Economy:
An often-overlooked economic measure is signaling serious trouble ahead The article refers to leading indicators index. US Leading Indicators The index has been trending further down in negative territory.
Sticky price inflation rose an annualized rate of 8.5% in September, up from 7.7% in August. Sticky-Price CPI - Federal Reserve Bank of Atlanta
The monthly average 30 year mortgage rate in September was 6.11%, up from 5.22% in August. In September 2021, the average rate was at 2.9%. 30-Year Fixed-Rate Mortgages Since 1971 - Freddie Mac
We'll continue to see double-digit declines in home sales, says KPMG's Swonk
New One Family Houses Sold: United States-St. Louis Fed
Existing Home Sales -St. Louis Fed
Home Ownership Affordability Monitor - Federal Reserve Bank of Atlanta (data through July 2022):
U.S.-listed Chinese stocks drop 15% after Beijing's power reshuffle makes the market 'uninvestable' Russia and China are ruled by 1 man dictators who have no internal restraints and no accountability for flawed decisions. Russia will remain "uninvestable" for decades while it remains to be seen whether China's dictator will make China's stocks uninvestable for a similar period. Both China and Russia are now 100% pure Orwellian countries.
++
Charts:
Capacity Utilization: Total Index-St. Louis Fed
Households and Nonprofit Organizations; Consumer Credit; Liability, Level-St. Louis Fed
Household Debt Service Payments as a Percent of Disposable Personal Income-St. Louis Fed
Household Financial Obligations as a percent of Disposable Personal Income-St. Louis Fed
All Sectors; Debt Securities and Loans; Liability, Level/Gross Domestic Product-St. Louis Fed
Personal Saving Rate-St. Louis Fed
4-Week Moving Average of Initial Claims- St. Louis Fed
Unemployment Rate-St. Louis Fed
Share of Labor Compensation in GDP at Current National Prices for the United States -St. Louis Fed
Households; Owners' Equity in Real Estate, Level -St. Louis Fed
15-Year Fixed-Rate Mortgage Average in the United States-St. Louis Fed
S&P/Case-Shiller 20-City Composite Home Price Index-St. Louis Fed
Median Sales Price for New Houses Sold in the United States-St. Louis Fed
Light Weight Vehicle Sales: Autos and Light Trucks- St. Louis Fed
Cass Freight Index: Shipments-St. Louis Fed
University of Michigan: Consumer Sentiment-St. Louis Fed
E-Commerce Retail Sales-St. Louis Fed
Consumer Price Index for All Urban Consumers: All Items in the U.S. City Average-St. Louis Fed
WTI Crude Oil Prices - 10 Year Daily Chart | MacroTrends
++++
Trump:
The NYT published an article yesterday that contains some backtracking on whether Walt Nauta, allegedly seen on video tape carrying boxes out of storage at Mar-A-Lago, told the FBI that he was ordered to do so by Trump. This is how the NYT phrases this contention now: "One person briefed on that interview said he was clear with investigators that Mr. Trump had directed him to, while another said that he was less specific about who had told him to do so, but that the implication was that it was Mr. Trump." Prosecutors Pressure Trump Aides to Testify in Documents Case - The New York Times Nauta was not told prior to or during the FBI interviews that surveillance video captured him removing the boxes. The only issue is who told him to move them. Nauta has hired 2 Washington criminal defense attorneys. Nauta, a former military valet for Trump, does not seem to be the kind of person able to afford them.
Trump's classified Mar-a-Lago documents held secrets about Iran, China - The Washington Post
Trump knew voter fraud numbers in court documents were false, judge says - The Washington Post
Donald responded to the evidence cited by the District Court Judge in a predictable manner. 'Nasty, wrong, ill-informed': Trump erupts at judge after being implicated in potential criminal offenses - Raw Story; Trump slams judge who said he knowingly pushed false voter fraud case
As usual for this creature, Trump does not make any attempt to rebut the evidence, but offers only venomous conclusory statements that highlight his multiple personality disorders.
Trump: "Who’s this Clinton appointed 'Judge,' David Carter, who keeps saying, and sending to all, very nasty, wrong, and ill informed statements about me on rulings, or a case (whatever!), currently going on in California, that I know nothing about - nor am I represented. With that being said, please explain to this partisan hack that the Presidential Election of 2020 was Rigged and Stolen. Also, he shouldn’t be making statements about me until he understands the facts, which he doesn’t!"
This case involves John Eastman, a Trump attorney, who does not want to produce documents in response to a subpoena that he claims are protected by Trump's attorney client privilege. After reviewing the documents, the judge found that the crime exception to the attorney client privilege applies to several documents, including emails sent to Trump that indicate, according to the Judge, that Trump made a false statement in a court pleading; was told that it was false by his attorneys; and made it anyway.
Trumpsters have threatened and intimidated election officials in Nevada that has resulted in multiple resignations and appointments of election deniers as chief election officials. Election Officials Quit in Fear After Harassment from Trump Supporters; Pro-Trump conspiracy theorists hound election officials out of office; Nevada's Republican election deniers prepare to sabotage the midterms - The Washington Post
Don the Authoritarian criticized the Jury's unanimous non-guilty verdict in a perjury trial brought by John Durham against Igor Danchenko who was a source for the Steele dossier. Analyst who provided Trump-Russia dossier information is acquitted of lying to FBI
In Trump's America, a jury is biased and the judge corrupt if they do not do what Donald wants.
As usual Trump does not discuss actual facts or provide evidence to support his attack, but offers only conclusory statements and confirms his mental problems:
Trump calls Danchenko verdict: 'Disgraceful judicial system' | Just The News
++
Russia/Putin:
Top Ukrainian general discusses war against Russia, Putin's nuclear threat: Exclusive - ABC News
Russia’s Draft Sends Barely Trained Men to War in Ukraine - The New York Times Many are already being sent back to Russia in coffins.
