Economy:
The U.S. Treasury Yield-Curve Recession Indicator Is Flashing Red | Morningstar
Fed's Bullard says rate hikes have had 'only limited effects' on inflation so far; Fed's Bullard suggests benchmark interest rate in 5%-7% range may be needed to bring inflation down-MarketWatch Bullard is currently a voting member. The Fed - Federal Open Market Committee
No one knows now how high the FED will take the FF rate. The lower end of that 5% to 7% range is likely.
An increase of at least 50 points next month is currently priced as a 100% certainty.
Bullards speech did increase the odds some that the FED will hike by 75 basis points:
 |
| As of 11/18/22 7:55 A.M. CT |
 |
| As of 11/22/22 7:16 A.M. CT (71.1% at +.5%; 28.9% at .75%) |
Total Household Debt Reaches $16.51 trillion in Q3 2022; Mortgage and Auto Loan Originations Decline - FEDERAL RESERVE BANK of NEW YORK ("Credit card balances also increased by $38 billion. The 15% year-over-year increase in credit card balances represents the largest in more than 20 years.")
Consumer Price Index, 1913- | Federal Reserve Bank of Minneapolis
Federal Funds Effective Rate-St. Louis Fed
Historical Prime Rate (currently at 7%)
++++
Allocation Shifts Discussed in this Post:
Investment Grade Corporate Bonds, Treasuries, CDs : +$32,000
Stocks: Net -$2,308.12
(consisting of $3,339.75 sale proceeds minus $1,031.63 in buys)
Realized Gains in Stocks: +$302.17
++++
Putin/Russia:
MH17 trial verdict: Dutch court finds two Russians, one Ukrainian separatist guilty Russia murdered 298 civilians when it fired a BUK missile from Russian controlled territory in eastern Ukraine. Evidence proved that the missile system was then moved back into Russia. Putin has not yet given a medal to those who shot down that passenger jet.
The Russian pilot who shot down Korean Air Lines Flight 007 knew that the plane was a Boeing passenger jet, as he later admitted. In that attack, Russia murdered 269 passengers including 22 children under the age of 12. The order to shoot down that civilian airplane was given by Anatoly Kornukov who did not care whether the plane was carrying civilians. The order was given shortly before the passenger jet returned to international airspace. Kornukov: "Oh (obscenities) How long [does it take him] to go to attack position, he is already getting out into neutral waters. Engage after burner immediately. Bring in the MiG 23 as well. while you are wasting time, it will fly right out." The plane was flying over international waters when the Russians destroyed it.
Russia initially denied any involvement, as one would expect, but only admitted its responsibility, a rarity for atrocities routinely committed by that nation, only after the U.S. presented incontrovertible proof, including radio intercepts.
Swedish Prosecutor Confirms Nord Stream Blasts Were Sabotage; Sweden says Nord Stream pipeline sabotaged, finds traces of explosives - The Washington Post Sweden found traces of explosives on debris. The only country with a motive for this sabotage is Russia.
Russia has been deliberately destroying energy and water infrastructure in Ukraine for several weeks as part of its terrorist campaign against civilians. Russian attacks on energy infrastructure leaves Ukraine in dark as winter approaches | PBS NewsHour; Russia targets Ukraine energy and water infrastructure in missile attacks | Ukraine | The Guardian; Russia strikes Ukraine energy infrastructure in new wave of attacks | The Hill
Unable to beat the Ukrainian army, does Russia really want to take on the U.S. and its Nato allies?
Is Dmitry Anatolyevich Medvedev an idiot or he is just trying to appeal to idiots? The response of Western leaders to a Russian made missile falling in Poland was exceedingly restrained. The Polish President did not accuse Russia of firing the missile, and no one claimed that the attack which killed 2 Polish farmers was intentional.
Maybe, someday, there will be a Russian investigation into how Dmitry became so rich on a government salary. Don't call him "Dimon" - YouTube
General Assembly adopts resolution on Russian reparations for Ukraine- UN News (94 countries voted for the resolution, while 14 voted no including Russia's most important ally China)
At G-20, China objects to calling Russia’s invasion of Ukraine a ‘war’ - The Washington Post
Angry families say Russian conscripts thrown to front line unprepared - The Washington Post For Putin and his kleptocrats, those conscripts are just canon fodder. Conditions will get far worse for them during the winter.
Russian TV Host Vladimir Solovyov Calls for Nuclear Strike in Ukraine
++++
Trump and His Party:
I managed to watch about 5 minutes of Trump's speech announcing his candidacy, but had to turn the channel before nausea overwhelmed me. He looked listless.
Fact check: 20 false and misleading claims Trump made in his announcement speech
Fact Checking Trump's Presidential Bid Announcement - FactCheck.org
Fact-checking 19 claims from Trump's speech announcing his 2024 run - The Washington Post
'Very unfair!' Trump melts down over exposure of tax avoidance schemes in Manhattan trial
Trump lashes out at special prosecutor announcement, says he will not 'partake' - POLITICO Trump said he has "proven to be one of the most honest and innocent people in our country." Attorney General Garland names special counsel in Trump Mar-a-Lago and Jan. 6 probes - ABC News Proof of Trump's honesty can be found here: Trump’s false or misleading claims total 30,573 over 4 years - The Washington Post
Fact check: Trump responds to special counsel news with debunked claim about Obama and the Bushes; Fact check: National Archives debunks Trump's false claim about Bush documents
Trump White House Blocked Dozens of New Government Websites (including those providing voting information, fighting human trafficking, and stopping fraud)
Democracy’s Dunkirk - The Atlantic
Ron DeSantis thinks Trump is 'f***ing nuts' and has 'no business' running in 2024: Report | Daily Mail Online; Psychoanalyst: Trump Is “Delusional Psychopath” Who Needs To Be Removed Immediately-YouTube'; The 'Shared Psychosis' of Donald Trump and His Loyalists - Scientific American Isn't it obvious?
