Economy:
Congress must address debt ceiling by June 5, Yellen warns One of unresolved issues is the republican demand to add work requirements as a precondition to receiving Medicaid and other safety net benefits. States’ Experiences Confirm Harmful Effects of Medicaid Work Requirements Did Medicaid Work Requirements Achieve Their Goals in Arkansas?; Arkansas’ Medicaid work requirement policy failed, study finds – Harvard Gazette
This policy change could not become law through the normal democratic process. The question is whether the republicans are willing to cause a debt default unless the Democrats and Biden agree to this policy change. Maybe the Democrats could agree to a compromise where work requirements are added only in Alabama, Mississippi, South Carolina, Tennessee, North and South Dakota, Wyoming, Kansas, Idaho and Oklahoma as test cases.
Minutes-Fed Meeting on 5/2-3/2023 The FED's staff is predicting a mild recession starting in the 2023 4th quarter:
The second estimate for first quarter real GDP growth was reported at 1.3%. Gross Domestic Product (Second Estimate), Corporate Profits (Preliminary Estimate), First Quarter 2023 | U.S. Bureau of Economic Analysis (BEA) The first estimate was 1.1%.
Personal consumption expenditures were up 3.8% compared to +1% in the 2022 4th quarter:
++
Allocation Shifts Discussed in this Post:
Treasury Bills Purchased at Auction: $6,000 principal amount
CDs: $2,000
Corporate Bonds: $2,000 in principal amount
Net Outflow Common Stocks : -$858.57
(consisting of $1,285.28 in proceeds minus $426.71 in purchases)
Realized Gains Stocks/Stock Funds: +$245.64
Weighted Average Dividend Yield Common Stock Buys: 7.45%
Stock CEFs: +$181.91 (RMT and GDV; GDV pays a monthly dividend)
Net Outflow Stocks/Stock Funds = -$676.66
Leveraged Bond CEFs: +$155.69 (yield at 8.99%)
"Preferred" Stock ETF: +$55.2 (variable monthly dividend)
REIT Equity Preferred Stock: +$56.25 (yield at 11.67%)
Bank Holding Company Preferred Stock: +$109.13 (yield at 8.02%)
2023 Outflow Common Stocks/Stock Funds: -$33,296.47
++++
First Horizon 3.55% SU Bond Matured on 3/26/23: $4,000
With less than 30 days to maturity, this bond declined to 95 on 5/5/23 after it was announced that TD would no longer be acquiring First Horizon. The YTM at that price was over 100%. The selloff made no sense particularly since FHN was receiving $225M from TD as part of that termination and would have been able to pay off this bond without that cash infusion. The original principal amount was $450M. Prospectus That link is also a prospectus for a 4% FHN SU bond maturing in 2025. I currently own 2 of those.
+++
Trump and His Anti-Democracy Party:
Trump Mar-a-Lago workers moved boxes day before FBI came for documents - The Washington Post; Washington Post: Trump employees moved boxes day before DOJ went to Mar-a-Lago
Using a poll average, Donald remains slightly ahead of Biden in a 2024 rematch. RealClearPolitics - Election 2024 - General Election: Trump vs. Biden
Trump has a substantial and commanding lead over DeSantis in the republican primary polls. RealClearPolitics - Election 2024 - 2024 Republican Presidential Nomination
Trump still dominating 2024 endorsement race, DeSantis' launch generates little movement No one should be surprised that republicans want Donald to have another 4 year term. 81% of republicans view him to be honest and almost as many as a good role model for their children.
The Minds of Trump Supporters - The Atlantic
Billionaires are backing DeSantis and plan to spend $100M helping him win in four early primary states. The plan involves visiting every potential voter at least 4 times in Iowa, New Hampshire, Nevada and South Carolina. How DeSantis Allies Plan to Beat Trump in the 2024 Presidential Election - The New York Times DeSantis is hoping to convince the American Taliban base of the republican party to abandon Donald.
Trump's 2025 vision: A lot more power for him; Report: Donald Trump, in a Second Term, Wants to “Control…Every Facet of Life in America” | Vanity Fair
Texas Panel Recommends Impeachment of Texas Attorney General Ken Paxton - The New York Times Paxton was the moving force behind the republican Supreme Court petition that requested the Court to nullify the certified voting results in 4 states won by Biden and to empower the republican controlled legislatures in those states to declare a winner.
As Trump has said many times, the result would have been different after disregarding the vote count and allowing the republican legislatures to declare the winner.
Trump has filed a $3.8B defamation suit against the Washington Post. Trump Defamation Suit Torn Apart by Lawyer: 'Doesn't Make Any Sense'
Newt Gingrich: "One of Trump’s great advantages is he talks at a level where third, fourth and fifth grade educations can say, ‘Oh yeah, I get that. I understand it."
The GOP Is Escalating Its War on Ideas | Vanity Fair
Putin and Trump have the same enemies list of U.S. citizens. Russia’s Latest Sanctions on U.S. Officials Turn to Trump Enemies - The New York Times
Top Republican Elise Stefanik (R-NY) Blasted by Former GOP Rep. for Spreading Lie About Migrants; Advocate lied about vets getting kicked out of NY hotels for migrants Ms. Stefanik spread a known false story that NY had evicted homeless veterans to make room for illegal migrants.
Sumner County, TN's hard-right shift It is a shift to a reactionary 19th Century political ideology from a more modern far right.
GOP Alarms About Government Spending Don't Include Huge Military Budgets Or other programs that they support.