Russian forces could face 'rout' in Kherson; US rejects Russian claim that Ukraine plans radioactive 'provocation' Russian army officers have left Kherson leaving recently mobilized and untrained civilians to defend Russian positions.
If a dirty bomb is used in Ukraine, it will be detonated by Russia who would then blame Ukraine and use the Russian "false flag" operation as a "provocation" to use tactical nuclear weapons or, at a minimum, use this claim to sway public opinion in Russia more toward support for Putin's invasion. It is even possible that Putin would use a dirty bomb on his own troops and then blame Ukraine.
Russia’s ‘Dirty Bomb’ Ploy - The Atlantic
Tactically, a dirty bomb would have no military significance and would only serve to contaminate a relatively small area of Ukraine's territory.
For now at least, unable to beat the Ukrainian army, Russia seems content in destroying Ukrainian power stations and water purification plants, the intended purpose being to deprive civilians of power during the winter and clean water.
In the Budapest Memorandum, signed by Russia and Ukraine in 1994, Russia promised it would respect Ukraine's sovereignty and its existing borders, a farcical promise from Russia as events later proved. Ukraine agreed to turn over its nuclear weapons to Russia. It is not worth the effort to negotiate a treaty with the Russians. They will take what a country gives them and then break whatever promise made in return.
Putin announced the imposition of "martial law" in the 4 Ukrainian territories illegally annexed by Russia. The reason given for imposing martial law was that Ukraine has not recognized Russia's claim to internationally recognized Ukrainian territory.
Putin introduces martial law in illegally annexed Ukrainian regions
Bakhmut: Devastation on Ukraine's eastern front, where the notorious Wagner group is making gains | CNN The Wagner Group recruits from Russian jails, offering clemency for 6 months of service in Ukraine. The Ukrainians say those convicts are used as cannon fodder where there masters send them out into the open, Ukrainian artillery rounds rain down on them, and then the Russians direct fire at the Ukrainian position.
Using Adoptions, Russia Turns Ukrainian Children Into Spoils of War - The New York Times This behavior is being investigated as another war crime committed by Russia.
While Russia commits war crimes and crimes against humanity on a daily basis, the only way to hold that nation accountable is to sever all trade relations and foreign investment permanently. Russia can then continue being China's cats paw.
+++
1. Corporate Bonds:
All bond purchases in the secondary market or at treasury auctions have a $1,000 par value per bond.
Short term interest rates popped higher after the FED signaled that it anticipated raising the FF rate higher in 2022 and 2023 than previously expected by the Bond Ghouls. The Fed - September 21, 2022: FOMC Projections materials, accessible version
A. Bought 2 Citizens Financial 4.3% SU Maturning on 12/3/25 at a 99.323 Total Cost:
%2012:3:25%20.png)
Finra Page: Bond Detail (prospectus linked)
Credit Rating: BBB
YTM at Total Cost = 4.524%
Current Yield at TC = 4.33%
B. Bought 2 Public Service Enterprise 2.875% SU Maturing on 6/15/24 at a 97.93 Total Cost:
%202.875%25%206:15:24.png)
Purchased on 8/30/22.
I now own 6 bonds. I also have sold my small ball position in the common stock.
Issuer: Public Service Enterprise Group Inc. (PEG)-Utility Holding Company
Finra Page: Bond Detail (prospectus linked)
Credit Ratings: Baa2/BBB
YTM at Total Cost: 4.08%, rounded down.
Current Yield at TC: 2.94%, rounded up.
C. Bought 1 Enterprise Products 3.9% SU Maturing on 2/15/24 at a Total Cost of 99.841:
%203.9%25%202:15:24%20.png)
Issuer: Operating entity for Enterprise Products Partners L.P. (EPD) who guarantees the notes:
EPD Earnings Press Release for the Q/E 6/30/22
Finra Page: Bond Detail (prospectus linked)
Credit Ratings: Baa1/BBB+
YTM at Total Cost = 4.013%
Current Yield at TC = 3.91%, rounded up.
D. Added 1 Enterprise Products Operating LLC 3.9% SU Maturing on 2/15/24 at a Total Cost of 98.414:
%202:15:2024%203.9%25%20.png)
Purchased 10/11/22. Discussed out of time order.
This is the same bond discussed in Item # 1.C. above.
YTM at Total Cost = 5.137%
Current Yield at TC = 3.9629%
I now own 2 bonds
E. Bought 1 Potomac Electric 3.6% First Mortgage Bond Maturing on 3/15/24 at a Total Cost of 99.726:
Purchased on 9/1/22.
Issuer: Wholly owned subsidiary of Exelon Corp. (EXC)
FINRA Page: Bond Detail (prospectus linked)Credit Ratings: A2/A
YTM at Total Cost = 3.786%
Current Yield at TC = 3.61%
I will most likely buy 2 more somewhere below 98.
F. Bought 2 Lazard L.L.C. 3.75% SU Maturing on 2/13/25 at a 98.705 Total Cost:
Issuer: A wholly owned operating subsidiary of Lazard Ltd. (LAZ)
LAZ Analyst Estimates-MarketWatch
Finra Page: Bond Detail (prospectus linked)
Credit Ratings: Baa3/BBB+
YTM at Total Cost = 4.317%
Current Yield at TC = 3.8%
G. Bought 2 Cubesmart LP 4% SU Maturing on 11/15/25 at a Total Cost of 98.038:
%2011:15:25%204%25%20%20.png){kind=small}
Issuer: Operating subsidiary of CubeSmart (CUBE) who guarantees the notes.
I have a small ball position in the common stock.
Finra Page: Bond Detail (prospectus linked)
Credit Ratings: Baa2/BBB
YTM at Total Cost = 4.665%
Current Yield at TC = 4.08%
I now own 4 bonds.
