BBDC, BDN, ELC, FSK, GIS, GTY, KMB, NYCB, PDM, TCBIO,TPVG, TRST, TSLX

Economy: 

The November CPI report, released earlier today, was better than the consensus estimate. Consumer Price Index Summary - 2022 M11 Results

Core CPI Annual at 6%, down from 6.3%, consensus at 6.1%. 

CPI Annual at 7.1%, down from 7.7%, consensus at 7.3%.

The Stock Jocks and Bond Ghouls are in major rally mode so far today. 

With the decline in asset prices this year, household net worth has declined for three consecutive quarters: 

Sourced from Z1 Federal Reserve Financial Accounts 3rd Q 2022.pdf  The third quarter decrease was $.4T. Household debt increased at a 6.3% annual rate. 

‘We Want to Be More Cautious:’ Goldman Sachs CEO on 2023’s Global Financial Outlook | WSJ - YouTube

Last Atlanta FED 2022 4th Q Real GDP Growth Estimate: 3.2% (12/9)

GDPNow - Federal Reserve Bank of Atlanta

Gundlach: U.S. Will Face Recession by Mid-2023 - Articles - Advisor Perspectives; 10 of Jeffrey Gundlach’s Economic, Market Predictions for 2023 | ThinkAdvisor (#2: Annual CPI will be below 4.5% after the May 2023 report; #4 Fed funds rate unlikely to reach 5%; #5: Possible strong bond returns in 2023 which is consistent with his inflation predictions); PowerPoint Presentation 12/6/22: Doubleline 

+++

Allocation Shifts Discussed in this Post: 

Treasury Bills: +$20,000

Corporate Bond: +$1,000

Common Stocks: -$823.72

(Consisting of $1,497.47 in sale proceeds minus purchases of $673.75 )

Weighted Average Yield-Common Stock Purchases: 10.27%

Common Stock Realized Gains: +$301.52

Non-Cumulative Equity Preferred Stock: $100.25, current yield =  7.17%

First Mortgage Baby Bond (ELC): +$108.6, current yield = 5.61%

++++

Putin and his Country: 

Prominent Putin foe Ilya Yashin sentenced to 8 and a half years in prison over criticism of Ukraine war - CBS News; Russia Finds War Critic Ilya Yashin Guilty of ‘Spreading False Information’ - The New York Times Yashin's crime was telling the truth about Ukrainian civilians being murdered by Russia in Bucha. Telling the truth in Russia is a major crime. Russia is and will remain a 100% pure Orwellian state that wishes to snuff out freedom and democracy in Ukraine and elsewhere.  

Alexei Gorinov, a deputy in the Krasnoselsky council, was sentenced to seven years in Putin's Gulag for suggesting that a children's drawing contest be postponed while Ukrainian children were dying.  

Darkness at Noon: A Novel - by Arthur  Koestler; Darkness at Noon - Wikipedia

Ukrainian strike hits Russian barracks in occupied Melitopol-The Guardian; Russian Mercenary Group's HQ Destroyed in Another Blow to Putin The strike reportedly destroyed the headquarters, barracks and mess hall for the Wagner mercenary group located in Kadiivka, Ukraine.   

Putin acknowledges the war in Ukraine could turn into a "long-term process." | DW News - YouTube

Putin warns of increasing nuclear threat. Hear ex-CIA director’s reaction - YouTube   

U.S. citizens, other than diplomats, should never set foot in Russia and this is just another reason why. The Other American Jailed in Russia on Marijuana Charges - POLITICO 

U.S. State Department Russia Travel Advisory:

Russia sends soldiers to war but ignores trauma they bring home - The Washington Post  

Over 1.5 million in Ukraine's Odesa without power after Russian drone attack | The Times of Israel (12/11/22)

U.N. Report On Russia Killings of Ukrainian Civilians (12/7/22)-EN.pdf

Neo-Nazi Russian militia appeals for intelligence on Nato member states | Ukraine | The Guardian

If Russians want to find Nazis in Ukraine, they only need to look in the mirror, which is an observation that I need to repeat often along with the GOP is not a conservative party. 

