CIZN, EMAPRC:CA, DEA, GDV, HIW, HR, HRZN, IDV, IVZ, MDLZ, O, ORCC, PDM, RTLPP, VT, VZ

Economy: 

Problematic inflation continues as a major problem for stocks and bonds. 

The BLS reported last Thursday that CPI rose 8.2% over the 12 month through September. Annual core CPI rose to 6.6% from the 6.3% reported through August. 

Consumer Price Index Summary - 2022 M09 Results

While the annual CPI and core CPI increases are hot and problematic, the annualized CPI for July-September was 2%. 

Drawing a firm conclusion from 3 months of data, particularly when September was at .04%, is not something that I would do.   

'Soft landing' unlikely as Fed tried to get grip on inflation: Robert Rubin - MarketWatch

Social security benefits will increase by 8.7% next year.

The odds that the FED will increase the FF rate by another 75 basis points is almost at 100% probability. 

Countdown to FOMC: CME FedWatch Tool

Bank of America CEO Brian Moynihan says the U.S. consumer is healthy

Russia sabotaged the Nord Stream 1 and 2 pipelines. Nord Stream gas leaks: Denmark says powerful explosions behind damage Putin says the U.S. did it. 

Dr. Fauci: Covid omicron subvariants BQ.1, BQ.1.1 are 'troublesome'

Goldman CEO David Solomon says there's a good chance of a recession and so it's time to be cautious

+++

Mar-a-Lago witness told FBI that boxes were moved at Trump's direction - The Washington Post; Trump Aide Was Seen on Security Footage Moving Boxes at Mar-a-Lago, republished by MSN.com from Trump Aide Was Seen on Security Footage Moving Boxes at Mar-a-Lago - The New York Times. The Trump aide was identified by the NYT as Walt Nauda. Trump Betrayed by His Diet Coke Valet, Walt Nauta

After the Grand Jury subpoena was served seeking documents marked as classified, Donald allegedly ordered that boxes be removed from a storage room to his residence. The intimation is that Trump did not want his lawyers to find those documents in the storage room and return them to the government.  

Trump attacks American Jews, says they must 'get their act together' on Israel 'before it's too late'  Donald has previously made these attacks. In his mind Trump believes that he has done so much for Israel that American Jews are expressing disloyalty to Israel by not worshipping him. 

When asked about the pandemic by Maggie Haberman, Trump responded "Can you believe this happened to me". All the Wildest Bits From Maggie Haberman’s New Donald Trump Book

Judge clears way for Trump to be deposed in defamation case - The Washington Post The plaintiff is E. Jean Carroll who claimed that she was raped by the leader of the Republican Party. 

Ms. Carroll plans to sue Trump for battery and intentional infliction of emotional distress under the recently passed NY Adult Survivors Act which allows victims of sexual abuse to pursue a lawsuit which would otherwise be barred by the statute of limitations, provided the suit is filed within 1 year after 11/22/22. E. Jean Carroll says she will sue Donald Trump for sexual assault - The Washington Post

Any lawyer representing Donald would not want him to testify under oath. Perjury would be a reasonably predictable outcome. So they will do everything legally possible to prevent the deposition and then, if Don the Con is ordered to testify, will have him take the 5th. Trump takes the Fifth - POLITICO 

Donald is paying his legal fees out of money raised by his PAC. Trump's PAC spends over $3.8 million on legal fees in August - CBS News; Trump uses donations to Save America PAC to pay legal bills; How Trump's legal expenses consumed GOP donor money - The Washington Post The PAC wrote a $3M check to a firm representing Donald in the document case. 

Trump Responds to Jan. 6 Committee Subpoena - Lawfare (letter included in article) It is hard to believe that the author of this letter is an adult. The letter reeks of multiple personality disorders.   

Donald is using the subpoena issued to him by the January 6th Committee to raise even more money from the mom and pop Trumpsters. Trump Solicits Cash As the Jan. 6 Committee Votes to Subpoena Him

The PAC needs to be renamed "Save Trump Money".

It is even conceivable that a few small Trumpster donors may start to wonder why a purported multi-billionaire needs their small contributions to pay his legal bills.  

Whistleblower complaint claims Trump media company committed 'fraudulent misrepresentations' - ABC News; Whistleblower Will Wilkerson reveals the turmoil inside Trump's Truth Social - The Washington Post

Democracy is on the ballot this November. Leaders of democracies increasingly echo Putin in authoritarian tilt, republished by MSN.com from Leaders of democracies increasingly echo Putin in authoritarian tilt - The Washington Post There is no doubt where this strong tilt toward authoritarianism can be found in the U.S. 

I wonder what the Lord would say when asked whether Donald or Vlad lies more.  

++

Russia is grabbing men off the street to fight in Ukraine - The Washington Post ("Police and military officers swooped down on a Moscow business center this week unannounced. They were looking for men to fight in Ukraine — and they seized nearly every one they saw. Some musicians, rehearsing. A courier there to deliver a parcel. A man from a Moscow service agency, very drunk, in his mid-50s, with a walking disability.")

Russia’s Draft Sends Barely Trained Men to War in Ukraine - The New York Times, republished by MSN.com at Russia’s Draft Sends Barely Trained Men to War in Ukraine Those conscripts are just Putin's cannon fodder. 

Russia using rape as 'military strategy' in Ukraine: UN envoy | CNN; Russian soldiers are supplied with Viagra to rape Ukrainian women and 'dehumanize' them, claims UN official

Russia looks to deprive Ukrainian civilians of water and electricity supplies

UN General Assembly demands Russia reverse course on ‘attempted illegal annexation’-UN News ("The results were 143 Member States in favour, with five voting against, and 35 abstentions. The countries who voted against were Belarus, the Democratic People's Republic of Korea, Nicaragua, Russia and Syria. A majority of those countries abstaining were African nations, alongside China and India.") The "Republic" of Korea is North Korea. Belarus is controlled by Putin. 

