Economy:
U.S. jobless claims — aka layoffs — fall slightly in early October but still very high - MarketWatch For the week ending, new initial unemployment claims were reported at 840,000 vs. the consensus estimate of 820K.
Weekly jobless claims: Unemployment benefit claims worse than expected
Trump calls for stimulus negotiations to stop until after Election Day (10/6/2020)
Trump says he will not negotiate on COVID relief until after election - Axios
Trump's ending of stimulus talks will mean a 'much slower' recovery, Fed's Mester says
When announcing the termination of negotiations in a tweet, Donald also announced that he will pass a stimulus bill immediately after he wins on 11/3/20. Someone may want to tell him that the Democrats will still control the House when and if Donald wins.
After ending stimulus talks and waiting a few hours, Donald then tweeted that he had not ended stimulus talks and would consider a pared down stimulus bill that would include some small business aid with money left over from the last package; $1,200 stimulus checks to everybody just before the election with Donald's signature on them; and another bailout for the airlines. Trump again calls for more airline aid after halting talks for broader stimulus
With Pelosi standing pat, and after ending negotiations, Donald raised his offer to $1.8T with the Democrats sitting on $2.2T. Trump raises coronavirus stimulus offer to $1.8 trillion, source says (10/9/2020)
Despite Trump's move, markets are still expecting stimulus and a sizable one if Democrats sweep
The number of holiday shoppers at stores to drop 25%, says ShopperTrak
Mortgage rates set another record low, sparking refinances
Trump steel tariffs bring job losses to swing state Michigan | Reuters
U.S. imposes tariffs on aluminum sheet from 18 countries: Commerce chief | Reuters
++++++
Markets and Market Commentary:
S & P 500 P/E Ratios as of 10/9/20:
Trailing 12 month GAAP: 37.86
Estimated forward 12 months non-GAAP: 25.75
Sourced: P/E & Yields
I view the stock market as overvalued and based on unrealistic earnings estimates over the next few years. There are sectors that are undervalued provided economic and other conditions improve.
AT&T's 7% dividend yield makes stock a 'value trap,' analyst says in downgrade - MarketWatch
Samsung Q3 2020 guidance (profits up 58% from the 2019 third quarter)
U.S. bank stocks are fine, if you are rich in patience | Reuters
++++++
Trump:
In the most recent Gallup poll, Donald's approval rating rose to 46% from 42%. Trump Job Approval; Trump sees approval rating increase, majority expect him to beat Biden: poll | Fox News
Retired 4 Star General Michael Hayden: If Trump Gets Another Term... - YouTube Hayden was selected by George Bush to be Director of the CIA and his prior positions include Director of the National Security Agency.
New England Journal of Medicine writes historic Trump COVID-19 editorial;
Dying in a Leadership Vacuum | NEJM ("This crisis has produced a test of leadership. With no good options to combat a novel pathogen, countries were forced to make hard choices about how to respond. Here in the United States, our leaders have failed that test. . . When it comes to the response to the largest public health crisis of our time, our current political leaders have demonstrated that they are dangerously incompetent.");
Donald does not want the American people to know how many were infected by the recent White House super spreader event. White House Is Not Contact Tracing ‘Super-Spreader’ Trump Rose Garden Event - The New York Times And Donald will not allow the CDC to do contract tracing either.
Dr. Fauci called the recent, mostly maskless gatherings at the WH hosted by Donald, as super spreader events. Fauci says data on masks "speaks for itself" after "super spreader" White House event - CBS News
Trump tweets ‘Don’t be afraid of Covid.’ Over 210K Americans are no longer worried about Covid.
Covid-19 Patients: Nearly One-Third Had Altered Mental State [Study] - The New York Times I doubt that anyone would notice Donald's "altered mental state" since he was crazy before becoming infected with Covid-19.
Maybe there are decrees to Trump's craziness that can be detected by his children, as being able, for example, to distinguish between really, really crazy from just plain crazy. Don Trump Jr. thought father acting 'crazy' at Walter Reed: report - Business Insider; “Don Jr. Thinks Trump Is Acting Crazy”: The President’s COVID Joyride Has the Family Divided | Vanity Fair
I am listening the audio version of Woodward's book "Rage" and believe it needs to reclassified as non-fiction horror.
COVID-19: Trump, staff violated CDC guidelines 23 times since Sept. 1: USA Today (10/7/20)
Trump's erratic behavior ignores worsening pandemic and its victims
‘We Need to Take Away Children,’ Jeff Sessions Said - The New York Times (the child separation policy was also supported by the former deputy AG Rod Rosenstein)
Manhattan prosecutor can obtain Trump's tax returns, court rules | Reuters
My only takeaway from the V-P debate is that Pence lies almost as much as Donald. He is not a straight shooter but he has learned to look pious and sanctimonious when lying. FactChecking the Vice Presidential Debate - FactCheck.org; Each member of Trump’s ticket is dishonest in his own way. - The Washington Post
The only interesting moment is when a fly alighted on Pence's hair and stuck around for 2 minutes. The Democrats had spent years training that fly to land on Pence's hair and to lay what looked like eggs, when in reality those were nano wireless transmitters that the democrats were going to use to spy on Trump's campaign. Sean Hannity and Tucker Carlson will each have an hour long program devoted to proving that particular conspiracy.
The fly then turned traitorous and endorsed Trump and provided facts of this nefarious plot to Fox "news". The fly that landed in Mike Pence's hair during the debate endorses the Trump campaign.
Trump calls in for rambling and ugly post-hospital interview; Trump insults Harris as 'a monster' morning after vice presidential debate - ABC News Among the usual venomous remarks, Disgusting Don called Harris a "monster" twice. Donald also called her a "communist".
Don the Authoritarian also demanded that Barr arrest Biden, Obama, and Hillary.
Donald Trump Calls for AG Barr to Indict Joe Biden With 26 Days Until Election;
‘Where are all of the arrests?’: Trump demands Barr lock up his foes - POLITICO;
Trump Lashes Out at His Aides With Calls to Indict Political Rivals - The New York Times
Trump, lagging in polls, pressures Justice Dept. to target Democrats and criticizes Barr - The Washington Post ("The president’s calls for the Justice Department to target his political opposition in the heat of a presidential campaign is a jarring moment without precedent in modern American history.")
Donald and his cult members are untethered from what has made America Great.
Barr's toad John Durham may release a report before the election: Prosecutor quits John Durham probe into Trump Russia investigation
Federal judge issues scathing decision to allow more ballot drop boxes in Ohio
Trump Party Senator Mike Lee’s tweets against “democracy,” explained - Vox Mike Lee (TrumpR-UT) was photographed maskless many times before being diagnosed shortly thereafter with Covid-19. How the White House Flouted Basic Coronavirus Rules - The New York Times
Trump Fund-Raiser Elliott Broidy Charged in Lobbying Case - The New York Times
Trump tax returns: Loses appeal to block subpoena While Trump's lawyers request a stay of that order, giving them time to appeal again to the Supreme Court, I doubt that the Court will grant the appeal. No one should be surprised by an indictment for tax fraud next year, assuming Donald is no longer President.
Jason Miller, a senior Trump advisor, called Michigan's Governor Gretchen Whitmer "disgusting" and filled with hate for delivering a thoughtful and brief speech condemning the white supremists who were arrested for an alleged plot to kidnap her.
Trump Adviser Jason Miller Attacks ‘Disgusting’ Gov. Whitmer, Target of Kidnapping Plot;
You may remember the Trumpsters invading the Michigan capital and legislative chamber with their automatic weapons, which Trump and the republican politicians in that state view as acceptable behavior. Michigan Democrats reiterate calls for banning guns from state Capitol building after alleged plot to kidnap governor foiled; Trump: Protesters with guns in Michigan Capitol are 'very good people' - Business Insider
Trump's collapse among seniors could endanger the entire Republican Party - Axios
I was watching the evening news when a Mitch McConnell campaign ad was aired. Local Nashville stations are picked up in southern Kentucky. I did not hear a single truthful statement during the ad. Normally, I would just quickly change the channel whenever a political ad starts, which is my recommendation for all voters, but the remote was hiding, having fallen in between cushions on my sofa.
Senator Lindsey Graham (R-SC) refused to be tested before an in person debate with his democrat challenger. South Carolina Senate debate scrapped after Harrison calls for Graham to get COVID-19 test | TheHill
One of the shockers this election season is that Graham may lose. Latest 2020 Senate Election Polls
PolitiFact | Trump makes unfounded claim that 2016 debate commission apologized for mic Just another lie among tens of thousands.
+++
The Trumpster Kimberly Guilfoyle:
The Secret History of Kimberly Guilfoyle’s Departure from Fox | The New Yorker This is lurid stuff.
Guilfoyle is dating Donald Jr.
