ARGD, ATLO, BK, CODIPRA, DEI, DGX, EMR, INCY, JEF, VZ

Economy: 

The Case-Shiller National Home Price Index was up 19.7% Y-O-Y in May. Home Prices.pdf The 20 large city composite was up 20.5% with Tampa experiencing the largest annual gain of 36.1%. Déjà vu. 

There is an ongoing major slowdown in new home sales: 

Census Bureau.pdf 

New One Family Houses Sold-St. Louis Fed

Median Sales Price of New Homes: 

Median Sales Price for New Houses Sold in the United States-St. Louis Fed

The inventory of unsold new homes is rising at a rapid rate: 

Monthly Supply of New Houses in the United State-St. Louis Fed

Before the rise in mortgage rates, the median priced home was already or rapidly becoming unaffordable for median income households. With rising mortgage interest costs and problematic inflation devouring more disposable income, the problem has become more severe. A continuation of the downward trend in new home sales is consequently a reasonable and likely prediction.  

The Fed will cut rates next year, says BofA. Here's what will happen to Treasurys. - MarketWatch The forecast is that the FED will cut in September 2023. Current treasury yield spreads are consistent with that forecast. The time frame for a .25% cut, which is  consistent with those current yield spreads, would be sometime in the April to December 2023. (see my comment published on 7/22) 

Yield Spreads: 

Note the inversions to the 1 year bill starting with the 2 year treasury note and the ten year inversion starting with the 6 month T Bill. 

Resource Center | U.S. Department of the Treasury

I will be participating in 1 month treasury bill auction tomorrow using cash earning .15% in my Schwab account. The 1 month T Bill started this month at 1.27% and closed yesterday at 2.17%. The rate may move up based on what the FED does later today. 

Currently, the CME FedWatch Tool has a 100% probability that the FF range will be increased by at least .75% with a 29.5% chance of a 1% increase. 

Countdown to FOMC: CME FedWatch Tool

I believe the increase needs to be +1%, followed by +.5% in September, and then wait until December before deciding on any further increase. Given the expected slowdown in the economy, a .25% increase in December would most likely need to be the limit. A 1.75% FF increase would take the range up to 3.25%-3.5% by year end from the current 1.5% to 1.75%. I doubt that the FED will go that high, maybe 3%-3.25% is more likely.  

+++

The Inescapable Conclusion From the January 6 Hearings - The Atlantic

'Disloyal sleaze bag!' Trump flips out on McConnell in late-night rant after Jan. 6 hearing - Raw Story 

Trump Goes On Unhinged Truth Social Rant After Jan 6 Hearing (7/22/22) After reading Demagogue Don's tweets for over 6 years, the only possible diagnosis is that Donald is a malignant narcissist and a psychopath whose primary expertise, as the leader of the Republican party, is his ability to successfully manipulate tens of millions with demonstrably false statements and narratives. Trump’s false or misleading claims total 30,573 over 4 years - The Washington Post; The 'Shared Psychosis' of Donald Trump and His Loyalists - Scientific American

Inside Trump '25: A radical plan for Trump’s second term; Trump’s Authoritarian Plans for a Second Term Should Scare the Crap Out of You | Vanity Fair

'He doesn't put country first': Trump's former Defense Secretary trashes his patriotism in CNN interview - Raw Story 

‘A gift to prosecutors’: New emails show how Trump aides coordinated ‘desperate’ fake electors scheme - Raw Story 

Video: Josh Hawley Cheered on Jan. 6. Then He Fled Running. - The New York Times Senator Hawley (R-MO) raised his hand in a fist, showing his solidarity with the violent mob that was about to attack the capitol. After the January 6 Committee showed that picture, Senator Hawley responded by placing the picture on his coffee mug. Josh Hawley Selling $20 Coffee Mugs With Image Of Him Riling Up Jan 6. Rioters

Arizona GOP censures Rusty Bowers after Jan. 6 testimony | The Hill Bowers was censured by the Republicans for telling the truth under oath. Trump slams ‘RINO coward’ Bowers for testifying in Jan. 6 hearing | The Hill

Election deniers going door-to-door demanding answers- 'No boundaries to ethics or civility' - Raw Story 

On the campaign trail, Republicans see a civil war - The Washington Post

Here is a campaign ad for a Republican running for Congress: Make AMERICA Dominant Again- YouTube

Lavrov blamed Russia's blockade of grain shipments from Ukraine to African countries on the U.S. Russia Seeks to Rally Support From African Allies - The New York Times Russia is a 100% pure Orwellian state. 

