Economy:
Social Security cost-of-living adjustment will be 1.3% in 2021
EU wins right to place tariffs on $4B U.S. goods in aircraft spat
Singapore releases third quarter 2020 GDP advance estimates (7% GDP Y-O-Y)
+++++
Markets and Market Commentary:
S & P 500 P/E Ratios
GAAP Trailing 12 months: 38.21
Non-GAAP Estimated Forward 13 months: 25.9
Sourced: P/E & Yields
VIX 27.41 +0.44 +1.63%: CBOE Volatility Index
The VIX is in what I define as an Unstable Vix Pattern.
The ten year treasury started this year at a 1.88% yield and closed last Friday at .76%:
Value stocks are poised to crush growth stocks after the presidential election - MarketWatch
Lower loan-loss provisions drive JPMorgan profit- Seeking Alpha (E.P.S. $2.92, beats by $.73; loan loss reserve build at $611M vs. consensus at $2.88B)
++++
Fidelity Website:
Fidelity has improved its website.
On the page listing my holdings, each security will have a "D" when a security is about to go ex dividend. Clicking the name will show me the ex dividend date and amount.
The symbol "E" indicates a forthcoming earnings release date or a recent earnings release.
TFC, which I own, had an "E" symbol. By clicking the name, this box appeared:
The box shows an E.P.S. of $.97 vs. the consensus at $.894.
At the top of the page, I can change the view to show dividend information for the entire portfolio which includes each holdings yield and ex dividend date.
++++
Optional Bond Redemptions:
Interest rates are so low that corporations are opting to redeem bonds early, notwithstanding the penalty imposed by a make whole provision.
The most recent example impacting my bond portfolio is HTA exercising its optional redemption right to redeem its 3.75% SU bond maturing on 4/15/23.
To exercise that right, HTA had to pay me $2,163.09 for two $1K par value bonds which I had purchased below par value. The penalty imposed by the make whole provision was 8.155%.
HTA was willing to pay that penalty for an early redemption since it was able to sell $800M in 2% SU bonds maturing in 2031, almost cutting in half the 3.75% coupon of the 2023 note while extending the maturity.:
Prospectus
While receiving a make whole payment is better than not receiving one, this trend of early redemptions is disrupting my bond ladder strategy.
I am receiving proceeds early that I will no longer reinvest in bonds, CDs and treasuries given the pathetic yields.
++++
Trump:
Senator Ben Sasse (R-Nebraska) unloads on Trump in constituent call, saying 'he mocks evangelicals' and has 'flirted with White supremacists' (audio of Sasse is included)(Sasse: "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" His office confirmed the authenticity of the recording.)
Former White House chief of staff John Kelly tells friends that Trump 'is the most flawed person' he's ever met "The depths of his dishonesty is just astounding to me. The dishonesty, the transactional nature of every relationship, though it's more pathetic than anything else. He is the most flawed person I have ever met in my life."
New research explores authoritarian mind-set of Trump’s core supporters - The Washington Post
Among prominent politicians, Trump is the foremost spreader of fact free conspiracy theories in U.S. history. Another 'massive' Trump conspiracy theory totally fizzles out
The two most recent conspiracy theories promoted by Donald worldwide as the U.S. President are goofier than most.
Donald retweeted a claim that Obama and Biden misled the country about the death of Osama Bin Laden, who was not killed in the raid. Instead, in TrumpWorld, the Seal Team killed a body double.
The second conspiracy claim is that Obama and Biden covered everything up by killing Seal Team 6. Trump Promotes Baseless, QAnon-Endorsed Conspiracy Theory Alleging Obama Staged Bin Laden’s Killing; Trump's conspiracy theories grow more desperate - The Washington Post The Seal Team 6 members who have been previously identified as participating in that mission are crisis actors in TrumpWorld.
If Donald loses his bid for reelection, I am confident that Alex Jones will welcome him as an anchor at InfoWars.
Conspiracy Theory Baselessly Claims Biden Had Navy SEALs Killed - FactCheck.org
Trump was the primary spreader of the Obama birther conspiracy which gained Donald credence and enhanced status among the faithful in 2015-2016.
By spreading a bizarre array of conspiracy theories thereafter, Trump was simply recognizing that republicans respond favorably to candidates who push divisive, fact free conspiracy theories involving democrats, the free press, and what they refer to as the "deep state".
Facts do no matter to Trumpsters, and never will. That is a critical piece of in information for the future.
All reliable information that disproves the conspiracy theory is "Fake News" in Trump's America.
For America's future, the critical piece of information that will be revealed on 11/3/20 is that over 62M voters decided to give a lying, vindictive, petty, mean spirited, ignorant, shameless, narcissistic, authoritarian minded sociopathic demagogue, with all of those traits being obvious, another 4 years as President.
Seven Springs:
Trump got a $21 million tax break for saving the forest outside his N.Y. mansion Seven Springs. Now the deal is under investigation. - The Washington Post The facts revealed in this investigation raise some questions about the appraisal used to justify the $21M charitable deduction for a conservation easement.
Trump classified the Seven Springs property as an investment in 2014 and has deducted the $2.2M in property taxes paid thereafter as a business expense "even as his 2017 tax law allowed individuals to write off only $10,000 in property taxes a year." Trump’s Taxes Show Chronic Losses and Years of Income Tax Avoidance - The New York Times I view the property tax deduction as more problematic than the the charitable deduction.
The Trump organization website states that Seven Springs is used as a retreat for the Trump family.”
Donald's finance disclosures indicate the property has generated somewhere between $5K to $10K since 2015. N.Y.S. A.G. Investigates Whether Trump Organization Improperly Inflated Property Values - The New York Times Based on the information so far disclosed in NYT investigation, I do not see how the $2.2+M in property taxes could be deducted as a business expense.
Receives Over $21M Suddenly From Money Losing Las Vegas Hotel in 2016- Co-owned with Trump Supporter Phil Ruffin:
The transactions described below appear far more problematic for Trump than the Seven Springs related items.
Trump was running out of campaign money and needed a cash infusion according to documents cited in this article: Trump’s Taxes Show He Engineered a Sudden Windfall in 2016 - The New York Times The facts uncovered by the NYT raise issues involving tax fraud and unlawful campaign contributions.
"The Las Vegas hotel had long been a money loser. Between 2010 and 2012, each partner put $23 million into the business Its losses were narrowing, though, and it began 2016 with $6.3 million in cash reserves. That might have been a decent cushion, but it was hardly enough to cover the more than $21 million in payments to Mr. Trump. In fact, the payments drove the hotel to its biggest loss ever."
Shortly after that money losing hotel paid over $21M that ended up in Donald's pocket, the "Trump-Ruffin partnership borrowed $30 million from City National Bank in Los Angeles. Mr. Trump signed the loan documents in New York City, but tax records show that Mr. Ruffin personally guaranteed nearly the entire amount." Ruffin is a multi-billionaire.
The primary issues raised by the facts cited in the NYT article are whether the payments were a legitimate business expense that could be deducted by the company and, related thereto, whether the payments were in reality a campaign contribution made when Donald needed money in 2016?
The article hints at another another issue. Was Donald bribed to support a rail line between Southern California and Los Vegas? ("And after the inauguration, Mr. Ruffin would ask for a favor. Would the president help revive a dormant project of great importance to a lot of powerful people in Las Vegas — a bullet train that would whisk gamblers from Southern California to the Strip in less than 90 minutes? . . .This past March, a panel composed largely of Trump appointees gave the train company permission to sell $1 billion in tax-free bonds to private investors. " )
Sure, there are buffers but who was really calling the shots on the rail line. Buffers- YouTube (short clip from Godfather II)
Trump as Swamp Creature-in-Chief:
The Trumpsters always cheer when Donald claims to be draining the D.C. swamp. Gullibility, ignorance and stupidity have to combine in some unholy alliance to accept that canard.
The Swamp That Trump Built - The New York Times This is a very detailed expose of Trump's financial conflicts. Just disgusting.
+++
Judge throws out Trump campaign’s Pennsylvania lawsuit - MarketWatch The federal judge was a Trump appointee. Donald is engaged in a large number of frivolous lawsuits designed to suppress voter turnout which is now standard operating procedure in the GOP's authoritarian playbook. As Trump refuses to say he’ll accept election results, Republicans press to make voting harder - The Washington Post (10/10/20)
Trump asks Supreme Court asked to block subpoena by DA Cyrus Vance Again I doubt that the Supreme Court will agree to review the last appellate court decision rejecting Trump's complaints about the subpoena being overly broad. Filing an appeal is just another delaying tactic IMO. The Supreme Court might stay the appellate court's decision until it reviews the petition for review which has not yet been filed by Trump's lawyers. That stay can be granted by one Justice. Rule 23. Stays | Supreme Court Rules; Reporters Guide to Applications Justice Alito would be the most likely Justice to grant a stay.
Obama lashes out at Trump for spreading misinformation ahead of election - The Washington Post
Obama: “Trump is a symptom of [misinformation] and an accelerant to it. When you look at insane conspiracy theories like QAnon seeping into the mainstream of the Republican Party, what that tells you is that there are no more guardrails within that media ecosystem.”