Russia attacked Kiev civilian targets yesterday using Iranian made Kamikaze drones, murdering several civilians including a woman who was 6 months pregnant. Russia hits Kyiv with new 'kamikaze' drone attack; Russia hits Ukrainian capital Kyiv with wave of kamikaze drones - BBC News - YouTube

Far from Putin's claims of resilience, Russian economy is being hammered by sanctions and exodus of international companies, Yale report finds - MarketWatch  

++++

1. Canadian Reset Equity Preferred Stocks: 

A. Bought Back EMAPRC:CA at C$18.45: 

Quote: EMA-PC.TO 

Issuer: Emera Inc. Stock Quote (Canada: Toronto) 

Website: Home | Emera

Regulated Companies | Emera

Emera Reports 2022 Second Quarter Financial Results | Emera

I have eliminated my common stock position. Item # 2. Sold 100 EMR:CA at C$62.77 (4/21/22 Post)(profit snapshot  = C$457) 

Last EMAPRC Elimination: Item # 1.A. Sold 100 EMAPRC:CA at C$22.03 (3/27/21 Post)(profit snapshot  = C$747) 

Security: 5 Year Reset Equity preferred stock. 

Prospectus Excerpts: 

Stopper Clause 

The Stopper Clause enforces the preferred shareholders superior claim to cash compared only to the common shareholders. To defer the preferred stock dividend, Emera must eliminate first the common share cash dividend.  

Link to Emera Preferred Stock Prospectuses: Preferred Shares | Emera

Par Value: C$25

Coupon: 2.65% spread to the 5 year Canadian government bond. 

Canada 5 Year Government Bond Overview | MarketWatch

Current Coupon: 4.721% paid on a C$25 par value (5 year bond at 2.071% at August 2018 reset)

Annual Dividend at 4.721% per share = C$1.1775

Current Yield at C$18.45 = 6.38% 

Next Reset: August 15, 2023

Currently, it can be reasonably anticipated that the coupon will reset at a higher level. The 5 year Canadian bond has recently been hovering near 3.7%. If that yield is the applicable on the reset date next year, then the coupon for the next five years would be 6.35% and my yield would increase to 8.6%. The actual yield may end up being higher or lower.

Dividends: Paid Quarterly and cumulative

Last Ex Dividend:  7/29/22

Callable: At issuer's option only on the five year reset dates

I do not anticipate that Emera will call this preferred stock on the next reset date. 

I group the Canadian reset equity preferreds with the U.S. resets. Advantages and Disadvantages of Equity Preferred Floating Rate Securities The U.S. equity preferred stock category that is the closest analogy is fixed-to-floating rate preferred stocks. The Canadian resets pay a fixed coupon for the first five years and then become floating rate securities. 

Previous Buy Discussions: Item #1.A. Added 50 EMAPRC at C$17.85 (10/26/19 Post); Item # 1.A. Bought 50 EMAPRC at C$18.7 (7/7/19 Post); Item # 2 Bought 50 EMAPRC at C$17.44 and 50 at C$17.84 Update For Exchange Traded Bond And Preferred Stock Basket Strategy As Of 7/13/16 - South Gent | Seeking Alpha

Other Sell Discussion: South Gent's Comment Blog # 8: Sold 100 EMAPRC at C$21.96 (profit C$429, no snapshot)

IB Account 2017 Trade

EMAPRC:CA Realized Gains to Date: C$1,176

2. Corporate Bonds: $14,000

A. Bought 2 Royal Bank of Canada 4% SU Maturing on 2/29/24 at Par Value: 

Purchased on 8/29/22. 

Issuer:  Royal Bank of Canada  (RY) 

RY Analyst Estimates | MarketWatch

SEC Filed Earnings Press Release for the Q/E 7/31/22 

Credit Ratings: A1/A

Interest paid quarterly. 

Current Yield and YTM = 4% 

B. Bought 2 Ameren Illinois 3.25% First Mortgage Bonds Maturing on 3/1/25 at a Total Cost of 98.848: 

Issuer: Wholly owned subsidiary of Ameren Corp.  (AEE), a utility holding company.  

AEE 10-Q for the Q/E 6/30/22 (Ameren Illinois results can be found at page 47)

AEE 2021 Annual Report (Ameren Illinois net income of $425M, up from $379M in 2020, see page 94)

Security: First Mortgage Bond

Finra Page: Bond Detail (prospectus linked)

Credit Ratings: A1/A 

YTM at Total Cost = 3.736%

Current Yield at TC = 3.2879% 

First Purchase.

C. Bought 2 Nextera Capital 3.55% SU Maturing on 5/1/27 at a Total Cost of 96.9: 

Purchased on 8/29/22. 

Issuer: Wholly owned subsidiary of NextEra Energy Inc.  (NEE) who guarantees the notes. 

NEE SEC Filings 

NEE SEC Filed Earnings Report for the Q/E 6/30/22

FINRA Page: Bond Detail (prospectus linked)

Credit Ratings: Baa1/BBB+

YTM at Total Cost: 4.29%, rounded up. 

Current Yield at TC = 3.6636%

D. Bought 2 Conagra 4.3% SU Maturing on 5/1/24 at a Total Cost of 98.573:  

Purchased 10/11/22. Discussed out of time order. 

Issuer: Conagra Brands Inc.  (CAG) 

SEC Filed Earnings Press Release for the F/Q ending 8/28/22 

CAG SEC Filings 

10-Q for the Q/E 8/28/22 

FINRA Page: Bond Detail (prospectus not linked)

Prospectus This part was part of a $7.025B offering. Of that total, $1.725B has already matured. The proceeds were used to finance Conagra's purchase of Pinnacle Foods in 2018. Conagra Brands Completes Acquisition Of Pinnacle Foods | Conagra Brands

Credit Ratings: Baa3/BBB-

YTM at Total Cost = 5.269%

Current Yield at TC = 4.36%

Last Debt Offering: $500M .5% SU Maturing on 8/11/23, offered in  August 2021. Prospectus 

Prior to that offering, CAG sold $1B in 1.375% SU notes maturing in 2027, which was sold in October 2020. Prospectus. 

