AQN, ARGOPRA, BHB, CAG, DEA, FTKLX, HPPPRC, JQC, KBWY, KMB, NFBK, RYLD, STWD, TPVG, VNOPRM

Economy: 

As expected, the FED raised the federal funds rate by 50 basis points. The current range is 4.25% to 4.5%. The Fed projects raising rates as high as 5.1% before ending inflation battle In September, the prediction was for a 4.6% median rate. 

What rattled the stock market after this announcement was the dot plot and economic projections which were at odds with market forecasts prevailing before the announcement. 

Notwithstanding the recent better than expected inflation reports, the Fed increased its inflation projections from its prior estimates made in September. 

The FED also increased its FF median rate and unemployment projections for 2023 through 2025.

The Fed - December 14, 2022: FOMC Projections materials, accessible version  

I do not view the inconsistency between what the market expected before the announcement and the current FED forecasts to be material for the economy.  A higher FF funds rate for longer will likely cause a continuation of yield inversions, with short term treasury rates being meaningfully higher than intermediate and longer term ones. 

Vanguard sees a recession in 2023 — and one 'silver lining' for investors - MarketWatch

Notwithstanding Powell's tough talk, the odds are less than 20% that the FF range will be 4.75%-5% or higher by December 2023. CME FedWatch Tool - CME Group

As of 8:00 A.M. CDT today, the odds of a 25 basis point hike in February is at 63% with a 50 basis point increase at 37%.

The Federal Reserve Bank of Atlanta revised its 4th real GDP growth forecast to 2.8% from 3.2% as of 9/15/22. GDPNow - Federal Reserve Bank of Atlanta

Recession Outlook 2023: BofA Expects Downturn in Q1, Stock Strategies

'Dr Doom' Nouriel Roubini Warns World Is on a 'Slow-Motion Train Wreck'

++++

Putin and His Country: 

It is clear that Putin will continue his war in Ukraine indefinitely, irrespective of how many Russians are killed or injured or the damage done to Russia's economy.  

How Putin’s War in Ukraine Became a Catastrophe for Russia - The New York Times Worth a read. Russians are leaking a variety of documents to western news organizations. 

Putin’s propaganda machine shifts its tone on Ukraine - YouTube Prior to the invasion, the minions on Putin TV predicted that Ukraine would fall in a matter of days. The current theme is that Ukraine was not subdued quickly as promised because Russia is fighting against NATO, which is of course false. Russia is losing battles against the Ukrainian army, supplemented by Ukrainian volunteers, who have received military supplies from Nato members. This video has several street interviews with Russians that show just how warped and misinformed they are.

'Russia is going to be defeated in Ukraine' | Ben Wallace full interview - YouTube Wallace is the UK Defense Secretary. The Russian army is the second best army now operating in Ukraine. 

Russian commander appears to call for use of nuclear weapons - YouTube

Russian Lawmaker, Pyotr Tolstoy, Moscow Will Use Missiles to 'Burn' European  Humanitarians With Napalm

In the latest independent poll conducted by the Chicago Council-Levada, three quarters of Russians support Russia's "special military operation" in Ukraine. Many Russians Support Ukraine Peace Talks but Not Letting Territory Go | Chicago Council on Global Affairs Less than 1/3rd of Russians view the war as unsuccessful.  While a majority support peace talks, there was virtually no support for making concessions. Putin and a majority of Russians want peace provided Ukraine first recognizes the four recently annexed internationally recognized Ukrainian territories and Crimea as part of the Russian Federation and consent to other demands. The problem with Russia goes far deeper than just Putin who is more of a reflection of average Russians, particularly those living in rural areas, than an aberration.  

An Alternate Reality: How Russia’s State TV Spins the Ukraine War - The New York Times Putin propagandists just love Fox "news" anchor Tucker Carlson. The NYT obtained copies of emails circulated among Russian propagandists that shaped false narratives provided on Putin TV.  

I Went to Ukraine, and I Saw a Resolve That We Should Learn From - The New York Times ("bombed-out buildings, survivors cooking over open fires outside, children injured by landmines, freshly vacated Russian torture chambers — 23 discovered so far here in the Kharkiv region alone — along with mass graves of corpses with hands tied and shattered limbs.") Russian Orcs are torturing Ukrainian civilians and raping women, but that has only hardened their resolve to fight.  

The Orcs frequently targeted for murder civilians, including children and journalists, who were in their vehicles. Surviving a Russian ambush in Ukraine | Sky News Chief Correspondent Stuart Ramsay - YouTube;  'I'm hit': Extended video of harrowing ambush on Sky News team in Ukraine this week | World News | Sky News

Dead Toddler pulled from rubble of latest Russian hit on Ukraine

Russia is really upset that the U.S. may provide Patriot Air Defense missile systems to Ukraine. Russia warns of ‘consequences’ if U.S. sends Patriot missiles to Ukraine | PBS NewsHour The Russians believe that their missiles should be allowed to blow up Ukrainian civilian infrastructure and murder Ukrainian civilians without being targeted by defensive missiles. 

