Economy:
For home sales last year, about one third were purchased using cash. See how all-cash offers dominate the housing market near you - Washington Post
That is consistent with Census data which has shown for well over a decade that about 1/3 of U.S. homes are owned free and clear of debt. Back in 2011, I referred to that data to highlight that the debt to disposable income data, which included those households having no mortgage debt, was actually a far more serious problem in 2007. Debt Burden of the American Household (6/14/2011 Post)
While the debt to disposable income ratio was at an all time high near 134% back in the 2007 4th quarter, the ratio would have been far more worrisome excluding those households with no debt.
Treasury Yield Curve February 2023:
Ten Year TIP Real Yield 2/10/23 = 1.41%
Breakeven Inflation Ten Year TIP = 2.33%
VMFXX-Vanguard Federal Money Market Fund: 7 day yield at 4.49% as of 2/9/23
If the Bond Ghouls are correct in predicting a 25 basis point FF increase on 3/22 and another .25% hike on 5/3, I would expect VMFXX to exceed a 5% yield sometime in May.
 |
| 3/22/23 Fed Meeting |
 |
| 5/3/23 Fed Meeting |
+++
Allocation Shifts Discussed in this Post:
Treasury Auctions: +$10,000 principal amount
Treasury Secondary Market Purchases: +$3,000 principal amount
Corporate Bonds: +$1,000 principal amount
Treasuries and Corporate Bonds: +$14,000
Individual Common Stocks: -$6,400.76
(Consisting of $6,487.56 in proceeds minus $86.8 purchase)
Realized Gains Common Stocks: +$953.42
2023 Y-T-D: U.S. Individual Common Stocks Net Outflow: -$17,543.15
2023 Y-T-D Stock Funds Net Outflow: -$3,998.02
2023 Y-T-D Net Outflow U.S. Stocks and Stock Funds: -$21,541.17
My primary goal is capital preservation followed by income generation. The existence of risk free income investments that yield 4%-5% is causing me to shift some money out of stocks. I would not characterize the Y-T-D shift as significant so far.
++++
Putin and His Servile Russian Orcs:
The U.S. State Department advised all U.S. citizens to immediately leave Russia:
Travel Advisory: Russia – Do Not Travel - U.S. Embassy & Consulates in Russia
Putin implicated in 2014 downing of Malaysia passenger jet that killed 298 - The Washington Post
Russia Releases Bizarre Statement About Targeting UK After Zelenskyy's Visit
Vuhledar: Mauling of Russian forces in Donetsk hotspot may signal problems to come | CNN
Wagner fighters in Ukraine recount the horrors of battle | CNN
Putin Ally Vladimir Solovyov Says U.S. Will Become Strait Named After Stalin for Ukraine War Solovyov is the most popular commentator on Russian television. Goebbels of Russia - Vladimir Solovyov - YouTube
Putin Ally Calls for Striking Parliament in London: 'No More Red Lines'
Putin TV is reminiscent of Goebbels' Nazi propaganda efforts, which is to be expected, but with a slick presentation format stolen from Fox "news". Solovyov frequently threatens the west with nuclear annihilation.
Russia acting to destabilise Moldova: Chisinau – EURACTIV.com
The monthly minimum wage in Russia is currently 16,242 Rubles. Russia: monthly minimum wage 2023 | Statista That translates into about US$220 per month.
Last week, Russia's Dear Leader chastised Robert Urazov, a government official, for not recognizing that Russia was the best country in the world. The official then apologized after the reprimand. Putin Reprimands Kremlin Official During Tense Exchange
The exchange is reminiscent of a scene in 1984: "How many fingers am I holding up, Winston?" | 1984 - YouTube In that scene, party member O'Brien is torturing Winston Smith. O'Brien extends 4 fingers and asks Smith how many fingers does he see. Smith replies: “Four! Four! What else can I say? Four!” O'Brien inflicts more excruciating pain. Finally, Smith says he sees 5 fingers, and O'Brien continues the torture, telling Smith “ No, Winston, that is no use. You are lying. You still think there are four.”
+++
Trump and His Party:
Trump campaign paid researchers to prove 2020 fraud but kept findings secret - The Washington Post The researchers "disputed many of his theories and could not offer any proof that he was the rightful winner of the election". Consequently, Donald decided to keep the report secret.
After helping MBS’s rise, Trump and Kushner benefit from Saudi funds - The Washington Post The new House Oversight Committee Chairman, James Comer (R-KY), told George Stephanopoulos that his Committee is focused on Hunter Biden and will not be investigating Kushner's financial ties to Saudi Arabia.
George Santos (R-NY) took puppies, left bad checks, Amish country farmers say - The Washington Post
Anna Paulina Luna (R-FL) rose to Congress on a compelling life story. It surprised some who knew her. - The Washington Post; Congresswoman Anna Luna (R-FL) claims to be Jewish, revealed to be granddaughter of Nazi - The Jerusalem Post
Marjorie Taylor Greene (R-GA) was a participant last week in a Pentagon secret briefing about China's spy balloon. House briefing on China spy balloon turns tense with Greene comments: ‘I chewed them out’ | The Hill; Marjorie Taylor Greene Tried Normal, Realized It’s Just Not Her Jam According to one attendee, she spewed profanities "while yelling and screaming" at the military officials.
