AIO, BMRN, DOV, HPP, HR, MATV, SLRC

Economy:

The Atlanta FED's real GDP forecast for the second quarter was revised down yesterday to -1.6% from -1.5% made on 7/15. GDPNow - Federal Reserve Bank of Atlanta

The recent strength in the USD will have a deflationary impact on inflation and multinational reported profits.  

The U.S. Dollar Index has moved up significantly in recent months, indicating USD strength against a basket of 6 foreign currencies. DXY US Dollar Index - Investing.com; U.S. Dollar Index (USDX) Definition This index was near 97 in early January 2022 and is currently hovering around 107. The Euro is weighted at 57+% in that index and recently traded at par with the USD. Euro to US Dollar Exchange Rate Chart | Xe

June Housing Starts: Single family housing starts in June declined 8.1% from May: 

Census Bureau-Monthly New Residential Construction -June 2022.PDF 

Builder Confidence Plunges as Affordability Woes Mount - NAHB

Mortgage Applications Decrease in Latest MBA Weekly Survey | MBA

Industrial production decreased .2% in June. Federal Reserve Board - Industrial Production and Capacity Utilization - G.17

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How Ray Epps Became the Victim of a Jan. 6 Conspiracy Theory - The New York Times I hope Mr. Epps files a defamation suit against those who have falsely claimed that the led a false flag operation on 1/6 including Delusional Don, Ted Cruz, Tucker Carlson, Fox "news" and other wingnuts. Ray Epps, a Trump supporter, describes life as victim of a Jan. 6 conspiracy theory; Ted Cruz Pushes Tucker Carlson's Ray Epps Jan. 6 Conspiracy Theory - Rolling Stone

Republicans block bill to protect women who travel to other states for abortions; Authorities confirm story about 10-year-old rape victim as abortion debate rages; National Right to Life official: 10-year-old should have had baby - POLITICO; Republicans shocked a 10-year-old can get pregnant after Ohio rape victim abortion story proves true (most of the republicans who mentioned the story called it lie before it was confirmed by authorities)

GOP Senate Candidates in Arizona Pledge Allegiance to Trump Ahead of His Visit | Vanity Fair

House passes bipartisan bill to create active shooter alert system 168 House republicans voted against this bill. Office of the Clerk, U.S. House of Representatives - Vote Details

I find it very difficult to believe the Secret Service's explanation of why text messages from 1/6 were deleted given their pro-Trump orientation. Secret Service turned over just one text after records request: report | The Hill; Secret Service has no new texts to provide Jan 6 committee, any texts not backed up have been purged and cannot be recovered - The Washington Post; National Archives asks Secret Service to probe Jan. 6 text matter The director of the Secret Service, James Murray, was appointed by Trump. Several agents in Trump's detail were Trumpsters. Who Is the Secret Service Really Protecting? - The Bulwark; 

Carol Leonnig: Tony Ornato Has Said A Lot Of Things Didn't Happen - YouTube Ornato, one of the agents on Trump's Secret Service detail, became Trump's Deputy Chief of Staff. 

Trump called ‘within the last week’ to overturn Wisconsin election results, speaker says, republished at MSN.com from Trump called ‘within the last week’ to overturn Wis. election results, Speaker Robin Vos says - The Washington Post Donald wants to cancel all votes in Wisconsin, where the ballot was deposited in a drop box which was permitted by the bipartisan Wisconsin Election Commission whose ruling was relied upon by legitimate voters. The 4 Republican Wisconsin Supreme Justices recently ruled that this practice will be prohibited in future elections. It would be unconstitutional to change Wisconsin's 2020 presidential election results.

Tucker Carlson Defends Putin, Says Italy Is Bigger Threat Than Russia

New report details Russian torture of Ukrainian civilians - CBS News 

Putin Aims to Shape a New Generation of Supporters, Through Schools - The New York Times This goes into great detail about Putin's efforts to indoctrinate and brainwash children. There is also something similar to the Hitler Youth program.    

