Thursday, April 28, 2022

AROW, BRBS, CU:CA, ENB, FLBR, FSMEX, RCUS, HTA, ILPT, NYCB, PAVE, PLFT, PPL, SHEL

Economy

The government estimated that real GDP fell 1.4% in the first quarter. That is the first estimate. U.S. Q1 GDP declined 1.4% The consensus was for +1%. Gross Domestic Product | U.S. Bureau of Economic Analysis (BEA)

Median-priced new home in the U.S. is roughly $77,000 more expensive than it was a year ago - MarketWatch

Mortgage Applications Decrease in Latest MBA Weekly Survey | MBA For the week ending 4/22/22, mortgage application volume on a seasonally adjusted basis decreased by 8.3% compared to the prior week. The mortgage refinance index was down 71% from the same week in 2021. 

Russia to Halt Gas Deliveries to Poland and Bulgaria - YouTube Economic sanctions need to be made permanent as a national security matter.  

Russian ADRs quit trading in the U.S. on 2/15/22. (e.g. Mobile TeleSystems PJSC ADR  (MBT). Trading in USD priced Russian ETFs was suspended on 3/4/22 with ERUS closing that day at $8.06, down from a 52 week high of $52.8. iShares MSCI Russia ETF (ERUS) Russia is uninvestable IMO, either through stock ownership or capital investments by companies located in western democracies. Putin chose that result rather than peaceful co-existence and mutually beneficial economic relationships.  

+++

Markets

ETF Year-to-Date Total Returns: As of 4/26/22 

Total Return includes reinvestments of dividends. 

Not Working

S&P 500 ETF Trust (SPY) = -11.88%

Invesco QQQ Trust (QQQ) = -20.28%

iShares Russell 2000 ETF (IWM) = -15.44%

Dow Jones Industrial ETF (DIA) = -7.89%

Dow Jones Internet ETF (FDN) = -31.16%

Technology Select Sector ETF (XLK) = -18.24%

Biotechnology ETF (IBB) = -21.7%

Health Care Select Sector ETF (XLV) = -6.08%

Consumer Discretionary Sector  ETF (XLY)  = -17.62%

Vanguard Real Estate ETF (VNQ) = -7.28%

iShares 20+ Year Treasury Bond ETF (TLT) = -18.11%

Invesco Taxable Municipal Bond ETF (BAB) = -13.86%

Investment Grade Corporate Bond ETF (LQD) = -13.82%

7-10 Year Treasury Bond ETF (IEF) = -9.22%

National Municipal Bond ETF (MUB) = -7.21%

Working

Energy Select Sector  ETF (XLE) =  +36.12%

Barely Positive: 

Consumer Staples Select Sector ETF (XLP) = +2.46%

Utilities Select Sector ETF (XLU) = +3.17%

+++

Earnings Reports -  Owned Stocks

AT&T (T) SEC Filed Press Release (Non-GAAP E.P.S. = $.77 with consensus at $.587 per Fidelity; 965,000 postpaid wireless net adds; 691,000 postpaid net phone adds; postpaid = monthly billing)

BCB Bancorp (BCBP) (E.P.S. at $.56 with consensus at $.498 per Fidelity; NIM  = 3.46%, down from 3.48% in the 2021 first quarter; efficiency ratio = 53%; NPL Ratio = .38%; Coverage Ratio = 368.1%; ROA =1.33%; ROE = 14.7%; tangible book value per share  = $14.41; noninterest expense = $12.959M, down from $13.583M in the 2021 first quarter; "Total loans receivable were $2.396 billion at March 31, 2022, up from $2.296 billion at March 31, 2021"; "Total deposits were $2.631 billion at March 31, 2022, up from $2.404 billion at March 31, 2021") The stock responded with a +7.65% gain last Friday, closing at $20.26

Cathay General Bancorp (CATY) SEC Filed Press Release (Net income of $75M or $.99 per share; Non-GAAP E.P.S. = $1.03 with consensus at $.912 per Fidelity;  NIM = 3.26%, up from 3.2% in the 2021 first quarter; Efficiency Ratio = 40.52%; Coverage Ratio = 168.28%; NPA Ratio = .4%; Charge Off Ratio: Net Recovery of $290K; ROA = 1.46%; ROE = 12.29%; Total Capital Ratio = 13.97% Non-interest expense increased $1.3 million, or 1.8%, to $72.7 million in the first quarter of 2022 compared to $71.4 million in the same quarter a year ago.)

Central Pacific Financial (CPF) SEC Filed Press Release (Net income of $19.4M or $.70 per share with the consensus at $.557 per Fidelity; Recorded a $3.8M credit to the provision for credit losses;  NIM = 2.97%, down from 3.19% in the 2021 first quarter; efficiency ratio = 63.16%; NPA Ratio = .07%; Coverage Ratio = 1,213.53%; ROA = 1.06%; ROE = 14.44%; Total Risk Based Capital Ratio = 14.2%; Board declared regular quarterly dividend of $.26 per share)

Dow (DOW) SEC Filed Press Release (GAAP E.P.S.  =$2.11; Non-GAAP E.P.S. at $2.34 with the consensus at $2,055 per Fidelity; "Net sales were $15.3 billion, up 28% versus the year-ago period, reflecting gains in all operating segments, businesses and regions. Sequentially, net sales were up 6%, driven by gains in Performance Materials & Coatings and Packaging & Specialty Plastics."; "Local price increased 28% versus the year-ago period"; "Volume increased 3% versus the year-ago period"; free cash flow  = $1.3B)

First Hawaiian (FHB) SEC Filed Press Release (Net income of $57.7M or $.45 per share with the consensus at $.443 per Fidelity; NIM = 2.42%, down from 2.55% in the 2021 first quarter; Efficiency ratio = 59.04%; NPL ratio = .07%; ROA = .93%; ROE = 9.19%; ROTE = 15.08%; Total capital ratio = 13.48%; Dividend payout ratio = 57.78%, meaning not likely to increase quarterly dividend rate of $.26 per share; Tangible book value per share. = $10.1) 

General Dynamics (GD) SEC Filed Press Release (Net income of $730M or $2.61 per share with consensus at $2.506 per Fidelity; revenues up 5% Y-O-Y to $9.392B) 

Kinder Morgan (KMI) SEC Filed Press Release (Net income of $667M or $.29 per share; adjusted to $732M or $.32 per share with consensus at $.287 per Fidelity; distributable cash flow of $1.455B of $.64 per share; Revenus= $4.293B or ; "For 2022, KMI budgeted to generate net income attributable to KMI of $2.5 billion and declare dividends of $1.11 per share, a 3% increase from the 2021 declared dividends. KMI also budgeted to generate 2022 DCF of $4.7 billion and Adjusted EBITDA of $7.2 billion and to end 2022 with a Net Debt-to-Adjusted EBITDA ratio of 4.3 times. KMI now expects net income, EBITDA and DCF to be favorable to budget due to stronger than expected commodity prices and favorable operating results from our Natural Gas and CO2 business segments, partially offset by higher costs.")

Lockheed Martin (LMT) SEC Filed Press Release (Net income of $1.7B or $6.44 per share with the consensus at $6.207 per Fidelity; revenues $15B; free cash flow of $1.1B; for 2022, guides to $26.7 E.P.S.)

