Economy:
First Estimate of 4th Quarter Real GDP: +2.9%; Gross Domestic Product, Fourth Quarter and Year 2022 (Advance Estimate) | U.S. Bureau of Economic Analysis (BEA)("The PCE price index increased 3.2 percent, compared with an increase of 4.3 percent. Excluding food and energy prices, the PCE price index increased 3.9 percent, compared with an increase of 4.7 percent.")
Personal Consumption Expenditures: +2.1%
While this report was positive, about 1/2 of the 2.9% GDP increase was caused by a rapid rise in inventories which is not sustainable. What some economists call "Core GDP", which includes only consumer spending, business fixed investment and home building, was up at a .2% annual rate. Wesbury - Q4 GDP Initial.pdf
I am expecting home building to contribute to 2023 GDP as mortgage rates fall. The first estimate of 4th quarter "residential investment" was a 26.7% annual rate of decline:
PCE inflation December 2022: Key Fed measure eased, spending declined
Annual PCE Inflation: 5%, down from 5.5% in the previous month
Annual Core PCE Inflation 4.4%, down from 4.7% in the previous month.
Mortgage Applications Increase in Latest MBA Weekly Survey | MBA
Pending Home Sales Increased 2.5% in December, Ending Six-Month Slide
Treasury Yield Curve January 2023:
+++
Allocation Shifts Discussed in this Post:
Treasury Bill Auction Purchases: +$5,000 in principal amount
Treasury Secondary Market Purchase: +$2,000 in principal amount
CDs: +$5,000
Treasury and CD Purchases: +$12,000
Corporate Bonds: Zero
Individual US Common Stocks: -$2,173.84
(Consisting of $2,535.29 in proceeds minus $361.45 in purchases)
Realized Gain U.S. Common Stocks = +$590.28
Individual Canadian REITs: -C$2,761 (200 units DIR.UN:CA)
Realized Gain Canadian REIT Sale: +C$653
Net Stock Funds: -$150.18 (FENY proceeds - THQ purchase)
+++
Putin and His Servile Orcs:
MH17: Human rights court will hear Netherland's case against Russia - BBC News Russia will never admit its responsibility for this civilian massacre.
"Very Dangerous" Wagner Convict Fighters in Ukraine Are Returning to Russia - The New York Times The NYT reviewed records from one Russian penal colony that showed that the recruits were in prison for murder, rape and other violent crimes. The experience of fighting in Ukraine will make them more dangerous to Russia's civilian population. When those released convicts commit more violent crimes, it is clear that Putin TV will not disclose that information to the Russian public.
Russian State TV Evokes Holocaust, Claims Baltic States 'Governed by Nazis' Are they crazy and stupid or just pretending to be crazy as a scare tactic?
Do you remember what people are dying for in Ukraine? It’s been 11 months now. - YouTube I wonder whether this channel, called "1420", is soft Russian propaganda aimed at Western audiences. If that is the case, having Russians parrot Putin TV talking points during interviews is not effective and simply creates a very negative impression of the Russians being interviewed. I suspect that a super majority of Russians support the invasion and will simply regurgitate the Orwellian state's rationale to justify their position. The remainder, still residing in that totalitarian state, are willing to acquiesce without a whimper of dissent.
66,000 war crimes committed by Russians have been reported so far-The Washington Post
On the deadly road from Mykolaiv to Nikopol, scenes of Russia’s brutal war - The Washington Post
Hear what Russians think about Western tanks for Ukraine - YouTube
‘Caldron of fire’: Battle between Ukrainian forces and Wagner group intensifies in Bakhmut - YouTube
Russian teen faces years in jail over social media post criticizing Ukrainian war | CNN
I recall reading comments made by Putin, who routinely creates an invented alternate reality for Russians, where he blamed Poland for starting WWII. Putin Blames Poland for World War II - The Atlantic After making those claims, the President of Russia's "Parliament", demanded that Poland apologize for starting WWII.
WWII actually started in 1939 when Nazi Germany and the Soviet Union, who were natural allies at that time, invaded Poland, carving that nation up in two as part of the Molotov–Ribbentrop Pact - Wikipedia
Russia is and will remain a violent and aggressive Orwellian state whose government is incapable of telling the truth. Russia is not going to change no matter what the western democracies do. Favorable economic relations with European and other democracies that benefited ordinary Russians and the Russian economy had no lasting impact and restoring those relations, which is highly unlikely for decades and possibly for centuries, will have no impact. Russia has revealed its true character in this war once again and that is not going to change or be forgotten.