Russia Repeatedly Strikes Ukraine’s Civilians. There’s Always an Excuse. - The New York Times; Russian strike kills 23 people in central Ukraine; Viral Photo Of Toddler Killed In Ukraine Is Stark Reminder War Continues; Russia hits two Ukrainian universities in Mykolaiv with 10 missiles - YouTube All economic ties between Russia and the West need to be permanently and completely severed. Russia nears gas shutdown in Europe as Germany rejects claims it can't fulfill contracts    

Russians flee Putin's regime after Ukraine war in second wave of migration

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1. Corporate Bonds: 

Treasury Yield Curve Rates - July 2022 through 7/19: 

Resource Center | U.S. Department of the Treasury

For 7/19, this chart shows a yield inversion with the 10 year note starting with the 6 month treasury bill. The 2 year note provides the most yield starting with the 1 month bill through the 10 year note. There is a 1 basis point inversion in the 2 and 3 year notes. 

Currently, my bond buying is heavily weighted in 2024 maturities based on the favorable yield comparison to other maturities and relatively short time period to maturity.

I am starting to buy more treasury bills at auction. The rollover will be quicker than the 2 year notes and will consequently have less interest rate risk. When investing in short term fixed income securities, the primary interest rate risk is what I call the risk of lost opportunity which occurs when rates continue to move higher after a purchase. To fully assess that risk, I need to take into account the income lost by keeping funds in meaningfully lower yielding sweep accounts longer. 

I am about 3 months behind in discussing bond purchases. Some bonds purchased yesterday will be discussed in early October. 

Other bonds purchased yesterday will be discussed in this post. 

I am about 1/2 way through my reallocation out of cash into bonds, assuming that interest rates continue to trend higher. 

A. Bought 2 Avangrid 3.2% SU Maturing on 4/15/25 at a Total Cost of  $98.66:

Issuer:  Avangrid Inc. (AGR) - Utility

AGR Analyst Estimates | MarketWatch

AGR SEC Filings

Earnings Report Q/E 3/31/22- SEC Filed Press Release 

Finra Page: Bond Detail (prospectus linked) 

Credit Ratings: Baa2/BBB

YTM at Total Cost = 3.698%

Current Yield at TC = 3.24%, rounded down. 

I have eliminated my position in the common shares. 

B. Bought 2 More Avangrid 3.2% SU Maturing on 4/15/25 at a Total Cost of 97.578: 

Purchased on 7/7/22. Discussed out of time order. 

See Item # 1.A. above. 

YTM at Total Cost = 4.126%

Current Yield at Total Cost: 3.2794%

C. Bought 2 Essex 4% SU Maturing on 3/1/29 at a Total Cost of 97.974:

Issuer: Operating Entity for Essex Property Trust Inc.  (ESS) -REIT

Finra Page: Bond Detail (prospectus linked)

As noted in the price chart therein, the price hit 118+ in August 2020. The decline since that time is due solely IMO to the rise in interest rates.  

Credit Ratings: Baa1/BBB+

YTM at Total Cost: 4.349%

Current Yield at TC: 4.08%, rounded down.  

D. Bought 2 American Electric Power 3.2% SU Maturing on 11/13/27 at a Total Cost of $95.90: 

Issuer: American Electric Power Co. Inc. (AEP) - Utility 

AEP Analyst Estimates | MarketWatch

AEP SEC Filings 

SEC Filed First Quarter Earnings Report: Q/E 3/31/22 

Finra Page: Bond Detail

Credit Ratings: Baa2/BBB

YTM at Total Cost = 4.048%

Current Yield at TC = 3.34%, rounded up.  

E. Bought 2 AbbVie 2.6% SU Maturing on 11/31/24 at a Total Cost of 98.353:

I now own 4 bonds. 

Issuer: AbbVie Inc.  (ABBV) 

EDGAR Entity Landing Page

ABBV Analyst Estimates | MarketWatch

SEC Filed Earnings Press Release for the Q/E 3/31/22 

FINRA Page: Bond Detail

Credit Ratings: Baa2/BBB+

YTM at TC = 3.304%

Current Yield at TC = 2.64%, rounded down. 

F. Bought 2 One Gas 1.1% SU Maturing on 3/11/24 at a Total Cost of 96.42: 

Issuer: ONE Gas Inc (OGS) - A Natural Gas utility

OGS Analyst Estimates | MarketWatch

FINRA Page: Bond Detail

Credit Ratings: A3/BBB+

YTM at Total Cost: 3.21%

Current Yield at TC = 1.05%, rounded up.  