McDonald's says cutting off its Russian business has actually helped improve its operating profitability American companies who have left Russia, and that would be just about all of them, are unlikely to ever return since Russia will do something in the future that would cause them to leave again and write down their investments if they did return. Russia is a pariah state and that is not going to change. 

+++

1. Corporate Bonds: 

A. Bought 10 Nextera Capital 2.94% SU Maturing on 3/21/24 at a Total Cost of 99.734: 

The price shown includes a $1 per bond commission.  The purchase price was 99.634. 

Issuer: A wholly owned subsidiary of NextEra Energy Inc. (NEE), a utility holding company, who guarantees the notes. 

The bond yields more than the common stock.

NEE SEC Filings 

Finra Page: Bond Detail (prospectus not linked)

Prospectus 

Credit Ratings: Baa1/BBB+ 

YTM at Total Cost = 3.093%

Current Yield = 2.95%, rounded up. 

B. Bought 2 Whirlpool 3.7% SU Maturing on 5/1/25 at a Total Cost of 98.893: 

Purchased 7/13/22. Discussed out of time order.

Issuer: Whirlpool Corp. (WHR) 

WHR Analyst Estimates | MarketWatch

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

WHR SEC Filings 

Finra Page: Bond Detail (prospectus linked)

Credit Ratings: Baa1/BBB

YTM at Total Cost = 4.122%

Current Yield at Total Cost = 3.7415%

I recently started a Placeholder position in WHR and have been adding in $10 dollar purchases which I will not be discussing here. 

C. Bought 2 Oracle 3.4% SU Maturing on 7/8/24 at a Total Cost of 99.121:

Purchased 7/20/22. Discussed out of time order. This is an actively traded bond. 

Issuer: Oracle Corp.

ORCL Analyst Estimates | MarketWatch

ORCL SEC Filings

Results for the F/Q Ending 2/28/22

Finra Page: Bond Detail (prospectus linked)

Credit Ratings: Baa2/BBB

YTM at Total Cost = 3.869%

Current Yield at TC =  3.43%

D. Bought 2 Hess 3.5% SU Maturing on 7/15/24 at a Total Cost of 98.945: 

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

Issuer: Hess Corp.  (HES) 

HES Analyst Estimates-MarketWatch

Hess SEC Filings 

2021 Annual Report 

Finra Page: Bond Detail (prospectus linked)

Credit Ratings: Baa3/BBB-

YTM at Total Cost: 4.062%

Current Yield at Total Cost: 3.54% 

E. Bought 2 American Express 3.3% FDIC Insured CDs: 

Bought 7/22/22. Discussed out of time order. 

F. Harpeth Valley Utility District, Tennessee Early Call on 4% Tax Free Bond: 

This optional call will occur on the first day it is permitted.  

2. Treasuries: 

All discussed out of time order. Purchased on 7/13-14/22. 

A. Bought 1 Treasury 2.125% Coupon Maturing on 7/31/25 at 98.1285:

YTM at Total Cost = 3.075%

Current Yield at TC = 2.1655%

I now own 3 including 1 in a RI account. 