I own a few common stock shares.

E. Bought 2 First American Financial 4.6% SU Maturing on 11/15/24 at a Total Cost of  98.068:

Purchased 10/12/22. Discussed out of time order. 

Issuer: First American Financial Corp. (FAF) 

FAF is a "provider of title, settlement and risk solutions for real estate transactions. With its combination of financial strength and stability built over more than 130 years, innovative proprietary technologies, and unmatched data assets, the company is leading the digital transformation of its industry." 

I own a few shares of the common stock. 

FAF Analyst Estimates-MarketWatch

FAF SEC Filings 

SEC Filed Earnings Press Release for the Q/E 6/30/22 

FINRA Page: Bond Detail (prospectus linked)

Credit Ratings: Baa2/BBB- 

The S & P rating is from 2014. Moody's rating was updated in 2020. 

YTM at Total Cost: 5.592%

Current yield at TC = 4.69%

F. Bought 2 Mid-America Apartment Communities LP 4.3% SU Maturing on 10/15/23 at a Total Cost of 99.155:

Purchased 10/14/22. Discussed out of time order. 

Issuer: Operating entity for the REIT Mid-America Apartment Communities Inc.  (MAA) 

MAA SEC Filings 

SEC Filed Earnings Release for the Q/E 6/30/22 

10-Q for the Q/E 6/30/22 

FINRA Page: Bond Detail (prospectus linked)

Credit Ratings: Baa1/BBB+

YTM at Total Cost: 5.185%

Current Yield at TC = 4.3366%

The bond yields more than the common stock which closed last Friday at $142.34. The dividend yield at that price is about 3.51%. 

G. Bought 2 Aetna 2.8% SU Maturing on 6/15/23 at a Total Cost of 98.7: 

Purchased on 10/14/22. Discussed out of time order. 

Aetna was acquired by CVS Health Corp.  (CVS) in 2018. 

CVS Analyst Estimates | MarketWatch

CVS SEC Filings 

Finra Bond Page: Bond Detail (prospectus linked)

Credit Ratings: Baa2/BBB 

YTM at Total Cost: 4.848%

Current Yield at TC = 2.8369%

I now own 4. 

This bond has some limited appeal for me given its YTM and short maturity. 

Last Friday, the 6 month T Bill closed at a 4.31% yield, so I pick up about .5% with this CVS bond compared to a treasury. 

Short term rates popped again after the last CPI report discussed above. 

Note the 10 year yield inversions with the 6 month and 1-5 year treasuries. 

3. Treasuries-Secondary Market Purchases: $10K in principal amount. 

My general approach in buying short term treasuries in the secondary market is to purchase 1 bond lots and then average down as interest rates rise. 

In this section, I highlight how this works, discussing more than 1 purchase of several bonds over less than a 2 month period. 

Given the short maturities, purchases at slightly lower prices will barely increase current yields but will have a meaningful percentage impact on YTMs.  

For example, I bought three 1 bond lots of a 2.75% coupon maturing on 11/15/23. The current yields for those purchases are  2.7682%, 2.7862%, and 2.8% The YTMs are 3.302%, 3.902%, and 4.517%.

With the GOP likely to regain control over the House, the likelihood of a U.S. debt default increases substantially IMO unless the debt limit is substantially increased before the republicans regain control. 

The republicans have already proven their willingness to cause a U.S. debt default unless the democrats agree to republican policy objectives which the republicans could not implement without the blackmail. 

The Democrats need to increase the debt limit in the lame duck session after the election.   

A. Bought 1 Treasury 2.75% Coupon Maturing on 5/31/23 at 99.726: 

YTM at Total Cost = 3.11%

Current Yield at TC = 2.7576%

B. Bought 1 Treasury 2.75% Coupon Maturing on 5/31/23 at 99.137: 

This is the same treasury discussed in Item #2.A. above. 

Purchased 10/13/22. Discussed out of time order. 

YTM at Total Cost = 4.164%

Current Yield at TC = 2.7739%

When buying short term treasuries in the secondary market, the spread in Fidelity's order book between buying 1 or 250 has widened. This is what the order book for this 2.75% note looked like when I decided to buy in my Schwab account rather than Fidelity:

Best Price for 1 at 99.156 = 4.12% YTM

This has become a widespread problem at Fidelity compared to Schwab based on a sampling that I did last Friday. This will cause me to buy treasuries in the secondary market only in my Schwab account going forward. 

I now own 3. 

C. Bought 1 Treasury 2.75% Coupon Maturing on 11/15/23 at 99.3428:

Purchased on 8/25/22. 

YTM at Total Cost = 3.302%

Current Yield at TC = 2.7682%

D. Bought 1 Treasury 2.75% Coupon Maturing on 11/15/23 at 98.6991: 

This is the same bond discussed in Item #2.C. above. 

Purchased on 9/15/22

YTM at Total Cost  = 3.902%

Current Yield at TC  = 2.7862%

E. Bought 1 Treasury 2.75% Coupon Maturing on 11/15/23 at 98.1442: 

This is the same bond discussed in Item # 2.C. above

Purchased on 10/13/22. Discussed out of time order. 

YTM at Total Cost = 4.517% 

Current Yield at TC = 2.8%

I now own 3. 

F. Bought 1 Treasury 2.875% Coupon Maturing on 10/31/23 at 99.558:

Purchased on 8/25/22.

YTM at Total Cost = 3.257743%

Current Yield at TC = 2.8878%

First Purchase.

G. Bought 1 Treasury 2.875% Coupon Maturing on 9/30/23 at 99.648: 

Purchased on 8/25/22. 

YTM at Total Cost = 3.202856%

Current Yield at TC = 2.8852%

H. Bought 1 Treasury 2.875% Maturing on 9/30/23 at 99.0594:

Purchased on 9/13/22. 

This is the same bond discussed in Item # 2.G. above.    