Feds examining whether alleged Hunter Biden emails are linked to a foreign intel operation Giuliani provided the NY Post, a publication owned by Reupert Murdock. U.S. intel had warned that Giuliani was being manipulated in a Russian intelligence operation aimed at Biden. White House was warned Giuliani was target of Russian intelligence operation to feed misinformation to Trump - The Washington Post
Trump Revives False Narrative on Biden and Ukraine - FactCheck.org
Trump's Law and Order Distortions - FactCheck.org
Trump's False Claim That Michigan Is 'Closed' - FactCheck.org
PolitiFact | No, the WHO didn’t change its lockdowns stance or ‘admit’ Trump was right Trump's statements rated as false.
PolitiFact | GOP again tries to brand Spanberger with 'Terrorist High' ad The GOP's ad is false and pure demagoguery.
+++
The Unqualified Political Hack Director of National Intelligence John Radcliffe:
Partisan Claims of 'Russia Hoax' Revived Ahead of 2020 Election - FactCheck.org The Trumpster John Radcliffe, who is currently Director of National Intelligence, restarted this Russia Hoax misinformation campaign for political reasons, probably at the urging of Senator Lindsey Graham (R-SC) and Donald.
09-29-20_Radcliffe Letter to Sen. Graham_Declassification of FBI's Crossfire.pdf; DNI Ratcliffe has broken his promise to keep politics out of intelligence, intelligence veterans say - The Washington Post (Marc Polymeropoulos, a former CIA officer who oversaw operations in Europe and Russia: “What we are seeing here is the worst-case scenario that was raised by the Democrats during Ratcliffe’s confirmation of putting such a political loyalist and national security neophyte into this important position. He is cherry-picking intelligence, and seriously risks exposing sources and methods for absolutely no reason other than to promote and protect the president before the election.”)
Radcliffe, one of Donald's most vocal political allies with no qualifications for his current position other than being a 100% pure Trumpster, was formerly a congressman from the rural 4th congressional district in Texas. Trump carried that district 75% to 22% in 2016.
Trump's New Intelligence Chief Spells Trouble | WIRED
John Ratcliffe, Trump's DNI nominee, follows QAnon
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Amy Barrett Confirmation:
No nominee is going to answer a question about how they will rule in a case. Judge Barrett continued that evasive practice during her confirmation hearing.
There is no question that she will vote to overrule Roe v. Wade based on her prior statements about that decision. She was picked by the republicans primarily for her willingness to overrule that decision and others as well.
In recent years, the viability of Roe as a precedent had continued in narrow 5 to 4 decisions with Justice Ginsberg in the majority. Another important vote was Justice Kennedy who voted to uphold the "essential" parts of Roe as a precedent in Planned Parenthood v. Casey.
When Barrett is seated as a Justice, there will be enough votes to overrule Roe and probably the gay marriage decision as well which was a 5 to 4 ruling with former Justices Ginsberg and Kennedy in the majority. Both are no longer on the court, being replaced by clearly reactionary judges.
A less obvious trend over the past several years, which will soon accelerate, will be for the 6 republican justices to roll back the federal government's power to regulate, or what I have previously referred to as a return to Lochner Era where the Supreme Court so favored business that it struck down laws that provided some benefits to workers. The Lochner era is set for a comeback at the Supreme Court; The Supreme Court's infamous 'Lochner era' ended in the 1930s-Vox; Lochner v. New York, 198 U.S. 45 (1909)
While the "conservative" judges claim that they are not making policy, but only applying the law to facts, the reality is that they will make policy by overruling legislation passed by the executive and legislative branches due to restrictive and sometimes bizarre interpretations of the Constitution that implement their political and ideological preferences.
As noted in a recent opinion written by the author of Kochland: The Secret History of Koch Industries and Corporate Power in America, the "Lochner era proves that policy negation is just as powerful as creation, and it affects just as many lives." Opinion | Charles Koch’s Big Bet on Barrett - The New York Times; “Kochland” Examines the Koch Brothers’ Early, Crucial Role in Climate-Change Denial | The New Yorker, see also Jane Meyer's Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right; Jane Mayer, "Dark Money" - YouTube
It is Charles Koch who is a main funding source for the Federalist Society, a reactionary group of lawyers who want to turn back the clock about 100 years or so and who have been selecting the republican judges including Supreme Court nominees.
Koch wants no federal government interference in any matter relating to his business including wage, worker safety and environment laws. So while Roe is important to the republican base, the goal of the republican monied interests in these nominations is to reverse up to 100+ years of legal precedent that the federal government has the constitutional authority to regulate some aspects of business behavior for the public good.
The constitutional garb for those decisions will primarily be based on a more narrow reading of the Commerce Clause (source of federal power to regulate) and an expansion of the 10th Amendment (new life to state rights).
I am predicting that the 6 to 3 republican majority will soon overrule or severely limit the 1984 Supreme Court decision in CHEVRON, U.S.A., INC. v. NATURAL RESOURCES DEFENSE COUNCIL, INC., et al., where the Court ruled that deference had to be given to how administrative agencies interpret their statutory authority, provided the interpretation was not unreasonable or Congress had not spoken to the precise issue at question.
Republican jurists want to get rid of that one since it would dramatically curtail the regulatory powers of federal agencies to regulate -particularly in the environmental area. Charles Koch hates that decision. That will only be a starting point IMO.
In recent years the court has been narrowing the scope of this decision. Chevron Deference Legal Information Institute
Another trend will be more decisions that assist the GOP politically that will be dressed up in constitutional garb. Some recent decisions can be understood as entrenching republican political power. Citizens United v. Federal Election Commission, 558 U.S. 310 (2010); Rucho v. Common Cause (2019)(green light to political gerrymandering); Shelby County v. Holder 570 U.S. 529 (2013); and Bush v. Gore, 531 U.S. 98 (2000); see also, Supreme Court: John Roberts’s anti-voting rights crusade, explained-Vox
The trend will be business friendly by giving businesses more leeway in creating conditions detrimental to the public's health and safety.
Opinion | Republican Judges Are Quietly Upending Public Health Laws - The New York Times
Charles Koch and his Federalist Society of fellow reactionaries have won. The only question now is how far will the clock be turned back.
Court packing, which I view as detrimental to the country, becomes more likely, not with a decision overruling Roe v. Wade which is now likely and expected, but a reactionary Supreme Court going too far in overruling precedents and creating new ones that negatively impact the health and safety of Americans.
I am just providing a frame of reference that will explain many of decisions that the 6 republican Justices will be making in the coming years.
The trend will be to void legislation passed by Congress and signed into law by a President, with policy being made by the 6 republican justices in that manner.
Supreme Court is about to have 3 Bush v. Gore alumni sitting on the bench
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Covid-19 Updates:
 |
| As of 10/16/20 |
Last Thursday, the Extremely Stable Genius told Americans that 85% of people who wear masks contract the coronavirus. He repeated that dangerous claim repeatedly last week.
Republicans know how to spread the virus through Mass Infection Events. Labor secretary's wife, who was at Rose Garden event, tests positive for coronavirus
Fauci says he was taken out of context in new Trump campaign ad touting coronavirus response
Trump mocks virus as he launches potential superspreader sprint to win reelection
U.S. pauses Eli Lilly's trial of a coronavirus antibody treatment over safety concerns
JNJ's coronavirus vaccine trial is paused after 'adverse event'
Pfizer won't apply for Covid vaccine EUA until 2nd half of November, CEO says
+++++
1. Small Ball:
A. Restarted EBTC-Bought 5 at $22:
Corporate Profile | Enterprise Bank
Stock Information as of 10/16/20:
Market Cap at $22.47 Closing Price: $267.6+M
This discussion will use a different format than usual.
Favorable:
1. Tangible Book Value Per Share: I am focusing more attention on buying bank stocks selling at discounts to tangible book value per share. For EBTC, I calculated the tangible book value per share at $26.11, using data as of 6/30/20 (shareholder equity $316.676M minus $5.656M in goodwill = $311.02M ÷ 11.911488M shares outstanding as of 6/30/20 = $26.12 tangible book value per share)
The $22 price ratio to that tangible book value per share is .84 rounded.
The stock rice to tangible book value per share peaked at 2.1 in 2018. Enterprise Bancorp Price / Tangible Book Value chart for EBTC - Koyfin
The stock price would be at $54.83 using the same 2.1 ratio now.
2. Charge off, NPA, NPL and Coverage ratios:
Sourced: SEC Filed Press Release for the Q/E 6/30/20 and 10-Q at page 56
Charge off ratio: Charge offs to total loans annualized
NPA: Non-performing assets to total assets
NPL: Non-performing loans to total loans
Coverage Ratio: The amount already set aside for loan losses as a percentage of non-performing loans
Charge Off Ratio: .01%
NPA: .53%
NPL: .67%
Coverage Ratio: 198.38%
These ratios give me a good picture of how prudent the bank has been in its underwriting standards. EBTC's ratios indicate a prudent bank. I view a coverage ratio of over 100% to be favorable when I initially take a position.