Stewart Rhodes: Oath Keepers leader sentenced to 18 years in prison for plot to keep Trump in power
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Putin and His Servile Orcs:
Russia destroys hospital in latest missile attack - BBC News; Hospital in Ukrainian city of Dnipro hit in Russian attack - Zelenskiy - YouTube The Orcs have routinely targeted hospitals. So far, the World Health Organization has tallied over 982 Russian attacks against Ukrainian healthcare facilities.
The Orcs claim that Ukraine is destroying its own hospitals and blaming Russia.
Russia’s attacks on health care in Ukraine are war crimes (Harvard Public Health)
WHO Condemns Russia's Aggression in Ukraine
Prigozhin says war in Ukraine has backfired and warns of Russian revolution - The Washington Post Prigozhin believes that the Russian government needs to be even more totalitarian. He wants the government to declare martial law, engage in "new waves of mobilization", and for Russians to live like North Koreans for a few years. Prigozhin at least acknowledged the obvious fact that Russia's effort to "demilitarize" Ukraine has been a spectacular failure.
Prigozhin is correct IMO to reference the possibility of another 1917 revolution. There were not that many Bolsheviks prior to seizing control over the government. In February 1917, there were about 24,000 Bolshevik members. As they gained more power throughout 1917, the membership grew to about 240,000 in September 1917.
The Czar had weakened his power through Russia's participation in WWI. And, hundreds of thousands of civilians had been trained and armed by the Russian military to fight in that conflict. Given the right spark, newly armed civilians fighting and dying in an unpopular war can turn their weapons on those who caused their suffering.
Russia controls Bakhmut, for now, but holding it will be difficult - The Washington Post
War in Ukraine could last ‘decades,’ ex-Russian President Medvedev says – POLITICO
In Belgorod, Russia, anti-Putin militia mounts cross-border incursion - The Washington Post; Belgorod: Anti-Putin Russians say they launched a cross-border attack from Ukraine. Here's what we know | CNN
Russians snitch on Russians who oppose war with Soviet-style denunciations - The Washington Post Russia and Russians are never going to change.
+++
1. Small Ball Sells:
A. Eliminated CTRA - Sold 22+ at $25.6:
Quote: Coterra Energy Inc.
CTRA is primarily a natural gas and NGL E&P with significant oil production primarily in its Permian Basin assets.
The price for natural gas has fallen significantly staring in August 2022 in response to lower demand. The U.S. price was near $9 per MMBtu and is currently hovering near $2.25 as of 5/23/23. Natural Gas Prices - Historical Chart | MacroTrends
Proceeds: $572.45
Website: Coterra Energy
Last Discussed: Item # 2.A. Eliminated CTRA in 2 Taxable Accounts- Sold 10 at $25.17 and 5 at $25.41 (2/5/23 Post)(profit snapshots = $95.4)
Last Buy Discussion: Item # 2.J. Started CTRA in Fidelity Taxable Account - Bought 5 at $21.53; 2 at $21.1; 2 at $20.75; 2 at $20.4; 2 at $20 and 1 at $19.56 (12/10/21 Post)
Profit Snapshot: Net of +$112.59 (some shares purchased with dividends sold at a loss)
Dividend: CTRA is one of the energy producers that pay both a regular and variable dividend. The regular quarterly dividend is currently $.20 per share. The variable dividend is based on free cash flow. The general policy is to pay out 50%+ of free cash flow through the base and variable dividend framework.
CTRA Realized Gains to Date: $218.14 (42+ shares)
I am interested in restarting a position at less than $20 per share. I like the dividend policy but am not optimistic that investors will remain positive with negative earnings comparisons and lower discretionary dividend payouts.
Analyst Report (available to Schwab customers):
Morningstar (5/5/23): 3 stars with a fair value estimate of $25
I do not have access to any other report. Some analysts have more bullish price targets.
B. Pared DGRO- Sold Highest Cost 2 Shares at $49.72:
Profit Snapshot: +$36
New Average cost per share: $29.98 (10 shares)
Dividends: Quarterly at a variable rate
Last 4 Dividends: $1.2 per share
The last 4 dividends when I published the May 2020 post was $.96 per share so the annual dividend per share has increased by $.24 or 25%.
Yield at $29.98 using $1.2 = 4%
Last Ex Dividend Date: 3/23/23
Top 10 Holdings:
Prior Realized Gains: $175.36
A similar ETF is the Vanguard Dividend Appreciation ETF (VIG)
Expense ratio: .08%
Performance – Vanguard Dividend Appreciation ETF | Morningstar
C. Eliminated GAM in Schwab Account - Sold 10 at $39.7:
 |
| $29 in Dividends |
Quote: General American Investors Co. Inc. (GAM) - Stock CEF
Proceeds: $397.01
Sponsor's website: General American Investors Company
GAM is one of the few CEFs that were formed prior to October 1929 and survived the 1929 crash.
The primary focus is long term capital appreciation.
2022 Annual Report (cost at $574.861+M, value at $1.231+B)
Top 10 Holdings as of 3/31/23:
Leveraged: Yes, with $190.117+M in 5.95% coupon $25 par value preferred stock. General American Investors Co. Inc. 5.95% Cumulative Preferred Series B Stock (GAM.PRB)
General American Investors (GAM) Performance | Morningstar (currently rated 3 stars)
Profit Snapshot: +$41.01
Last Discussed: Item # 1.M. Restarted GAM - Bought 5 at $37.25; 5 at $36.95 (1/16/2021 Post)
Dividends: Recently, the dividends have been paid semiannually, except for 2020 when there was an annual payment. Dividends are primarily sourced from long term capital gains.