YTM at Total Cost = 3.802%

Current Yield at TC =  2.9%

I. Bought 1 Treasury 2.875% Maturing on 9/30/23 at 98.6486:

This is the same bond discussed in Item # 2.G. above. 

Purchased 10/14/22. Discussed out of time order. 

YTM at Total Cost: 4.336%

Current Yield at TC = 2.9144%

I now own 3. 

J. Bought 1 Treasury 2% Coupon Maturing on 5/31/24 at 97.757: 

Purchased on 8/25/22. 

YTM at Total Cost = 3.319687%

Current Yield at TC = 2.0459%

K.Bought 1 Treasury 2% Coupon Maturing on 5/31/24 at 97.4455: 

This is the same bond discussed in Item # 2.I. above. 

Purchased on 9/9/22.

YTM at Total Cost = 3.546%

Current Yield at TC = 2.05%

I now own 6. I will not be buying more. 

4. CDs: 

I had a $5K three month CD last week that had a 2% coupon. 

I am redirecting the proceeds into higher yielding CDs.  

A. Bought 2 Morgan Stanley Bank 4.4% Maturing on 11/11/24: 

Interest paid monthly.

FDIC Insured. 

B. Bought 2 Wells Fargo 4.3% CDs Maturing on 4/15/24:   

Interest paid monthly. 

FDIC Insured. 

5. Treasury Auction Purchases-$15K in Principal Amount:  

A. Bought 3 Treasury Bills at 10/11/22 Auction: 

91 day Bill

Matures on 1/12/23

Interest will be taxable in 2023. 

Investment Rate = 3.591% 

B. Bought $10,000 Treasury Bill at 10/13/22 Auction: 

56 Day Bill 

Matures on 12/13/22 

Investment Rate: 3.548%

C. Bought 2 Treasury Bills at 10/17/22 Auction: 

182 Day Bill. 

Matures on 4/20/23

Investment Rate: 4.398%

The purchase was funded in my mind's eye from SLG redeeming at maturity two 3.25% SU bonds.  

SLG SU bonds are currently rated Ba1/BBB-. Moody's downgraded the debt by 1 notch last March. One reason for the downgrade was SLG using cash to buyback stock rather than to pay down debt.  

I bought this bond in June 2020 at a 99.579 TC. The YTM was then at 3.437%. Item # 2.C. Bought 2 SLG 3.25% SU Maturing on 10/15/22 at a Total Cost of 99.579 (6/20/2020 Post) 

6. Small Ball: 

The '60/40' Portfolio Is Having Its Worst Year in a Century. What’s Next. | Barron's (10/15/22) No one knows with certainty what is going to happen. 

I do know how poorly bond funds have performed this year, as vintage bonds bought when interest rates were far lower than now have suffered bear market plus declines in value, wiping out total returns for 5 years or more in many cases. 

One of the broadest U.S. bond ETFs is the iShares Core US Aggregate Bond ETF  (AGG) The total return YTD through 10/14/22 was -15.69% which wiped out the meager total returns for the five years ending on 10/14/22, reducing the average annual total return to -.69%. That .-69 would be far worse after adjusting for taxes owed on the distributions and more importantly inflation. Anyone who bought at the 52 week high of $115.50 will have a very long wait to sell at a profit and possibly not during their lifetime. 

Longer duration bond funds have done worse than AGG. The five year annual average total return for TLT was at -2.8% and only +.07% for 10 years. TLT – Performance – iShares 20+ Year Treasury Bond ETF | Morningstar 

Possibly the longest duration treasury ETF is the PIMCO 25+ Year Zero Coupon US Treasury ETF that had a YTD total return of -41.98% through last Friday and a ten year annual average total return of -.09%. Stripping the coupon from the treasury lengthens the duration and makes the stripped treasury more sensitive to up and down interest rate changes. Strip Bonds Definition; Duration Definition and Its Use in Fixed Income Investing

The 5 year annual average total return for the SPDR® Long Term Corporate Bond ETF (SPLF) was -2.13% through last Friday. 

When my individual bonds mature or are redeemed early, I can avoid those fiascos that are inherent in bond funds when interest rates start to rise for an extended period of time. You have to be an old investor to know what a long term bear market looks like in real time. The last one started in 1949 and ended in 1982.  

During the recent stock market decline, I continued my small ball, scatter shot buying and will be discussing about 1/2 of those trades. 

I can continue doing this kind of buying for the remainder of my life without having to be concerned about selling at a loss to pay expenses. 

I am nowhere close to investing my monthly interest income from bonds in common stocks. 

Until the FED brings problematic inflation under control, or investors believe that it soon will be, I do not foresee a sustained and meaningful stock market rally.  

History does support my "or" clause in the previous sentence. 

Inflation was still hot in August 1982 but was falling fast and the FED had already started to reduce to FF rate from its record high near 20% to around 10%. 

Federal Funds Effective Rate-St. Louis Fed

The forecasted transition to a bull market was not based on the then current recession or CPI (6.1% in 1982, down from 13.5% in 1980), but on the belief that the FED had killed the inflation bogeyman that was the dominant cause of long term bear markets in both bonds and stocks. 

Recession of 1981–82 | Federal Reserve History

Consumer Price Index, 1913- | Federal Reserve Bank of Minneapolis

A. Added 5 IVZ at $13.90: 

Quote: INVESCO Ltd.  (IVZ)

IVZ is a global investment management firm that offers mutual funds, CEFs, ETFs, Unit Trusts and wealth management. Fees are based on the total assets managed by the funds. During the second quarter, there was a net outflow. The total amount of fees collected will also fluctuate with changes in security prices.

IVZ SEC Filings

IVZ  Analyst Estimates | MarketWatch

Last Discussed: Item # 2.A. Restarted IVZ in Schwab Account- Bought 10 at $16.93; 5 at $16.25  (8/2/22 Post) I discussed the last earnings report in that post. 