What does Putin believe that he can accomplish in Ukraine?
Sanctions are not going to end unless Russia retreats back to its borders, pays reparations to Ukrainian citizens and companies, and turns over tens of thousands of its war criminals for prosecution at the Hague along with documents evidencing those war crimes and witnesses to them who did not participate.
Ukraine is not going to recognize the recently annexed internationally recognized Ukraine territories as belonging to the aggressor Russia. According to Russian diplomats, serious peace conditions can occur once the west withdraws support for Ukraine, Ukraine agrees to "denazify" and "demilitarize" and to cede control of those Ukrainian territories to Russia. In Putin's upside down worldview, it is the West's fault that Ukraine will not agree to those peace terms.
Even if Russia has a successful offensive this Spring that captures all of those recently annexed Ukrainian territories, that is not going to end the war since Ukraine will launch counter offensives to retake whatever territory is lost to Russian aggression. The Ukrainian army has certainly proven that it is far more competent and motivated than the Russian army and is now better supplied and trained.
I am expecting a Russian offensive to start before training is completed on the tanks recently promised to Ukraine. Delivery of those tanks to the front lines will occur in time for a summer Ukrainian counter-offensive.
Putin has brought Russia a long term war that has no end in sight and will result in hundreds of thousands of Russian deaths, at least two times more than that injured, lifelong emotional trauma for the survivors, and a much lower standard of living for the Russians lasting decades. Those results are now written in stone. And what are the positives that Russia and its citizens will gain? Nothing.
+++
Trump and His Party:
Donald, like his soulmate in Russia, is a creator of an upside down alternate reality divorced from truth.
Donald tweeted that his unrivaled stamina was proven once again by winning a golf tournament at his club.
Trump won the golf tournament even though he was not present for 1 of the 2 rounds. Donald Trump declares himself winner of his own golf championship He used one of his scores, tabulated by him, from a prior round. Other players were surprised to learn that Don the Con was leading by 5 strokes after the first round even though he did not play. Donald needs an independent PGA tour official to monitor his play, score and conformity to the rules of golf since he is a notorious cheat. Commander in Cheat: How Golf Explains Trump-Kindle Store
George Santos: Justice Department asks FEC to stand down as prosecutors probe New York congressman - The Washington Post Santos is going to be indicted before year end.
George Santos Claims He Survived ‘Assassination Attempt' and Mugging in NYC | NBC New York - YouTube
How George Santos pitched investors on Harbor City, an alleged Ponzi scheme - The Washington Post
In search of George Santos’s Baruch College volleyball career - The Washington Post Santos did not attend Baruch College, but nonetheless claims that he graduated summa cum laude and attended the university on a volleyball scholarship. According to Santos, he was a volleyball phenom who "sacrificed both my knees and got very nice knee replacements, knee replacements from playing volleyball." How George Santos Made Baruch Volleyball Famous - The New York Times Santos even claimed that his team beat Yale which does not even have a men's volleyball team. In the last tally that I reviewed, 4 GOP House representative have called upon Santos to resign.
The newly elected governor of Arkansas, the republican Sarah Huckabee who was Donald's press secretary, promised to "get the over-regulating, micromanaging, bureaucratic tyrants off your backs, out of your wallets and out of your lives". Washington sends Arkansas more than twice what Arkansas residents pay in taxes. Balance of Payments Portal | Rockefeller Institute of Government (2020 federal government per capita receipts from Arkansas at $6,476 balanced against $13,337 in per capita federal government payments excluding Covid related payments and $17,318 with Covid) My thought is that the House republicans need to tie their approval of a debt limit increase to cutting back federal spending in red states to match the tax receipts received from those states.
+++
1. Sold 200 DIR.UN:CA at C$13.815 (C$2 Commission):
Quote: DIR-UN.TO
Website: Dream Industrial REIT
Investment Category:
Profit Snapshot: +C$653
Item # 1. Bought 100 DIR.UN:CA at C$12.23 (7/6/22 Post); Item # 3.B. Bought 100 DIR.UN:CA at C$8.83 (4/4/20 Post)
Dividend: Monthly at C$.05833 per unit (C$.70 annually)
I do not anticipate a dividend raise.