At least we know now what the priorities are for the republicans in the House: impeach Biden and others including the AG; investigate Hunter Biden; cause a U.S. debt default unless the democrats agree to GOP spending cuts; and stop all investigations into Trump. House Republicans plan investigations and possible impeachments with new majority Pursuit of those objectives will simply contribute to republican House losses in 2024, particularly in those congressional districts that the GOP managed to flip in 2022. The Senate map in 2024 favors the republicans.
Gerrymandering in Florida by the anti-democracy party has led to republican gains in the Houses. How DeSantis Remade Florida's Congressional Districts — ProPublica
AZ Election Official Hiding Over Threats, Kari Lake Refuses to Concede
Trump: 'Jewish People Don't Appreciate Israel' In TrumpWorld, the only way for Jews to appreciate Israel is to kiss the ground that Trump walks upon while chanting over and over again "I will vote for the Extremely Stable Genius in 2024".
+++
1. Investment Grade Corporate Bonds: +$16,000
November Treasury Yield Curve Data:
November TIP Real Yield Data:
A. Bought 2 Essex Portfolio LP 3.875% SU Maturing on 5/1/24 at a Total Cost of 97.912:
%203.875%25%205:1:24.png){kind=small}
Issuer: Operating entity for Essex Property Trust Inc. (ESS)
ESS SEC Filed Earnings Report for the Q/E 9/30/22
Finra Page: Bond Detail (prospectus linked)
Credit Ratings: Baa1/BBB+
YTM at Total Cost = 5.312%
Current Yield at TC = 3.9576%
B. Bought 2 Canadian Natural Resources 3.8% SU Maturing on 4/15/24 at a Total Cost of 97.816:
%203.8%25%204:15:24.png)
Finra Page: Bond Detail (prospectus linked)
Credit Ratings: Baa1/BBB-
Canadian Natural Resources - Credit Ratings
YTM at Total Cost = 5.348%
Current Yield at TC = 3.8848%
C. Bought 1 Ventas LP 3.5% SU Maturing on 2/1/25 at a Total Cost of 94.975:
%202:1:2025%203.5%25%20.png)
Issuer: Operating entity for Ventas Inc. (VTR) who guarantees the note.
VTR SEC Filed Earnings Report for the Q/E 9/30/22
Finra Page: Bond Detail (prospectus linked)
Credit Ratings: Baa1/BBB+
YTM at Total Cost = 5.895%
Current Yield at TC = 3.6852%
My first round-trip for this bond was in 2017:
%202025%20+$39.3.jpg){kind=small} |
| 2 Bonds +$39.3 |
I next sold this bond at 104.9658 in 2019.
%20+$72.99%20.png){kind=small} |
| 1 Bond +$72.99 |
Overall I have so far been successful trading Ventas bonds.
Success is defined as a profit + the coupon.
Other 2019 Transactions: Total 2019 at +$344.53
%202020%20+$8.74%20RI.png){kind=small}
%20+$19.64.png){kind=small}
%20+$39.86.png)
%20+$38.67.png)
%20+$90.62.png){kind=small}
%202020%20+$10.97.png){kind=small}
%202022%20$4.74%20RI%20.png)
%202026%20+$58.3.png){kind=small}
2020-2021: +$295.42
%202026%20+$136.95.png){kind=small}
%20+$113%20.png){kind=small}
VTR Bond Trading To Date = $679.25
D. Bought 2 Kinder Morgan Energy Partners 4.25% SU Maturing on 9/1/24 at a Total Cost of 97.725:
%209:1:24%204.25%25%20.png)
Issuer: Kinder Morgan Inc. (KMI) through its acquisition of Kinder Morgan Energy Partners.
I own the common stock.
KMI SEC Filed Earnings Press Release for the Q/E 9/30/22
FINRA Page: Bond Detail (prospectus linked)
Credit Ratings: Baa2/BBB
YTM at Total Cost = 5.556%
Current Yield at TC = 4.3489%
E. Bought 2 HCA 5% SU Maturing on 3/15/24 at a Total Cost of 99.314:
%205%25%203:15:24.png)
Issuer: HCA Healthcare Inc. (HCA)
HCA Analyst Estimates | MarketWatch
HCA SEC Filed Earnings Press Release for the Q/E 9/30/22
Finra Page: Bond Detail (prospectus linked)
Credit Ratings: Baa3/BBB-
YTM at Total Cost = 5.515%
Current Yield at TC = 5.0345%
F. Bought 1 Public Service Electric & Gas 3.75% First Mortgage Bond Maturing on 3/15/24 at a Total Cost of 98.375:
%203.75%25%203:15:24%20.png)
Issuer: Wholly owned subsidiary of the utility holding company Public Service Enterprise Group Inc. (PEG)
PEG SEC Filed Earnings Press Release for the Q/E 9/30/22
FINRA Page: Bond Detail (prospectus linked)
Credit Ratings: A1/A
Security: First Mortgage Bond.
YTM at Total Cost = 4.975%
Current Yield at TC = 3.81%
G. Bought 2 Ares Capital 4.2% SU Maturing on 6/10/24 at a Total Cost of 96.653:
%204.2%25%206:10:24.png)
Issuer: Ares Capital Corp. (ARCC)
I own a few common shares of this BDC.
SEC Filed Earnings Press Release for the Q/E 9/30/22
FINRA Page: Bond Detail (prospectus not linked)
Credit Ratings: Baa3/BBB-
YTM at Total Cost = 6.405%
Current Yield at TC = 4.3454%
I now own 4.
H. Bought 2 Williams Partners 4.5% SU Maturing on 11/15/23 at a Total Cost of 99.363:
%2011:15:23%204.5%25.png)
Issuer: Williams Cos. (WMB) acquired Williams Partners LP in 2018. Williams Completes Acquisition of Williams Partners
I own the common stock.
