Economy:
Takeaways from Fed Chair Powell's testimony- CNN Business Powell reiterated that the Fed currently anticipated raising the FF rate by 50 basis points later this year.
Bank of England June decision: 50-basis-point rate hike to tackle persistent inflation
Goldman joins Wall Street banks in cutting China's growth outlook GS cut its outlook to 5.4% growth from 6%.
Existing-Home Sales Edged Higher by 0.2% in May
AIA/Deltek Architecture Billings Index Indicates Rebound in May Business Conditions - AIA
++++
Allocation Shifts Discussed in this Post:
Corporate Bonds: $8,000 in principal amount
CDs - FDIC Insured: $5,000
Treasury Bills Purchased at Auction: $2,000 in principal amount
Exchange Traded Utility First Mortgage Bonds: +$441.67 (weighted yield at 5.54%)
Inflow U.S. Common Stocks: +$603.22 (weighted yield at 9.79%)
Canadian Common Stock: C$1,168 TC (yield at 8.05%)
Stock Funds: +$131.3 (yield about 10.66%, using 12 month trailing variable dividends for RYLD)
Net Inflow Stocks/Stock Funds: +$1,617.52 (valuing for this purpose the Canadian stock at US$883)
U.S. REIT Equity Preferred Stocks: -$172 (realized gain $42.5)
Canadian Reset Equity Preferred: +C$2,327.5
2023 Net Outflow Common Stocks/Stock Funds = -$30,832.42
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Trump and His Anti-Democracy Party:
President: Republican primary : 2024 Polls | FiveThirtyEight
Trump’s Indictment Shows He Has Killed His Conscience - The Atlantic He never had one to kill IMO.
Maureen Dowd had some perceptive comments about Donald's character: "Trump is feral, focused on his own survival, with no sense of shame or boundaries or restraint." Opinion | To Jail or Not to Jail - The New York Times
Trump’s indictment plus candidacy could endanger democracy and rule of law - The Washington Post
Several republican presidential candidates have referred to the renaming of Fort Bragg to Fort Liberty as an example of wokeness. Who was Fort Bragg named for? Braxton Bragg, the South’s worst general. - The Washington Post; PolitiFact | Some GOP hopefuls want to honor Confederate Braxton Bragg with US base. Here's what to know
Mike Pence: "We will end the political correctness in the hallways of the Pentagon, and North Carolina will once again be home to Fort Bragg."
Ron DeSantis: "It’s an iconic name and iconic base, and we’re not gonna let political correctness run amok in North Carolina."
This military base was named after the Confederate general Braxton Bragg. One confederate officer summarized Bragg's character as "obstinate but without firmness, ruthless without enterprise, crafty yet without stratagem, suspicious, envious, jealous, vain, a bantam in success and a dunghill in disaster."
Bragg owned 104 slaves on his Louisiana sugar plantation and was an avowed racist. He was a former U.S. army officer who wanted to dismember the Union in order to preserve slavery. Bragg was also at best a mediocre military leader who was known for his temper, lack of leadership skills and cruelty. Republicans want to continue venerating him by keeping the name Fort Bragg forever for this major military base.
Alito Took Unreported Luxury Trip With GOP Donor Paul Singer — ProPublica It was well known that Singer had cases before the Supreme Court where the republican Justice Alito did not recuse himself while joining in an opinion favorable to Singer.
What was not known, because Alito refused to disclose, was Alito taking a fishing trip with Singer where he was comped a $100,000 chartered private jet ride and a $1,000 per day luxury fishing lodge.
Alito denied that he did not do anything improper, claiming that he had no idea that Singer had cases before the Supreme Court and argued he had no duty to report any of those gifts. ProPublica questions Alito trip; justice responds in Wall Street Journal - The Washington Post
The entire boondoggle was arranged by Josh Leo of the Federalist Society who helped Alito win his seat on the Supreme Court and who has also been instrumental in providing luxury travel and accomodations for the republican Justice Thomas.