Originalism is going to get women killed - The Atlantic; Federal appeals court strikes down domestic violence gun law - POLITICO A panel of three republican judges held that a federal statute that restricted gun access to those who are under a state restraining order to protect an intimate partner or child was unconstitutional. Opinion.pdf (authored by Corey Wilson, appointed by Trump) The presence of a gun in a domestic violence situation increases the risk of femicide by over 1,000%.
The case involved a man who was under a protective order, entered with his consent, that prohibited him from owning firearms after an "alleged" assault on his girlfriend. The guy had been involved in several shootings as noted in the republican judges' opinion:
The police located him, found the firearms, and confiscated them. Rahimi contended that a criminal conviction based on his possession of firearms in violation of the protective order violated his constitutional right to bear arms and the republican Judges agreed.
As previously discussed, the "conservative" Republican Supreme Court Justices believe that what Americans viewed as acceptable in the 1780s or 1868 when the 14th Amendment was adopted, assessed by the laws then in existence, defines the existence and scope of constitutional rights now. (scroll to "Due Process Clause of the 14 Amendment"- 6/28/22 Post)
I know that it hard to believe, but it is nonetheless a correct assessment of what a conservative judicial philosophy means to republican judges. I discussed in the 6/28/22 post, linked in the preceding paragraph, that this "conservative" judicial approach does not actually interpret the constitution as written, as claimed by republicans, but is based instead on judge created provisions that conforms to their personal ideological preferences (pro gun ownership regardless of the consequences, anti-abortion).
Republican Lawmakers in Missouri Vote Against Banning Children From Carrying Guns In Public With 1 exception, all Missouri republican legislators voted in favor of children carrying guns in public without adult supervision.
++++
1. Small Ball Sells:
A. Eliminated BMY in Fidelity Taxable Account - Sold 14 at $74.64:
Quote: Bristol Myers Squibb Co.
This elimination leaves me with 15+ shares owned in my Schwab account with an average cost per share of $60.34:
 |
| Price as of 2/10/23 Close/Unrealized Gain of $182.28 |
I will keep those shares and will consider averaging down only when the purchase lowers my average cost per share.
My primary concern has been and continues to be the loss of patent exclusivity for Revlimid.
2022 4th Quarter Product Revenues:
In comparison to the decline in Revlimid revenues, which is expected to accelerate Y-O-Y, revenues from 9 new products was reported at $645M.
BMY Analyst Estimates | MarketWatch
Pharmaceutical Research & Development Pipeline
Proceeds: $1,044.93
Profit Snapshot: $206.75
Last Discussed: Item # 2. Eliminated BMY in Vanguard Taxable Account - Sold 15+ at $77.56 (5/5/22 Post)(profit snapshot = $279.11)
Last Substantive Buy Discussion: Item # 1.E. Added to BMY in Fidelity Account: Bought 1 at $60.34; 1 at $59.98; 1 at $59.5 (10/29/21 Post)
Dividend: Quarterly at $.57 per share, last raised from $.54 effective for the 2023 first quarter payment
Dividend History - Bristol Myers Squibb
Last Ex Dividend: 1/5/23, owned as of.
Last Earnings Report (Q/E 12/31/22): SEC Filed Press Release
Comparisons are to the 2021 4th quarter.
GAAP E.P.S. = $.95, down from $1.01
Non-GAAP E.P.S. = $1.82, down from $1.84
Consensus Non-GAAP at $1.72
The huge difference in GAAP and non-GAAP is related primarily to non-cash charge of $2.343B relating to amortization of acquired intangible assets.
As I recall, that non-cash charge is primarily due to the Celgene acquisition which brought Revlimid into BMY's product portfolio.
Revenues: $11.406B, down from $11.985, down 5% and down 1% in constant currencies.
2022 GAAP E.P.S. at $2.95, down from $3.12
2022 Non-GAAP E.P.S. at $7.7, up from $7.16
2023 Guidance:
Non-GAAP E.P.S. of $7.95 - $8.25, guiding Revlimid revenues to about $6.5B. That estimate may prove optimistic. Revlimid revenues in 2021 were reported at $12.821B.
B. Eliminated DOW in 2 Taxable Accounts - Sold 5 at $59.71; 8 at $60.2:
Quote: Dow Inc.
Proceeds: $779.11
DOW Analyst Estimates | MarketWatch
Investment Category: Bond Substitute
Profit Snapshots: $54.14
 |
| Schwab Taxable Account |
 |
| Vanguard Taxable Account |
I am keeping 5+ shares owned in my Fidelity account that have an average cost of $52.59 per share:
 |
| Price as of 2/10/23 Close/Unrealized Gain = $42.11 |
The yield at that AC number is currently 5.32%. I will consider averaging down in that account when the purchase lowers my AC per share.
Last Discussed: Item # 2.E. Added to DOW - Bought 2 at $58.69; 3 at $56.32; 2 at $55 in Vanguard Taxable Account. (12/3/2021 Post) Those shares were among those sold.
Dividend: Quarterly at $.70 per share ($2.8 annually)
Next Ex Dividend: 2/27/23
Last Earnings Report (Q/E 12/31/22): SEC Filed Earnings Press Release
Comparisons are to the 2021 4th quarter.
GAAP E.P.S. = $.85 (includes gain from a patent infringement award)
Non-GAAP E.P.S. = $.46, down from $2.15
Consensus Non-GAAP E.P.S. = $.58
Revenues: $11.9B, down 17%
GAAP to Non-GAAP Reconciliation:
I do not care much for companies that are this erratic in earnings and revenues, and erratic is normal for chemical companies.