WMB SEC Filed Earnings Press Release for the Q/E 9/30/22
FINRA Page: Bond Detail (prospectus linked)
Credit Ratings: Baa2/BBB
YTM at Total Cost = 5.13%
Current Yield at TC = 4.53%
I. Bought 1 Citigroup 5.5% SU Maturing on 11/16/23 at Par Value - Fidelity Corporate Notes Program:
%205.5%25%2011:16:23%20.png){kind=small}
Purchased on 11/14/22. Discussed out of time order.
Interest paid monthly.
2. CD Purchases-FDIC Insured: +$6,000
A. Bought 2 Live Oak 4.85% CDs Maturing on 5/24/24:
.png){kind=small}
Interest Paid Monthly.
B. Bought 1 Ally Bank 5.1% CD Maturing on 11/17/25:
Interest Paid Semi-Annually.
C. Bought 1 UBS Bank 4.8% CD Maturing on 5/16/24:
Interest Paid Monthly
D. Bought 2 Morgan Stanley Bank 5% CD Maturing on 11/15/25:
Interest Paid Monthly.
3. Treasuries-Auction Purchases in Schwab Account: +$10,000
The Schwab sweep fund currently pays .4%. I am running a low balance in that fund, with purchasing T Bills at auction as my preferred alternative to keeping funds in that low yielding sweep fund.
A. Bought 5 Treasury Bills at 11/21/22 Auction:
%205:25:23.png){kind=small}
181 Day Bill
Purchased at 97.7274
Matures on 5/25/23
Investment Rate: 4.689%
I have received two postcards from my bank over the past week offering me a deal on a 6 month CD at 3%.
B. Bought 5 Treasury Bills at 11/21/22 Auction:
%202:23:23%20.png){kind=small}
90 Day Bill
Matures on 2/23/23
Purchased at 98.935
Investment Rate: 4.324%
A. Eliminated HOLX - Sold 21+ at $75.69:
Quote: Hologic Inc.
HOLX Analyst Estimates | MarketWatch
Annual Report for the F/Y Ending 9/24/22
Website: Hologic: Breakthrough Diagnostic & Medical Imaging Solutions
Profit Snapshot: Net at +$40.54
Some lots were sold at a loss.
Last Discussed: Item # 2.B. Sold 9 HOLX at $78.52; 7 at $78.64(6/1/22 Post)(profit snapshots = $90.22) As discussed in that post, HOLX used the bonanza from its Covid testing business to buy several companies.
Dividend: None and none expected.
Last Earnings Report (4th F/Q ending 9/24/22): SEC Filed Press Release
Revenue from Covid testing has been falling for several quarters.
Net income for the 2022 fiscal year was reported at $1.302B or $5.13 per diluted share, down from $1.8715B or $7.21 per share in the 2021 fiscal year.
GAAP E.P.S. for the 4th F/Q: $.47, down from $1.28 in the 2021 fiscal 4th quarter.
Non-GAAP E.P.S. for the 4th F/Q = $.82, down from $1.61.
Consensus non-GAAP = $.63 per Schwab
The market responded favorably to this report even though the Y-O-Y comparisons were negative.
GAAP to Non-GAAP Reconciliation: Footnotes omitted in snapshot
"Revenue of $953.3 million decreased (27.6%) for the quarter, or (25.6%) in constant currency, primarily driven by lower sales of COVID-19 assays and supply chain challenges related to semiconductor chips in our Breast Health business compared to the prior year period. Revenue, however, was significantly higher than the Company’s guidance of $840 to $870 million provided last quarter."
"Molecular Diagnostics revenue declined (43.2%), or (41.3%) in constant currency, primarily driven by lower sales of COVID-19 assays compared to the prior year period."
"Excluding COVID-19 revenues, Molecular Diagnostics revenue grew 17.2% on an organic, constant currency basis."
Revenue Breakdown:
I no longer have a position in HOLX. I will consider restarting a position at less than $60, provided revenues from the non-COVID testing business are growing at a meaningful rate. Since HOLX does not pay a dividend, I will keep the position small when and if I restart a position.
Analyst Reports (available to Schwab customers):
Morningstar (11/1/22): 3 stars with a Fair Value of $70, narrow economic moat
S&P (11/16/22): 4 stars with a 12 month PT of $85. Analyst expects revenues to decline 21.5% in fiscal 2023 compared to fiscal 2022.
Argus (8/30/22): Buy with a $95 PT.
Based on near term future profits and revenues, I would go with the Morningstar analyst's FV estimate rather than the PTs of S & P and Argus. That could change with Covid testing revenues restarting a major uptrend. which is possible, but there is no reason now to factor that possibility into a pricing/valuation decision.
B. Eliminated ETSY in Fidelity Account - Sold 6+ at $118.81:
Quote: Etsy Inc. (ETSY)
ETSY Analyst Estimates | MarketWatch
Profit Snapshot: Net of $56.7
Some lots were sold at a loss.
Last Discussed: Item #2.M. Added to ETSY with $50 buys at $84.29; $77.68 and $70.58 (5/26/22 Post); Item # 4.D. Added to ETSY - Bought $50 at $107.7; $50 at $97.8 (5/5/22 Post)
Last Sell Discussion: Item # 1.B. Sold 1 ETSY at $213.2 (9/24/21 Post)
Dividend: None and none expected
Last Earnings Report (Q/E 9/30/22): SEC Filed Press Release
ETSY reported a GAAP loss of $963.1M or $7.62 per share due to a non-cash impairment charge of $1B ($8.2 per share) on its 2021 purchases of Elo7 and Depop.
Unlike many other investors, I am not willing to dismiss that impairment charge since it constitutes an admission that ETSY overpaid for those acquisitions. The CEO claimed that the timing of those acquisitions could have been better. You don't say. The CEO is paid a lot of money to prudently deploy shareholder capital.