Nikki Haley Generously Declares She Wouldn’t Have Women Executed for Getting an Abortion
Several republicans have stated that Robert Kennedy Jr., who claims to be a Democrat, would be an ideal running mate for Trump. I agree with that assessment. Of Course the Right Has Welcomed RFK Jr. With Open Arms | Vanity Fair Norah Rothman, writing for the conservative National Review publication, summarized some of Kennedy's positions: (1) Bill Gates is engaged in a campaign to genetically modify the human race; (2) the Covid vaccines were developed, not because of any need for them, but to enrich the medical establishment (3) antidepressants are causing the mass shootings; (4) Russia's invasion of Ukraine was a neocon and CIA setup; (5) 5G cell phone towers are being set up to control out behavior; and (6) the reason for trans kids is that they are swimming in toxic chemicals. RFK Jr.’s Polling Strength Undermines Democrats’ ‘Party of Science’ Claims | National Review
Republicans' Push to Impeach Joe Biden Could Backfire 219 House Republicans voted to proceed with articles of impeachment. The high crime is that Biden had not adopted the GOP's policy positions on illegal immigration.
Republicans also want to expunge Donald's two impeachments. House Republicans' attempt to expunge Trump's impeachment
House GOP circus needs a ringmaster, 'and that's not Kevin': Steele on Republican chaos
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Putin and His Servile Orcs:
Prigozhin, head of the Wagner mercenary group, is in open rebellion against Putin after seizing control of Rostov, 600 miles south of Moscow, apparently with no resistance from the regular Russian army. Analysis: Moscow is at risk of losing its iron grip on power in Russia. The next 24 hours are critical | CNN Wagner has sent columns of forces toward Moscow. Putin has ordered that the rebellion be crushed.
In stunning rebuke, Russian mercenary chief says Russia's invasion of Ukraine was based on lies - ABC News Yevgeny Prigozhin is still an Orc but no longer a servile one to Putin.
Putin is the traitor to the Russian people.
Without question, Putin lied to the Russian people about the reasons for invading Ukraine in February 2022.
Ukraine was not a security threat to Russia. Russia is a security threat to all democracies located on its western borders.
There was consequently no need to "demilitarize" Ukraine who possessed mostly antiquated Soviet era weapons prior to the Russian invasion. Putin's invasion has succeeded in "militarizing" Ukraine with modern western weapons
The democratically elected leaders of Ukraine were not Nazis. There were no biological laboratories.
Putin simply wanted to seize internationally recognized Ukrainian territory in service of his personal imperial ambitions, attempting to garner a place in Russian history alongside Peter the Great and Catherine the Great. When Catherine the Great Invaded the Crimea and Put the Rest of the World on Edge | History| Smithsonian Magazine; How Catherine the Great may have inspired Putin's Ukraine invasion; Ukraine dismantles statue of Russian Empress Catherine the Great | Euronews
Why the Evidence Suggests Russia Blew Up the Kakhovka Dam - The New York Times
Putin Mocked Over 'Weird' Lectern Moment In The Kremlin
Russia Sought to Assassinate an Informant in the U.S. - The New York Times
Early stages of Ukrainian counteroffensive "not meeting expectations," western officials tell CNN Unless Putin is overthrown by some sane Russian who is concerned about the welfare of the population, this offensive is going to be a long and tough slog, with both sides suffering casualties measured in the tens of thousands. Ukraine will regain some territory. I would define success as cutting off the land bridge to Crimea and then using the Himars and other artillery systems to take out all of the Russian military facilities in Crimea. I view it as unrealistic that Ukraine will be able to dislodge Russia completely from the internationally recognized Ukrainian territory since Putin is willing to sacrifice up to 300,000 more Russians, maybe more, to avoid that outcome.
Russia has been, is now and most likely always will be a rogue, totalitarian and Orwellian state.