Russians turn to George Orwell’s 1984 to make sense of Putin - YouTube

Lukashenko Calls Himself, Putin Most 'Harmful and Toxic People' on Earth

The war in Ukraine has decimated a once feared Russian brigade - The Washington Post The article. which is worth a read IMO, discusses the  decimation of Russia's 200th Motor Rifle Brigade. Dead and missing soldiers from that brigade have been replaced by conscripts who are poorly trained and ill equipped. While over 800 Russian soldiers from that brigade were killed or missing, Russia claimed that only 4 soldiers, including one officer, were killed. The Russian government is not capable of telling the truth.  

Russia Wagner Officers Watch by Drone As Troops Sent to Die: UK Intel

Unable to beat Ukraine's military, Russia has decided to destroy Ukraine's economy with missiles, including the civilian energy and water infrastructure, making life miserable for the civilian survivors and sending them into poverty and despair. No distinction is made between civilians who speak Russian or Ukrainian. Russia is destroying Ukraine's economy, raising costs for U.S. and allies - The Washington Post This tactic is more likely to be successful compared to Russia's military campaign. Russia caused a 33% contraction in Ukraine's economy this year. 

+++

Trump and His Party: 

Trump 'Pyramid Scheme' Trial Slated to Start In January 2024

Donald Trump’s ‘Major Announcement’ Is Grifty NFT Project; "Cash grab": Knives out in TrumpWorld as his closest allies rage over his "worthless" NFT stunt Donald said there was a big announcement coming and speculation grew that he was going to select a VP candidate. Instead, the big announcement was this NFT grift. The offerings sold out in 24 hours. Why is the Carnival Barker "billionaire" engaged in such undertakings if he is as rich as he claims?   

Governor DeSantis (R-FL) targets Covid vaccine manufacturers and CDC in latest anti-vaccine moves | CNN Politics DeSantis wants to empanel a grand jury to investigate those advocating Covid vaccines, including medical associations and vaccine manufacturers. He is only trying to out crazy Donald, a prerequisite for beating Trump in the 2024 primaries. 

Inside Mar-a-Lago, Where Thousands Partied Near Secret Files - The New York Times

'He lies': Kevin McCarthy's political mentor rips him as liar in scathing attack | Washington Examiner

++++

Allocation Shifts Discussed in this Post: The general thrust continues to be a willingness (1) to purchase 4%+ yielding treasury bills, CDs and corporate bonds; (2) to reduce the dollar amount of my stock allocation while increasing my dividend income; (3) to increase slightly my allocation to high yield equity preferred stocks; and (4) to harvest some common stock gains. 

Treasury Bills: +$25,000 

CDs: +2,000

Corporate Bonds: -$8,000 (includes $10,000 redemption at maturity)

Common Stocks: -$2,885.4

(consisting of $3,536.61 in proceeds minus $651.21 in purchases)

Realized Gains Common Stocks: +$662.72 

Weighted Average Yield Common Stock Purchases: 8.2%

Stock Mutual Funds: +$50  

Leveraged CEFs and High Yield ETFs: +$421.2

REIT Equity Preferred Stocks: +$1,163.19 (Weighted Average Yield = 8.89%)

Non-REIT Equity Preferred Stock: +101.75 (yield = 8.6%)

++++

1. Treasury Auction Purchases: Payments for the following purchases identified in A. and B. below were sourced from $10K in proceeds, received on 12/13/22, from a 1 month treasury bill and $10K in proceeds received from an AEP SU bond that matured on 12/15/22. Those proceeds were received in my Schwab sweep account that pays .40%. I try to keep funds in that sweep account for only a few days given the yield alternatives. 

The highest treasury yield is currently the 6 month T Bill: 

A. Bought 10 Treasury Bills at the 12/14/22 Auction: 

17 week/119 Day T Bills

Matures on 4/18/23

Interest: $146.77 

Investment Rate (coupon equivalent): 4.569%

B. Bought 10 Treasury Bills at 12/19/22 Auction: 

91 Day Bill

Interest: $108.44

Matures on 3/23/23: 

Investment Rate: 4.397%

C. Bought 5 Treasury Bills at 12/19/22 Auction: 

Payments sourced from partial redeployment of proceeds from matured treasury bills in two accounts.

Interest (5 bills) = $115.01

182 Day Bill

Matures on 6/22/23: 

Investment Rate: 4.722%

2. Equity REIT Preferred Stocks:

While I view preferred stocks as a disfavored security, I am adding to positions based their depressed prices juicing the current yields. 