Broker Reports (available to Schwab customers):
Morningstar (11/3/22): 4 stars with a FV of $170, with a wide moat
S&P (10/10/22): 3 stars with a 12 month PT of $106, lowered from $115.
Argus (11/4/22): Hold
Repurchase: I will reconsider starting a small ball purchase "program" when and if the price sinks below $70. The price last fell below $70 on 6/17/22.
C. Eliminated IVZ - Sold 20 at $19.5:
Quote: INVESCO Ltd. (IVZ)
IVZ Analyst Estimates | MarketWatch
IVZ Analyst Estimates | MarketWatch
Last Discussed: Item Item # 5.A. Added 5 IVZ at $13.9 (10/18/22 Post); Item # 2.A. Restarted IVZ in Schwab Account- Bought 10 at $16.93; 5 at $16.25 (8/2/22 Post)
The stock price improved since my last purchase based primarily on the recent stock market rally and the rise in short term interest rates which ended the need to grant fee waivers for managed MM funds.
IVZ earnings are generally dependent on 3 factors: (1) the total assets under management (AUM); (2) the prices of those assets and (3) fee waivers. If prices crater, as they did in 2008, March 2020 and earlier this year, IVZ earnings will take a hit.
Profit Snapshot: +$69.66
Last Ex Dividend: 11/9/22 (owned as of)
Last Earnings Report (Q/E 9/30/22): SEC Filing
GAAP E.P.S. = $.34, up from $.26 in the 2022 second quarter, but down from $.71 in the 2021 third quarter
Non-GAAP E.P.S. = $.34, down from $.39 in the 2022 second quarter and $.77 in the 2021 third quarter.
Non-GAAP Consensus E.P.S. = $.41 per Schwab
"$1,323.3 billion in ending AUM, a decrease of 4.8% from the prior quarter"
"$7.7 billion of net long-term outflows, but showing resilience in key capability areas with net long-term inflows of $3.7 billion from active fixed income, $3.9 billion from our institutional channel, and $2.1 billion from our China joint venture"
Other Sell Discussions: Item # 1.E. Eliminated IVZ in Vanguard Taxable Account - Sold 10 at $18.91 (2/5/21 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.
Analyst Reports (available to Schwab customers):
Morningstar (10/25/22): In response to the earnings report, the analyst kept the 3 star rating but lower the fair value estimate to $17 per share from $19.
S&P (10/26/22): 3 stars with a 12 month PT of $16, trimmed $2 in response to the earnings report.
Argus (10/27/22): Buy, but reduced PT to $21 from $24.
For now, I decided to own a 4% Invesco Finance SU bond maturing on 1/30/24, whose purchase will be discussed in the next post, rather than IVZ.
I will consider repurchasing IVZ at less than $14.
D. Sold 2 SU at $35.8-Schwab Taxable Account:
Quotes:
USDs: Suncor Energy Inc. (SU)
CADs: Suncor Energy Inc. (Canada: Toronto)
Canadian Dollar to US Dollar Exchange Rate Chart | Xe
Website: Suncor
SEC Filings (foreign company forms)
Profit Snapshot: +$25.05
Average Cost per share after pare this account: $20.52 (10 shares)
The share price cratered in 2020 in response to a dividend cut and a crash in energy prices caused by the pandemic.
I believe that the WTI crude oil price peaked in early June 2022. Oil Price Charts | Oilprice.com
Remaining Lot Details this account:
 |
| Price as of 11/10/22 Close |
Dividend: Quarterly at C$.52 per share (C$2.08 annually), last raised from C$.47 effective for the 2022 4th quarter payment.
Dividends – Stock Information | Suncor
Historical Dividends in USDs: Suncor Energy Inc. (SU) Dividend History | Seeking Alpha
Yield: Will depend on the CAD/USD conversion rate. At a .75 CAD/USD, the yield would be 7.6% at US20.52.
Next Ex Dividend Date: 12/1/22
Last Discussed: Item # 6.E. Pared SU - Sold 4 at $33.13 in Fidelity Taxable Account (11/1/22 Post)(profit snapshot +$43.97).
Last Buy Discussion: Item # 2.K. Added to SU in Vanguard Taxable Account-Bought 2 SU at $20.93 (5/8/21 Post)
Last Earnings Report (Q/E 9/30/22): SEC Filed Press Release
All amounts are in Canadian Dollars.
SU reported a net loss of $609M after a "a non-cash impairment of $3.397 billion against the company’s share of the Fort Hills assets, a $723 million unrealized foreign exchange loss on the revaluation of U.S. dollar denominated debt recorded in financing expenses, the recognition of $147 million of insurance proceeds related to the company’s assets in Libya recorded in other income (loss), a $65 million foreign exchange loss related to the sale of the company’s share of its E&P assets in Norway, a $7 million unrealized gain on risk management activities recorded in other income (loss) and an $857 million income tax recovery related to the items noted."
The Fort Hills asset impairment resulted from SU acquiring an additional 21.3% interest in this project for C$1B last month. That set a new value for this project that required the noncash asset impairment charge. This acquisition brought SU's interest to 75.4% with Total owning the remainder. Suncor Energy to acquire additional working interest in Fort Hills Project.pdf
Operating Earnings per share = $1.88
Adjusted funds from operations per share = $3.28, up from $1.79 in the 2021 third quarter
Free Cash Flow: $3.094B
Gross Revenues Net of Royalties: $6.706B, up from $4.473B in the 2021 third quarter (page 17 supplemental)
Other Sell Discussions: Item # 2.H. Pared SU in Fidelity Taxable Account - Sold Highest Cost 10 Shares at $40.1 and 7 at $40.6 (6/9/22 Post)(profit snapshot = $237.35); Item # 2.E. Pared SU in Fidelity Taxable Account - Sold 10 at $36.77 (5/12/22 Post)(profit snapshot = $72.19); Item # 2 Sold 50 SU at $40.95 - Elimination (8/16/14 Post)(profit snapshot = $598.08)
E. Pared COLB in Schwab Account - Sold 5 at $34.32:
Quote: Columbia Banking System Inc.