Yield at Sales Price: 5.07%
Last Ex Dividend: 1/30/23
Last Earnings Report (Q/E 9/30/22): Dream Industrial REIT Reports Strong Q3 2022 Financial Results
 |
| Footnotes omitted from snapshot due to length |
Other Recent News: Dream Industrial REIT Announces the Formation of a Canadian Industrial REIT JV with GIC and the Acquisition of Summit Industrial REIT (11/7/22) Dream will own 10% and will manage the JV properties for a fee.
Sell Discussions: Item # 3.A. Sold 100 DIR.UN:CA at $11.92 (4/27/19 Post)(profit snapshot = C$219); Item # 3.B. Sold 300 DIR.UN:CA at C$9.48 (4/2/2018 Post)(profit snapshot = +C$389)
In my Fidelity account, there was another sale of 700 units that netted a CAD profit but a USD loss of $6.88.
 |
| DREUF Symbol is for the USD Priced Grey Market Shares |
The USD tax reported profit or loss will be based on converting the CAD purchase cost into USDs and the proceeds paid in CADs into USDs. That is what Fidelity did in the previous snapshot by using the USD prices for DREUF.
Commissions Paid to Fidelity for 4 Transaction: C$76
Sold at C$10.09 in 2018: Proceeds at C$7,044
Cost: C$6,358 (2 transactions in 2014 and 1 in 2015)
CAD Profit: C$686
I am fine with generating a C$686 profit that generates a US$6.88 loss for tax reporting purposes.
The $6.88 loss in USDs with a CAD profit at C$686 indicates that the CAD fell significantly in value during my holding period. For example, most of the USD loss was associated with a 300 unit purchase on 5/23/14 when the CAD/USD was near .92. The exchange rate was near .79 when that lot was sold. Canadian Dollar to US Dollar Exchange Rate Chart | Xe That 300 unit lot was bought at C$9.53 and sold at C$10.09.
I quit using Fidelity for international trades in local currencies due to much higher currency conversion fees and commissions compared to Interactive Brokers which is the account that I now use to buy international stocks in local currencies. IB would have charged C$14 for all 4 DIR.UN:CA trades in 2014, 2015 and 2018.
CAD Realized DIR.UN:CA Gains to Date: +C$1,947
2. Small Ball Sells:
A. Eliminated KEY-Sold 15 at $17.04; 10 at $18.16; 10 at 18.22:
Quote: KeyCorp (KEY)
KEY Analyst Estimates | MarketWatch
I was not pleased by the 2022 4th quarter report, discussed below, and the overall mediocre performance since my purchase of these shares.
Proceeds: $619.39
Investment Category: Regional Bank Basket Strategy I started to keep track realized gains in regional bank stocks in 2009 through taking snapshots.
Profit Snapshots: +$79.03
 |
| 15 shares +$72.86 |
The two ten share lots were recently purchased.
Dividend: Quarterly at $.205 per share, last raised from $.195 effective for the 2022 4th quarter payment. Prior to the Near Depression in 2008, KEY was paying a $.365 per share dividend which was ultimately cut to $.01 effective for the 2009 second quarter payment. KEY Dividend History | Nasdaq The dividend history is consequently extremely poor.
Last Ex Dividend: 11/28/22
Last Earnings Report (Q/E 12/31/22): SEC Filed Press Release
Comparisons are to the 2021 4th quarter
E.P.S. = $.38, down from $.64
Consensus at $.55
Earnings were hit by a $265M provision for credit losses. KEY and several other banks are adding to credit loss reserves in anticipation of a 2023 recession or weak economy economy.
NIM: 2.73%, up from 2.44% but nonetheless disappointing given the rise in interest rates Y-O-Y.
"Cash" Efficiency Ratio: 60.3%, up from .594%
NPL Ratio: .32%, down from .45%
Charge off ratio: .14%, up from .08%. The addition to credit loss reserves in the 4th quarter exceeded charge offs by $.20 per share.
ROTE: 18.07%, down from 18.69%
KEY Realized Gains to Date - Starting in 2009: $817.98
The largest gain was in 2013: Item # 1. Sold: 140 KEY at $11.8 (7/27/13 Post)(profit snapshot = $429.32) Some of those shares were bought at less than $5.
Analyst Reports (available to Schwab customers):
S&P (10/28/22): 3 stars with a $17 PT. The analyst maintained those ratings after KEY released its 4th quarter report.
Argus (1/20/23): Buy but reduced PT from $26 to $21. I do not agree with the analyst characterization of KEY's efficiency as impressive. The efficiency ratio is need of improvement.