B. Bought 1 Treasury 2.625% Coupon Maturing on 12/31/23 at 99.257:  

YTM at Total Cost = 3.1485%

Current Yield at TC = 2.6446%

C. Bought 1 Treasury 2.75% Coupon Maturing on 4/20/23 at 99.804: 

YTM at Total Cost = 2.998%

Current Yield at TC = 2.7554%

D. Bought 1 Treasury 2.125% Coupon Maturing on 11/30/23 at 98.542: 

YTM at Total Cost  = 3.215%

Current Yield at TC =  2.1564%

I now own 3 bonds. 

E. Bought 1 Treasury 2.625% Coupon Maturing on 6/30/23 at 99.484: 

YTM at Total Cost = 3.174%

Current Yield at TC = 2.6386%

I now own 3 bonds including 1 in a RI account. 

F. Bought 1 Treasury 2.375% Coupon Maturing on 8/15/24 at 98.3699:

YTM at Total Cost = 3.188%

Current Yield at TC = 2.4144%

I now own 3 bonds. 

G. Bought 1 Treasury 1.625% Coupon Maturing on 10/31/23 at 98.141: 

YTM at Total Cost = 3.101%

Current Yield at TC = 1.6558%

I now own 5 bonds including 1 in a RI account. 

3. Small Ball: 

I am continuing to fail miserably at redirecting proceeds from stock sales as well as interest and dividend payments into new dividend paying stock purchases. I am about $4K behind in July. Possibly I may reduce that by about 50% with a 100 share purchase. 

A. Bought 10 DEI at $22.53: 

This is a new name for me. 

Quote: Douglas Emmett Inc. (DEI) 

52 week high: $36.97, hit intraday on 1/7/22 

% Decline from $36.97 to $22.53 = 39%

DEI is "one of the largest owners and operators of high-quality office and multifamily properties in Los Angeles County, California and Honolulu, Hawaii."  

Properties: DEI's "Consolidated Portfolio consisted of (i) a 17.8 million square foot office portfolio, (ii) 4,415 multifamily apartment units and (iii) fee interests in two parcels of land from which we receive rent under ground leases. We also manage and own an equity interest in an unconsolidated Fund which, at March 31, 2022, owned an additional 0.4 million square feet of office space. We manage our unconsolidated Fund alongside our Consolidated Portfolio, and we therefore present the statistics for our office portfolio on a Total Portfolio basis."

Dividend: Quarterly at $.28 per share, last raised from $.26 effective for the 2020 first quarter payment 

DEI Dividend History | Nasdaq

Yield at $22.53: 4.97%

Last Ex Dividend: 6/29/22

Last Earnings Report (Q/E 3/31/22): SEC Filing 

FFO per share = $.50, up from $.44

AFFO per share = $.454

DEI does not provide the AFFO per share number. I calculated it by dividing the $94.092M in AFFO by the weighted average diluted shares of 207.101M. 

In the AFFO calculation, recurring capital expenditures, a major cost item for office and apartment REITs, is deducted from FFO. 

Office Occupancy: 84.6% Below average for Office Reits that I own. 

Apartment Occupancy: 98.2%

2022 Guidance: 

Recent Acquisition: 

Debt: This table reveals a reason for the significant recent stock price decline. While the damage from rising short term rates is currently contained by interest rate swaps, as noted in the table below, those swaps have relatively short term expiration dates starting in 2023 and ending in 2027, excluding the swap that expired on 6/1/22.  

In the past, DEI benefited by excessive reliance on borrowing at small spreads to short term rates.  

B. Bought 5 CODIPRA at $24.69: 

Quote:  Compass Diversified Holdings 7.25% Preferred Series A Stock 

52 week high: $26.35

Issuer: Compass Diversified Holdings (CODI) 

CODI Analyst Estimates | MarketWatch

CODI SEC Filings 

SEC Filed Earnings Press Release for the Q/E 3/31/22 (net income of $29.7M, revenues at $510.5M)

Security Prospectus 

Par Value: $25

Optional Redemption: On or after 7/30/22 at par plus accrued and unpaid dividends. 

Dividend: Paid quarterly and non-cumulative. 