Quest Diagnostics (DGX) SEC Filed Press Release (GAAP E.P.S.  = $2.92; Non-GAAP net income of $392M or $3.22, with the consensus at $2.975 per Fidelity but down from $3.76 in the 2021 first quarter that benefit from Covid testing; revenues at $2.611B; Covid testing revenues fell to $599M from $828M in the 2021 first quarter; cash provided by operations = $480M with capital expenditures at $63M; guides 2022 to adjusted E.P.S. of $9 to $9.5)

SL Green Realty (SLG) SEC Filed Press Release and Supplemental (FFO per share = $1.65, down from $1.73 in the 2021 first quarter; "Manhattan same-store office occupancy was 92.7% as of March 31, 2022, inclusive of leases signed but not yet commenced. The Company's target is to increase Manhattan same-store office occupancy, inclusive of leases signed but not yet commenced, to 94.3% by December 31, 2022"; revenues = $187.964M; Dividend Payout Ratio using Funds Available for Distribution = 75.1%, page 6 of the Supplemental filing; Dividends are paid monthly at $.3108 per share)

Verizon (VZ) SEC Filed Press Release (Non-GAAP E.P.S. = $1.35, one cent better than the consensus; GAAP E.P.S. at $1.06; revenues in line at $33.6B; lost 292,000 consumer postpaid wireless customers; consumer wireless average postpaid monthly bill up 2.6% to $123.96; capital expenditures of $5.8B during the quarter; free cash flow of  $1B; debt as of 3/31/22 = $153.382B; Reduced guidance for 2022 from its March 2022 projections, going from 3% revenue growth to flat with adjusted E.P.S. of $5.4 to $5.55; "Capital spending, excluding C-Band, in the range of $16.5 billion to $17.5 billion. Additional expenditures related to the deployment of the company's C-Band 5G network are expected to be in the range of $5 billion to $6 billion") The stock responded with a 5.6% decline, the largest single day decline since 3/12/20. Verizon Stock Had Its Worst Its Day Since the Pandemic Hit | Barron's

++++

Putin is an autocratic psychopath who will murder people on a vast scale. In that respect, he is no different from Stalin or Hitler. 

Earlier this week, Russia raised again the prospect of nuclear war unless the western democracies quit helping Ukraine resist the Russian invasion, Russia's attempted overthrow of a democratically elected government, its intentional slaughter of Ukrainian civilians and the massive intentional destruction of civilian structures including apartments, homes, small businesses, industrial plants, hospitals, and schools. Russia’s Sergey Lavrov Warns of ‘Real’ Nuclear War Risk Over Ukraine - BloombergPentagon chief: ‘Irresponsible’ for Russia to talk about potential nuclear escalation | The Hill  

Russian State TV: Vladimir Putin May Start a Nuclear War but We Are Ready to Die

Putin vows 'lightning-fast' retaliation against other nations in Ukraine war This speech was made to Russia's "parliament". The Russians applauded Putin's threat to murder everyone on  the planet. So that is a clear sign that Russia's invasion of Ukraine is not going well. Putin's threats of nuclear annihilation are a strong indication of Russia's glaring conventional military weakness that has resulted in out-of-control craziness to use nuclear weapons.  

In response to recent setbacks against the Ukrainian military, Russia targeted an apartment complex in Odessa with two cruise missiles, murdering several civilians including an infant. Russian missiles hit Odessa apartment blocks, killing at least 8Odesa missile attack: 'My world was destroyed by a Russian missile' - BBC News

Clarissa Ward found that Russia was intentionally targeting apartment buildings in Kharkiv, which has a large Russian speaking population, and then doing a "double tap" targeting paramedics and other first responders. Those attacks occur nowhere near the current fighting. See the moment CNN crew gets caught in Russian shelling - YouTube (see "double tap" coverage at 2:08); Clarissa Ward reports from city pulverized by Russian strikes - YouTube 

Who Is Olga Skabeyeva, Russian Propagandist Who Made WWIII Remark After reading her comments, I concluded that she is in dire need of a brain transplant. 

Russians accused of burying 9,000 civilians in mass grave near Mariupol: April 21 recap. republished by MSN.com from Mariupol mayor says Russians buried 9,000 civilians in mass grave: USA Today And how many of those murdered civilians were Russian speakers? 

Russia aims to take "full control" of southern Ukraine, Major General Rustam Minnekayev says - CBS News Russia wants to absorb all of Ukraine. As made clear by Minnekayev, Russia's first bite is to conquer all of Eastern and Southern Ukraine, creating a land bridge to Crimea, previously seized from Ukraine in 2014, and then through Odessa to the Russian created separatist region in Moldova which is probably next on Russia's conquest list. The ostensible reason given by Minnekayev for Russia's military aggression and crimes against humanity is to protect Ukrainians who speak Russian from discrimination, assuming they survive Russia's effort to help them.  

U.S., Ukrainian officials weigh ‘high possibility’ of Putin invading Moldova - POLITICO

Mystery over FOUR 'suspicious suicides' of Russian gas executives 'linked to Putin' | Daily Mail OnlineTwo Russian gas executives and their families found dead within 24 hours - YouTube

Russian journalist gives update on what Russians are hearing about war - YouTube  

Ukraine war: Putin is 'Satan in human form', says priest, as firefighters losing battle to save Kharkiv and patients treated in corridors | World News | Sky News

Russia's tanks in Ukraine have a 'jack-in-the-box' design flaw. And the West has known about it since the Gulf war Even without the design flaw, tanks are largely an outmoded weapon given the prevalence an anti-tank weapons capable of being transported by one person. 

+++

1. Eliminated CU:CA - Sold 100 at C$38.6

Quote: Canadian Utilities Limited (CU-TO)

CU.TO - Canadian Utilities Limited Profile | Reuters

Canadian Dollar to US Dollar Exchange Rate Chart | Xe

CANADIAN UTILITIES REPORTS 2021 EARNINGS

This elimination is part of my ongoing elimination of utility stocks. 

Profit Snapshot: +C$433


Buy DiscussionItem # 1. Bought 100 CU:CA at C$34.25 (5/8/21)

Consider to Repurchase: <C$32 

If the total cost was s at C$31, for example, the dividend yield would be 5.7% using the current dividend rate.  

Dividend: Quarterly at C$.442 per share (C$1.768 annually)

Canadian Utilities | Dividends & Stock Splits

Last Ex Dividend: 2/2/22 (owned as of)

Last Earnings Report (Q/E 3/31/22): This report was released yesterday evening. 

"Canadian Utilities Limited (Canadian Utilities or the Company) today announced first quarter 2022 adjusted earnings of $219 million ($0.81 per share), $28 million ($0.11 per share) higher compared to $191 million ($0.70 per share) in the first quarter of 2021."

"First quarter earnings attributable to equity owners of the Company reported in accordance with International Financial Reporting Standards (IFRS earnings) were $227 million ($0.78 per Class A and Class B share), $86 million ($0.32 per Class A and Class B share) higher compared to $141 million ($0.46 per Class A and Class B share) in the first quarter of 2021."

CANADIAN UTILITIES REPORTS FIRST QUARTER 2022 EARNINGS

2. Corporate Bonds and Treasuries

I am very slowly building a bond ladder. The weighted average maturity is currently close to 2.5 years. Most of the ten year treasury yield can be picked up with a two year treasury note. 

These purchases are best described as a return of my money investments rather than a return on my money, though I do view the income generation as satisfactory given my financial situation and objectives. 

A. Bought 2 Ares Capital 2.15% SU Bonds Maturing on 7/15/26 at a Total Cost of 91.07:

                                         
Finra Page: Bond Detail

Issuer: Ares Capital Corp. (ARCC)  - An Externally Managed BDC 

ARCC SEC Filings 

I own the common shares and have been selling my highest cost shares. 