She is Donald's campaign finance chairman and gave a disgusting speech at the RNC convention.
She is a excellent fit for both Donalds.
Guilfoyle's assistant when she was at Fox "news, a woman hired out of college in 2015, claimed "that she was frequently required to work at Guilfoyle’s New York apartment while the Fox host displayed herself naked, and was shown photographs of the genitalia of men with whom Guilfoyle had had sexual relations." And, then the complaint, which is 41 pages long, apparently goes on and on. Guilfoyle denies the allegations, but she was forced out at Fox and Fox settled with her former assistant. Fox News paid Kimberly Guilfoyle's former assistant $4 million after sexual harassment accusations, New Yorker reports - ABC17NEWS
+++++
Covid 19- Updates:
 |
| As of 10/9/20 |
Trump blocked the CDC from issuing an order requiring mask wearing on all forms of public transportation. Trump administration kept CDC from issuing mask requirement on public transportation: report | TheHill
Donald says it was a blessing from God that he became infected with Covid-19. Maybe the Trumpsters will pray for God's help in contracting this potentially deadly disease. The truth of the matter is that do not need divine intervention.
COVID: Hospitalized patients prone to brain malfunction, study finds
Donald claimed last Tuesday that Covid-19 was "far less lethal!!!" for "most populations" than the common flu. Twitter flagged the claim as a violation of Twitter rules about "spreading misleading and potentially harmful" information about the pandemic:
Donald's statement that the coronavirus is "far less lethal!!!" in "most populations" then the seasonal flue is of course a lie and just another example of him deliberately misleading the public about the pandemic, something that he has willfully done since the beginning.
Donald and his Fox "news" are the primary spreaders of fact free conspiracy theories and false information that, along with other media outlets generating Fake News, are the primary creators of the Alternate Reality known as TrumpWorld.
Past Seasons Estimated Influenza Disease Burden | CDC (22K estimated flue deaths in the 2019-2020 season; 34,200 in 2018-2019; 61,000 in 2017-2018; 38,000 in 2016-2017; 23,000 in 2015-2016; 51,000 in 2014-2015)
President Trump, saying he feels good, returns to White House and promptly ignites new mask controversy - MarketWatch On his return, Donald made a point of removing his mask when entering the White House where hundreds of people work. When he did so, the WH was technically a Covid-19 hot spot, and Donald was contagious.
The message that Donald is conveying to those who still listen to him is that it is okay to go maskless even after becoming infected and working in a building with hundreds of uninfected persons. To wear a mask is to allow Covid-19 to "dominate" your life.
White House reporters furious with officials for having 'endangered' their lives after West Wing coronavirus outbreak Donald's Press Secretary Kayleigh McEnany and 4 assistant press secretaries have been diagnosed with Covid-19. Tracking the White House Coronavirus Outbreak - The New York Times Trumpsters are going to be reckless with other people's well being and health. Wearing a mask is an intolerable burden on their freedom to infect, hospitalize and kill others.
Trump advisor Corey Lewandowski spotted without mask after coronavirus concern
Mark Meadows' Daughter Had Atlanta Wedding Despite Coronavirus Restrictions | PEOPLE.com
At Least 9 People At Trump Campaign Rally in Minnesota Tested Positive for COVID-19, Health Officials Say This Trump Mass Infection Event was held on 9/18/20.
McConnell avoids visiting White House over its handling of coronavirus - POLITICO Since Mitch views the WH safety protocols as inadequate, he has not visited the WH since 8/6/20. McConnell says he hasn't been to White House since August due to COVID-19 practices - Axios
2 more White House residence staff tested positive for the coronavirus
Trump says 'no president's ever pushed' the FDA like him, vaccine coming 'very shortly' Donald is proud that he is pressuring the FDA to approve a vaccine. Those efforts cause many to question whether the FDA will be bowing to political pressure when approving one or more vaccines. That is already showing up in the polling as a concern and will likely lead to millions refusing to take it. Poll: Most Americans Worry Political Pressure Will Lead to Premature Approval of a COVID-19 Vaccine; Half Say They Would Not Get a Free Vaccine Approved Before Election Day | KFF This is just another example of Donald's bad leadership.
The 100% pure Trumpster Senator Ron Johnson (R-WIS) is sending the same message. Republican recalcitrance about the virus persists even as GOP faces growing turmoil - The Washington Post Johnson: There is an "unjustifiable hysteria" about the pandemic. “Why do we think we actually can stop the progression of a contagious disease?” So why take precautions like wearing a mask or socially distancing is the signal that Johnson is sending. The question is not whether the virus can now be stopped of course, but whether the number of infections, hospitalizations, and deaths can be slowed, until there is an effective vaccine, by taking a few precautions like wearing a mask in public.
Trump irresponsibly continues downplaying Covid-19 as he tweets he will leave the hospital
Chris Wallace blasts Trump family, guests for not wearing masks at debate - The Washington Post (Wallace:“The rules from the Cleveland Clinic could not have been more clear. Everyone, everyone in the audience was to wear a mask.”)
All but one of military's Joint Chiefs of Staff quarantine after admiral tests positive
Trump points to slain veterans' families in response to questions about how he caught Covid
Donald also falsely claimed that the Regeneron antibody cocktail was a cure for Covid-19. Trump is promising free antibody treatments for everyone. -POLITICO; Trump’s Regeneron antibody cocktail is not a Covid-19 “cure” - Vox
COVID patient’s heart-lung transplant is world’s first-Vanderbilt University
++++
1. Small Ball:
Small ball is the only game that I am comfortable playing now. My last stock buying spree was in March-April 2020 and many of those acquired positions have now been sold.
All of my $1K par value corporate bonds, treasury bills and CDs are in a runoff mode.
I am playing small ball with a few risky exchange traded bonds with $25 par values. (e.g. see Item # 2.A. below).
A. Eliminated AIV-Sold 11 at $37.72:
Profit Snapshot: +$18.19
I discussed the reasons for eliminating this position in a 9/15/20 comment.
B. Eliminated ING-Sold 89 at $8.38:
Quote: ING Groep N.V. ADR Overview
ING | ING Groep N.V. ADR Analyst Estimates
I mentioned this sell in a 9/20/20 comment, noting that ING had suspended its dividend payments and I consequently sold into a price rally.
Profit Snapshot: $5.61 (9/15/20 Sell Only)
This was an escape where I used a rally to exit the position at whatever net profit was available.
At the request of regulators, ING and other European financial institutions suspended their common share dividend payments. ING bank suspends dividend payments due to coronavirus outbreak The dividend was the main reason why I owned the stock. Dividend policy & payments | ING Until there is a resumption, I will not buy any shares. I currently have no position.
Most of my ING trades have been in its hybrids. ING Hybrids I do not own any now. Most have been called by the issuer.
Last Earnings Report (Q/E 6/30/20): ING posts 2Q2020 net result of €299 million | ING
C. Started JPM as a Placeholder-Bought 1 at $99.88; 1 at $98.69; 1 at $97.87; 1 at $94:
Quote: JPMorgan Chase & Co. (JPM)
Stock Information as of 10/9/20:
Dividend: Quarterly at $.90 per share ($3.6 annually), last raised from $.8 effective for the 2019 third quarter.
Dividend History | JPMorgan Chase & Co.
Dividend History:
Average cost per share = $97.61
Yield at AC = 3.69%
Last Ex Dividend: 10/5/20 (owned as of)
5 Year Financials: (page 40 Annual Report)
5 Year Chart:
Last Earnings Report (Q/E 6/30/20): 2Q20.PDF
JPM will be reporting third quarter results next Tuesday. Results for the second quarter were knocked down substantially by credit losses and a huge reserve build.
Other Recent News: CFTC Orders JPMorgan to Pay Record $920 Million for Spoofing and Manipulation | CFTC
BofA names the defensive stocks to consider to ride out fall volatility
Broker Reports (available to Schwab customers):
Morningstar (9/16/20): 3 stars with a $111 FV
Argus (7/14/20): Buy
S & P (7/14/20): 4 stars with a 12 month PT of $115
Credit Suisse (9/16/20): Outperform with at a $122 PT
D. Restarted K- Bought 1 at $64.52; 1 at $63.9; 1 at $63; 1 at $62.32; 1 at $61.34; 1 at $61.9: :
Quote: Kellogg Co. (K)
Stock Information as of 10/9/20:
Kellogg Co. Analyst Estimates | MarketWatch
Investor Relations - Kellogg Company
Kellogg Company | Our Brand Portfolio
MORNINGSTAR FARMS® GARDEN VEGGIE BURGERS-Kellogg's long standing entry into veggie burgers and chicken products. Chik'n | MorningStar Farms; Burgers | MorningStar Farms; What We Do | MorningStar Farms (plant based products since 1974)
Last Sell Discussions: Item # 1.B. Sold 30 K at $66.3 (3/21/20 Post); Item # 2. Pared Kellogg- Sold 10 at $69.3 (1/8/2020 Post); Item # 2.C. Sold 10 K at $66.3 (12/28/19 Post); Item # 3.B. Sold 10 K at $63.95 (8/10/2019 Post)
Last Buy Discussion: Item # 1 Bought 50 Kellogg at $55.44 and 10 at $54.68-Used Commission Free Trades (7/20/19 Post) I realized a $525.98 gain from these shares.