Stopper Clause: Yes, standard provisions. CODI can not eliminate the preferred share dividend and pay a cash dividend to common shareholders or use cash to buy common stock. The stopper clause enforces the preferred shareholders superior claim to cash compared only to the common shareholders.  

Yield at $24.69 = 7.34%

Last Ex Dividend: 7/14/22 (shortly before purchase)

C. Restarted BK in Schwab Account- Bought 5 at $43.05: 

History this Account: 

Quote: Bank of New York Mellon Corp.

BK SEC Filings

BK Reuters Profile 

BK Analyst Estimates | MarketWatch (As of 7/22/22, the 2022 consensus E.P.S. was at $4.18; at $4.75 in 2023; and $5.18 in 2024). Using the $4.71 estimate for 2023, the P/E at $43.05 is 9.14)

Last Buy Discussions: Item # 1.L. Added to BK-Bought 3 at $34.81 (10/3/20 Post); Item # 1.G. Bought 5 BK at $36.9; 1 at $35.98; 1 at $35.77 (9/12/20 Post)

Last Elimination: Item # 2.A. Eliminated BK- Sold 4 at $51.87 in Fidelity Account; 10 at $51.63 in Vanguard Account; and 5 at $51.75 in Schwab Account (8/27/21 Post)(profit snapshots  = $310.97) 

Dividend: Quarterly at $.37 per share ($1.48 annually), last raised from $.34 effective for the 2022 third quarter payment. 

BK Dividend History | Nasdaq

Yield at $43.05 = 3.44%

Last Ex Dividend: 7/22/22 (shortly after purchase) 

Last Earnings Report (Q/E 6/30/22): SEC Filed Earnings Press Release

GAAP E.P.S. = $1.03, up from $.86 in the 2022 first quarter, but down from $1.13 in the 2021 second quarter. 

GAAP Net Income Applicable to Common Shareholders: $835M

Non-GAAP E.P.S. = $1.15, excludes an unanticipated litigation reserve. 

Revenue: $4.3B, up 7%

ROTE = 19.2%

Tangible Book Value per share: $22.o2 

BK earnings have been negatively impacted by its money market fee waivers. The negative impact has been trending down as short term rates rise:

Earnings headwinds include the impact of Russian sanctions, the recent strength of the USD reducing the value of foreign earnings, and increased spending to fund growth initiatives.  

Analyst Reports (available to Schwab customers): 

S & P (7/15/22): 3 stars with a 12 month PT of $44, reduced from $50 in response to the second quarter report which the analyst, using the GAAP number of $1.03, called a $.09 per share miss to the consensus E.P.S. estimate. 

Morningstar (7/20/22): 4 stars with a FV of $56 and a wide economic moat. 

Argus (7/19/22): Buy with a $63 PT. The analyst states that the adjusted E.P.S. of $1.15 beat the consensus by 3 cents. 

Credit Suisse (7/18/22): Outperform with a 12 month PT of $50, reduced from $52. 

D. Added to ATLO in Schwab Account- Bought 10 at $22.20: 

History this Account: 

Quote: Ames National Corp.

Ames National Corporation Profile | Reuters

"Ames National Corporation affiliate Iowa banks are First National Bank, Ames; Boone Bank & Trust Co., Boone; State Bank & Trust Co., Nevada; Reliance State Bank, Story City; United Bank & Trust, Marshalltown; and Iowa State Savings Bank, Creston, Iowa."

ALTO SEC Filings

2021 Annual Report

ATLO Analyst Estimates | MarketWatch

Investment Category: Regional Bank Basket Strategy

Last Buy Discussion: Item # 4.E. Bought 5 ATLO at $22.64  - Fidelity Account  (6/28/22 Post) I discussed the 2022 first quarter earnings report in that post. SEC Filed Press Release

Average cost per share this account:  $22.875 (20 shares)

Dividend: Quarterly at $.27 per share ($1.08 annually), last raised from $.26 effective for the 2022 second quarter payment.  Ames National Corporation Dividend History

Yield at  $22.875 = 4.72%

Next Ex Dividend: 7/29/22

Last Earnings Report (Q/E 6/30/22): SEC Filed Press Release 

Net Income = $4.193M

E.P.S. = $.46 

No analyst ratings. 