G. Bought 2 Evergy 2.45% SU Maturing on 9/14/24 at a Total Cost of 96.777: 

Purchased on 7/7/22. Discussed out of time order. 

Issuer: Evergy Inc. (EVRG) 

EVRG Analyst Estimates | MarketWatch

EVRG SEC Filings 

SEC Filed Earnings Press Release for the Q/E 3/31/22 

I now own 8 bonds. The last purchase was at 97.429 TC (YTM at 3.612%). Item # 1.C. (6/28/22 Post) 

FINRA Page: Bond Detail (prospectus linked)

Credit Ratings: Baa2/BBB+

YTM at Total Cost = 4.009%

Current Yield at TC  =  2.53%

I have eliminated my position in the common stock. 

H. Bought 2 Eversource (formerly known as Northeast Utilities) 3.15% SU Maturing on 1/15/25 at a Total Cost of 98.192: 

Purchased on 7/7/22. Discussed out of time order. 

I now own 4 bonds. The prior purchase was at a total cost of 99.836. Item # 3.B. (4/21/22 Post) 

Issuer: Eversource Energy (ES)

ES 2021 Annual Report

ES SEC Filings 

SEC Filed Earnings Press Release for the Q/E 3/31/22 

FINRA Page: Bond Detail (prospectus linked)

Credit Ratings: Baa1/BBB+ 

YTM at Total Cost = 3.913%

Current Yield at TC = 3.21%, rounded up. 

ES sold last month a 4.2% SU maturing on 6/27/24 that was trading above par value when I bought this 1/25 SU which had a slightly higher YTM based on the then existing prices. Bond Detail

I have eliminated my position in the common stock. 

I. Bought 2 Ventas L.P. 3.75% SU Maturing on 5/1/24 at a Total Cost of 99.446: 

Purchased on 7/12/22. Discussed out of time order. 

Issuer: Operating Entity for Ventas Inc. (VTR) who guarantees the notes. 

VTR SEC Filings 

SEC Filed Earnings Press   Release for the Q/E 3/31/22 

2021 Annual Report 

10-Q for the Q/E 3/31/22 (debt discussed starting at page 21, total at $12.413+B)

I am not currently concerned about a default. Credit risk for this REIT does increase IMO when the time period is extended into long term bonds. A lot of things can go wrong when the time period for evaluating credit risk is 10 to 20 years, particularly with VTR's debt load.      

Finra Page: Bond Detail (prospectus not linked)

Prospectus 

Credit Ratings: Baa1/BBB+

YTM at Total Cost = 4.07%

Current Yield at TC = 3.77% 

J. Bought 2 Treasury 2.5% Coupon Maturing on 1/31/24 at 98.918: 

Purchased 7/19/22. Discussed out of time order. 

YTM at Total Cost  = 3.23%

Current Yield at TC = 2.5273%

K. Purchased 1 Treasury 2.875% Coupon Maturing on 4/30/25 at 99.023: 

Purchased on 7/19/22. Discussed out of time order. 

YTM at Total Cost = 3.2443%

Current Yield at TC = 2.9034%

Note that almost nothing is gained in YTM by going out 15 more months compared to the note discussed in Item 1.J. maturing in January 2024. 

The only reason for going further out in time is the possibility that rates may start to trend back down to such an extent that I would be better off with the April 2025 note than the one maturing in January 2024. I view the probability that this will actually happen at less than 50%. The bond ladder approach is based on accepting that I do not know what will happen in the future. Currently I own only 1 Treasury maturing in April 2025. 

2. Small Ball:  

I am finding it increasingly more difficult to take on equity risk when short term investment grade bonds yield over 4%. I am trying, so far without success, to buy dividend paying stocks with all of my cash flow generated by interest and dividend payments as well as proceeds from stock sales.  

I am averaging down some on dividend paying stocks and stock funds. The dollar amounts are meaningless and are far below what I am suppose to be doing now. Perhaps, I need to fire Left Brain as our Head Trader and bring back Right Brain. 