Charge-Off Rate on All Loans, All Commercial Banks-St. Louis Fed (.55% as of last update)
3. EBTC Did Not Lose Money in 2008-2009: While this period is now more distant, and managers may have changed significantly since then, the bank's culture tends to have longevity that survives the comings and goings of individuals.
Note the increase in the dividend penny rate each year.
4. Dividend History: Related to making prudent loans is that EBTC did not cut its dividend during the Near Depression in 2008 or thereafter.
The current quarterly dividend rate is $.175 per share.
5. Stock Price Decline:
6. Unrealized gains in investments: It is interesting that many banks have negligible unrealized gains on their investments or net unrealized losses. How does anyone lose money in fixed income investments during the greatest and longest bull market in bonds? So I like to see a nice positive unrealized gain number on quality fixed coupon investments. EBTC's unrealized gain stood at $31.324M as of 6/30/20:
 |
| Page 14 10-Q |
8. Net Interest Margin above average at 3.68%.
Net Interest Margin for all U.S. Banks-St. Louis Fed (2.89% as of last update)
Net interest income "for the three months ended June 30, 2020 amounted to $32.5 million, an increase of $3.7 million, or 13%, compared to the three months ended June 30, 2019. Net interest income for the six months ended June 30, 2020 amounted to $62.4 million, an increase of $5.6 million, or 10%, compared to the six months ended June 30, 2019. The increase in net interest income was due largely to interest-earning asset growth, primarily in loans, partially offset by a decline in T/E margin. The Company recognized $948 thousand in PPP interest income and $1.6 million in PPP fees, accreted to interest income, during the second quarter." Sourced from page 47, 10-Q.
Unfavorable:
Both the E.P.S. and loan modification data are understandable under the circumstances. The issue is the uncertainty relating to how many loans will result in charge-offs. If the problem becomes acute, then the bank may have to raise equity capital at distressed prices which was commonplace in the 2008-2009 period.
1. E.P.S. Decline:
2019 First & Second Quarters: $.74 and $.66
2020 First & Second Quarters: $.34 and $.61
See SEC Filed Earnings Press Release for the Q/E 3/31/20
2. Loan Modifications: 22.1% of total loans in loan modifications as of 6/30/20 which is troubling.
3. Capital Ratios: Given the potential for future loan losses, I would like to see somewhat higher capital ratios. The recent subordinated bond offering did improve the ratios.
A subordinated bond issued by a bank can be treated as a form of equity capital: Subordinated Debt: Tool for Financing Growth Interest payments are tax deductible by the issuer.
4. Return on Equity and Return on Assets: While the returns on average assets and equity are current unsatisfactory, that is due to lower earnings caused by the pandemic and recession.
B. Added to BRKL-Bought 5 at $8.85; 2 at $8.59; 1 at $8.23:
Quote: Brookline Bancorp Inc.
Closing Price 10/16: BRKL $9.42 +$0.10 +1.02%
Investment Category: Regional Bank Basket Strategy
Brookline Bank- Corporate Profile
Brookline Bancorp Inc. Analyst Estimates
Last Discussed: Item # 1.E. (8/22/20 Post)
Old Average Cost: $9.51
New Average CostPer Share: $9.19
Dividend: Quarterly at $.115 ($.46 annually)
Dividend Yield at AC : 5.01%
Last Ex Dividend: 8/6/20
C. Started DBX as a Lottery Ticket-Bought 5 at $19.1; 1 at $18.87; 1 at $18.7 :
Quote: Dropbox Inc. (DBX)
Investment Classification: Lottery Ticket (total exposure limit of $1k)
Closing Price 10/16: DBX $20.32 +$0.18 +0.89%
"Dropbox is building the world’s first smart workspace where businesses and individuals can create, access, and share this content globally. We serve more than 600 million registered users across 180 countries"
Most of those customers use the free service with the company hoping they will upgrade to a paid subscription.
Paid users stood at 15M as of 6/30/20, up from 13.6M in the year ago quarter.
 |
| Page 6 2019 Annual Report |
"One of the most important features of our platform is its broad interoperability with a range of diverse devices, operating systems, and third-party applications. Our platform is accessible from the web and from devices running Windows, Mac OS, iOS, Android, WindowsMobile, and Linux. We also have integrations with Microsoft, Adobe, Apple, Salesforce, Atlassian, Slack, BetterCloud, Google, IBM, Cisco, VMware, Okta, Symantec, Palo Alto Networks, Zoom, and a variety of other productivity, collaboration, data management, and security vendors." (page 17, identified as a potential risk since DBX does not control those third party platforms).
The IPO was in March 2018 at $21: Prospectus
Website: Dropbox
Dropbox Investor Relations | Dropbox
Average Cost Per Share: $19.01 (7 shares)
Chart Since IPO:
"Net cash provided by operating activities was $145.9 million, as compared to $128.8 million in the same period last year. Free cash flow was $119.8 million, as compared to $95.1 million in the same period last year."
ARR = Annual Recurring Revenue
"Total ARR ended at
GAAP:
Cash on Hand: $1.223B
Actual and potential competition from Amazon, Google and Microsoft are major future headwinds.
Dropbox, Inc. (DBX) CEO Drew Houston on Q2 2020 Results - Earnings Call Transcript | Seeking Alpha ("For the full-year 2020, we are raising our revenue guidance range, which was previously $1.880 billion to $1.900 billion to $1.891 billion to $1.901 billion. . . We are raising our non-GAAP operating margin guidance range, which was previously 17.5% to 18%, to 18% to 18.5% and we are raising our free cash flow guidance range, which was previously $460 million to $470 million to $465 million to $475 million." at page 6)
Prior Trades: None
D. Started FUTY-Bought 1 at $37.19 as a Placeholder:
Quote Fidelity MSCI Utilities Index ETF Overview
Investment Classification: Placeholder-Bond Substitute
Closing Price 10/16: FUTY $40.85 +$0.37 +0.91%
Expense Ratio: .08%
Sponsor's website: FUTY | ETF Snapshot - Fidelity
Dividends: Quarterly at a variable rate
Last Ex Dividend: 9/18/20
Top Holdings as of 9/30/20: 1% or greater weighting
E. Added to SBSI-Bought 1 at $24.5; 1 at $23.88:
Quote: Southside Bancshares
Closing Price 10/16: SBSI $25.69 -$0.19 -0.73%
Investment Category: Regional Bank Basket Strategy
Southside Bank - Corporate Profile
Dividend: Quarterly at $31 per share ($1.24 annually)
Old Average Cost per share: $26.59
New Average cost per share: $26.27 (15 shares)
Yield at AC = 4.65%
Last Ex dividend: 8/19/20
Last Discussed: Item # 1. E. (9/19/20 Post) I have nothing to add to that recent discussion.
Purchase Restriction: Each subsequent purchase must reduce my average cost per share.
F. Added to EVRG-Bought 1 at $49.9; 1 at $49.7; 1 at $49.3; 1 at $49.16; 1 at $48.9 and Sold 2 at $54.10-highest cost lot (Fidelity Taxable Account):
Purchases:
Small Ball Trading Rules for a bond substitute.
 |
| Snapshot Intraday 10/15/20 |
Profit: $1.89
Quote: Evergy Inc. (EVRG)
Investment Classification: Bond Substitute
Closing Price 10/16/20: EVRG $54.92 +$0.50 +0.92%
Investor Overview | Evergy, Inc.
EVRG Analyst Estimates | MarketWatch
Dividend: Quarterly at $.505 ($2.02 annually)
Yield at AC = 3.98%
Last Ex Dividend: 8/19/20
Last Discussed: Item # 1.C. (9/19/20 Post) I have nothing to add to that recent discussion.
Purchase Restriction: Each subsequent purchase must reduce my average cost per share.
G. Added to CSCO-Bought 1 at $38.82; 1 at $38.34; 1 at $37.69 :
Quote: Cisco Systems Inc.
