CLOU, DNB, EBIZ, ERC, FLYW, IMGN, IRM, JRI, MBWM, NWBI, SMMV, VT

Economy: 

Fed Chair Powell calls inflation 'frustrating' and sees it running into next year

Costco, Nike and FedEx are warning there's more inflation set to hit consumers as holidays approach  bill to avert government shutdown and debt default - YouTube

U.S. auto sales forecast to plummet in third quarter as chip shortage plagues industry

Household Debt Service and Financial Obligations Ratios The trends remain favorable. 

Yesterday, liberal House Democrats prevented the passage of the $1T bipartisan infrastructure bill ($555B in new funding) that was approved in the Senate by a 69 to 30 vote.  House Delays Vote on Infrastructure Bill as Democrats Feud - The New York Times The "progressives" wanted assurances that the $3.5T human infrastructure and climate bill will pass in the Senate, which will never happen given the opposition of two Democrats. Senator Manchin (D-WV) said he would vote for no more than $1.5T. Manchin Proposal.pdf Senator Sinema (D-AZ) opposes the $3.5T bill but plays coy on what she will accept. News report indicates that she opposes the tax increases that Manchin will accept. If this dysfunction continues for much longer, the odds that the Republicans will win back the Senate and House in 2022 rise significantly IMO.  

+++

Markets and Market Commentary: 

Merck to seek emergency authorization for oral Covid-19 treatment I mentioned in my last that Roche and its partner Atea Pharmaceuticals (AVIR) are moving an oral Covid treatment (AT-527) through trials. When I last checked, AVIR was up over $10 in pre market trading this morning.  AT-527 | Atea Pharmaceuticals

Professor Jeremy Siegel who called Dow 20,000 says he’s nervous about trends in inflation that could spark a stock-market correction - MarketWatch

Goldman Sachs hikes oil forecast to $90, citing ‘most bullish hurricane in history’ - MarketWatch

Here are five places to invest for income that Wall Street is overlooking, says Fidelity manager - MarketWatch

Multi-asset income: how does it work? - Schroders global 

These 3 Dividend Stocks Could Soar Between 23% and 32%, According to Wall Street | The Motley Fool (BMY, EPD, and MA are the 3 stocks mentioned. I own only BMY)

Tracing the Bond Market’s Historic Bull Run | Barron's Barron's claims that the bull market started on  9/30/1981 when the ten year treasury topped out at a 15.82% yield. The 50 year bull market in bonds was preceded by a 32+ year bear market which started during another period when the FED suppressed the ten year treasury yield well below the inflation rate.  

+++

Arizona ballot review commissioned by Republicans reaffirms Biden’s victory - The Washington Post I would place zero reliance on this "audit". Nonetheless it confirmed Biden's victory in Arizona. The review added 99 votes to Biden's count and took away 261 votes from Trump. Don the Authoritarian, the unchallengeable leader of America's anti-democracy, pro-authoritarian party, responded with a demand that Arizona's Republican Attorney General Mark Brnovich, who is running for the Senate, launch a criminal investigation and for the Republican Governor to decertify the election results.

At a "Save America" rally held on 9/25/21, Don the Con told the cheering crowd that the brazenly partisan Arizona "audit" proved there was fraud. At Georgia Rally, Trump Falsely Claims Arizona Audit Found He Won in Maricopa County; PolitiFact | Trump falsely describes Arizona audit findings (rated Pants on Fire);Fact check: Arizona audit affirms Biden win, doesn't prove voter fraud-USA Today; Arizona audit debunks Trump’s false claims, but the poison of misinformation still threatens the electoral process - The Washington Post Before the Republicans launched their brazenly bogus "audit" financed by rich Trumpsters and conducted by an election conspiracy theorist, real audits had already confirmed Biden's victory. No one, who is alive today and is well known, lies more than Donald IMO.  No one comes close. 

It needs to be remembered that Don the Authoritarian demanded that Pence reject the Arizona certified results since Trump was claiming fraud. Trump pressures Pence to throw out election results-POLITICO; Mike Pence Sought Way To Hand Election To Trump Claims Book - YouTube; Fact check: Fact check: Eastman's arguments on overturning the 2020 election are pure fantasy; READ: John C. Eastman-Trump lawyer's memo on six-step plan for Pence to overturn the election;  John C. Eastman - Wikipedia

And it needs to be remembered that 126 Republican House members, including the GOP House leaders Kevin McCarthy and Steve Scalise, and 18 Republican state AGs petitioned the Supreme Court to throw out the certified election results in Georgia, Michigan, Pennsylvania and Wisconsin (all won by Biden) and allow Republican dominated state legislatures to decide whether Biden or Trump won those states.  

