Economy:
JPMorgan Now Expects Nine Straight Fed Rate Increases Until March 2023 | Barron's Each predicted increase would be just .25%. I am looking forward to those hikes given my cash balances, and maybe the Stock Jocks will eventually freak out giving me better entry points in dividend paying stocks. I would welcome a 50% decline.
Russia has launched a full scale invasion of Ukraine.
This invasion will IMO have more of an impact on U.S. investor sentiment than on U.S. corporate profits. The initial reaction will be a significant decline in U.S. stock prices, in part due to a growing recognition that Putin is a violent and insane psychopath who may not stop with Ukraine.
Russia's military aggression will cause energy prices to spike, which will feed into inflation. WTI looks like it will cross over $100 per barrel today. Oil jumps, Brent tops $100 as Russia launches attack on Ukraine Increases in commodity prices will have negative impacts on several U.S. companies while benefiting others.
Europe is planning to free itself from reliance on Russian natural gas which is a no brainer as a national security matter. Part of that effort will be doubling down on renewable energy. E.U. to unveil new energy strategy in wake of Russia-Ukraine crisis - The Washington Post That may turn into a major positive for clean energy stocks that have been a bear market.
In the interim, the U.S. and other countries will be able to replace Russia's natural gas supply with liquified natural gas transported by tankers. US becomes world's top exporter of liquefied natural gas | CNN Business; U.S. liquefied natural gas export capacity will be world’s largest by end of 2022- U.S. Energy Information Administration (EIA)
The cost of insuring Russian government debt from default rose to $450,000 per $10M in bonds yesterday. Biden’s Russia sanctions over Ukraine send tremors through stock and bond markets - The Washington Post
The USD priced iShares MSCI Russia ETF (ERUS) will crash today in price due to the declines in Russia's stock market and currency which was already trash before Russia's invasion. Russian stocks crash and ruble plunges to record low | CNN Business
The Russian 10 year government bond closed yesterday at a 10.87% yield. Russia 10-Year Bond Yield - Investing.com
Putin called upon Ukrainian soldiers to lay down their arms or they will be responsible for the bloodshed resulting from Russia's invasion of their homeland.
Putin: “Anyone who tries to interfere with us, or even more so, to create threats for our country and our people, must know that Russia’s response will be immediate and will lead you to such consequences as you have never before experienced in your history.” He noted Russia's nuclear arsenal.
Putin says Russia intends to demilitarize and denazify Ukraine, an aim accomplished by replacing the democratically elected government with his "people's" representatives.
The U.S. needs to immediately ban the importation of any product made in Russia and any product that contains a part made in Russia that is not already in transit. It is time to cease doing anything that puts money in Putin's coffers. The U.S. does import some Russia oil and that needs to end now. Increased U.S. production can easily replace that loss.
Serious consideration needs to be given to disconnecting Russia from the Society for Worldwide Interbank Financial Telecommunication (SWIFT). Homepage | SWIFT - The global provider of secure financial messaging services
China calls for talks on Ukraine but signals tacit support for Russia’s attack - MarketWatch It is not surprising that the dictator in China supports his fellow traveler in Russia.
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Markets and Market Commentary:
Last Tuesday, the S & P 500 index closed at 4,304.76, down 10.3% from its record close on 1/3/22. I would attribute the decline to a valuation reset triggered by Russia's military aggression and continued problematic inflation numbers. A bear market is probable now IMO.
I will be doing some light buying today, as I have done in the past during major volatility spikes.
The VIX is currently up about 27% and may go over 40 today.
My cash position in brokerage accounts is currently over 60% and growing through bond redemptions and my unwillingness to redirect the proceeds into risk assets. The dollars allocated to high quality bonds, mostly Tennessee municipal bonds, is still higher than those allocated to stocks.
CBOE Russell 2000 Volatility Index
Charts:
S&P Shiller PE Ratio Chart Since 1870 (second chart)
The Buffett Indicator: Market Cap to GDP - Updated Chart | Longtermtrends
Capacity Utilization: Total Index-St. Louis Fed
All Sectors; Debt Securities and Loans; Liability, Level/Gross Domestic Product-St. Louis Fed
Nonfinancial Corporate Business; Debt Securities; Liability, Level-St. Louis Fed
Federal Debt Held by Federal Reserve Banks-St. Louis Fed
Households and Nonprofit Organizations; Consumer Credit; Liability, Level-St. Louis Fed
Household Debt Service Payments as a Percent of Disposable Personal Income-St. Louis Fed
Household Financial Obligations as a percent of Disposable Personal Income-St. Louis Fed
Personal Consumption Expenditures (PCE-St. Louis Fed
Velocity of M2 Money Stock St. Louis Fed
Personal Saving Rate-St. Louis Fed
4-Week Moving Average of Initial Claims- St. Louis Fed
Unemployment Rate-St. Louis Fed
Households; Owners' Equity in Real Estate, Level -St. Louis Fed
15-Year Fixed-Rate Mortgage Average in the United States-St. Louis Fed
S&P/Case-Shiller 20-City Composite Home Price Index-St. Louis Fed
Median Sales Price for New Houses Sold in the United States-St. Louis Fed
Share of Labor Compensation in GDP at Current National Prices for the United States -St. Louis Fed
Light Weight Vehicle Sales: Autos and Light Trucks- St. Louis Fed
Cass Freight Index: Shipments-St. Louis Fed
Leading Index for the United States-St. Louis Fed
University of Michigan: Consumer Sentiment-St. Louis Fed
E-Commerce Retail Sales-St. Louis Fed
Consumer Price Index for All Urban Consumers: All Items in the U.S. City Average-St. Louis Fed
Crude Oil Prices: West Texas Intermediate (WTI) - Cushing, Oklahoma-St. Louis Fed
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Earnings Reports-Owned Stocks:
Bank of N.T. Butterfield & Son (NTB) SEC Filed Press Release (net income of $41.7M or $.84 per share, with the consensus at $.808 per share; the Board declared the regular quarterly dividend of $.44 per share and authorized a new $500M share repurchase program; repurchased 534,828 share in 2021; NIM = 2%, down from 2.25% in the 2020 4th quarter; core efficiency ratio at 64.7%; NPA ratio = .5%; ROA = 1.1%; ROE = 17.1%; Core ROTE = 18.8%; total capital ratio = 21.2%; tangible book value per share = $18.08) In response this report, the stock rose $3.33 to close at $40.79 (2/15/22). Historical Prices & Data I did not see any good reason IMO for that kind of response. I am down to owning 18 shares with an average cost per share of $24.19. The dividend yield at my AC is 7.28%.