Investment Classification: Contrarian Value/Bond Substitute
Closing Price 10/16: CSCO $40.16 +$0.19 +0.48%
Annual Report for the F/Y Ending on 7/25/20
Last Discussed: Item # 1.H. (9/13/2020) I discussed the last earning report in that post. SEC Filed News Release
Dividend: Quarterly at $.36 per share ($1.44 annually)
Old Average cost per share: $41.04
New Average cost per share: $40.49 (15 shares)
Yield at AC : 3.56%
Last Ex Dividend: 10/1/2020 (owned as of)
Recent News (since last discussion): Cisco hit with $1.9B judgment for 'willful and egregious' patent infringement against Centripetal Networks - Silicon Valley Business Journal
H. Added to WBS-Bought 1 at $25.5; 1 $25.08; 1 at $24.82; 1 at $24.6; 1 at $24.4 :
Quote: Webster Financial Corp. (WBS)
Closing Price 10/16/20: WBS $28.80 -$0.05 -0.17%
WBS Analyst Estimates | MarketWatch
Investor Relations | Webster Financial Corporation
Investment Category: Regional Bank Basket Strategy
Last Discussed: Item # 4.A. Restarted WBS-Bought 5 at $26.2 (8/29/20 Post)
Dividend: Quarterly at $.40 per share ($1.6 annually)
Old Average Cost = $26.2
New Average Cost per share: $25.54 (10 shares)
Yield at AC: 6.26%
Last Ex Dividend: 8/4/20
Quote: Fidelity MSCI Financials Index ETF Overview
Closing Price 10/16: FNCL $35.56 +$0.07 +0.20%
Average Cost Per Share: $34.9 (7 shares)
Last Discussed: Item # 1.L. (9/19/20 Post)
Sponsor's Website: FNCL | ETF Snapshot - Fidelity
Expense Ratio: .08%
Prior Round-Trips: Item # 4.F. Sold 50 FNCL at $34.47 (2/10/2017 Post)(profit Snapshot = $278.53); Item # 2 Sold 60 FNCL at $28.75 (1/6/2015 Post)(profit snapshot = $135.71)
J. Added to FIVG (Vanguard Taxable)- Bought 1 at $27.78:
Quote: FIVG | Defiance Next Gen Connectivity ETF Overview
Closing Price 10/16: FIVG $29.96 -$0.02 -0.07%
Sponsor's Website: The First 5G ETF - FIVG
Last Mentioned: Item # 1.D. (10/3/2020 Post)
I also recently discussed this ETF in a 10/9/2020 comment.
Expense Ratio: .3%
New Average Cost Per Share this account = $28.86 (13 shares)
K. Added to BDGE-Bought 2 at $17.45; 2 at $17.2; 2 at $17.03; 1 at $16.8:
See Item J. above.
M. Added to NBTB-Bought 1 at $27.03; 1 at $26.6:
Quote: NBT Bancorp Inc. (NBTB)
Investment Category: Regional Bank Basket Strategy
Investor Overview | NBT Bancorp
Dividend: Quarterly at $.27 per share ($1.08 annually)
Dividend History | NBT Bancorp
New Average Cost per share: $29.28 (10 shares)
Yield at AC: 3.69%
Last Ex Dividend: 8/31/2020
Last Discussed: Item # 1.G. (9/16/20 Post)
N. Added to ORI: Bought 2 at $14.18 and 1 $14.16:
History This Account:
Quote: Old Republic International Corp
Investment Classification: Bond Substitute
For a description of ORI's businesses, see pages 4- 6 of its 2019 Annual Report
ORI - Old Republic International Corporation Profile | Reuters
Stock Information as of 10/16/20:
Average Cost Per Share: $15.35 (13 shares)
Yield at AC = 5.47%
Last Ex Dividend: 9/3/20
Reinvestment: No
Last Discussed Common Stock: Item # 5.A Eliminated ORI-Sold 50 at $19.67 (10/26/17 Post)(profit snapshot = $88.47)
I restarted ORI with a 10 share buy at $15.7 executed on 5/27/20.
5 Year Financial History: Erratic
5 Year Chart:
Last Earnings Report (6/30/20): SEC Filed Earnings Press Release
Note: $.94 of the $1.34 GAAP E.P.S. number represents an increase in the value of owned securities. That simply indicates that the investment portfolio recovered from the first quarter debacle. GAAP E.P.S. does not reflect what is going on with ORI's business operations. The core E.P.S. number was $.42 vs. $.45 in the 2019 second quarter.
Tangible Book Value Per Common Share: $19.27 as of 6/30/20 (shareholder equity = $5.8589B ÷ .304035642M outstanding shares, with no preferred stock or intangible assets; see data at page 3, 10-Q) This is my calculation and comes with the usual caveats including the fact that I have no training whatsoever in accounting.
See: Book Value Per Share (BVPS) - Overview, Formula, Example
Bonds: My last transaction in an ORI bond was to sell 2 of its 3.875% senior unsecured bonds maturing in 2026: Item # 4.A. (9/11/2019 Post)(profit snapshot = $145.88); Bond Detail. I previously had eliminated another 2 bond position in 2017. Item # 3.B. (12/30/17 Post)(profit snapshot = $18.16).
Goal: I view this stock as a bond substitute. Consequently, the goal is to earn a total return in excess of the dividend payments. A satisfactory result is defined as harvesting several dividend payments and then exiting the position at any profit.
Purchase Restriction: Each subsequent purchase must reduce my average cost per share.
Last Round-Trip Snapshot:
 |
| 2017 ORI 50 Shares +$88.47 |
Item # 5.A. Eliminated ORI-Sold 50 at $19.67 (10/26/17 Post)
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.
I Started reading this morning, and got up to the trump stuff and thought, hum, this time I'll skip down to the stock trades. I always read through them, but after the trump etc, my head's spinning. Maybe I'll absorb more.
ReplyDeleteSo I went down and discovered a tutorial! I understand a good deal of it. There's a few more terms I still need to look up.
The Unrealized gains on investment was the most interesting. That's the kind of table that I would look at and have no idea it's purpose or what it was about. Once I know it's about how they use their money to gain divs/interest, the table makes easy sense. The name of it is different too in the sec report, and has nothing that used to clue me in either.
The loans that are late are okay in some categories. The commercial is high at 47%. I'd want to stop whether there's something in the relief bill that encouraged delaying payment, so that the number may not reflect risk (or may still - one can't tell).
There's a lot to look at still, figure out how to spot the stuff, look at other stocks.
---
The other point you made is that these aren't the easy hold for years of a large cap blue chip.
The risk down doesn't bother me, as long as eventually the economy recovers. But for a change buying here out of favor and not at the peek is a positive.
But keeping an eye for div cuts and finances getting tighter, buyouts... factors that can substantially change the stock... that's good to know.
Land: The regional bank stock sector has a large number of stocks yielding 5% or more, based in large part on their price declines starting in March.
DeletePBCT, for example, is a well run regional that is a dividend aristocrat, having raised its dividend for more than 25 consecutive years.
https://en.wikipedia.org/wiki/S%26P_500_Dividend_Aristocrats
PBCT closed at $10.58 last Friday, and has a 6.81% current yield at that price:
https://www.marketwatch.com/investing/stock/pbct
When investing in them, it is important to recognize the economic headwinds that include NIM compression, the recession and pandemic. NIM compression probably caused the topping action in 2018, followed by price declines into March 2020 that accelerated with the economic downturn.
For an income investor, the danger now is dividend cuts.
Third quarter reports are now starting to be released. One key category for focusing attention is the number of loan modifications that have ended with borrowers returning to normal payments. I want to see a big decrease in loan payment deferrals and no significant increase in charge offs.
It does appear to me that the pandemic is entering another wave up, and that may stall and reverse recoveries in localities suffering those spikes in infections, hospitalizations and deaths.
For future earnings, it is important to have an existing significant build in the loan loss reserve before making an investment. The coverage ratio is the amount of loan loss reserves already taken as a percentage of non-performing loans. That build up in reserves has already hit earnings and may presage an increase in earnings down the road if some of the reserves are released since the bank over reserved for losses that did not materialize.
++
Donald called Senator Sasse stupid today. Sasse, born and raised in Nebraska, graduated from Harvard and received a Phd in history from Yale. His doctorate dissertation, titled "The Anti-Madalyn Majority: Secular Left, Religious Right, and the Rise of Reagan's America", won several prizes.
https://en.wikipedia.org/wiki/Ben_Sasse
Sasse is a traditional republican conservative in a party that is no longer conservative. Consequently Trump called him a republican in name only which is the case when defining the republican party as the one that emulates Donald, protects, nurtures and enables him.
Donald is an ignorant idiot IMO; but he does know how to blow the dog whistles that appeal to the republican base.
So, the div cut risk, and general rockiness of the economic landscape for regional banks... means at this time it's important to look for strong numbers and not compromise.
DeleteETFs are a way to diversify and not wind up in a bankrupt name & losing all principle. Problem is that an ETF will go down more than the top quality will, because it will contain some bankrupcies. That's always the debate on going for an ETF vs a few individual stocks.
A div aristocrat regional. I hadn't thought of aristocrats in this subsector! Well worth the exploration.
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I didn't know about his dissertation. It's so great when that work is seminal. Sounds like he's had his pulse on a difficult topic that's been core to leading to what's happening now. That explains why media's always wondering where he'll stand on issues, even thought he's been voting or not challenging Trump.
I still don't get why he didn't stand up to trump. If just a few GOPs had linked hands together they could have had the upperhand over Trump and trained Trump (the tiny bit that's possible on who's in charge.)
Just to present another point of view, if you're willing:
ReplyDeleteIMHO, your remarks on the future of the Supreme Court are unnecessarily pessimistic. Supreme Court appointments have ALWAYS been narrowly poltical and partisan, and some of the appointees turned out to be very good judges, people who rose above themselves. John Marshall? Earl Warren?
David: While John Marshall was a great Supreme Court justice, and one of the most influential, I would not include him in the point that you are making.
DeleteSome more recent examples would be David Souter, John Paul Stevens, and Harry Blackmun.