Morningstar (1/19/23): 4 stars with a FV of $24. The analyst notes that KEY expects net interest income to rise only 6%-9% this year and loans to increase by the same percentage. That implies no NIM improvement which ended 2022 at a disappointing level.
I do not have access to these reports:
RBC (1/20/23): Lowers PT to $22 from $24, keeps outperform rating.
Wedbush (1/20/23): Lowers PT to $17 from $18, keeps neutral rating.
Jeffries (1/20/23): Lowers PT to $18 from $19.
B. Pared FENY Again in Fidelity Taxable Account - Sold 5 at $24.39; 5 at $25.18:
Quote: Fidelity MSCI Energy Index ETF
Sponsor's website: FENY | ETF Snapshot - Fidelity
Expense Ratio: .08%
Proceeds: $247.88
Profit Snapshot: $86.78 (1/20/23 and 1/26/23 sales only)
Average cost per share before pares: $13.19
Average cost per share after pares: $12.47 (40+ shares)
 |
| Snapshot Intraday on 1/26/23 after second 5 share pare |
Dividend: Quarterly at a variable rate.
Last 4 Dividends: $.795 per share
Yield at New AC Using $.795 annual: 6.38%
2022-2023 Sell Discussions: Item # 4.D. Pared FENY- Sold 5 at $22.85 (1/10/23 Post)(profit snapshot = $33.69)(contains snapshots of prior trades); Item # 6.D. Pared FENY - Sold 10 at $23.17 (11/1/22 Post)(profit snapshot = $70.64); Item # 4.C. Pared FENY in Fidelity Taxable Account - Sold 10 at $25 (6/15/22 Post)(profit snapshot = $88.89); Item # 2.C. Pared FENY Again - Sold 10 at $22.74 (6/1/22 Post)(profit snapshot = $66.29)Item # 3.J. Sold 4.918 FENY at $21.68 (4/14/22 Post); Item # 3.J. Sold 4.918 FENY at $21.68 (4/14/22 Post)(profit snapshot = $27.41); Item # 2.I. Pared FENY- Sold 5 at $20.95 (4/7/22 Post)(profit snapshot = $24.2)
Prior to 2022, the two largest annual gains were in 2014 and 2017: Item # 4. Eliminated FENY - Sold 60+ at $18.83 (10/26/17 Post)(profit snapshot = $127.78); Item # 5 Sold 50 FENY at $27.81 (8/6/14 Post)(profit snapshot - $115.96) A long term bear market in energy stocks started in the later part of 2014 and continued through 2020 when the FENY annual total return was -33.15%; -9.89% in 2014; -2.31% in 2017; -19.98% in 2018 and barely positive at +9.07% in 2019)
FENY – Performance – Fidelity® MSCI Energy ETF | Morningstar (Total Return in 2022 = +63.09% and +55.69% in 2021. Even with those returns, the annual average return over the 5 year period ending 1/20/23 was +7.74%) If a fund goes down 50% in 1 year as some did in 2022, the fund would need to gain 100% to erase that 50% and move to a zero average annual rate of return.
FENY – Portfolio – Fidelity® MSCI Energy ETF | Morningstar
FENY Realized Gains: +$759.7
WTI Crude Oil Prices - 10 Year Daily Chart | MacroTrends
Natural Gas Prices - Historical Chart | MacroTrends
C. Eliminated DBX - Sold 9 at $23.3 and 4 at $23.385:
Proceeds: $303.34
Quote: Dropbox Inc. (DBX)
IPO at $21 in March 2018. Prospectus
Investment Category: Lottery Ticket Basket
Profit Snapshots: $58.14
Last Discussed: Item # 2.D. Added to DBX - Bought 1 at $18.1; 1 at $17.79 (10/28/2020 Post); Item # 1.C. Started DBX as a Lotto-Bought 5 at $19.1; 1 at at $19.1; 1 at $18.87; 1 at 18.7 (10/17/20 Post)
Dividend: None and none expected.
Last Earnings Report (Q/E 9/30/22): SEC Filed Press
GAAP Net Income of $83.2M, up $75.6M
GAAP E.P.S. = $.23, up from $.19
Revenues: $591M, up from $550.2M
Non-GAAP E.P.S. = $.43
GAAP to Non-GAAP Reconciliation:
Paying Users: 17.55M, up from 16.49M
GAAP Operating Margin: 15.1%, up from 14%
D. Eliminated MS - Sold 2 at $97.66:
Quote: Morgan Stanley (MS)
Proceeds: $195.32
MS Analyst Estimates | MarketWatch
$52 week range: $72.05 to $109.73
Profit Snapshot: +100.42
Last Discussed: Item # 3.A. Bought 1 MS at $47.97; 1 at $46.93 (11/7/2020 Post)
Dividend: Quarterly at $.775 per share, last raised from $.7 effective for the 2022 third quarter payment.