A. Added 5 AIO at $16.15:

Quote:  Virtus Artificial Intelligence & Technology Opportunities Fund Overview - A CEF

This CEF owns  common stocks, convertible securities and junk bonds. 

AIO SEC Filings 

Sponsor's website: Virtus AllianzGI Artificial Intelligence & Technology Opportunities Fund

Virtus AllianzGI Artificial Intelligence & Technology Opportunities Fund (Last SEC Filed shareholder report for the six month period ending 1/31/22) List of holdings starts at page 20. 

Investment Category: Monthly Income Generation

Last Buy Discussion: Item # 3.G. Added to AIO - Bought 5 at $18.7; 5 at $17.95; 5 at $17.2 5 at $16.8 (5/19/22 Post) 

Leverage: Yes at 16.81% as of 6/30/22

Data Date of 7/13/22 Trade: 

Closing Net Asset Value per share: $18.64

Closing Market Price: $16.21

Discount = -13.04%

Sourced: AIO  - CEF Connect 

Dividend: Monthly at $.15 per share (regular only)

AIO paid a $3.4497 dividend in January 2022, consisting of long and short term capital gains, that went ex dividend on 12/23/22. I owned only 10 shares at that time and took the distribution in cash. I owned that 10 share lot when the fund paid a $1.55+ special distribution in 2020. Given the significant decline in AIO's portfolio this year, I would not anticipate a capital gains distribution this year.  

I started to reinvest the dividend with the May 2022 payment. 

Average Cost per share = $17.94 (40+ shares)

Yield at AC = 10%  (regular dividend only)

AIO Portfolio | Morningstar (provides a list of the top 16 holdings as of 5/31/22)

B. Added 1 DOV at $119.4: 

Quote: Dover Corp.  (DOV)

Dover Profile-Reuters

DOV Analyst Estimates | MarketWatch

2021 Annual Report

SEC Filed Earnings Press Release for the Q/E 3/31/22 

New Average cost per share: $121.1 (2 shares)

I discussed this stock in my last post and have nothing further to add here: Item # 2.I. Bought 1 DOV at $122.28 (7/13/22 Post) 

C. Eliminated BMRN in Vanguard and Schwab Taxable Accounts - Sold 2 at $89.25 and 2 at $89.25: 

Quote: BioMarin Pharmaceutical Inc.

Website: BioMarin Pharmaceutical Inc.

Our Pipeline - BioMarin

BMRN Analyst Estimates | MarketWatch

BMRN SEC Filings

Profit Snapshots: +$47.7 

Dividend: None and none expected. I have been reducing my exposure to non-dividend paying stocks that can still be sold at a profit while maintaining a toehold in the shares. 

Last Earnings Report (Q/E 3/31/22): Biomarin Pharmaceutical (BMRN) SEC Filed Press Release 

GAAP diluted E.P.S. = $.63; Non-GAAP E.P.S. at $.18 with the consensus at $.171 per Fidelity; GAAP included a $89M, net of tax,  " on the sale to a third party of the Rare Pediatric Disease Priority Review Voucher (PRV) we received from the FDA in connection with the U.S. approval of Voxzogo"; 

Revenues  = $519.4M, up from $488M in the 2021 first quarter; 

Voxzogo was recently approved by the FDA and the European Medicines Agency (EMA) as "the only approved therapy for children with achondroplasia"; 

Expects to return to double digit revenues growth in 2022; 

Expects a CHMP opinion in mid-2022 on valoctocogene roxaparvovec, a gene therapy for severe hemophilia; the stock tanked in August 2020 when the FDA asked for more data on that treatment, BioMarin Receives Complete Response Letter (CRL) from FDA for Valoctocogene Roxaparvovec Gene Therapy for Severe Hemophilia A - Aug 19, 2020. The stock closed at $118.54 on 8/18/20 and at $76.72 the next day, so receiving EMA and FDA approval for this gene therapy is still viewed by the Stock Jocks as essential to a meaningfully higher price 

Last Substantive Buy Discussions: Item # 2.K. Added 1 BMRN at $75.68- Fidelity Taxable Account (6/9/22 Post); Item # 2.E. Started BMRN as a Placeholder- Bough 2 at $77.65 in Vanguard Account; 1 at $77.55 (Fidelity); 2 at  $76.95-Schwab Account(6/12/21 Post) I still own the 2+ shares held in my Fidelity account.  