Last Ex Dividend: 11/10/22
General American Investors Co. Inc. (GAM) Dividend History | Seeking Alpha
Data as of 5/18/23:
Closing Net Asset Value per share: $48.75
Closing Market Price: $40.1
Discount: -17.74%
Average 3 year discount: -16.1%
Sourced: GAM - CEF Connect
Previous Discussions: Item # 2.B.Eliminated GAM-Sold 109+ at $32.74 (2/15/17 Post)(profit snapshot = +$88.53. I reinvested the year end distribution of $320.29 to buy 9.8167 shares which were sold at a $13.41. profit)-Item # 1 Bought 100 GAM at $31.9-Update For CEF Basket Strategy As Of 7/18/16 - South Gent | Seeking Alpha
Sold 107+ GAM at $34.44 (10/19/13 Post)(profit snapshot=$518.31/Total Return=$717.12))-Item # 3 Bought 100 of the Stock CEF $29.52 (9/20/2012 Post)
General American Investors (GAM) Performance | Morningstar (YTD +9.74% vs. 10.25% for SPY)
GAM Realized Gains to Date: +$647.85
D. Pared FENY Again - Sold 10 at $21.64:
Quote: Fidelity MSCI Energy Index ETF
Proceeds: $216.39
I sold my highest cost 10 shares.
Sponsor's website: FENY | ETF Snapshot - Fidelity
Expense Ratio: .08%
FENY – Portfolio – Fidelity® MSCI Energy ETF | Morningstar
FENY – Performance – Fidelity® MSCI Energy ETF | Morningstar
WTI Crude Oil Prices - 10 Year Daily Chart | MacroTrends
Natural Gas Prices - Historical Chart | MacroTrends
Profit Snapshot: $56.04 (5/19/23 sale only)
Average cost per share after pare: $11.29 (30+ shares)
 |
| Snapshot Intraday on 5/19/23 after pare |
Dividend: Quarterly at a variable rate.
I am no longer reinvesting the dividend.
Last 4 Dividends: $.835 per share
Yield Using $.835 per share and $21.64 Price: 3.86%
Yield Using $.835 and New AC of $11.29 = 7.4%
FENY Realized Gains to Date: $815.74
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)
2. Small Ball Buys:
A. Added to BHK - Bought 5 at $10.56; 5 at $10.33:
Quote: BlackRock Core Bond Trust Overview - Leveraged CEF Bond Fund
Cost: $104.44
Gradually building up to a 100 share position.
Investment Category: Monthly Income Generation.
Sponsor's website: Core Bond Trust | BHK
Number of Holdings as of 4/28/23: 1,547 (extremely diversified bond fund)
Leveraged: Yes, substantial at 33.39% as of 4/28/23
Average cost per share: $11.34 (68+ shares)
Dividend: Monthly at $.0746 per share ($.895 annually)
Some ROC Support.
Yield at AC = 7.89%
Last Ex Dividend: 5/12/23
Last Discussed: Item # 1.J. Added to BHK - Bought 10 at $10.92 (4/4/23 Post)
Data Date of 5/17/23 Trade:
Closing Net Asset Value per share: $10.94
Closing Market Price: $10.34
Discount: -5.48%
Average 3 Year Discount: -1.98%
Sourced: BHK-CEF Connect
Credit Quality:
BHK Trading Profits to Date: $381.68
B. Added to PGX - Bought 5 at $11.04:
Quote: PGX | Invesco Preferred ETF Overview
Expense Ratio: .5%
PGX – Invesco Preferred ETF – ETF Stock Quote | Morningstar (currently rated 2 stars)
Last Discussed: Item # 4.D. Restarted PGX - Bought 10 at $12.43 (1/23/23 Post)
The price decline since this purchase was caused mostly by bank holding company preferred stocks. Preferred stocks issued by SVB Financial and First Republic fell to below $1 per share. The turmoil resulted in significant price declines in other regional bank holding company preferred stocks.
Several REIT preferred stocks have also suffered significant declines, primarily those issued by Office REITs like VNO.PRM discussed in Item # 2.E. below.
The PGX price decline in 2023 originates from actual or perceived credit quality issues.
The price decline during 2022 was caused mostly by the rise in interest rates.
Average cost per share: $11.97 (15 shares)
Dividend: Monthly at a variable rate.
Invesco Preferred ETF (PGX) Dividend History | Seeking Alpha
Yield at $11.97: 6.015% In calculating the yield, I did not add up the last 12 monthly payments but simply used $.06 per month as a substitute.
Last Ex Dividend: 5/22/23 (owned all as of)
Last Sell Discussions: Item # 5 Sold: 200 PGX at $14.38 (11/12/2010); Item # 3.A. Eliminated PGX - Sold 100 at $14.51 (8/1/2020); Item # 1.A Sold 50 PGX at $14.35 (3/3/19 Post)
C. Added to RTL - Bought 5 at $4.6:
Quote: Necessity Retail REIT Inc. (RTL)- Externally Managed
Cost: $23
The external managers are viewed negatively.
Subsequent to this purchase, RTL agreed to be acquired by Global Net Lease (GNL). Global Net Lease and The Necessity Retail REIT to Merge, Creating Sector-Leading Diversified Net Lease REIT Each RTL share will be exchanged into .67 GNL share.
RTL and GNL share a common external manager.
Longer term, this is a positive IMO for both GNL and RTL shareholders since the transaction involves management internalization of the combined company.
"Pursuant to the internalization agreement, upfront consideration to the External Manager will consist of $325 million of GNL stock and $50 million in cash."
"The Internalization is projected to result in annual cash savings of approximately $54 million through elimination of the asset management fees, property management fees, incentive fees, equity issuance fees, and reimbursable expenses currently payable to the External Manager, net of internalized employee compensation, rent and overhead, and excluding the one-time costs associated with the Transactions."