Preliminary Lessons in Conventional Warfighting from Russia's Invasion of Ukraine: February–July 2022 This publication needs to be required reading for non-brain dead Russians, though merely downloading it could lead to a long prison sentence for attempting to find accurate information. The plan included the kill-or-capture of key Ukrainian leaders by the FSB including Ukrainians involved in the 2014 Revolution of Dignity (pp. 10-11) 

++

Trump and his Party: 

Kari Lake, the anti-democracy party candidate for Arizona's governor, filed a lawsuit requesting that a court overrule the election results and declare her the winner. Failed Candidate for Governor Kari Lake Demands She Be Declared Winner Lake also expressed support for Trump's demand to cancel the Constitution. Kari Lake Agrees with Trump's Call to "Terminate" Constitution - YouTube; Rep. Paul Gosar (R-AZ) supports Trump's call to 'terminate' the Constitution Kari Lake could have won by simply moderating her primary full bore Trumpster shtick and made herself more appealing to more moderate republicans who were needed to win. 

White Nationalists, Other Republicans Brace for ‘Total War’ | Southern Poverty Law Center Marjorie Taylor Greene (R-GA), referring to the republican 1/6 insurrection, made this comment to cheers and applause: “I will tell you something, if Steve Bannon and I organized that, we would have won. Not to mention, it would’ve been armed.” She claims now that she was just trying to make a joke. Ms. Greene will be given a prominent role in the House when the GOP regains control next January.  

Elon Musk Is a Far-Right Activist - The Atlantic

Twitter dissolves Trust and Safety Council, Yoel Roth flees home - The Washington Post After an attack by Musk, the former head of Twitter's Trust and Safety Council, had to flee with his family from their home. Hopefully, advertisers will abandon Twitter in droves.  I do not have a Twitter account and would cancel it now if I did. I certainly would not pay a monthly fee for a verification and will never do anything to create revenue for a Musk owned company.  

++++

1. Bond Allocation:

I am close to a saturation point in my dollar allocation to investment grade corporate bonds.   

For the next several months, or until yields for corporate bonds meaningfully increase, proceeds from maturing corporate bonds will be directed into treasury bills purchased at auctions.  

I have 10 American Electric Power SU bonds that will mature on 12/15/22: 

Purchased on 3/19/20 at a TC of 96.828 (Price includes commission)

I plan to redirect the proceeds into a 3 month treasury bill purchase on 12/19.

I have $20,000 in Treasury Bills maturing today. Of that amount, $10,000 will be used to purchase 17 week treasury bills at the 12/14/22 auction. 

December 2022 Treasury Yield Curve: 

Yield inversion remains extreme. 

Resource Center | U.S. Department of the Treasury

The 2 year treasury note yield was at .78% on 1/3/22. The peak yield for that note this year was 4.72% hit on 11/7/22: 2022 Treasury Yield Curve Data The dominant trend since 11/7 has been down. 

A. Bought at 12/8/22 Auction 20 Treasury Bills: 

Matures on 1/10/23. 

Purchased at 99.7161

28 Day Bill

Interest: $56.78

Set up for automatic reinvestment into 1 month T Bills until canceled. 

Investment rate (coupon equivalent): 3.711%

On 12/8/22, the 30 year treasury bond closed at a 3.44% yield. The highest yield across the entire maturity spectrum that day was 4.71% from both the 6 month and 1 year bills.  

B. Bought 1 Royal Bank of Canada 5.35% SU Maturing on 1/16/24 at par: 

Offered under Fidelity's Corporate Notes Program.

I would have bought more but my cash reserves in this account has fallen close to zero. The cash balance will soon be replenished with proceeds from maturing treasury bills ($40K in this account before year end), but not before the cut off date for this purchase. 

Interest paid quarterly. 

Details: 

2. Small Ball Buys: 

The recent emphasis is on increasing my 2023 dividend income while reducing my dollar allocation to stocks. 

A. Added 10 NYCB at $8.53: 

Quote: New York Community Bancorp 

NYCB SEC Filings

NYCB Analyst Estimates | MarketWatch

Investment category: Regional Bank Basket Strategy

Since my last discussion, NYCB completed its acquisition of Flagstar Bancorp. Press Release (12/1/22) "Flagstar Bank, N.A. operates 395 branches across nine states, including strong footholds in the Northeast and Midwest and exposure to high growth markets in the Southeast and West Coast.  Through its Flagstar Mortgage division, the Company operates nationally through 81 retail home lending offices and a wholesale network of approximately 3,000 third-party mortgage originators." For the 2022 third quarter, Flagstar reported net income of $73M and expanded its NIM by 29 basis points to 3.98%. NIM contraction has been a historical problem for NYCB as I have previously discussed here.  