Columbia Banking System (COLB) SEC Filed Press Release (net income of $42.9M or $.55 per share, which includes $.12 per share in acquisition related expenses; non-GAAP E.P.S. at $.67; consensus at $.59; NIM = 3.05%, down from 3.52% in the 2020 4th quarter; NPA ratio = .11%; NPL Ratio = .22%; tangible book value per share = $22.05; other ratios negatively impacted by acquisition related expenses)
Duke Energy (DUK) SEC Filed Press Release (GAAP E.P.S. = $.93; Adjusted E.P.S. at $.94 with the consensus at $.958; 2021 GAAP E.P.S. at $4.94, adjusted to $5.24; 2021 revenues at $25.097B; 2022 E.P.S. non-GAAP guidance = $5.3 to $5.6; long term adjusted E.P.S. growth rate of 5% to 7% through 2026)
Essential Properties (EPRT) SEC Filed Press Release (AFFO per share = $.37, up 37%; 2021 AFFO per share. = $1.34, up 21%; number of properties at 1,451; weighted average lease term at 14 years; weighted occupancy at 99.1%)
Financial Institutions (FISI) SEC Filed Press Release (net income available to common shareholders of $19.2M or $1.21, up from $.84 in the 2020 4th quarter; quarterly dividend at $.27 per share; 2021 4th Q consensus E.P.S. at $1.00 per Fidelity; 2021 diluted E.P.S. = $4.78; NIM = 3.14%, down from 3.22% in the 2020 4th quarter; efficiency ratio = 56.76%; NPL ratio = .33%; NPA ratio = .22%; Charge off ratio = .16%; coverage ratio = 326%; ROA = 1.39%; ROE = 15.55%; ROTE = 15.81%; Tangible book value per share = $26.26, up from $23.52 as of 12/31/20)
Kellogg (K) SEC Filed Press Release (GAAP E.P.S. = $1.26; non-GAAP E.P.S. at $.83 with the consensus at $.791 per Fidelity; organic Y-O-Y revenue growth of 5.2% which excludes the impact of currency and the extra week in the prior fiscal quarter; the quarter was negatively impacted by a strike, a "modestly" higher tax rate, worldwide supply disruptions, input inflation, and a fire at a cereal plant; guides fiscal 2022 to adjusted E.P.S. growth to 1% to 2% with cash flow in the $1.1B to $1.2B range after about $600M in capital expenditures)
New York Community Bank (NYCB) SEC Filed Press Release (Non-GAAP E.P.S. = $.31 with the consensus at $.31; GAAP E.P.S. at $.30; "2021 GAAP diluted EPS was up 18% to $1.20 compared to $1.02 in full-year 2020; non-GAAP diluted EPS for full-year 2021 were $1.24, up 43% compared to non-GAAP diluted EPS in full-year 2020."; NIM = 2.44%, down from 2.47% in the 2020 4th quarter; efficiency ratio = 37.7%; NPA ratio = .07%; NPL Ratio = .07%; Coverage ratio = 611.79%; ROA = 1.03%; ROE = 8.71%; ROTE = 14.37%; For 2021 4th Q, "total non-interest expenses were $135 million, unchanged on a linked-quarter basis and up $1 million compared to the year-ago fourth quarter. Included in fourth quarter 2021 were $7 million in merger-related expenses, compared to $6 million during the third quarter and zero compared to the year-ago fourth quarter. Excluding this item, total operating expenses were $128 million for the current fourth quarter compared to $129 million for the third quarter and $134 million in the year-ago fourth quarter."; tangible book value per share = $8.85) The adjusted NIM, which excludes 12 basis points from loan and security prepayments, was reported at 2.32%, up 2.24% in the 2020 4th Q.