Average Cost per share = $16  (20 shares)

Dividend: Quarterly at $.188 per share ($.752 annually) 

IVZ Dividend History | Nasdaq

Yield at AC = 4.7%

Last Ex Dividend: 8/22/22

Sell Discussions: Item # 1.E. Eliminated IVZ in Vanguard Taxable Account-Sold 10 at $18.91 (2/6/21 Post)(profit snapshot = $105.91); Item # 1.A. Sold 83+ at $17.3-Schwab Account and Item # 1.B. Sold 71+ IVZ in Fidelity Taxable Account  at $17.39 (1/1/21 Post)(profit snapshots = $330.88) Those sales eliminated my taxable account positions until I restarted the position in my Schwab taxable account in July 2022.  

B. Added 5 HRZN at $9.7-Schwab Taxable Account: 

Quote: Horizon Technology Finance Corp. (HZNC)- A BDC

HRZN SEC Filings

Investment Category: Monthly Income Generation

2021 Annual Report (risk factor summary starts at page 27 and ends at page 63)

10-Q for the Q/E 6/30/22 (summary of investments starts at page 7, debt discussed starting at page 38) 

Management: External

Website: Horizon Technology Finance

Last Discussed: Item # 2.B. Bought 20 HRZN at $11.84 in Schwab Taxable Account (6/9/22 Post) I discussed the 2022 first quarter report in that post. 

Price Impact of Last Public Stock Offering: The stock closed at $13.03 on 3/10/22 in response to this announcement at $13.03 and at $14.55 on 3/9/22. Horizon Technology Finance Corporation Prices Public Offering of Common Stock; Prospectus (public offering price at $14.35; underwriters discount at $.574 per share; net to HRZN at $13.776 per share before its expenses estimated at $150K) 

The reported net asset value per share was $11.68 as of 3/31/22.

I generally have a negative response to BDC stock offerings that are priced below net asset value per share.  

Average cost per share this account = $11.41 (25 shares)

Dividend: Monthly at $.10 per share.

HRZN Dividend History | Nasdaq

Yield at AC = 10.5171%

Last Ex Dividend: 10/17/22 

Net asset value per share history: 

I view this history as a negative. The performance starting in 2016 has resulted in relatively stable net asset values per share in the $11 to $12 range.  

 6/30/22:   $11.69

 3/31/22:    $11.68

12/31/21:    $11.56

12/31/20:   $11.02

 3/31/20:   $11.48 
12/31/19:    $11.83
12/31/18:    $11.64
12/31/17:    $11.72
12/31/16:    $12.09
12/31/15:    $13.85
12/31/14:    $14.36 10-K at page 54 
12/31/13:    $14.14
12/31/12:    $15.15
12/31/11:    $17.01

October 2010: IPO at $16, net of $14.88 to HRZN after underwriting discount: Prospectus 

Last Earnings Report (Q/E 6/30/22): SEC Filing 

NII per share at $.35

Annualized portfolio yield on debt investments: 14.2%

Held a portfolio of equity position or warrants in 90 companies

Company Assessment of Asset Quality:

Page 49, 10-Q 

HRZN estimates that it income will increase as interest rates go up but the final impact will depend on how many loans remain current as interest rates increase. 

Pages 63-64 10-Q 

The dynamics at play here are that a major funding source for loans is equity, some debt is at fixed rates, and the loan spreads to short term term interest rates are much higher than the variable rates paid on HRZN debt. 

C. Added 5 IDV at $22.52: 

Quote: IDV | iShares International Select Dividend ETF Overview 

YTD, the total return has been impacted by the infamous Double Whammy, as the USD surged in value against foreign currencies and stocks priced in those currencies plunged in value. 

Sponsor's website: iShares International Select Dividend ETF | IDV

Expense ratio = .49% 

Number of Holdings: 103 as of 10/13/22

Portfolio Characteristics: 

Last Discussed: Item # 3.F. Restarted IDV - Bought 10 at $25.79; 2 at $25.53; 3 at $25.08 (7/18/20 Post) 

Last Elimination: Item # 2.B. Eliminated IDV-Sold 21+ at $32.44 (12/14/19 Post)

Average cost per share:  $24.86 (20 shares)

Dividends: Quarterly at a variable rate. 

Last 4 Dividends per share: $1.93, rounded up. 

Yield at AC =  7.7635% (using last 4 quarterly payments)

Last Ex Dividend: 9/26/22

Top 10 Holdings as of 10/13/22: 

Of those stocks, I own and have been building a position in A.P. Moller Maersk

Goal: Any profit on the shares after harvesting the cash dividends.

D. Added to RTLPP-Bought 5 at $20.6; 5 at $19.6; 5 at $18.79: 

Quote: Necessity Retail REIT Inc. 7.5% Preferred Series A Stock

Issuer: Necessity Retail REIT Inc. (RTL)

I own the higher yielding common shares. 

Last Discussed: Item # 2.C. - Bought 5 RTLPP at $21.5 (6/28/22 Post)

Investment Category: Advantages and Disadvantages of Equity REIT Cumulative Equity Preferred Stocks, a subcategory of Equity REIT Common and Preferred Stock Basket Strategy

Average cost per share: $20.12 (20 shares)

Security:  Prospectus (May 2019) 

Par Value: $25

Yield at AC  =  9.32%   

Optional Redemption: At par + accrued dividends on or after 3/26/24. 

Maturity: None, potentially perpetual 

Placement in Capital Structure: Equity Preferred, senior only to common

Dividends: Paid Quarterly, Cumulative and non-Qualified.  

Stopper Clause: Yes, standard in that the company is prohibited from paying a common share cash dividend and deferring the preferred share dividend payment.  

Last Ex Dividend: 10/6/21 (owned 5 as of)

E. Added to HIW- Bought 2 at $27; 3 at $26.88; 1 at $25.66; 1 at $24.84-Schwab Taxable Account: 

Quote: Highwoods Properties Inc. (HIW)-Office REIT

HIW SEC Filings

Website: Highwoods

2021 Annual Report

Investment Category: Equity REIT Common and Preferred Stock Basket Strategy

Last Discussed: Item # 3.B. Bought in Schwab Taxable Account  5 HIW at $34.29; 5 at $33.4 (8/10/22 Post) I discussed the last earnings report in that post. HIW Announces-Second Quarter 2022 Results.pdf

Dividend: Quarterly at $.50 per share

HIW Dividend History | Nasdaq

I am reinvesting the dividend. 