Prayer for Relief: Sourced: Supreme Court filing 

This needs to sink in really deep. The requested relief was to cancel millions of votes cast by legal voters and then in effect anoint Don the Authoritarian as President. Donald and most Republican politicians put their stamp of approval on this effort.   

Nearly a dozen states enacted laws this year that could subvert the results of future elections, an analysis finds, citing VRL: Election Subversion Report. All of those states are controlled by Republican legislatures.  

Texas Caves To Donald Trump And Announces Election Audit Trump won Texas. 

Texas’s redistricting effort opens with a draft map protecting Republican incumbents against growing numbers of Democratic-leaning voters - Washington Post The Republicans are targeting people of color in an effort to diminish their voting power. 

Opinion | Our constitutional crisis is already here - The Washington Post (noting, correctly IMO, that a few Republican election officials, who performed their duties in battleground states, have been "systematically removed or hounded from office" by Republicans; 16 Republican controlled states have already passed or proposed shifting election authority away from election officials to the republican dominated legislatures; and the Republicans in Arizona are advancing a bill that will allow the republican controlled legislature to decertify election results. Those are not conservative, pro-Democracy policies and actions, of course, but are consistent with an anti-democratic and authoritarian policies and actions) 

I agree with the former Bush speechwriter David Frum that the continued existence of America's Democracy will be on the ballot in 2022 and 2024. David Frum: How Democrats Could Trigger a Trump Comeback - The Atlantic 

If Demagogue Don is healthy, I believe that the will run again in 2024 and will win the Republican nomination. "A psychopath": Psychologists call Trump the "most psychiatrically disordered president in history"; Say it plainly: Trump is a psychopath - New York Daily News; Psychoanalyst: Trump Is “Delusional Psychopath” Who Needs To Be Removed Immediately 'He's A Psychopath': Trump Insider Says Military Will Haul Trump Out Of The White House-YouTube; The 'Shared Psychosis' of Donald Trump and His Loyalists - Scientific American I would also anticipate that almost all of the 74+ million individuals who voted to give him another 4 year term will do so again. 

7 Characteristics of the Modern Psychopath | Psychology Today

Peril - Kindle edition by Woodward, Bob, Costa, Robert- Amazon.com 

Trump-Endorsed Cheney Challenger Harriet Hageman Called Him 'Racist, Xenophobic' in 2016 It is standard fare to abandon principles, assuming any exist, when Trump's endorsement is at stake.  Lindsey Graham: Trump is a 'race-baiting, xenophobic' bigot (2015) - CNN Video It is all about power rather than "conservative" principles. 

How Tucker Carlson twisted a 2015 clip of Biden into a conspiracy theory - The Washington Post

George Will On How Trumpism Became Republican Dogma - YouTube

Republican Senators Dan Sullivan, Marsha Blackburn, and Josh Hawley aim their fire at the military - The Washington Post

CNN tracks down doctor, Simone Gold, spreading dangerous lies. Hear her shocking claims - YouTube She has been indicted for participating in the 1/6 insurrection. She has pleaded not guilty.  

+++++

As previously noted, I have been eliminating my small ball stock ETF positions. I use those ETFs to increase my stock allocation and will sell them when I am in a stock allocation reduction mode.  I bought a large number of them more than a year ago during 2020.  

I have been using some of the proceeds to buy individual dividend paying stocks with dividend yields in excess of 3% and below market P/E ratios. 

An example is the 10 share purchase of a microcap regional bank, Mercantile Bank (MBWM),  discussed in Item # 1.C. below. 

The focus has been on dividend stocks with high single digit, or low double digit P/E ratios that are expected to grow earnings in 2021 and 2022. 

I am paring some dividend stock positions where valuations are high IMO due to significant increases in prices since my purchases. An example is IRM discussed in Item 1.A. below. 

I am continuing to buy stock Lottery Tickets as a form of entertainment. 