H. Bought 2 General Mills 4% SU Maturing on 4/17/25 at a Total Cost of 97.35:
%204%25%204:17:25.png)
Purchased on 10/13/22. Discussed out of time order.
Issuer: General Mills Inc. (GIS)
I own the common stock.
FINRA Page: Bond Detail (prospectus linked)
Credit Ratings: Baa2/BBB
YTM at Total Cost = 5.143%
Current Yield at TC = 4.1089%
I. Bought 1 Citigroup 5.2% SU Maturing on 4/19/24:
%20QI%205.2%25%204:19:24%20.png)
Purchased 10/17/22-Fidelity Corporate Notes Program.
Discussed out of time order.
Quarterly interest payments
J. Bought 1 Entergy Arkansas 3.7% First Mortgage Bond Maturing on 6/1/24 at a Total Cost of 98.035:
%206:1:24.png)
Issuer: Wholly owned subsidiary of Entergy Corp. (ETR)
ETR 10-Q for the Q/E 6/30/22 The results for Entergy Arkansas start at page 111.
Security: First Mortgage attached to substantially all assets.
FINRA Page: Bond Detail (prospectus linked)
Credit Ratings: A2/A
YTM at Total Cost: 4.988%
Current Yield at TC = 3.774%
In Item # 5.N. below, I discuss adding 5 EAI shares, a 4.875% Entergy Arkansas FM exchange traded baby bond that matures in 2066 unless called earlier at the issuer's option. The current yield using my total cost number of $22.44 is 5.43% vs. 3.774% for the 2024 FM bond.
However, for that 1.656% increase in yield, I take on considerably more interest rate risk for the 2066 bond.
The main interest rate risk for me buying the 2024 FM bond is the risk of lost opportunity, which is created by the YTM and current yield continuing to rise for this bond after purchase. I am willing to assume that type of risk since I can hold all bonds until maturity, and I increase my current income with all purchases.
While I bought EAI at a 10.24% discount to par value, that will not add much to my YTM if the bond is redeemed in 2066. I roughly calculate the YTM to maturity at 5.49%, barely above the current yield.
If the issuer elected to redeem EAI in 5 years, which would occur only when the optional redemption would benefit the issuer, the YTM would increase to about 7.34%.
2. Treasury Purchases-Secondary Market: $6,000
While I have continued to buy treasuries in the secondary market, I will be making far fewer purchases in favor of treasury bills and notes bought at auction.
Between 10/25/22 through 11/15/22, I have $70K in 1 and 2 month treasury bills maturing in my Schwab account. I have not decided on how to reinvest those proceeds. To pick up more yield, some proceeds will likely be redirected into 10 lot corporate bond purchases, focusing on 2023 and 2024 maturities.
A. Bought 1 Treasury 2.375% Coupon Maturing on 8/15/24 at 98.078:
%208:15:24%202.375%25.png){kind=small}
Purchased 9/2/22.
YTM at Total Cost = 3.404%
Current Yield at TC = 2.42%
I now own 4 bonds. I will not be buying more.
B. Bought 1 Treasury 2.5% Coupon Maturing on 1/31/24 at 98.726:
%202.5%25%201:31:2024.png){kind=small}
YTM at Total Cost: 3.428491%
Current Yield at TC = 2.5%, rounded down.
I now own 4 bonds. I will not be buying more.
C. Bought 1 Treasury 2.5% Coupon Maturing on 8/15/23 at 99.128:
%20.png)
YTM at Total Cost = 3.473%
Current Yield at TC = 2.522%
D. Bought 1 Treasury 2.5% Coupon Maturing on 8/15/23 at 98.5016:
%208:15:23%202.5%25%20.png){kind=small}
This is the same Treasury discussed in Item # 2.C. above.
Purchased on 10/19/22. Discussed out of time order.YTM at Total Cost = 4.375%
Current Yield at TC: 2.538%
This one was bought in my Schwab account. When I placed the order, the following snapshot shows the Fidelity order book for this security:
I now own 4. I will not be buying more.
E. Bought 1 Treasury 2% Coupon Maturing on 4/30/24 at 97.699:
4:30:24.png){kind=small}
YTM at Total Cost = 3.459%
Current Yield at TC = 2.047%
I now own 3 bonds. I will not be buying more.
F. Bought 1 Treasury 3.25% Coupon Maturing on 8/31/24 at 97.765:
%203.25%25%208:31:24%20.png)
Purchased 10/21/22. Discussed out of time order.
YTM at Total Cost = 4.52%
Current Yield at TC = 3.3242%
I now own 3.
3. Treasury Auction Purchases: $15,000
I will be participating in the 2 year treasury note auction today.
Between 10/25/22 through 11/15/22, I have $70K in 1 and 2 month treasury bills maturing in my Schwab account. I have not decided on how to reinvest those proceeds. To pick up more yield, I will be buying more 6 month and 1 year bills. Some proceeds will likely be redirected into 10 lot corporate bond purchases, focusing on 2023 and 2024 maturities. Schwab has a 1 per bond commission for corporate bond purchases but a $10 minimum. I will consequently use that account to buy 10 bonds.
Investment Rate (coupon equivalent yield)
Coupon Equivalent Rate (CER) Definition
A. Bought at 10/18/22 Auction $10,000 Treasury Bill at 99.426:
56 Day Bill
Matures on 12/20/22.
Investment Rate = 3.763%
B. Bought $3,000 Treasury Bill at 10/25/22 Auction:
%204:27:23.png)
%204:27:23%20.png){kind=small}
182 Day Bill
Matures on 4/27/23
Investment Rate (coupon equivalent): 4.552%
C. Bought $2,000 Treasury Bill at 10/25/22 Auction:
%201:26:23%20.png){kind=small}
Matures on 1/26/23
Investment Rate (coupon equivalent): 4.097%
4. CD Purchases: $6,000
FDIC Insured. Acts as a pacifier for me.
