ARESF, DES, JRI, OFS, SBRA, TWO

Economy:

Japan's exports fall for 12th straight month - MarketWatch

Uncertainty remains on Wall Street about China-US phase one agreement (viewed increasingly as more of a trade truce than a trade deal) Until I am able to read the "Phase 1" agreement, which is not publicly available, and review opinions about its contents from independent trade experts, I will reserve final judgment on the importance.  

Fannie Mae boosts 2020 housing forecast 'significantly'

Philadelphia Fed manufacturing index slumps in December to lowest reading in six months - MarketWatch (.3, down from 10.4 in November; below zero indicates contraction) 

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Markets and Market Commentary:

FedEx (FDX) Earnings Q2 FY 2020 (adjusted E.P.S. at $2.51 vs. $2.76 consensus)

Dupont, GoDaddy among Wall Street's most 'undervalued' stocks I have no interest in any of the stocks mentioned in that article. I occasionally will look at DuPont but have not it owned any shares for several years. 

These 10 S&P 500 stocks were lousy in 2019, but they could return 40% or more in 2020 - MarketWatch DuPont made this list as well. 

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Portfolio Management: 

I have been busy on other matters for the past week. 

Notwithstanding earlier comments that I would not be buying more short term treasury bills at auction, given their low yields, I have found myself redeploying most of the proceeds from maturing treasuries, bonds, and CDs into 1 to 3 month treasury bills.  

I am not spending much time researching new stocks to purchase since I am in a sell into strength mode. 

If the stock rally extends into January, I will most likely eliminate all or most of my remaining stock mutual funds, harvesting close to my annual goal of $25+K in capital gains during that month. I will then just wait for the next major bear market to happen. 

In that event, I will likely transition to 1 blog post per month starting next February until my buying picks up again. 

I am hoping that intermediate term interest rates continue to trend higher since I would be more than satisfied with buying high quality corporate bonds, maturing in the 3 to 7 year range, that have 3%+ YTMs (preferably closer to 4% for the 5 to 7 year maturities). Yields are not close to those levels now. 

The ten year treasury closed last Friday with a 1.92% yield. 2019 Daily Treasury Yield Curve Rates That yield will probably need to exceed 2.50% to open up what I now view as acceptable intermediate term yields for higher quality corporate bonds.  

Average Yields as of 12/20/19

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Trump:

Former White House officials say they feared Putin influenced the president’s views on Ukraine and 2016 campaign - The Washington Post

Trump calls Democrats 'deranged,' 'spiteful' in angry letter to Pelosi over impeachment Several of Donald's mental illnesses are reflected in this letter, including malignant narcissism, delusional disorder and paranoia. 

Donald is now suffering from what psychologists call narcissistic injury and rage: 

The Destructive Force of Narcissistic Injury | Psychology Today; Narcissistic rage and narcissistic injury - Wikipedia

4 takeaways from the impeachment of President Trump

Lie of the Year 2019: Donald Trump’s claim whistleblower got Ukraine call 'almost completely wrong' | PolitiFact

Giuliani boosted in an interview that Donald is "very supportive" of his efforts in the Ukraine. Giuliani repeatedly asserted that Donald was actively involved in his efforts to smear Joe Biden and to get rid of any State Department official who got in their way. The Ukrainian Prosecutor Behind Trump’s Impeachment | The New Yorker (Giuliani: “I believed that I needed Yovanovitch out of the way. She was going to make the investigations difficult for everybody.”); Giuliani Provides Details of What Trump Knew About Ambassador’s Removal - The New York Times 

Trump repeats many falsehoods in letter to Pelosi about impeachment | PolitiFact

Trump Letter to Pelosi on Impeachment: FactCheck.org (click yellow highlights for fact checks)  

Fact-checking President Trump’s impeachment letter to Pelosi-The Washington Post

Trump touts Putin speaking out against his impeachment

Trump's disgusting and deplorable attack on Debbie Dingell 

Emails Show Trump Asked About Ukraine Aid Before Zelensky Call

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"Christianity Today" and Trump: 

Major evangelical Christian magazine "Christianity Today" says Trump must be removed from office - MarketWatch

Excerpt from Editorial: “The president of the United States attempted to use his political power to coerce a foreign leader to harass and discredit one of the president’s political opponents That is not only a violation of the Constitution; more importantly, it is profoundly immoral. The reason many are not shocked about this is that this president has dumbed down the idea of morality in his administration. He has hired and fired a number of people who are now convicted criminals. He himself has admitted to immoral actions in business and his relationship with women, about which he remains proud. His Twitter feed alone—with its habitual string of mischaracterizations, lies, and slanders—is a near perfect example of a human being who is morally lost and confused.” Trump Should Be Removed from Office | Christianity Today

Trump's Response: 

Trump is malevolent. 