1. Small Ball-All About Risk Mitigation: 

A. Pared IRM Again in Fidelity Taxable-Sold 3 at $49.12: 

Quote: Iron Mountain Inc (IRM)

Closing Price 9/30/21: IRM $43.45 -$0.86 -1.94% 

SEC Filings

2020 IRM Annual Report

10-Q for the Q/E 6/30/21 

Long Term Debt as of 6/30/21 (page 21-10-Q): 

Website: Iron Mountain Inc (IRM)

Investment Category: Equity REIT Common and Preferred Stock Basket Strategy

Last Buy Discussions:  Item # 2.E. Started IRM in Schwab Taxable Account-Bought 10 at $26.8; 5 at $25.8; 5 at $25.25; 5 at $24.9 (12/5/20 Post); Item # 1.B. Added 3 IRM at $22.99; 2 at $22.31 (6/20/20 Post); Item # 2.F. Added to IRM in Fidelity Taxable-Bought 1 at $26.88; 2 at $26.2; 1 at $25.7; 1 at $25.52; 1 at $24.96 (12/5/20 Post)(substantive discussion); Item # 2.A. Added 1 IRM at $26.46; 1 at $26.07; 1 at $25; 2 at $23.95; 1 at $23.3; 1 at $23.76; 1 at $24.33; 1 at  $22.61; 1 at $24.33; 1 at $22.6 and 1 at $21.79 (5/2/20 Post)

Profit Snapshot: $86.06 (9/2/21 sale only)

New Average Cost Per Share this account = $23.59 (17 shares)

Snapshot Intraday on 9/2/21 after pare

The AC per share was reduced from $24.01. 

Dividend: Quarterly at $.618 per share ($2.472 annually)

Yield at New AC this account = 10.48%

Last Ex Dividend: 9/14/21

Last Earnings Report (Q/E 6/30/21): SEC Filed Press Release

Revenue = $1.12B

AFFO = $246M

AFFO per share = $.85 

2021 Guidance: 

Sell Discussions: Item # 2.K. Pared IRM in Fidelity Taxable Account-Sold 5 at $44.18; Item #2.L. Pared IRM in Vanguard Taxable-Sold 1 at $46.19; and Item # 2.M. Pared IRM in Schwab Taxable-Sold 1 at $46.93  (6/19/21 Post); Item # 1.K. Sold 5 IRM at $37.69 (4/30/21 Post); Item #1.B. Sold 2 IRM at $35.63; 5 at $36.8 (2/27/21 Post); Item # 1.L. Sold 5 IRM in Schwab Account at $36.42  and Item #1.M. Sold 2.731 in Fidelity Account at $36.86 (4/1/21 Post); Item #1.B. Sold 2 IRM at $35.63; 5 at $36.8 in Fidelity Taxable (2/27/21 Post); Item # 1.B. Pared IRM-Sold 15 at $33.04 (2/22/20 Post); Item # 1.C. Sold 10 IRM at $33.91-Used Commission Free Trade (12/26/18 Post); Item # 3 Sold 50 IRM at $33.82 Update For Equity REIT Basket Strategy As Of 4/6/16 - South Gent | Seeking Alpha

The goal in all accounts for this stock is a total return in excess of the dividend payments before the ROC adjustments to the tax cost basis.

Broker Reports (available to Schwab customers): 

Credit Suisse (8/5/21): Underperform with an $18 PT. This analyst has been super negative for years. The analyst argues that IRM faces the following risks: slower recovery from Covid loss in demand; high existing leverage, lack of financial flexibility and high capital spending; volume declines in physical storage; execution risks in carrying out IRM's Project Summer restructuring; and customer acquisition costs. The $18 PT is based on the analyst's applying a 9x multiple to his 2023 EV/EBITDA estimate. The most favorable "blue sky" scenario, which is not what this analyst predicts, would be a $31 price. 

S & P (8/17/21): 4 stars with a 12 month PT of $47 

IRM Realized Gains to Date: $893.71 (Most of the realized gains occurred this year and in 2016: $450.36 in 2021 so far and $398.06 in a 50 share round-trip in 2016) The gain excludes a trade made in 2013 before IRM was a REIT. 

B. Eliminated EBIZ-Sold 1 at $32.93; 2 five share lots at $33: 

Quote:  Global X E-commerce ETF Overview

Closing Price 9/30/21: EBIZ $30.18 -$0.13 -0.42% 

Sponsor's Website: E-commerce ETF

Profit Snapshots: $83.83 

5 Shares Fidelity Taxable +$60.59

1 Share Vanguard Taxable +$3.77

5 Shares Schwab Taxable +$19.47 

Last Discussed: Item # 2.L. Bought 5 EBIZ at $20.88 (5/30/21 Post) 

Top Holding as of 9/23/21: Note that Amazon, the leading online retailer, is not among the top ten holdings which is impossible to justify IMO. 