A. Added 70 HPP.PRC at $12.98: 

Quote: Hudson Pacific Properties Inc. 4.750% Cumulative Preferred 

I was working my way up to 100 shares but decided to end that process quickly with this 70 share purchase. The yield at $12.98 is 9.15% which was acceptable to me. 

Issuer: Hudson Pacific Properties Inc.  (HPP)

Website: Hudson Pacific Properties 

HPP SEC Filings

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

Last Discussed: Item # 5.G. Added to HPP.PRC - Bought 5 at  $15.38; 5 at $14; 5 at $13.65; 5 at $12.7- Fidelity Taxable Account (10/25/22 Post) 

Average cost per share: $13.61 (100 shares)

Snapshot Intraday on 12/9/22 after add 

Yield at New AC = 8.725%

Yield at $12.98 purchase price = 9.15%

Last Ex Dividend: 12/16/22 (owned all as of)

Security: Prospectus

Par Value: $25 (offered at $25 in November 2021)

Placement in the Capital Structure: Equity Preferred Stock, senior only to common stock. 

Maturity: Potentially perpetual unless called by issuer. 

Optional Call Date: Anytime on or after 11/16/26

Stopper Clause: Standard. The Stopper Clause prevents the issuer from deferring payment of a cumulative preferred dividend while paying a cash common stock dividend or using cash to buy back common stock. The Clause enforces the preferred stock's superior claim to cash compared only to the common stock. 

Dividends: Paid quarterly, cumulative and non-qualified 

B. Added 10 VNOPRM at $15.82- Fidelity Taxable Account: 

Quote: Vornado Realty Trust 5.25% Cumulative Preferred Series M

Issuer: Vornado Realty Trust (VNO)

VNO SEC Filings

SEC Filed Earnings Press Release for the Q/E 9/30/22 

Last Discussed: Item # 5.A. Added 5 VNO.PRM at $15.38 - Schwab Taxable Account (11/8/22 Post); Item # 3.A. Added to VNO.PRM - Bought 5 at $19.41-Schwab Account (5/19/22 Post) 

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

Security: Prospectus

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

Par Value: $25

Dividends: Cumulative, Non-Qualified (pass through entity, not taxed at the corporate level) and Paid Quarterly

Optional Call Date: On or after 12/13/22 at par value plus accrued and unpaid dividends. 

Stopper Clause: Yes. A "stopper clause" is the legal mechanism that enforces the preferred shareholders superior right to cash vs. the common shareholder. VNO can not defer paying a cumulative preferred dividend and continue paying a cash dividend to the common shareholders. 

Last Ex Dividend: 12/14/22 (owned all as of) 

New Average Cost per share this account: $15.82 (20 shares)

Snapshot Intraday on 12/9/22 after add

Yield at New AC = 8.2965%

Sell Discussions: Item # 3.A. Sold 10 VNO.PRM at $25.34 (10/31/2020 Post); Item # 3.C. Sold 5 VNO.PRM at $24.99-Highest Cost lot bought at $19 (7/18/20 Post); Item # 2.A. Eliminated VNO.PRM-Sold 50 at $22.95 (5/23/19 Post)

VNO.PRM Realized Gains to Date: $158.54

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

Maximum Position All Accounts: 100 shares 

Goal: Any total return in excess of the dividends paid.

C. Added 5 EPR.PRC at $19.35: 

Quote: EPR Properties 5.75% Cumulative Convertible Preferred Series C Stock

Last Discussed: Item # 2.A. Restarted EPR.PRC - Bought 5 at $21.98 (6/28/22 Post) 

Security: Convertible Equity Preferred Stock

Issuer: EPR Properties (EPR) 

Last Friday, JPM raised its common stock rating to neutral from underperform with a $52 price target.   

Website: The Diversified Experiential REIT - EPR Properties

Investment Category: Advantages and Disadvantages of Equity REIT Cumulative Equity Preferred Stocks, part of the Equity REIT Common and Preferred Stock Basket Strategy.

Prospectus

One of EPR's major tenants, Regal Cinema, recently declared bankruptcy:

Generally, I would anticipate that Regal will reject some leases and negotiate lower rents on the remaining properties.  

Earnings report for the Q/E 9/30/22 

EPR SEC Filings 

Par Value: $25

Dividends: Quarterly, Cumulative and non-qualified  

Average cost per share: $20.665 (10 shares)

Yield at AC = 6.956%

Yield at $19.35 = 7.43% 

Conversion into Common Stock: Conversion feature is currently assigned no value, or close to it, based on price. That has not always been the case as shown by some price levels before the pandemic, including those of some of my prior sales. 

As of 9/30/22, the conversion price was at $59.92. (page 9: Q3-2022-Summary-of-Series-C-Preferred-Shares.pdf) So this security currently stands as a "busted" convertible. 