Subsequent to the closing, GNL is expected to reduce its dividend from $.40 to $.354 per share.
There will also be improvements to corporate governance which is currently highly unfavorable for both REITs.
"The combined internally managed company, which will operate as Global Net Lease ("GNL Post-closing"), is expected to own and manage over 1,350 properties and have an aggregate real estate asset value of approximately $9.6 billion at the closing of the Transactions."
"The Transactions are expected to be more than 9% accretive in Q4'23 relative to GNL's Q1'23 adjusted funds from operations ("AFFO") per share on an annualized basis."
"Net debt to annualized adjusted EBITDA is expected to be reduced from 8.3x for GNL in Q1'23 and 9.6x for RTL in Q1'23 to an estimated 7.6x in Q4'23 for GNL Post-closing."
The merger is expected to close in the third quarter.
2022 Annual Report (risk factor summary starts at page 4 and ends at page 30).
Website: Necessity Retail REIT
Interactive Property Map — Necessity Retail REIT
Last Discussed: Item # 3.H. Added to RTL - Bought 3 at $5.29 (5/6/23 Post)
Last Substantive Discussion: Item # 1.H. Added to RTL - Bought 2 at $6.08 (4/1/23 Post) I discussed the 2022 4th quarter report in that post. SEC Filed Press Release
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Average cost per share: $6.88 (235+ shares)
Dividend: Quarterly at $.2125 ($.85 annually)
The Necessity Retail REIT, Inc. (RTL) Dividend History | Seeking Alpha
Yield at AC per share: 12.35%
Last Ex Dividend: 4/12/23
Last Earnings Report (Q/E 3/31/23):
SEC Filed Press Release and Supplemental
AFFO per share: $.23, down from $.24 in the 2022 first quarter.
2023 first quarter FFO was hit by a $2.181M expense related to an ongoing proxy fight. That sum was added back to FFO in computing AFFO.
"The Company’s portfolio consisted of 1,039 net leased properties located in 47 states and the District of Columbia and comprised approximately 27.6 million rentable square feet as of March 31, 2023"
92.6% leased with a 7.1 years remaining weighted average lease term
86.1% of leases have annual real escalators.
Weighted average annual real escalator: 1.4%
10-Q for the Q/E 3/31/23 ("During the three months ended March 31, 2023 and 2022, uncollectible amounts were $
D. Added to PFC - Bought 5 at $13.9:
Quote: Premier Financial Corp.
Cost: $69.5
Historical Prices & Data - Yahoo Finance
Last Discussed: Item # 3.C. Restarted PFC - Bought 5 at $14.95 (5/13/23 Post) I discussed the 2023 1st quarter earnings report, which I viewed unfavorably, in that post.
Average cost per share: $14.43 (10 shares)
Dividend: Quarterly at $.31 per share ($1.24 annually)
Yield at AC per share: 8.59%
Last Ex Dividend: 5/4/23 (owned 5 as of)
E. Added 5 VNOPRM at $11.25:
Quote: VNO-PM
Equity preferred stock issued by Vornado Realty Trust (VNO)
Website: Vornado Realty Trust | A Fully Integrated Real Estate Investment Trust (REIT)
Investment Category: Advantages and Disadvantages of Equity REIT Cumulative Equity Preferred Stocks, a subcategory of Equity REIT Common and Preferred Stock Basket Strategy
Par Value: $25
Coupon: 5.25%
Dividends: Paid quarterly, non-qualified, and cumulative
Average cost per share: $16.45 (25 shares)
Yield at AC per share: 7.98%
Yield at $11.25: 11.67%
Next Ex Dividend: 6/14/23
Stopper Clause: Standard
VNO primarily owns high quality office buildings in NYC and San Francisco. VNO also owns THE MART in Chicago.
Those markets have been hit hard by the work from home trend. VNO's problems have been aggravated by an inordinate amount of variable rate debt.
In April 2023, Vornado suspended its common stock dividend until the end of 2023. Vornado Announces Postponement of Common Share Dividends Until Year-End and Authorization of $200 Million Share Repurchase Program | Vornado Realty Trust Given the ongoing difficulties, I would not anticipate much, if any common share dividend payment at year end.
VNO is continuing to pay preferred stock dividends. Vornado Declares Quarterly Dividends on Preferred Shares Those dividends are cumulative and can not be eliminated outside of a bankruptcy but only deferred. If deferred, the entire deferred amount has to be paid in full when a cash dividend is paid to the common stock owners or cash is used to buy common stock.
Sell Discussions: Item # 3.A. Sold 10 VNO.PRM at $25.34 (10/31/2020 Post); Item # 3.C. Sold 5 VNO.PRM at $24.99-Highest Cost lot bought at $19 (7/18/20 Post); Item # 2.A. Eliminated VNO.PRM-Sold 50 at $22.95 (5/23/19 Post)
VNO.PRM Realized Gains to Date: $158.54
Goal: Any total return in excess of the dividend payments.
F. Bought 5 VABK at $29.25-Fidelity Taxable Account:
Quote: Virginia National Bankshares Corp.
Cost: $146.25
This stock is thinly traded with wide/bid ask spreads.
Investment category: Regional Bank Basket Strategy
Last Discussed: Item # 3.C. Eliminated VABK in Vanguard Taxable Account - Sold 5 at $39 (3/19/23 Post)-Item # 2.F. Bought 5 VABK in Vanguard Taxable Account at $33.8 (12/3/2021 Post)
Average cost per share: $30.93 (10 shares)
Dividend: Quarterly at $.33 per share ($1.32 annually), last raised from $.30 effective for the 2023 first quarter payment.