C. Started MBWM-Bought 5 at $30.4; 5 at $29.95: 

Quote: Mercantile Bank Corp. 

Closing Price 9/30/21: MBWM $32.03 -$0.54 -1.66% 

This is a new name for me. 

"Based in Grand Rapids, Michigan, Mercantile Bank Corporation is the bank holding company for Mercantile Bank of Michigan. Mercantile provides banking services to businesses, individuals and governmental units, and differentiates itself on the basis of service quality and the expertise of its banking staff. Mercantile has assets of approximately $4.7 billion and operates 43 banking offices."

MBWM Analyst Estimates | MarketWatch (as of 9/28/21, the 2021 consensus E.P.S. was $3.67; $2.79 for 2022; and $2.93 for 2023). I do not have access to those analyst reports and consequently can only guess why the consensus E.P.S. declines from $3.67 this year to $2.79 in 2022. My guesses are the analysts anticipate a meaningful income decline from selling mortgage loans due to a rise in interest rates, the loss of income generated by PPP loan fees, and continued pressure on NIM or an insignificant increase from rising spreads.  Nonetheless, if I assumed that $2.79 proved to be an accurate prediction for 2022, and I suspect it is too pessimistic without a recession, the P/E at my average cost of $30.18 would be 10.82.  The significant predicted Y-O-Y decline in E.P.S., however, is not a favorable condition for stock price appreciation, notwithstanding that low valuation.  

MBWM SEC Filings 

10-Q for the Q/E 6/30/21 

Investment Category: Regional Bank Basket Strategy

Average Cost per share =  $30.18 (10 shares)

Dividend: Quarterly at $.30 per share, last raised from $.29 effective for the 2021 third quarter payment. 

MBWM Dividend History | Nasdaq

Yield at AC = 3.98%

Last Ex Dividend: 9/2/21. I bought 5 shares the day before this ex dividend date after noticing that the stock was down $.80 per share intraday. The prior day close was at $31.2. I then bought 5 shares after the ex dividend date. 

5 year financial data: 

2020 Annual Report at page F-3 

Last Earnings Report (Q/E 6/30/21): SEC Filed Press Release

SEC Filed Investor Presentation (charts and tables)

E.P.S. = $1.12, up from $.54 in the 2020 second quarter

NIM = 2.76%, down from 3.17% in the 2020 second quarter  (fairly typical problem)

Efficiency Ratio: 57.66% (okay)

NPL Ratio = .08% (excellent)

NPA Ratio = .07% (Excellent)

Charge off ratio: (.04%, net recovery/Excellent)

ROA = 1.53% (better than average)

ROE = 16.27% (excellent)

Tangible Book Value per share = $25.03

Income for the sale of mortgage loans = $7.69M, down from $10.199M in the 2020 2nd Q. 

Regulatory Capital Ratios as of 6/30/21: 

D. Pared ERC Again-Sold Highest Cost 12 Shares at $13.18:

Quote: Wells Fargo Multi-Sector Income Fund Overview

ERC SEC Filings

Last SEC Filed Shareholder Report (semi-annual for the period ending 4/30/21)

One reason for selling shares is that this fund is selling at a premium to net asset value per share now.  

Leverage:  27.93% as of 9/24/21

As of 4/30/21, the fund had a revolving credit facility that "charged interest at the 30 day London Interbank Offered Rate (LIBOR) plus 0.70% or the 1 Month LIBOR plus 0.70% and a commitment fee of 0.15% per annum of the unutilized amount of the commitment amount." For the 6 month period ending on 4/30/21,  the fund "had average borrowings outstanding of $139,000,000 at an average interest rate of 0.84% and paid interest in the amount of $583,866, which represents 0.32% of its average daily net assets (annualized)." Source: Page 50 of the shareholder report linked above. 

Low cost leverage does allow the fund to support a higher dividend than a non-leveraged fund owning the same securities. The additional income is generated by the spread between the borrowing cost and the yields on income producing securities bought with those borrowed funds. 

The fund IMO does not have a good track record in generating profits. As of 4/30/21, the unrealized gain was at $9.79M with a cost basis of $498.653M or just 1.96%. And, the fund had unused capital loss carryforwards of "$13,476,458 in short-term capital losses and $26,393,929 in long-term capital losses."  The bottom line for me is that this fund is kept on a short leash, and my exposure will be light years below insignificant. The goal is to earn a return in excess of the dividends paid.   