Time will tell. The trends that I describe were evident before Kavanaugh, Barrett and Gorsuch.
I have seen nothing so far that suggests Kavanaugh or Gorsuch will be anything other than reactionary justices.
I would be shocked if Barrett will surprise anyone in the years to come.
The majority decision in Bostock v. Clayton County, written by Gorsuch, was not surprising given his textualist approach to interpreting statutes.
What we will see over the next decade is a more restrictive reading of the Commerce Clause and a more expansive reading of the Tenth Amendment (a resurgence in "state rights")that will result in more decisions overruling laws passed by Congress and signed into law by the President. In effect, the republican justices will be making policy in the guise of constitutional interpretation just as the liberals have done in creating a general constitutional right to privacy that is not expressly mentioned in the Constitution but created by a somewhat expansive interpretation of the liberty interest mentioned in the 14th Amendment.
https://www.law.cornell.edu/wex/privacy
http://law2.umkc.edu/faculty/projects/ftrials/conlaw/rightofprivacy.html#:~:text=The%20Supreme%20Court%2C%20however%2C%20beginning,procreation%2C%20marriage%2C%20and%20termination%20of
As I argued in a recent comment, the privacy right argument tied to the 14th Amendment makes more constitutional sense for a true conservative than the decisions that include corporations as "persons" within the meaning of that Amendment.
The constitutional argument against Roe v. Wade and related right to privacy decisions is succinctly made by Justice Scalia in this video interview.
Deletehttps://www.youtube.com/watch?v=Rj_MhS2u-Pk
The argument is the word "liberty" is modified in the 14th Amendment by "due process" which is then interpreted narrowly to mean only that liberty can not be deprived with the procedural right to due process, the right to be heard and to challenge the denial of liberty. The 14th Amendment in this view does not grant any liberty constitutional right anymore than it granted the substantive "liberty to contract" right that prevailed in Lochner Era to strike down minimum wage laws as an example. The distinction is between procedural and substantive due process. If that is the basis for overruling Roe v. Wade, then more than the right of privacy, outside of the rights specifically enumerated in the Bill of Rights, will go by the wayside IMO. For example, will incorporation of the Bill of Rights, procedurally and substantively, through the 14th Amendment, and applied to state action, survive?
https://www.law.cornell.edu/wex/incorporation_doctrine#:~:text=The%20incorporation%20doctrine%20is%20a,applies%20both%20substantively%20and%20procedurally.
I would further note that the Scalia approach, limiting the 14th Amendment "due process" clause to procedural rights rather than substantive ones, is inconsistent with the "conservative" position that the 2nd Amendment is incorporated through that clause and consequently restricts the power of states to regulate guns.
DeleteIn the 5 to 4 decision in McDonald v. Chicago, the 5 republican judges, including Scalia, incorporated the 2nd Amendment into the 14th Amendment's due process clause and applied its holding in Heller to state laws regulating firearms.
https://www.oyez.org/cases/2009/08-1521
The republican justices ignore their inconsistent constitutional arguments which reflects IMO their biases.
On 2nd amendment... now that we know Russia's been funneling money through the NRA, I've wondered how it's effecting images on the laws.
DeleteLand: The point that I am making is not whether Heller, which recognized a second amendment right for gun ownership independent of belonging to a the "militias" that were commonplace when the Constitution was drafted in the 1780s. As a constitutional issue, the Heller decision was a correct reading of the Second Amendment. Heller dealt with a gun law passed by the District of Columbia, which of course is not a state.
Deletehttps://www.oyez.org/cases/2007/07-290
The issue instead is whether the 14th Amendment's "due process" is being applied consistently by the republican justices when applied to state laws relating to abortions and guns.
That clause reads in pertinent part as follows:
"nor shall any State deprive any person of life, liberty, or property, without due process of law"
https://www.law.cornell.edu/constitution/amendmentxiv
Note the use of the word "person". This Amendment was passed in part to protect the civil rights of newly freed slaves. Yet, when Congress tried to implement the provision in Civil Rights laws, the Supreme Court struck those laws down as unconstitutional while proclaiming that corporations were persons and entitled to constitution protections from state action.
As I noted above, the republican justices will say, when it comes to Roe v. Wade and related decisions, that the quoted section is merely "procedural", and has no substantive value. The due process simply relates to providing a procedure for a person to complain about loss of liberty for example. (see video of Scalia linked in my previous comment)
However, when it comes to guns, the republican justices wave a magic wane over this due process clause and change it to a substantive provision that applies to state laws relating to guns. That is what they did in the McDonald case decided after Heller.
The point that I am making, sadly, is that the Constitution means what 5 or more Justices says it means. Both sides make stuff up that are tailored to their ideological and political beliefs more than moored in the Constitution's plain meaning.
The Supreme Court's interpretations of the due process clause of the 14th Amendment are just a mish mash of inconsistent thinking IMO.
I'm slowly starting to understand the legal aspects you're describing.
DeleteThe justices are reading into the Constitution in order to support positions they believe are either 1) what USA is ready for and wants or 2) is best for USA or their business buddy's benefit (public desire be irrelevant.)
Is the Constitution so well done, that it's better to stick to the plain interpretation?
Or do some of these twists result in more of what society has grown into?
--
A correct reading of 2nd Amendment is ownership is protected out of a militias? That's because it says can't deprive a person's life, liberty, or property, without due process of law?
I've wondered why that militia clause couldn't be used to restrict gun ownership. I'd want people to have to sign up with a militia to own a gun legally. And that the militias then have their info and can be pressured to require background checks by making them responsible for their memberships' behavior in some vague way.
Land: In part, I am reacting to Amy Barrett's claim that the Supreme Court should not be making policy. That Court has always been making policy through interpretation.
DeleteThe most likely interpretation of the due process clause of the 14th Amendment is that it is procedural only. However, the Supreme Court had a problem that arose many years ago. The First Amendment, for example, explicitly states that Congress shall make no law abridging the enumerating freedoms:
1st Amendment: "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances."
A plain reading of the First Amendment would mean that states were free to do so unless the state constitution, as interpreted by the state supreme court, prohibited a law restricting free speech, religion or the right to petition for the redress of grievances.
So how do you keep the states from doing bad things. The Court made the policy of having national rules on first amendment rights by incorporating the First Amendment into the 14th Amendment's Due Process clause that by its plain terms applied to the states. So the 14th Amendment Due Process clause become both procedural and substantive.
So if a judge was actually a stickler for refusing to make national policy decisions, and did not read into a phrase what was not there, the 14th Amendment would be purely procedural as Justice Scalia argued when talking about Roe v. Wade. But then he turns around and makes the Due Process Clause as substantive when deciding a case involving a state law on guns.
The "right to privacy" really got legs in a decision made prior to Roe that involved the constitutionality of a Connecticut law that prohibited advising a woman on contraception or prescribing a contraceptive device, and even went further in making it a crime. The Court did not like that law, but how do you keep the states from doing that kind of nonsense? The solution was the "right to privacy".
https://supreme.justia.com/cases/federal/us/381/479/#tab-opinion-1945663
As to Heller being correctly decided, my opinion is not based on whether restrictions relating to guns are advisable, and many are IMO. The issue is what does the Second Amendment mean, recognizing that it was an example of poor phraseology. The dissenting judges in that 5 to 4 decision have good arguments IMO.
The synopsis of the decision explains why the majority had a better position IMO:
https://www.oyez.org/cases/2007/07-290
The Court in Heller did not decide what restrictions would be permissible in furtherance of a compelling state interest which overrides the constitutional protection. The court in that case was addressing a law that prohibited the possession of any handgun in a person's home.
So that's what the legal arguments are. Interesting... the article does a nice job too.
DeleteIt made me wonder if there isn't a proper angle here to argue that (the preface from the article is: guns should be allowed because at the time militias were common and anyone could be called into one)...
so couldn't one argue that at that time you'd be called to one properly only if you were sober, sane, not prone to sociopathic rages, and not prone to pointing your guns at your spouse?
At that time culturally those weren't concepts, but surely the basic underlying concept existed of competence to hold a gun before being brought into a militia.
This argument could then open the door easily to basic background checks and stopping felons and spouse abusers.
It wouldn't stop ownership of machine guns that I can see.
While I tend to lean dem on a number of points, and I am strongly for fixing the # of gun deaths (murder & suicide & accidents) and mass shootings...I've always had a bit of fear of not having rights to access a gun against riots or the gov't if I needed to, or form a militia. (Based on family history). I've been taught how to shoot one, but never owned one. I'm a terrible marksman, including going back to every sports game I ever played.
Even funnier - my sister was required take a course every couple years and pass a gun test to keep her job. But because of her actual position was not permitted to carry a gun. Tax payer money hard at work!
"Swamp Creature-in-Chief" Lol.
ReplyDeleteI went back to read the political stuff, and now my head's swimming. I guess it's the swamp lapping at it.
"Business friendly" is another way to say demagoguery-style ultra rich person favors like how Russia's set up.
There's that letter by 100 very rich people in NY who were against all of this. FWIW, hopefully some votes.