Organon (OGN) SEC Filed Press Release (Non-GAAP E.P.S. = $1.37 with the consensus at $1.24 per Fidelity; GAAP E.P.S. at $.79; adjustments are detailed in press release; 2021 revenues = $6.3B; 4th quarter revenues = $1.604B; "2022 financial guidance provided; revenue range of $6.1 billion to $6.4 billion and Adjusted EBITDA margins in the range of 34%-36%")
Pfizer (PFE) SEC Filed Press Release (GAAP E.P.S. of $.59, adjusted to $1.08 with the consensus at $.866 per Fidelity; for 2022, revenue guidance is $98B to $102B with adjusted E.P.S. of $6.35 to $6.55; for 2022, Comirnaty, the Covid Vaccine, revenues expected to be about $32B based on supply contracts signed as of late January; for 2022, Paxlovid, the Covid treatment pill, revenues expected at about $22B based on contracts signed or committed as of late January; without revenues from Paxlovid and Comirnaty, revenues declined 2% operationally in the 4th quarter but rose 6% in 2021; of the total $23.838B in 4th quarter revenues, the following contributed about 70%: Comirnaty at $12.504B (52.45%), Eliquis at 1.5B (6.29%), Ibrance at $1.398B (5.86%), and Prevnar family of vaccines at $1.302B (5.64%/down 26% Y-O-Y); Eliquis revenus rose 19%; Xeljanz, which received a black box warning label from the FDA, generated $721M in revenues, up 4% from the 2020 4th quarter; FDA requires warnings about increased risk of serious heart-related events, cancer, blood clots, and death for JAK inhibitors that treat certain chronic inflammatory conditions | FDA)
Qualcomm (QUAL) SEC Filed Press Release (GAAP net income of $3.399B or $2.98 per share with a 30% increase Y-O-Y in revenues to $10.705B; non-GAAP E.P.S. at $3.23, up 49%, with the consensus at $3; guides current quarter non-GAAP E.P.S. to $2.8 to $3 with GAAP between $2.39 to $2.59 with the GAAP to Non-GAAP adjustments being $.36 per share for share based compensation and $.05 other items primarily related to acquisitions)
Sanofi (SNY) SEC Filed Press Release ("Business" E.P.S. = €1.38, each USD priced ADR = .5 ordinary share traded in Euros; Fidelity has the USD E.P.S. at $.789 with the consensus at $.72; revenue growth of 4.1% to €9.994B; for 2021, "business" E.P.S. reported at €6.56, "up 11.9% on a reported basis and 15.5% at CER"; in the 4th quarter, Dupixent (collaboration with REGN) had a 53.1% sales increase to €1.548B)
Virginia National Bankshares (VABK) SEC Filed Press Release (GAAP E.P.S. = $.98; NIM = 2.72%, down from 3.32% in the 2020 4th quarter; Efficiency ratio = 57.7%; NPL Ratio = .05%; Charge off ratio at .06%; ROE = 12.86%; Tangible Book Value per share = $27.36)
W. P. Carey (WPC) SEC Filed Press Release (AFFO = $245.6M or $1.30 per share; 2021 AFFO at $921.5M or $5.03 per share, up 6.1% compared to 2020; guides 2022 AFFO of between $5.18 and $5.30; portfolio occupancy = 98.5%; rent collection at 99.8%)
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Trump Calls Putin’s Ukraine Moves “Genius”- Vanity Fair; Analysis: Donald Trump sides with Vladimir Putin
The Fox "news" anchor Tucker Carlson continues to defend Putin. Tucker Carlson Defends Putin Amid Ukraine Crisis: ‘That Is Not Treason’
Mississippi voted to send all its Black people to Africa 100 years ago - The Washington Post The bill passed 25 to 9 in 1922.
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1. Eliminated AX.UN:CA - Sold 200 Units at C$13.02:
 |
| C$2 Commission |
1 Year Chart to 2/16/22:
Dividends: Monthly at C$.05 per share
Dividends Paid in CADs 12/31/21 through 2/15/22- My IB Account:
Among those dividends are two regular Artis monthly dividends of C$10 and one special dividend of C$64. The special dividend was the cash portion sourced from 2021 property sales. ARTIS REIT Announces Special Dividend
The REIT sold its Greater Toronto Area industrial portfolio for C$750M. Artis Real Estate Investment Trust Announces Sale of GTA Industrial Portfolio for $750 Million; Artis Real Estate Investment Trust Closes the Sale of GTA Industrial Portfolio (7/16/21)
After selling those prime assets, Artis has been engaged in buying units of depressed Canadian office REITs which is a meaningfully riskier strategy than owning the prime industrial properties sold for C$750M. Artis REIT Announces Participation in Investor Group to Acquire Cominar REIT in All-Cash Transaction (10/24/21); ARTIS REIT Announces 10% Ownership, Together with its Joint Actors, in Dream Office REIT (2/14/22).
While that change in strategy may work out, my conservative nature prefers owning prime industrial properties in Toronto rather than units of depressed Canadian office REITs. I consequently used the rally to liquidate my position.
The next earnings report is scheduled for release on 3/3/22.
The last report was for the Q/E 9/30/21 which I did not greet with enthusiasm. Artis Real Estate Investment Trust Releases Third Quarter Results (11/3/21)(AFFO per share declined to C$.23 from C$.27 in the 2020 third quarter)
2. Equity REIT Preferred Stocks:
A. Bought 10 SLGPRI at $24.98:
Quote: SLG-PI
Issuer: SL Green Realty Corp. (SLG)- A REIT that owns office building in the NYC metropolitan area.