Profit Snapshot: +$34.84 (8/31/21 sale only)

AC per share Before Pare = $8.82

AC after Pare = $8.56 (28 shares)

Snapshot Intraday on 8/31/21 after pare

Dividend: Monthly at a slightly variable rate  (ROC supported)

Yield at $8.56 = 13.18% (assumes an estimated $.094 average penny rate)

Last Ex Dividend: 9/13/21

Data Date of 8/31/21 Trade: 

Closing Net Asset Value per share = $12.88

Closing Market Price: $13.19

Premium =  +2.41%

Sourced: ERC-CEF Connect 

The premium has increased since 8/31. This indicates to me that the fund is currently attracting yield hogs.  

E. Restarted Lotto IMGN-Bought 5 at $5.95; 5 at $5.49: 

Quote: Immunogen Inc

IMGN SEC Filings

2020 Annual Report 

Our Pipeline | ImmunoGen for ADC Technology-focused Cancer Treatment

Investment Category: Blackjack Hand, part of the Lottery Ticket Basket

I have no measurable confidence that IMGN will receive either a favorable FDA decision for its lead drug candidate mirvetuximab or, if approved, that the costs of manufacturing marketing and trials will justify its pursuit. At IMGN's current stock price, investors are expressing the same opinions and consequently would be surprised, or shocked may be the better word, when and if this drug becomes meaningfully successful when and if approved.  

I am merely making a blackjack hand bet that I am wrong which is a possibility. And, buying stock Lottos is a form of entertainment for the Old Geezer. 

IMGN has had some success, but has sold it royalties to advance its clinical stage compounds.  (see pages 12-13 for the drug Kadcyla , 10-Q for the Q/E 6/30/21) 

Investors bid up the stock after IMGN reported a $.16 per share profit in the 2020 4th quarter. SEC Filed Press Release As I previously explained, the profit was an illusion created by accounting conventions: 

The company is burning through money at a rapid rate. And, it is supporting its clinical trial program through its ATM program.  

Most Recent Buy Discussion: Item # 2.B. Restarted IMGN-Bought 10 at $5.85 and 5 at $5.45  (12/12/20 Post)

Sell Discussions:  Item # 2.H. Eliminated IMGN Again-Sold 15 at $10.5 (3/16/21 Post)(profit snapshot = $71.75); Item # 3 Sold 50 IMGN at $9.58 (2/12/2018 Post)(profit snapshot = $383.48); Item # 3.C. Sold 100 IMGN at $3.55 (3/8/17 Post)(profit snapshot = $77.48)  

IMGN Realized Gains to Date = $532.71 

Last Loss Report (Q/E 6/30/21): SEC Filed Press Release 

F. Eliminated SMMV in Vanguard Account -Sold 5 at $38.65: 

Quote: iShares Edge MSCI Minimum Volatility USA Small-Cap ETF Overview

Closing Price 9/30/21: SMMV $37.08 -$0.43 -1.15% 

Sponsor's Website: iShares MSCI USA Small-Cap Minimum Volatility Factor ETF

Expense Ratio = .2%

Morningstar Page: iShares Edge MSCI Min Vol USA Sm-Cp ETF (SMMV)-Morningstar (currently rated 4 stars)

Profit Snapshot: +$24.25 (RI)

Last Buy Discussion: Item # 1.G. Bought 5 SMMV in Fidelity Account at $28.96 (8/8/20 Post)

Last Sell Discussion: Item # 1.E. Eliminated SMMV in Schwab Taxable-Sold 5 at $38.22 (5/16/21 Post)(profit snapshot = $22.1)  

Dividends: Quarterly at a variable rate

I find it silly to pay a dividend with six digits after the decimal point. The fund should simply pay a round number for 3 quarters and whatever income remains in the 4th quarter dividend.  

Last 4 Dividends = $.52 per share (rounded)

Yield at $38.65 = 1.35%

This kind of yield is one reason why I am selling stock ETFs. 

Some Top Holdings as of 9/23/21: 

Of those stocks, I currently own a few shares of CUBE and have been paring my position. Item # 1.L. Pared CUBE Again-Sold 1 at $53.15 (9/24/21 Post)(reduced AC to $21.19) 

I have recently acquired and eliminated IDA. 