++++
1. Canadian Reset Equity Preferred Stocks:
A. Added to PPL.PRC - Bought 100 at C$16.8:
Quote: PPL-PC.TO
Issuer: Pembina Pipeline Corp. (PBA)
I have a significant Canadian dollar position and will use that idle cash to buy securities on the Toronto exchange. I have traditionally lightened up on my CAD position by converting CADs back into USDs when the CAD/USD exchange rate is greater than .8. That last exchange back into USDs was in 2017. Item # 1.A. Bought $15,000 USDs with $18,757 CADs (8/31/2017 Post)(bringing short term realized currency gain up to US$1,123)
PPL.TO - Pembina Pipeline Corp Profile | Reuters
I have a small ball position in the common stock. I last discussed PBA here: Item # 4.F. Pared PBA in Fidelity Account - Sold 3 at $37.9 (4/21/22 Post)(profit snapshot = $66.54). That pare increased my total PBA realized gain to US$1,946.52 and reduced my AC per share in that account to US$14.68.
Buy Discussions: Item # 2.B. Bought 100 PPLPRC at C$15.88 (3/7/20 Post); Item # 1. Bought 50 PPLPRC at C$15.8 (7/3/19 Post); Item # 1.B. Bought 50 PPLPRC at C$17.23 (5/25/19 Post); Item # 1.A. Bought 100 PPL.PR.C. at C$17.7 (3/23/19 Post) Using FIFO accounting, I will consider selling the lot purchased at C$17.7 at greater than $20.
Sell Discussion: Item # 2.B. Sold 100 PPPPRC:CA at C$21.64 (6/1/17 Post)(profit snapshot = C$496)
Placement in Capital Structure: Equity preferred stock, senior only to common stock.
Par Value: C$25
Coupon: 2.6% spread to the 5 year Canadian Government Bond yield
Canada 5-Year Bond Yield - Investing.com
Last Reset: March 2019 when the 5 year bond was at 1.878%
Current Coupon: 4.478% paid on the C$25 par value (C$1.1195 annually per share) 4 more quarterly payments at that rate.
Average cost per share: C$16.75 (400 shares)
Current Yield at AC = 6.68%
Last Ex Dividend: 4/28/23
Coupon Resets every 5 years. Once Pembina allows the coupon to reset, the preferred stock is call protected for 5 more years.
Next Reset: March 2024
I am expecting a higher coupon after that reset.
If the 5 year Canadian bond was then at a 3.5% yield on the next reset date, the coupon would become 6.1% which would increase the yield from 6.68% to 9.1% at my constant average cost per share number. If that 5 year yield was then at 4%, the coupon would then be 6.6% and the yield would increase to 9.86.%
Dividends: Cumulative and paid quarterly
Issuer option to call: Only on reset dates, at par + accrued and unpaid dividends. The current share price is only consistent with a 100% probability that the stock will not be called at par in March 2024.
Focusing just on interest rate risk, the 5 year Canadian reset preferred stocks will perform well when the 5 year Canadian bond yield declines after the reset or the preferred stock price is not yet priced in a significant increase in the coupon with an upcoming reset.
Conversely, poor or subpar performance will occur when the coupon resets at a low rate and interest rates start to rise after the reset. That was the case with this preferred stock after its March 2019 reset.
For profit tracking purposes, I include snapshots of my Canadian reset equity preferred trades in this post: Advantages and Disadvantages of Equity Preferred Floating Rate Securities Realized gains so far on Canadian Reset equity preferred stocks totals C$16,951.
Realized Gain PPLPRC: C$496 (100 share lot sold in 2017)
Realized Gain PPLPRG: C$507 (100 share lot sold in 2017)
Total Realized Gain PPL Reset Preferred Stocks: C$1,003.