Dividend: Quarterly at $.57 per share ($2.28 annually)
Last raised from $.56 to $.57 effective for the 2019 third quarter
Last Ex Dividend: 8/31/20
Average Cost Per share: $62.81
Dividend Yield at AC = 3.63%
5 Year Financials:
5 Year Chart:
Last Earnings Report (Q/E 6/27/20): SEC Filed Press Release
The year ago quarter include the Keebler cookies and other products that were sold in July 2019. Press Release
"On July 28, 2019, we completed the sale of selected cookies, fruit and fruit-flavored snacks, pie crusts, and ice cream cones businesses to Ferrero International S.A. (“Ferrero”) for $1.3 billion in cash, on a cash-free, debt-free basis and subject to a working capital adjustment mechanism. The operating results for these businesses were included in our North America and Latin America reporting segments prior to the sale." 10-Q for the Q/E 6/27/20 at page 29
Last Bond Offering (5/2020): $500M 2.1% SU Maturing 2030-Prospectus
On 10/7/20, Goldman Sachs reduced its PT to $68 from $73 and maintained its neutral rating.
Broker Reports (available to Schwab Customers):
Morningstar (7/30/20): 4 stars with a $82 FV
Argus (8/11/20): Buy, raised PT to $77 from $76, noting adjusted E.P.S. beat the consensus estimate by $.30.
S & P 8/10/20): 3 stars with a 12 month PT of $73.
Credit Suisse (7/30/20): Outperform with a $77 PT
Schwab has recently move the location of brokerage reports. They can now be found by clicking the "Reports" tab.
E. Restarted SO as a Placeholder-Bought 1 at $52.7:
Quote: Southern Co.
"Southern Company is a holding company that owns all of the common stock of three traditional electric operating companies (Alabama Power, Georgia Power, and Mississippi Power), as well as Southern Power and Southern Company Gas, and owns other direct and indirect subsidiaries. The primary businesses of the Southern Company system are electricity sales by the traditional electric operating companies and Southern Power and the distribution of natural gas by Southern Company Gas."
Closing Price 10/9: SO $58.74 +$0.03 +0.05%
SO Analyst Estimates | MarketWatch
Southern Company - Information for Investors
I have primarily invested in Southern's senior unsecured bonds. The remaining ones matured earlier this year. The yields are so low now that I will not even consider the possibility of buying one.
Dividend: Quarterly at $.64 per share ($2.56 annually), last raised from $.62 effective for the 2020 first quarter payment.
Yield at $52.7: 4.86%
Last Ex Dividend: 8/14/20
Last Earnings Report (Q/E 6/30/20): SEC Filed News Release
10-Q for the Q/E 6/30/20
Last Round-Trips:
 |
| 2010 SO 101+ Shares +$48.61 |
 |
| 2015 SO 50 Shares +$108.05 (dividend harvest) |
Item # 6 Sold 101 SO at 33.93 (4/16/10 Post)-Item # 2 Bought 100 SU at $33.27 (12/23/2009 Post)
F. Added to NTB-Bought 2 at $23.15; 1 at $22.3; 1 at $21.9; 1 at $21.6:
Quote: Bank of Butterfield Ltd.
Closing Price 10/9: NTB $25.15 -$0.38 -1.49%
Investment Category: Regional Bank Basket Strategy
Last Discussed: Item # 1.F. (9/12/2020 Post) I have nothing to add to that post.
Old Average Cost Per Share: $25.97
New Average Cost Per Share: $25.24 (31 shares)
Dividend: Quarterly at $.44 per share ($1.76 annually)
Yield at AC = 6.81%
G. Restarted EXC-Bought 2 at $35.72; 1 at $35; 1 at $34.35:
Quote: Exelon Corp
"Exelon Corporation (Nasdaq: EXC) is a Fortune 100 energy company with the largest number of electricity and natural gas customers in the U.S. Exelon does business in 48 states, the District of Columbia and Canada and had 2019 revenue of $34 billion. Exelon serves approximately 10 million customers in Delaware, the District of Columbia, Illinois, Maryland, New Jersey and Pennsylvania through its Atlantic City Electric, BGE, ComEd, Delmarva Power, PECO and Pepco subsidiaries. Exelon is one of the largest competitive U.S. power generators, with more than 31,000 megawatts of nuclear, gas, wind, solar and hydroelectric generating capacity comprising one of the nation’s cleanest and lowest-cost power generation fleets. The company’s Constellation business unit provides energy products and services to approximately 2 million residential, public sector and business customers, including three fourths of the Fortune 100."
Abbreviations used in the preceding quote:
ComEd: Commonwealth Edison
Pepco: Potomac Electric Power
BGE: Baltimore Gas & Electric
Stock Information as of 10/9/20:
EXC Analyst Estimates | MarketWatch
Investor Relations | Exelon Corporation
Dividend: Quarterly at $.3825 ($1.53 annually); last raised from $.3625 effective for the 2020 first quarter.
Dividends | Exelon Corporation
Average Cost Per Share: $35.195
Yield at AC = 4.347%
Last Ex Dividend: 8/13/20
5 Year Chart:
Last Earnings Report (Q/E 6/30/2020): SEC Filed Press Release
SEC Filed Earnings Call Slides
Prior Trades:
 |
| 2011 EXC 139+ Shares +$142.67 |
 |
| 2016 100 + Shares +$163.43 |
 |
| 2016 EXC 107+ shares Net of $64.76 |
Item # 2. Sold 100 EXC at $44.67 (7/27/11 Post)
Item # 3 Sold Remaining Shares of EXC at $44.44 (9/22/11 Post)
On 10/5/20, Morgan Stanley adjusted its PT to $60 from $58 and maintained its overweight rating.
Bonds: I have been more active in trading EXC senior unsecured debt and the senior unsecured and first mortgage bonds of EXC's wholly owned subsidiaries.
I currently own the following:
2 Baltimore Gas & Electric 2.8% SU Bonds Maturing on 8/15/22: Bond Detail; Item # 1.C. (3/28/17 Post)
2 Commonwealth Edison 3.15% First Mortgage Bonds Maturing on 11/23/2024; Bond Detail; Item # 1.D. (3/28/17 Post))
4 Exelon 2.45% SU Bonds Maturing on 4/15/21; Bonds Detail; Item # 2.A. (4/3/19 Post); Item # 4.C (5/23/20 Post)
Broker Reports (available to Schwab customers)
Morningstar (9/1/20): 3 stars with a FV of $41
Argus (9/11/20): Buy with a $42 PT
S & P (8/13/20): 3 stars with a $41 PT
Credit Suisse (8/27/20): Outperform with at $44 PT
H. Started EXC (Schwab Taxable)-Bought 3 at an AC of $35.11:
See Item # 1.G. above
I. Started AEP-Bought 1 at $79.58:
Quote: American Electric Power Co.
"American Electric Power, based in Columbus, Ohio, is focused on building a smarter energy infrastructure and delivering new technologies and custom energy solutions to our customers. AEP’s approximately 17,400 employees operate and maintain the nation’s largest electricity transmission system and more than 221,000 miles of distribution lines to efficiently deliver safe, reliable power to nearly 5.5 million regulated customers in 11 states. AEP also is one of the nation’s largest electricity producers with approximately 30,000 megawatts of diverse generating capacity, including more than 5,200 megawatts of renewable energy. AEP’s family of companies includes utilities AEP Ohio, AEP Texas, Appalachian Power (in Virginia and West Virginia), AEP Appalachian Power (in Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana, east Texas and the Texas Panhandle). AEP also owns AEP Energy, AEP Energy Partners, AEP OnSite Partners, and AEP Renewables, which provide innovative competitive energy solutions nationwide."
Closing Price 10/9: AEP $89.82 +$0.44 +0.49%
My most important position will be in AEP's senior unsecured debt.
I currently own 10 AEP 2.95% SU bonds maturing on 12/15/22. Item #5.A. (4/18/20 Post); FINRA Page Those 10 bonds were bought at a total cost of 96.828. The trade was on 3/19/20, with a YTM at that time of 4.191%, meaningfully higher than the current stock dividend yield:
 |
| Third Party Price as of 10/10/20 |
I sold 2 of the 12 that were owned in May 2020. Item # 2.B. (6/20/20 Post)(profit snapshot +$104.29)
Dividend: Quarterly at $.70 ($2.8 annually)
Stock & Dividends | AEP Investors
Last raised from $.67 per share effective for the 2019 4th quarter payment.