On the day of this purchase, the regional bank ETF KRE declined by 5% compared to a 1.79% S&P 500 decline. NYCB fell 5.75%. NYCB  Historical Prices 

I am in the process of repurchasing the 100 shares sold at $10.87. Item # 2. Sold 100 NYCB in Vanguard Taxable Account at $10.87  (8/23/22 Post) I bought back 10 of those shares at $8.44 and another 10 at $8.57.  Item # 6.C. Bought 10 NYCB at $8.44 (11/1/22 Post)(discussed the third quarter earnings report in that post, SEC Filed Earnings Press Release for the Q/E 9/30/22); Item # 3.N. Added to NYCB in Vanguard Taxable Account - Bought 10 at $8.57 (10/4/22 Post) This leaves me with 70 shares to buy at lower prices.

New Average cost per share this account: $8.96

Dividend: Quarterly at $.17 per share ($.68 annually)

Yield at AC: 7.59%

Yield at $8.53 purchase price: 7.97%

Last Ex dividend: 11/4/22 

I discussed the last earnings report in a recent post and have nothing further to add here. Item # 6.C. (11/1/22 Post);  SEC Filed Press Release

NYCB Realized Gains to Date: $1,505.34 

B. Added 5 PDM at $9.56; 5 at $9.37; 5 at $9.12; 5 at $8.95: 

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

Working my way up to 100 shares in this account. 

Website: Home - Piedmont Office Realty Trust

Management: Internal

Portfolio 

PDM SEC Filings 

10-Q for the Q/E 9/30/22 (debt is listed and discussed starting at page 15

Last Bond Offering (9/21): Prospectus, $300M of 2.75% SU Maturing on 4/1/22; Bond Detail. This bond recently hit a low near 69 which indicates the impact on price from the parabolic rise in interest rates over the past year and the potential for much higher refinancing costs in the years to come.   

Investment category: Equity REIT Common and Preferred Stock Basket Strategy

Last Discussed:  Item # 5.H. Added 5 PDM at $9.6 (10/18/22 Post) 

Last Substantive Discussion: Item # 3.B. Added to PDM in Schwab Taxable - Bought 5 at $12.46 (8/30/22 Post)

Average cost per share this account: $11.4 (72+ shares)

Dividend: Quarterly at $.21 per share

Yield at New AC per share = 7.37%

Yield at $8.95 -Last Purchase Price = 9.39% 

Last Ex Dividend: 11/23/22

Last Earnings Report (Q/E 9/30/22): 

SEC Filed Press Release and Supplemental

FFO = $61.352M

FFO per share: $.50

AFFO = $43.482M

AFFO per share: $.35

In its AFFO calculation, PDM does deduct from FFO recurring maintenance expenses and revenue created by the straight line accounting convention:

10-Q at page 35

The $.21 per share quarterly dividend is currently well covered by cash available for distribution. 

2022 FFO per share Guidance: $1.99 to $2.01, revised down from $1.99 to $2.05. 

Leased: 86.8%

Weighted Average cost of debt: 3.69%

Debt to Gross Asset Ratio: 39.8%

Interest Expense increased $4.8M compared to the 2021 third quarter. 

Management Comment: "the broader operating environment continues to pose numerous challenges to the commercial real estate sector including the impact of remote work, rising inflation and interest rates as well as the potential for an economic recession. Regardless of these headwinds, our current leasing pipeline remains stable, with over 150,000 square feet of leases already executed thus far in the fourth quarter and another 300,000 square feet in documentation, positioning the Company to close 2022 having completed over two million square feet of leasing and the portfolio approximately 87% leased. While both the public and private markets continue to struggle with the trajectory of the office sector, we believe Piedmont’s focus on high-quality assets in amenity-rich office environments in conjunction with a well-capitalized, low leveraged balance sheet positions us to successfully navigate these challenging waters."

Recent Acquisition:

Last Sell Discussions: Item # 1.A. Eliminated PDM in Schwab Account - Sold 5 at $18.71 and 34+ at $18 (12/31/21 Post); 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)

PDM Realized Gains to Date: $364.83

Goal: Any realized gain on the shares + the dividend. 