NIM = 2.57%, down from 2.84% in the 2021 second quarter

Efficiency Ratio = 61.51%

ROA = .77%

Charge Offs: $5,000

ROE = 9.78%

"Effective June 17, 2022, the State of Iowa enacted a phased-in reduction to the bank franchise tax rate through annual reductions of 0.3% over a five-year period. The reduction commences in 2023 and results in the current rate of 5% declining to 3.5% in 2027. This rate decrease created a non-recurring reduction to the Company’s deferred income tax asset and increased income tax expense by $780 thousand in the second quarter of 2022. Once the rate reduction is fully implemented in 2027, the Company expects to realize tax savings of approximately $120 thousand for every $10 million of taxable income."

E. Added to VZ in Fidelity Account- Bought 1 at $49.83; 1 at $47.25; 1 at $45; 1 at $44: 

Quote: Verizon Communications Inc.

VZ Analyst Estimates | MarketWatch

VZ SEC Filings

2021 Annual Report

The Stock Jocks did not respond well to the 2nd quarter earnings report and forward guidance: 

Closing Price 7/22/22: Verizon $44.45 -$3.21 -6.74% 

When discussing VZ in the past, I have noted what I consider to be its main problems: (1) an extremely high long term debt level ( $136.134B as of 6/30/22), which is becoming more of a concern with rising interest rates; (2) heavy capital expenditures and high labor costs, and (3) a business that operates in an increasingly competitive industry sector that requires substantial promotional spending and price cuts. When combined, those factors are just not a good mix IMO and that conclusion is an obvious one.  

Last Buy Discussions: Item # 4.C. Bought 2 VZ at $51.29 (4/21/22 Post); Item # 1.A. Added to VZ in Fidelity Account-Bought 5 at $54.12; 2 at $52.73; 3 at $52.32; 2 at $51.56; 5 at $50.95 (10/29/21 Post)

Investment Category: Bond Substitute 

AC per share this account = $52.01 (24+ shares)

Dividend: Quarterly at $.64 per share ($2.56 annually), last raised from $.627 effective for the 2021 third quarter payment. There was no increase for the 2022 third quarter payment.  

VZ Dividend History | Nasdaq

I am reinvesting the dividend. 

Yield at AC  = 4.92%

Last Ex Dividend: 7/7/22

Last Earnings Report (Q/E 6/30/22): SEC Filed Press Release 

GAAP E.P.S. $1.24, down from $1.4 in the 2021 second quarter

GAAP Net Income = $5.3B, down 10.7%

VZ attributed the decline to "the divestiture of Verizon Media, higher device subsidies and promotional spending associated with increased wireless activations, wireline revenue declines and inflationary cost pressures."

Non-GAAP E.P.S. $1.31, down from $1.39 in the 2021 2nd Q. 

GAAP to Non-GAAP: 

Revenues: "Relatively" flat at $33.8B

Postpaid Net Additions: Only 12,000

2022 Guidance:  Adjusted E.P.S. range of $5.10-$5.25, down from prior guidance of $5.4-$5.5. 

Goal: As previously stated, victory is defined as a total return of 2%+ in excess of the dividends paid.  

F. Added 1 DGX at $130.5:

Quote:  Quest Diagnostics Inc. (DGX) 

Quest Diagnostics - Investor Relations

DGX SEC Filings

2021 SEC Filed Annual Report

DGX Analyst Estimates-MarketWatch (As of 7/21/22, consensus E.P.S. estimate for 2022 was at $9.44; at $8.45 in 2023; and at $9.13 in 2024). E.P.S. was at $14.12 in 2021. The variations  are primarily due to Covid testing revenues)  

Second quarter earnings report was released on 7/21. 