G. Eliminated SMMV in Fidelity Taxable-Sold 5 at $37.83: 

See Item #1.G. above

Profit Snapshot:  +$44.37

H. Eliminated FLYW in Fidelity Account-Sold 3 at $47.03: 

Quote: Flywire Corp.

Closing Price 9/30/21: FLYW $43.84 +$0.20 0.46% 

Investment Category: Lottery Ticket Basket 

Last Discussed: Item # 2 Bought 2 FLYW at $31.6 (8/6/21 Post) I still own those 2 shares. 

FLYW Analyst Estimates | MarketWatch

SEC Filings

Profit Snapshot: $43.19

Last Loss Report (Q/E 6/30/21): SEC Filed Press Release

GAAP revenue increased 56% Y-O-Y: 

 

I. Pared JRI Again-Sold 12.661 Shares Bought with Dividends at $16.31: 

Quote: Nuveen Real Asset Income & Growth Fund Overview- A Leveraged CEF

Closing Price 9/30/21: JRI $15.25 -$0.09 -0.59% 

"The Fund seeks to deliver a high level of current income and long-term capital appreciation by investing in real asset-related companies across the world and the capital structure, including common stocks, preferred securities, and debt. Real asset-related companies include those engaged in owning, operating, or developing infrastructure projects, facilities, and services, as well as REITs."

Number of Holdings: 452 as of 9/31/21

Asset Allocation as of 8/31/21: 

JRI SEC Filings

Effective Leverage as of 8/31/21: 28.82%

Sponsor's Website: Nuveen Real Asset Income and Growth Fund

Last Buy Discussions: Item # 1.G. Added to JRI-Bought 10 at $11.8; 10 at $11.66 (8/1/20 Post); Item # 1.C. Added 5 JRI at $8.95; 10 at $8.09; 10 at $10.16; 10 at $10.66 (5/16/20 Post)

Profit Snapshot: $53.03  (9/2/21 sale only)

New average cost per share this account = $10.42 (107 shares)

Snapshot intraday on 9/2/21 after pare

The AC per share was reduced from $10.6

Dividend: Monthly at $.0965 ($1.16 annually rounded)

Yield at new AC = 11.13%

Data Date as of 9/2/21:  

Closing Net Asset Value per share  = $17.5

Closing Market Price: $16.29

Discount: -6.91%

Sourced: JRI-CEF Connect 

Sell Discussions: Item # 2.C. Pared JRI-Sold 22.235 at $16.11(8/6/21 Post)(profit snapshot = $42.31); Item # 2.A. Pared JRI-Sold 30 at $15.9-highest cost shares (6/19/21 Post)(profit snapshot = $14.73); Item # 1.K Eliminated JRI in Schwab Taxable Account-Sold 100 at $11.48  (6/6/20 Post)(profit snapshot = $69.35); Item # 2.A. Sold 102+ JRI at $17.98 (12/22/19 Post)(profit snapshot = $140.67); Item # 1.A. Sold 100 JRI at $17.51(10/30/19 Post )(profit snapshot = $100.41); Item # 4 Sold 100 JRI at $17.23 (10/2/19 Post)(profit snapshot = $40.45)  

Realized Gains to Date: $480.92

J. Pared FFNW in Schwab Taxable-Sold 5 at $16.25 on the ex-dividend date: 

Quote: First Financial Northwest Inc.  (FFNW)

FFNW Analyst Estimates

FFNW SEC Filings

Last Buy Discussion: Item # 1.B. Started FFNW in Schwab Taxable- Bought 10 at $9.55; 5 at $9.05 (10/3/20 Post) 

Investment Category: Regional Bank Basket Strategy

Profit Snapshot: $33.5

New AC per share this account: $9.3 (10 shares)

Dividend: Quarterly at $.11, last raised from $.10 effective for the 2021 first quarter payment. 