Morgan Stanley (MS) Dividend History | Seeking Alpha
Last Ex Dividend: 1/17/23
Last Earnings Report (Q/E 12/31): SEC Filing While earnings were better than expected, I was not impressed.
Comparisons are to the 2021 4th quarter.
Revenues: $12.7B, down from $14.5B
Net Income: $2.2B, down from $3.7B.
GAAP E.P.S.: $1.26, down from $2.01
E.P.S. Excluding Integration Expenses: $1.31, down from $2.08.
Consensus Non-GAAP E.P.S. = $1.19
Analyst Reports (available to Schwab customers):
Morningstar (1/17/23): 3 stars with a FV of $91
S&P (1/17/23): 3 stars with a 12 month PT of $95, raised from $90
Argus (1/17/23): Buy with a 12 month PT of $104.
E. Pared GMRE in Schwab Taxable Account - Sold 15 at $10.465:
Quote: Global Medical REIT Inc. (GMRE)
Proceeds: $159.68
Website: Global Medical REIT
Management: Internal
10-Q for the Q/E 9/30/22 "The weighted average interest rate and term of the Company’s debt was
Proceeds: $159.69
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Profit Snapshot: +$3.39
Average cost per share before pare this account: $9.01
Average cost per share after pare this account: $8.36
 |
| Snapshot Intraday on 1/20/23 after pare |
Dividend: Quarterly at $.21 per share
Yield at New AC = 10.05%
Last Ex Dividend: 12/21/22
Last Earnings Report (Q/E 9/30/22):
SEC Filed Press Release and Supplemental
FFO per share: $.23
AFFO per share $.25
In calculating AFFO, there is no deduction from FFO for routine maintenance expenditures.
The AFFO calculation is consequently not equivalent to cash available for distribution. AFFO per share would likely be much lower with that deduction.
There is line item elsewhere for a $3.663M expenditure for "Capital expenditures on existing real estate property" which can be found, not in the FFO to AFFO calculation, but under "Investing activities" that use cash.
Cash spent on capital expenditures that improve the value of the property are not deducted but maintenance expenses are deducted. Adjusted Funds From Operations - Overview, How To Calculate, Example
I do not have enough information to separate out maintenance expenditures from the general category of "Capital expenditures", but suspect that most of those expenditures are for routine maintenance which can vary significantly quarter to quarter.
If I reduced FFO by say $3M for maintenance expenditures in the 3rd quarter, AFFO would be $14.133M or $.2027 per share which does not cover the quarterly dividend of $.21.
"As of September 30, 2022, the Company’s portfolio was 96.8% occupied and comprised of 4.9 million leasable square feet with an annualized base rent of $113.7 million. As of September 30, 2022, the weighted average lease term for the Company’s portfolio was 6.4 years with weighted average annual rental escalations of 2.1%, and the Company’s portfolio rent coverage ratio was 4.7 times."
GMRE Realized Gains = $390.99
The largest gain was in 2018: Item # 4.A. Eliminated GMRE-Sold 98+ at $9.41 (11/28/18 Post)(profit snapshot = $159.1)
F. Eliminated QCOM in Vanguard Taxable Account - Sold 4 at $131:
Quote: Qualcomm Inc.
QCOM Analyst Estimates | MarketWatch
Proceeds: $523.99
Profit Snapshot: $33.81
Last Discussed: Item # 1.I. Bought 2 QCOM at $126,49; 1 at $123.2 in Vanguard Account; 2 at $129.11 in Schwab Account; and Sold 1 in Fidelity Account at $166.5 (11/11/21 Post)(profit snapshot = $43.61)
Current Position: 2 shares in my Schwab account. The plan is to keep those shares and to consider buying more in that account when the purchase reduces my average cost per share.
Dividend: Quarterly at $.75 per share, last raised from $.68 effective for the 2022 first quarter payment. There was no increase in the 2023 first quarter
Next Ex Dividend: 3/1/23
Last Earnings Report (F/Q 9/25/22): This report was for the 4th fiscal quarter.