Credit Ratings: Baa3/BBB- 

Bought at 90.97

Total Cost at 91.07 includes $1 per bond commission

YTM at Total Cost = 4.46%

Current Yield at Total Cost = 2.36%

B. Bought 2 Entergy 2.95% SU Bonds Maturing on 8/1/2026 at a Total Cost of 98.368

FINRA Page: Bond Detail

Issuer: Entergy Corp. (ETR) 

ETR SEC Filings  

Credit Ratings: Baa2/BBB

Bought at 98.268

Total Cost at 98.368 (includes $1 per bond commission) 

YTM at TC = 3.351%

Current Yield at TC = 3%

I recently eliminated my common stock positions. 

The ETR dividend yield at yesterday's closing price of $120.68 is about 3.35%, the same as the this bond's YTM. When that occurs for a utility company stock, I will generally go with the bond and give up the dividend increases in exchange for the safer security. The reason involves my capital preservation investment objective. I know what my total return will be when this bond matures but it is unknowable whether or not the ETR stock price will add to or subtract from the dividend yield on 8/1/26.

C. Bought 1 Treasury 2.125% Coupon Maturing on 3/31/24

YTM = 2.44%

Current Yield: 2.14%

D. Bought 1 Treasury 2.25% Coupon Maturing on 10/31/24:

YTM = 2.474%

Current Yield = 2.26%

E. Bought 1 Treasury 2.25% Coupon Maturing on 11/15/24:

YTM  = 2.44%

Current Yield: 2.26%

F. Bought 1 Treasury 2.125% Coupon Maturing on 11/30/24

YTM = 2.48%

Current Yield =  2.14%

Fidelity Order Book at Time of Purchase: 

This order book highlights that there is little difference in yield when buying only 1 bond compared to buying 250.  

G. Bought 1 Treasury 2.5% Coupon Maturing on 1/31/25


YTM:  2.613%
Current Yield: 2.51%

H. Bought 1 Treasury 1.75% Coupon Maturing on 6/30/24 at 97.8035


I now own 2. The prior purchase, executed on 3/29 and discussed in my last last post (Item # 1.F.), was at 98.4579, creating a 2.457% YTM. The decline in price was sufficient for me to buy one more.  

YTM at TC = 2.794%
Current Yield at TC = 1.79%

3. Bought 100 NYCB at $10.52-Vanguard Taxable Account

Quote: New York Community Bancorp Inc. (NYCB)

NYCB SEC Filings

Investment Category: Regional Bank Basket Strategy

Dividend: Quarterly at $.17 per share ($.68 annually)

NYCB Dividend History | Nasdaq

The $.17 rate was initiated effective for the 2016 first quarter payment and was then reduced from the previous $.25 per share. 

Yield at $10.52: 6.46%

Last Ex dividend: 2/4/22

Last Earnings Report (Q/E 3/31/22): This report was released yesterday after the market's close. SEC Filed Press Release 

GAAP Net Income of $147M or $.31 per share. 

Non-GAAP at $.32, which excludes acquisition related expenses. NYCB is in the process of acquiring Flagstar Bancorp. 

Consensus at $.314 per Fidelity

NIM = 2.43%, steady. 

Efficiency Ratio: 38.65% (excellent)

NPA Ratio = .11% (excellent)

Coverage Ratio = 313.18%

Charge off ratio = Net recovery of $2M. 

ROTE  14.76%

Earnings Report (Q/E 12/31/21): 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; 

NIM = 2.43%

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. 

Sell DiscussionsItem # 1.A. Eliminated NYCB in Fidelity Account-Sold 46+ shares at $12.31 (3/10/19 Post)South Gent's Comment Blog # 5: Sold 50 NYCB at $15.58  (11/16/16 Comment)Update For Regional Bank Basket Strategy As Of 10/19/15 - South Gent | Seeking Alpha: Item # 1 Sold 150 NYCB at $18.57 (profit snapshot = $999.66); Item # 2.D. Sold 50 NYB  at $14.25 (3/25/13 Post)Item # 7 Sold 50 NYB at $17.51 (7/28/2010 Post)(profit snapshot +$331.03)  

NYCB Realized Gains to Date: $1,470.16

4. Eliminated GIS in Schwab Account - Sold 21+ at $71

Quote: General Mills Inc

GIS SEC Filings

GIS Analyst Estimates

General Mills: Brands overview

Profit Snapshot: +$294.64

Last Buy DiscussionsItem 3.L. Added to GIS in Fidelity Account-Bought 1 at 58; 1 at $57.67 (8/20/21 Post)Item # 1.G. Added to GIS in Fidelity Taxable Account-Bought 5 at $55.9; 5 GIS at $55.5; 5 at $55.2; 5 at $54.9; 5 at $54.5; 5 at $54 (2/6/21 Post)Item # 1.A. and 1.B. Started GIS in Schwab Taxable account and Added to GIS in Fidelity Taxable Account (1/9/21 Post)

The lowest price paid over the past 3 years was $36.75. Item # 5 A. Bought 2 GIS at $40.25, 2 at $39.45, 10 at $38.3 and 5 at $36.75-Used Commission Free Trades (12/29/18 Post)

Dividend: Quarterly at $.51 per share, last raised from $.49 effective for the 2020 4th quarter payment. 

GIS Dividend History-Nasdaq

Last Earnings Report (3rd F/Q ending 3/27/22): SEC Filed Press Release

Adjustments to GAAP: 

GAAP E.P.S. at $1.08 which includes a $170M net pre-tax gain on divestitures; 

Non-GAAP E.P.S. at $.84 with the consensus at $.781 per Fidelity; 

"Net sales were essentially flat to last year at $4.5 billion, including a 3-point net headwind from divestiture and acquisition activity. Organic net sales increased 4 percent, reflecting 7 points of positive organic net price realization and mix, partially offset by a 4-point headwind from lower organic pound volume.";  

"Third-quarter net sales for the Pet segment increased 30 percent to $568 million, driven by favorable net price realization and mix and strong volume growth. Net sales results in the quarter included a 14-point benefit from the pet treats acquisition. Organic net sales were up 16 percent. Segment operating profit increased 8 percent to $111 million, driven primarily by favorable net price realization and mix and higher volume, including benefits from the pet treats acquisition, partially offset by higher input costs and higher SG&A expenses."; 

For fiscal 2022, "Constant-currency adjusted diluted EPS are now expected to range between flat and up 2 percent, driven by the higher outlook on adjusted operating profit. Adjusted diluted EPS were previously expected to range between down 2 percent and up 1 percent." 

Shortly before the report was released, JPM reiterated its neutral rating and reduced its price target to $64 from $67 (3/22), while GS reiterated its sell rating while raising its PT to $58 from $57 (3/16). 

I still own GIS in several accounts with the largest being a 60 share position held in my Fidelity account with an average cost per share of $56.12.

Other Sell DiscussionsItem # 2.B. Sold 2+ GIS at $671. and 3 at $69.22-Fidelity Account (1/7/22 Post)(profit snapshot = $46.67); Item # 3.B. Sold 1.582 GIS at $64.42 - Eliminated Shares Bought with Dividends (6/4/21 Post)(profit snapshot = $8.09); Item # 1.A. Pared GIS in Fidelity Taxable-Sold 4 at $61.37 (4/17/21 Post)(profit snapshot = $9.95); Item # 1.A. Eliminated GIS-Sold 27+ at $54.86 (3/21/20 Post)(profit snapshot = $426.37); Item # 1.A. Sold 13 GIS at $55.02-Used Commission Free Trade (8/17/19 Post)(profit = $134.13); Item 1.B. Sold Highest Cost GIS lots at $51.69 (4/7/2019 Post)Item #2.A. Sold 10 GIS at $56.18-Used Commission Free Trade  (12/21/17 Post) Snapshots of 2007 through 2017 round-trip trades can be found in Item 1.B (+$1,809.99). The largest single gain was $1,285.51 realized on a 52 share lot in 2016. There have not yet been any realized losses.  