First Financial Northwest, Inc. Common Stock (FFNW) Dividend History | Nasdaq

Yield at New AC = 4.73%

Last Ex Dividend: 9/2/21

Last Earnings Report (Q/E 6/30/21): 

First Financial Northwest, Inc. (FFNW) Reports Second Quarter Earnings 

net income of $3.8M or $.40 per share with the consensus per Fidelity at $.244; 

NIM = 3.36%, up from 3.12% in the 2020 second quarter; 

efficiency ratio =66.92%; 

a big deal for this small bank is that a $2M nonperforming loan paid off; 

NPA Ratio = .03%; 

NPL Ratio = 0.00%; 

net recovery-no charge offs; 

ROA = 1.07%; 

ROE = 9.54%; 

tangible book value per share = $16.58; 

total capital ratio = 15.7% 

I also own 15 shares in my Fidelity taxable account with an average cost per share of $9.46: 

As of close on 9/27/21

K. Eliminated CLOU (Fidelity Taxable)-Sold 10 at $31.4: 

Quote: Global X Cloud Computing ETF Overview

Closing Price 9/30/21: CLOU $29.28  +$0.14 + 0.48% 

Sponsor's Website: Cloud Computing ETF

Number of Holdings: 32

Expense Ratio = .68%

Last Buy Discussion: Item # 1.D. Bought 10 CLOU at $16.25 (5/23/20 Post) 

Profit Snapshot: +$151.49 

Dividends: None

Fund Characteristics: I thought the P/E would be higher. 

Top 10 Holdings as of 9/24/21:

I currently have small ball positions in CRM and DBX.

L. Eliminated VT in Fidelity Account-Sold 1 at $106.76: 

Quote: Vanguard Total World Stock ETF Overview

Closing Price 9/30/21: VT $101.83 -$0.70 -0.68% 

Sponsor's Website: VT - Vanguard Total World Stock ETF

Expense Ratio: .08%

Number of Stocks as of 8/31/21: 9,102

Some Holdings: 

Profit Snapshot: $46.77

Item 1.D. Bought 1 VT at $59.99 in my Fidelity Taxable Account (5/30/20 Post)

Last Buy Discussion: Item # 1.P. Bought 1 VT in Vanguard Taxable at $96.19  (4/1/21 Post) 

Prior Sell Discussion: Item # 3.D. Sold 5 VT at $79.01 (12/18/19 Post)

Vanguard Total World Stock ETF (VT)-Morningstar (currently rated 4 stars)

Dividends: Quarterly at a variable rate. 

Last 4 dividend payments: $1.72 rounded

Yield at $106.76  = 1.61%

For an investor focused far more on current income generation than capital appreciation, a 1.61% dividend yield is not a desired outcome. It is acceptable when combined with the realized gain of 78% on the 1 share lot, provided I do not lose it. 

M. Bought 5 DNB at $16.96: 

Quote: Dun & Bradstreet Holdings Inc. 

Closing Price 9/30/21: DNB $16.81 +$0.11  +0.66%  

"Dun & Bradstreet is a leading global provider of business decisioning data and analytics. . . As of December 31, 2020, we had a global client base of approximately 137,000, including some of the largest companies in the world. Covering nearly all industry verticals, including financial services, technology, communications, government, retail, transportation and manufacturing, our data and analytics support a wide range of use cases. In terms of our geographic footprint, we have an industry-leading presence in North America, a growing presence in the United Kingdom, Ireland, Northern and Central Europe, India and Greater China through our majority or wholly-owned subsidiaries and a broader global presence through our Worldwide Network alliances "

On 1/21/21, DNB "acquired 100% ownership of Bisnode, a leading European data and analytics firm and long-standing member of the Dun & Bradstreet WWN alliances, for a total purchase price of $805.8 million. The transaction closed with a combination of cash of $646.9 million and 6,237,087 newly issued shares of common stock of the Company in a private placement valued at $158.9 million based on the stock closing price on January 8, 2021. Upon the close of the transaction, we settled a zero-cost foreign currency collar and received $21.0 million, which reduced our net cash payment for the acquisition. The transaction was partially funded by the proceeds from the $300 million borrowing from the Incremental Term Loan."  10-Q for the Q/E 6/30/21 at page 26 

DNB Analyst Estimates | MarketWatch (as of 9/27/21, the non-GAAP average E.P.S. estimate for 2021 was $1.05; $1.15 for 2022 and $1.29 for 2023). Using the consensus estimate for 2022 and a $16.96 price, the P/E is 14.74)

DNB SEC Filings 

Investment Category: Lottery Ticket Basket 

Long Term Debt: $3.545B with long term pension and post-retirement benefits adding $516.5M to that burden.  I view this as too much leverage for this business which is the main reason for the Lotto classification. Moody's has a B1 rating on DNB's senior secured debt and a Caa1 rating on its senior unsecured debt. (sourced Moody's report dated 7/16/2020, upgrading SU debt from Caa2 to Caa1 and senior secured from B2 to B1). Those are speculative credit grades. 