A. Bought 2 Wells Fargo 4.5% CDs Maturing on 10/21/24:
%2010:21:24.png)
B. Bought 2 Wells Fargo 4.4% CDs Maturing on 4/22/24:
Interest paid monthly.
C. Bought 2 JP Morgan 4.7% CDs Maturing on 10/25/24:
%20.png){kind=small}
Interest paid semiannually.
5. Small Ball:
Utility stocks have taken a beating starting in September with the significant percentage rise in interest rates. The Utilities Select Sector SPDR Fund (XLU) fund closed at $78.12 on 9/12/22 and at $63.31 last Friday, up $1.15 that day.
I eliminated earlier this all of my utility stocks (e.g. AEP, AGR, DUK, ETR, EVRG, PEG) but am gradually building a 100 share position in the higher yielding AQN discussed below.
I am starting to buy more equity REIT preferred stocks as their prices plummet, creating 8%+ current yields for new purchases.
One reason for their price decline, probably the most important, is the rise in the "risk free" treasury yields. Another reason is these junior securities, senior only to common stock, will not perform well when common stocks are volatile and in a significant downtrend.
Equity REIT Preferred stocks, most with junk credit ratings, will normally sell at significant yield spreads to the 10 year treasury which closed yesterday at a 4.25% yield, up from 1.63% as of 1/3/22.
So going down in price as treasury yields rise is to be expected and will likely continue until the intermediate term treasuries start to go back down in yield and volatility in common stocks subsides with a dominant uptrend in major indexes.
A 4% yield spread to the current 10 year treasury yield is sufficient to perk my buying interest, but only in small lots as there is no sign yet that treasury yields are going to enter a dominant and persistent decline trend anytime soon.
Unlike bank preferred stocks, which pay non-cumulative dividends, equity REIT preferred stocks pay cumulative dividends which can only be deferred after the common dividend is eliminated and a common dividend has to be paid when there is net income to preserve the REIT tax status.
A 1 cent cash dividend would be enough to prevent deferral of the REIT cumulative preferred dividend. While that is the good news, the bad news is that the REIT is paying out already most of its cash available for distribution to common shareholders rather than building a nice cash cushion for the preferred dividend or to use most of that free cash flow to invest in new properties, reducing the need to finance with new debt.
A. Added to AQN - Bought 5 at $10.69; 5 at $10.26 - Schwab Taxable Account:
Quotes:
Algonquin Power & Utilities (U.S.: NYSE)
Algonquin Power & Utilities (Canada: Toronto)
AQN Analyst Estimates in USD | MarketWatch
Website: Algonquin Power & Utilities Corp.
Last Discussed: Item # 3.F. Added to AQN - Bought 5 at $12.88 (9/27/22 Post)
I discussed the second quarter report in that post.
In that post, I mentioned that AQN had hit a regulatory snag in its pending acquisition of Kentucky Power from American Electric Power Co. Inc. (AEP)
Algonquin Power & Utilities Corp. Announces Agreement to Acquire Kentucky Power (10/26/21)
The snag involves Kentucky Power's 50% ownership in the Mitchell Coal Generation plant. AQN made it a condition of its acquisition that operating control of that plant be transferred to another AEP subsidiary, and AQN would then exit its position in 2028. West Virginia's regulatory agency refused to approve those changes.
After that failure to secure approval, AQN and AEP modified their agreement to reduce the acquisition price by $200M. Algonquin Agrees to Path Forward on Kentucky Power Acquisition That press release does not specifically mention a $200M reduction in the price but merely says the revised price is $2.646B including the assumption of debt. The October 2021 press release announcing the acquisition had the price at $2.846B including the assumption of debt.
While other publicly disclosed details are non-existent, that $200M reduction in the purchase price may be for AQN waiving the condition precedents involving that coal plant which AQN does not want.
Average cost per share: $13.25 (50 shares)
Prior AC was at $13.95
Working my way up to 100 shares.
Dividend: Quarterly at $.1808 ($.7232 annually)
Yield at New AC = 5.46%
Last Ex Dividend: 9/28/22
My only round-trip was to eliminate my 300 CAD share position. Item # 1. Sold 300 AQN:CA at C$19.51 (4/21/22 Post)(profit snapshot = C$303)
B. Added to AIO -Bought 5 at $15.7:
Quote: Virtus Artificial Intelligence & Technology Opportunities Fund Overview - A Balanced CEF
The fund owns corporate bonds, common stocks and convertible bonds.
Working my way up to 100 shares.
Sponsor's website: Virtus Artificial Intelligence & Technology Opportunities Fund
Virtus Artificial Intelligence & Technology Opportunities Fund - SEC Filed Shareholder Semiannual Report for the period ending 7/31/22. (schedule of investments starts at page 16)
Last Discussed: Item # 2.A. Added 5 AIO at $16.15 (7/20/22 Post); Item # 3.G. Added to AIO - Bought 5 at $18.7; 5 at $18.08; 5 at $17.95; 5 at $17.2; 5 at $16.8 (5/19/22 Post)
Investment Category: Monthly Income Generation
Data as of 10/10/22 Trade Date:
Closing Net Asset Value per share: $18.22
Closing Market Price: $15.78
Discount: -13.39%
Sourced: AIO-CEF Connect
Leveraged: Yes at 17.1% as of 10/18/22
Average cost per share: $17.67 (46+ shares)
Dividend: Monthly at $.15 per share
I start to reinvest the dividend effective with the May 2022 payment.
Yield at New AC = 10.19% (regular monthly dividend only)
Last Ex Dividend: 10/12/22
Most of the price depreciation since my first 10 share purchase is due to a $3.45 per share short and long term capital gain distributions paid in January 2022.
I owned only 10 shares on the ex dividend date.