Realized Gains Starting in 2007: $2,714

5. Pared SHEL in Schwab Taxable Account- Sold All Shares with a cost basis over $50

29 shares sold at $58.34

Quote: 
Shell PLC ADR  (SHEL), formerly known as Royal Dutch Shell.



Profit Snapshot: +$84.89


Average cost per share before pare: $42.84

Average cost per share after pare: $33.3

As of close on 4/19/22 after pare

Dividend: Last Quarterly at US$.48 per share ($1.92 annually) 

As previously discussed, SHEL slashed its dividend in 2020 from 47 to 16 cents. Shell cuts dividend for first time since WW2 - BBC News Chevron and Exxon did not cut their dividends.  

Yield at $33.33: 5.76%

Last Ex Dividend: 2/17/22

Last Buy DiscussionItem # 1.F. Added to RDSB-Bought 1 at $34.08; 1 at $28.9, 1 at $27.61; 1 at $24.88; 1 at $24.18- Schwab Taxable (5/23/20 Post) I still own those shares. 

Last Earnings Report (Q/E 12/31/21): Shell PLC (SHEL) SEC Filed Press Release 

Adjusted ADR E.P.S. at $1.66 

Consensus at $1.409 per Fidelity 

Recent Sell DiscussionsItem # 1.P. Pared RDSB in Schwab Taxable- Sold 5 at $49.36 (10/22/21 Post)Item # 3.D.  Sold All Remaining Shares Purchased with Dividends in Fidelity Account at $40.14 (10/8/21 Post)(reduced my average cost per share to $25.76

In January 2014, I sold  52+ shares of RDS/A at $70.85 and 51+ shares of RDS/B at $70.83 after a profit warning. Item #2 (1/28/2014 Post)(profit snapshots = $325.89); Cockroach Theory Definition  

This stock has been in a long term bear market that started in 2014. I would characterize the recent rally- at this time - as a cyclical bull market within the confines of a long term secular bear market. Subsequent developments may prove that the rally marked the end of the long term bear market or confirm the current opinion. 

Starting on 8/22/14 through 4/22/22, The Energy Select Sector SPDR ETF (XLE) produced an annual average total return of +.97% compared to 12.51% for SPY. DRIP Returns Calculator | Dividend Channel If I ended XLE period at 8/22/21, the annual average total return was -6.46%

6. Pared HTA - Sold 20 out of 70 at $31.8

Quote: Healthcare Trust of America Inc. (HTA)

HTA SEC Filings

2021 Annual Report

Portfolio Overview - HTA: 471 Medical Office Buildings (MOB) containing 25.6M square feet of leasable space. 

HTA is in the process of being acquired by Healthcare Realty Trust Inc. (HR) If completed, each HTA share will be exchanged for 1 HR shares + $4.82 in cash per HTA share. Healthcare Realty and Healthcare Trust of America Enter Into $18 Billion Strategic Combination - Healthcare Realty This is a reverse merger where HTA will be the surviving company. I have a smaller position in HR. I intend to hold my remaining HTA shares until the merger is completed.  

Last Discussed:  Item # 1.H. Sold 5 HTA at $31.61; 5 at $32.89 (11/11/21 Post)(profit snapshot = $96.87) As discussed in that post, the problem with MOB REITs is that they are not materially growing funds available for distribution per share

Last Buy DiscussionsItem # 1 Bought 100 HTA at $22.8; 2 at $22 and Sold 2 at $26.7 (5/2/20 Post)

Investment Category: Equity REIT Common and Preferred Stock Basket Strategy

Profit Snapshot: +$198.37


New AC per share = $21.85 

Snapshot Intraday on 4/6/22 after pare 

Dividend: Quarterly at $.325 per share ($1.3 annually)

HTA Dividend History | Nasdaq

The quarterly rate was at $.29 in 2015. 

Yield at $21.85 = 5.95%

Last Ex Dividend: 4/1/22. I sold shortly after the ex dividend date. 

Last Earnings Report (Q/E 12/31/21): SEC Filed Press Release

Normalized FFO per share = $.43 (FFO per share as defined by NAREIT = $.42) 

Funds available for Distribution: $79.2 million, a decrease of 1.4% compared to Q4 2020.

FAD per share: $.3485

Dividend growth has been significantly restrained longer term due to the inability to increase FAD per share. FAD per share was at .344 in the third quarter of 2016. SEC Filed Press Release 

While HTA and other MOB REITs have increased slightly the dividend over a long period, the increases simply narrowed the difference between FAD per share and the increased dividend rate.   

Other Sell DiscussionsItem # 3.B. Sold 10 HTA at $28.17; and 10 at $29.27 (7/18/20 Post)(profit snapshot = $118);  Item # 2.D. Eliminated HTA-Sold 30 at $32.51 (2/8/2020 Post)(profit snapshot = $178.02); Item # 1.A. Sold 10 HTA at $31.31 (1/29/20)(profit snapshot = $44.34); Item # 2.B. Sold 10 HTA at $30.81 (11/28/19 Post)(profit snapshot = $39.2); Item # 1.A. Sold 15 HTA at $28.57-Used Commission Free Trade (9/12/18 Post)(profit snapshot = $46.12); Item # 2 Sold 50 HTA at $26.25 Update For REIT Basket Strategy As Of 10/28/15 - South Gent | Seeking Alpha (profit snapshot = $124.1)

HTA Realized Gains to Date: $756.54 (currently ranked at # 10 in profits realized in this basket)

7. Small Ball:

A. Pared ENB in Schwab Account- Sold 2 at $46.77

History this Account: 


Quote: 
Enbridge Inc. (ENB)

ENB Profile | Reuters

ENB Key Metrics | Reuters

Investment Categories: Dividend Growth, Bond Substitute, Large Cap Valuation 

Last Buy DiscussionsItem # 1.F. Added to ENB in Vanguard Taxable Account-Bought 5 at $29.51; 5 at $28.95; 5 at $27.4 (10/31/20 Post)Item # 1.C. Added 5 ENB at $30.65-Fidelity Taxable (8/15/20 Post)Item # 1.C. Added 1 ENB at $27.23; 1 at $26.21; 1 at $25.49; 1 at $24.29; 1 at $23.68  (4/18/20 Post)

Profit Snapshot = +$33.27


New AC per share this account: $28.52

Dividend: C$.86 per share (C$3.44 annually) 

Last Ex Dividend: 2/14/22

Yield at $28.52 Assuming .80 CAD/USD = 9.65%

I have recently discussed ENB and have nothing further to add here:  Item # 3.F. Pared ENB in Fidelity Account - Sold 5 at $42.4 (3/17/22 Post) I will discuss the first quarter earnings report after it is released on 5/6. I discussed the last report in the previously linked post. 

ENB Trading Profits To Date: $379.56

Goal: Any profit in excess of the dividend payments. 

B. Added to BRBS- Bought 5 at $14.55

Quote: Blue Ridge Bankshares Inc.

BRBS SEC Filings

10-K for 2021

There are no analyst estimates. 

Investment Category: Regional Bank Basket Strategy

Buy DiscussionsItem # 2.C. Bought 5 at $15.9; 5 at $15.10; 10 at $14.9 (3/24/22 Post) I discussed the 2021 4th quarter report in that post; 

Item # 2.L. Bought 5 BRBS at $16.49 (8/12/21 Post) 

Average Cost per share = $15.31  (35 shares)

Dividend: Quarterly at $.125 per share ($.50 annually), last raised from $.12 effective for the 2022 second quarter payment. 