SU Bonds: The bonds are issued by PDM's operating L.P. and are guaranteed by by PDM. I currently own 4.   

Item # 2.K. Bought 2 Piedmont Office REIT L.P. 3.4% SU Bonds Maturing on 6/1/23 at a Total Cost of 98.783 (11/1/22 Post); FINRA Page (rated at Baa2/BBB).

Item # 1.A. Bought 2 Piedmont Office REIT L.P. 4.45% SU Bonds Maturing on 3/15/24 (11/8/22 Post) 

C. Added 5 BBDC at $8.6-Vanguard Taxable Account: 

Quote: Barings BDC Inc.  (BBDC)

Website: Company Overview

BBDC SEC Filings

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

Management: External

Average cost per share = $9.78 (35 shares)

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

Dividend History-BBDC

Yield at AC  = 9.816%

Yield at $8.6- Last Purchase Price = 11.16%

Last Ex Dividend: 12/6/22 

The 5 share lot was bought on this ex dividend date. 

I discussed the last earnings report in a recent post and have nothing further to add here. Item # 4.A. Added to BBDC in Vanguard Taxable Account - Bought 5 at $8.99  (11/29/22 Post); SEC Filed Earnings Press Release for the Q/E 9/30/22 

D. Added 5 TSLX at $18.3; 5 at $18.1 - Schwab Taxable Account: 

Quote: Sixth Street Specialty Lending Inc. (TSLX)

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

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

TSLX SEC Filings 

Management: External

I discussed this BDC in my last post and have nothing further to add here. Item # 5.G. Initiated TSLX - Bought 5 at $18.8; 5 at $18.6 (12/6/22 Post)

Average Cost per share: $18.45  (20 shares)

Dividend: Quarterly at $.45 per share ($1.8 annually)

Yield at $18.45: 9.756%

Next Ex Dividend: 12/14/22

E. Added 5 ELC at $21.72-Fidelity Taxable Account: 

Quote: Entergy Louisiana LLC  First Mortgage Bonds 4.875% Series due 2066

Investment Category: Exchange Traded Baby Bonds, a subcategory of Exchange Traded Bonds

Last Discussed: Item # 2.N. Bought 5 ELC at $23.12; 5 at $22.65 - Fidelity Taxable Account (6/1/22 Post) 

I have limited my exposure to this first mortgage bond due to interest rate risk that I can better control by purchasing Entergy Louisiana $1K par value First Mortgage bonds. I currently own 3 Entergy Louisiana FM bonds maturing on 4/1/28. I am willing to accept lower current yields from the $1K par value FM bonds, compared to ELC, in exchange for substantially lower interest rate risk. 

I would not be concerned about credit risk even if this bond was not secured by substantially all assets owned by Entergy Louisiana. The first mortgage lien just adds protection in case that proves to be wrong. 

Prospectus 

Average cost per share in this account: $22.44 (20 shares) 

Yield at $22.44  =  5.43% 

Last Ex Interest Date: 11/29/22

Security: First Mortgage Bond  

Par Value =  $25

Interest Payments: Quarterly at $.304688 per share

Trades Flat 

Optional Call: On or after 9/1/2021 at par value plus accrued and unpaid interest

Maturity Date if Not Called: 9/1/2066  

Credit Ratings: A2/A

Last Sell Discussion: Item # 4.B. Sold 30 ELC at $24.87- Used Commission Free Trade (5/1/2019 Post)(profit snapshot = $91.58) 

Maximum Position All Accounts: 300 shares

F. Added 5 BDN at $6.20: 

Quote: Brandywine Realty (BDN)- Office REIT

Our Properties | Brandywine Realty Trust

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

SEC Filings

Investment Category: Equity REIT Common and Preferred Stock Basket Strategy

Average cost per share: $8.21 (110+ shares)

Dividend: Quarterly at $.19 per share ($.76 annually).