The conversion price started at $71.34 and has drifted down as determined by a complex formula. One component of that formula is the the amount that common share quarterly dividend exceeds $.685 per share.  

Common share dividends are now paid monthly at $.275 per share or $.825 per share on a quarterly basis.  Dividends | EPR Properties  

The value of this security has been negatively impacted by credit concerns related to financial problems experienced by several tenants (e.g. Regal bankruptcy), the rise in risk free yields, and no value assigned to the conversion feature. The credit concerns are far less now than during the early pandemic period when survival of this REIT was questionable. A robust rally in the common stock, which causes the conversion to come into play, fewer problems with tenant non-rent or reduced rent payments,  and/or a decline in interest rates, would be a tailwins for this preferred stock. 

Sell Discussions: 

Item # 4.B. Sold 10 ERPPRC at $20.32 (7/3/2020 Post)(profit snapshot = $76.66);

Item # 3.B.  Sold 10 EPRPRC at $17.5 and 5 at $16.22 (5/2/20 Post)(profit snapshot = $16.6) 

Item # 3 Sold 50 EPRPRC at $27.49 (10/21/18 Post)(profit snapshot = $178.58)-Item # 1 Bought 50 EPRPRC at $23.78-Used Commission Free Trade (4/23/18 Post)

Item # 1.B. Sold 50 EPRPRC at $28.48 (9/12/18 Post)(profit snapshot = $224.22)-Item # 1 Bought 50 EPRPRC at $24  (4/23/18)

Item # 3 Sold 50 EPRPRC-Update For Equity REIT Basket Strategy As Of 4/6/16 - South Gent | Seeking Alpha (profit snapshot = $160.48)

EPR.PRC Trading Profits to Date: $656.54 

Maximum Position: 50 shares 

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

2. Small Ball Buys: 

A. Bought 10 NFBK at $15.58: 

Quote Northfield Bancorp Inc. (NFBK) 

"Northfield Bank, founded in 1887, operates 38 full-service banking in Staten Island and Brooklyn, New York, and Hunterdon, Middlesex, Mercer, and Union counties, New Jersey."

This is my first purchase. For the price to move higher, the bank will need to show earnings growth which is not currently expected in the forward E.P.S. estimates.  

Northfield Bancorp Inc. Analyst Estimates | MarketWatch (as of date of purchase, the consensus E.P.S. for 2022 was at $1.36; at $1.31 for 2023 and at $1.34 in 2024).  

NFBK SEC Filings 

10-Q for the Q/E 9/30/22

2021 Annual Report

Market Cap at $15.58: $744+M

Investment Category: Regional Bank Basket Strategy

Dividend: Quarterly at $.13

Yield at $15.58: 3.34%

Last Ex Dividend: 11/8/22

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

Comparisons are to the 2021 third quarter. 

E.P.S. = $.37, up from $.33

Consensus at $.34 per Fidelity

NIM: 3.08%, up from 2.99% (fair, but below what I would hope to see)

Efficiency Ratio: 40.34%, down from 46.38%  (excellent, lower is better)

NPL Ratio: .23% (excellent)

NPA Ratio: .17% (excellent)

Charge off ratio: Net recovery of $149,000. (excellent)

Coverage Ratio (allowance for loan losses to non-performing loans): 423.96% 

For new purchases, a coverage ratio above 100% is comforting. 

ROA: 1.19%, up from 1.18% (average)

ROE: 9.45%, up from 8.48%  (below average)

Tangible Book Value ("TBV") per share: $13.61, down from $14.08

TBV per share has been declining for banks, primarily due to owned securities declining in value.  This accounting item negatively impacts shareholder equity and TBV per share but has no impact on earnings unless the securities are sold.  As owned debt securities are redeemed or mature, the proceeds can be reinvested into higher yielding securities. 

For the 3rd quarter, the bank "had no sales of debt securities available-for-sale, and no gross realized gains or losses. For the nine months ended September 30, 2022, the Company had gross proceeds of $41.5 million on sales and calls of debt securities available-for-sale, with gross realized gains of $264,000 related to the sales of securities and no gross realized losses." 

B. Added $50 to FTKLX at $10.36: 

Quote: Fidelity Disruptive Technology Fund Overview

Last Discussion: Item # 6.N. (11/8/22 Post) 

Fidelity® Disruptive Technology-Morningstar

Sponsor's website: FTKLX - Fidelity ® Disruptive Technology Fund Loyalty Class 1 | Fidelity Investments (closed to new investors)

C. Added to STWD - Bought 5 at $19.9, 5  at $19.05 - Schwab Account: 

Quote: Starwood Property Trust Inc.  (STWD)

Starwood Property Trust, Inc. - Home

SEC Filings

New Average cost per share this Account: $20.08 (15 shares)  

Dividend: Quarterly at $.48 per share ($1.92 annually)

Yield at AC of $20.08 = 9.56%

2021 Annual Report (company summary of risk factors starts at page 15 and ends at page 56)

My Risk Assessment: High, confirmed by a long term chart.  