Price Swing Intraday on 7/21: $130.01-$135.24

52 Week High: $174.16, hit on 12/31/21. 

Buy Discussions: Item # 2.D. Added $50 DGX at $132.85 and $50 at $129.96 (3/10/22 Post)(discussed 2021 4th quarter earnings report); Item # 2.G. Bought 1 DGX at $141.45  (11/26/21 Post)

Average cost per share: $134.59 (2+ shares)

Snapshot as of Close on 7/21/22

P/E at $124.59 Using $8.45 2023 E.P.S. Estimate = 14.74

TTM P/E at 8.97

Dividend: Quarterly at $.66 per share, last raised from $.62 effective for the 2022 second quarter payment. The quarterly dividend was at $.30 in 2013. 

DGX Dividend History | Nasdaq

Yield at $134.59 = 1.96%

Last Ex Dividend:  7/5/22

Last Earnings Report (Q/E 6/30/22): SEC Filed Press Release 

GAAP E.P.S. = $1.96

Non-GAAP E.P.S. = $2.36, down from $3.18 in the 2021 first quarter

Non-GAAP Consensus E.P.S. = $2.292 per Fidelity

Base revenues, which exclude Covid testing, increased by 2.9%. 

Raised non-GAAP E.P.S. guidance to a $9.55-$9.95 range from $9-$9.5. 

Covid testing revenues are just unpredictable and will cause wide variations in profits and revenues. 

For 2022 DGX raised its Covid testing revenue guidance to $1.15B-$1.3B range from $.85B-$1B range. I believe that COVID testing will likely be generating a new revenue stream, compared to pre-2020, for DGX and LH for decades. 

DGX has about 2300 patient service centers across the U.S. DGX and its primary competitor Laboratory (LH) dominate the national independent testing market. 

Analyst Ratings (reports available to Schwab customers): 

Morningstar (7/21/22):  3 stars with a $143 RV and a narrow moat.  

Credit Suisse (7/22/22): Neutral with a 12 month PT of $143. 

Argus (5/17/22): Buy with a $150 PT. 

S&P (7/21/22): 3 stars with a 12 month PT of $142, lowered PT from $157. 

G. Eliminated INCY in Fidelity Account- Sold 10+ at $83: 

Quote: Incyte Corp.

INCY Analyst Estimates

INCY SEC Filings

2021 Annual Report

Profit Snapshot: $134.18 (7/21/22 sale only)

Last Substantive Buy Discussion: Item # 1.I. Added to INCY in Fidelity Taxable- Bought 2 at $72.8; 1 at $71.5; 1 at $70.5; 1 at $69.3; 1 at $68.18; 1 at $66.8; 1 at $65.28 (4/29/22 Post)

I discussed the 2022 first quarter earnings report in this post: Item # 2.K. Eliminated INCY in Schwab Account -Sold 5 at $81.13 (7/13/22 Post) As I mentioned in that post, I have been selling stocks that do not pay dividends where I still have a profit.

Dividend: None and none expected. 

Previous 2022 Sell Discussions: Item # 4.G. Eliminated INCY in Vanguard Taxable Account - Sold 4 at $80.12; Item #4.H. Pared INCY in Schwab Taxable Account -Sold 2 at $80.12; and Item #4.I. Pared INCY in Fidelity Taxable Account-Sold 2 at $81.1 (4/21/22 Post)(profit snapshots = $46.27)

2022 INCY Realized Gains: $180.45

H. Bought 1 EMR at $82.78: 

Quote: Emerson Electric Co. (EMR) 

Emerson Investor Information 

EMR SEC Filings

Investment Category: Dividend Growth 

EM Analyst Estimates | MarketWatch (As of 7/22/22, the 2022 consensus E.P.S. estimate was at $5; at $5.41 for 2023; and at $6.05 for 2024. Using the $5.41 estimate for 2023 and the $82.78 price, the P/E is 15.3)

I view EMR as a solid industrial stock but have not owned shares in awhile due to valuation concerns, which I still have, but am less concerned at $82.78 than at the 52 week high of $105.89. 