Average cost per share: $30.96 (16+ shares)

Yield at AC = 6.46%

Last Ex Dividend: 8/19/22

Last Elimination: Item # 1.I. Eliminated HIW - Sold 7 at $47.22 (2/3/22 Post)

HIW Early Bond Redemption: Highwoods redeemed its 3.625% SU bonds on 10/17/22 that would have matured on 1/15/23. I owned 5 bonds.  

Fidelity Account 

Vanguard Account 

The last full six month payment was on 7/15/22.  

Profit Snapshots: +$40.55

As long as the issuer does not default, I will receive my original investment + a small profit on corporate bond buys.  

HIW SU debt is currently rated Baa2/BBB. 

The common stock at its current price or lower is more attractive to me than the bonds. The next SU bond maturing is in 2027, currently priced near a 6% YTM. Bond Detail

F. Added 5 ORCC at $10.94- Vanguard Taxable Account: 

Quote: Owl Rock Capital Corp. - A BDC

ORCC SEC Filings

Owl Rock Capital Corporation - Investor Relations

2021 Annual Report (risk summary discussion starts at page 30 and ends at page 64)

10-Q for the Q/E 6/30/22

Last Discussed: Item # 3.F. Added to ORCC in Fidelity Taxable Account - Bought 5 at $11.14(10/4/22 Post) I discussed the last earnings report in that post. SEC Filed Press Release

Item # 3. Added to ORCC in Fidelity Taxable Account - Bought 5 at $11.4 (10/4/22 Post)(discussed 2022 second quarter report in that post; SEC Filed Press Release) 

Item  L.-Bought 5 ORCC at $12.2 in Fidelity Taxable Account(6/22/22 Post)(discussed 2022 first quarter report) 

Average cost per share this account: $12.04 (30 shares)  

Dividend: Quarterly at $.31 per share  (regular only)

Yield at AC this account = 10.3%   

Maximum Position in this Account = 100 shares

Purchase Restriction: 10 or less shares with each subsequent purchase having to be at the lowest price in the chain. 

G. Added to DEA - Bought 5 at $15.12: 

Quote: Easterly Government Properties Inc.

DEA SEC Filings

Properties | Easterly Government Properties, Inc.

10-Q for the Q/E 6/30/22

Management: Internal

Investment Category: Equity REIT Common and Preferred Stock Basket Strategy/Bond Substitute

Last Discussed: Item # 3.B. Added to DEA - Bought 5 at $15.71 in Fidelity Taxable Account (10/4/22 Post) 

Last Substantive Discussion: Item # 3.E. Added to DEA in Fidelity Taxable Account - Bought 5 at $17.7  (9/6/22 Post) I discussed the last earnings report in that post. SEC Filed Press Release

Average cost per share this account: $19.39 (85 shares)

Dividend: Quarterly at $.265 per share ($1.06 annually)

DEA Dividend History | Nasdaq

I will reinvest the dividend starting with the next payment. 

Yield at AC = 5.4667%

Last Ex Dividend: 8/10/22

DEA Realized Gains to Date: $561.84. The largest gain was $272.6. Item # 1.A. Sold 21+ DEA at $28.81 (6/6/20 Post)

Purchase Restriction: 5 share lots with each subsequent purchase required to be at the lowest price in the chain. 

Maximum Position this Account: I will quit buying shares in this account, other than through dividend reinvestment, when I reach 100 shares. 

H. Added to PDM - Bought 5 at $9.63-Schwab Taxable Account:

Quote: Piedmont Office Realty Trust Inc. Cl A  (PDM)

Investment Category: Equity REIT Common and Preferred Stock Basket Strategy

Last Discussed: Item # 3.A. Added to PDM in Schwab Taxable Account-Bought 5 at $10.6; 5 at $10.2 (10/4/22 Post) 

Last Substantive Discussion: Item # 3.B. Added to PDM in Schwab Taxable - Bought 5 at $12.46 (8/30/22 Post) I discussed the last earnings report in that post. SEC Filing

Working my way up to 100 shares. 

Average cost per share = $12.32 (50+ shares)

Dividend: Quarterly at $.21 per share

I started to reinvest the dividend effective for the 2022 third quarter payment. 

Yield at AC = 6.818%

Last Ex Dividend: 8/25/22

Sell Discussions: Item # 1.A. Eliminated PDM in Schwab Account - Sold 5 at $18.71 and 34+ at $18 (12/31/21 Post)(profit snapshot = $235.88); Item # 2.H. Eliminated PDM- Sold 10 at $17.95 in Fidelity Account and 10 at $18.02 in Vanguard Taxable Account  (1/7/22 Post)(profit snapshots = $128.95)

Purchase Restriction: Each subsequent purchase will be limited to 10 shares or less and must be at the lowest price in the chain. The next purchase will most likely be 10 shares at less than $9.5. 

I. Added to HR - Bought 5 at $19.7; 5 at $19.31: 

Quote: Healthcare Realty Trust Inc. (HR)

HR SEC Filings 

Healthcare Realty Trust (HR) and Healthcare Trust of America (HTA) Announce Closing of Merger - Healthcare Realty This combination was completed on 7/22/22. I will wait to discuss earnings until I have a full quarter to review which will be the 2022 4th quarter. 

"As of the closing of the Healthcare Realty-Healthcare Trust of America merger on July 20, 2022, the Company was invested in over 700 real estate properties totaling more than 40 million square feet and provided leasing and property management services to over 30 million square feet nationwide."

HR acquired HTA in a reverse merger where Healthcare Trust of America (HTA) was the surviving entity. HTA then changed its name and symbol to Healthcare Realty Trust (HR), with the headquarters of the combined entity being at HR's domicile which is Nashville, Tennessee. 