I recently discussed buying the common shares which pays monthly dividends Item # 2.H. (2/10/22 Post)(discussed 4th quarter earnings report in that post); Item # 2.I. Bought 5 SLG at $69.82 (11/5/21 Post)
Investment Category: Advantages and Disadvantages of Equity REIT Cumulative Equity Preferred Stocks, part of the Equity REIT Common and Preferred Stock Basket Strategy
Security: Prospectus
Par Value: $25.
Coupon: 6.5%
Yield at 24.98 = 6.505%
Dividends: Paid quarterly and cumulative
Callable now at issuer's option at par value + accrued and unpaid dividends.
Placement in Capital Structure: Equity Preferred stock senior only to common stock and junior to all debt.
Round-Trip Discussions:
Item # 3.A. Eliminated SLGPRI - Sold 20 at $25.96 (9/12/20 Post)(profit snapshot = $122)- Item # 4.A. Restarted SLGPRI-Bought 10 at $20.75; 10 at $19 (5/9/20 Post)
Item # 5 Sold 50 SLGPRI at $23.6 (4/3/2014 Post)(profit at $29.58)-Item # 4 Bought 50 SLGPRI at $22.69 (11/6/2013 Post)
I will soon lose two SLG SU bonds. Item # 2.C. Bought 2 S L Green Operating LP 3.25% SU Bonds Maturing on 10/15/22 at a TC of 99.579 (6/20/20 Post)
I will probably continue buying this preferred stock, but in 5 share lots with each subsequent purchase having to be at the lowest price in the chain.
3. Regional Bank Basket Nips and Tucks:
A. Eliminated PBCT- Sold 62+ at $20.93:
PBCT is in the process of being acquired by M&T Bank Corp. (MTB). Each PBCT share will be exchanged for .118 MTB. M&T Bank Corporation Announces Agreement to Acquire People's United Financial, Inc. - Feb 22, 2021
Profit Snapshots: +$580.1
62 shares
Unless PBCT's acquisition by MTB falls through, which I do not anticipate, this will be my last discussion of PBCT. The last remaining approval has to come from the FED. SEC Filing (PBCT and MTB agree to extend the merger deadline from 2/21/22 to 6/1/22)
PBCT Realized Gains: $1,525.02
I did own the 62+ shares on the last ex dividend date:
The total return was good mostly to the realized gains and, to a far lesser extent, the above average dividend yield.
Based on recent MTB earnings reports, I decided that I did not want to own MTB shares at its current price and consequently sold out of my PBCT and MTB positions.
B. Eliminated MTB- Sold 4 at $182.75:
Quote: M&T Bank Corp.
Profit Snapshot: +$141.91
Last Buy Discussion: Item # 3.D. Added 1 MTB at $146.9 (7/9/21 Post) Based on a higher than average NPL ratio, negative adjusted E.P.S. growth Y-O-Y and a massive decline in NIM Y-O-Y, I would want a lower price than $146.9 before considering a small ball purchase.
Current Position: None.
Last Sell Discussion: Item # 2.O. Eliminated MTB in Fidelity Account-Sold 1 at $156.25; 2.62 at $160 (11/5/21 Post)(profit snapshot = $42.52)
Dividend: Quarterly at $1.2 per share, last raised from $1.11 effective for the 2020 4th quarter payment.
Last Ex Dividend: 2/25/22
Last Earnings Report (Q/E 12/31/21): SEC Filed Press Release
GAAP E.P.S. at $3.37, down from $3.52 in the 2020 4th quarter.
Merger related expenses of $.12 per share included in GAAP E.P.S.
Adjusted E.P.S. $3.49 (no merger related expenses in the 2020 4th Q)
NIM = 2.58%, down from 3% in the 2020 4th Quarter
Efficiency Ratio = 59.7%
NPL Ratio = 2.22% (much higher than other banks that I own)
Charge off ratio = .13%
"Noninterest expense totaled $928 million in the fourth quarter of 2021, compared with $845 million in the corresponding quarter of 2020 and $899 million in the third quarter of 2021. Excluding expenses considered to be nonoperating in nature, such as amortization of core deposit and other intangible assets and merger-related expenses, noninterest operating expenses were $904 million in the recent quarter, $842 million in the fourth quarter of 2020 and $888 million in 2021’s third quarter. Factors contributing to the increase in noninterest operating expenses in the recent quarter as compared with the year-earlier quarter were higher costs for salaries and employee benefits (including increased incentive compensation expenses), outside data processing and software, and professional services."
I have started to pay far more attention to increases in noninterest expense and view substantial increases, as reflected in the previous paragraph, unfavorably.
C. Pared HBAN-Sold Highest Cost 10 shares at $16.22:
Quote: Huntington Bancshares (HBAN)
Last Buy Discussions: Item # 2.C. Added to HBAN-Bought 2 at $7.4; 1 at $7.27; 1 at $6.96; 10 at $7.92 (5/30/20 Post); Item # 3.D. Added to HBAN-Bought 10 at $11.6; 10 at $11; 5 at $9.5; 5 at $8.4; 2 at $7.5 (3/28/20 Post)
Profit Snapshot: +$42.79
Average Cost per share after pare: $9.31 (62+ shares)
 |
| Snapshot Intraday 2/8/22 after pare |
The AC per share was reduced from $9.67.
Dividend: Quarterly at $.155 per share ($.62 annually), last raised from $.15 effective for the 2021 4th quarter payment.