My largest position was a 52+ share lot sold in 2010. 

+$600.68

EMR has one of the best long term dividend growth histories, having raised its annual dividend for 65 consecutive years.  

Dividend Aristocrats In Focus: Emerson Electric

Dividend: Quarterly at $.515 per share ($2.06 annually), last raised 1.98% from $.505 effective for the 2021 4th quarter payment. That dividend growth rate is unappealing to me given my age, current inflation, and reasonably anticipated future inflation rates. To compensate for the slow growth rate, I want lower stock prices.  

Emerson Electric Company Common Stock (EMR) Dividend History | Nasdaq 

Yield at $82.78: 2.49%

Last Ex Dividend: 5/12/22

EMR owns 55% of Aspen Technology, Inc. (AZPN)

Last Earnings Report (2nd F/Q ending 3/31/22): SEC Filed Press Release The next earnings report is scheduled for release on 8/9/22. 

GAAP E.P.S. = $1.13, up from $4.93 

Revenues up 8% to $4.791B

Revenue Breakdown by Business Segment: 

Cash and Cash Equivalents: $6.929B

EMR announced that it was exiting its business in Russia, as almost all U.S. companies have done. Hopefully, none of them will ever resume sales, directly or indirectly, to Russian companies or consumers. 

F/Y 2022 Guidance: 

3rd F/Q Guidance: 

GAAP E.P.S. = $1.-$1.05

Non-GAAP E.P.S.  = $1.25 to $1.3 

Revenue Growth: 7 to 9%

Last Bond Offering (9/21): $750M of .875% SU Maturing in 2026 Prospectus; Bond Detail 

There are a very large number of sub 1% coupon bonds available for purchase. I prefer going with higher coupon bonds that provide more current income. As I see it, the advantage of a .875% bond bought at a significant discount to par value is income deferral to a year when the marginal tax rate is expected to be significantly lower.   

SU Bond Credit Ratings: A2/A

Analyst Reports (available to Schwab customers): 

Morningstar (5/5/22): 4 stars with a $113 FV and a wide moat.  

Credit Suisse (5/4/22): Outperform with a 12 month PT of $112. 

S&P (5/17/22): 3 stars with a 12 month PT of $96

Argus (5/10/22): Buy with a $96 PT.  

Emerson’s Majority Owned Subsidiary, AspenTech, Announces Agreement to Acquire Metals and Mining Software Leader Micromine (7/27/22). 

I. Added 5 ARGD at $22.59-Schwab Account: 

Quote: Argo Group International Holdings Ltd. 6.5% Senior Notes Due 2042 (ARGD) This bond formerly traded under the AGIIL symbol. 

History this Account: 

Issuer: Wholly owned subsidiary of Argo Group International Holdings Ltd. (ARGO) who guarantees the note. 

ARGO Analyst Estimates

ARGO SEC Filings

Investment Category: Exchange Traded Baby Bonds, a subcategory EXCHANGE TRADED BONDS

Yield at $22.59 = 7.19%

Security: Final Prospectus Supplement

Placement in Capital Structure: SU 

Par Value: $25

Interest: Paid Quarterly 

Maturity: On 9/15/2042 unless called at the issuer's option earlier. 

Optional Call: At par value plus accrued and unpaid dividends whenever the issuer wants to exercise this option. Call protection expired on 4/17/17. The issuer appears content to pay 6.5% on a bond that has a 2042 maturity.  