Last Ex Dividend: 8/7/20
Yield at $79.58: 3.52%
I do not find that yield appealing for this company.
AEP Analyst Estimates | MarketWatch
5 Year Financial Data:
Last Earnings Report (6/30/20):
Purchase Restriction: Each subsequent purchase must be at the lowest price in the chain. I am not enamored with the current dividend yield, even after taking into consideration that interest rates will remain low for an extended period. There is no GAAP earnings growth as shown in the 5 year financial history. Each dividend raise consequently increases the payout ratio.
J. Restarted USB as a Placeholder-Bought 1 at $37.87; 1 at $35.9; 1 at $35.4; 1 at $34.8:
Quote: U.S. Bancorp (USB)
Closing Price 10/9: USB $39.17 -$0.33 -0.84%
"U.S. Bancorp, with more than 70,000 employees and $547 billion in assets as of June 30, 2020, is the parent company of U.S. Bank National Association, the fifth-largest commercial bank in the United States."
Investment Category: Regional Bank Basket Strategy
USB Analyst Estimates | MarketWatch
Investor Relations U.S. Bancorp
Dividend: Quarterly at $.42 per share ($1.68 annually); last raised from $.37 effective for the 2019 third quarter payment.
Dividend and stock split information | U.S. Bancorp
Average Cost Per Share: $35.99
Yield at AC = 4.7%
Last Ex Dividend: 9/29/20
5 Year Financials:
5 Year Chart:
Last Earnings Report (Q/E 6/30/20): SEC Filed Press Release; 10-Q for the Q/E 6/30/20 The third quarter report is expected for next Wednesday.
 |
| 10-Q Page 1 |
NPA Ratio: .38%
Due to the pandemic and recession, the "Company’s provision for credit losses for the second quarter of 2020 was $1,737 million, which was $744 million higher than the prior quarter and $1,372 million higher than the second quarter of 2019. The Company’s provision for the second quarter of 2020 reflects a $1,300 million increase in the allowance for credit losses to recognize the expected losses from these deteriorating economic conditions. . . . The allowance for credit losses was $7,890 million at June 30, 2020, compared with $6,590 million at March 31, 2020, and $4,466 million at June 30, 2019. The increase year-over-year was due to the impact of the change in accounting principle on January 1, 2020, which added $1.5 billion to the allowance for credit losses and the reserve build related to the potential economic impact of COVID-19."
SEC Filed 2nd Quarter Earnings Conference Call Presentation
Only Prior Trade: +$189.34
Broker Reports (available to Schwab customers):
Morningstar (9/16/20): 4 stars with a FV of $45
Argus (7/15/20): Buy with at $42 PT
S & P (7/16/20): 4 stars with a $42 PT
Credit Suisse (9/16/20): Underperform with at $41 PT.
Purchase Restriction: Each subsequent purchase must reduce my average cost per share. I am not reinvesting the dividend.
K. Added HBNC Fidelity Account-Bought 5 at $10.3; 2 at $9.9; 3 at $9.57:
Quote: Horizon Bancorp Inc. (HBNC)
Closing Price 10/9: HBNC $11.67 +$0.07 +0.56%
SEC Filed Investor Presentation July 2020
Investment Category: Regional Bank Basket Strategy
Last Substantive Discussion: Item # 1.D. (9/12/20 Post) I have nothing to add to that post.
New Average Cost Per Share: $10.78
Yield at AC = 4.45%
Last Sell: Item # 2 Sold 60 HBNC at $24.96 (4/30/12 Post)(profit snapshot $428.68)
L. Added to IGR-Bought 2 at $6.08; 5 at $5.82:
Quote: CBRE Clarion Global Real Estate Income Fund Overview
Closing Price 10/9: IGR $6.24 -$0.04 -0.64%
Closing net asset value per share: $7.44
Closing Market Price: $5.91
Average Cost Per Share This Account: $6.21 ( 313+ shares)
Dividend Yield at AC: 9.66%
M. Added to TRMK-Bought 1 at $20.75:
Quote: Trustmark Corp.
Closing Price 10/9: TRMK $23.06 -0.29 -1.24%
TRMK Analyst Estimates | MarketWatch
Investment Category: Regional Bank Basket Strategy
Last Discussed: Item # 1.C. Restarted TRMK-Bought 5 at $22.3 (9/5/20 Post)
New Average Cost Per Share: $22.03 (6 shares)
Yield at AC = 4.18%
TRMK Realized Gains to Date: $762.35
2. Exchange Traded Bonds:
A. Started AJXA-Bought 5 at $23.08:
Quote Great Ajax Corp. 7.25% Convertible Senior Notes Overview
Issuer: Great Ajax Corp. (AJX) I would classify this company as an externally managed mortgage REIT.
AJX SEC Filed Earnings Report for the Q/E 6/30/20
AJX 2019 SEC Filed Annual Report (risk factor summary starts at page 13 and ends at page 41)
AJX reminds me too much of RAIT Financial which went bankrupt in August 2019. Maybe that is unfair, but that is what went through my mind when I reviewed the last filed earnings press release.
I dabbled some in RAIT exchange traded senior unsecured notes and managed to exit my remaining positions profitably early in 2017. Item # 1.C. Sold 100 RFT at $24.75 (3/1/2017 Post)(profit snapshot = $87.04); Item # 1.E. Eliminated RFTA-Sold 100 at $25.1 (1/27/17 Post)(profit snapshot = $26.52). I do not know what happened to those notes in bankruptcy.
Investment Category: Exchange Traded Baby Bonds
Security Prospectus
Par Value: $25
Coupon: 7.25% paid in quarterly installments
Current Yield at $23.08 = 7.85%
Trades Flat
Last Ex Interest Date: 9/30/20 (day after purchase)
Initial Conversion Price: $15.21 (of no value given the current common stock price-busted)
Maturity Date: 4/30/24
Optional Redemption Prior to Maturity: Not likely based on the condition precedent set out in the prospectus:
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.
"Donald may want to hold out for the U.S. paying $10K to everyone who votes for him- paid in unmarked $100 bills immediately on proof of the proper vote and confirmed by his armed poll watchers. "
ReplyDelete:-)
It appears the market really is comfortable with the stimulus coming after the Jan installment of Congress.
"The number of holiday shoppers at stores to drop 25%, says ShopperTrak"
I bet there's a splurge of online shopping for people to make themselves feel better. The cap is the recession's effect on people's finances.
I was surprised that Rod Rosenstein turned out to be a-moral. I thought he was "only" easily pressured and weak.
I learned too, more about Pence than I wanted to know. The mute button came in handy, especially to his syrup. No wonder the fly landed there.
"Donald and his cult members are untethered from what has made America Great."
That would be a great book title. And book topic.
"but the remote was hiding, having fallen in between cushions on my sofa. "
I hear cats are good remote finders... Where ever it falls, they sit on it. So they are excellent remote hiders too.
Took a long time to finish my taxes. Curiously, I discovered that somehow with max .1% interest, my ameritrade account gaining $22 in interest, and I'd missed that page. A quick calculation and I don't see how. But nevertheless, it required redoing all the worksheets and entries. Only to discover my tax was the same with and without it.
Kellogg? I wouldn't have thought of it... but a good solid old company with a real div, reinventing itself, has appeal.
ReplyDeleteInteresting buys.
I haven't learned yet how Trump presented today - high energy or death's door. The video snips I've seen indicate someone who's feeling well.
Physically well. Mentally same as always.
I'd vote for a potted plant. Or a person who smokes a pot plant that's not potted. And feel safer by huge amounts.
Land: Kellogg has gradually reduced its revenues derived from cereal as a percentage of total revenues.
DeleteFor the Q/E 6/27/20, cereal accounted for 41.67% of total sales:
Page 26:
https://www.sec.gov/ix?doc=/Archives/edgar/data/55067/000162828020011358/k-20200627.htm
The sell of its Keebler cookie and other non-cereal products did cause a blip in the downtrend.
I find the Morningstar brand the most interesting. That division has been making plant based "burgers" and "chicken" for decades before Beyond Meat (BYND) and others entered the market. The market cap of BYND is currently at $12.17B vs. Kellogg at $22.58B.
Kellogg has benefited from the pandemic. I doubt that major investors believe that the last quarter was a new normal growth story, but more of a one off due to more people eating at home.
I will eat some Kellogg products for breakfast, including cereal, pop tarts and Eggo waffles.
https://www.poptarts.com/en_US/home.html
https://www.leggomyeggo.com/en_US/products/waffles.html
I will sometimes munch on the Cheez-It snack but not Pringles. I have not tried the RXBAR protein bars.
The noodle products are primarily or entirely (memory fog here) sold in emerging markets where noodles are viewed as a breakfast alternative.