COLB Analyst Estimates | MarketWatch
This was my highest cost lot in this account.
Investment Category: Regional Bank Basket Strategy
Profit Snapshot: $6.6
Last Discussed: Item # 2.G. Added to COLB - Bought 5 at $28.9; 5 at 27.98- Fidelity Account (5/12/22 Post)
Average cost per share this account: $28.63 (10+ shares)
Dividend: Quarterly at $.30 per share
Yield at New AC this account: 4.19%
Last Ex Dividend: 10/14/22
Last Earnings Report (Q/E 9/30/22): SEC Filing
Comparisons are to the 2021 third quarter.
E.P.S. = $.83, up from $.74
NIM = 3.47%, up from 3.17%
Efficiency Ratio: 52.84%, down from 56.67%
NPL Ratio = .12%, down from .22%
ROA: 1.26%, up from 1.16%
ROE: 11.44%, up from 8.97%
ROTE: 18.81%, up from 13.82%
COLB is in the process of acquiring Umpqua Holdings.
F. Pared REYN in Fidelity Taxable Account -Sold 3+ at at $30.91:
The lots were the highest cost one that could be sold profitably. I sold on the ex dividend date.
Quote: Reynolds Consumer Products Inc. (REYN)
REYN Analyst Estimates | MarketWatch
I discussed the reasons for paring this position in my last post, where I summarized the less than stellar third quarter earnings report. Item # 6.E. Pared REYN in Schwab Taxable Account - Sold 2 at $31.28 (11/15/22 Post); SEC Filed Earnings Press Release for the Q/E 9/30/22
Profit Snapshot: +$6.01
Average cost per share this account after pare: $28.74 (31+ shares)
 |
| Snapshot Intraday on 11/15/22 after pare |
Dividend: Quarterly at $.23 per share ($.92 annually)
REYN Dividend History | Nasdaq
I am not anticipating a dividend increase.
Yield at $28.74 AC = 3.2%
Last Ex Dividend: 11/15/22 (owned all as of)
Last Buy Discussion: Item # 2.M. Added to REYN in Vanguard Taxable Account - Bought 2 at $26.78 (6/9/22 Post)
G. Eliminated REYN in Vanguard Account - Sold 18 at $31.25:
See Item # 4.F. above.
Profit Snapshot: Net of +$40.26
Some shares were sold at a loss.
H. Sold 1 GTY at $33.11 - Schwab Taxable Account:
Quote: Getty Realty Corp.
Website: Getty Realty
SEC Filed Investor Presentation: 10/26/22
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
I discussed the last earnings report in this post. Item # 6.I. Pared GTY in my Fidelity Taxable Account - Sold Highest Cost 5 Share Lot at $30.89 (11/8/22 Post); SEC Filed Press Release
Profit Snapshot: +$5.79
New AC per share after pare: $26.87 (5 shares)
Dividend: Quarterly at $.43 per share ($1.72 annually)
Getty Realty Corp. Announces Increased Quarterly Cash Dividend
Getty Realty Corp. (GTY) Dividend History | Seeking Alpha
Yield at $26.87 AC this account: 6.4%
I. Eliminated OHI in Schwab Account - Sold 3 at $31.17:
Quote: Omega Healthcare Investors Inc. (OHI)- Nursing Home and Senior Living REIT
I view nursing home REITs to be riskiest property sector. Operators frequently go bankrupt, or require rent concessions or loans from the owner to remain viable.
2021 Annual Report Debt discussion starts at page F-44.
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Profit Snapshot: +$9.55
Last Discussed: Item # 3.J. Pared OHI in Fidelity Taxable Account - Sold Highest Cost 6 Shares at $33.11 (8/16/22 Post)(discussed second quarter report) This reduced my AC per share in that account to $28.44.
In my recent discussions, I have expressed concerns about FAD dividend coverage for the quarterly dividend given the ongoing problems with several tenants paying rent. Those issues are discussed in the recent earnings press release for the third quarter:
Last Buy Discussions: Item # 2.C. Bought 1 OHI at $26.83; 1 at $26.48; 1 at $25.47 (5/12/22 Post)(discussed first quarter report); Item # 2.D. Added to OHI - Bought 2 at $28.57; 2 at $28.1 (12/10/21 Post)
Dividend: Quarterly at $.67 per share ($2.68 annually)
Dividends – Omega Healthcare Investors, Inc.
Last Ex Dividend:
Last Earnings Report (Q/E 9/30/22): SEC Filed Earnings Press Release
FFO per share = $.65, down from $.73 in the 2021 third quarter
Funds Available for Distribution: $172.555M, down from $198.791.
FAD per share: $.709, down from $.806
For a REIT that owns nursing homes and the inevitable issues with operators paying rent, I do not view the cushion between the quarterly FAD per share and the quarterly dividend to be adequate.
Largest Realized Gain to Date: 101+ shares at $887.91
Second Largest Gain to Date: Item #5.A. Sold 107 OHI at $34.55 (7/15/17 Post)(profit snapshot = $211.51)
Other Gains Exceeding $100: Item # 3.C. Eliminated OHI-Sold 26 at $31.44 (6/25/21 Post); Item # 6 Sold 100 OHI at $37.38 - Update For Equity REIT Basket Strategy As Of 8/27/16 - South Gent | Seeking Alpha
The remaining realized gains are less than $100.
J. Eliminated MAC - Sold 10 at $13.09:
Quote: Macerich Co.- A Mall REIT
The pandemic only accelerated the decline in Mall REITs. Macerich does own several Class A malls.