So you've convinced me -- I'll canvass for Biden. What a mess. A big dangerous mess.
I like some of his policies, not others. But they'll all so moderate & able to be discussed and moderated by other moderates. I'll take it!
----
For the courts the ideas going around that there used to be 9 circuits, now there's 13. So it's been logical to expand to 13 so each justice is handling a circuit. (Circuits or districts?).
I'd like to see addition of as many as blocked by McConnell on that nonsense about last year of presidency. (During primary campaigning I could see, but he's not honoring even that.)
Then ideally law would be made to require approval by 90% of the senate for every addition. Also add basic job experience required for all judge appointments. Stop packing ability by anyone, and add only justices without ideological views who are reasonably moderate and capable.
----
There is a swing back from zooming and remote work. I believe it's time to look at REITS for a pop as this idea takes root in investors' imagination. However, after any pop, I wouldn't hold on. Actually reality will be quite painful for a while.
It's not the only article I've seen. People are itching to be done with lockdowns. Some are still keeping safe, but more and more are finding ways to justify what they wouldn't do 3 months ago.
https://www.npr.org/2020/10/14/923428794/from-the-folks-who-brought-you-boring-meetings-ceos-want-to-ditch-sterile-zoom-c
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I read that Pelosi and Mnuchin are talking and she's giving it 48 hours to make a deal before the elections.
I'd expect translation will be strong rally tomorrow on anticipation of an excepted deal?
There's also a pathway to block immune system reaction found or it's replication. It's disappeared from my google news list. But that too many trigger a rally.
What do you think about expanding to 13 to match the # of circuits?
DeleteI'd read a list of past justice's approval votes... they were at least 85% of reps (I assume 2/3s rule were forcing that). None were these narrow votes. That seems important to go back to. (I think it was Dems that got rid of it first for lower courts?)
Land: Once you start to increase the number of Justices, there will be no end to it. The Court will increasingly be seen as nothing more than an extension of political and ideological disputes between the two political parties.
DeleteOld National Bancorp (ONB)
ReplyDelete$14.12 +0.36 +2.62%
https://www.marketwatch.com/investing/stock/onb
The pop today was the result of a better than expected earnings report released before the market opened today:
https://www.globenewswire.com/news-release/2020/10/19/2110374/0/en/Old-National-reports-3rd-quarter-earnings-of-77-9-million-or-0-47-per-share.html#:~:text=Old%20National%20Bancorp%20(NASDAQ%3A%20ONB,or%20%240.46%20per%20diluted%20share.
Note there were no charge-offs during the quarter. Instead there was a net recovery of $3M.
I will be discussing this bank in my next post. I have bought and sold it many times going back to 2012 and recently restarted a small ball position at $12.71
Item # 1.B.
https://tennesseeindependent.blogspot.com/2020/06/bxmx-cswc-emp-fdn-onb-nwhuf-pdm-orcc.html
I will be discussing it in my next post since I added to that position.
5 year Financials:
http://ir.oldnational.com/IRW/FinancialHighlights/100391?keyReport=-58
International Business Machines Corp laid another egg with its 3rd quarter report released after the close.
ReplyDeleteAFTER HOURS $121.90 -$3.62 -2.88%
After Hours Volume: 1.4M
Last Updated: Oct 19, 2020 at 7:51 p.m. EDT
https://www.marketwatch.com/investing/stock/ibm
The earnings report is summarized here:
https://seekingalpha.com/news/3623438-ibm-slips-after-third-consecutive-revenue-decline
I mentioned in a prior comment eliminating my small ball positions in several account, selling shares between $133 to $133.5, after the shares popped in response to the IBM's announcement that it planned to split into two companies.
I view IBM as a bond substitute and will probably start to reacquire those shares previously sold if the price tomorrow falls below $122.
+++
Washington Trust beat the consensus estimate by 2 cents:
https://seekingalpha.com/news/3623404-washington-trust-bancorp-eps-beats-0_02-beats-on-revenue
There is a recent SA article on this bank which is not yet behind the SA paywall:
https://seekingalpha.com/article/4379597-washington-trust-solid-yield-for-those-looking-for-dividend-income-modest-price-appreciation
+++
FNB also reported better than expected earnings after the close:
https://seekingalpha.com/news/3623463-f-n-b-eps-beats-0_03-misses-on-revenue
Press Release:
https://www.prnewswire.com/news-releases/fnb-corporation-reports-third-quarter-2020-earnings-per-share-of-0-25--301155167.html
Tangible Book Value Per Share: $7.81
F.N.B. Corp.
$7.40 -$0.10 -1.33%
YIELD 6.49%
https://www.marketwatch.com/investing/stock/fnb
Regions Financial Corp. (RF)
ReplyDelete$13.11 +$0.77 +6.20%
Last Updated: Oct 20, 2020 at 10:13 a.m. EDT
https://www.marketwatch.com/investing/stock/rf
The 3rd quarter regional bank earnings reports are starting to be released and several, including Regions, have reported better than expected results.
https://www.businesswire.com/news/home/20201020005146/en/
GAAP E.P.S. of $.52
I restarted a small ball "buying program" in late January 2020, which turned out to be a mistake based on what happened thereafter. I kept adding all the way down $7.5 (3/18/20 purchase), which lowered my average cost per share to $12.48 (57+ shares)
The non-GAAP number was lower at $.49. The consensus estimate was for $.33.
https://seekingalpha.com/news/3623530-regions-financial-eps-beats-0_16-beats-on-adj-revenue
I did not buy IBM today. My gut informed me that the sellers were not yet done trashing the stock.
ReplyDeleteInternational Business Machines Corp.
$117.37 -$8.15 -6.49%
https://www.marketwatch.com/investing/stock/ibm
++
McConnell appeared to publicly squash the hope of a stimulus deal before the election. Mark Meadows claimed there were still major disagreements on some major sticking points including aid to state and local governments.
++++
I do spend time researching mini caps, particularly in the regional bank sector.
One of those is CNA Financial (CCNE) that has about a $283M market cap at today's closing price of $16.77. This bank reported after the close:
SEC Filed Earnings Release:
https://www.sec.gov/Archives/edgar/data/736772/000073677220000041/ccne10-20x2099x1xnextg.htm
Two analysts provide estimates and the consensus was for $.35 per share. Estimates are usually non-GAAP numbers.
The non-GAAP E.P.S. was reported at $.70 and GAAP at $.47. The non-GAAP numbers excludes merger expenses relate to the recently closed acquisition of the Bank of Akron, prepayment penalties associated with paying off higher cost debt and branch closures.
SeekingAlpha has the beat at $.35:
https://seekingalpha.com/news/3623902-cnb-financial-eps-beats-0_35-beats-on-revenue
One factor to note in all bank reports this quarter is the number of loans that have come off deferrals:
"At October 20, 2020, the Corporation had $187.4 million of COVID-19 related deferred loan payments for its commercial and consumer customers, or 5.6% of total loans, down from $626.0 million, or 20.7% of total loans, at June 30, 2020."
"tangible book value per common share was $18.58 as of September 30, 2020"
"Efficiency Ratio, net of merger costs, prepayment penalties and branch closure costs" = 56.54%
Charge off ratio: .11%
NIM: 3.5%
FYI, CNA Financial recently sold a non-cumulative 7.125% equity preferred stock that has a $25 par value.
DeleteCNB Financial Corp. 7.125% Preferred Stock Series A (CCNEP)
https://www.marketwatch.com/investing/stock/ccnep
I am really not that interested but I did buy earlier today 5 shares at $25.3. This is what I am now calling a TINA trade.
TINA = There is no alternative
Prospectus:
https://www.sec.gov/Archives/edgar/data/736772/000119312520226998/d99161d424b5.htm
Since this preferred stock started to trade a few weeks ago, the bid/ask spread has been significant and narrowed to 5 cents earlier today which is probably as good as it will get given the small number of shares outstanding.
I am managing to keep my cash allocations relatively steady at high levels through a significant number of small ball buys. This is not easy since I have am constantly receiving proceeds from bond maturities and early redemptions, interest and dividend payments.
My Fidelity taxable account, for example, is currently at 42.5% in cash, about where it was a few weeks ago when I last mentioned the cash allocations per account.
I am using a shotgun scatter small ball approach to dividend paying stocks as the primary method of increasing my cash steam.
If I see CCNEP fall below $25, I will buy another 5 shares. Preferred stocks will crater, even if interest rates decline, during a meltdown in the S & P 500 like the one occurring last March.
I've been reading along. But now that I'm getting to posting, maybe not say much when it's this late (for coherency.)
ReplyDeleteI missed the start of SNL on Sat, but it was funny. Though wish they hadn't described Biden as old and confusing... his answers were largely solid. Still, this was a nice break today.
https://www.youtube.com/watch?v=gC7lm4Ng5KM
It has dawned on me that the pre-voting has broken so many records, the pollsters can't possibly know how to model the electorate. Hopefully the higher # of Dem registered voters and floods of money and several, Conservative groups against Trump, are a sign.