Dividends | Blue Ridge Bankshares Inc.

Yield at AC per share 3.27%, rounded up. 

Last Ex Dividend: 4/14/22

Maximum Position: 100 shares

Purchase Restriction: 5 or 10 shares lots with each subsequent purchase at the lowest price in the chain.

BRBS has not yet released its 1st quarter report. 

C. Bought 5 AROW at $31.6


Quote: Arrow Financial Corp.  (AROW)

AROW SEC Filings

Investment Category: Regional Bank Basket Strategy

2021 Annual Report 

3 Year Financial Data


Last  DiscussionItem # 1.C. Bought 5 AROW at $34.9; 5 at $34.4 in Fidelity Account-Then Eliminated Position in that Account Selling 15 at $36.1 in response to the 4th quarter earnings report (2/10/22 Post) I eliminated my position in my based on what I viewed as an unsatisfactory 4th quarter earnings report, noting that I still viewed AROW as a quality micro cap bank.  

Dividend: Quarterly at $.27 per share ($1.08 annually). Arrow Declares Increased March 2022 Cash Dividend

In addition, the bank has paid a  stock dividend most every year since 1996 and has had two 5 for 4 stock splits. AROW Split History The Seeking Alpha dividend history page appears to be adjusted for the stock dividends and splits. Arrow Financial Corporation (AROW) Dividend History | Seeking Alpha

Even with all of the stock splits and stock dividends, the diluted shares outstanding stood at only 16.073M as of 12/31/21. 

Yield at $31.6: 3.42%, rounded up. 

Last Ex Dividend: 2/28/22

Last Earnings Report (Q/E 3/31/22): This report was released on 4/26. SEC Filed Press Release 

Net Income of 12.6M or $.78 per share

Consensus at $.71 

Quarterly Dividend at $.27

NIM = 2.9%, down from 2.99% in the 2021 first quarter. 

Efficiency ratio = 52.3% (good)

NPL Ratio = .36% (good) 

NPA Ratio = .24% (good)

Charge off ratio = .06% (excellent) 

Coverage Ratio = 289% (comforting)

Tangible Book Value per share: $20.83, up from $19.89 in the 2021 first quarter. 

Total Risk Based Capital Ratio: 15.33% (well capitalized)

AROW Realized Gains to Date: $747.69

Most of the profit originated from a 52 share trade: Item # 1. Sold 52+ AROW at $37.5 (7/2/18 Post)

D. Eliminated PAVE = Sold 6 at $28.19; 5 at $28.15:


Quote: Global X US Infrastructure Development ETF Overview

Sponsor's Website: U.S. Infrastructure Development ETF

Expense Ratio: .66%

Profit Snapshots: $54.36 (excludes profit of $13.42 from selling 3 shares on 3/2/22)


Purchase discussion at Item # 2.Q. Bought 8 PAVE - Multiple Purchases with an AC at $22.38 (3/6/21 Post)

TOP 10 Holdings as of 4/26/22

This elimination was in response to the price rise taking into account that many of the owned stocks have high P/E ratios particularly for economically sensitive and cyclical businesses. 

P/E multiples for the top 25 holdings can be found at Global X US Infrastructure Dev ETF (PAVE) Portfolio - Morningstar.

Morningstar currently has a 5 star rating. 

Last 4 Dividends: $.69 per share

Yield at $28.19: 2.45%

E. Pared PLFT in Schwab Account - Sold Highest Cost Shares (20) Purchased with Dividends at $14.07

Quote: PennantPark Floating Rate Capital (PFLT)

PFLT SEC Filings

Last Buy Discussion: Item # 1.G. Bought 10 PFLT at $6.06; 4 at $5.75 (6/6/20 Post)

Profit Snapshot: $46.13


New Average cost per share this account: $8.97

As of close on 4/19/22 after pare

The AC was reduced from $9.53 (100+ shares): 

Snapshot Intraday on 4/19/22 before pare

Dividend: Monthly at $.095 per share (regular dividend only)

PFLT Dividend History | Nasdaq

Yield at $8.97 Average Cost = 12.71%

Last Ex Dividend: 4/14/22

Net Asset Value per share history

12/31/21:  $12.70

3/31/21:    $12.71 Press Release 2021 1st Q Earnings 
3/31/20:   $12.20   
10-Q at page 5 

12/31/19:  $12.95
9/30/19:   $12.97
6/30/19:   $13.07 
3/21/19:    $13.24

12/31/18    $13.66

9/30/18    $13.82
6/30/18:   $13.82
9/30/17:   $14.10
9/30/16:   $14.06
9/30/15:   $13.95
9/30/14:   $14.40
9/30/13:   $14.10
9/30/12:   $13.98

IPO April 2011 at $15 (net to company at $13.9 after underwriters' discount and before PFLT expenses related to the offering) 

5 Year Chart: 


Last Earnings Report (Q/E 12/31/21): SEC Filed Press Release 

NII per share = $.33

Dividends paid during quarter: $.285 per share

"Our debt portfolio consisted of 99.9% variable-rate investments. As of December 31, 2021, we had three portfolio companies on non-accrual, representing 2.9% and 2.5% of our overall portfolio on a cost and fair value basis, respectively. Our overall portfolio consisted of 115 companies with an average investment size of $10.3 million, had a weighted average yield on debt investments of 7.5%, and was invested 87% in first lien secured debt (including 13% in PSSL), less than 1% in second lien secured debt and 13% in preferred and common equity (including 4% in PSSL). As of December 31, 2021, 99.5% of the investments held by PSSL were first lien secured debt."

The 2022 first quarter report is scheduled for release on 5/4. 

Most Recent Sell DiscussionsItem # 3 Sold 102 PFLT in Schwab Account at $13.26- Highest Cost Lots (7/30/21 Post)Item # 2.A. Eliminated PFLT in Fidelity Account-Sold 81+ at $12.01 (12/14/19 Post)

Prior Realized Gains = $135.28




PFLT Realized Gains to Date: +$181.41

Goal: Any realized gain + dividends paid. 

F. Pared PPL in Fidelity Account = Sold 17+ at $29.3


Quote: PPL Corp.

PPL Corp. Analyst Estimates

PPL Investor Relations

2021 Annual Report

PPL SEC Filings

Profit Snapshot: +$51.01



I recently discussed PPL and have nothing further to add here. The stock has been a disappointment. Item # 3.G. Eliminated PPL in Vanguard Taxable Account -Sold 13 at $26.45 (3/17/22 Post) (profit snapshot = $54.41)

PPL has not yet released its first quarter report. 

G.  Added $50 FSMEX at $67.75 and $50 at $62.41



That is 7.88% decline between those two recent purchases.  The prior $50 purchase was made on 3/22/22 at $72.33 

Quote:  Fidelity Select Medical Technology and Devices Portfolio Overview

Sponsor's Website: Fidelity ® Select Medical Technology and Devices Portfolio

Expense Ratio: .7%

Fidelity® Select Medical Tech and Devices (FSMEX)-Morningstar (currently rated 5 stars)

H. Eliminated FLBR


Quote: Franklin FTSE Brazil ETF Overview

Sponsor's Website: Franklin FTSE Brazil ETF - FLBR

Expense Ratio = .19%

Profit Snapshot: +$15.27 

Purchase discussionItem # 2.L. Bought 5 at $20.02 (3/3/22 Post) I described the investment category in that post as "Primarily Lottery Ticket basket, secondarily possible Masochistic Contrarian Value." 