BDN Dividend History | Seeking Alpha

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

Yield at $8.21 AC per share:  9.257%

Yield at $6.2 Purchase Price: 12.26%

Next Ex Dividend: 1/4/23 

I discussed the last earnings report in a recent post and have nothing further to add here. Item # 7.F. Added to BDN - Bought 3 at $6.53 (11/15/22 Post); SEC Filing 

G. Added 5 TPVG at $12.45 - Schwab Taxable Account: 

Quote: TriplePoint Venture Growth BDC

Management: External

TPVG SEC Filings

2021 Annual Report (summary of risk factors starts at page 24 and ends at page 52)

Last Substantive Buy Discussions: Item # 2.D. Restarted TPVG in Schwab Account - Bought 5 at $13.8 (6/1/22 Post); Item # 3.B. Added 5 TPVG at $11.1; 5 at $10.7; 5 at $8.2; 5 at $6.92; 2 at $5.35; 2 at $4.45; 2 at $4; 2 at $3.5; 2 at $2.99; 5 at $4.96  (4/11/2020 Post)

Last Public Share Offering (August 2022 at $13.75 per share): Prospectus  (4.162M shares including the greenshoe)

Net Asset Value per share history: Downward valuation adjustments appear to be the main cause for the 2022 NAV per share decline. 

IPO in March 2014 at $15

9/30/22:    $12.69

6/30/22:   $13.01 "Net change in unrealized losses on investments for the second quarter of 2022 was $26.3 million, consisting of $16.8 million of net unrealized losses on our debt investment portfolio and $4.9 million of net unrealized losses on our warrant and equity portfolio resulting from fair value and mark-to-market adjustments, and $4.6 million of net unrealized losses from foreign currency adjustments. Net unrealized gains on investments for the second quarter of 2021 were $3.2 million, resulting primarily from fair value adjustments. The Company’s net realized and unrealized losses were $34.9 million for the six months ended June 30, 2022, compared to net realized and unrealized gains of $5.5 million for the six months ended June 30, 2021."

3/31/22:     $13.84

12/31/21:   $14.01

9/30/21:    $13.92

12/31/20:  $12.97

6/30/20:   $13.17

3/31/20:   $12.85

12/31/19:  $13.34

9/30/19:   $13.47
12/31/18:  $13.50  
9/30/18:   $13.59
12/31/17:  $13.25
9/30/17:   $13.39 
9/30/16:   $13.44
9/30/15:   $14.52 

Average cost per share this account: $13.03 (15+ shares)

Dividend: Quarterly at $.37 per share (regular only), last raised from $.36 effective for the 2022 4th quarter payment. 

TriplePoint Venture Growth (TPVG) Dividend History | Seeking Alpha

Yield at AC this account: 11.36%

Next Ex Dividend: 12/14/22

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

NII per share  = $.51, up from $.32 in the 2021 third quarter 

"13.8% weighted average annualized portfolio yield on total debt investments for the quarter"

"15.4% return on average equity, based on net investment income during the quarter"

"Held debt investments in record level 59 portfolio companies, warrants in 102 portfolio companies and equity investments in 50 portfolio companies as of September 30, 2022" 

"During the third quarter of 2022, the Company recognized net realized losses on investments of $13.2 million, resulting primarily from the sale of Pencil and Pixel, Inc., which was rated Red (5) on the Company’s credit watch list, and its removal from the investment portfolio."  The Pencil and Pixel loans were made in 2020 and totalled $15M principal amount and were acquired at a $15.331M cost. The value assigned to those loans was $15.331M as of 12/31/21, page 87. So either these loans were wildly overvalued on 12/31/21 or the business went south really fast. That company operated as Modsy. Modsy quietly shut down while some customers were still awaiting refunds | TechCrunch 

With BDCs, loans are made mostly to high risk private companies and the coupons reflect the heightened credit risk. Defaults are to be expected but there is always a concern that more mistakes can be made when a BDC grows rapidly in capital, through share issuances and new debt, as TPVG has done. I do not understand why the Pencil and Pixel loans were even made unless too little time was spent evaluating the potential risk. 

Net asset value per share: $12.69, down from $14.01 as of 12/31/22.  

TPVG Assessment of Credit Quality:

As with other BDCs, TPVG net investment income increases as interest rates rise since a majority of loans are priced at spreads to short term rates (e.g. Prime, SOFR). 