B. Added 50 TRPPRH at C$12.95:
Issuer: TC Energy Corp. (TRP) (Transcanada changed its name to TE Energy)
TRP Analyst Estimates | MarketWatch
TRP SEC Filed Earnings Report for the Q/E 3/31/23
I have a small ball position in the common stock (22 shares). I also own 100 TRPPRD, 250 TRPPRE, and 2 different Transcanada SU bonds (1 of those mature on 10/16/23 and the other on 1/15/26).
{TRPPRE resets at a 2.35% spread to the 5 year Canadian government bond in October 2024, last discussed at Item #5.A. Bought 100 TRPPRE at C$15 and 50 at C$11.12, last sold at C$22.6- Item # 2.A. Sold 100 TRPPRE at C$22.26 (5/23/17 Post)(profit snapshot = C$467.5), par value C$25}
{TRPPRD resets at a 2.38% spread to the 5 year Canadian government bond in April 2024, current coupon at 3.903%, last discussed at Item # 3.A. Bought 50 TRPPRD at C$13, par value = C$25}
Average cost per TRPPRH share: $12.53 (200 shares)
Other Currently Owned Shares: Item # 1.A. Bought 50 TRPPRH at C$11.1 (11/16/2019); Item # 3 Bought 100 TRPPRH at C$13 (2/23/19 Post)
Par Value: C$25
Equity Preferred Stock, senior only to common stock.
Dividends: Paid quarterly and cumulative
Prospectus Excerpt:
Coupon: Resets quarterly at a 1.28% spread to the 3 month Canadian Government bond. This spread is awful but the current discount to par value makes it appealing.
When I purchased this 50 share lot, the Canadian 3 month was trading at 5%. Canada 3-Month Bond Yield - Investing.com
Selected treasury bill yields - Bank of Canada:
If 5% was the yield on the next 3 month reset date, the coupon for the 3 month period would be 6.28% which becomes appealing given the C$12.97 total cost per share (includes C$1 commission on 50 shares, same for a 100 share purchase at IB). The annualized yield using the 5% rate and my total cost per share would be 12.1% (.0628 x. C$25 = C$1.57 per share ÷ C$12.97 per share TC = 12.1%) The actual annual yield would depend on the variable coupons for all 4 quarters.
I have one prior round trip: Item # 5.B. Sold 100 TRPPRH at C$14.2 (5/17/17 Post)(profit snapshot C$393). That lot was bought at C$10.25.
Prospectuses for TRP preferred shares are linked at this webpage: TC Energy — Stock Information
The Canadian preferred shares that reset quarterly at spreads to the 3 month Canadian government treasury bill ("base yield") have become more attractive over the past 12 months given the rise in the base yield. If higher short term rates are the long term new normal, then those preferred stocks become even more attractive at their current discounts to par value. The future long term course of the base yield for those securities, however, is not knowable.
2. Corporate Bonds:
As a reminder, pass through entities like REITs and BDCs pay out all or almost all of cash flow as common share dividends. Accordingly, there is a minimal cash cushion for SU debt owners.
If Ares Capital was not a BDC but a regular corporation who paid out no more than 50% of GAAP net income in common share dividends, its SU debt would be rated higher than BBB-, assuming the same asset coverage. The pass through structure favors the common shareholder and is a major negative for SU debt owners.
A. Bought 2 PNC Financial 3.9% SU Maturing on 4/29/24 at a Total Cost of 98.124:
New Finra Page: Bond Page | FINRA.org
Credit Ratings: A3/BBB+
YTM at Total Cost: 6.17% (very high for A3 rated bond maturing in April 2024)
Current yield at TC: 3.97%
I now own 4 bonds.
B. Bought 2 Ares Capital 4.25% SU Maturing on 3/1/25 at a Total Cost of $95.4:
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Issuer: Ares Capital Corp. (ARCC) - Externally Managed BDC
I have a small ball position in the common stock.
SEC Filed Earnings Press Release for the Q/E 3/31/23
New Finra Page: Bond Page | FINRA.org
Credit Rating: BBB-
YTM at Total Cost: 7.17% (high for a BBB- rated bond maturing in early 2025).