Franklin FTSE Brazil ETF (FLBR) Quote - ARCX | Morningstar (currently rated 2 stars)

Brazil is one of the countries that has substantial economic potential which has not been realized due to poor leadership.  The leader on that list is Russia. 

I. Added to ILPT - Bought 5 at $19.69; 5 at $17.65

Quote: Industrial Logistics Properties Trust

ILPT SEC Filings

Investment Category: Equity REIT Common and Preferred Stock Basket Strategy

This purchase is typical small ball trading. I recently started a position with several small ball purchases. Item # 3.D. Bought 10 ILPT at $21.67; 5 at $20.67; 5 at $20.35 (4/14/22 Post). I then added 5 shares at $20.08 the day before the ex dividend date. Item # 4.K. Added 5 ILPT at $20.08 (4/21/22 Post) 

I bought this last 5 share lots after the ex dividend date. The lowest price lot was bought after the release of the first quarter report which was not panned by investors. I turned on the dividend reinvestment option after this latest decline. 

Average Cost per share  = $20.33 (35 shares)

Dividend: Quarterly at $.33 ($1.32 annually)

Yield at AC per share: 6.49%

Last Ex Dividend Date: 4/22/22

Last Earnings Report (3/31/22): SEC Filed Press Release and Supplemental.This report was released yesterday.   

Normalized FFO per share at $.42, down from $.47 in the 2021 first quarter. 

Occupancy at 98.9%

Same Store Occupancy: 99.3%

"During the first quarter, we entered new and renewal leases and completed rent resets for approximately 885,000 square feet at weighted average rental rates that were 27.9% higher than prior rental rates for the same space"

The significant increase in leverage is due to the Monmouth REIT acquisition that closed in February 2022. Industrial Logistics Properties Trust - Industrial Logistics Properties Trust Completes Acquisition of Monmouth Real Estate Investment Corporation


DisclaimerI 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.

30 comments:

  1. From the fact that you are buying treasury securities whose YTMs are much lower than what look to me like reasonable guesses at inflation, can I assume that you don't expect to see anything better in the near future?

    ReplyDelete
    Replies
    1. David: The alternative given my financial objectives is to keep the funds used to buy those low yield, negative real rate of return, treasuries in a broker sweep account which currently yields .01%. As rates go up I will add to my short term treasury positions in 1 bond lots. The goal is simply to earn more dollars than I would otherwise receive in a broker MM fund. The Stock Jocks would not be impressed with that objective.

      If the FED raises the FF rate by .5% next month which is expected, most of the broker MM funds will simply absorb that increase in their management fees (Vanguard being an exception) It will take another .5% FF increase for those MM funds to reflect some of that increase. The MM yields will not immediately go up to reflect all of the second .5% FF since older and lower yielding short term debt instruments will have to roll over first. Generally, it take about 70 days for a MM to rollover all of its securities into higher yielding ones.

      The bottom line is that I do not anticipate that the MM funds will return more than the short term treasuries that I am buying.

      I will add to corporate bond purchases as well in 1 bond lots as I did earlier this morning when I bought 1 Morgan Stanley 3.125% SU bond maturing on 7/27/26 at a TC of 96.6 which produces a 4% YTM.


      https://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C743636&symbol=MS4385344

      And, if a recession is brewing, the FED may respond, as it has in the past, by reversing course and restarting QE yet again and reinstituting ZIRP. So I can not predict the future and that is a fundamental caveat that influences my asset allocations.

      Delete
    2. I was wondering why buy bonds when they're giving negative returns. This is a good explanation. Also good logic when you have a lot of funds so my high rate accounts aren't nearly enough.

      Could QE even work? It'd just exacerbate the inflation to rates gap.

      This economy is matching the usual pattern of presidential elections.

      -----

      Tesla looks like a good trade opportunity? I'm not going to try to time this.

      Delete
  2. Buffet at company meeting coming up! That will likely be the biggest market impact IMHO.

    So GDP is coming down with all these factors.
    Rates never inverted and aren't anywhere near it now.

    ----

    Amazon's down a lot? Sounds that's reflecting it's projections.
    Apple's strong.
    Roku's worried that TV sales are down. (Is buying slowing economically or is the TV market reaching saturation?)
    I listened to CNBC's interview of Intel but didn't gain any sense.
    Interesting that PPL didn't go anywhere. I'd wondered if it would when you bought. I'd owned it a long time ago.

    ----
    Yesterday was frustrating. I was in a meeting from 12-1:45. I missed the climb & moment to get in. Yesterday I noted, I want to learn to chase, but maybe not this time. So far it's been a good "missed" opportunity.

    ---

    Josh - the one FG likes, is describing this environment as bearish. He's always been heavily bullish. Making the good point that fundamentals no longer matter. A good company is good, but it's on sale 3 out of 4 days.

    He's looking at Amazon as opportunity, but without urgency. ...But it's time to start looking at buying (not specific to Amazon.)

    ---
    I clicked notify me before posting any comment, and am not getting notifications. Hum. Maybe it needs a comment to trigger.

    i don't care for the new setup. You have to scroll both an inside and outside bar to see your comment. I used to be able to use the double arrow on the frame corner to expand the box.

    -----

    I filed on the Roundup case. I've never done something like this. I have no emotional energy on it, so it's safe to do. After fees & payback medical insurance, I can't imagine much coming of it. That assumes it goes anywhere. (There's an appeal waiting for supreme court to decide if it will take it.) Something's fun about doing it. A chance to tell someone I'm really annoyed about the lymphoma. That seems to be it.

    ReplyDelete
    Replies
    1. Land: The GDP report was weak due to a number of factors that do not indicate IMO weakness in the economy. Personal expenditures rose 2.7%, higher than the 2021 4th quarter when real GDP increased by 6.9%.

      See Table 2:
      https://www.bea.gov/sites/default/files/2022-04/gdp1q22_adv.pdf

      Nominal GDP increased at a 6.5% annual rate in the 2022 first quarter (first estimate). Inflation was higher which took the real GDP number into negative territory.

      Real GDP would have been positive but for a massive surge in imports that resulted in a 3.2% drag.

      The core real GDP was up 3.7% which includes consumer spending (+2.7% annual rate), business fixed investment (+9.2% rate), and home building (+2.1% rate)

      I do believe that a continuation of problematic inflation makes a recession more likely. The primary reason is that the FED will likely respond by increasing the FF rate more than the market currently expects. So what happens if the FF rate is 2.5% on 1/1/23 and CPI is at 6%+ and with core CPI and PCE inflation remaining persistently high.

      The government reported today that the March 2022 personal consumption expenditure inflation rose 6.6% with the core PCE inflation up 5.2%.

      https://www.bea.gov/news/2022/personal-income-and-outlays-march-2022

      The PCE price index has recently been lower than CPI. The FED prefers the PCE price index:
      https://www.investopedia.com/terms/p/pce.asp


      +++

      Putin, who is an evil psychopath, resembling Stalin far more than other Russian leader over the past century, will cause the murder of Russian citizens. I would not put any faith in what Russian police say about those deaths.
      https://www.newsweek.com/russian-oligarch-deaths-suicide-gas-exec-fled-igor-volobuev-vladislav-avaev-sergey-protosenya-1701373

      Delete
    2. Thanks! Good to know consumption is up!

      The rest goes with that I don't see how the Fed can time it perfectly. Any mismatch to market expectations... or what the inflation/rates/economy needs... will have a lasting drag.

      I'm hoping for good entrance prices.

      ----

      Yep, those weren't suicides. What I don't get is how an MSNBC guest declared that they were. Families don't kill themselves as a group.

      Delete
  3. It was the family's of those two oligarchs that were dead too? I heard the news on the news, and they settled on suicide was very possible.