DOW $1K par value SU bonds: I currently own 2 that mature in 2027. I prefer owning Dow SU bonds maturing in less than 5 years than the common stock.
Analyst Reports (available to Schwab customers):
Morningstar (1/26/23): 4 stars with a $72 fair value
S&P (1/30/23): 3 stars with a 12 month PT of $55
Argus (1/27/23): Buy, raised PT to $65 from $56.
I do not have to these reports published after this earnings report:
Barclays: Increases PT to $57 from $.52, maintains equal weight
UBS: Increases PT to $62 from $57, maintains neutral rating
BMO: Cuts PT to $65 from $69, maintains market perform
Citigroup: Raises PT to $60 from $56, maintains neutral rating.
The PT raises may be in response to some headwinds, including input cost inflation and lower sales due to restocking, dissipating some later this year and into 2024.
The current consensus non-GAAP E.P.S. estimate for the 2023 first quarter is currently $.38. Dow reported $2.34 in the 2022 first quarter. SEC Filed Press Release
C. Eliminated LYB S0ld 6 + at $98.42:
Quote: LyondellBasell Industries N.V. Cl A
LYB Analyst Estimates-MarketWatch
Products & Technology | LyondellBasell
Investment Category: Bond Substitute
Proceeds: $672.61
Profit Snapshot: $58.35
Last Discussed: Item # 4.D. Bought 1 LYB at $85.34 (6/28/22 Post); Item # 3.J. Eliminated LYB in Vanguard Taxable Account - Sold 2 at $110.24 (5/19/22 Post)(profit snapshot = $41.80)
Almost all of the small ball purchases were not discussed.
Dividend: Quarterly at $1.19 per share, last raised from $1.13 effective for the 2022 second quarter payment.
Dividend History | LyondellBasell
Special Dividend: $5.22 in June 2022. LyondellBasell Announces $5.20 Special Dividend and Increases Quarterly Dividend by 5 Percent
Last Ex Dividend: 11/27/22
Last Earnings Report (Q/E 12/31/22): SEC Filed Press Release
Comparisons are to the 2021 4th quarter.
GAAP E.P.S. at $1.07, down from $2.18
GAAP Net Income: $353M
Non-GAAP E.P.S. = $1.29, down from $3.63
Consensus at $1.22
Non-GAAP E.P.S. excludes $.29 per share in costs related to exiting the refining business.
Revenues: $10.206B, down from $12.83B
Outlook:
Consider to Repurchase: <$85, small ball rules.
I will keep my total exposure to less than $1K.
D. Eliminated LXP - Sold 20+ at $11.57:
Quote: Lexington Industrial Trust (LXP)
Proceeds: $236.15
Properties | LXP Industrial Trust
Website: LXP Industrial Trust - Preeminent single-tenant U.S. industrial REIT
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Profit Snapshot: +$33.37
Last Discussed: Item # 4.E. Added to LXP - Bought 5 at $9.74 (9/22/22 Post); Item # 3.I. Bought 10 LXP at $10.47 (9/13/22 Post)
Dividend: Quarterly at $.125 per share, slashed from $.177 in 2019 to $.1077 and then raised to $.12 effective for the 2022 first, quarter payment. The $.12 rate was recently raised to $.125 effective for the 2023 first quarter payment. The current penny rate of $.125 is 29.38% below the pre-slash dividend.
Dividend History: Very Poor. I have lost my subdued enthusiasm for this stock after the dividend cut.
2022 Dividend Classifications:
Last Ex Dividend: 12/29/22, owned as of.
Last Earnings Report (Q/E 9/30/22): The 4th quarter report is scheduled for release on 2/16/23.
2022 Third Quarter Report: SEC Filed Earnings Press Release
FFO per share = $.17, underwhelmed
LXP Realized Gains to Date: $1,957.89
Some Sell Discussions: I eliminated my position in response to the dividend slash mentioned above. Item # 1.B. Eliminated LXP - Sold 155+ at $9.46 (6/26/19 Post)(profit snapshot = $6.37); Item # 1.B. Sold 108+ LXP at $9.45-Used Commission Free Trade (2/6/19 Post)(profit snapshot = $79.9); Item # 1.C. Sold 137+ LXP at $9.08 and 53 at $9.06 In 2 Separate Roth IRA Accounts (9/12/18 Post)(profit snapshots = $914.11); Sold 100 LXP in Fidelity Roth IRA at $11.15 (1/6/17 comment- profit of $271.9 referenced with no snapshot); Item # 1 Sold 150 LXP in Vanguard Roth IRA-Update For Equity REIT Basket Strategy As Of 6/24/16 - South Gent | Seeking Alpha (profit snapshot = $80.19); Item # 2 Sold 250 LXP on Ex-Dividend Date in Two Taxable Accounts-Update For Equity REIT Basket Strategy As Of 4/6/16 - South Gent | Seeking Alpha (profit snapshot = $224.65); Item # 1. Sold 54 LXP at $11.44 Vanguard Roth IRA (1/27/15 Post)(profit snapshot = $64.4); Item # 1 Sold 101+ LXP at $10.65 (10/28/14)(profit snapshot = $51.76)
Current Common Stock Position: None
Bond Ownership: I own 3 LXP 4.4% SU bonds maturing on 6/15/24 which are generally lightly traded with large bid/ask spreads. FINRA Bond Detail (currently rated Baa2/BBB-). When buying a corporate bond that is lightly traded, I go into the trade knowing that I will probably have to hold until maturity or early redemption.