That factual observation, which is not subject to any reasonable and rational dispute among normal people, has nothing to do with politics or political ideology.  

81% of evangelicals voted for Trump in 2016 and 77% of white evangelicals approve of Donald's performance as President. PRRI Poll 

I would estimate that close to 80% of evangelicals will vote for Trump in 2020. If that estimate proves to be wrong, it is more likely to be higher than 80% rather than lower.  

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1. Small Ball Adds:

A. Added 50 ARESF at $8.86:

Quotes:

USD Priced Shares: ARESF (U.S. pink sheet exchange)
CAD Priced Shares: AX-UN.TO

Closing Price Yesterday: ARESF $9.02 +$0.03 +0.33% 

Company Website: Artis REIT

Portfolio Map

Q3-19 Investor Presentation

ARESF is the ordinary share (not an ADR) of the Canadian REIT Artis Real Estate Investment Trust. Five letter symbols ending in "F" indicate the ordinary shares of foreign stock, priced in USDs and traded on either the U.S. Grey Market or the U.S. Pink Sheet Exchange. A 5 letter symbol ending in "Y" indicates that the foreign security is an ADR priced in USDs and traded on one of those two U.S. exchanges.

The ARESF price will reflect the price of the ordinary shares traded in Toronto converted into USDs. XE: Convert CAD/USD. Canada Dollar to United States Dollar

This is an average down from a prior purchase made prior to Artis slashing its monthly distribution by 50%. Item # 1.A. $9.98 (7/9/18 Post)

Artis Real Estate Investment Trust Releases Third Quarter Results and Announces New Initiatives to Deliver Improved Value to Unitholders (11/1/18 Post)

2018 Distribution Slash: Artis was not covering its distribution with cash flow prior to the distribution slash. 

As I recall, the coverage was tight before the collapse in energy prices in 2014 wrecked havoc on property prices and occupancy levels in western Canada (primarily Alberta) where Artis had a significant presence. 

Artis has since reduced its exposure to those energy dependent economies and expanded it footprint in the U.S. 

Current Dividend: Monthly at C$.045 per unit (C$.54 annually)

The dividend yield will depend on the CAD/USD exchange rate, recovery of the 15% withholding tax through utilization of a foreign tax credit,

5 Year Chart at time of Purchase:

Position this Account: 150 units

Maximum USD Priced Units:  200 units

Recent Earnings Report (Q/E 9/30/19):

Note that the AFFO payout ratio was at 112.5% for the 2018 third quarter and was reduced to 56% in the 2019 third quarter.

The Calgary office segment was reduced to 6.4% of the total. AFFO per unit increased by 4.4% compared to the 2018 third quarter. The weighted average rental rate on renewals increased by 8.7%. The net asset value per share was reported at C$15.72 per unit.

I also own a fixed-to-floating rate Artis equity preferred stock. Item # 3.A. Bought 50 AXPRI at C$23 (12/16/18 Post); AX-PI.TO.

2. Eliminations:

All trades are commission free unless otherwise noted:

A. Sold 102+ JRI at $17.98:

Quote: JRI | Nuveen Real Asset Income & Growth Fund Overview

Profit Snapshot: +$140.67 (ex 9/12/19 sell)

JRI: CEF Connect

Sponsor's website: JRI

JRI SEC Filed Semi-Annual Report (period ending 6/30/19)

JRI SEC Filings

B. Sold 77+ DES at $28.13:

Quote: WisdomTree U.S. SmallCap Dividend Fund Overview

Profit Snapshot: +$44.17

Most Recent Discussion: Item # 5.B. Added 5 DES at $26.26; 5 at $25.25; 5 at $24.2 and 5 at $23.4 (1/2/19 Post)

Sponsor's Website: WisdomTree U.S. SmallCap Dividend Fund

WisdomTree U.S. SmallCap Dividend Fund (DES) Total Returns

I will consider restarting the small ball DES "buying program"  when and if the price sinks below $23.

C. Sold 78+ TWO at $14.7:

Quote: Two Harbors Investment Corp. (TWO)

Profit Snapshot: Net at $3.5

TWO is a mortgage REIT. I view any share profit after collecting several dividends to be a victory.

Dividend: Quarterly at $.40 per share

Two Harbors Investment Corp. Announces Third Quarter 2019 Common and Preferred Stock Dividends

The dividend has been cut several times since hitting $.74 per share back in 2012. The last cut was from $.47 to $.40 effective for the 2019 third quarter payment which went ex dividend on 6/28 and paid on 7/29.

I reinvested the dividend starting with the January 2019 payment.

Two Harbors Investment Corp.-Dividend History

Last Ex Dividend: 9/27/19

Last Earnings Report: Two Harbors Investment Corp. Reports Third Quarter 2019 Financial Results

I no longer have any exposure to MREIT common or preferred stocks.