Prior to the mergers completion, HTA paid out a $4.82 per share dividend. I owned 50 HTA shares and received a $241 cash payment: 

I suspect that all of that cash payment will be classified as a return of capital, reducing my HTA average cost per share. I also own a few shares of HR and those were exchanged on 1 for 1 basis for HTA shares.  

Last Discussed: Item # 2.A. Added to HR - Bought 5 at $26.5 (3/24/22 Post) 

Investment Category: Equity REIT Common and Preferred Stock Basket Strategy

AC per share without 2022 ROC Adjustment: $22.54 (75 shares) 

The average cost per share will be adjusted down in early 2023 when HR discloses the ROC component of the special distribution discussed above.  

I suspect that the entire distribution will be so characterized. 

If that proves correct, then my AC per share would be reduced to $19.32. 

Dividend: Quarterly at $.31 per share . The last HTA dividend was prorated to $.19 due to the merger.  SEC Filing 

Yield at Estimated Revised cost if $19.32 per share =  6.42%

Legacy HTA Sell Discussions: Item # 6. Pared HTA - Sold 20 at $31.8 (4/28/22 Post)(profit snapshot = $198.37); Item # 1.H. Sold 5 HTA at $31.61; 5 at $32.89 (11/11/21 Post)(profit snapshot = 96.87); Item # 3.B. Sold 10 HTA at $28.17; and 10 at $29.27 (7/18/20 Post)(profit snapshot = $118.58);  Item # 2.D. Eliminated HTA-Sold 30 at $32.51 (2/8/2020 Post)(profit snapshot = $178.02); Item # 1.A. Sold 10 HTA at $31.31 (1/29/20)(profit snapshot = $44.34); Item # 2.B. Sold 10 HTA at $30.81 (11/28/19 Post)(profit snapshot = $39.2); Item # 1.A. Sold 15 HTA at $28.57-Used Commission Free Trade (9/12/18 Post)(profit snapshot = $46.12); Item # 2 Sold 50 HTA at $26.25 Update For REIT Basket Strategy As Of 10/28/15 - South Gent | Seeking Alpha (profit snapshot = $124.1)

Legacy HR Sell Discussion: Item # 2 Sold 50 HR at $26.33 Update For REIT Basket Strategy As Of 10/19/15 - South Gent | Seeking Alpha (profit snapshot = $103.07/dividend harvest trade).

Realized Gains Legacy HTA and HR Shares = $859.81  (HTA = $756.54; HR = $103.27)

Profit snapshots provided in the blog may be increased by ROC adjustments to the cost basis made in following year. 

As previously discussed many times, both HTA and HR as separate REITs had the same problem. Over an extended period of time, both failed to meaningfully increase cash available for distribution (CAD) per share. (In Item # 1.H discussing legacy HTA; wherein I calculated the CAD per share in the 2021 3rd quarter at $.349; at $.377 in the 2020 third quarter and at $.344 in the 2016 3rd quarter or flat over a 5 year period. In Item # 2.A. discussing Legacy HR, I noted that the CAD per share was $.33 in the 2021 4th quarter and at $.31 in the 2012 4th quarter) 

Combining the two REITs into 1 mega MOB REIT does not solve that problem.  

I attribute the inability to meaningfully grow CAD to overpaying for MOBs.  

A 4% to 5.5% capitalization rate for MOBs may be arguably rational when the ten year treasury is below 2% and short term borrowing costs are at less than 1%. The acquisitions did not materially add to CAD per share even when interest rates were abnormally low, but arguably price appreciation in the real estate and an active disposition policy could rationally support the prices being paid, with some luck and good timing which is a selling to the greater fool strategy. 

In 2021, legacy HR acquired 44 buildings for $756M. The weighted average capitalization rate was 5.3%.  Healthcare Realty Trust Announces Full Year 2021 Acquisition and Disposition Activity  HR defines the capitalization rate for acquisitions to be the first year forecasted net operating income dividend by the purchase price. In Legacy HR's second quarter supplemental filing, it claimed a capitalization rate of 5.2% in 2022 through 8/1/22 and a 4.2% capitalization rate for dispositions.  

Interest rate costs have risen substantially in 2022 and may rise further, thereby undermining the semi-rational justification for purchases at low cap rates. And with the dive in equity prices, raising more capital near the current stock price to fund purchases is not prudent and probably dilutive IMO. 

 J. Added to CIZN  - Bought 5 at $14.63: 

Quote: Citizens Holding Co. (CIZN)

CIZN SEC Filings

Investment Category: Regional Bank Basket Strategy

Last Discussed: Item # 2.I. Bought 10 CIZN at $17.45 (8/16/22 Post) I discussed the second quarter earnings report in that post. 

Last Elimination: Item # 2.L. Eliminated CIZN -Sold 25 at $19.06 (4/7/22 Post)

Average cost per share: $16.51  (15 shares)

Dividend: Quarterly at $.24 per share ($.96 annually)

CIZN Dividend History | Nasdaq

Yield at AC = 5.8147%

Last Ex Dividend:  9/15/22 (owned 10 shares as of) 

CIZN Realized Gains to date: $435.89

K. Added to GDV- Bought 1 at $19.6: 

Quote: Gabelli Dividend & Income Trust Overview - A Stock CEF

GDV SEC Filings

Last SEC Filed Semiannual Report (period ending 6/30/22)

GDV-CEF Connect 

Leveraged: Yes, through preferred stock issues, see page 18. 

Sponsor's Website: GDV

Top 10 Holdings as of 9/29/22: 

Of the top 10 holdings, I currently have small ball positions in GPC, JPM and MDLZ. Expanding the comparison to the next 10 highest weightings, I have small ball positions in BK, PFE and VZ.  

Average cost per share this account: $20.33 (8+ shares)

Dividends: Monthly at $.11 per share. 

Managed Distribution Plan. 