Chart: Bear Market of unknowable duration 

Dividend: None and none expected. 

Last Earnings Report (Q/E 6/30/21): SEC Filed Press Release 

Revenues = "$520.9 million, an increase of 24.4% and 23.2% on a constant currency basis compared to the second quarter of 2020, which includes the net impact of lower deferred revenue purchase accounting adjustments of $2.1 million."

GAAP Loss  = ($51.7M)

GAAP Loss per share = ($.12)

Non-GAAP Income = $108M

Non-GAAP E.P.S. = $.25

Reconciliation of GAAP Loss to Non-GAAP Income: 

I have no problem with those adjustments. The largest add back was $133M in non-cash amortization of intangibles. 

2021 Outlook: 

Maximum Position: 20 shares, viewed as high risk but made into a more attractive speculation due to recent downtrend in price IMO.  

Broker Report (available to Schwab customers): 

Credit Suisse (8/3/21): Outperform with a $33 PT. The analyst was surprised by the negative response to the 2nd quarter earnings report which was viewed as "solid results" by this analyst. The analyst noted that the non-GAAP E.P.S. was above expectations as way the 2.8% growth in organic revenue. 

N. Restarted NWBI-Bought 5 at $12.55 (RI): 

Quote: Northwest Bancshares Inc. 

Closing Price 9/30/21: NWBI $13.28 -$0.12 -0.90% 

I am going to start mentioning here a few Roth IRA trades.  

As of 12/31/20, NWBI conducted its "business through our main office located in Warren, Pennsylvania, 93 other full-service offices and six free-standing drive-through locations throughout our market area in central and western Pennsylvania, 30 full-service offices and one free-standing drive-through location in western New York, 13 full-service offices and one free-standing drive-through location in eastern Ohio, and 25 full-service offices locations in Indiana. At December 31, 2020, our premises and equipment had an aggregate net book value of approximately $161.5 million." 

NWBI Analyst Estimates | MarketWatch

NWBI SEC Filings 

2020 Annual Report 

Number of Banking Offices: 170

Investment Category: Regional Bank Basket Strategy

5 Year Historical Financial Data: 

Dividend: Quarterly at $.20, last raised from $.19 per share effective for the 2021 second quarter payment. 

NWBI Dividend History | Nasdaq

Yield at $12.55: 6.37%

This yield is hard to ignore entirely. My trepidation is due to what I consider a poor loan loss and earnings growth history.  

Last Ex Dividend: 8/4/21

Marketable Securities Available for Sale as of 6/30/21: 

Last Earnings Report (Q/E 6/30/21): SEC Filed Press Release

Net Income = $.49M (enhanced by a "$25.3M pre-tax gain from the previously disclosed sale of its insurance business to USI Insurance Services on April 30, 2021."

E.P.S. = $.38

NIM  = 2.91%

Efficiency Ratio = 67.25% (too high, needs to fall below 60%)

The efficiency ratio calculation "excludes gain on sale of insurance business, amortization of intangible assets and merger, asset disposition and restructuring expenses (non-GAAP)"

Charge-off ratio = .22% (better than average)

NPL Ratio = 2.01% (way too high IMO)

NPA Ratio = 1.46% (too high)

Coverage Ratio = 56.66%

Tangible Book Value Per Share = $9.22

Other ratios impacted by the $25.3M pre-tax gain from the sale of NWBI's insurance business. 

"Total interest income increased by $1.7 million, or 0.8%, to $210.6 million for the six months ended June 30, 2021 from $208.9 million for the six months ended June 30, 2020. This increase is the result of an increase in the average balance of interest-earning assets of $2.385 billion, or 22.3%, to $13.070 billion for the six months ended June 30, 2021 from $10.685 billion for the six months ended June 30, 2020 due primarily to internal growth as well as the MutualBank acquisition. Offsetting this increase was a decrease in the average yield earned on interest-earning assets to 3.23% for the six months ended June 30, 2021 from 3.93% for the six months ended June 30, 2020. This decrease in average yield is attributed to a decline in overall market interest rates."

Regulatory Capital as of 6/30/21: Solid IMO

NWBI Realized Gains to Date: $216.75

Sell Discussions: Item # 1 Sold 156+ NWBI at $12.52 (6/30/11 Post); Item # 2 Sold 50 NWBI at $12.5 (2/22/11 Post); Item # 1.I. Eliminated NWBI - Sold 15 at $10.48 (9/5/2020 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 sale 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 my family members.