TPVG's assessment of interest rates on net investment income: 

10-Q for the Q/E 9/30/22 

Borrowings: Mostly Fixed Coupon SU bonds

2025 SU: 4.5%

2026 SU: 4.5%

2027 SU: 5%

Sell Discussions: Item # 2.J. Pared TPVG in Fidelity Taxable Account- Sold 5 at $16.95;5 at $18.83 and Item #2.K. Pared TPVG in Vanguard Account - Sold 3 at $17.62 (11/26/21 Post)(profit snapshots = $84.38 and $30.46); Item #3.R. Finished Selling Fractional Shares Bought with Dividends-Fidelity Account  (6/4/21 Post)(profit  =$2.01/.461 share); Item # 1.L. Sold 5 TPVG at $15.67 in Schwab Taxable and Item #1.M. Sold 11 TPVG at $15.67-highest cost shares in Fidelity Taxable (5/16/21 Post)(profit snapshots  = $74.43); Item # 1.R. Pared TPVG in Fidelity Account-Sold 5 at $15.35 (4/9/21 Post)(profit snapshot = $20.74); Item # 1.C. Pared TPVG-Sold 4 at $14.85 (4/1/21 Post)(profit snapshot = $13.71); Item # 3.K. Pared-Sold 9 at $13.13-Lots Bought with Dividend (1/30/21 Post)(profit snapshot = $26.95); Item #1.L. Pared TPVG in Vanguard Taxable Account-Sold 10 at $12.41 (8/22/20 Post)(profit snapshot = $17.1; contains snapshots of prior round-trip trade profits); Item # 2.L. Pared TPVG in Vanguard Taxable Account-Sold 10 at $12.6 (8/15/20 Post)(profit snapshot $9.99); Item # 1.J. Eliminated TPVG in Schwab Taxable Account-Sold 30 at $10.58 (8/8/20 Post)(profit snapshot = $94.3); Item # 2.A. Pared TPVG-Sold 14 shares at $15.61-Used Commission Free Trade (9/1/2019 Post)(profit = $46.33); Item # 2.A. Sold 74+ TPVG at $14.87 (7/20/19 Post)(profit snapshot= $246.43); Item # 4.C. Eliminated  TPVG in Roth IRA Account (4/17/19 Post)(profit snapshot = $88.87); Item # 3.B.(4/14/19 Post)(profit = $71.76); Item 3.A. Sold 40 TPVG at $13.44-Schwab Account and Item #3B Sold 50 TPVG at $13.39 Vanguard Roth  IRA (3/13/19 Post)(profit snapshots of $4.17 and $4.49 ); Item 2.B. Sold 50 TPVG at $13.39 (3/4/2017 Post)(profit snapshot = $153.08); Item # 3 Sold 50 TPVG at $12.33 (1/16/17 Post)(profit snapshot = $83.48) 

Needless to say, I am a frequent trader of this stock. 

TPVG Realized Gains to Date: $1,076.87

Goal: Any total return in excess of the dividend payments prior to ROC adjustments to the tax cost basis. 

TPVG Positions in other taxable accounts: AC per share reduced by selling the highest cost lots profitably and keeping the low cost ones. 

Fidelity: 29 shares with a $5.11 AC per cost, yield at 28.96% 

Vanguard: 10 shares with a $4.68 AC per share, yield at 32.62%   

Years to double at 32.62% = 2.46. The Rule of 72 (with calculator) - Estimate Compound Interest

Last Pares in those 2 accounts: Item # 2.J. Pared Again TPVG in Fidelity Account - Sold 5 at $16; 5 at $18.83 and #3.K. Pared TPVG in Vanguard Account - Sold 3 at $17.62  (11/26/21 Post)

H. Added 4 FSK at $18.8 - Fidelity Account: 

Quote: FS KKR Capital Corp.

FSK SEC Filings

Management: External 

Website: FS/KKR Advisor, LLC – One of the largest managers of BDCs

FS KKR Capital Corp. Announces Effectiveness of Four-to-One Reverse Stock Split (June 2020)

I discussed the last earnings report in a recent post. Item # 7D. Added 2 FSK at $19.1 (12/15/22 Post); SEC Filing. I noted in that post that I was in the process of buying back 9 shares sold at $23.04. Item # 2.M. Pared FSK - Sold 9+ at $23.04 (3/24/22 Post) 

Average cost per share this account: $19.72 (75+ shares)

Net asset value per share as of 9/30/22: $25.3 according to the company. 

Dividend: Quarterly at $.61 per share  (regular only)

Some special distributions have been paid.  

FS KKR Capital Corp (FSK) Dividend History | Seeking Alpha

Yield at $19.72 AC: 12.37% (regular only)

Last Ex Dividend: Today 12/13/22, includes a $.07 special distribution. 