C. Added to GAM - Bought 5 at $34.25-Schwab Taxable Account:
Quote: General American Investors Co. Inc. Overview
SEC Filed Shareholder Report for the period ending 6/30/22 (cost at $607.045+M with the market value at $1.202+B, at page 4)
Sponsor's website: General American Investors Company GAM is one of the oldest CEFs, established in 1927, and one of the few CEFs that survived the 1929 crash and the Great Depression. Portfolio turnover has averaged 20.9% over the past 5 years.
Leveraged: Yes at about 15.74% as of 10/21/22 using preferred stock. General American Investors Co. Inc. 5.95% Cumulative Preferred Series B Stock.
Last Discussed: Item #1.M. Restarted GAM in Fidelity Taxable Account - Bought 5 at $37.25; 5 at $36.95 (1/16/21 Post)
Data as of 10/10/22 Trade Date:
Closing Net Asset Value per share: $40.94
Closing Market Price: $34.19
Discount: -16.49%
Sourced: GAM-CEF Connect (click "Pricing Information" tab)
Average cost per share: $35.6 (10 shares)
Recent Dividend History: The yield will depend on the highly variable capital gains distribution. The total 2021 year end dividend was $3.05 per share:
Morningstar (currently rated 2 stars)
General American Investors (GAM) Portfolio | Morningstar (lists 25 top holdings)
GAM Trading Profits to Date: $606.84
Prior Round-Trips: Item # 2.B.Eliminated GAM-Sold 109+ at $32.74 (2/15/17 Post)(profit snapshot = +$88.53. I reinvested the year end distribution of $320.29 to buy 9.8167 shares which were sold at a $13.41. profit)-Item # 1 Bought 100 GAM at $31.9-Update For CEF Basket Strategy As Of 7/18/16 - South Gent | Seeking Alpha
Sold 107+ GAM at $34.44 (10/19/13 Post)(profit snapshot=$518.31/Total Return=$717.12))-Item # 3 Bought 100 of the Stock CEF $29.52 (9/20/2012 Post)
So far I have been content in selling the shares at a profit after collecting 1 or more year end distributions.
D. Added to LXP - Bought 5 at $8.9-Schwab Taxable Account:
Working my way up to 100 shares.
Quote: Lexington Industrial Trust (LXP)
Properties | LXP Industrial Trust
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Last Discussed: Item # 4.E. Added to LXP- Bought 5 at $9.74 (9/20/22 Post)
Last Substantive Discussion: Item # 3.I. Restarted LXP-Bought 10 at $10.47 (9/13/22 Post) I discussed the second quarter report in that post. SEC Filed Press Release and Supplemental
Average cost per share = $9.89 (20 shares)
Dividend: Quarterly at $.12 per share
Yield at New AC = 4.85%
Last Ex Dividend: 9/29/22
LXP Realized Gains to Date: $1,914.49
The largest gain was $853.36. Item # 1.C. Sold 137+ LXP at $9.08 (9/12/18 Post)
E. Added to DOC - Bought 5 Shares at $13.5-Schwab Taxable Account:
Quote: Physicians Realty Trust (DOC)
Investment Categories: Equity REIT Common and Preferred Stock Basket Strategy/Bond Substitute
Average cost per share: $14.32 (20 shares)
Dividend: Quarterly at $.23 per share ($.92 annually), last raised from $.225 effective for the 2017 4th quarter payment.
Forget about dividend growth.
Yield at New AC = 6.4246%
Last Ex Dividend: 10/3/22
Purchase Restriction: 5 or 10 share lots with a 100 share maximum position. Each subsequent purchase must reduce my average cost per share.
Last Discussed: Item # 4.A. Restarted DOC - Bought 10 at $14.94; 5 at $13.9- Schwab Taxable Account (10/11/22 Post) I discussed the last earnings report in that post. SEC Filed Press Release
Last Elimination: Item # 1. Eliminated DOC- Sold 46+ at $17.66 (7/3/20 Post)(profit snapshot = $213.64)
DOC Realized Gains to Date: $617.28
F. Added to OGN - Bought 5 at $23.25-Fidelity Taxable:
Quote: Organon & Co. (OGN)
2021 Annual Report (summary of risk factors starts at page 26 and ends at page 41)
OGN Analyst Estimates | MarketWatch
Last Discussed: Item # 3.G. Bought 5 OGN at $25.1; 5 at $23.6 - Fidelity Taxable Account (10/4/22 Post)
Last Substantive Discussion: Item # 3.I. Added to OGN - Bought 5 at $28.72 (9/6/22 Post)I discussed the last earnings report in that post. SEC Filed Press Release
Average cost per share = $26.66 (40+ shares)
Dividend: Quarterly at $.28 per share ($1.12 annually)
Yield at New AC = 4.2%
Last Ex Dividend: 8/12/22
OGN's debt level, acquired mostly as part of its separation from Merck, is worrisome.
OGN Merck Debt Assumption:
In the second quarter, 77.9% of OGN's revenues originated in international markets and GAAP accounting profits will be negatively impacted by the USD's strength.
Another issue is recent negative annual E.P.S. trend. The 2021 E.P.S. was $6.28 and the average estimate for 2022 is currently at $4.93. The consensus for 2023 and 2024 are $5.22 and 5.61 respectively. If OGN hits that $5.22 estimate, the P/E at $23.25, my last purchase price, would be 4.45.
G. Added to HPPPRC - Bought 5 at $15.38; 5 at $14; 5 at $13.65; 5 at $12.7 -Fidelity Taxable Account:
Quote: Hudson Pacific Properties Inc. 4.750% Cumulative Preferred C Stock
Issuer: Hudson Pacific Properties Inc. (HPP)
Website: Hudson Pacific Properties: A West Coast Real Estate Group
Last Discussed: Item # 2.K. Bought 10 HPPPRC at $17.36 (6/1/22 Post) That was my first purchase.