Investor Information | Macerich
Profit Snapshot: $42.01
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Last Discussed: Item # 5.F. Bought 10 MAC at $8.89 (7/6/22 Post)
Last Round-Trip: Item # 2.I. Sold 10 MAC at $15.67 (9/10/21 Post)(profit snapshot = $38.47)
Dividend: Quarterly at $.15 per share, slashed from $.70 per share to $.01 effective for the 2020 second quarter payment.
Macerich Declares Quarterly Dividend
Last Ex Dividend: 11/8/22, owned as of
Last Earnings Report (Q/E 9/30/22): SEC Filed Report
Portfolio occupancy at 92.1%.
Mortgage Debt: $4.259+B
I did not see FAD numbers in this report.
Debt is discussed starting at page 20
Analyst Reports available to Schwab customers:
Morningstar (11/4/22): 5 stars with a $27.5 FV and no moat.
S&P (11/7/22): 3 stars with a 12 month PT of $12
5. Small Ball Buys:
A. Added to MATV - Bought 5 at $19.3; 5 at $18.55- Fidelity Taxable Account:
Quote: Mativ Holdings Inc. (MATV)
MATV Analyst Estimates | MarketWatch (As of 11/16/22, the consensus 2023 E.P.S. was $3.44, up from $3.11 this year)
Mativ was created through the July 2022 combination of Schweitzer-Mauduit International and Neenah Papers. SWM and Neenah Complete Merger to Become Mativ, a ~$3 Billion Global Leader in Specialty Materials
Average cost per share this account: $21.37 (45 shares)
At a 2023 E.P.S. of $3.44, the P/E at the $21.37 AC per share is 6.21.
Dividend: Quarterly at $.40
Yield at AC this account = 7.487%
Next Ex Dividend: 11/23/22
Last Earnings Report (Q/E 9/30/22): SEC Filed Press Release
Investors reacted negatively to this report which gave me an opportunity to average down.
GAAP E.P.S. = ($.43), includes "significant expenses related to the Neenah merger closing and integration".
Non-GAAP E.P.S. = $.74
Consensus Non-GAAP: $.81 per Schwab
GAAP to Non-GAAP Reconciliation: Major Items
"Sales increased 76% to $674.1 million with 12% constant currency organic sales growth, or 7% organic growth including negative currency impacts; strong sales growth in release liners, protective solutions, filtration, and paper and specialty packaging led the portfolio"
Schwab Account Position: 18 shares with a $20.74 AC per share
Maximum Position All Accounts: 200 shares
B. Added to KIO - Bought 2 at $11.38:
Quote: KKR Income Opportunities Fund Overview- A CEF
Last SEC Filed Shareholder Report: Semiannual period ending 4/30/22
Sponsor's Website: KIO | KKR Funds
Leveraged: Yes, high at 43.27% as of 11/15/22
Risk Assessment - Very High due to credit quality and leverage.
Credit Quality Owned Securities as of 9/30/22: Junk Rated Securities
Investment Category: Monthly Income Generation
Average cost per share: $13.75 (45+ shares)
Dividend: Monthly at $.105 per share
I am currently reinvesting the dividend.
Yield at AC = 9.16%
Last Ex Dividend: 11/9/22
Data Date of 11/11/22 Purchase:
Closing Net Asset Value per share: $12.53
Closing Market Price: $11.35
Discount: -9.42%
Sourced: KIO - CEF Connect (Click "Pricing Information" Tab)
C. Started CIZN in Fidelity Account- Bought 10 at $14.1:
Quote: Citizens Holding Co. (CIZN)
"Citizens Holding Company (the “Company”) is a one-bank holding company and the parent company of The Citizens Bank of Philadelphia (the “Bank”), both headquartered in Philadelphia, Mississippi. The Bank currently has twenty-eight banking locations in fourteen counties in East Central, North, and South Mississippi." The bank owns all of those buildings except for two branches. 2021 Annual Report at pages 25-26.
The market capitalization at $14.1 is about $79M. There are no analyst estimates. For the first 9 months, E.P.S. was reported at $1.28, up from $1.02 in the 2021 comparable period.
Investment Category: Regional Bank Basket Strategy
Dividend: Quarterly at $.24 per share ($.96 annually)
CIZN Dividend History | Nasdaq
Yield at $14.1: 6.81%
Last Earnings Report (Q/E 9/30/22): SEC Filed Press Release This release provides inadequate information which is generally the case for really small bank holding companies.
E.P.S. = $.46, up from $.34
Charge off ratio: Net Recovery of $75K
Other Financial Metrics Presented as YTD rather than Quarterly:
 |
| Page 33 10-Q |
Last Elimination: Item # 2.L. Eliminated CIZN -Sold 25 at $19.06 (4/7/22 Post)(profit snapshot $16.12)
CIZN Realized Gains to Date: $435.89
Almost all the total gain was realized in 2011 and 2015.
Overall, this stock would have been a disastrous long term hold. The 2011 sale was at $20.56. Item # 4 Sold 100 CIZN at $20.56 (3/2/11 Post) The 2015 sale was at $22.5. Sold 50 CIZN at $22.5 Update On Regional Bank Basket Strategy As Of 7/17/15 - South Gent | Seeking Alpha (mentioned in text)
D. Restarted FTS - Bought 5 at $39.88:
Quotes:
USDs: Fortis Inc.
CADs: Fortis Inc. (Canada: Toronto)
Canadian Dollar to US Dollar Exchange Rate Chart | Xe
Website: Fortis
"Fortis is a well-diversified leader in the North American regulated electric and gas utility industry with 2021 revenue of $9.4 billion and total assets of $64 billion as at September 30, 2022. The Corporation's 9,100 employees serve utility customers in five Canadian provinces, nine U.S. states and three Caribbean countries."
