump-wants-complete-trade-deal-idUSKBN1W51Z9
I have published a new post:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2019/09/observations-and-sample-of-recent_21.html