I don't see a stimulus coming. Futures are green and today ended green even with the downturn. The market is so optimistic. I don't know why McConnell is allowing this - it seems counter to his long term goals like getting re-elected. But he isn't.
ONEOK Inc.(OKE)
ReplyDelete$28.43 -$0.49 -1.69%
https://www.marketwatch.com/investing/stock/oke
OKE is a currently hated stock by most analysts. The stock has had a rough year, with a 52 week high at $78.58.
I own 5 to 10 shares in two taxable accounts, both positions are slightly in the green. My larger position is in 2 SU bonds bought earlier this year after a price plunge.
I was somewhat surprised that OKE declared its regular quarterly dividend of $.935 per share or $3.74 annually.
https://www.prnewswire.com/news-releases/oneok-declares-quarterly-dividend-301157319.html
If the dividend continued at that rate, and a raise is probably not in the cards anytime soon, the yield at today's closing price is 13.16%.
+++
First Bancorp Inc. (FNLC)
$23.06 -$0.28 -1.20%
https://www.marketwatch.com/investing/stock/fnlc
This is the First Bancorp with Maine branches. I also own the one based in N.C (FBNC) which closed today at $23.62, up $.68. Both stocks have done well since my recent purchases.
FNLC reported after the close:
"Unaudited net income was $7.1 million, a new quarterly record for the Company, and up $807,000 or 12.8% from the $6.3 million reported for the three months ended September 30, 2019. Earnings per common share for the period on a fully diluted basis were up $0.07 to $0.65 per share, an increase of 12.1% from the prior year."
https://www.businesswire.com/news/home/20201021005953/en/
GAAP efficiency ratio 50.60%
Return on Average Equity 12.32%
Return on Average Tangible Common Equity 14.27%
NPL Ratio: .63%
NPA Ratio: .43%
Charge Off Ratio: .15%
Tangible Book Value Per Share: $17.32
Net Interest Margin TE 2.93%
+++
TrustCo (TRST)
GAAP E.P.S. beat by 3 cents
https://seekingalpha.com/news/3624449-trustco-bank-eps-beats-0_03-revenue-in-line
+++
United Community Banks, Inc. (UCBI)
Beat GAAP by $.25
Beat Non-GAAP at $.21
According to SA:
https://seekingalpha.com/news/3623994-united-community-banks-eps-beats-0_21-beats-on-revenue
UCBI was a recent add to my regional bank basket.
+++
"Umpqua Holdings EPS beats by $0.22, beats on revenue"
https://seekingalpha.com/news/3624466-umpqua-holdings-eps-beats-0_22-beats-on-revenue
+++
"Brandywine Realty Trust FFO in-line, misses on revenue"
https://seekingalpha.com/news/3624512-brandywine-realty-trust-ffo-in-line-misses-on-revenue
Webster Financial Corp. (WBS)
ReplyDelete$31.32 +$1.84 +6.24%
https://www.marketwatch.com/investing/stock/wbs
I discussed WBS in this post.
The bank reported earnings earlier today that beat the consensus estimate by 8 cents.
https://www.prnewswire.com/news-releases/webster-reports-third-quarter-2020-earnings-of-0-75-per-diluted-share-301157897.html
GAAP at $.75 per share
+++
Huntington Bancshares Inc
$10.05 +$0.36 +3.72%
Last Updated: Oct 22, 2020 at 9:52 a.m. EDT
https://www.marketwatch.com/investing/stock/hban
E.P.S. of $.27, beat consensus by 2 cents.
https://seekingalpha.com/news/3624765-huntington-bancshares-q3-shows-strength-in-mortgages-loan-and-deposit-growth
++++
AT&T Inc.
$28.24 +$1.52 +5.69%
Earnings Report:
https://www.businesswire.com/news/home/20201022005578/en/
Old Republic International Corp. (ORI)
ReplyDelete$17.16 +$1.29 8.13%
https://www.marketwatch.com/investing/stock/ori
I discussed ORI in this post. Investors responded favorably to the earnings report released before the market opened today.
https://www.prnewswire.com/news-releases/old-republic-reports-results-for-the-third-quarter-and-first-nine-months-2020-301157966.html
E.P.S. Operating: $.62 vs. $.51 a year ago
The operating E.P.S. number excludes gains or losses in ORI's investment portfolio. The valuation change in the portfolio added $.21 per share.
The consensus operating E.P.S. was $.44. Revenue rose to $1.88B from $1.77B in the 2019 third quarter, beating the consensus estimate of $1.68B.
++
Intel reported after the close and the stock is getting clobbered in after hours trading. I do not have a position.
AFTER HOURS
$48.50 -$5.40-10.02%
After Hours Volume: 2.7M
As of 4:15 EST
This is the kind of thing that makes me worry about buying individual stocks. INTC was a good buy for me. Did well for a good amount of time, and gave a div. There was no reason to expect it to sink on technical development difficulties.
DeleteI want to check if this tanking and report is reflection of what was the 1st reason to nosedive. Or if this report is additive to the prior bad numbers.
I'm down 4.3% with $137 loss. The 20 I sold, I doubt was more gain, than my current loss.
My Garmin's still going strong. But then it raises the worry I should leave while it is. But that's how you wind up not getting gains as stocks rise...
Land: Since I do not own Intel, I will just read an article discussing the earnings report.
DeleteI read this one published at Marketwatch:
https://www.marketwatch.com/story/intel-stock-plunges-10-after-earnings-show-bigger-sales-drop-than-expected-11603397818?mod=mw_latestnews
There are several problems revealed in that article that go beyond the technical difficulties in manufacturing a next generation 7 nanometer chip. AMD has already released one, which, as I recall, is being manufactured by Taiwan Semiconductor. That earlier development called into question Intel's much vaunted manufacturing prowess.
I sold out of Intel too early which makes me hesitant to buy back into the stock higher than $40, though I am a bit queazy at that price now with this last earnings report. I am probably comfortable at $35 for a re-entry.
Eliminated remaining shares at $52.29
Profit Snapshot: +$2,266.94 (excluding 50 shares sold on 3/19/18)
Item # 1
https://tennesseeindependent.blogspot.com/2018/03/observations-and-sample-of-recent_29.html
Thank you! 10% down. That's more than a small surprise. I just happened to buy in 2018 during that dip so it's not 10% underwater now.
DeleteI was thinking of buying more the last few days but it's climb to 53 from 48 made me want to wait for another general market down few days. So dumb luck I hadn't bought more.
At this point, I'd buy AMD or another competitor. AMD's up 2.4% afterhours.
For a buy in price, definitely at $35, but I need to see it's technical supports to see if there's a past higher spot like $40 or $43 that it will sit at waiting for better days.
It's been good management and company culture for a long time. It should attract management that can turn this around in the several weak areas like chips in random home stuff (internet of things).
They have several different areas, so it's like looking at a household products company with some areas doing well, others not. They've been weak on servers for a long time. It's not evident yet that the chip problem is causing any of these numbers. Nor that they are that bad by themselves. Looks like it's a market being worried about INTC so anything less than stellar would get a pullback because of the chip problem. That that wasn't fully baked in yet.
It's not enough yield for this trouble. Hummm.
People's United Financial Inc. (PBCT)
ReplyDelete$11.33 $0.77 +$7.29%
https://www.marketwatch.com/investing/stock/pbct
Today's gain in regular hours trading is being extended after hours:
after hours:
$11.60 +$0.27 +2.38%
After Hours Volume: 117.5K
Last Updated: Oct 22, 2020 at 4:52 p.m. EDT
PBCT reported its third quarter results after the bell, beating the consensus E.P.S. by 5 cents.
https://www.prnewswire.com/news-releases/peoples-united-financial-reports-third-quarter-net-income-of-144-6-million-or-0-34-per-common-share-301158173.html
I own this one in several of my accounts and have been adding to my positions some as of late. I mentioned PBCT in a 10/17 comment above, referencing its status as a dividend aristocrat.
"Provision for credit losses on loans of $27.1 million, decreased $53.7 million linked-quarter"
"Efficiency ratio of 53.8 percent, improved 300 basis points year-over-year"
Charge off ratio: .15%
NPL ratio: .68%
Return on average tangible common equity =
13.1%
Tangible book value per common share =
$10.37, up from $9.74 in the 2019 3rd Q.
"Non-interest income totaled $101.1 million in 3Q20 compared to $89.6 million in 2Q20."
I hadn't buckled down to buying it. Was waiting on the entry point. It is performing like an aristocrat.
DeleteThe nice thing about a popular stock is how much is written about it.
DeleteSo far the report itself isn't enough to explain anything. They're raising guidance for the future.
Apple announced plans not to use Intel and to go in house (this year or last). It was not a clear flag, and the market dipped then didn't care. But in retrospect, there's questions about the company leadership. This may have been the big flag.
This article goes through the leadership. Not useful to you since you're not in the stock.
https://www.marketwatch.com/story/how-did-intel-lose-its-silicon-valley-crown-2020-10-16
A lot asks is Intc hitting development limits or management limits. That seems like a false question. There's plenty more to develop. It may not be at the same speed and growth, but it's not stagnating. And other companies have grown.