Yield at AC per share: 6.49%

Next Ex Dividend: 11/14/22

Last Discussed: Item # 1.B. Restarted GDV - Bought 5 at $21 (1/23/21 Post) 

Investment Category: Monthly Income Generation

Gabelli Dividend & Income (GDV) Quote | Morningstar (currently rated 2 stars)

L. Added to VNO -Bought 1 at $22.12; 1 at $21.54; 3 at $21-Schwab Taxable Account: 

Quote: Vornado Realty Trust  (VNO)

VNO SEC Filings

Investment Category: Equity REIT Common and Preferred Stock Basket Strategy

Last Discussed: Item # 3.F. Bought 3 VNO at $25.6 (9/6/22 Post) 

Last Substantive Discussion: Item # 3.K. Bought 5 VNO at $28.43; 2 at $27-51- Schwab Taxable Account (8/10/22 Post). I discussed the last earnings report in that post. SEC Filed Press Release

Average cost per share: $24.85 (20 shares)

Dividend: Quarterly at $.53 per share 

VNO Dividend History | Nasdaq

I will be reinvesting the dividend starting with the next payment.   

Yield at AC = 8.53%

Last Ex Dividend: 8/5/22

M. Added to VZ in Schwab Taxable Account - Bought 1 at $38.65; 1 at $36.76; 1 at $35.73: 

The stock is still searching for a bottom IMO. 

Quote: Verizon Communications Inc.

VZ Analyst Estimates | MarketWatch

VZ SEC Filings

2021 Annual Report

10-Q for the Q/E 6/30/22 

Investment Category: Bond Substitute with some dividend growth 

Last Discussed: Item # 3.E. Bought 1 VZ at $49.93; 1 at $47.25; 1 at $45; 1 at $44 (7/27/22 Post) I discussed in that post the last earnings report and summarized what I viewed as Verizon's main problems as follows: 

"(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." 

The 5 year annual average total return (dividends reinvested) for VZ through last Friday was -1%. 

Average Cost per share this account: $47.13  (13+ shares)

Dividend: Quarterly at $.65 per share ($2.6 annually)

I am reinvesting the dividend. 

Yield at AC = 5.5167%

Last Ex Dividend: 10/6/22 (owned 11+ as of)

Maximum Position: 100 shares all accounts excluding shares purchased with dividends. 

Purchase restriction: 1 to 5 share lots with each subsequent purchase required to be at the lowest price in the chain. 

Goal: Total Return of > 2% on the shares + the dividends. 

N. Started O as a Placeholder- Bought 1 at $57.78; 1 at $55.83: 

Quote: Realty Income Corp. (O) - A Net Lease REIT.  

SEC Filings 

10-Q for the Q/E 6/30/22 (SU debt listed at page 18)

As of 6/30/22, Realty Income owned 11,426 properties with approximately 218.5M square feet of leasable space. Occupancy was at 98.6% with a weighted average lease term of approximately 8.8 years. (p. 32, 10-Q)  

Last Round-Trip: Item # 1. Eliminated Realty Income (O)- Sold 100 at $52.37Update For Equity REIT Basket Strategy As Of 1/21/16 | Seeking Alpha (profit snapshot = $1,579.50)- Item # 6 Bough 100 Realty Income (O) at $36.96 (12/10/13 Post) I took all of the dividend payments in cash. 

Investment Category: Equity REIT Common and Preferred Stock Basket Strategy

Average Cost per share: $56.81

Dividend: Monthly at $.248, last raised from $.2475 effective for the October 2022 payment.  

Realty Income Corporation Common Stock (O) Dividend History | Nasdaq

While this REIT frequently raises its dividend, the increases are inconsequential. The penny rate in the 2012 first quarter was $.144565, so maybe the rate will double in 15 or so years.  

Yield at AC = Currently at 5.24%.

Last Ex Dividend: 9/30/22

Last Bond Offering (10/22): Prospectus for $750M 5.625% SU Maturing in 2032 

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

For a triple net lease REIT, FFO and CAD will be close to one another since the tenants pay property operating expenses including property taxes, maintenance and insurance.  

FFO to AFFO

Net income to FFO calculation: 

2022 Guidance: AFFO per share of $3.84-$3.97

O.  Added to MDLZ - Bought 1 at $56.05: 

Quote: Mondelez International Inc. Cl A  (MDLZ)

MDLZ Analyst Estimates | MarketWatch

MDLZ Analyst Estimates | MarketWatch

MDLZ SEC Filings

Mondelez International History: Everything Investors Need to Know | The Motley Fool

MDLZ. Key Metrics | Reuters

MDLZ Profile | Reuters

Last Discussed: Item # 2.G. Bought 2 MDLZ at $58.31 (11/5/21 Post) 

Average cost per share = $57.55 (3 shares) 

Dividend: Quarterly at $.385 per share, last raised from $.35 effective for the 2022 third quarter payment. 

Yield at AC   =  2.68%, rounded up. 

Given the low dividend yield, I prefer buying the MDLZ SU bonds. I will buy up to 10 bonds. 

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

P. Added to VT - Bought 1 at $79.51: 

Quote: Vanguard Total World Stock ETF Overview 

Sponsor's Website: VT-Vanguard Total World Stock ETF 

Expense Ratio: .07%

Average cost per share = $87.85 (2 shares)

Investment Category: World Stock Diversification

VT –-Morningstar (currently rated 3 stars)

VT Performance –Morningstar (YTD Total Return through 10/14/22 at -25.71%)

Dividends: Quarterly at a variable rate

Last 4 Dividends: $2.04 per share, rounded down.  

Top 10 Ten Holdings as of 9/30/22: 

Maximum Position: 20 shares 

My last round trip was just 1 share: 

2021 VT 1 Share +$46.77  

Item # 1.L. Eliminated VT - Sold 1 Share at $106.76 (10/1/2021 Post)-Item 1.D. Bought 1 VT at $59.99 in my Fidelity Taxable Account (5/30/20 Post) 

Prior Elimination: Item # 3.D. Sold 5 VT at $79.01 (12/18/19 Post)(profit snapshot = $29.54)   

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.