I have not tried the Kashi products:
https://www.kelloggs.com/en_US/brands/kashi-consumer-brand.html
see also:
https://www.investopedia.com/articles/company-insights/081716/top-8-companies-owned-kelloggs-k.asp
Dillard's Capital Trust I 7.5% (DDT)
ReplyDelete$24.90 +$1.80 +7.79%
https://www.marketwatch.com/investing/stock/ddt
The next quarterly ex interest date is on 10/15.
DDT is a junior exchange traded bond with a $25 par value. This issuer is Dillards (DDS), a department store chain.
This issuer's stock popped today on news that Ted Weschler has acquired a 5.89% stake:
https://www.sec.gov/Archives/edgar/data/28917/000091957420006291/d8629158_13-g.htm
Dillard's Inc.
$53.45 11.37 27.02%
https://www.marketwatch.com/investing/stock/dds
While Weschler is one of Berkshire stock investors, this take appears to be a personal one.
https://www.cnbc.com/2020/10/12/dillards-jumps-15percent-after-one-of-buffetts-investing-lieutenants-discloses-personal-stake.html
I own small DDT position in several of my accounts, viewing it as high risk.
The last buy discussion can be found here:
Item # 3.B. Added 1 DDT at $14.17; 1 at $17.5; 1 at $16; 1 at $15.28:
https://tennesseeindependent.blogspot.com/2020/05/axpra-brg-cfg-ddt-duk-fsk-igr-irt-jri.html
The largest position, a 20 share lot, is in another taxable account. The average cost per share in that account is $16.72.
I may sell my highest cost lot on a pop over $25.
My first position in DDT was acquired in March 2009 at $5.82. This one will crash and burn from time to time.
Item # 4.
https://tennesseeindependent.blogspot.com/2009/03/fed-buying-up-to-300-billion-in.html
Of course, I'm looking after the big pop. At this price, I'm not going in.
DeleteAt the lower price it was a risk potential reward for possible pop. But 1.3% div & -4 earnings, it's got risk.
I looked yesterday, but now today, it's down 12.7%. Profit taking, or "thank goodness I can get out" selling.
You're talking the bonds though.
Question is whether to put it on my watch or buy placeholder list.
DeleteConsidering I'm better off with indices and only select issues, this seems like a pass for me. Unless I'm missing some strong factor.
Land: If you are referring to DDS, the common stock, I have zero interest in buying a department store stock. I own the junior exchange traded bond DDT. I did not pare the position today even though the price went over $25. My problem is that I do not need more cash earning .01% but then I don't want to ride DDT down either.
DeleteA "placeholder" for me is simply a tickler that I may want to include a stock in a "wave small ball buying program" when the market tanks.
Currently, everything is small ball.
Lottery tickets are a version of small ball that caps the maximum dollar exposure at $1,000. DBX and KC are LTs.
I may be playing small ball with a stock like Kellogg but the position could accelerate to 100 shares at the right price, meaning somewhere around $55.
A placeholder will stop at 1 to 5 shares.
For the most part, this is all about risk control when the dominant objectives are (1) preservation of capital and (2) income generation.
For JPM, I need a little more than a placeholder (when considering my portfolio and objective to still increase principle.) But for others that are reminders for when they go down, and are more risky, one or merely onto a watch list, is enough.
DeleteLottery tickets are fun to look up. If one strikes my fancy (and a few of these are interesting), they'll be a buy.
Grocery stores seem like they can be good buys if you spot one with good upside potential for specific reasons, and good divs in this low interest environment. However overall, they seem to trend into and out of favor. Kind of like owning clothing trends.
Exelon Corp. (EXC)
ReplyDelete$40.17 +$0.20 +0.49%
Last Updated: Oct 13, 2020 at 9:40 a.m. EDT
https://www.marketwatch.com/investing/stock/exc
The high for today was at $40.97, hit one minute after the open. The stock has been drifting down since then.
I discussed buying EXC in this post. Those purchases were made last month.
I wrote the section dealing with this company before Corvex Management recommended the stock at a conference a few days ago.
Corvex believes that value will be unlocked by separating EXC into two companies.
Bloomberg reported earlier today that the Board is looking into that option:
https://www.thestreet.com/investing/exelon-mulls-separating-non-utility-assets
https://www.reuters.com/article/us-exelon-corvex/corvexs-meister-says-exelon-stock-can-rise-calls-it-a-defensive-play-idUSKBN26T3LT
Looking into the option is not the same as doing it. EXC may become more appealing to utility investors by splitting off its nuclear plants into a separate company.
I would attribute the small decline today to the Lilly and JNJ Covid trials being place on holds amid safety concerns. Those pauses brought back the "we are not out of the woods yet" back into active memory.
ReplyDeleteInterest rates declined meaningfully on a percentage basis and that put the bank rally into reverse. The ten year treasury decline five basis points in yield (.79% to .74%)
I thought the JPM earnings report was good under the circumstances. Investors initially reacted positively but ultimately took the stock down possibly on a renewed pandemic fears. JPM closed at $100.78, down $1.66.
Another sector falling more the major indexes was Office REITs, a REIT sector, along with the hotel, senior housing and nursing home REITs, that have been hit the hardest by the pandemic.
The JNJ trial involves a Covid-19 vaccine.
The LLY trial involves an antibody LY-CoV555
https://www.cnbc.com/2020/10/13/us-pauses-eli-lillys-trial-of-a-coronavirus-antibody-treatment-over-safety-concerns.html
https://www.cnbc.com/2020/10/13/jnjs-coronavirus-vaccine-trial-paused-after-adverse-event-reported-36-hours-ago.html
The positives were mostly in the stay-at-home trade stocks. The stay-at-home trade includes packaged food companies like Kellogg and General Mills:
Kellogg Co.
$66.82 +$0.51 +0.77%
https://www.marketwatch.com/investing/stock/k
General Mills Inc.
$62.72 +$0.37 +0.59%
https://www.marketwatch.com/investing/stock/gis
The main beneficiaries have been several companies whose stocks are included in the First Trust Dow Jones Internet Index ETF (FDN):
$202.27 +$1.70 +0.85%
https://www.marketwatch.com/investing/fund/fdn
Investors developed second thoughts quickly about IBM's proposed plan to split into 2 companies. I mentioned in comments to my last post that I eliminated my tiny positions in several accounts (4 of them) between $133 and $133.5 since I was not on board with the price pop.
10/8/20 comment
https://tennesseeindependent.blogspot.com/2020/10/ffic-ffnw-fivg-mgv-trst-ucbi.html?showComment=1602173103643#c694299959488318789
International Business Machines Corp.
$125.10 -$2.11 -1.66%
https://www.marketwatch.com/investing/stock/ibm
With the decline in interest rates, making new bond purchases unattractive, I am more willing to nibble in stocks like IBM, where I have an overall negative opinion, as bond substitutes. The limited goal for stocks so designated is to harvest dividends and escape with any profit that may be available.
I am now down 18+ IBM shares in 1 account with an average cost of $121.89. I am not permitted by Left Brain's small ball purchase restriction from buying more in that account unless the purchase reduces my AC.
I'd noticed one trial put on hold last night because one subject was sick. I didn't notice the other.
DeleteThanks for the thoughts on JPM. This is a good spot to buy a placeholder or a few shares. I missed that downturn, so it creates hesitation to buy a lot here. BUT that's how I miss opportunities.
With the div, and PE, and I have lack of banks. Buying this one for long term - 5-10 years or more - is a good idea.
Land: The Lilly drug is similar to the Regeneron antibody cocktail that Donald took. REGN rose today with the LLY trial being placed on hold.
DeleteThe vaccine candidate which is probably closest to announcing phase 3 trial results is the one from Pfizer. I do not view the JNJ vaccine as that important in the scheme of things.
JPM did recently go ex dividend (10/5).
There are two fundamental headwinds for banks: (1) the net interest margin is likely to remain under pressure and (2) credit losses related to the pandemic and recession.
The decline today in bank stocks was IMO related to a resurgent concern about the pandemic's duration and a possible acceleration of credit losses resulting therefrom. The last quarter was much better than expected from JPM on its loan loss reserve build. Trading profits were good.
I hope the Stock Jocks are not moving bank stocks up and down based on the ten year treasury going from .65% to .78% and then down a bit today. Those moves will have no meaningful impact on NIM.
Another issue for the big banks is that they employees have a tendency to commit crimes in pursuit of their bonuses/compensation.
While big banks have a lot more sources for generating profits than the small regional banks that I normally buy, those sources also tend to lead to huge fines for law violations and sometimes lead to large losses as well.
I'm going to buy back more into PFE. I'd sold out all and bought back 10 out of 85. Decided to wait, see if there's another jolt down at all. Has a nice div. The plus is the vaccine. The minus is a DNC win will be hard on drug companies.