So it's management. The Apple move was probably the flag.
This all reinforces that your $35 entry point is probably right.
So I'll keep an eye out for a good exit and buy back later on a down - maybe. I own SOXX which is too high to buy into. Don't own Ndivia or AMD. TXN Texas Instruments is doing well for me. I'd decided they too are a good management culture like Garmin. I don't often see Micron mentioned in the same articles. They must be too narrow a business, a cyclic producer and not much more. I'll have to decide what to buy instead.
I'm still undecided and will have to keep looking around. This could well be a glitch period and then it recovers. In which case it's a chance to buy while down.
In this case I'd noticed that the SOXX ETF did very well, and safer than the individual stocks. I took at as encouragement for the KRE ETF idea over individual issues.
Regional banks continue to report better than expected earnings. I would generally attribute that result to three factors: (1) lower loan loss reserve builds; (2) more than expected borrowers returning to normal payments after loan modifications; and (3) strong mortgage banking.
ReplyDeleteSouthside Bancshares Inc (SBSI) reported this morning, beating expectations by 26 cents per share.
"Third quarter diluted earnings per share of $0.82, an increase of 41.4% compared to same period in 2019."
"Nonperforming assets remain low at 0.23% of total assets";
"Total COVID-19 modified loans decreased 76.5%, to $76.5 million
efficiency ratio (FTE) = 50.07%
ROA = 1.48%
ROE = 12.89%
ROTE = 17.73%
NPL Ratio: .16%
NPA Ratio: .23%
Total Risk Based Capital Ratio= 19.03%
Tangible Book Value per share: $18.97
Charge Off Ratio: .04%
https://www.globenewswire.com/news-release/2020/10/23/2113526/0/en/Southside-Bancshares-Inc-Announces-Financial-Results-for-the-Third-Quarter-Ended-September-30-2020.html#:~:text=(%E2%80%9CSouthside%E2%80%9D%20or%20the%20%E2%80%9C,the%20same%20period%20in%202019.
Quote
https://www.marketwatch.com/investing/stock/sbsi
++
"United Bankshares (UBSI) EPS beats by $0.29, beats on revenue"
https://seekingalpha.com/news/3625270-united-bankshares-eps-beats-0_29-beats-on-revenue
Quote:
https://www.marketwatch.com/investing/stock/ubsi
Press Release:
https://www.businesswire.com/news/home/20201023005064/en/United-Bankshares-Inc.-Announces-Record-Earnings-for-the-Third-Quarter-of-2020
KRE is above 200MA and breaking out above it's recent high. I was checking after the market went down about buying in, but it's bucking the trend.
DeleteCuriously PBCT and First Bancorp are still below their 200 MA.
Looking at PBCT, it hasn't been this low since 2004. That's either not a good sign for the sector that it's been sinking (on the NIM as you've explained. Otherwise known as jihad on the savings class). Or a great opportunity for growth potential as well as div, when the economy really does start to recover.
I put in an order for 10 PBCT at 11.20. (Went back to lower it, and it's already filled.)
Would you apply small ball rules of buying only at lower prices?
INTC sunk 11% more today. Also curiously, hasn't gone below it's recent lows that it hovered at.
I have a little VZ. Want to add eventually. Did well in earnings this time.
This site has the report date. But it seems to be missing the updates for the last few days -- or I'm not using it correctly.
https://finance.yahoo.com/calendar/earnings?from=2020-10-18&to=2020-10-24&day=2020-10-21
Land: Even though regional bank stock have rallied some, investors IMO still view the sector with disfavor.
DeleteThe most recent rally started with better than expected third quarter earnings reports. Prices started to move up in anticipation of earnings yet to be released which was the case, for example, with PBCT yesterday.
The long term problem relating to net interest margin compression remains.
The PPP interest income and the fees paid by the government to make those loans have helped directly and indirectly. The indirect benefit is that those low interest loans which can be forgiven have cut down the number of borrower bankruptcies and probably helped many to come off loan payment deferrals earlier.
The rally stalled shortly after the bell today but is starting to gain some steam again in the last hour.
I still view the sector as worthy of more buys using the small ball strategy given the dividend yields and low P/E valuations, at least with the banks showing resiliency in the third quarter reports notwithstanding the recession and pandemic.
I view this sector and others as being derisked some due to the price declines, so I look at the 200 day SMA lines differently as providing a valuation cushion that can be enhanced through a small ball trading strategy and purchase restrictions.
For PBCT, I will discuss in my next post starting positions in two taxable accounts. I have preexisting positions in two ROTH IRA's and my Schwab account with about 90+ shares. All are in the green except for the Schwab account.
Victory is defined for PBCT as exiting the position with an annual average total return of 8% or higher. Most of that return can be secured through the dividend + a small profit on the shares.
I am using a small ball strategy in all accounts where each subsequent purchase has to reduce my average cost per share. I will consider selling highest cost lots on pops.
That's a clear summary. It's the impression I've gotten, from your recent posts, and looking at stocks in the sector.
DeleteSmall ball authorized. Hopefully there'll be opportunity to buy more, lower. The end of day rally, I imagine is all the optimism of a deal in the next two days, rolled into one. I don't see a deal. So hopefully that will be my opportunity.
It must be hard on people for whom that $1200 check matters a good deal.
It's funny on this, I took the below 200 MA as fine. It's part of buying into hopefully value, already down. There must be some banks above their 200 day for KRE to be.
The day started with value rallying, but that's not how it closed. I've finding this a news-cycle based emotionally unclear or erratic market.
Land: I own several regional bank stocks that have recently crossed above their 200 day SMA lines using a 1 year chart.
DeleteE.G. EBMT, HBAN, KEY, FNLC, BHB, HBNC, LARK, CCNE, WBS, ONB
A few others are right at the line: WASH, EBTC
All of these stocks had awful looking charts before moving over the 200 day SMA lines over the past few days or closer to it.
Well...that answers how KRE is over 200. Quite a few moved over when these two hadn't yet.
DeleteThese charts are poor. But they aren't quite as awful as falling knives! Seems like the deep value but still with risk, type.
Got another note from First Foundation about a rate reduction. .75%
Discover Bank is .60%. So I'm .15% ahead! Weeee. If these were brooms, the floor would be very clean.
I wish someone would poll investors what they expect if Biden vs Trump wins. The broad economic question on some polls isn't enough info.
Horizon Technology Finance Corp. 6.25% Notes Maturing on 09/15/22 (HTFA)
ReplyDeletehttps://www.marketwatch.com/investing/stock/htfa
Normally, I would not fool with buying an exchange traded bond that is so close to maturity. But with the advent of zero commissions and .01% yields on idle cash, a 6.25% yield on this SU bond looks respectable so I added to my position today at less than the $25 par value.
The next ex interest date is 11/30/20 according to data furnished by Schwab. The current spread is $24.83 bid/ $24.9 ask. Par value is $25.
The issuer may call early at anytime.
Last Discussed: Item #4.A
https://tennesseeindependent.blogspot.com/2020/06/bpyup-ccne-cna-d-ddt-fnb-good-hrzn-htfa.html
I discussed restarting the common shares in that post as well. Item # 1.A.
The only disadvantage is that it can be called at anytime? Otherwise, it's a nice yield for as long as it lasts?
DeleteI'm getting so many requests for money. They're multiplying like rabbits. I keep thinking of your comment about the plethora of them since giving. What are they going to do with money now? They can't spend it fast enough.
DeleteLand: It does not matter how long it lasts when I can buy at less than par value, paying no brokerage commission, and the alternative is .01%. If redeemed early, the issuer will owe accrued and unpaid interest. I am not currently concerned about the credit risk. The issuer is a BDC.
DeleteLand: I have received so far today over 300 emails from my new friends asking for more money than I have already donated to their campaigns. Some are from candidates who want to become my friend, provided I donate to their campaign and then they were barrage me with daily requests for more. Politicians are insatiable for cash.
DeleteI did not watch the debate last night. I am unable listen to Donald lying non-stop. According to the fact checkers, he lied more last night than he did in the first debate and virtually every sentence uttered by him then was false.
Yes, I have many new friends around the country, from districts counties I've never heard of. I am also lauded for my support of causes of all sorts, some I definitely would not have considered signing up for.
DeleteI am sure you are very popular.
I had the debate on last night. I also was doing some work, which did get done. Meanwhile, my mute button was necessary. I simply can't listen. Which makes it disjointed and somewhat confusing. The most noticeable is that I don't know why but apparently NO is so hard to say. He talked over the moderator, and then she'd add "okay you have 10 secs more" and he'd take 30. They needed to send in a kindergartner teacher, since they do know how to say "be quiet now" and mean it! You didn't miss anything. Nothing.
Not even an entertaining fly.
I am committed to do volunteer work tomorrow all day. May my drop in the bucket help.
I have published a new post.
ReplyDeletehttps://tennesseeindependent.blogspot.com/2020/10/aod-bdge-bhb-bpyup-brgpra-ediv-exg-fidi.html