HBAN Dividend History | Nasdaq Prior to the Near Depression, HBAN's quarterly dividend rate was at $.265 per share. The dividend was first slashed to $.1325 per share in 2008 and then to 1 cent effective for the 2009 second quarter payment. The payment remained at 1 cent per share until the bank raised it to 4 cents effective for the 2011 4th quarter payment.
I generally have an unfavorable opinion of this bank based on its past history. Maybe the current managers are better but I would not bet on it.
I have sold all shares profitably that had been bought with dividends.
Yield at AC: 6.66%, perhaps I need to sell a few more shares to change that percentage.
Next Ex Dividend: 3/17/22
Last Earnings Report (Q/E 12/31/21): SEC Filed Press Release
GAAP E.P.S. at $.26, adjusted to $.36
The adjustments relate primarily to the TCF acquisition: "Specifically, fourth-quarter results were negatively impacted by $177 million pretax of TCF acquisition-related expenses and $10 million pretax of expenses related to the exit of a strategic distribution relationship."
NIM = 2.84%
NPL Ratio: .64%
Efficiency, ROE, ROA and ROTE ratios were negatively impacted by acquisition related expenses.
Tangible book value per share =$8.06
Last Sell Discussions: Item #1.A. Pared HBAN in Fidelity Account- Sold 50 at $14.6 and 20 at $15 and Item #1.B. Sold 4 HBAN in Vanguard Account at $14.6 (1/31/21 Post)(profit snapshots = $48.36);
HBAN realized gains to date: $1,018.67
4. Small Ball-Hyper Risk Mitigation and Management Trading Technique:
A. Added to DEA - Bought 10 at $20.4:
Quote: Easterly Government Properties Inc.
I am replacing shares that were recently sold at a slightly higher prices. Item # 2.M. Pared DEA in Fidelity Taxable Account- Sold 12+ at $23.01 (1/13/22 Post)(I discussed the 2021 third quarter report in that post); Item # 3.E. Pared DEA in Fidelity Taxable-Sold 10 at $22.92 (8/20/21 Post)
Easterly Government Properties Inc Profile-Reuters
Website: Easterly Government Properties, Inc.
Properties | Easterly Government Properties, Inc.
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Last Buy Discussion: Item # 3.B. Added 5 DEA at $20.76-Fidelity Taxable Account (10/8/21 Post)
Average Cost per share this account: $20.33 (60 shares)
Dividend: Quarterly at $.265 per share ($1.06 annually), last raised from $.26 effective for the 2021 third quarter payment.
Yield at AC = 5.21%, rounded down
Last Ex Dividend: 11/10/21
The 2021 4th quarter report will be released on 2/25. I will discuss it in the earnings section.
Other Sell Discussions: Item # 1.A. Sold 21+ DEA at $28.81 (6/6/20 Post)(profit snapshot = $272.6); Item # 3.A. Sold 10 DEA at $22.39 (11/20/19 Post)(profit snapshot = $47.24); Items 1.A. and 1.B. Sold 10 DEA at $19.81 and Eliminated DEA in Schwab Account at $19.81 (8/24/19 Post)(profit snapshots $74.38); Sold 10 DEA at $21.44-Used Commission Free Trade (5/17/18 Post)(profit snapshot = $22.59); Item 5. A. Sold 50 DEA at $21.59-Used Commission Free Trade (12/11/17 Post)(profit snapshot = $97.85)
DEA Realized Gains to Date: $561.84, currently at #11 in my REIT basket.
Goal: Very modest at dividend + annual realized gains of 2%+ before ROC adjustments to the cost basis.
B. Bought Back 10 EAF at $10.10 and 5 at $9.76:
History this Account:
Quote: GrafTech International Ltd.
"GrafTech International Ltd. is a leading manufacturer of high-quality graphite electrode products essential to the production of electric arc furnace steel and other ferrous and non-ferrous metals. The Company has a competitive portfolio of low-cost, ultra-high power graphite electrode manufacturing facilities, including three of the highest capacity facilities in the world. We are the only large-scale graphite electrode producer that is substantially vertically integrated into petroleum needle coke, a key raw material for graphite electrode manufacturing. This unique position provides competitive advantages in product quality and cost."
EAF Analyst Estimates | MarketWatch
I am buying back shares recently sold at slightly higher prices. Item # 1.F. Eliminated EAF Again- Sold 10 at $11.51 (12/31/21 Post)
Investment Category: Lottery Ticket Basket
Last Buy Discussion: Item # 2.A. Restarted EAF- Bought 10 at $10.55 (9/10/21 Post)
Dividend: Quarterly at $.01 per share, slashed from $.085 effective for the 2020 second quarter payment.
Last Earnings Report (Q/E 12/31/21): SEC Filed Press Release My general reaction to this report was favorable.
Net income of $141M or $.54 per share, adjusted to $.50 per share.
"Sales volume increased 19% compared to the fourth quarter of 2020"
"Production volume increased 28% compared to the fourth quarter of 2020"
Reduced debt during the quarter by $100M
2021 net income of $388M or $1.46 per share, adjusted to $1.74 with cash flow at $443M and a debt reduction of $400m.
GAAP to Non-GAAP Calculations:
So why is the TTM P/E so low? The main reasons IMO is that long term supply agreements, which have higher prices than current spot prices, are expiring and the spot prices are higher cyclical.