Investment Category: Equity REIT Cumulative Equity Preferred Stocks, a subcategory of Equity REIT Common and Preferred Stock Basket Strategy
Security: Prospectus
Par Value: $25 (offered at $25 in November 2021)
Placement in the Capital Structure: Equity Preferred Stock
Maturity: Potentially perpetual unless called by issuer.
Optional Call Date: Anytime on or after 11/16/26
Stopper Clause: Standard
Average cost per share = $15.08 (30 shares)
The price exceed par value frequently exceed the $25 par value during the 2021 4th quarter and into January 2022.
 |
| As of 10/21/22 Close |
Dividends: Paid quarterly, cumulative and non-qualified
Yield at New AC = 7.8747% (.0475% coupon x. $25 par value = $1.1875 annually per share ÷ $15.08 AC per share)
At $12.5 total cost per share, which is 1/2 of par value, the yield is double the coupon rate of 4.75% or 9.5%.
Yield at last purchase price of $12.7 = 9.35%
Last Ex Dividend: 9/16/22
H. Bought 5 CTOPRA at $19.85-Schwab Taxable Account:
Quote: CTO-PA
This is my first purchase. My next purchase will be a 5 share lot at below $19.
Issuer: CTO Realty Growth Inc. (CTO) | MarketWatch - An Externally Managed Equity REIT
I recently started a position in the common shares.
Recent News: CTO Realty Growth Announces Sale of Three Properties in Jacksonville, Florida for $34.9M(9/26/22)(one of the properties was CTO's last remaining multi-tenant office building); CTO Realty Growth Announces Acquisition of Mixed-Use, Grocery Anchored Property in Richmond for $93.9M (10/17/22)
Security: Prospectus
Par value: $25
Placement in the Capital Structure: Equity Preferred Stock senior only to common stock.
Coupon: 6.375%
Issuer Optional Call Date: On or after 7/6/26
Dividend: Quarterly at $.3984 per share, cumulative and non-qualified.
Yield at $19.85 = 8.03%
Last Ex Dividend: 9/9/22
Stopper Clause: Yes, standard provision.
I. Added 5 GMREPRA at $23.06:
Quote: GMRE-PA
Last Discussed: Item # 4.C. Bought 10 at $24.66 (10/11/22 Post)
Other Buy Discussion: Item # 2.A. Bought 10 GMREPRA at $21; 5 at $16.88 (4/18/20 Post) I still own those shares in another account.
Prior Sell Discussions: Item # 1.B. Sold 70 GMREPRA at $25.87 (4/24/19 Post)(profit snapshot = $208.36); Item # 1.A. Sold 30 GMREPRA at $24.84 (2/20/19 Post)(profit snapshot = $9.79)
Maximum Position All Accounts: 100 sharesJ. Added 5 GLQ at $6.82:
Quote: Clough Global Equity Fund Overview - A CEF
Sponsor's website: Clough Global - GLQ
SEC Filing-Holdings as of 7/31/22 I am not a fan and would describe several stock holdings as speculative clinical stage biotech companies.
SEC Filed Semiannual Report for the period ending 4/30/22 (GLQ holdings list starts at page 21)
This CEF has performed poorly since I first bought shares. Adding to the position with a 5 share buy, part of an effort to dig myself out of hole, violates the First Law of Holes.
Leveraged: Substantial at 57.17% as of 10/17/22.
Average cost per share: $10.23 (25 shares)
Dividend: Monthly at $.1162 per share.
Recent distributions have been classified as 100% return of capital based on the fund's section 19(a) notices. The dividend needs to be eliminated until it can be supported by capital gains.
I changed my dividend option to reinvestment starting with the next payment.
Yield at AC = 13.63%
I would not characterize a 100% ROC supported dividend as having any yield.
Last Ex Dividend: 10/20/22 (owned all as of)
Data Date of 10/17/22 Purchase:
Closing Net Asset Value per share: $7.61
Closing Market Price: $6.82
Discount: -10.38%
Sourced: GLQ-CEF Connect
K. Pared FHN in Fidelity Account - Sold 26+ Shares at $24.02:
Quote: First Horizon National Corp. (FHN)
FHN Analyst Estimates | MarketWatch
Investment Categories: Regional Bank Basket Strategy/Arbitrage
I discussed the reasons for reducing my arbitrage position in a comment published on 10/18/22.
Toronto Dominion is in the process of acquiring FHN for $25 per share, but the acquisition has not yet received regulatory approval. The price may be increased slightly for a delay after 11/27/22. TD to Expand in the Southeastern U.S. with Acquisition of First Horizon
I sold the highest cost lots held in this account, including the shares discussed here: Item # 4.E. Added to FHN in Fidelity Taxable Account (6/15/22 Post)
In response to that announcement, I increased my FHN position by buying 450 shares as an arbitrage play. Item # 1. Added 450 FHN at $21.53 (5/19/22 Post) The shares sold were higher cost shares bought for the same reason and 3+ shares bought with a recent quarterly dividend. I am keeping for now that 450 share lot and all shares with a low cost basis that were acquired before the merger announcement.
I may sell the 450 share lot in the $24-$25 range to lock in a profit near the buyout price and to harvest the gain in 2022 when my income took a hit from far lower stock profits which are currently about 1/3 of my $25K minimum annual level. Trading profits have been difficult to achieve in 2022. My 2023 income will be much higher from interest and dividend payments.
Profit Snapshot: +$40.72
Average cost per share after pare this account: $20.34 (497+ shares)
Dividend: Quarterly at $.17 per share
FHN has continued paying its dividend pending consummation of the merger.
Yield at $20.34 this account: 3.34%
Last Earnings Report (Q/E 9/30/22): SEC Filed Press Release Earnings reports become relevant again when and if the merger falls through.