Consider to Buy: The new consider to buy range is at less than $10, small ball rules.
E. Eliminated SEM - Sold 60+ at $30.45:
Proceeds: $1,845.27
I would prefer having those proceeds earning 4+% in a MM fund than taking a chance that this position would go back into loss territory. Earnings have been disappointing since I initiated a position, largely due to meaningfully higher costs related to the pandemic and lower utilization rates for elective procedures.
SEM Analyst Estimates-MarketWatch
Investor Relations | Select Medical
Profit Snapshot: Net of +$49.74 (some shares sold at a loss)
Last Discussed: Item # 4.L. Eliminated SEM in Schwab Taxable Account - Sold 20+ at $29.69 (8/10/22 Post); Item # 1.B. Added to Falling Knife SEM- Bought 5 at $22.01 (2/17/22 Post)
Dividend: Quarterly at $.125 per share
Dividend History: Very poor. No dividend was paid starting in the 2015 second quarter through the 2021 first quarter. There has been no dividend increase since the first $.125 per share dividend was paid in the 2021 second quarter. I am not expecting a dividend increase.
Last Ex Dividend: 11/15/22
Last Earnings Report (Q/E 9/30/22): SEC Filed Press Release
Comparisons are to the 2021 third quarter.
E.P.S. $.21, down from $.57
Revenue: $1.567+B, up from $1.534+B
Consider to Repurchase: <$25, small ball rules.
F. Eliminated FISV - Sold 2 at 108.41:
Quote: Fiserv, Inc.
Proceeds: $216.86
Website: Financial Services Technology, Mobile Banking, Payments | Fiserv
Investor Relations - Fiserv, Inc.
FISV Analyst Estimates (In my last post discussing FISV, published in early December 2021, I noted there that the 2023 consensus E.P.S. was $7.51. Currently the 2023 estimate is at $7.29)
Profit Snapshot: +$11.59
Dividend: None and none expected. I am eliminating several non-dividend paying stocks. I currently am more interested in receiving 4%+ in a MM fund than keeping a small ball position in a non-dividend paying stock.
Last Earnings Report (Q/E 12/31/22): The stock jumped in response to this report, rising $8.88 to close at $115.28 (2/7/23).
GAAP E.P.S. = $1.23, up from $.50
Non-GAAP E.P.S. = $1.91, up from $1.57
Non-GAAP Consensus at $1.9
GAAP to Non-GAAP Reconciliation:
 |
2023 Guidance: Adjusted E.P.S. of $7.25-$7.4 with organic revenue growth of 7% to 9%.
2022 Adjusted E.P.S. = $6.49, up 16% compared to 2021.
I still own ETFMG Prime Mobile Payments ETF (IPAY) that has FISV in its top ten weightings, currently at 6.07%.
G. Eliminated GOOGL - Sold 3+ at $107.71:
Quote: Alphabet Inc. Cl A (GOOGL)
52 week range: $83.34-$144.25
GOOGL Analyst Estimates | MarketWatch
Alphabet’s GOOG vs. GOOGL: What’s the Difference?
Proceeds: $373.33
Profit Snapshot: +$59.98
Last Discussed: Item # 4.F. Bought 1 GOOGL at $98.07; 1 at $91.01 (11/29/22 Post)
Dividend: None and none expected.
Last Earnings Report (Q/E 12/31/22): Unfavorable
Comparisons are to the 2021 4th quarter unless otherwise noted.
Net Income: $13.624B, down from $20.642B
GAAP E.P.S. = $1.05, down from $1.53
Consensus at $1.18
Revenues: $76.048B, up from $75.325
Free Cash Flow: $16.019B, down from $18.551B
2022 GAAP E.P.S. = $4.56, down from $5.61
Consider to Repurchase: <$90, small ball rules.
H. Eliminated CNQ in Fidelity Taxable Account - Sold 3 at $58.43:
Quotes:
USD: Canadian Natural Resources Ltd. (CNQ)
CAD: Canadian Natural Resources Ltd. (Canada: Toronto)
I am keeping the 10 share held in my Vanguard Taxable Account. The average cost per share is at $31.45:
 |
| Price as of 2/10/23 Close/Unrealized Gain at $291.6 |
Proceeds: $175.28
CNQ Analyst Estimates | MarketWatch
Website: Canadian Natural Resources
CNQ SEC Filings (foreign company forms)
Investor Relations – Canadian Natural Resources
Profit Snapshot: $75.32
Last Discussed: Item # 2.A. Added to CNQ in Vanguard Taxable Account - Bought 5 at $30 (9/17/21 Post) Item # 1.H. Started CNQ in Vanguard Taxable-Bought 5 at $32.9 (6/19/21) I still own those shares.