Goal: Any profit on the shares + the dividend. 

Realized STWD Net Gain to date: +$94.48

The largest gain to date was $47.74: Item # 1.A. Sold 10 STWD at $25.96  (2/16/2020 Post) That transaction was on 2/2/20. The closing price on 3/24/20 was at $8.80.

I have nothing further to add to my recent discussion: Item # 5.D. Bought 5 STWD at $21.29 - Schwab Account (12/6/22 Post) I discussed the last earning report in that post. SEC Filed Press Release As noted in that post, I own STWD in other accounts, with the largest position being 29+ shares with a current AC per share of $14.26. During the March 2020 meltdown, STWD fell below $10. An intraday low during that month was $7.59, hit on 3/18/20.

D. Added to AQN - Bought 5 at $7.05: 

Quote: Algonquin Power & Utilities Corp. (AQN)

AQN Analyst Estimates | MarketWatch

In a surprise decision, the Federal Energy Regulatory Commission refused to approve of AQN's acquisition of Kentucky Power. FERC Turns Down Algonquin Plan to Buy AEP’s Kentucky Power | T&D World

Last Discussed: Item # 5.C. Added to AQN - Bought 5 at $7.29 (12/6/22 Post) 

The 3rd quarter earnings report sent this stock spiraling down. I discussed that report in this post. Item # 5.E. Added 5 AQN at $7.91; 5 at $7.45 (11/22/22 Post); SEC Filed Press Release

New Average cost per share: $11.59 (70 shares)

Dividend: Quarterly at US$.1808 

The non-GAAP E.P.S. for the 3rd quarter was $.11. If that kind of poor result continues for much longer, a dividend slash is both prudent and likely IMO. 

Yield at $11.59 AC = 6.24%

Yield at $7.05: 10.26%. Needless to say, that kind of yield is not available in other utility stocks and indicates a consensus opinion that the dividend rate will be slashed. 

Last Sell Discussion: Item # 1. Sold 300 AQN:CA at C$19.51 (4/21/22 Post)(profit snapshot = C$303)

E. Added to RYLD - Bought 5 at $19.19- Schwab Account:

Quote: Global X Russell 2000 Covered Call ETF (RYLD)

Sponsor's Website: Russell 2000 Covered Call ETF

New Average cost per share this account: $21.22 (25+ shares)

Dividends: Monthly at a variable rate. 

I am reinvesting the dividend as a means to randomly average down. 

Sponsor's calculation of Yield as of 12/12 Closing Price: 

The trailing yield includes a short term capital gain distribution of $.3056 paid in January 2022.

Last Discussed: Item # 4.C. Added to RYLD - Bought 2 at $19.46  (11/29/22 Post) I have nothing further to add here. 

F. Added to DEA - Bought 5 at $14.94; 5 at $14.17- Fidelity Taxable:

                    

Quote: Easterly Government Properties Inc.

Website: Easterly Government Properties, Inc.

Properties | Easterly Government Properties, Inc.

As of 9/30/22, DEA "owned 88 operating properties and seven operating properties through an unconsolidated joint venture (the “JV”) in the United States, encompassing approximately 9.1 million leased square feet, including 94 operating properties that were leased primarily to U.S. Government tenant agencies and one operating property that was entirely leased to a private tenant."

Properties were 99% leased as of 9/30/22.

Major Disposition:

"On November 1, 2022, Easterly announced it had entered into an agreement to sell a 10-property portfolio totaling approximately 668,000 leased square feet for approximately $205.3 million in gross proceeds (the "Disposition Portfolio"). As of September 30, 2022, the Disposition Portfolio was 99% leased to the U.S. Government with a weighted average remaining lease term of 7.9 years and a weighted average age of 14.0 years. . . . At the time of its announcement, Easterly has completed the sale of nine of the 10 assets, with an expected closing on the remaining asset in late December 2022. . . . Assuming the Company uses gross proceeds from the sale of the Disposition Portfolio to pay off outstanding debt, as of September 30, 2022, the Company's pro forma outstanding debt would have a weighted average maturity of 6.1 years and a weighted average interest rate of 3.6%. Easterly’s pro forma Net Debt to total enterprise value would be 41.7% and its pro forma Adjusted Net Debt to annualized quarterly pro forma EBITDA ratio would be reduced from 7.4x to 6.9x."