Current Yield at TC: 4.45%
I now own 4 bonds.
C. Bought 2 Welltower 4.5% SU Maturing on 1/15/24 at a Total Cost of 99.179:
%204.5%25%201:15:24.png)
Issuer: Welltower Inc. (WELL) - Healthcare REIT
WELL SEC Filed Business Update: 6/6/23
WELL SEC Filed Financial Report for the Q/E 3/31/23
New Finra Page: Bond Page | FINRA.org Welltower changed its name from Health Care REIT.
Credit Ratings: Baa1/BBB+
YTM at Total Cost: 5.99% (high for a BBB+ rated bond maturing in January 2024)
Current Yield at TC = 4.54%
I now own 4 bonds.
D. Bought 2 Owl Rock Core Income 5.5% SU Maturing on 3/21/25 at a Total Cost of 96.533:
Issuer: Externally Managed Private BDC
SEC reports are filed since this BDC issues publicly traded bonds.
Owl Rock Core Income Corp. 10-Q for the Q/E 3/31/23
10-Q for the Q/E 3/31/23 (summary of investments starts at page 6; debt discussed starting at page 80
New Finra Page: Bond Page | FINRA.org
Prospectus The notes were initially offered in a private placement. This prospectus permits the bonds to be publicly traded.
Credit Ratings: Baa3/BBB-
YTM at Total Cost: 7.65%
Current Yield at TC = 5.7%
I now own 4 bonds.
Last Bond Offering (June 2023): SEC Filing ($500M in a 7.95% SU maturing in 2028)
The publicly traded BDC Owl Rock Capital Corp. (ORCC) has the same external manager.
3. Bought 100 RNW:CA at C$11.67 (C$1 Interactive Brokers Commission):
Quote: TransAlta Renewables (RNW:CA)
Website: TransAlta Renewables - A Renewable Energy Leader
USD Cost per share with Commission: About US$8.83 x. 100 = US$883
Our Facilities (Transalta has ownership interests in 26 wind facilities, 11 hydroelectric facilities, 8 natural gas facilities, 2 solar facilities, 1 natural gas pipeline, and 1 battery storage project. The total megawatts of those facilities is 2,965MW)
Some of my prior trades were the USD priced shares that trade on the U.S. Grey Market. TransAlta Renewables Inc. (TRSWF) This is a dark market where bid/ask prices are not displayed except when I traded in my Schwab account. I no longer trade in that market since Schwab now charges a commission that is higher than what I pay Interactive Brokers for a 100 share lot which is C$1. The Toronto market is also far more liquid than the U.S. Grey Market with narrow bid/ask prices.
Last Eliminations: Item # 1. Eliminated RNW:CA - Sold 100 at C$16.98 (1/13/22 Post)(profit C$588.5); Item # 1 Eliminated TRSWF in Schwab Account-Sold 100 at US$14.94 (11/26/21 Post)(profit snapshot US$505.31) As noted in thost posts, I did not believe investors were properly assessing the negative impact from losing all the wind turbines at the Kent Hills 1 and 2 generation facility due to foundation failures. One turbine had collapsed and an engineering study concluded that all foundations had been negligently designed. The cost was originally estimated at C$75M-C$100M with C$3.4M in lost revenue per month. Canadian developer TransAlta Renewables to rebuild onshore wind farm after turbine collapse | Windpower Monthly I suspected that the cost would be substantially higher so I eliminated the positions.