Dividend: C$.85, up from C$.75 effective for the 2023 first quarter payment. There was also a C$1.5 special dividend paid in August 2022. The dividend was not cut during the energy price collapse in 2020. Dividends – Canadian Natural Resources
Last Earnings Report (Q/E 9/30/22): Robust
SU Bonds: I currently own 4 CNQ SU bonds: 2 CNQ 3.9% SU bonds maturing on 2/1/2025, FINRA Bond Detail, and 2 CNQ 3.8% SU bonds maturing on 4/15/24, FINRA Bond Detail, discussed at Item # 1.B. (11/22/22 Post)
I. Eliminated SU in 2 Taxable Accounts - Sold 8 at $33.09; 10 at $33.29:
Quotes:
CAD: Suncor Energy Inc. (Canada: Toronto)
Canadian Dollar to US Dollar Exchange Rate Chart | Xe
Website: Suncor
SEC Filings (foreign company forms)
I am keeping 19+ shares held in my Fidelity Taxable Account that have a $14.83 average cost per share:
 |
| Price as of 2/10/23 Close/Unrealized Gain = $371.67 |
Profit Snapshots: +$273
 |
| 8 Shares +$145.22 |
 |
| 10 Shares +$127.78 |
Last Discussed: Item # 4.D. Sold 2 SU in Schwab Taxable Account at $35.8 (11/22/22 Post)(profit snapshot $25.05)
Last Buy Discussion: Item # 2.K. Added to SU in Vanguard Taxable Account-Bought 2 SU at $20.93 (5/8/21 Post)
Dividend: Quarterly at C$.52, raised from C$.47 effective for the 2022 4th quarter payment. Slashed from C$.465 to C$.21 effective for the 2020 second quarter payment.
In USDs: Suncor Energy Inc. (SU) Dividend History | Seeking Alpha (substantial slash in 2020)
Last Ex Dividend: 12/1/22, owned as of
Last Earnings Report (Q/E 9/30/22): SEC Filing The 4th quarter report is scheduled for release tomorrow.
Other Sell Discussions: Item # 6.E. Pared SU - Sold 4 at $33.13 in Fidelity Taxable Account (11/1/22 Post)(profit snapshot = $43.97); Item # 2.H. Pared SU in Fidelity Taxable Account - Sold Highest Cost 10 Shares at $40.1 and 7 at $40.6 (6/9/22 Post)(profit snapshot = $237.35); Item # 2.E. Pared SU in Fidelity Taxable Account - Sold 10 at $36.77 (5/12/22 Post)(profit snapshot = $72.19); Item # 2 Sold 50 SU at $40.95 - Elimination (8/16/14 Post)(profit snapshot = $598.08)
SU Realized Gains to Date: +US$1,249.64
J. Eliminated IRM in Vanguard Taxable Account - Sold 3 at $54.35:
Quote: Iron Mountain Inc (IRM)
Profit Snapshot: +$98.68
I am keeping the shares owned in my Fidelity account. The average cost per share is at $23.01:
 |
| Price as of 2/10/23 Close/Unrealized gain at $453.65 |
The yield at $23.01 is currently at 10.75%.
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Iron Mountain - Investor Relations
Last Discussed: Item # 4.G. Sold 1 IRM in Fidelity Taxable Account at $55.04 (9/20/22 Post)
Dividend: Quarterly at $.6185
Last Ex Dividend: 12/14/22, owned as of
Last Earnings Report (Q/E 9/30/22): SEC Filed Press Release and SEC Filed Slides for 3rd Quarter Conference Call
Long Term Debt (net of current portion): $10.228+B, up from $8.962+B in as of 12/31/21.
IRM's SU debt is rated at Ba3/BB- (junk).
The 4th quarter report is scheduled for release on 2/23/23.
IRM Realized Gains to Date:
I have zero interest in buying shares at the current price.
K. Eliminated CIZN in Vanguard Taxable Account - Sold 25 at $16.63:
Quote: Citizens Holding Co. (CIZN)
Investment Category: Regional Bank Basket Strategy
The secondary categories are Dividend Harvest Strategy and Bond Substitute.
Profit Snapshot = $32.5
I am keeping the 20 shares held in my Fidelity Taxable account which have a $13.52 average cost per share. The dividend yield at that average cost is 7.1%.
I have been eliminating several duplicate stock positions. Several of those positions have been sold in my Vanguard taxable account where I receive my most favorable dividend yield on a sweep MM fund.
Last Discussed: Item # 2.C. Added to CIZN in Fidelity Taxable Account - Bought 5 at $13.14; 5 at $12.75 (1/3/23 Post); Item # 5.C. Started CIZN in Fidelity Account - Bought 10 at $14.1 (11/22/22 Post)
Dividend: Quarterly at $.24 ($.96 annually)
CIZN Dividend History | Nasdaq
Last Ex Dividend: 12/15/22 (owned as of)
Last Earnings Report (Q/E 12/31/22): SEC Filing
Recent earnings reports have been much better than what I come to expect from this bank which I would describe as most underwhelming.
Comparisons are to the 2021 4th quarter.
Net Income: $2.463M, up from $1.81M
E.P.S. = $.44, up from $.32
NIM = 2.87%, up from 2.6%
NPL Ratio: .74%, down from 1.13%
Coverage Ratio: 169.86%
ROE: 15.3%, up from 6.74%
E.P.S. for 2022 = $1.47, up from $1.34 in 2021.
CIZN Realized Gains to Date: $503.29
2. Treasury Bill Purchases at Auction: +$10,000 in principal amount
A. Bought 5 Treasury Bills at 2/6/23 Auction:
%205:11:23%20.png){kind=small}
Matures on 5/11/23
91 Day Bill
Interest: $58.01
Investment Rate: 4.708%
B. Bought 5 Treasury Bills at 2/8/23 Auction:
17 Week Bill
Interest: $77.68
Investment Rate: 4.84%
3. Treasury Note Purchases - Secondary Market: +$3,000 in principal amount.
A. Bought 1 Treasury 2.5% Coupon Maturing on 1/31/24 at a Total Cost of 97.8159:
%203:31:24.png){kind=small}
YTM at Total Cost: 4.791%
Current Yield at TC = 2.558%
I now own 5.