D. Added 5 SLRC at $14.35; 5 at $14: 

Quote: SLR Investment - A BDC

Website: Home

Management: External 

SLRC SEC Filings

10-Q for the Q/E 3/31/22

2021 Annual Report (risk summary starts at page 28 and ends at page 70)

Last Substantive Buy Discussion: Item # 2.B. Added to SLRC - Bought 5 at $15.39; 5 at $14.65 (5/26/22 Post) 

I discussed the last earnings report in that post and have nothing further to add here. SLR Investment (SLRC) SEC Filed Press Release

Last Reported Net Asset Value per share = $19.56 as of 3/31/22

SLRC Average cost per share this account: $16.13 (120 shares)

Dividend: Monthly at $.13667 per share ($1.64 annually)

After I made these purchases, I changed my dividend option to reinvestment given the current yield and discount to net asset value per share. 

As previously discussed, a dividend cut is a possibility since the current penny rate is not covered by NII. 

Yield at $16.15: 10.1674%

Last Ex Dividend: 7/20/22

Goal: Any total return before ROC adjustments to the tax cost basis in excess of the dividend payments 

BDC stocks will generally crater more than major stock indexes in response to a recession and/or a bear market. However, that is not the case so far in 2022. 

Total YTD Returns Through 7/19/22: 

BIZD – Performance – VanEck BDC Income ETF | Morningstar

SPY – Performance – SPDR® S&P 500 ETF Trust | Morningstar

SLRC Realized Gains to Date = $100.07

E. Added 5 MATV at $20; 5 at $19.4: 

Quote: Mativ Holdings Inc. (MATV)

As previously discussed, the name and symbol recently changed from Schweitzer-Mauduit International (SWM) after SWM acquired Neenah Papers. SWM and Neenah Complete Merger to Become Mativ, a ~$3 Billion Global Leader in Specialty Materials

I discussed the SWM 2022 first quarter report in this post: Item # 2.G. Bought 5 SWM at $25.35 (5/26/22 Post)

MATV Analyst Estimates | MarketWatch

Website: Speciality Materials Manufacturing

MATV SEC Filings

Average cost per share = $22.06 (35 shares)

SWM was paying a quarterly dividend of $.44 per share. 

The next dividend declaration will be made in August. 

It is not clear whether the combined company will continue with that penny rate. 

If the SWM dividend is continued, the yield at $22.06 would be 7.98%.

F. Added 5 HPP at $13.99: 

Quote: Hudson Pacific Properties Inc.  (HPP)

Website: Hudson Pacific Properties: A West Coast Real Estate Group

HPP SEC Filings

2021 Annual Report

I discussed the last earnings report here: Item # 5.C. Started HPP with a 5 Share Purchase at $15.26 (7/6/22 Post)

New AC per share = $14.56 (15 shares)

Dividend: Quarterly at $.25 per share

Yield at $14.56 = 6.87%

Last Ex Dividend: 6/16/22

G. Added 4 HR at $24: 

Average cost per share = $26.88 (15 shares)

On 7/20, HR acquired HTA in a reverse merger. HR shareholders received 1 HTA share for each HR share. HTA shareholders received $4.82 per share in cash. The ex dividend date for that special distributions was 7/21. Healthcare Realty and Healthcare Trust of America Enter into Strategic Combination (2/28/22) While HTA was the surviving corporation, the symbol was changed to HR. 

Merged Healthcare Realty Trust and Healthcare Trust of America to be Included in S & P 400 MidCap Index on 7/21/22

Prior to this transaction closing, I owned 50 Healthcare Trust of America (HTA) shares with an average cost per share of $21.85: 

As of 7/15/22 Close

I will consequently receive $241 as my cash payment, and my 15 HR shares will be exchanged for 15 HTA shares. I do not know how much of that special dividend will be classified as ROC, though I suspect all of it will. 

As previously discussed, both of these MOB REITs have proven their inability to increase cash available for distribution per share over a long period of time. I do not expect that to change by combining the two entities.  

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.