Net income = $257M
GAAP E.P.S. = $.45
Non-GAAP E.P.S. = $.44
Consensus at $.43
NIM: 3.49%, up from 2.41% in the 2021 third quarter
Adjusted Efficiency Ratio = 52.42%
NPL Ratio: .51%, down from .63%
Charge off ratio: .08%
L. Pared FHN in Schwab Account - Sold 10 at $24.15:
See Item # 5.K. above
I had bought only 10 shares in this account as an arbitrage play and those shares have now been sold.
Remaining shares this account:
 |
| Price as of 10/19/22 Close |
Profit Snapshot: $22.91
Average cost per share this account: $9.6 (20+ shares)
M. Pared FNB in Schwab Taxable Account - Sold 5 at $12.78 and 5 at $13.47:
Profit Snapshot: $43.37
Last Discussed: Item # 4.A. Pared FNB in Vanguard Taxable Account - Sold 10 at $12.19 (9/27/22 Post)(reduced AC per share to $7.7, 67+ shares)
Last Buy Discussions: Item # 1.C. Added to FNB-Bought 3 at $7; 5 at $6.47; 10 at $6.81 (6/20/20 Post); Item # 4.B. Added 5 FNB at 8.8; 5 at $8.43; 5 at $7.62; 5 at $6.6 (4/30/20 Post)
New Average cost per share this account: $7.23 (55+ shares)
Remaining Lots this account:
 |
| Price as of 10/19/22 Close |
Dividend: Quarterly at $.12 per share
I quit reinvesting the dividend in this account effective for the 2020 third quarter payment.
Yield at AC this account: 6.64%
Last Ex Dividend: 9/1/22
Last Earnings Report (Q/E 9/30/22): SEC Filed Press Release
Comparisons are to the 2021 third quarter.
GAAP Net Income = $135.5M
GAAP E.P.S. = $.38
Non-GAAP E.P.S. = $.39, up from $.34.
Consensus at $.363 per Fidelity
Non-GAAP E.P.S. excludes $.01 per share in merger related expenses.
NIM: 3.19%, up from 2.76%
Efficiency Ratio Non-GAAP: 49.4%, down from 55.43% (down is good)
NPL Ratio: .3%
Charge Off Ratio: .04%
Coverage Ratio: 439.9% (allowance for credit losses to non-performing loans)
ROE: 9.91%, up from 8.74%
ROTE: 18.43%, up from 16.41%
FNB Realized Gains to Date: $1,687.87
N. Added to EAI in Vanguard Taxable Account - Bought 5 at $22.44; 5 at $21.65:
I highlighted the maturity year in red just to emphasize the interest rate risk.
Issuer: Wholly owned subsidiary of Entergy Corp. (ETR)
Investment Category: Income Generation with a First Mortgage Baby Bond, part of the Exchange Traded Bond category.
Last Discussed: Item # 3.M. Added to EAI in Fidelity Taxable Account - Bought 5 at $23.66; 5 at $23; 5 at $22.73 (5/19/22 Post)
Security: Prospectus
First Mortgage attaching to substantially all assets
Par Value = $25
Coupon: 4.875%
Issue Optional Redemption: On or after 9/1/21 at par plus accrued and unpaid interest. Interest rate risk is asymmetric in favor of the issuer given the optional call date and the potential maturity date.
Maturity: 9/1/2066, unless redeemed early at the issuer's option.
Trades Flat (i.e. whoever owns the security on the ex interest date receives the entire quarterly interest payment)
Interest Paid Quarterly
Average Cost per share this Account: $23.22 (25 shares)
Yield at AC = 5.25%
The 30 year treasury bond closed at 4.4% yesterday, up from 2.01% as of 1/3/22. 2022 Treasury Yield Curve-U.S. Department of the Treasury. The current yield for EAI at my last purchase price ($21.7) is 5.63%.
Next Ex Interest Date: 11/29/22
Credit Ratings: A/A2
Last Sell Discussions: Item # 4.B. Sold 30 EAI at $24.7-Used Commission Free Trade (5/18/19 Post); Item # 4.B. Sold 30 EAI at $24.73-Used Commission Free Trade (3/17/19 Post)
EAI trading profits to date: $102.14
Goal: Interest + any profit on the bonds.
Purchase Restriction this account: Up to 100 shares with each subsequent purchase required to be at the lowest price in the chain.
Maximum Position All Accounts: 300 shares.
O. Added to FIW - Bought 1 at $72.74:
Quote: First Trust Water ETF Overview
Sponsor's webpage: First Trust Water ETF (FIW)
Last Discussed: Item # 1.K. Started FIW as a Placeholder-Bought 1 at $77.5; 1 at $75.5 (4/1/21 Post)
First Trust Water ETF (FIW)-Morningstar (currently rated 5 stars)
Average cost per share = $75.25 (3 shares)
Dividends: Quarterly at a variable rate
Last 4 Dividends: $.4846
Last ex dividend: 9/23/22
Holdings Weighted at >2% as of 10/21:
P. Added to UL in Fidelity Taxable Account- Bought 1 at $43.03:
Quote: Unilever PLC ADR
The ordinary shares trade in London and are priced in British Pence. Unilever PLC (U.K.: London); British Pound to US Dollar Exchange Rate Chart | Xe Part of the weakness in the USD priced ADR is the decline in British Pound's value when converted into USDs.
ADR Ratio: 1 for 1
All brands | Unilever global company website
Completion of Unilever’s Unification | Unilever (As a result, the EURO priced ADR UN no longer exists. I have in the past owned UN)
Last Substantive Buy Discussion: Item #2.I. Added to UL in Fidelity Taxable Account - Bought 2 at $42.55 (6/9/22 Post)
Average cost per share this account: $51.49 (32+ shares)
Dividends: Paid quarterly. The USD rate will depend on currency conversions. The USD dividend has trended down starting in 2020 even though the dividend rate in British Pence has remained the same.