B. Bought 1 Treasury 2.25% Coupon Maturing on 3/31/24 at a Total Cost of 97.2776:
%203:31:24.png){kind=small}
YTM at Total Cost: 4.717%
Current Yield at TC = 2.313%
I now own 3.
C. Bought 1 Treasury 2.25% Coupon Maturing on 1/30/24 at 97.5337:
%201:31:24%202.25%25%20.png){kind=small}
Current Yield at TC = 2.3069%
I now own 4.
4. Corporate Bonds:
A. Bought 1 GATX 4.35% SU Maturing on 2/15/24 at a Total Cost of 99.259:
Issuer: GATX Corp.
GATX Analyst Estimates | MarketWatch
SEC Filed Earnings Press Release for the Q/E 12/31/22 (net income of $48.4M)
FINRA Page: Bond Detail (prospectus not linked)
Credit Ratings: Baa2/BBB
YTM at Total Cost: 5.106%
Current Yield at TC = 4.38%
I now own 3.
5. Small Ball Buy:
A. Added to BBDC in Vanguard Taxable Account - Bought 10 at $8.68:
Quote: Barings BDC Inc. (BBDC)
Management: External
Last Discussed: Item # 3.C. Added 5 BBDC in Vanguard Taxable Account at $8.15 (12/27/22 Post)
Last Substantive Discussion: Item # 4.A. Added to BBDC in Vanguard Taxable Account - Bought 5 at $8.99 (11/29/22 Post) I discussed the last earnings report in that post. The 2022 4th Q. report is scheduled for release on 2/24/23.
New average cost per share: $9.39 (50 shares)
Dividend: Quarterly at $.24 per share
Yield at new AC = 10.22%
Last Ex Dividend: 12/6/22
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.
On housing this is from the San Fransisco Fed Reserve board.
ReplyDelete"A policy tightening equivalent to a 1 percentage point increase in the federal funds rate could reduce rent inflation as much as 3.2 percentage points over 2½ years."
https://mailchi.mp/sf.frb.org/frbsf-economic-letter-1569985?e=5e018de5a8
On congress woman Luna, eew.
ReplyDeleteThis is even more info:
""I was raised as a Messianic Jew by my father,” Luna had told the Jewish Insider, clarifying that she identifies as a Christian. “I am also a small fraction Ashkenazi.""
Messianics who call themselves Jews are a movement to trick Jews into converting by pretending that Christianity is Judaism (all for that end time scenario where Jews have to become Christians for Jesus to come.) It's a modern version of the antisemitic supersessionism / replacement ideas.
As she says she isn't Ashkenazi either (a small %).
A grandchild of a Nazi is by itself not an indictment of the person. But lying about it is, especially to claim the opposite.
Hopefully people will realize she's not part of Jewish community and doesn't represent it in any way.
I think got a knock off of Revlimid in the research study (name was different & I'd asked.) The med will be increases in use since it's been effective on more conditions. But that doesn't help when there's a generic.
ReplyDeleteAdded to Barings? Good to know. I've been holding. Hoping to have less loss at some point from my way too high purchase.
ReplyDeleteLand: My 10 share add to BBDC is not an expression of overflowing enthusiasm. It is possible that investors are overestimating the credit loss issues, fueled by the recent non-accruals including the Core Scientific loan. BDCs with variable rate loans are experiencing increases in net investment income and possibly BBDC will surprise when it announces 2022 4th Q. NII.
DeleteI believe not allowing those under restraining orders to have guns is part of the common sense gun policy that nearly all American's support.
ReplyDeleteThis court is legislating from the bench. ... Not in USA's preferences.
Probably matches the NRA with it's Russian funding.
For the 6 Republican Supreme Court Justices, what Americans view as acceptable in 2023 in not remotely relevant when interpreting the Constitution. To determine the scope of the second Amendment as applied to a federal statute, the republican judges will look at laws in existence when the Constitution was ratified in 1788 when there were no restrictions on people owning guns who were violently abusing their wives. For state gun laws, the relevant year is 1868 when the 14th Amendment was ratified.
DeleteWe are only beginning to see the ramifications and results from this extremely reactionary approach that is accepted by the republican justices on the Supreme Court and republican appointed lower court judges, particularly those selected by Trump.
I would emphasize that the interpretation of the bill of rights, as applied to state laws, involves also a judge created incorporation by reference into the Due Process Clause of the 14th Amendment.
That judge created incorporation was necessary for the Republican Justices to strike down state gun laws which the Court did in 2022:
https://www.law.cornell.edu/supremecourt/text/20-843
The Constitution as interpreted for almost 150 years, including by the first Chief Justice who was a contemporary of the Founders, was that the first 8 Amendments did not apply to state laws. It was only in 1925 that the Justices first discovered that the First Amendment was incorporated by reference into the 14th Amendments Due Process Clause, adopted in 1868, which was entirely a Judge created incorporation which was understandable as a matter of policy since many states would trash aspects of 1st Amendment rights.
It's extremely unsettling how damaging a sociopath who didn't even think he'd win has been to damaging the war and USA and will continue to be by proxy even if he were to die today.