GAAP E.P.S. = $2.54, up from $2.45
Non-GAAP E.P.S. = $3.13, up from $2.55
Revenues: $11.396B GAAP, up 22%
2023 1st Quarter Guidance: Non-GAAP E.P.S. $2.25-$2.45
Reconciliation of GAAP to Non-GAAP:
Last Bond Offering (11/2022): Prospectus
Use of Proceeds: Proceeds will be used to retire lower cost debt.
G. Eliminated UBSI - Sold 1 at 39.36 and 10 at $39.75:
Quote: United Bankshares Inc.
Investment Category: Regional Bank Basket Strategy
Proceeds: $436.86
Profit Snapshots: $187.03
Last Discussed: Item # 2.I. Pared UBSI - Sold 6 at $40.81 (5/28/21 Post)(profit snapshot = $92.55)
Last Substantive Buy Discussion: Item # Restarted UBSI-Bought 1 at $26.6; 1 at $26.34; 3 at $25.95; 5 at $25.54; 2 at $24.6; 1 at $24.32; 2 at $24.04; 1 at $23.68; 1 at $22.21; 1 at $21.81; 1 at $21.3; 2 at $20.9 (9/26/20 Post)
Dividend: Quarterly at $.36 per share, last raised from $.35 effective for the 2021 4th quarter payment.
United Bankshares, Inc. (UBSI) Dividend History | Seeking Alpha
49th Consecutive Year of Dividend Increases for United Bankshares, Inc. | Business Wire (11/18/22)
Last Ex Dividend: 12/8/22
Last Earnings Report (Q/E 12/31/22): SEC Filed Press Release (released after my sale)
Net income: $99.765M, up from $73.852M in the 2021 4th quarter
E.P.S. = $.74, up from $.56
The 2021 4th quarter included $20.4M in expenses related to the acquisition of Community Bankers Trust that distorts the Y-O-Y comparisons.
Consensus at $.66
NIM = 3.87%
Efficiency Ratio: 49.07%
NPA Ratio: .21%
NPL Ratio: .29%
ROTE: 15.28%
UBSI Realized Gains to Date: $1,628.39
The largest gain was in 2015: Item # 1 Sold 50 UBSI at $41.58-Update For Regional Bank Basket Strategy As Of 8/7/15 - South Gent | Seeking Alpha (profit snapshot = $1,235.01)
KRE Chart Starting in 2006: SPDR S&P Regional Banking ETF (KRE) Interactive Stock Chart (topped out near $51 in early February 2007, when negative news events started to come out on subprime and Alt-A loans, bottoming in March-June 2009 near $17, then sideways chop action mostly between $20-$30 until January 2013, then a breakout formation topping out near $68 in June 2018, major spikes up and down in 2020, and a current price below the June 2018 top with a going nowhere channel mostly between $58 to $73 starting in February 2021.
H. Liquidation of Fractional Share in Vitesse Energy Received in a JEF Spinoff:
Quote: Vitesse Energy Inc. (VTS)
Proceeds: $8.65
Profit Snapshot: +$2.08
I own only 5 shares of Jefferies Financial Group Inc. (JEF).
Owners of JEF received 1 share of VTS for every 8.49668 JEF shares owned on the ex distribution date. SEC Filing
As a result of this spinoff, my cost basis in JEF was reduced from $31.02 to $29.7. Item # 3.J. Bought 5 JEF at $31.02 (7/27/22 Post)
I. Eliminated TXN - Sold 1+ Share:
Proceeds: $288.06
Quote: Texas Instruments Inc. (TXN)
Analog | Embedded processing | Semiconductor company | TI.com
TXN Analyst Estimates-MarketWatch When I last discussed TXN, I noted that the 2023 consensus E.P.S. estimate was $8.83 as of 7/20/22. As of 1/27/23, the estimate was $7.66.
Profit snapshots: +$39.6
Last Discussed: Item # 2.G. Bought 1 TXN at $148.67 (7/13/22 Post)
When discussing TXN, I have expressed an opinion that the stock was overvalued. While investors will frequently value non-technology companies with highly cyclical earnings in a 8-12 P/E range near or at cyclical peak earnings, TXN which experiences the same up and down erratic earnings cycles will be awarded a much higher P/E.