    What an odd conclusion when it was family members too. They didn't even mention family. I think MSNBC.

    ----

    Josh now saying AAIA (?) investor sentiment is at lowest it's been in years. So we're at washout levels. But he thinks internals and technicals are still back. Such as new lows list is growing.

    ReplyDelete
  4. Back in 2013, when the ten year treasury yield went from 1.66% in May to 3.04% as of 12/31/13, KRE experienced one of its most robust rallies, producing a total return of +47.5%:

    SPDR® S&P Regional Banking ETF
    https://www.morningstar.com/etfs/arcx/kre/performance

    With the ten year treasury yield rising this year, currently near 2.93%, KRE's total return is down over 10% YTD, falling over 3% today:
    https://www.marketwatch.com/investing/fund/kre?mod=over_search

    For the regional bank stocks that I own, earnings reports have been mostly in line or better than expected, with several reporting much better than expected earnings.

    First quarter earnings do not explain IMO why those stocks are declining even with interest rates increasing, TTM P/E multiples generally in the high single digits or low double digits, and dividend yields generally at 4% or higher at current prices.

    One explanation is simply that just about everything is going down, irrespective of valuation and better than expected first quarter earnings reports.

    Another more ominous possible reason, which involves fundamentals, is a forecast that earnings are at, or near a peak, and the odds of a recession within the next 12 months has become more likely. If that is the reason, then investors are looking past current reports. For the banking sector, this kind of forecast would mean more non-performing loans and charge-offs and meaningful Y-O-Y declines in E.P.S.

    Bank stocks did start to roll over in 2006, which proved to be a correct forward prediction of the 2008 recession, but not the severity of it.

    AMZN did not help calm the nerves, falling today $406.30 or 14.05% after a disappointing earnings report.
    https://www.marketwatch.com/investing/stock/amzn

    Many of the mega cap technology and internet related stocks that led the march to new highs are well into bear market territory now.

    ReplyDelete
    Replies
    1. That's the thing... tech led the rally. There hasn't been a new leader. It should be household redecorating, or vacationing.

      Covid didn't end, so the moment for a new leader didn't happen. Instead there's this nebulous world of everyone switching jobs, supply chain confusion, and no clear move forward into a recovered world, that was expected.

      ---

      One CNBC presenter answered my question. The prior two crashes were slow at first, this type of amount down. Then in a single week another 23 or 17% respectively.

      The VIX model says this is unstable territory. But within that I don't know if it says more. In 2020 there was plenty of immediate down. It looked like a big crash, but stage two of catastrophic never happened. I'd wondered then if it would come later.

      Still 20% down is normal. It's not a crash or recession.

      Delete
    2. The bank warning and history is very interesting. Wasn't a good timing mechanism considering it took 2 years. But a good heads up.

      Delete
  5. Land: The 2008 Near Depression was inevitable in 2006.

    Housing prices started to fall in 2006.

    https://fred.stlouisfed.org/series/CSUSHPINSA

    Subprime and Alt-A mortgage lenders started to go into bankruptcy starting in early 2007. During February and March 2007, more than 25 subprime lenders declared bankruptcy.

    I would say the decline in regional bank stocks started to signal problems at most a few months before they became obvious.

    If I focus on KRE's price action rather than the kind of regional bank stocks that I own, the top occurred in February 2007 near $51 which was followed by a persistent waterfall decline to $14+ (3/2009).

    ReplyDelete
    Replies
    1. I didn't realize the timing was that close!

      I wasn't paying close attention in 2006. Instead following a non-active investment policy of ignoring my broker accounts, except to rebalance 1x a year.

      A counter thought is that in that crisis, banking *was* the crisis. It's probably not as focal this time, so even more so, banks shouldn't be declining. Especially on better margins.

      Could be everything going down, but energy isn't. Apple's stayed afloat.

      Could be reflecting expectation of housing stalling because rates will need to increase for inflation.

      What it says is that when you plug all the worry factors into investor's minds, collectively, the economy will be slowing.

      ---
      Another CNBC point is that while consumer spending increased, consumer savings decreased. The spending is coming from savings, not robustness.

      ---
      I have an overall decline of 5.8% from high points.

      I add totals every once in a while, (and probably didn't on an exact ATH day.)
      Highs of those were April 2021, Sept 2021, and end of March 2022.
      So that decline is just this month.

      Delete
    2. I find curious that with all the talk of recession, none of the articles or advice on TV, radio... talks about selling.

      They assess whether it's time to buy,
      and what to buy when it's time.

      Delete
  6. LAND: Stripping out government transfer payments, personal income was up 8.6% for the 12 months ending in March with wages and salaries up 13.33%.

    Compare March 2022 with March 2021:
    In Billions of Dollars:
    Wages and Salaries Line 3, Table 1
    March 2021: 9,702.2
    March 2022: 11,073.6
    Up Y-O-Y 1,371.4
    % Change Y-O-Y =14.13%

    That is an aggregate number for all workers rather than individual percentage increases. Still the numbers are healthy.

    https://www.bea.gov/sites/default/files/2022-04/pi0322.pdf

    https://www.bea.gov/sites/default/files/2021-04/pi0321.pdf

    "Personal saving was $1.15 trillion in March and the personal saving rate—personal saving as a percentage of disposable personal income—was 6.2 percent (table 1)."

    The core PCE price index in March was up 5.2% from one year ago, which was the largest increase since January 1982.
    https://www.cnn.com/2022/04/29/economy/pce-inflation-march/index.html

    Wage and salary increases per individual can not keep pace with inflation at current levels, so a substantial number of households will have to support spending through reducing the savings rate which has been going down though still good IMO, dipping into savings and/or increasing debt. None of those options are optimal longer term.

    As long as consumer spending holds up, a recession is unlikely.

    ReplyDelete
    Replies
    1. Well, my income isn't keeping up with the raises.

      Good point that however it's done, if consumers are spending there wasn't be a recession likely.

      Delete
    2. FG's comment is that this time the wall of worry reasons are real. That's a change. He's not shouting to sell out.

      In 2006 it was evident that the something wrong was subprimes. Paper's had articles debating if it mattered. Until the crash and there wasn't any question.

      I don't know of anything now that has that position. A lot of pressures but nothing specific as the cause.






      Delete
    3. Land: Back in 2007, most investors were not particularly worried about the unfolding disaster in subprime and Alt-A mortgage loans, but there were exceptions including me.(e.g. "The Big Short" by Michael Lewis) I just did not have access to enough information to correctly predict the seriousness of what was already inevitable in 2007, nowhere close, but did react during 2007 by making a substantial reduction in my stock portfolio.

      There is almost invariably a lot of bad news that people latch onto to justify their aversion to stocks. Frequently, the reasons used to justify that aversion are not important even in the short term and irrelevant longer term.

      Problematic inflation is one problem that concerns me the most, since I started to invest during the late 1960s and my brain was forever imprinted with the problems that prolonged problematic inflation will cause in both the stock and bond markets.

      The rally so far today is pretty feeble given what happened last Friday and in April.

      I am continuing to buy treasury notes maturing in 2023 and 2024 in 1 bond lots. That process is one way to address the rise in interest rates, since each subsequent 1 bond purchase will by at a lower price and a higher yield. And the maturity terms are sufficiently short that maturities will start to rollover within 1 to 2.5 years generally.

      Delete
  7. I do not like this new set up. I wrote a whole comment. I was copying it clipboard before hitting publish and that triggered a glitch.

    ReplyDelete
  8. So...

    Yes very true that most people weren't taking the problems seriously back then. If I remember, there was some laughing at those who worried.