Delete*To damaging the world, not war
DeleteMy main takeaways from the January CPI report released earlier today is that inflation is grudgingly declining, remains significantly problematic and the numbers support the consensus that the FED will raise the FF by 25 basis points next month and in May. The odds of yet another 25 basis point increase in June is now close to 50/50.
ReplyDeleteThis kind of information does provide me with some guidance on whether I need to move more money into a MM fund, particularly the Vanguard Federal MM fund, as a risk reduction that provides what I consider, given my financial situation, adequate income.
Where I own a stock in several accounts, and one of those is my Vanguard account, I will continue selling the duplicate positions in that account.
So inflation is following the trajectory you anticipated. The market is more optimist about a rate cut this year (I think unreasonably so.)
DeleteSo you're not massively selling ... nor buying with all the cash (from bonds) raised already. But cleaning up a bit by selling.
So the market's rallying. It's unknown if it will pause or decline when/if that rate cut doesn't happen.
Land: After the last employment report and today's CPI release, I am expecting the FED to raise the FF rate by 75 basis points by June, probably in three successive .25% increases that will take the range up to 5.25%-5.5%. If there is to be a rate decrease, it will likely be back to 5% to 5.25% late in 2023. As I have discussed previously, I do not see the FED becoming convinced this year that its job is done on bringing problematic inflation under control.
DeleteI would emphasize that a significant contributor to the annual inflation rate is owners equivalent rent which accounts for 25.424% of CPI.
https://www.bls.gov/news.release/cpi.t02.htm
That is not an "expense" that is actually paid, but a BLS derived number of what it would cost a homeowner to rent their home.
I view the likely trend of FED FF increases as material to my asset allocation decisions. So I am favoring cash now in all taxable accounts other than Schwab (sweep account pays .45%) where I will continue keeping the cash near zero primarily through purchases of treasury bills at auction using the proceeds from maturing bills and treasury notes.
Land: The stock market is doing fine under the circumstances which include an ongoing FED tightening cycle, a rapid rise in interest rates with the prime rate now at 7.75%, up from 3.5% a year ago, and problematic inflation continuing for over a year now.
ReplyDeleteThe regional bank earnings reports for the 4th quarter show no signs of credit stress among borrowers in the aggregate, with the NPL and Charge Off ratios remaining at low levels consistent with an ongoing expansion and totally inconsistent with a recession during that quarter.
I believe consumer spending will hold up in the aggregate based on increases in disposable personal income. Households with significant savings and the wherewithal to secure the highest current risk free yields, through purchases of CDs or treasury bills, will generate considerably more interest income this year compared to 2021 and 2022. Spending sourced from more disposable income rather than increases in credit card debt is very beneficial to a consumer led economy.
Those are good points about the strong state of things. Especially banks showing good numbers.
ReplyDeleteIt's the indecisiveness on a piece of news that leaves me baffled. It dislikes strong labor market, then 20 mins later it soars. Realistically it's done that for years so I shouldn't be surprised. But added to it, I can't tell what to think of each data news either.
Rates make it so much easier to sit on the sidelines. After inflation it's a negative but it's hard to get that into my head.
I keep seeing articles that credit card debit is up, and the saved money during the pandemic is used up.
https://www.foxbusiness.com/economy/credit-card-debt-soars-new-record-high-inflation-squeezes-americans
My sister bought a car and paid cash because they offered 3.9% loan and interest rates are around 1%. Those were her words even though I've been talking about Vang and First Foundation for months. She told the dealer that she might do better investing but she's not good at that. I'm not sure the general public realizes they are getting very underpaid on rates.
___
I wonder if we could live with higher inflation and let it sort itself out with less active Fed focus, since it doesn't seem to be harming the economy.
Land: Last month, the stock market experienced a nice rally based in large part on an assumption that inflation would soon be under control. Part of that scenario is that the FED would hike 25 basis points at its February meeting, which it did, and then the next move would be rate cuts late in 2023.
ReplyDeleteIt is now dawning on the Stock Jocks that this scenario is not likely to happen. The change was precipitated by the last jobs and CPI reports.
Inflation is not yet under control. Maybe it will be late this year or next year, or maybe it will still be a big problem well into 2024.
The FED will continue raising the FF rate and may not stop with a 75 basis point increase between now through the June meeting. The prime rate will rise with each increase.
I believe stock investors have been too dismissive of the inflation numbers.
For investors who came of age during the 1970s, and I am one, problematic inflation was the main cause of a long term bear market in stocks and bonds and was not easily brought under control. In the late 1970s and early 1980s, I was investing cash in 3 and 6 month CDs that paid more than 15%.
I have reduced my stock allocation by about $4K this week so far. Most of that reduction is house cleaning as I eliminate duplicate stock positions.
Given the risk free rate of return, I am satisfied with increasing my cash allocation held in my Vanguard taxable account, and expect the yield in VMFXX to exceed 5% sometime in late May. The 7 day yield is currently at 4.51%, compounded at 4.6%:
https://investor.vanguard.com/investment-products/mutual-funds/profile/vmfxx
About 150M Americans own stock:
https://www.fool.com/research/how-many-americans-own-stock/
I would say that most of those people are sophisticated enough to move their cash to higher yielding risk free investments, including purchasing CDs through brokerage accounts rather than at their bank that offers non-competitive yields, and into higher yielding MM funds and even treasury bill purchases at auction.