3. Small Ball Adds:

A. Bought 10 OFS at $11.06:

Quote: OFS Capital Corp.  (OFS)

Closing Price Yesterday: OFS $11.64  +$0.10 +0.87% 

Website: Homepage - OFS Capital
OFS SEC Filings
2018 Annual Report (risk summary starts at page 25 and ends at page 51)

Management: External, a major negative. 

Last Sell Discussions: Item # 3.B. Sold 10 OFS at $12.04(11/30/19 Post); Item # 4.B. Sold 60 shares at $12 (11/13/19 Post) In the last linked post, I discussed the last earnings report which contained some negative developments. The price decline since those pares made the stock slightly more attractive.

Last Buy Discussions: Item # 3B. Bought 10 OFS at $9.95 and 20 at $9.61 Using Fidelity Commission Free Trades (1/9/19 Post)

Average Cost Per Share This Account: $10.4

Dividend: Quarterly at $.36 per share ($1.44 annually)

Dividend Yield at a $10.4 Total Cost = 13.8%

Next Ex Dividend: 12/23/19 

Net Asset Value Per Share History:

The recent trend starting in 2017 is worrisome. 

The decline in the third quarter precipitated the pare of my highest cost lots held in my Fidelity account.  

9/30/19:   $12.74 (14.31% decline from 12/31/16)

6/30/19:   $12.95   Page 2 10-Q  

3/31/19     $13.04   10-Q

12/31/18    $13.10
6/30/18     $13.70
03/31/18   $13.67
12/31/17    $14.12
12/31/16   $14.82
12/31/15    $14.76
12/31/14    $14.24
12/31/13    $14.54

IPO Offering Price at $15 (November 2012) with proceeds after the underwriters' discount at $13.05 Final Prospectus Supplement

Using the $12.74 net asset value per share as of 9/30/19, the discount to net asset value at the 10 share purchase price of $11.06 is 13.19%. Given the NAV per share decline starting in 2017, I do not regard that discount to be an acceptable buffer which explains the rationale for the small ball approach notwithstanding the high dividend yield.   

I also own shares in my Schwab account where I have worked the average cost per share number down to $10.1. 

B. Bought 10 SBRA at $20.76:

Quote: Sabra Healthcare REIT Inc. (SBRA)
Website: Home | Sabra
Sabra SEC Filings

Closing Price Yesterday: SBRA $21.37 +$0.10 +0.45% 

2018 Annual Report (risk summary starts at page 13 and ends at page 23)  

Properties: Properties | Sabra

"As of September 30, 2019, Sabra’s investment portfolio included 434 real estate properties held for investment (consisting of (i) 304 Skilled Nursing/Transitional Care facilities, (ii) 62 Senior Housing communities (“Senior Housing - Leased”), (iii) 44 Senior Housing communities operated by third-party property managers pursuant to property management agreements (“Senior Housing - Managed”) and (iv) 24 Specialty Hospitals and Other facilities), one investment in a direct financing lease, 20 investments in loans receivable (consisting of (i) one mortgage loan, (ii) two construction loans and (iii) 17 other loans), nine preferred equity investments and one investment in an unconsolidated joint venture that owns 170 Senior Housing - Managed communities. As of September 30, 2019, Sabra’s real estate properties held for investment included 43,553 beds/units and its unconsolidated joint venture included 7,538 beds/units, spread across the United States and Canada."

Those property sectors are among the riskiest in the REIT universe. 

I recently eliminated by SBRA position held in my Schwab account, selling 135+ shares at $24.3+:

I am not a fan. Harvesting the dividend and selling the stock at a profit, which has been accomplished in the past, is the goal.

SBRA Information Day of Purchase:

SBRA 5 Year Chart Day of Purchase:

Dividend: Quarterly at $.45 per share ($1.8 annually)

Dividend Yield at $20.76 = 8.67%

Last Ex Dividend Date: 11/14/19

Last Discussions: I did discuss buying a few shares in my Fidelity account, using my small ball purchase restriction, but have not bought any shares since I bought 10 shares on 2/9/18. Item # 2.D. Bought 10 SBRA at $16.21(2/12/18 Post); Item # 2.B. Bought 5 SBRA at $17.13 (2/8/18 Post); Item 3.B. Bought 10 SBRA at $17.9 (1/21/18 Post) I can not buy more shares in that account until the purchase price falls below $16.21.

Last Earnings Report: Sabra Reports Third Quarter 2019 Results; Continues to Improve Leverage and Other Credit Metrics; Reaffirms 2019 Guidance

During the 2019 third quarter, SBRA sold 4.2M shares under its ATM program at an average price of $21.82. Page 27 10-Q 

Goal: Net profit on the shares + dividends

Last Bond Offering: Prospectus (3.9% SU rated Ba1 due 2029, FINRA) 

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.