DeleteGILD is down to a good buy in price, low 60s. But that stock doesn't seem to ever get permanently ahead. Apparently, they don't take the right risks to grow their pipeline.
I haven't bought JPM yet either. Unless it pops & I miss the moment, it's in a trading range, near top of it, & I can wait a little.
There is that problem that a big banks and money sources tend to corrupt. Then a Too Big to Fail becomes a "bad scene." JPM seems to not have had that problem significantly. Also Jamie Dimon is revered, so if he left, it'd cause a big price dent. I happened to be out of Pimco when Bill Gross left. Pure luck.
LAND: I do not view a successful vaccine for Pfizer as make or break for the company.
DeleteHowever, if Pfizer reports later this month that the Phase 3 trial failed on either safety or efficacy (or worse both), that could break the market, at least temporarily.
I view PFE as a bond substitute. Another one of those is AT & T which is hated as much as, maybe more than IBM at the moment.
I just started another one, Dow, as a placeholder and probably will not discuss the purchase in the blog.
Dow Inc.
$48.83 +$0.95 +1.98%
52 WEEK RANGE $21.95 - $56.25
YIELD 5.73%
EX-DIVIDEND 8/28/20
https://www.marketwatch.com/investing/stock/dow
I can not generate much interest at the current price, which explains the placeholder status and a 2 share buy.
If I had it as placeholder last March, I would have taken the position up to 100 shares in March, but I did not know it had fallen so much, focusing more on buying more shares in virtually everything that was already owned in my accounts. I was hitting a 100 or more fills a day several times during that month.
DOW was not on a monitor list either.
I am less likely to pick up a large price drop when the stock is on a monitor list consisting of well over 400 stocks than when it is already in one or more accounts; and I see the price scrolling down through the positions.
My ballot is in. I messed up signing my name (I know, how?) but the election direction said it doesn't matter. So in the box it went!
ReplyDeleteI finally got a chance to do a quick look at FG's weekend blog. It's what I suspected. He's still bullish long term, but short term he puts it as "more cloudy."
I haven't had any desire to buy IBM. I had piles of it for years. I got out, I'll stay there. I haven't seen a shift in their management's skill. The employees are still skilled from what I talk to.
Land: I will be voting today in a totally futile gesture. Tennessee makes it far too difficult to secure a mail-in ballot, so I will be voting in person.
DeleteBiden will do better than Hillary in TN. Voting by blacks in Nashville and Memphis was lower than normal in 2016. TN has 95 counties and Hillary carried 3 including Davidson (Nashville), Shelby (Memphis) and one sparsely populated county that is predominantly black.
https://www.politico.com/2016-election/results/map/president/tennessee/
The latest poll has Trump up about 10 points in Tennessee.
++
I have no rational hope that IBM will be a worthwhile capital appreciation investment over, at a minimum, the next year or so.
The reason for owning it now is to generate income and hopefully avoid losing money on the shares which I have been successful at so far.
I'm starting to be bothered by how our votes are collected together and morphed into other votes if our neighbors think differently.
DeleteI don't know what the "best" solution is. Just that a handful of counties in Florida shouldn't be deciding our president every election.
Mail-in was made easy where I am, and the drop box is about 2 miles from my house. Early voting is a great option. I did that in 2016. There was still a line.
Both of those avoid something (yet another something) that's worrying me.
https://www.miamiherald.com/news/politics-government/article245597985.html
It's from Woodward's book supposedly, (which I haven't read.)
I was sure when Trump started beating up on mail-in voting and the post office, his strategy to win involved changing votes or suppression on election day. With the shift to mailin his plan wouldn't be work.
He can't trigger it for early voting because it'd risk being discovered too soon to change the election.
Maybe it's paranoia, but this made more sense to me than merely that he's been trying to create confusion to suppress the vote.
+++
IBM is a good bond substitute. It's tempting. But for a while it was nearly 40% of my entire finances. (From buying on the stock plan, then it kept growing, which isn't a bad thing.)
Land: In 2016, it took me about 15 minutes to vote in person early.
DeleteToday, it took 1 1/2 hours.
I blame Donald for the well above normal turnout that is creating significantly longer wait in line periods.
Tennessee makes it far too difficult to vote by mail. Since mail-in ballots will not be a factor, Tennessee should be called early on 11/3 for Trump. If it is too close to call that day, then Donald is going to lose in a landslide nationally.
I came across Enterprise Bank Corp. EBTC.
ReplyDeleteUgly chart in a downtrend, but with room to fall.
But 3.16% div, no debt, 9.06PE, 27% payout ratio.
https://finviz.com/quote.ashx?t=EBTC&ty=c&ta=0&p=m
I haven't looked at details yet. So I don't know their strengths or weaknesses.
I see you owned them in 2010, but doesn't look like since.
I was looking for Enterprise car rental, lol.
Land: Charts for regional banks stocks are ugly. The only differences are in the decree of ugliness.
DeleteMost regional bank stock prices topped out in 2018 which was the case with EBTC. Since peaking at $41+ in mid-2018, the stock price has almost been halved since then. The dominant trend after the 2018 top has been down, with one notable rally late in 2019 that started at $28 and topped near $34. The last downtrend started in March 2020, with the price at $31. There does appear to be some bottoming action starting in July in the $20-$23 range.
Similar topping action in regional banks started in 2006.
I do not own EBTC now but it does have many of the financial metric characteristics that appeal to me as a contrarian "value" investor.
I would prefer seeing the capital ratios higher. And, the dividend yield is too low even at the shellacked price. I have bought only a few shares in 1 bank that has a lower dividend yield. (Eagle Bancorp of Montana, EBMT, which has done well since my 10 share purchase at $15.9 on 8/6)
I eliminated my EBTC position in 2011, selling my remaining 100 share lot at $15.95, recognizing a profit of $491.11.
Item # 4
https://tennesseeindependent.blogspot.com/2011/04/sold-100-ebtc-at-1595updated-regional.html
Bank stocks may be under pressure today in response to the BAC and WFC earnings reports that highlight the main problems faced by banks now.
https://seekingalpha.com/news/3621995-bofa-sharesminus-2-q3-net-interest-income-slumps
I may buy 5 or 10 EBTC this morning. If I do, I will discuss the purchase in my next post out of time order.
Land: There was a huge bid/ask spread on EBTC earlier this morning when I placed a limit order to buy 5 at $22, which was filled. The spread was close to $1.
DeleteEBTC does have some debt.
Yahoo Finance does show $36.873M in debt.
https://finance.yahoo.com/quote/EBTC/balance-sheet?p=EBTC
YF includes a "lease liability" of $17.829 million, the amount owed for leases over their remaining terms, which accountants view as debt. I would exclude that number from what I view as debt.
As of 6/30/20, EBTC has a subordinated debt total of $14.879M. Borrowings from FHLB fluctuate up and down and stood at $4.165M as of 6/30/20.
See pages 3 and 59:
https://www.sec.gov/Archives/edgar/data/1018399/000101839920000058/ebtc63020-10q.htm
The debt increased in July through the offering of $60M in subordinated bonds:
"On July 7, 2020, the Company completed a private placement with registration rights of $60.0 million in fixed-to-floating rate subordinated notes due July 15, 2030 and redeemable at the Company's option on or after July 15, 2025 (the "Notes"). The Notes bear a fixed rate of 5.25% for the first five years and will reset quarterly thereafter to the then current three-month Secured Overnight Financing Rate, as published by the Federal Reserve Bank of New York, plus 5.175%. The Company is entitled to redeem the Notes, in whole or in part, on any interest payment date on or after July 15, 2025, or at any time, in whole but not in part, upon certain other specified events. The Company intends to use the net proceeds from the offering for general corporate purposes, organic growth and to support Bank regulatory capital ratios. Management anticipates contributing approximately $53.0 million of the net proceeds to the Bank in the third quarter of 2020."
Page 11
https://www.sec.gov/Archives/edgar/data/1018399/000101839920000058/ebtc63020-10q.htm
EBTC did not cut its dividend during or after the Near Depression period.
I would characterize the unrealized gain on its investment portfolio as good: Page 14, $31.324M as of 6/30/20.
The lease liability "debt" is summarized at pages 27-28 of the last 10-Q linked above.
I calculated tangible book value per share at $26.10 as of 6/30/20. The $22 price is at .84 to that number. A high was hit in June 2018 at 2.1.
https://www.koyfin.com/company/EBTC/price_tangible_book
I didn't buy it yet. FNLC First Bancorp has a similar profile but higher div. Maybe I should create my own basket, or just get into KRE.
DeleteI need to read this a few times to understand it all.
Are there any particularly good sources at describing how to assess a stock's fundamentals? I've come across so many timing books, but very little on how to read a sec report, or use the ratios posted, and what I've seen was poorly written. I google on investopedia. But that's not always the best way to grasp a total topic.