Virginia National Bankshares Corporation (VABK) Dividend History | Seeking Alpha
Yield at $30.93: 4.27%
Last Ex Dividend: 3/9/23
Comparisons are to the 2022 first quarter.
Last Earnings Report (Q/E 3/31/23): SEC Filing
Net Income of $5.8M
E.P.S. $1.08, up from $.92
NIM: 3.71%, up from 2.59%
Efficiency Ratio: 56.2%, down from 62% (down is good)
NPA Ratio: .08%
NPL Ratio: .13%
Charge off ratio: .02%
Coverage ratio: 632.9% (p. 40, 10-Q)
ROE: 17.57%
Tangible Book Value per share: $23.89
Owned Securities:
Deposit Information at page 42.
Noninterest bearing at 32.1%
"Total deposits as of March 31, 2023 were $1.4 billion, a decrease of $81.1 million compared to December 31, 2022, and a decrease of $377.1 million compared to March 31, 2022 (dollars in thousands). As stated above, during 2022, the Company made a strategic decision to delay increasing rates paid on deposit accounts. As a result, the Company has experienced expected declines during 2022 and the first quarter of 2023 in deposit balances."
Loan to Deposit Ratio: 67.3%. This is low and gives the bank room to allow for depositors leaving in search for higher yields.
"The Company utilizes a third-party to offer multi-million-dollar FDIC insurance to customers with balances in excess of single-bank limits through Insured Cash Sweep® (ICS) plans. Deposit balances held in ICS plans amounted to $126.4 million as of March 31, 2023 and $134.6 million as of December 31, 2022."
See, Keep-Deposits-Safe-with-ICS; Network Banks | IntraFi
Webster Bank, operating subsidiary for Webster Financial (WFS), has entered this business with the acquisition of interLink. Webster Signs Definitive Agreement to Acquire interLINK; Webster Closes interLINK Acquisition
G. Added 5 RMT at $8.24:
Quote: RMT | Royce Micro-Cap Trust Inc. Overview - A Stock CEF
SEC Filing-Holdings as of 3/31/23 My only overlap with individually owned common stocks is regional bank stocks {NTB, VABK (discussed above), OPBK, FCF}. I consequently achieve some diversity with this CEF. Most of the stocks owned by this fund are not on my radar or any monitor list that I have.
Sponsor's website: Royce Micro-Cap Trust (RMT)
Last Discussed: Item # 2.A. Eliminated RMT in Vanguard Taxable Account - Sold 10 at $10.36 (2/10/22 Post)(profit snapshot = $44.26)
Average cost per share: $7.88 (35 shares)
With this purchase, I changed my dividend option to reinvestment.
Dividend: Quarterly at a variable rate.
Royce Micro Cap Trust (RMT) Dividend History | Seeking Alpha
Last 4 Dividends: $.90 per share
Yield Using $.90 and $7.88 AC per share = 11.42%
Last Ex Dividend: 3/10/23
Data Date of 5/18/23 Trade:
Closing Net Asset Value per share: $9.53
Closing Market Price: $8.29
Discount: -13.01%
Average 3 year discount: -12.34%
Sourced: RMT -CEF Connect
Last Buy Discussion: Item # 1.E. Bought 10 RMT at $5.9 (6/6/20 Post)
RMT Realized Gains to Date: $2,661.8
Largest Annual Gain: $2,269.01 on 759+ shares
 |
| 2014 |
H. Added to CLPR - Bought 10 at $5.04:
Quote: Clipper Realty, Inc.- Primarily a NYC Apartment REIT
Cost: $50.4
Clipper Equity REIT Properties
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Last Discussed: Item # 1.G. Added to CLPR - Bought 10 at $5.38; 10 at $5.16 (4/8/23 Post)
Average cost per share: $6.41 (103+ shares)
Dividend: Quarterly at $.095 ($.38 annually)
Clipper Realty Inc. (CLPR) Dividend History | Seeking Alpha
I am reinvesting the dividend.
Yield at AC = 5.93%
Last Ex Dividend: 5/12/23 (owned 91+ as of)
Last Earnings Report (Q/E 3/31/23): SEC Filing
Revenue: $33.7M
AFFO: $4.5M
AFFO per share: $.11, up from $.10 in the 2022 2nd quarter.
Leased Occupancy: 98.9%
Collection Rate: 98.7%
CLPR "substantially completed our development of the 1010 Pacific Street building, branded “Pacific House”, including obtaining a temporary certificate of occupancy for a majority of the building at the end of the first quarter, well ahead of schedule and on budget. As a result, we were able to refinance the building early to a fixed rate mortgage that will substantially decrease our interest costs compared to the construction loan."
10-Q for the Q/E 3/31/23 (debt discussed starting at page 16, mostly fixed rate with maturities between 2028-2032)
Properties:
A Luxurious Standard of Living — Pacific House (176 units) CLPR expects this apartment building to be fully leased by the end of the current quarter. Clipper Realty Inc. (NYSE:CLPR) Q1 2023 Earnings Call Transcript - Insider Monkey
I. Added to BTZ - Bought 5 at $10.25:
Quote: BlackRock Credit Allocation Income Trust (BTZ)
Gradually building up to a 100 share position.