This problem is now mostly in the rear view mirror. All of the new foundations have been laid, 13 towers have been reinstalled and the remainder are expected to commence commercial operation later this year:
Dividend: Monthly at C$.0783 per share (C$.94 annually)
1 CAD to USD - Canadian Dollars to US Dollars Exchange Rate
TransAlta Renewables Declares Dividends - TransAlta Renewables
 |
| Amounts in CADs |
Canada will withhold 15% when the shares are owned in a U.S. citizen's non-retirement account. After tax return will depend on how much of the Canadian tax can be recovered through a foreign tax credit. Claiming Foreign Taxes: Credit or Deduction? | Charles Schwab
Yield at C$11.67 (before taxes): 8.05%
Next Ex Dividend: 7/14/23
5 Year Chart to Intraday on 6/19/23:
Last Financial Report (Q/E 3/31/23): TransAlta Renewables Reports First Quarter 2023 Results - TransAlta Renewables
Free Cash Flow per share: C$.35
Cash Available for Distribution per share: C$.27
Dividends: C$.27
Hopefully, with the return of full operation from the Kent Hills wind turbines, and more normal wind conditions, CAD coverage of the dividend will increase.
Renewable Energy Production: 1,219 GWH, down from 1,310 GWH in the 2022 second quarter. The company attributed the lower production to lower than normal wind conditions throughout Canada that negatively impacted production from its Canadian wind generation facilities.
Other Trade Discussions:
Item # 1 Sold 100 RNW:CA at C$17.92(3/14/20 Post)(profit snapshot = C$511)-Item # 2 Bought 100 RNW:CA at C$12.79 (9/14/19 Post);
Item # 3. B. Sold 150 RNW:CA at C$13.97 (profit snapshot = C$163.5)- Item # 2.A. Bought 100 RNW:CA at C$12.91 (6/18/18 Post), Item #2.A. Bought 50 RNW:CA at C$12.45 (7/12/18 Post)
RNW:CA/TRSWF Realized Gains to Date:
USD = $581.05
CADs = $1,263
Goal: Any total return in excess of the dividends.
4. Small Ball Stock and Stock Fund Buys:
A. Added 5 AOD at $8.21:
Quote: abrdn Total Dynamic Dividend Fund Overview
Cost: $41.05
AOD SEC Filed Annual Report for the F/Y ending 10/31/22
SEC Filing: Holdings as of 1/31/23
Sponsor's website: abrdn Total Dynamic Dividend Fund, Inc.
Non-U.S. equities will generally be close to 1/2 of the total and have probably been a drag on past returns.
Average cost per share: $8.03 (83+ shares)
Dividends: Monthly at $.0575 per share ($.69 annually)
I am reinvesting the dividend.
There has been some recent ROC support. The fund has to realize capital gains to fully support the dividend. Unrealized net capital appreciation stood at $202.78M as of 1/31/23.
Yield at New AC = 8.59%, rounded down
Last Ex Dividend: 6/22/23 (owned all as of)
Data Date of Purchase:
Closing Net Asset Value per share: $9.51
Closing Market Price: $8.19
Discount: -13.88%
Average 3 Year Discount: -11.56%
Sourced: AOD - CEF Connect
abrdn Total Dynamic Dividend (AOD) Portfolio | Morningstar (List of top 25 holdings) Morningstar has no rating for this CEF.
B. Added to RYLD - Bought 5 at $18.05:
Last Discussed: Item # 4.E. (1/16/23 Post)
Sponsor's website: Russell 2000 Covered Call ETF (RYLD)
New Average cost per share: $19.69 (35+ shares)
Dividends: Monthly at a variable rate
I am reinvesting the dividend.
Last 12 Dividends per share (through May): $2.11, rounded up.
Yield at AC Using Annual Rate of $2.11 = 10.69%
Last Ex Dividend: 6/20/23 (owned all as of)
C. Bought 10 TRIN at $13.59:
Quote: Trinity Capital Inc. (TRIN) - Internally Managed BDC
This is my first purchase.
TRIN 2022 SEC Filed Annual Report (Risk factor summary starts at page 23 and ends at page 66)
3 Year Financial Results Summaries:
 |
| Page 89, Annual Report |
Realized Gains and Losses 2021-2022:
"During the year ended December 31, 2022, our gross realized gains primarily consisted of the sale of our equity positions in two portfolio companies, and our gross realized losses primarily consisted of the sale of our debt positions in three portfolio companies. During the year ended December 31, 2021, our gross realized gains primarily consisted of the sale of our debt positions in two portfolio companies, and our gross realized losses primarily consisted of the sale of our equity positions in three portfolio companies."