Recent annual GAAP E.P.S.:
2017: $3.61
2018: $5.59
2019: $5.24
2020: $5.97
2021: $8.26 2021 10-K at page 24
2022: $9.41
Dividend: Quarterly at $1.24
Texas Instruments Incorporated (TXN) Dividend History | Seeking Alpha
Last Ex Dividend: 1/30/23
Last Earnings Report (Q/E 12/31/22): SEC Filed Press Release
E.P.S. = $2.13, down from $2.27
"Revenue decreased 11% sequentially and 3% from the same quarter a year ago. As we expected, our results reflect weaker demand in all end markets with the exception of automotive."
"TI's first quarter outlook is for revenue in the range of $4.17 billion to $4.53 billion and earnings per share between $1.64 and $1.90." (emphasis added). E.P.S. for the 2022 first quarter was reported at $2.35. 10-Q at page 2
For 2022, free cash flow was reported at $5.923B, down from $6.294 in 2021.
Valuation: Looking at recent E.P.S. history and the current forecast, I am just not comfortable buying TXN at more than 15 x. $8 annual E.P.S. or $120 per share. TXN is currently in a down earnings cycle. The fact that I am uncomfortable buying at more than $120 will not prevent me from a small ball buy at less than $150 again.
3. Small Ball Buys:
While most regional banks that I follow have reported decent 4th quarter earnings, and good Y-O-Y improvements in their net interest margins, a noteworthy number have reported negative NIM comparisons or barely positive.
An example is Washington Trust Bancorp Inc. (WASH), who reported a 2022 4th quarter NIM of 2.65%, down from 2.71% in the 2021 4th quarter. WASH SEC Filed Earnings Press Release WASH missed the consensus E.P.S. estimate as well. The Stock Jocks responded by hammering the stock. WASH Historical Prices & Data (closed at $46.8 on 1/25/23 and at $42.08 the next day)
For the banks experiencing problems with Y-O-Y NIM comparisons, the causes appear be an inordinate amount of deposits that were acquired wholesale, where coupon rates were higher and repriced quicker than what was paid on customer deposits, accompanied by a failure to increase interest yields in owned securities and loans to offset those higher deposit costs. The end result was a failure to generate a material improvement in NIM compared to the 2021 4th quarter notwithstanding the rise in interest rates.
For those who buy CDs through brokerage accounts, there has been a significant downtrend in yields over the past several weeks, though yields remain substantially higher than in the 2021 first quarter.
A. Added 5 THQ at $19.54:
Quote: Tekla Healthcare Opportunities Fund Overview - A CEF
Sponsor's Website: Tekla Capital
SEC Filed Annual Report F/Y Ending 9/30/22
Last Discussed: Item #5.F. Started THQ in Schwab Taxable Account - Bought 10 at $20.05 (11/22/22 Post) I have nothing substantive to add to that recent discussion.
Data Date of 1/23/23 Purchase:
Closing Net Asset Value per share: $22.1
Closing Market Price: $19.59
Discount: -11.36%
Sourced: THQ - CEF Connect (Click "Pricing Information" tab)
Average cost per share this account: $19.88 (15 shares)
Dividend: Monthly at $.1125 per share ($1.35 annually)
Yield at AC: 6.79%
Last Ex Dividend: 1/19/23
B. Added 5 COLB in Vanguard Taxable Account at $27.5:
Quote: Columbia Banking System Inc.
COLB Analyst Estimates | MarketWatch
Investment Category: Regional Bank Basket Strategy
Last Discussed: Item # 4.E. Pared COLB in Schwab Taxable Account - Sold 5 at $34.32(11/22/22 Post); 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: $29.09 (15 shares)
Dividend: Quarterly at $.30 per share
Yield at AC this account = 4.125%
Next Ex Dividend: 2/3/23
Last Earnings Report (Q/E 12/31/22): SEC Filed Press Release
Comparisons are to the 2021 4th quarter.
E.P.S. = $.88, up from $.55
Non-GAAP E.P.S. = $.93, excludes 5 cents in acquisition related expenses, up from $.67 which excludes 12 cents in acquisition related expenses.
Net Interest Margin: 3.64%, up from 3.05%
Efficiency Ratio: 52.29%, down from 59.57%
NPA Ratio: .07%, down from .11%
NPL Ratio: .12%, down from .22%
Charge off ratio: Net recovery.
ROTE: 22.3%, up from 10.36%
Expects to complete the Umpqua acquisition on 2/28/23.
C. Added 5 HTBK in Vanguard Taxable Account at $11.88:
Quote: Heritage Commerce Corp.
On the day of this purchase (1/27/22), HTBK closed at $11.93, down $.50 or 4.02% from the prior close.