FTS SEC Filings (SEC for foreign company)
Last Elimination: Item # 2.J. Eliminated FTS - Sold 10 at $45.16 (3/10/22 Post)(profit snapshot = $61.85). I noted in that post that my consider to repurchase price was below $40. My concern expressed in that post, which motivated the elimination, was that interest rates would rise faster than currently expected.
Last Buy Discussions: Item # 1.K. Added to FTS-Bought 5 at $39.25; 5 at $38.71 (3/13/21 Post); Item # 3.A. Started FTS-Bought 5 at $40.25 (1/30/21 Post) Those shares have been sold.
Dividend: Quarterly at C$.565 per share (C$2.26 annually), last raised from C$.535 effective for the 2022 4th quarter payment. Canada will withhold a 15% tax when the dividend is paid into a U.S. citizens taxable account.
Yield at $39.88: Depends on the CAD/USD exchange rate. If I assumed a .75 CAD/USD exchange rate, the yield would be about 4.25% at US$39.88.
Last Ex Dividend: 11/16/22, day after purchase.
Last Earnings Report (Q/E 9/30/22): SEC Filing
All amounts are in Canadian dollars.
Net Income = $326M or $.68, up from $.63
Adjusted E.P.S. = $.71, up from $.64
"Announced annual dividend growth guidance of 4-6%; guidance period extended through 2027"
Other Fortis Securities: I will generally own periodically Fortis reset equity preferred stocks, bought on the Toronto exchange using my CADs, and Fortis SU debt traded in the U.S.
I currently own 150 shares of the reset equity preferred stock FTS-PM.TO. Item # 2.B. Bought 50 FTS.PRM at C$12.4 (5/23/20 Post); Item # 3.A. Bought 50 FTS.PRM at C$16.28 (3/14/20 Post); Item # 2. A. Bought 50 FTS.PRM at C$17.55 (11/23/19 Post) That security will reset its coupon in December 2024 at a 2.48% spread to the 5 year Canadian government bond yield. I am reasonably anticipating a coupon increase since the last reset created a 3.91% coupon (C$.97825 annually per share). If the 5 year bond was at 4% on the reset date, the coupon would become 6.48%, creating a C$1.62 annual dividend rate per share paid on C$25 par value. My current AC per share is at C$15.41.
E. Added 5 AQN at $7.91; 5 at $7.45:
Quote: Algonquin Power & Utilities Corp. (AQN)
AQN Analyst Estimates | MarketWatch
Last Purchase Discussion this Account: Item # 5.A. Added to AQN in Schwab Account - Bought 5 at $10.69; 5 at $10.26 (10/25/22 Post)
Last Discussed: Item # 6.P. Stared AQN in Vanguard Taxable Account - Bought 10 at $10.92 (11/1/22 Post)
For stocks that I own, excluding Lottos, AQN released the worse third quarter earnings report.
Broker rating downgrades and lower price targets soon followed.
I do not have access to these reports:
BMO to US$11 from US$17.5, rating reduced from outperform to market perform
RBC to US$12 from US$17, rating reduced to sector perform from outperform
TD to US$10 from US$13, reduced rating to hold from buy.
If the problems persist, a dividend cut needs to happen IMO.
I am not giving up yet, since some of the problems are temporary or related to the delay in acquiring Kentucky Power. The negative impact from a rise in interest rates is probably not temporary. It may take a year or so before I know whether this approach will work out.
My approach now is to average down in 5 share lots only, with each subsequent purchase having to be at the lowest price in the chain, until I hit 100 shares. My maximum position in all accounts is 200 shares.
Average cost per share this account: $12.77 (55 shares)
Dividend: Quarterly at US$.1808 per share ($.7232 annually)
Yield at AC: 5.66% (assumes no dividend cut, viewed as likely if problems persist)
Last Earnings Report (9/30/22): SEC Filed Press Release
All amounts are in US Dollars.
GAAP Loss: $195.2M or $.29 per share
Non-GAAP Earnings: $73.5M or $.11 per share
Non-GAAP Consensus at $.17 per share.
GAAP to Non-GAAP Reconciliation
Revenues: $666.7M up 26%
2022 Guidance: Lowers 2022 adjusted E.P.S. guidance to $.66-$.69 from $.72-$.77:
Reevaluating Long Term Guidance: Points to lower expectations:
Quote: Tekla Healthcare Opportunities Fund Overview - A CEF
Sponsor's website: Fund Basics | Tekla Capital Management LLC
SEC Filed Shareholder Semiannual Report for the period ending 3/31/22
SEC Filing (investments as of 6/30/22)
Last Buy Discussions: Item # 1.I Restarted THQ-Bought 10 at $16.7 and 5 at $16,58 (3/7/20 Post); Item # 3.E. Added 5 THQ at $16.25, 5 at $14.3; 5 at $14.07 and 5 at $11.9 (3/28/20 Post)
Investment category: Monthly Income Generation
Leveraged: Yes at close to 20%
Dividend: Monthly at $.1125 per share ($1.35 annually)
Significant ROC support without capital gains
Yield at $20.05: 6.73%
Last Ex Dividend: 11/18/22, after purchase.
Data Date of 11/15/22 Trade:
Closing Net Asset Value per share: $21.93
Closing Market Price: $20.08
Discount: -8.46%
Sourced: THQ-CEF Connect (Click "Pricing Information" Tab)
Top 10 Holdings as of 9/30/22:
Asset Allocation: The fund owns some bonds issued by healthcare companies and had a 6.1% allocation to healthcare REITs as of 6/30/22.