This is EAF's estimates for revenue declines in those long term supply agreements:
The footnote 14 reference in the snapshot refers to "expected termination fees from a few customers that have failed to meet certain obligations under their LTAs."
The "fourth quarter LTA average realized price was $9,400. The average realized non-LTA price for graphite electrodes delivered and recognized in revenue in the fourth quarter was just over $5,000, an increase of approximately 10% over third quarter non-LTA pricing."
The Stock Jocks are discounting the TTM earnings due to the expiration of the LTAs and the lower spot prices as noted in the previous paragraph.
The key then becomes a continued recovery in spot prices, with the best case scenario being that customers will enter into new LTAs at higher than current spot market prices.
Management guided spot prices up for the current quarter, implying a price of around $5,950 per ton.
Other Sell Discussions: Item # 1.R. Eliminated EAF-Sold 53+ at $12.37 (2/13/21 Post)(profit snapshot = $110.97); Item # 1.Q. Pared EAF-Sold 25 at $11.8 (1/16/21 Post); Item # 3.I. Eliminated EAF in Fidelity taxable account-Sold 46+ at $9.94 (1/1/21 Post); Item # 2.B. Sold 27 EAF at $11.2 (2/12/20 Post); Item #3.C. Sold 25 at $14.48 (12/18/19 Post); Item # 2.A. Sold 110 EAF at $13.48 (11/20/19 Post)
EAF Trading Profits to Date: +$380.07
Broker Report (available to Schwab customers): I have access to only one.C. Added to GTY-Bought 5 at $28.35; 5 at $27.76:
Quote: Getty Realty Corp.
Website: Getty Realty
Last Discussed: Item # 1.B. Bought 5 GTY at $30.2; 2 at $29.64; 3 at $29.28 (10/29/21 Post) GTY is a new name for me and those were my first purchases.
Average cost per share: $28.91 (20 shares)
Dividend: Quarterly at $.39 per share ($1.56 annually)
Yield at AC = 5.4%, rounded up.
Last Ex Dividend: 12/22/21
Last Earnings Report (Q/E 12/31/21): Released on 2/23/22 after my purchases. SEC Filed Press Release
FFO per share = $.47
AFFO per share = $.51
"AFFO excluding stock-based compensation and amortization of debt issuance costs: $0.54 per share" and at $2.08 for 2021.
"During the quarter ended December 31, 2021, the Company sold 10 properties for aggregate gross proceeds of $13.7 million and recorded a net gain of $6.8 million on the dispositions. The dispositions included seven assets in upstate New York which reflected the first tranche of the sale of a 21-asset portfolio to the existing tenant."
"During the quarter and year ended December 31, 2021, the Company raised gross proceeds of $44.0 million and $94.1 million, respectively, through its at-the-market (“ATM”) equity program."
"Subsequent to year end, the Company closed on the private placement of $225 million of senior unsecured notes, including (i) $100 million of 3.45% notes funded at closing and maturing in February 2032, and (ii) $125 million of 3.65% notes to be funded in January 2023 and mature in January 2033. Proceeds from the notes funded at closing were used to repay all amounts outstanding on the Company’s revolving credit facility and for general corporate purposes, including to fund investment activity. Proceeds from the delayed funding notes will be used to prepay $75 million of 5.35% senior unsecured notes maturing in June 2023 and for general corporate purposes, including to fund investment activity."
"The Company has established its 2022 AFFO guidance at a range of $2.08 to $2.10 per diluted share" That guidance excludes stock based compensation and amortization of debt issuance costs.
Acquisitions during the 4th quarter and 2022 to date:
FFO to AFFO Calculation:
E. Bought 5 NWL at $21.34:
Quote: Newell Brands Inc.
NWL Analyst Estimates | MarketWatch
NWL is a "global consumer goods company with a strong portfolio of well-known brands, including Rubbermaid, FoodSaver, Calphalon, Sistema, Sharpie, Paper Mate, Dymo, EXPO, Elmer’s, Yankee Candle, Graco, NUK, Rubbermaid Commercial Products, First Alert, Spontex, Coleman, Campingaz, Oster, Sunbeam and Mr. Coffee."
Increases in material and logistic costs, highlighted by a negative earnings report released by Clorox on 2/4, may have had some spillover impact on NWL's 8%+ decline that day.
This is a new name for me. I noticed that the stock was down over 8% on 2/4/22. I did not see any news specific to NWL that would explain the decline. On 2/3/22, the company declared its regular quarterly dividend of $.23 per share. Newell Brands Declares Dividend on Common Stock
Website: Newell Brands
Dividend: Quarterly at $.23 per share ($.92 annually), last raised from $.19 effective for the 2017 second quarter payment.
Dividend History | Newell Brands
Yield at $21.34: 4.31%
Ex Dividend: Today, 2/25/22
Last Earnings Report (Q/E 12/31/21): SEC Filed Press Release This report was released after my small ball purchase. The stock rose 11.07% in response on 2/11.
GAAP Diluted E.P.S. = .22
Non-GAAP E.P.S. at $.42 per share with the consensus at $.32.
GAAP to Non-GAAP Reconciliation:
Revenues: "$2.8 billion, an increase of 4.3 percent compared with the prior year period, during which the company experienced elevated demand across many of its categories."