I've asked this on various sites and places and not gotten suggestions, so I think there isn't much out there.
Well, first I need to read the tangible book link, since i have no idea how that's calculated.
The debt ratio on finviz was small enough, I figured it was not a problem. But also needed to investigate.
I'd noticed they hasn't buckled or cut div during 2008. Makes for good management and culture. Management changes, but usually culture remains.
Thinly traded is important info. Can make it hard to get out if it's more than a tiny holding...
Land: Many banks will provide book value and tangible book value per share information in their earnings releases. Some provide only book value per share or no calculation for either which is the case for Enterprise Bancorp.
DeleteTangible book value per share excludes goodwill and other intangibles and those numbers can be found on the balance sheet.
The book value per common share is the shareholder equity minus preferred stock number divided by the outstanding shares.
For tangible book value per common share, the calculation would subtract goodwill and other intangibles.
I discussed PFBI in my 10/3 post. The company calculated its tangible book value per share at $13.73:
https://www.sec.gov/Archives/edgar/data/887919/000088791920000016/pressreleasetext07302020.htm
Shareholder equity $253.995M
Goodwill and other intangibles = $52.533M
No preferred stock
Tangible Equity: $201.462M
The company divided that number by the shares outstanding as of 6/30/20 or 14.673257M = $13.729876 per share.
When I have to make my own calculation, I may be off a cent or two compared to someone else because I used a different share count number, taking the average shares outstanding during the quarter rather than the shares outstanding at quarter's end. I am not sure what is the correct approach and do not care either when the results are close. Technically, I suspect that the tangible book value as of 6/30/20 would use the shares outstanding at quarter's end, but I prefer the average weighted number when that is provided.
FFNW, which is discussed in that 10/3 post, provides its tangible book value per share at $15.14 as of 6/30/20
Page 13
https://www.sec.gov/Archives/edgar/data/1401564/000093905720000298/ffnw8k72820exh991.htm
I would rely on the number provided by the company.
If I had to calculate it, I would take the $153.976M and subtract $1.785M in goodwill and other intangibles which equals $152.191. There is no preferred stock. Shares outstanding as of 6/30 is shown at 10.048961. Using that full number I come up with $15.144949 per share in tangible book value. I would attribute the slight difference to rounding the number down to $15.14.
The tangible book value per share would be higher using the average diluted weighted shares. The number would move up to $15.39.
I recalculated the EBTC number using the shares outstanding as of 6/30/20 and came up with a $26.12 tangible book value of per share.
https://www.sec.gov/Archives/edgar/data/1018399/000101839920000054/ex99-63020financialpressre.htm
I am frequently trading mini cap stocks with large bid/ask spreads. I do not use market orders of course. I will set a limit price at what I am willing to pay that day. Today that was $22 for 5 shares. Tomorrow the limit buy price may be $21.5 for another 5 shares depending on whether the pressure is to the downside, either in that stock or in a proxy like KRE.
U.S. Bancorp (USB)
ReplyDelete$39.12 +$0.87 (+2.27%)
As of 10:47AM EDT
https://finance.yahoo.com/quote/USB?p=USB
S&P 500 3,453.70 -34.97 (-1.00%)
I discussed USB in Item # 1.J. above. The position has been classified as a Placeholder.
The Stock Jocks are responding to a better than expected 3rd quarter earnings report released after the close yesterday.
The rally today suggests that it is okay that E.P.S. declined some Y-O-Y provided the build up in loan loss reserves was much lower than expected and a few other financial metrics are viewed as favorable under the circumstances.
SEC Filed Press Release:
https://www.sec.gov/Archives/edgar/data/36104/000119312520268950/d36659dex991.htm
Revenues increased slightly Y-O-Y.
E.P.S. was reported at $.99 vs. consensus at $.91, but from $1.15 in the 2019 third quarter.
Average total deposits grew 15.9% and average total loans grew 6.4%, both Y-O-Y numbers.
Net interest income declined only slightly Y-O-Y to $3.23B from $3.28B.
Return on common equity, even with the earnings slide, was good at 12.8%.
The reserve build slid to $635M from $1.7B in the first quarter.
I bought 10 shares PFE at 36.50 on an order. So $365. It's not going to be it's best price, but I want to start walking back into my PFE position.
ReplyDeleteI think I may be better off with KRE so I don't have to be as skilled at assessing individual small banks. Today isn't the day to buy in my opinion (at the moment). So that will give me time tonight (meeting during the day) to go through the info and assessments and think about it more. I like the profile of the subsector - divs and eventually the economy will recover.
The rest of my ownings don't seem like buys or sells at this point either.
GILDs still sinking. Amgen's down on a failed trial. But I think this might be an opportunity, because other pipelines of theirs did well recently.
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1 1/2 wait is long! Though the places with 10-11 hours is ridiculous. I hope all this means that we get to change govts and get rid of this mess.
People actually believe that Biden has competency problems, because TRUMP spreads that lie.
Land: KRE is still a contrarian play given the headwinds of net interest margin suppression, loan losses and continue loan loss reserve builds.
ReplyDeleteEven with the recent rally, KRE's total return through yesterday YTD was -32.05%.
https://www.morningstar.com/etfs/arcx/kre/performance
The dividend yield has improved due to the price decline and most banks have not yet cut their dividends.
I pick up up more yield with individual stock selection, though I do own individually 6 of the top 10 KRE holdings.
Those top holdings include some large banks.
The ETF First Trust NASDAQ ABA Community Bank Index Fund (QABA) excludes the larger regionals, but that ETF has a higher expense ratio than KRE, has light trading and generally larger bid/ask spreads (currently at 5 cents compared to KRE at 1 cent.
https://www.ftportfolios.com/retail/etf/etfsummary.aspx?Ticker=QABA
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Donald is pushing a new conspiracy theory through twitter. Did you know that Obama and Biden murdered Seal Team 6 to cover up a failed Osama Bin Laden that killed his body double. Osama is still alive, possibly living in Iran protected. Who knew before Donald informed us so.
https://www.forbes.com/sites/jackbrewster/2020/10/14/trump-promotes-baseless-qanon-endorsed-conspiracy-theory-alleging-obama-staged-bin-ladens-killing/#29bba96c5b16
If KRE contrarian if buying to hold for 5 or 10 years? Short term these can definitely sink. But if the economy eventually improves, they should too.
DeleteThough you point out something worrying. If divs haven't been cut, what's the chances, with a vaccine coming eventually, that banks will need to?
The reserves seem to be enough to cover the bankruptcy factor adequately.
I'm having trouble guessing and figuring out what the official guess is about a Biden presidency. It should only be! But he will raise tax on corps from 21 to 27%. However, that money will go to stimulus, individuals, small business. So maybe it's a wash.
But if he's seen as business unfriendly, the market won't like that. And stimulus friendly is a positive.
Then there's what's on Maddow right now. She's posting overwhelming increases in covid cases. I don't know how much here is vs. this station tends to get enthusiastic about this topic as news.
With schools opening and covid-lockdown fatigue, it's a reasonable expectation.
The Texas family that has a small get together that you shared, is still in my head. It's so easy to catch and have a bad experience unexpectedly.
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Well, I don't have much answers on much of anything. So FWIW, I've posted plenty of questions...
Land: The economy requires massive federal government stimulus to meaningfully grow which I would broadly define as 2% or greater real GDP growth. That was the case before the pandemic and will remain so after the pandemic is over.
DeleteThe federal budget deficit was near $1 trillion annually before the pandemic.
If that had been cut in half during 2017, 2018 or 2019, the likelihood of a recession following thereafter would have been high.
For the fiscal year ending 9/30/20, the federal budget deficit was $3.13 trillion:
https://www.cnbc.com/2020/10/16/us-government-budget-ends-fiscal-year-with-a-more-than-3-trillion-deficit.html
Increases in the deficit are being monetized by the Federal Reserve's endless Q/E programs where it creates new money to buy the debt issued by the treasury.
The deficit is improved somewhat by the Fed then turning over the interest payments to the treasury.
This cycle of money creation, debt monetization and ballooning out-of-control deficits will continue after the pandemic. The long term prognosis is grim.
Banks are economically sensitive businesses. With normal federal reserve policies, and an economic recovery, their profits would be increasing with an expansion in net interest margins, more loans, and fewer defaults.
However, the Fed has shown that it will continue extremely abnormal monetary policies even during an economic recovery and inflation running near 2%, which was the case after 2008 and prior to the pandemic.
Continued suppression of interest rates below the inflation rate will continue to be a headwind for businesses whose profits are significantly dependent on interest rate spreads.
The raise in the corporate tax rate will hurt a lot of banks.
I do not view banks as long term holds-never have.
The best time to buy has in the past been during a recession when their stock prices return to levels close to the prior recession.