Sell Discussions: Item # 1.H. Pared THQ in Fidelity Account - Sold 10 at $17.55 and 10 at $17.9 - Highest Cost Lots (5/23/20 Post)(profit snapshot = $23.34); Item # 1.B. Sold Remaining THQ-61+ Shares at $17.5 (9/1/19 Post)(profit snapshot = $60.49); Item # 2.A. Sold 53 THQ at $17.98(7/31/19 Post)(profit snapshot = $44.81); Item # 5 Sold 100 THQ at $17.59-Used Commission Free Trade(7/7/19 Post)(profit snapshot = $79.88 and contains 2017 profit snapshots =$555.56); Item # 2.C. Sold 232+ THQ at 17.59 (7/3/17 Post); Item # 2.D. Sold 118+ THQ at $18.7 in a Roth IRA Account (7/3/17 Post;); Item # 3. Sold 160+ THQ at $17.41 (6/5/17 Post)
I currently own 15+ THQ shares in my Fidelity account, with an average cost at $13.43. That position resulted from selling my highest cost lots.
THQ Realized Gains to Date: $822.13 includes a $33.52 gain on a 50 share lot sold in 2016 and $24.63 from a 6 share lot sold in 2021.
G. Added 10 GRX at $9.9-Schwab Account:
Quote: Gabelli Healthcare & Wellness Trust Overview- A CEF
Sponsor's Website: Healthcare and Wellness Rx Trust - GAMCO Investors, Inc.
SEC Filed Semiannual Report for the period ending 6/30/22
Morningstar (currently rated 2 stars)
Leveraged: Yes at close to 24% based on the last disclosure.
Last Discussed: Item # 4.M. Added 5 GRX at $9.8 (9/27/22 Post)
Average cost per share this account: $11.37 (76+ shares)
Dividend: Quarterly at $.15 per share
I am reinvesting the dividend.
Yield at $11.37: 5.277% (regular only)
Next Ex Dividend: 12/8/22
Data Date of 11/17/22 Trade:
Closing Net Asset Value per share: $11.7
Closing Market Price: $9.84
Discount: -15.9%
Sourced: GRX-CEF Connect
Top 10 Holdings as of 9/29/22:
H. Added 3 CET at $34- Schwab Account:
I bought this 3 share lot after CET went ex dividend for its $2.25 per share year end distribution. 7 shares were owned on the 2022 ex dividend date. Of that $2.25, $1.75 per share is expected to be taxed as long term capital gains and $.50 as ordinary income.
The same 7 shares were owned on the 2021 year end ex dividend date which was for $3.55 per share.
Lot Details:
Average cost per share this Account: $34.58
Net Asset Value per share as of 11/18/22: $41.23 (released only on a weekly basis)
Top 10 Holdings as of 9/30/22:
CET last explained how it values its Plymouth Rock stock in its semiannual report for the period ending 6/30/22 at page 13, which I have linked above CET notes at page 14 that this valuation method resulted in a $48.32+M reduction in value during the first six months. CET received $9.344+M in dividends from Plymouth during that period.
6. TIP Buys Roth IRA Account:
While these TIPs do not mature in 5 years, I only have historical data for 5 year TIPs.
The real yield for the 5 year TIP started 2022 at a -1.58% real yield.
As of 11/15/23, the real yield was at +1.53%.
2022 TIP Real Yields-U.S. Department of the Treasury
While the breakeven inflation rate has recently been trending down since peaking at 3.57% in March 2022, falling to 2.4% as of 11/15/22, the nominal 5 year treasury has had a major move higher in yield this year, going from +1.37% (1/3/22) to +3.93% (11/15/22). 2022 Nominal Treasury Yield Curve -U.S. Department of the Treasury
The 5 year nominal treasury peak yield in 2022 was at 4.39% (11/7/22) and has drifted down in response to lower than anticipated October CPI.
A 5 year TIP bought at a negative yield early in 2022 can only adjust to the significant rise in the nominal 5 year treasury yield by going down in price.
5-Year Breakeven Inflation Rate- St. Louis Fed
Breakeven Inflation Rate: The annual average CPI rate necessary for a TIP purchase to breakeven with the same maturity nominal treasury. Viewed by many as the market's forecast for the annual average CPI rate which will change based on incoming data.
Bond Economics: Primer: What Is Breakeven Inflation?
Inflation Is Up, So Why Are TIPS Returns Down? | Charles Schwab
Are TIPS a Bargain? | Morningstar
The price of a TIP will vary based on changes in the breakeven inflation rate and the comparable maturity nominal treasury yield.
I do not own any TIP ETFs.
TIP – Performance – iShares TIPS Bond ETF | Morningstar (YTD Total Return through 11/21/22= - 12.54; 5 year annual average total return = +1.96%)
VTIP – Performance – Vanguard Short-Term TIP ETF | Morningstar (YTD total return through 11/31/22 = -3.43%; 5 year annual average total return = 2.43%)
I am buying TIPs with short maturities. While these are liquid, there is a possible significant interest rate risk associated with intermediate and longer term maturities. I would not want to buy a 20 year TIP now, for example, and then see the nominal 20 year treasury double in yield. I have traded long term TIPs, primarily in 2016-2017:
Examples from 2016:
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Currently I do not own any TIPs maturing after 2030. I will consider making trades when and if I view the uptrend in nominal rates has ended and real yields are more attractive on long term TIPs compared to short term ones.
5 Year TIP Real Yield Chart:
A. Bought 1 TIP .125% Coupon Maturing on 4/15/2026 at 94.531:
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I now own 3.
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.
Interesting stuff on the inversion and yield curves and economic data.
ReplyDeleteI'll get to read the rest more carefully later when I get to my dad's.
I wonder what account this will post from since I'm trying it from my new cell.
For a long time it didn't matter where I kept my cash. Now even the 20K floating in ameritrade is losing nearly a $800 a year vs Vanguard. Not even some place fancy for yield.
Well, today was a decisive day...
ReplyDeleteI sold some energy on Friday but haven't had a chance to add it here. IV tomorrow so after that.
I have published a new post:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2022/11/ahh-ahhpra-bbdc-cl-fdn-ffbc-googl-nwl.html