FactSet Revenue Consensus at $2.65B
Cost of sales increased by 9.1% due in significant part to higher input, particularly for resins, and logistic costs. (e.g. Producer Price Index by Industry: Plastics Material and Resins Manufacturing- St. Louis Fed)
2022 Guidance: "initiated its full year 2022 outlook, with expected net sales of $9.93 billion to $10.13 billion and normalized earnings per share of $1.85 to $1.93."
Other Recent Material News: Investors may also be reacting to this news released shortly after my purchase: Newell Brands Announces Agreement to Sell the Connected Home & Security Business to Resideo Technologies, Inc. (2/7/22). This business "produces and distributes smoke and carbon monoxide combo alarms, fire suppressants, fireproof safes and other home safety products under the most trusted brands in the industry, BRK and First Alert, which help protect the lives, wellbeing and valuables of consumers" and produced $395M in 2021 net sales. Gross proceeds to NWL are expected to be $593M. NWL "anticipates using the after-tax proceeds of the transaction toward both debt paydown and share repurchase, with the goal of maintaining the company’s current leverage ratio. As such, Newell Brands’ Board of Directors has authorized a $375 million share repurchase program, effective immediately. The transaction is expected to have an approximately neutral impact on the company’s normalized earnings per share in 2022, considering the anticipated use of proceeds."
F. Restarted Lotto NKTR-Bought 10 at $10.59:
Quote Nektar Therapeutics
Website: Nektar | Home | New Pathways to Smarter Medicine
NKTR Analyst Estimates | MarketWatch (as of 2/22/22, the consensus E.P.S. for 2022 is -$2.37) Investors have lost patience with this stock.
Press Releases | Nektar Therapeutics
Investment Category: Blackjack Hand, part of the Lottery Ticket Basket
Nektar | Medicines | U.S. Medicines Marketed by Our Partners
The 2020 Annual Report summarizes the agreements with collaboration partners at pages 14-19. Note that the company has historically raised capital by selling royalty rights (Movantik, CIMZIA, Adynovate)
Nektar | Pipeline | R&D Pipeline
To win this Blackjack Hand, NKTR's cancer drug ("Bempegaldesleukin"), currently in multiple trials, needs to work. Maybe the drug needs a new name.
NKTR's collaboration agreement for this drug is with BMY and is summarized at pages 21-22.
Profits will be allocated 65% to NKTR and 35% to BMY.
Development cost in combination with BMY's Opdivo will be allocated 67.5% to BMY and 32.5% to NKTR.
"In April 2018, BMS paid us a non-refundable upfront cash payment of $
Round Trip Trades: Item # 7 Sold 20 NKTR at $23.89 (10/19/17 Post)(profit snapshot = $191.82); Item 5.A. Sold 50 out of 70 NKTR at $22.53(4/11/17 Post)(profit snapshot = $355.40) I am playing with the House's money with this last 10 share purchase.
Current Position: 10 shares.
Maximum Position: 20 shares
Adds only in 2 share lots with each purchase having to be at the lowest price in the chain.
Last Loss Report (Q/E 9/30/21): SEC Filed Press Release and 10-Q
Net loss = $120.706M
Loss per share = $.70
"Cash and investments in marketable securities at September 30, 2021 were approximately $955.3 million as compared to $1.2 billion at December 31, 2020."
G. Eliminated AMGN in Vanguard Account- Sold 1 at $242.45 and Pared AMGN in Fidelity Account - Sold .451 at $242.64:
Quote: Amgen Inc.
2021 AMGN Annual Report (patent information starts at page 6; patent litigation summaries are summarized in note 19, starting at page F-46)
Investment categories: Dividend Growth/Bond Substitute
AMGN Analyst Estimates | MarketWatch
Website: Investors | Amgen Inc.
Profit Snapshots: +$22.51
Average Cost AMGN Position in Fidelity Account after pare: $209.45 (1.793 shares)
 |
| Snapshot Intraday on 2/8/22 after pare |
Dividend: Quarterly at $1.94 ($7.76 annually), last raised from $1.76 effective for the 2022 first quarter payment.
AMGN Dividend History | Nasdaq
Yield at $209.45: 3.7%, rounded down.
Last Ex Dividend: 2/14/22
Last Buy Discussions: Item # 2.E. Added to AMGN - Bought $50 at $201.7 (12/22/21 Post); Item # 2.F. Bought $50 AMGN at $208.1 and $100 at $205.26-Fidelity Taxable (11/18/21)
Last Earnings Report (Q/E 12/31/21) SEC Filed Press Release
Non-GAAP net "operating" income of $2.997B or $4.36 per share
Consensus at $4.079 per Fidelity
GAAP E.P.S. = $3.36
Revenues up 3% to $6.8B, compared to the 2020 4th Q.
2021 free cash flow at $8.4B
Note the 13% decline in Enbrel revenues:
The revenues from the migraine drug Aimovig declined 13% to just $88M.