Average cost per share: $10.31 (15 shares)
Dividend: Monthly at $.0839 per share ($1.01 annually)
BlackRock Credit Allocation Income Trust (BTZ) Dividend History | Seeking Alpha
Data Date of 5/19/23 Trade:
Closing Net Asset Value per share = $11.13
Closing Market Price: $10.24
Discount: -8%
Average 3 year discount: -5.89%
Sourced: BTZ - CEF Connect
J. Added to GDV - Bought 2 at $20.43; 5 at $19.97:
Quote: Gabelli Dividend & Income Trust Overview - Leveraged Stock CEF
Cost: $140.71
Investment Category: Monthly Income Generation
Last Discussed: Item # 6.K. Added to GDV - Bought 1 at $19.6 (10/18/22 Post)
Sponsor's Website: GDV
Leveraged: Yes, through fixed and variable rate preferred stock.
Average cost per share: $20.23 (15+ shares)
Dividend: Monthly at $.11 per share ($1.32 annually)
Yield at AC per share: 6.525%
Next Ex Dividend: 6/14/23
Data Date of 5/19/23 Trade:
Closing Net Asset Value Per Share: $24.19
Closing Market Price: $20.36
Discount: -15.83%
Average 3 year discount: -12.17%
Sourced: GDV-CEF Connect
Top 10 Holdings as of 3/31/23:
K. Started ONBPP - Bought 5 at $21.83:
Quote: Old National Bancorp 7% Preferred Series A Stock (ONBPP)
Non-cumulative equity preferred stock issued by the bank holding company Old National Bancorp (ONB).
ONB Analyst Estimates-MarketWatch
ONB SEC Filed Earnings Press Release for the Q/E 3/31/23
Original Prospectus: This preferred stock was originally issued by First Midwest, denominated then as its Series A preferred stock. ONB acquired First Midwest in 2022 and converted the Series A into an ONB preferred stock that had the same terms. SEC Filing
See also: February 2022 Filing-Registration for Public Trading
Par Value: $25
Coupon: 7%
Dividends: Paid quarterly, qualified and non-cumulative.
Optional Redemption: On or after 8/20/25
Stopper Clause: Standard (page S-18)
Yield at $21.83 = 8.02%
Next Ex Dividend: 8/3/23
I have a small ball position in the common stock.
L. Added 1 COLB at $20.31:
Quote: Columbia Banking System Inc.
Working my way up slowly to 100 shares.
COLB Analyst Estimates | MarketWatch
Investment Category:
Recent News: Columbia Banking System and Umpqua Holdings Corporation Complete Merger (3/1/23)
Last Buy Discussion: Item # 2.D. Added to COLB- Bought 5 at $25.46; 5 at $21.6; 5 at $20.9 (3/19/23 Post) I discussed the 2022 4th quarter report in that post. SEC Filed Press Release
Last Sell Discussion: Item # 2.D. Eliminated COLB in Vanguard Taxable Account - Sold 15 at $31.86 (2/20/23 Post)(profit snapshot = $41.56)
Average cost per share: $28.02 (53+ shares)
Dividend: Quarterly at $.36 ($1.44 annually), last raised from $.30 effective for the 2023 second quarter payment. Columbia Banking System Announces Increase to Common Share Dividend
I am reinvesting the dividend.
Yield at AC = 5.14%
Next Ex Dividend: 5/30/23
Last Earnings Report (Q/E 3/31/23): SEC Filing
The GAAP E.P.S., efficiency ratios, ROA, ROTE, and ROE numbers are distorted due to the Umpqua acquisition.
GAAP E.P.S. ($.09)
Non-GAAP E.P.S. = $.46
NIM: 4.08%
NPL Ratio: .2%
NPA Ratio: .14%
Charge off ratio: .23%
Tangible book value per share: $15.12
Investment Securities:
My grade on interest rate risk management is a "C". I may be too lenient in my grades.
Pledged Securities:
The Umpqua acquisition added deposits during the quarter. I am more interested in seeing deposit flows in the 2023 second quarter.
K. Added 1 HIW at $20.56; 1 at $20.14:
Quote: Highwoods Properties Inc. (HIW)- an Office REIT
Cost: $40.7
Website: Highwoods
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Average cost per share: $25.44 (37+ shares)
Dividend: Quarterly at $.50 per share
I am reinvesting the dividend.
Yield at AC = 7.86%
Last Ex Dividend: 5/19/23 (owned 36+ as of)
Last Sell Discussion: Item # 1.I. Eliminated HIW - Sold 7 at $47.22 (2/3/22 Post)
Last Substantive Discussion: Item # 3.I. Added to HIW - Bought 1 at $22.04; 1 at $21.32; 3 at $21.25; 5 at $20.7 (5/13/23 Post) I discussed the 2023 first quarter report in that post. HIW-Announces-First-Quarter-2023-Results.pdf
L. Added to BNL - Bought 5 at $15.31:
Cost: $76.55
Management: Internal
Last Discussed: Item # 1.E. Added 5 BNL at $15.77 (4/28/23 Post)
Last Substantive Discussion: Item # 1.K. Started BNL-Bought 10 at $16.29 (3/25/23 Post) I discussed the 2022 4th quarter report in that post. SEC Filed Press Release
New average cost per share: $15.91 (20 shares)
Dividend: Quarterly at $.275 per share ($1.1 annually)
Broadstone Net Lease, Inc. (BNL) Dividend History | Seeking Alpha
Yield at New AC = 6.91%
Last Ex Dividend: 3/30/23 (owned 10 as of)
Last Earnings Report (Q/E 3/31/23):
SEC Filed Press Release and Supplemental
AFFO per share: $.34
Total Lease Revenue: $118.992M
Portfolio: 801 properties; Occupancy at 99.4%
Top 20 Tenants:
Dispositions: I do not recall seeing another REIT providing the acquisition price of a sold property. I like this kind of detail.