Easterly Government Properties Announces Agreement to Sell 10-Property Portfolio and Completes Sale of Nine Portfolio Properties (for about $205.3M)  

Recent Acquisition:  Easterly Government Properties Completes Acquisition of VA - Phoenix, the Eighth of 10 Properties in the VA Portfolio (11/28/22); Easterly Government Properties Enters Into Joint Venture and Announces Agreement to Acquire 1,214,165 SF Department of Veterans Affairs Portfolio for $635.6 Million(10/13/21 Press Release; "The 100% build-to-suit VA Portfolio is entirely comprised of state-of-the-art, Class A Green Globe® Certified facilities, either recently delivered or under construction.") Those properties have a weighted average lease term of 19.8 years and are 100% leased. DEA manages the JV and has a 53% stake. 

DEA SEC Filings

10-Q for the Q/E 9/30/22 

Properties | Easterly Government Properties, Inc.

Investment Category: Equity REIT Common and Preferred Stock Basket Strategy

New Average cost per share: $18.84 (96+ shares)

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

DEA Dividend History | Nasdaq

I started to reinvest the dividend with the last payment.  

Yield at New AC: 5.63%

Last Ex Dividend: 11/9/22

Last Discussed: Item # 5.G. Added to DEA - Bought 5 at $15.12 (10/18/22 Post) 

Last Earnings Report (Q/E 9/30/22): SEC Filed Press Release 

FFO = $32.438M or $.32 per share

CAD = $28.529M or $.277 per share (up from $.274 per share in the 2021 third quarter)

Net income/FFO/CAD Calculations: 

DEA Realized Gains to Date: $561.74. The largest gain was $272.6. Item # 1.A. Sold 21+ DEA at $28.81 (6/6/20 Post)

Purchase Restriction: I will add 5 more shares this account at below $14 and then limit averaging down through dividend reinvestment. 

G. Bought 5 AGRO.PRA at $20.35- Fidelity Taxable Account:

Issuer: Argo Group International Holdings Ltd (ARGO)

Quote: Argo Group International Holdings Ltd. Series A Non-Cumulative Preferred Stock

ARGO Analyst Estimates | MarketWatch

Issuer SEC Filings

10-Q for the Q/E 9/30/22 

SEC Filed Loss Report  for the Q/E 9/30/22 (GAAP loss was $51.4M with non-GAAP operating earnings at $15.5M)

Investment Category: This is a fixed-to-floating rate security that I include in my Equity Preferred Floating Rate Securities classification. 

Last Discussed: tem # 2.J. Bought 5 ARGO.PRA at $24.48- Schwab Taxable Account (6/1/22 Post) 

Security: Prospectus

Par Value: $25

Placement Capital Structure: Equity Preferred Stock, senior only to common stock. 

Stopper Clause: Yes 

Dividends: Paid Quarterly, Non-Cumulative and Qualified

Coupon: 7% to but excluding 9/15/25, then, if not called, resets for 5 years at a 6.712% spread to the 5 year treasury note.  (see prospectus at pages S7-8) 

I would attribute the recent price decline to a rise in interest rates and increased credit concerns.

Yield at 7% Fixed Coupon and $20.35 TC = 8.6%

Last Ex Dividend: 11/29/22 

Maximum Position All Accounts: 50 shares given the credit quality concerns that I currently have based on recent earnings reports.  

H. Added 5 JQC at $5.09:

Quote: Nuveen Credit Strategies Income Fund Overview 

JQC Sponsor's Website 

JQC SEC Filings 

JQC is a leveraged junk bond and senior loan CEF.  

SEC Filed Shareholder Report for the Semiannual Period Ending 7/31/22 (list of JQC holdings starts at page 83)

Last Discussed: Item # 3.K. Pared JQC - Sold 5.99 Shares at $6.57 (6/12/21 Post) Those were lots purchased with dividends. I turned off dividend reinvestment and currently own no shares purchased with dividends. 

Effective Leverage: Substantial at 39.57+% as of 10/31/22 according to the Sponsor

Holdings: 405 as of 10/31/22

Nuveen Credit Strategies Income (JQC)-Morningstar (currently rated 3 stars)

New Average cost per share:  $5.22 (85 shares)

Snapshot Intraday on 12/9/22 after add

Dividend: Currently, Monthly at $.0475, raised from $.042 effective for the November 2022 payment. 

Dividend has significant ROC support. 

Yield at $5.22: 10.92%

Last Ex Dividend: 12/14/22 (owned all as of) 

Data Date of 12/9/22 Trade:

Closing Net Asset Value per share: $5.85

Closing Market Price: $5.08

Discount: -13.16%

3 Year Average Discount: -9.67%

Sourced: JQC - CEF Connect 

Goal: I would describe this fund as high risk given the leverage and credit quality of owned securities. The goal is to trade my way to a total return in excess of the dividends paid based on original cost unadjusted by ROC distributions. 