HTBK Analyst Estimates | MarketWatch (as of 1/28/23, the 2023 consensus E.P.S. was at $1.39)
Last Discussed: Item # 3.A. Bought 5 HTBK at $11.8 - Fidelity Taxable Account (8/16/22 Post)
Average cost per share this account: $11.67 (20 shares)
Dividend: Quarterly at $.13 per share ($.52 annually)
Yield at AC = 4.46%
Next Ex Dividend: 2.8/23
Last Earnings Report (Q/E 12/31/22): SEC Filing
I had a more positive reaction to this report than the Stock Jocks.
Comparisons are to the 2021 4th quarter.
E.P.S. = $.34, up from $.23
NIM: 4.1%, up from 2.84%
Efficiency Ratio: 44.98%, down from 54.32%
NPL Ratio: .07%, down from .12%
NPA Ratio: .05%, down from .07%
Coverage Ratio: 1,959.26%
ROE: 13.4%, up from 9.35%
ROTE: 18.89%, up from 13.5%
Total Capital Ratio: 14.2%, up from 14.4%
Loan to deposit ratio: 75.14%
Interest Income up 23%
D. Bought 5 TRST at $32.91 in Schwab Taxable Account:
I bought back 5 of the 20 shares sold at $38.
The stock experienced an 11.49% decline on 1/25/23, closing that day at $33.06, apparently in response to a Piper Sandler downgrade from neutral to underperform which was accompanied by a PT change to $36 from $39. I do not have access to that report. The downgrade was apparently in response to the earnings report, released on 1/23/23 and discussed below, which was favorable IMO. I can not explain the downgrade.
Quote: Trustco Bank Corp. (TRST)
Investment Category: Regional Bank Basket Strategy
Last Discussed: Item # 3.A. Eliminated TRST in Schwab Taxable Account - Sold 20 at $38 (12/13/22 Post)
Dividend: Quarterly at $.36 per share, last raised from $.35 effective for the 2023 first quarter payment.
TrustCo Bank Corp NY (TRST) Dividend History | Seeking Alpha
Yield at $32.91: 4.3756%
Last Ex Dividend: 12/1/22
Last Earnings Report (Q/E 12/31/22): SEC Filed Earnings Press Release
Comparisons are to the 2021 4th quarter.
Net Income: $20.91M, up from $16.241M
E.P.S. = $1.10, up from $.85
Consensus at $.99 per Schwab
NIM: 3.34%, up from 2.69%
Efficiency Ratio: 48.75%, down from 58.5%
NPL Ratio: .37%, down from .42%
Coverage Ratio: 2.4x
ROA = 1.38%, up from 1.05%
ROE = 13.91%, up from 10.92%
TRST Realized Gains to Date: $1,352.09
4. Treasury Auction Buys: +$5,000
A. Bought 2 Treasury Bills at 1/24/23 Auction:
1 Year T Bill
Matures on 1/25/24
Interest: $90.39
Investment Rate: 4.692%
B. Bought 3 Treasury Bills at 1/25/23 Auction-Funds Sourced from Schwab Sweep Account:
17 week/119 Day T Bill
Matures on 5/30/23
Interest: $45.82
Investment rate: 4.757%
5. Treasury Secondary Market Purchases: +$2,000
Purchases funded from Schwab sweep account.
I am currently near $1K in my Schwab sweep account and consequently will not be able to participate in today's auctions. I will receive in that account later this week $10K from an early municipal bond redemption and will redirect that amount into a 3 month T bill auction next week. Another $5K T bill will mature on 2/2. I will keep those funds in the Schwab sweep account to fund possible stock purchases.
A. Bought 1 Treasury 2.25% Coupon Maturing on 12/31/23 at a Total Cost of 97.7703
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YTM at TC = 4.72%
Current Yield at TC = 2.3%
I now own 5.
B. Bought 1 Treasury 1.625% Coupon Maturing on 10/31/23 at 97.7274:
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YTM at Total Cost: 4.708%
Current Yield = 1.663%
I now own 4.
6. CDs-FDIC Insured: +$5,000
A. Bought 2 Schwab Bank 4.7% CDs Maturing on 2/22/24:
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Interest paid semiannually.
B. Bought 2 Schwab Bank 4.7% CDs Maturing on 11/2/23:
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Interest paid at maturity.
C. Bought 1 UBS Bank 4.7% CD Maturing on 2/1/24:
Interest paid monthly.
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.