Debt:
 |
| Unsecured Debt |
 |
| Mortgages |
3. Treasury Bills Purchased at Auction: $6,000 in principal amount.
A. Bought 2 Treasury Bills at the 5/22/23 Auction:
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Matures on 11/24/23
183 Day Bill
Interest: $52.56
Investment Rate: 5.398%
B. Bought 1 Treasury Bill at the 5/22/23 Auction:
%208:24:23%20.png){kind=small}
Matures on 8/24/23
91 Day Bill
Interest: $13.27
Investment Rate: 5.409%
C. Bought 3 Treasury Bills at 5/24/23 Auction:
Matures on 9/26/23
119 Day Bill
Interest: $52.16
Investment Rate: 5.442%
4. CDs - FDIC Insured:
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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.
Based on a brief summary of the debt limit increase deal, it looks like Biden gave the republicans more than I thought that he would.
ReplyDeleteI would characterize the agreement as the most the republicans could hope to receive without causing the democrats to balk altogether. There are republicans who will cause a default unless they receive everything they want.
https://www.cnn.com/2023/05/27/politics/whats-in-the-debt-ceiling-deal/index.html
https://www.cnn.com/2023/05/28/politics/debt-limit-talks-sunday-joe-biden-kevin-mccarthy/index.html
Biden will face defections among the liberals. He did manage to limit new work requirements primarily to food stamps but certain exemptions would be expanded.
+++
I have been nibbling on bank holding company preferred stocks.
In my next post, I will discuss a 10 share purchase of VLYPP at $16.31, a fixed-to-floating rate equity preferred stock issued by the bank holding company Valley National (VLY):
Valley National Bancorp 6.25% Perp. Pfd. Series A
https://www.marketwatch.com/investing/stock/vlypp?mod=search_symbol
The fixed coupon lasts until June 30, 2025 when it will transition, if not redeemed, to a floater that pays a 3.578% spread to the 3 month Libor rate or the alternate rate specified in the prospectus. The current yield at my TC is 9.58%.
Another VLY fixed-to-floating rate preferred stock, VLYPO, closed last Friday at $20.58 and that one is now in its floating rate coupon period. The float is at a 3.578% spread to the 3 month Libor or alternate rate. This one currently has a slightly higher dividend yield even at its higher price.
So why go with VLYPP?
Say the alternate rate in 2026 is 3% when both securities are in their floating rate periods.
Coupon for VLYPP = 6.85%
Yield at $16.31 (my purchase price) = 10.5%
Coupon for VLYPO = 6.578%
Yield at $20.58 (closing price 5/26) = 7.99%
Valley National Bancorp Declares Its Regular Quarterly Preferred and Common Stock Dividends
https://ir.valleynationalbank.com/news/press-releases/news-details/2023/Valley-National-Bancorp-Declares-Its-Regular-Quarterly-Preferred-and-Common-Stock-Dividends-c8468c7d9/default.aspx
Using the penny rates in that release, the VLYPO dividend of $0.558444 would generate an annualized yield of 10.85% at a $20.58 purchase price (assumes 4 payments at that penny rate) So that is about a 1% annual yield advantage compared to VLYPP at my purchase price. The calculations will of course change with the prices of each preferred stock and the subsequent variable rate dividends paid by VLYPO until both become floaters with VLYPP having the higher spread and the much lower current cost.
If the return when calculated is that high, is there risk to the VLY Bank defaulting?
Delete_____
With the ceiling crisis over, I expected to see futures rally heavily. They haven't. I want to keep an eye in the morning to see if there's a trade to buy into.
Is SnP breaks 4200 that's the magic number that everyone's talking about to call this bull valid. Maybe that's why futures aren't high - full expectations for 4200 to wind up holding.
This is a long time for so much limbo.
Land: I recently discussed the last VLY earnings report in Item # 2.G.:
Deletehttps://tennesseeindependent.blogspot.com/2023/05/bbdc-botz-brkl-cfg-fhb-fhnpre-hbnc-jqc.html
I was underwhelmed but did not see anything that would cause me to be concerned-yet- about solvency. Deposits were relatively unchanged as of 3/31/23 compared to 12/31/22. The non-performing loan to total loan ratio was at .5% which is not stellar but okay.
So the equity preferred VLYPP is worth taking some risk IMO given the current yield and the potential hedging value of a floating rate security when short term interest rates are relatively high, as now compared to longer term rates in the yield curve, and possibly moving higher that would make floating rate securities more desirable than the longer term fixed coupon bond positions.
Currently I am not taking much of a risk with a 10 share buy.
Several short term fixed rate junior bonds issued by bank holding companies currently have 8% to 9.5% and I am nibbling in that sector as well as fixed coupon and fixed-to-floating rate equity preferred stocks that pay qualified dividends.
I'll take a look. If buying a junior bond - then those rates are permanent until the bond matures? Or these are traded, so the price goes up if rates come down?
DeleteLand: Most junior bonds have fixed rate coupons. Interest rate risk is mitigated by focusing purchases on short term bonds. Some junior bonds are fixed-to-floating rates like the VNYPP preferred stock that I discussed earlier.
DeleteAn example of a junior bond issued by a bank holding company with a short term maturity is the Fulton Financial 4.5% JB that matures on 11/15/24.
At Fidelity, the current ask price, available for a 1 bond purchase, is 95.311. The YTM at that price, before adjusting for commission, is about 7.973%. I discussed that bond here:
ITEM # 3.B.
https://tennesseeindependent.blogspot.com/2023/05/bbdc-botz-brkl-cfg-fhb-fhnpre-hbnc-jqc.html
Schwab will charge a $1 per bond commission with a $10 minimum. So buying less than 10 bonds at that broker is not price competitive with Vanguard, IB, and Fidelity that also charge $1 per bond but have no minimum.