Credit Rating: BBB- by S&P 

Average cost per share this account:  $22.76 (105 shares) 

Interest Payments: Quarterly at $.40625

Yield at AC this account  = 7.14%

Next Ex-Interest Date: 8/31/22

Previous Sell Discussions: Item # 5.A. Pared ARGD in Schwab Account- Sold 25 at $25.4-Part of Highest Cost Lot (5/23/20 Post); Item # 3 Sold 50 AGRD at $25.87 (9/25/19 Post); Item # 4 Sold 100 AGIIL at $25.11 (9/25/17 Post); Item # 4 Sold 50 AGIIL at $26.89 - Update For Exchange Traded Bonds And Preferred Stocks Basket Strategy As 6/3/16 - South Gent | Seeking Alpha; Item # 2 Sold 50 AGIIL at $24.21-Roth IRA (6/28/14 Post); Item # 2 Sold: 50 AGIIL at $24.48 (6/7/14 Post)

ARGD-AGIIL Realized Gains to Date: $599.94

Most of the $599.94 total was realized in 3 trades made when the symbol was AGIIL = $415.53

Unrealized Gains Other Taxable Accounts: 

Fidelity: 5 shares with an average cost of $11.6 per share, purchased on 3/18/20. 

Vanguard: 10 shares with an average cost of $21.81 per share.

On 7/25/22, the 20 year treasury bond closed at a 3.28% yield. The ARGD current yield at $22.59 is 7.19%. The YTM is higher given the discount to par value. The ARGD YTM spread to the 20 year treasury is high compared to other corporate bonds maturing in 20 years that are rated BBB- or Baa3. That implies either a mispricing for the exchange traded bond or more concerns about the issuer's credit risk than reflected in a BBB- credit rating. 

Examples of BBB- Rated Bonds Maturing in 2042: YTM as of 7/25/22 close. 

Molson Coors 5% Maturing 5/1/42 = 5.212%

Kraft Foods 5% Maturing on 6/4/42 = 5.369%

The YTM for ARGD at $22.59 is about 7.43%.  I do not have access to software that would allow me to make a precise calculation. 

J. Bought 5 JEF at $31.02: 

Quote: Jefferies Financial Group Inc. (JEF) 

52 week high at $44.47. 

This is a new name for me. 

"Jefferies Group operates in two business segments: Investment Banking and Capital Markets, and Asset Management. Investment Banking and Capital Markets includes investment banking, capital markets and other related services. Investment banking provides underwriting and financial advisory services to clients across most industry sectors in the Americas, Europe, the Middle East and Africa, and Asia Pacific. Capital markets businesses operate across the spectrum of equities and fixed income products."

The company also has a "legacy" merchant banking business. JEF is "well along in the process of liquidating this portfolio, with the intention of selling to third parties, distributing to shareholders or transferring the balance of this portfolio to our Asset Management reportable segment over the next few years. Our Merchant Banking reportable segment primarily includes Linkem (fixed wireless broadband services in Italy); Vitesse Energy, LLC ("Vitesse Energy") (oil and gas production and development); real estate, primarily HomeFed LLC ("HomeFed"); Idaho Timber (manufacturing) and FXCM Group, LLC ("FXCM") (provider of online foreign exchange trading services)."

Idaho timber was recently sold for $239M for an estimated pre-tax gain of $140M. The company plans to spinoff Vitesse Energy to shareholders. Jefferies Announces Strategic Transactions to Simplify Operations to Continue Focus on Building the Leading Independent, Full-Service Global Investment Banking Firm

JEF SEC Filings 

10-Q for the F/Q Ending 5/31/22 

JEF Analyst Estimates | MarketWatch  

Dividend: Quarterly at $.30 per share, last raised from $.25 effective for the 2022 first quarter payment. 

Yield at $31.02: 3.87%

Next Ex Dividend: 8/12/22  

Last Earnings Report (Second F/Q Ending 5/31/22): SEC Filed Earnings Press Release 

There was a major decline in JEF's  equity and debt underwriting in this quarter. E.P.S. was reported at $.45, down from $1.30 in the 2021 second fiscal quarter. 

Repurchased 8M shares during the quarter at an AC of $32.3. 

Tangible Book Value per share = $33.36

Only 1 analyst report is available to me. S&P currently rates the stock 3 stars with a 12 month PT of $28 based on a weakening industry outlook. The target price was reduced by S&P from $36 to $28 on 6/28/22.   

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.