For the bottom 50%, living paycheck to paycheck, with little or no savings and significant credit card, mortgage and/or other debt, will be the norm going forward. Those households have been hit hard by inflation in necessary purchases. Higher yields on risk free savings is not going to help much, and the net impact for many of those households from a rise in interest rates is probably negative.
Most of the increase in disposable income resulting from higher rates will be concentrated in the top 20%-25% but that is a lot of people. A significant percentage of those households have no debt and a significant amount of cash available for investment at higher yields. For those still with mortgage debt, long term refinancing at historically low fixed rates will increase their disposable income after mortgage payments, and many of those households are earning more on their cash now than the coupons on their mortgages.
TravelCenters of America (TA) rose 70.7% yesterday in response to BP's cash tender offer of $86 per share.
ReplyDeletehttps://www.businesswire.com/news/home/20230215005964/en/
I do not own the common shares. I own TANNI and TANNL, two $25 par value senior unsecured exchange traded bonds.
TANNI has a 8.25% coupon.
https://www.marketwatch.com/investing/stock/tanni?mod=search_symbol
TANNL has an 8% coupon.
https://www.marketwatch.com/investing/stock/tannl?mod=search_symbol
Both of those bonds can now be called at par value + accrued and unpaid interest.
If the merger goes through, BP is not going to pay those coupons and will redeem those exchange traded bonds. Consequently, I would not pay a premium to par value but will likely keep what I own now until maturity, which assumes the mergers is terminated, or early redemption by BP.
That explains an email I received this morning that said SA's top pick is up 70%. It made them sound like one of those motley fool announcements. It was TA.
DeleteI have published a new post:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2023/02/clpr-colb-cto-dov-etn-fdus-fivg-hban.html
I've been thinking about this post and the 1970s. I remember nearly 20% interest. But wasn't aware of the stock market or the worries for the economy from the high interest since I wasn't paying attention at all.
ReplyDeleteEven in late 80s or early 90's I bought a house at 12% mortgage rate using my credit union. (Week before and after, rates were 10%.)
It's made me consider a shift. For a long time, I've been worried about getting more into the market and missing out.
Instead, that extended inflation and down market makes using mutual funds and straight interest, worth serious consideration, while waiting to see how this inflation plays out.
The 3 months of VIX under 20 would be a good indicator of when the field is clear to get back in... if it isn't evident sooner.
I have about 1/3 of my funds that need to be in the market since they'll pay for the later part of 'retirement', in 20+ years. (If I live that long.) Until then the other 2/3s will be used. (Rough guess on 1/3-2/3.)
I've been living with the assumption that the market will recover in 1-2 years after a recession or rates are down. It's still possible that rates will be down in 1-2 years.
But the possibility that this will be a drawn out mess is still possible and I may not want to discount that possibility so much!!!
The market pundits may start introducing this idea. If they do it will shrink the market. If they don't, the current post 2008 enthusiasm will float the market well.
So while I don't have a definitive answer, I'm going to be shifting my view of what I need to do a bit.
The % in the market would include 401k owners without any other accounts?
ReplyDeleteMy sister's never had debt beyond mortgage. She's good with managing her money. Her husband tried the market and lost and never went back in. So they are in the don't own stocks category. Though they have a 401k or two, that I assume are in stocks. But they aren't the lower 50% paycheck to paycheck, nor low earners. (She master's is getting her nothing but her husband has a solid paying job.)
I'm not convinced that as many people realize the interest rate they could be earning as one would think. I suspect this class of people is bigger than it seems. Possible evidence is that bigger banks haven't been forced to raise their rates yet.
A good topic for CNBC to address, if their sponsors wouldn't exit in droves.
Land: Investors have been fortunate so far that the stock market has recovered fairly quickly after recent 30%+ declines.
ReplyDeleteProblematic inflation led to long term secular bear markets in both bonds and stocks over an 18 year period starting in 1966, though bonds started their bear market around 1950 after the FED stopped manipulating interest rates far below the inflation rate.
See U.S. Monetary Policy 1945-1951
https://www.nber.org/system/files/chapters/c11485/c11485.pdf
It is not generally understood that bonds were in a 32 year bear market starting in 1950.
Problematic inflation is one of the strong secular trends that can cause long term bear markets in the two major asset classes.
The annual average total return (dividends reinvested) for the S&P 500 starting on 1/1/1966 through July 1982, adjusted for inflation, was at -1.813%. That is an annual average number, adjusted for inflation, with dividends reinvested.
https://dqydj.com/sp-500-return-calculator/
It remains to be seen whether the FED can bring inflation back down close to its 2% target.
There is still a lot of stimulus in the U.S. economic system, including substantial deficit spending by the federal government, long term mortgage debt financed at extremely low rates which increases substantially household disposable income after debt service payments, higher wage increases, realized gains from stocks, and more interest income from risk free savings and fixed income investments which I view as important.
There have been in the past where it has taken more than a decade to return back to a high reached before the onset of a long term bear market. It was 11/23/1954 for the DJIA to surpass the high hit on 9/3/1929, (partly due to additions/deletions from the index) and the DJIA was below its 1969 high price in the summer of 1982 by more than 10%. There was another long period of negative inflation adjusted returns starting around 1906, aggravated by the 1907 panic and crash, and extending to about 1920.
So there are no guarantees. The issue is how to cope with the inevitability of uncertainty and resolution of that issue significantly depends on situational risks faced by individuals and their families.