As with bank holding company preferred stocks, I would not expect a junior bond to have any value when and if the FDIC seizes the operating bank.
As I have discussed here, bank holding company preferred stocks, junior bonds and senior unsecured bonds have taken hits in price, unrelated to interest rate risk, starting in March 2023 due to the regional bank turmoil that has resulted in the failure of 3 mid-sized banks. Two of those banks had preferred stocks that are trading now below $1 and are probably worthless IMO.
An example of a fixed-to-floating rate junior bond is ZIONL, a $25 baby bond that I recently discussed.
DeleteThat one is issued by the bank holding company Zions Bancorporation (ZION):
Item # 2.I.
https://tennesseeindependent.blogspot.com/2023/05/bbdc-botz-brkl-cfg-fhb-fhnpre-hbnc-jqc.html
The advantages of ZIONL compared to a non-cumulative equity preferred stock issued by a bank holding company is that it has a maturity date (9/15/28), the interest payment can not be eliminated outside of a bankruptcy and the coupon is about to become a floater which may prove to be beneficial at a 3.89% spread to the 3 month Libor rate, currently around 5.4%, or the alternate rate if no Libor quotes are available which will soon be the case. I suspect, but do not know, that the alternate rate would be close to Libor if that rate had been allowed to continue.
The non-cumulative equity preferred stock is potentially perpetual, may generally be called 5 years after issuance at par value which the issuer will do when it is in its interest to do so, and the dividend can be eliminated once no cash dividend is used to buy back common stock or to pay dividends on that junior equity stock.
The main benefit of the bank holding company preferred stock dividend is that the dividends are qualified which makes a difference for high bracket U.S. taxpayers when owned in a taxable account.The yield may also be higher than the junior bond.
It was sounding not too worth the complication until that last paragraph had my ears perk up. Qualified divs, and higher yield for preferred stock than junior bond.
DeleteHigher interest to 2028 is nice. A 3.89% spread is appealing.
10 share bet on Valley is a deal breaker though, such a large bet.
BP completed its acquisition of TravelCenters (TA). I owned two TA baby bonds, TANNI and TANNL, which will be redeemed at their $25 par values on 6/15/23.
ReplyDeletehttps://www.sec.gov/Archives/edgar/data/1378453/000110465923061210/tm2315684d2_ex99-1.htm
As previously discussed, I expected this redemption to happen since BP was not going to pay the 8% and 8.25% coupons.
+++
There are some republicans who want to sabotage the recent debt increase deal in the House Rules committee, where there are 9 republicans and 4 Democrats.
In order to become Speaker, McCarthy promised that it would not bring to the floor any bill that was not approved by 7 of the 9 republicans.
https://www.cnn.com/2023/05/29/politics/chip-roy-house-rules-committee/index.html
The Rules Committee is meeting today.
Two republicans in the House Rules Committee, both extremely irresponsible politicians, have publicly stated their opposition. They are Chip Roy (R-TX) and Ralph Norman (R-SC). A third republican, Thomas Massie, has not yet said how he will vote.
If Massie votes against the bill and the Democrats provide a majority with the other 6 republicans, then McCarthy would be in a spot. Failure to advance out of committee a bill approved by the majority that would result in a U.S. default, simply because of his promise made to become speaker, would have serious adverse repercussions in the 2024 election. I would think Massie knows that and will vote to advance.
So far the Stock Jocks have yawned at the debt limit deal. But then there was not the kind of reaction in 2011 when the S&P 500 fell about 20% going into the final two days before the limit was lifted.
Since this isn't doing much to the market, what's next until the usual Sept market stress? It helps so much that there's TARA.
DeleteGood news for those looking for a pullback to invest into... there's a lot of articles that the bear is over the bull market is here. That means the boat is tipping to the bull side.
ReplyDelete"Are we in a bull market?"
https://www.google.com/search?client=firefox-b-1-d&sxsrf=APwXEdddWHefwhzPPs5GWRR3SvOcPoA9pA:1685498854407&q=Are+we+in+a+bull+market+now%3F&sa=X&ved=2ahUKEwilv_HDvJ7_AhVrk4kEHRxQAj8Qzmd6BAgXEAY&biw=1273&bih=532&dpr=3
"Are we in a bear market" yields similar results.
Land: The S&P 500 is still more than 500 points below the closing high of 4,796.56 hit on 1/3/2022. The fact that the index is up more than 20% since the pandemic low is not IMO sufficient to label this a bull market since the S&P 500 is currently nowhere near its previous high.
DeleteI would characterize the action as more consistent with a weak bear pattern starting in January 2022.
JP Morgan characterizes the pattern as neither a bull or bear market.
https://www.jpmorgan.com/wealth-management/wealth-partners/insights/the-bull-and-bear-cases-for-2023
While part of today's stock market decline may be attributed to nervousness about the House vote on the debt limit deal, I expect the deal to pass before the government defaults, though many House republicans would prefer a debt default to voting for the bill.
ReplyDeleteI believe the Stock Jocks are mainly reacting to weak China data, including today's official government release of manufacturing PMI, which showed a contraction at 48.8. Since this is the official government release, I would just assume the actual contraction is worse.
China's export data release in April claimed exports rose 8.5%, down from the prior month's 14.8%. That suggests global demand is slowing down.
Thanks. That explains it much better than debit ceiling worries.
DeleteThere's a few datapoints in USA too that show slowdowns.
I have published a new post:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2023/06/ajxa-bdn-colb-csco-fgdfx-fisi-ftekx-glw.html