    Even so, the topic was getting some mumbles in media then. There's legit worries now but I haven't spotted what the corruption topic is this time. Based on human nature and the same feel, it there is one lurking, but what it is, is a puzzle. Maybe it won't be corruption based this time, but just a conflation of a bunch of problems.

    Inflation is a big worry. With other worries adding to it such as Russia oil being off the market and pushing up Energy prices.


    I saw the big short for the first time a few weeks ago. Well done. The amazing part for them then was timing. So hard and risky with shorts. But because he knew when variable rates would start tripling, he could bet based on timing.

    --
    The problem with a rally is that bigger investors will be looking to sell into it. Unless there's a short squeeze. At VIX under 30 until the last two days, that wasn't a big pressure.




    ReplyDelete
  9. I realized a fatal flaw in my investing plan. At current portfolio if I get 2% over inflation, I can replace my income (if adding SSDI) adequately to live off divs.

    I hoped to get higher interest by investing in stocks when they're lower since current divs are generally so-so. Problem is then my portfolio will be lower in value. So I'll get less stocks.. and when prices rise, my divs will be lower than hoped. So obvious now.

    I'm about 1/2 in cash (from before now) because price entries haven't been that good. But that's generally the advice on investing articles and stations. And it's worrisome to be doing the popular action.

    Off to buy an ibond with the new rates. I waited until now in hopes of a little fixed rate. Still 0%.

    ReplyDelete
  10. Today was another Dramamine day. I still don't see any specific news at 3pm. It looked like a HFT buy off support that self-fed.

    ReplyDelete
  11. APY on ibond is 9.85 by compounding semi-annually? That's what I'm getting using calculators.
    https://www.omnicalculator.com/finance/apy

    ReplyDelete
    Replies
    1. Land: The new IBond coupon is actually 4.81% which represents a 6 month CPI rate. The 9.62% is a double of that 4.81% to arrive at an annual rate assuming the same coupon was in effect for an entire year which will not happen.

      https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm


      To arrive at a known 12 month yield through October 2022 without compounding, I would simply add the prior coupon of 3.56% to 4.81% which gives me a 8.37% annual rate for the 12 months ending 10/21/22.


      Delete
  12. According the CME FedWatch Tool, there is a 99.8% chance that the FED will increase the FF rate range by .5% tomorrow.

    https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html

    What has changed a lot from just a few months ago are the odds relating to the FF range after the December 2022 meeting.

    Target Rate in Basis Points
    275-300 36.4%
    300-325 49.9%
    325-350 10.4%

    The odds that the FF rate will be at least 3% to 3.25% is currently at 60.8%.

    The odds are at 97.2% that the rate will then be at 2.75% to 3%.

    As of yesterday's close, the treasury yield curve is showing some interesting inversions.

    5 Year = 3.01%
    7 Year = 3.04%
    10 Year = 2.99%

    https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202205

    The 7 year treasury started 2022 at a 1.55% yield.

    I do not recall seeing this kind of yield inversion previously, but my memory is nowhere near what it use to be. I interpret the inversion and the rapid change in yields this year in intermediate term yields as a market signal that the FED will maintain a higher FF rate longer once it hits its target range.

    Equity REITs have been harder as the ten year yield approached 3%. I interpret that response to concerns about debt refinancing costs.

    Yesterday, VNQ declined $2.51 or 2.41% to close at $101.23 which took that REIT ETF into correction territory for the year:

    https://www.morningstar.com/etfs/arcx/vnq/performance

    Some of my scatter shot, small ball "buying programs" have been in that sector since I view the price movement as an overreaction.

    ReplyDelete
    Replies
    1. So lack of .75% was the big excitement.

      Still leaves inflation and rates ratio a problem.

      Delete
  13. I noticed an anomaly in the HR and HTA stock prices earlier today. Something was amiss yesterday but I did not see any publicly available news to explain it until today.

    Healthcare Realty Trust Inc.
    $30.74 +$2.19 +7.67%
    Last Updated: May 3, 2022 at 1:53 p.m. EDT
    https://www.marketwatch.com/investing/stock/hr?mod=over_search

    Healthcare Trust of America Inc.
    $28.53 -$1.43 -4.79%
    https://www.marketwatch.com/investing/stock/hta?mod=over_search

    I recently pared my HTA position and discussed both HTA and HR in Item # 5.

    The anomaly is that HTA had agreed to be acquired by HR, with each share of HTA exchanged for 1 HR + $4.82 in cash per share. Using the $30.74 HR quoted above, that would come to $35.56 per HTA share.

    The merger has not yet been called off but the Stock Jocks are saying it will be.

    The reason is that Welltower has made a $5B offer to acquire HR, which was rejected by HR but Welltower remains interested according to the WSJ.

    https://www.fool.com/investing/2022/05/03/why-healthcare-realty-stock-jumped-as-much-as-11-t/

    IMO, combining HR and HTA does not create a better MOB REIT IMO, since neither REIT has been able to grow FAD per share as I have shown in prior posts.

    Consequently, HR shareholders would most likely be better off with Welltower's offer.

    Apparently HR's offer to acquire HTA was motivated by an effort for HR's management to fend off the Welltower offer and to become yet another example of bigger is not necessarily better.

    ReplyDelete
  14. The Stock Jocks liked my portfolio today.

    One of the best gainers was a small ball position in the chemical company Chemours (CC) that reported yesterday.

    Closed at $38.91 + $5.81 + 17.55%
    https://www.marketwatch.com/investing/stock/cc?mod=over_search

    CC reported non-GAAP E.P.S. of $1.46 on a 23% increase in revenues. The consensus was at $.922. GAAP E.P.S. was slightly lower at $1.43.

    https://www.sec.gov/Archives/edgar/data/1627223/000156459022017071/cc-ex991_6.htm

    I am not interest in buying more shares anywhere near the current price. While impressive, CC still has issues, as I previously discussed, and it is a cyclical company so earnings will look good for awhile and then not so good.

    Last Discussed:
    Thursday, March 31, 2022
    Item # 3.G. Bought 5 CC at $23.2-Fidelity Account and 4 at $23.99 in Schwab Account:
    https://tennesseeindependent.blogspot.com/2022/03/ajxa-amcr-bmy-cc-cve-enbprpca-flsw-fraf.html

    The stock was in a severe falling knife mode when I bought those shares.

    Another mover today for me was Cotera Energy:

    Coterra Energy Inc. (CTRA)
    $31.66 +$2.74 (+9.47%)
    https://finance.yahoo.com/quote/CTRA?p=CTRA

    Earnings were better than expected.
    https://www.sec.gov/Archives/edgar/data/858470/000085847022000014/ctra-3312022xxexx991earnin.htm

    As previously discussed, this company pays a base and variable dividend each quarter. The next dividend will be $.60 per share, of which $.15 is the base and $.45 is the variable.

    I own CTRA is several accounts.

    Last Buy Discussion
    Friday, December 10, 2021
    Item # 2.J. Started CTRA-Bought 5 at $21.53; 2 at $21.1; 2 at $20.75 and 2 at $20.4; 2 at $20; 1 at $19.56:
    https://tennesseeindependent.blogspot.com/2021/12/ari-cowz-crm-ctra-enbprpca-fdn-fnb-irm.html

    ReplyDelete
  15. I have published a new post:
    https://tennesseeindependent.blogspot.com/2022/05/botz-box-cl-etsy-exel-fpf-ilpt-irm-nycb.html

    ReplyDelete
  16. I noticed that the new Comment format has hidden the "Notify Me" box. The box is still present but requires you to click the Enter Comment link first (or the "No comments" link if there are no comments).

    ReplyDelete