Unilever PLC Common Stock (UL) Dividend History | Nasdaq
Last 4 Dividend Payments in USDs: $1.8746
Yield at AC Using $1.87 = 3.63%
Last Ex Dividend: 8/4/22
Last Earnings Report (Q/E 6/30/22): Q2 2022 Results Announcement.pdf
Results are being negatively impacted by input cost inflation.
Earnings increased 1% with a 4.9% favorable currency impact.
Purchase Restriction: 1 or 2 share lots, with each subsequent purchase required to reduce my average cost per share, switching to 5 share lots at below $40.
Maximum position all accounts: 200 shares
Q. Added to BK -Bought 1 at $39.21; 1 at $38.17; 1 at $37.73:
Quote: Bank of New York Mellon Corp.
BK Analyst Estimates | MarketWatch
Last Discussed: Item # 3.C. Restarted BK in Schwab Account -Bought 5 at $43.05 (7/27/22 Post) I discussed the second quarter earnings report in that 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)
Average cost per share = $41.3 (8 shares)
Dividend: Quarterly at $.37 per share ($1.48 annually), last raised from $.34 effective for the 2022 third quarter payment.
Yield at AC = 3.5835%
Next Ex Dividend: 10/26/22
Last Earnings Report (Q/E 9/30/22): SEC Filed Press Release
GAAP E.P.S. = $.39
Adjusted E.P.S. = $1.21, up from $1.09 in the 2021 third quarter.
Adjusted Net Income = $983M
GAAP included a $.81 per share charge, "primarily related to impairment of goodwill associated with the Investment Management reporting unit, which was driven by lower market values and a higher discount rate". Other items were severance costs, litigation reserves and gains on "disposals".
Total Revenues = $4.3B, up 6%
Asset Under Management: $1.8T, decreased 23% primarily "market impact". This will be a common issue for asset managers who earn fees based on asset values given the declines in stock and bonds. Investment and wealth management revenue decreased by 16%.
The Security Services unit increased revenue by 13%
Net interest revenue increased by 44%, "primarily reflecting higher interest rates".
The Market and Wealth Services unit increased revenues by 17%.
Key Drivers for that segment:
$22M negative impact in the 2022 third quarter, down from -$262M in the 2021 third quarter.
R. Added 1 AOD at $7.07:
Quote: abrdn Total Dynamic Dividend Fund Overview
SEC Filed Semiannual Shareholder Report for the period ending 4/30/22
Leveraged: Lightly at 4.19% as of 10/17/22 using a line of credit
Average Cost per share: $8.01 (73 shares)
Dividend: Monthly at $.0575 per share ($.69 annually)
I am reinvesting the dividend.
Yield at New AC = 8.61%
Last Ex Dividend Date: 10/21/22 (owned all as of)
Data Date of 10/10/22 Trade:
Closing Net Asset Value Per Share: $8.2
Closing Market Price: $7.09
Discount: -13.54%
Sourced: AOD- CEF Connect
S. Added to OPI - Bought 1 at $12.35-Schwab Taxable Account:
Quote: Office Properties Income Trust (OPI)
10-Q for the Q/E 6/30/22 (debt discussed starting at page 34). OPI has a relatively insignificant amount of mortgage debt ($83.018M on two properties) Most of its debt is in SU bonds that mature between 2024-2050 and borrowings of $230M as of 6/30/22 under its credit facility. For now, the SU bonds have a nice cushion of protection due to their superior claim to assets.
OPI is a national REIT focused on owning and leasing office properties primarily to single tenants and those with high credit quality characteristics. As of June 30, 2022, approximately 63% of OPI's revenues were from investment grade rated tenants. OPI owned and leased more than 170 properties as of June 30, 2022, with approximately 22.5 million square feet located in 32 states and Washington, D.C. . . . OPI is managed by The RMR Group (Nasdaq: RMR), a leading U.S. alternative asset management company with more than $37 billion in assets under management as of June 30, 2022."
Earnings Press Release for the Q/E 6/30/22
A Select Income SU bond, maturing in less than 2 years, which is now an OPI obligation, is currently trading near a 10% YTM. 4.25% SU Maturing on 5/15/24 One maturing on 2/1/2025 is trading near a 12% YTM. Bond Detail The Bond Ghouls are expressing some skepticism on OPI's survival to pay off that debt.
If those yields are still around when OPI SU debt has to be refinanced, then other alternatives need to be pursued, including some combination of more mortgage debt, asset sales and a significant dividend cut.
Refinancing the 2024 SU bond at 10%+ or the 2025 SU at 12% for 3 years are not a viable options.
Last Discussed: Item # 3.D. Added to OPI in Schwab Taxable Account - Bought 2 at $16, 3 at $15.03; 1 at $14.49; 4 at $14.15; 1 at $13.67 (10/4/22 Post)
Last Substantive Discussion: Item # 3. Added 5 OPI at $18.6; 5 at $18.24 (8/30/22) I discussed the last earnings report in that post.
When discussing this Office REIT, I have expressed an opinion that it is deservedly hated by investors who count and that is confirmed by a long term price chart. Office Properties Income Trust (OPI) Interactive Stock Chart - Yahoo Finance That chart screams incompetence with a megaphone.
And, investors have turned very negative recently on all Office REITs including the ones that are internally managed by competent people.
One major concern is that the work from home trend will lead to a non-temporary glut in office space, resulting in office vacancies and rent concessions on renewals, as cost pressures including financing and maintenance costs increase significantly. Just a bad mix for owners.
The question is whether I can harvest the dividend and escape at some point with any profit on the shares before any ROC adjustment to the tax cost basis.
Average cost per share = $17.51 (32 shares)
Dividend: Quarterly at $.55 per share.
Yield at AC = 12.56%
Last Ex Dividend: 10/21/22 (owned all as of)
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.