I. Bought 5 TCBIO at $20.05: 

Quote: Texas Capital Bancshares Inc. 5.75% Preferred Series B Stock 

This is my first purchase. 

Issuer: Texas Capital Bancshares Inc. (TCBI) 

TCBI Analyst Estimates | MarketWatch

TCBI SEC Filings 

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

Security: Prospectus (offered at $25 in February 2021)

Status in Capital Structure: Equity Preferred Stock, senior only to common stock 

Par Value: $25 

Coupon: 5.75%

Dividends: Quarterly, non-cumulative and qualified. 

Yield at $20.05 = 7.17%

Maturity: Potentially Perpetual 

Issuer Optional Call: On or after 6/15/26

Stopper Clause: Yes, standard. 

Purchase Restriction: Average down in 5 share lots. 

3. Small Ball Sells:

A. Eliminated TRST in Schwab Account - Sold 20 at $38: 

Quote: Trustco Bank Corp.  (TRST)

TRST SEC Filings

2021 Annual Report

10-Q for the Q/E 9/30/22 

Proceeds:  $759.9 

Profit Snapshot:+$129.8

Last Buy Discussion: Item # 2.F. Added to TRST in Fidelity Account - Bought 3 at $30.53 (6/1/22 Post) I still own the shares owned in my Fidelity account. (20 shares with an AC per share at $31.82)

Dividend: Quarterly at $.36 ($1.44 annually)

Yield at $38 = 3.79%

Last Ex Dividend: 12/1/22 (owned as of)

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

Comparisons are to the 2021 third quarter. 

E.P.S. = $1.01, up from $.87

Consensus at $.88

NIM: 3.16%, up from 2.65%

Efficiency Ratio: 49.87%

NPL Ratio: .4%, down from .46%

Charge off Ratio: Net recovery of $132K

Coverage Ratio: 243.6%

ROA: 1.24%, up from 1.08%

ROE: 12.78%, up from 11.4%

Full Service Branches: 144

Sell Discussions: There was a 1 for 5 reverse stock split in 2021 that explains the lower prices. TRST Split History

Item # 3.G. Eliminated TRST-Sold 15+ in Schwab Taxable at $7.45 and 40+ in Fidelity Taxable at $7.44 (5/14/21 Post)(profit snapshots = $111); Item # 3.A. Eliminated TRST Sold 56+ at $8.8 (11/27/19 Post)(profit snapshot = $68.51); Item # 1.D. Pared TRST-Sold 10 at $6.72 (1/9/21 Post); Item # 2.B. Sold 125 TRST at $8.6  (11/2/19 Post); Item # 2 Sold 100 TRST at $6.69 Update For Regional Bank Basket Strategy As Of 7/26/16-South Gent | Seeking Alpha; Item # 1 Sold 315+ TRST at $6.92 (1/11/15 Post)(largest gain to date = $549.47); Sold 50 TRST at $7.29 (11/25/13 Post); Sold 308 TRST at $6.64 (10/28/13 Post)(profit snapshot = $238.38)

TRST Realized Gains to date: $1,352.09  

B. Pared GTY - Sold 5 at $33.48-Fidelity Taxable Account: 

Proceeds: $167.39

Quote: Getty Realty Corp.

Website: Getty Realty

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

2021 Annual Report

Our Portfolio | Getty Realty

SEC Filed Investor Presentation: 10/26/22

Investment Category: Equity REIT Common and Preferred Stock Basket Strategy

Profit Snapshot: +$20.04 (12/6/22 sale only)

Last Discussion: Item # 4.H. Sold 1 GTY in Schwab Taxable Account at $33.11 ( Post) 

New AC per share this account: $27.33 (20 shares)

Snapshot Intraday on 12/6/22 after pare 

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 new AC this account: 6.29% 

Next Ex Dividend: 12/21/22

I discussed the last earnings report in a recent post and have nothing further to add here: 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 Earnings Press Release for the Q/E 9/30/22

C. Pared GIS in Fidelity Taxable Account - Sold 5 at $86.64: 

Quote: General Mills Inc. (GIS)

Proceeds: $433.21

GIS Analyst Estimates | MarketWatch

GIS SEC Filings

General Mills: Brands overview

Profit Snapshot: $145.71 (12/7/22 sale only)

Average cost per share this account after pare: $55.56 (45 shares)

Snapshot Intraday on 12/7/22 after pare

While I am selling my highest cost lots, I am no longer reducing my AC much. The AC before this last pare was at $55.75. 