Largest Gain to Date: Item # 5 Sold 804+ JQC at $9.35 (5/16/12)(profit snapshot = $1,060.89) 2012 proved to be the best total return year for this fund over the last 10 years. Morningstar has the 2012 total return at 30.61%.

I. Added to KBWY - Bought 5 at $20.49; 5 at $19.95; 5 at $19.52 (Fidelity Taxable): 

Quote: Invesco KBW Premium Yield Equity REIT ETF Overview

Sponsor's website: Invesco KBW Premium Yield Equity REIT ETF

Last Buy Discussion: Item # 2.H. Bought 3 KBWY at $22.88- Vanguard Taxable Account (6/19/21 Post) 

Average cost per share this account: $20.71 (20 shares)

Dividends: Monthly at a variable rate

Expense ratio: .35% 

Top 10 Holdings: 

Of those holdings, I have positions in GNL, OPI, RTL, BDN, GOOD, and SLG. 

Of the remaining holdings, I have positions in GTY, SBRA, MPW, AHH, STAG, DEA, LXP, and PLYM. 

Maximum Position All Accounts: 100 shares given the significant overlap in owned stocks.  

J. Added 5 TPVG at $12.21; 5 at $11.77: 

Quote: TriplePoint Venture Growth BDC

Management: External

TPVG SEC Filings

2021 Annual Report

TPVG declined by 7.31% on 12/13 to close at $11.79. 

I discussed the reasons why in a comment published on 12/13/22. 

To summarize, TPVG disclosed on 12/12/22 that a portfolio company, Medly Health, had filed a bankruptcy petition. SEC Filing

TPVG made this observation in that SEC filing: "Although the amount of recovery of the Company’s investments in Medly is not yet determinable, the Company expects to assign its investments in Medly a rating of 5 under its credit watch list and fully write-down the fair value of its investments in Medly, excluding the debtor-in-possession credit facility, while actively monitoring Medly’s bankruptcy proceedings on an ongoing basis to evaluate its ability to recover any amounts on its investments in the future." (emphasis added)

As of 9/30/22, TPVG had a $34.39M loan outstanding to that company which it then valued at $31.829M. 10-Q page 9.  

The issue goes far beyond the loss that will ultimately be realized in this loan. 

The other issues are the viability of TPVG's underwriting standards and its valuation marks for loans that are still performing. 

Pharmaca parent Medly files for bankruptcy – Boulder Daily Camera

In my last post, I discussed a similar problem relating to a $15+M loan made to Pencil and Pixel that was sold at a near total loss during the third quarter. Item # 2.G. Added to TPVG - Bought 5 at $12.45 (12/13/22 Post) I discussed the last earnings report in that post. 

Prior to that Pencil and Pixel loss, I already had concerns about the judgment and underwriting standards at this BDC as well as its valuation marks. I am now hyper concerned about those issues. 

I will consequently limit my exposure to no more than 100 shares.  

Average cost per share this account: $12.62 (25+ shares)

Dividend: Quarterly at $.37 per share (regular only)

TriplePoint Venture Growth (TPVG) Dividend History | Seeking Alpha

I am reinvesting the dividend in this account only.  

Special Dividend: Ex on 12/21/22. TPVG declared a $.10 per share special distribution. TriplePoint Venture Growth BDC Corp. Announces Special Distribution of $0.10 per Share  

Yield at AC = 11.73% (regular dividend only)

Ex Dividend Date regular distribution: 12/14/22 (owned all as of)

TPVG Realized Gains to Date: $1,076.87

Maximum Position All Accounts: 100 shares given the recent poor performance that casts doubt on management's due diligence and valuation marks for loans.  

Current Total Position: 64+ shares

Other Accounts (not reinvesting the dividends): 

Fidelity 29 shares at a $5.11 AC per share

Vanguard 10 shares at a $4.68 AC per share

3. Small Ball Sells: 

A. Eliminated CAG in Vanguard Taxable Account- Sold 20 at $38.27: 

Quote: Conagra Brands, Inc.

Proceeds = $765.4 

CAG Analyst Estimates | MarketWatch

CAG SEC Filings

Brands | Conagra Brands

Profit Snapshot:  = $113.1 (12/13/22 sale only)

Last Discussed: Item # 5.A. Eliminated CAG in Fidelity Account - Sold 18+ at $37.07 (12/6/22 Post) (profit snapshot = $52.4)

Last Substantive Discussion: Item # 6.B. Pared CAG in Vanguard Account - Sold 5 at $36.66 (11/8/22 Post)(profit snapshot = $4.59). I discussed the last earnings report in that post, which underwhelmed me, and have nothing further to add here. SEC Filed Earnings Press Release for the Fiscal Quarter Ending 8/28/22 

CAG SU Bonds: I have decided to own only CAG SU bonds for now. Item # 2.D. Bought 2 Conagra 4.3% SU Maturing on 5/1/24 at a Total Cost of 98.573 (10/18/22 Post); Bond Detail

B. Eliminated CAG in Schwab Account - Sold 22+ at $38.36: 

See Item # 3.A. above. 