Amgen has several drugs that are experiencing revenue declines due to generic/biosimilar competition. AMGN mentions in its 2021 Annual Report that companies have launched biosimilar versions of "EPOGEN, NEUPOGEN and Neulasta and have approved biosimilars for ENBREL." Page 8 The fact that the FDA has approved a biosimilar does not mean that it can be sold in violation of a valid patent. Sandoz's Enbrel biosim case turned away at SCOTUS, giving Amgen's blockbuster 8 more years of free rein | FiercePharma (5/17/21); Appeals Court Affirms Validity Of Enbrel® (etanercept) Patents Injunction Against Sandoz's Infringement Stands (7/1/20)
Otezla was acquired for $13.4B from Celgene as an antitrust condition for its acquisition by BMY. Amgen Completes Acquisition Of Otezla® (apremilast)| Amgen (11/21/19 Press Release)
2021 Otezla revenues were reported at $2.239B, up only 2% from $2.195B in 2020. A new indication was approved in December 2021. FDA APPROVES OTEZLA® (APREMILAST) FOR THE TREATMENT OF ADULT PATIENTS WITH PLAQUE PSORIASIS, REGARDLESS OF SEVERITY LEVEL
Amgen claims the following patents for Enbrel that have not yet expired:
Overall, I am uneasy about the negative revenue trends for several drugs, as reflected in the snapshot above, so I am not able to generate enough enthusiasm sufficient to buy more than a few shares. I will consider buying in $50 to 1 share lots when the purchase will lower my average cost per share.
My largest position within the past decade was a 20 share lot sold in 2016, realizing a gain of $310.68.
H. Bought 5 ECON at $23.95:
Quote: Columbia Emerging Markets Consumer ETF Overview
Sponsor's website: ECON | Columbia Emerging Markets Consumer ETF
Expense ratio = .49%
Last Round-Trip: Item # 2.E. Sold 15 ECON at $23.03 (12/14/19 Post)(+$18.84)-Item # 3.A. Added 10 ECON at $21.68 (9/27/19 Post); Item # 4.A. Bought 5 ECON at $21.96 (6/29/19 Post)
I keep thinking that this ETF will work given the rapid growth in middle class emerging market consumers, but it has not yet proved to be anything other than a major dud.
Morningstar Rating: 1 Star
5 year annual average total return through 2/17/22 = .87% with the 10 year at .69%.
Describing those returns as pathetic is a gross understatement.
But, then, the past is not necessarily prologue for the future.
Dividends: Annual at a nominal rate
I. Bought 2 VWO at $49.85:
Quote: VWO | Vanguard FTSE Emerging Markets ETF Overview
Sponsor's website: Vanguard FTSE Emerging Markets ETF
Expense Ratio = .10%
Holdings as of 1/31/22: 5,293 stocks
Some Top Holdings as of 1/31/22:
A number of these stock, particularly those based in China, are in bear markets.
Dividends: Quarterly at a variable rate
Yield at $49.85 = 2.61% rounded up and assumes $1.3 per share in annual dividends
Last Ex Dividend: 12/20/21
Last Round-Trip: Item # 2.K. Sold 5 VWO at $51.05 (8/12/21 Post)(profit snapshot = $57.91) Item # 3.H. Bought 5 VWO at $39.46 (7/18/20 Post)
China is included in the emerging market definition which is ludicrous IMO.
Many of the emerging market countries provide little or no legal protections for shareholders and are consequently very high risk before delving into other potentially negative issues like currency devaluations, accounting concerns, and debt, particularly debt denominated in foreign currencies like the USD.
Russian stocks have all of those issues and many more, making them uninvestable from my perspective.
Just on the currency issue alone, 1 USD would have purchased 29 Russian Rubles in 2012 and would buy about 78 now. US Dollar to Russian Ruble Exchange Rate Chart | Xe The market capitalization of the Russian stock market was $951+B in 2010 and $694.7B in 2020. Russia Stock market capitalization, in dollars - data, chart | TheGlobalEconomy.com The market cap of Apple is currently around $2.7 trillion.
Other Sell Discussions: Item # 2.E. Sold 20 VWO at $42.61 (12/11/19 Post)(profit snapshot = $34.06); Item # 3 Eliminated VWO: Sold 25 at $43.69 -Roth IRA (4/15/15 Post)(profit snapshot +$70.27); Item # 3 Sold 65 VWO at $41.75 (10/11/13 Post)(profit snapshot $113.36); Item # 2. Sold: 100 of the Stock ETF VWO at $50.22 (4/12/11 Post)(profit snapshot =$129.55)
VWO Trading Profits to Date = $405.15
J. Bought 1 PHG at $33.03; 1 at $31.7:
Quote: Koninklijke Philips N.V. ADR
This company is based in the Netherlands.
Website: Global home | Philips
PHG ADR Analyst Estimates | MarketWatch
SEC Filings (foreign issuer forms)
The ordinary shares are traded in Euros. Koninklijke Philips N.V. (Netherlands: Euronext Amsterdam)
ADR ratio: 1 for 1
Euro to US Dollar Exchange Rate Chart | Xe
A bought the two shares shortly after the stock was slammed, perhaps too much, due to an earnings warning. Philips stock tumbles toward biggest selloff since 2008 after downbeat revenue outlook - MarketWatch (1/12/22) By nature, I am a dumpster diver.
By having the position in my Fidelity account, I am more likely to see a decline that could perk my interest in buying a few more shares.
Dividend: Annually, currently at €.85 per share, subject to a Netherlands withholding tax. For U.S. citizens, the maximum tax is 15% but the broker has to claim their customers treaty rights at the source. Otherwise, the Netherlands will withhold the maximum amount permitted by its law. The ADR custodian will also deduct its fee from the dividend.
Next ex dividend: 5/12/22
Last Earnings Report (Q/E 12/31/21): SEC Filed Press Release
The following is self-explanatory.
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.