Dividend: Quarterly at $.54 per share ($2.16 annually)

General Mills, Inc. (GIS) Dividend History | Seeking Alpha

Yield at $55.56: 3.89%

Yield at 86.64 Sales Price: 2.49%

Next Ex Dividend: 1/9/23

Last Discussed: Item # 6.A. Pared GIS - Sold 5 at $81.64 (11/8/22 Post)(profit snapshot = $118.72)

Last Substantive Discussion:  Item # 4.B. Pared GIS in Fidelity Taxable Account - Sold 5 at $80.65 (9/27/22 Post) I discussed the last earnings report in that post. SEC Filed Earnings Press Release for the 1st Fiscal Quarter Ending Q/E 8/28/22 

Last Bond Offering (11/22): $500M in 5.241% SU notes maturing in 2025, Prospectus

My Last GIS SU Bond Buy: Item # 1.H. Bought 2 General Mills 4% SU Maturing on 4/17/25 at a Total Cost of 97.35 (10/25/22 Post)(YTM then at 5.143%); Finra Page For me, it is material that this bond has a YTM significantly in excess of the common stock, even at my $55.56 average cost per share)

D. Sold 1 KMB at $136.97 (highest cost lot in  Fidelity Taxable Account): 

Quote: Kimberly-Clark Corp.

Investment Category: Dividend Growth

KMB Analyst Estimates | MarketWatch

When I last discussed KMB in March 2021, the 2023 E.P.S. average estimate was then at $8.54. As of  12/9/22, the current 2023 E.P.S. consensus was at $6.33. 

SEC Filings

Kimberly-Clark – Our Brands

Investors | Kimberly-Clark Corporation

I view KMB as overvalued at $136.97, but will maintain a very small position as a very weak hold. Based on recent earnings and sales trends, I would classify the stock as a sell but that assumes a continuation of problems that have led to the unsatisfactory earnings, including the negative impacts of input cost inflation on profit margins.  

Recent earnings reports have been impacted by pandemic related buying of toilet tissue and input cost inflation.    

Profit Snapshot: +$5.97

New Average cost per share this account: $125.48 (5+ shares)

Snapshot Intraday on 12/9/22 after pare

Dividend: Quarterly at $1.16 ($4.64 annually), last raised from $1.14 effective for the 2022 second quarter payment. 

Dividend/Split History | Kimberly-Clark Corporation

Yield at $125.48 = 3.7%

Yield at Sales Price of $136.97: 3.39%

Last Ex Dividend: 12/8/22 (owned all as of)

Last Buy Discussion: Item # 2.A. Bought 2 KMB at $131; 1 at $128.98, 2 at $128.8 (3/6/21 Post) 

Last Earnings Report (Q/E 9/30/22): 

E.P.S. = $1.38, down from $1.39 in the 2021 third quarter

Non-GAAP E.P.S. = $1.4, down from $1.62 

Non-GAAP Consensus: $1.44

Organic sales increased due to price hikes: 

"Sales of $5.1 billion in the third quarter of 2022 increased 1 percent compared to the year-ago period. Organic sales increased 5 percent as net selling prices rose 9 percent and product mix increased sales 1 percent while volumes declined 5 percent. Changes in foreign currency exchange rates reduced sales 4 percent."

Note the decline in volume as prices increased 9%. 

"Results were impacted by $360 million of higher input costs. Lower volumes, higher marketing, research and general expense as well as unfavorable foreign currency effects reduced operating profit in the quarter. Results benefited from higher net selling prices and $80 million of cost savings from the company’s FORCE (Focused On Reducing Costs Everywhere) program."

2022 Outlook: 

2022 GAAP E.P.S. Range: $5.67 to $6.1

Adjusted 2022 Range: Lower end of $5.6 to $6

Analyst Reports (available to Schwab customers): 

Morningstar (11/13/22): 3 stars with a $128 fair value estimate and a narrow moat rating. Analyst calculates that commodity cost inflation reduced gross margins by more than 700 basis points. Notes that KMB expects cost inflation of $1.4-$1.6B in 2022 on top of the $1.5B in incremental costs experience in 2021.   

Argus (10/25/22): Hold when the price was then at $120.21

S&P (10/26/22): Hold with a 12 month PT of $116.

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.