Proceeds: $868.55

Profit Snapshot: $101.31

C. Eliminated SHEL in Vanguard Taxable Account - Sold 10+ at $57.4: 

Does Not Include Fractional Share Liquidated on Settlement Day 

Proceeds:  $610.27 

Quote: Shell PLC ADR (SHEL)

Shell PLC ADR Analyst Estimates | MarketWatch

Investors | Shell Global

Profit Snapshot: +$317.77

Last Discussed: Item # 5.C. Pared SHEL in my Fidelity Account - Sold 4 at $56.67 (11/29/22 Post)(profit snapshot = $112.2). I discussed the last earnings report in that post and have nothing further to add here. SEC Filing

I am down to owning 10 SHEL shares in my Fidelity account with the average cost per share at $24.6 (see snapshot at previously linked post).    

My gut has informed me that the WTI crude oil price peaked near $120 earlier this year and energy stocks are still being priced as if prices are near that level rather than the actual price near $70. WTI Crude Oil Prices - 10 Year Daily Chart | MacroTrends 

Earlier 2022 Elimination: Item # 1.  Eliminated SHEL in Schwab Account  - Sold 38+ at $55.05 (8/30/22 Post)(profit snapshot = $831.18)

D. Eliminated KMB in Vanguard Taxable Account - Sold 3 at $138.44 and Eliminated KMB in Schwab Account - Sold 3+ at $136.55: 

Quote: Kimberly-Clark Corp.

KMB Analyst Estimates | MarketWatch

SEC Filings

Kimberly-Clark – Our Brands

Investors | Kimberly-Clark Corporation

Proceeds: $831.65

Profit Snapshots: +$64.21 

Last Discussed: I discussed the last earnings report in that post and have nothing further to add here. Item # 3.D. Sold 1 KMB in Fidelity Account at $136.97  (12/13/22 Post) 

E. Eliminated BHB in Vanguard and Schwab Taxable Accounts - Sold 10 at $30.69 and 5 at $30.74: 

I am down to owning 30 shares in my Fidelity account.  I have sold all shares with a cost basis over $21.5.  

Quote: Bar Harbor Bankshares (BHB)

BHB SEC Filings

10-Q for the Q/E 9/30/22

Bar Harbor Bankshares Analyst Estimates | MarketWatch

Proceeds: $460.64

Profit Snapshots: +$66.33  

10 Shares +$46.18 

5 Shares +$20.15 

Last Discussed:  Item # 4.D. Pared BHB in Fidelity Account - Sold 10 at $30 (12/6/22) That pare reduced my average cost per share to $17.98 (30 shares) I discussed the third quarter earnings report in that post and have nothing further to add here. SEC Filed Earnings Press Release

BHB Realized Gains to Date: $4,630.58

4. Corporate Bonds and CDs: -$6,000 Net

I temporarily ran out of money in my Fidelity account which explains why I only bought 2 corporate bonds discussed below. That account will soon be replenished with proceeds from maturing treasury bills, starting with $10K today and another $30K before year end. 

A. Bought 2 Manufacturers & Traders 4.85% CDs Maturing on 6/17/22: 

Issuer: Operating Bank for M&T Bank Corp. (MTB) 

Interest paid semiannually. 

B. Bought at par value 1 Bank of Montreal 5.4% SU Maturing on 12/16/24: 

Offered under Fidelity's corporate notes program. 

Details: 

Credit Ratings: A2/A-/AA-

Credit Ratings for Debt Investors - About BMO Canada

C. Bought at par value 1 Bank of Nova Scotia 5.35% SU Maturing on maturing on 12/19/24: 

Purchased under Fidelity Corporate Notes program. 

Interest paid quarterly. 

E. Redemption - 10 American Electric Power SU Bonds Maturing on 12/15/22- Schwab Taxable Account:  

Profit Snapshot: $317.2

Semiannual Interest Payment: $147.5

Proceeds were redirected yesterday into a 3 month treasury bill purchase.  

5. Cash Flow into my Fidelity Account on 12/15/22: 

Cash flow from interest payments is building up with my increased allocation to corporate bonds. 

$1K par value corporate bonds: $570.73

I own corporate bonds in 4 taxable accounts. Of the bonds referenced in this snapshot, I own 10 Arizona Public Service SU bonds in my Schwab account which made a semiannual payment of $167.5: 

There are other bonds referenced in the previous snapshots that are also owned in other accounts. An example is the Public Service Enterprise SU bond maturing on 6/15/24 which is owned in my Interactive Brokers account. 

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.