That was the case for many of them last March, with stock prices at or near levels last seen in 2009.
Holding the stocks past 2016 to 2018, with many starting their topping action in 2016 and 2017, would have been counter productive with most of the appreciation since 2009 lost in the 2018-2020 time frame.
I consequently view the banks as income vehicles that I will trade.
I did hold several that were bought in 2010 for a long time, including WASH and BHB, but I did the right thing by eliminating those positions and then restarting a position this year.
If a vaccine is coming later this year that works, and an economic recovery continues, I do not anticipate widespread dividend cuts, though there will be exceptions like Wells Fargo that recently slashed its payout.
On the other hand, if the pandemic continues well into next year, more cuts can be reasonably expected.
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Tennessee's republican governor was told by the WH Covid task force to implement a statewide mask mandate due to an acceleration of cases.
He ignored it and did not tell the public about it. A freedom of information act request discovered the recommendation. While I voted for the republican governor Haslam twice, his predecessor, I voted for the former democrat Nashville mayor in the governor's race who was soundly defeated by the nitwit who is the current governor.
We can all sleep well tonight knowing that Donald is reading anonymous Qanon posts for his daily intelligence briefings.
ReplyDeleteThe Fox and Friends briefings can be too complex at times for the Extremely Stable Genius so sourcing intelligence from conspiracy websites is less mentally taxing.
The Trumpsters really did not need to be told by Donald that Osama Bin Laden was alive; and that Obama and Biden murdered Seal Team 6 to cover up a botched raid which killed only Osama's body double.
It is obvious in TrumpWorld that those who now claim to be part of that raid are actors.
https://www.cnn.com/2020/10/15/politics/donald-trump-osama-bin-laden-conspiracy-theory-fact-check/index.html
I am still listening to Woodward's book "Rage".
Earlier today, I was not stunned to hear Dan Coats and Jim Mattis call Donald "dangerous" and unfit to be President. Those are obvious observations.
It was already clear that Trump paid no attention to U.S. intelligence briefings and frequently made impulsive and uninformed decisions impacting U.S. national security.
Trump is far more inclined to accept as true something that he heard on Fox and Friends or read on a Qanon website than what he was being told by U.S. intelligence services including the CIA.
Mattis has publicly issued a warning to the American people.
https://www.theatlantic.com/politics/archive/2020/06/james-mattis-denounces-trump-protests-militarization/612640/
https://www.theguardian.com/us-news/2020/oct/15/angela-stanton-king-qanon-conspiracy-theory
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Value outperformed growth today, and small caps outperformed large caps.
The regional bank ETF rose 2.42% compared to a .47% decline in the Vanguard Growth ETF (VUG)
https://www.marketwatch.com/investing/fund/kre
https://www.marketwatch.com/investing/fund/vug
The Russell 2000 ETF IWM finished up 1.03% vs. the S & P 500 down .15%.
https://www.marketwatch.com/investing/fund/iwm
https://www.marketwatch.com/story/the-russell-2000-index-just-did-something-it-has-only-done-six-times-in-the-past-34-years-2020-10-15?mod=mw_latestnews
The possible reasons for the outperformance of KRE and IWM are growing confidence in a U.S. economic recovery and an overcrowded trade in large cap growth stocks. If that is a correct assessment, the Stock Jocks can still turn on a dime, sell the banks, small caps and value stocks and buy the high P/E growth stocks.
Audio recording of Senator Ben Sasse (R-Nebraska) talking about Donald, confirmed as authentic by his office:
ReplyDelete"The way he kisses dictators' butts. I mean, the way he ignores that the Uyghurs are in literal concentration camps in Xinjiang right now. He hasn't lifted a finger on behalf of the Hong Kongers. The United States now regularly sells out our allies under his leadership. The way he treats women and spends like a drunken sailor. The ways I criticized President (Barack) Obama for that kind of spending I've criticized President Trump for as well. He mocks evangelicals behind closed doors. His family has treated the presidency like a business opportunity. He's flirted with White Supremacists"
Audio included in article:
https://www.cnn.com/2020/10/15/politics/ben-sasse-trump-criticism/index.html
Sasse's recording is not surprising info. Too bad he hasn't stood up to Trump while in office. Voting for witnesses etc..
DeleteThe news cycle is overwhelming. While you sorted out Qanon, I was reading tweets about Guliani's grand find. I couldn't stop reading, they were too funny.
A man living in CA, went to his dad's in DE. Dropped a water logged computer at a repair shop, while drunk (cause that's what you do when you're drinking). With sensitive info that would sink him. Waterlogged is hard to get info off of. They didn't write up a ticket, and get his name, and the owner is blind enough to not recognize him but is sure it's him. He forgot about his computer all together. It went to the FBI. But Guliani just happened to be notified and given emails by the owner. Who looked at private info you aren't allowed to steal, through enough emails to spot this. All in sync with Russian disinformation. All because "but her emails" worked 4 years ago, so why not get stuck in a rut.
Even if I have some details wrong, it's the most holey tall tail I've ever heard.
This admin should be fired for incompetence. They can't even put together a scheme better than that.
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Then there were the townhalls. I only watched the Biden. Saw snips of Trump's. That way I could sleep last night.
Yes, apparently Trump is getting his intelligence from Qanon, Alex Jones, Russia, and probably a talking snake.
Biden did well. Many people can quibble on his policies. But that's because he HAS policies.
Biden's ratings beat Trump's. Not by too much. Many people were watching to see a crash and burn effect.
https://www.cnn.com/2020/10/16/media/town-hall-ratings-biden-trump/index.html
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I've offered a new way to help canvassing. They need worker bees to transfer voters' info from one database to another. As calls are completed, they need to pull out voters for a direct-call database etc.. Yay. It means I can contribute while doing something reasonably fun! I can't stand phonebanking. Letter writing is over (unless you want to pay for stamps yourself I think.) Text banking is fine but everyone wants to.
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That was one day of value doing well. Today DOW was up too, so that's usually value leading. Is this showing follow through? The sell off at the end of the week, seems like it's too soon to call.
Land: I view Senator Sasse as a sane republican politician. He did not speak out until after he won the republican primary earlier this year with Donald's endorsement and no meaningful opposition in the general election.
DeleteThe former Senator Bob Corker (R), who I did vote for, did speak out some while he was a senator but ultimately decided that he wanted nothing to do with Trump's party and decided to retire. He was replaced by a 150% Trumpster Marsha Blackburn, an demagogic Know Nothing, who soundly defeated Phil Bredesen, an intelligent and knowledgeable moderate Democrat, and a successful 2 term governor and Nashville's mayor for 8 years. I voted for Bredesen in that election and when he ran for governor.
The GOP is not a conservative party and can not IMO be salvaged as one.
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The alleged Hunter Biden emails were published by the New York Post, a rag owned by Rupert Murdoch, another person who is shameless and who gave us Fox "news". The FBI is investigating the matter as a Russian intelligence operation.
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I am more concerned about the country's future now than at anytime in my life which explains why I started to make campaign contributions in 2018 and have accelerated those this year. It do not support many democrat policies, though my opposition varies depending on the policy, but I strongly oppose Trump's party and its growing authoritarian, demagogic, reactionary and anti-democratic tilt.
I have found that my campaign contributions have resulted in acquiring many new "friends" who constantly barrage me with emails, totalling around 200+ a day, all of which go to my junk email folder. It is interesting that I will receive an email from a new friend shortly after making a donation asking for more money.
I make the contributions through ActBlue:
https://secure.actblue.com/
If you go to that website, there is a ticker reflecting the contributions that is constantly running up at a rapid pace now.
Bank of New York Mellon Corp. (BK)
ReplyDelete$38.25 +$1.02 +2.74%
Last Updated: Oct 16, 2020 at 2:39 p.m. EDT
https://www.marketwatch.com/investing/stock/bk
The Stock Jocks are responding to a better than expected 3rd quarter report.
https://seekingalpha.com/news/3622773-bank-of-new-york-mellon-eps-beats-0_05-beats-on-revenue?mod=mw_quote_news
For the most part, I have limited myself to BK's senior unsecured bonds but those are no longer providing an adequate yield. Many of those bonds are actively traded with narrow bid/ask spreads.
The 2023 BK 2.2% SU maturing on 8/16/23 last traded at 104.97, creating at that price a yield-to-maturity of .32% which is totally out of the question for a buy.
http://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C746348&symbol=BK4392812
I did start the common shares with buys in several accounts and discussed the purchases in one here:
Item # 1.L. Added to BK-Bought 3 at $34.81:
https://tennesseeindependent.blogspot.com/2020/10/ffic-ffnw-fivg-mgv-trst-ucbi.html
I have published a new post:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2020/10/bdge-brkl-csco-dbx-ebtc-evrg-fivg-fncl.html