"During the year ended December 31, 2022, our net unrealized depreciation totaled approximately $134.8 million, which included net unrealized depreciation of $5.4 million from our warrant investments, $89.7 million from our equity investments and $39.7 million from our debt investments. The net unrealized depreciation from our equity investments for the year ended December 31, 2022 stemmed primarily from the reclassification of our gross unrealized appreciation related to proceeds of approximately $69.9 million from the sale of two equity investments."
Dividend: Regular quarterly at $.48 per share ($1.92 annually), increased from $.47 effective for the 2023 second quarter payment which had been reduced from $.61 per share that was paid in the 2022 4th quarter.
Trinity Capital Inc. (TRIN) Dividend History | Seeking Alpha
Several special dividends have been paid. The next payment will include a $.05 per share special dividend.
Yield at $13.59: 14.13% (regular dividend only)
Next Ex Dividend: 6/29/23
Net Asset value per share history:
3/31/23: $13.07
12/31/22: $13.15
Part of the net asset value per share decline in 2022 was due to the payment of $.60 per share in special dividends.
12/31/21: $16.40
IPO: $14 per share (January 2021) Prospectus
Last Earnings Report (Q/E 3/31/23):
SEC Filed Press Release and SEC Filed 1st Quarter Investor Presentation
10-Q for the Q/E 3/31/23 (summary of investments starts at page 8) A loan with an (18) number indicates that the loan is on non-accrual which includes loans made to Core Scientific.
TRIN took a hit on its loans to Core Scientific, a crypto mining company, last year after the company filed for bankruptcy. Crypto Miner Core Scientific Hopes to Emerge from Bankruptcy by September, Lawyers Say; Bitcoin miner Core Scientific filing for bankruptcy, will keep mining (12/20/22); Bitcoin miner Core Scientific (CORZ) warns it might go bankrupt, stock plunges (10/27/22)(Core's stock market capitalization hit $4.3B in July 2021 and had fallen to $90M after this announcement. 10-Q for the Q/E 3/31/23)
The total cost of the Core Scientific loans was reported at $23.169M with a fair value claim of $13.897M as of 3/31/23. The loan was at $19.524M as of 12/31/21 and then valued at $19.621M. 2021 Annual Report at page 99 I have no opinion on whether the current valuation mark is reasonable.
Net Investment Income: $41.5M
Basic NII per share: $.55
Diluted NII per share: $.52
Quarterly Dividend: $.47
Effective yield on average debt investment: 15.2%
% of debt investments on non-accrual: 2.3% based on fair value. The % would be much higher based on original cost numbers.
Company assessment of credit risks:
Company Debt: One negative is that this small BDC is that all of its fixed coupon debt obligations, totalling $432.5M, mature in 2025 and 2026. Refinancing costs may be higher.
$182.5M in a 7% SU exchange traded baby bond maturing on 1/16/25, Trinity Capital Inc. 7% Notes Due 2025 (TRINL)
$50M in 6% convertible notes maturing on 12/11/25
$125M in 4.375% SU bonds maturing on 8/24/26
$75M in 4.25% SU bonds maturing on 12/15/26
The credit facility is based on a spread to the SOFR rate.
D. Added to CLPR - Bought 10 at $5.30:
Quote: Clipper Realty, Inc. - primarily a NYC apartment REIT
I am simply averaging down in small lots until I hit 200 shares.
10-Q for the Q/E 3/31/23 (debt discussed starting at page 15; the fixed coupon rates are favorable with maturities starting in 2028 through 2032.)
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Management: Internal
New Average cost per share: $6.17 ($135+ shares)
Dividend: Quarterly at $.095 per share ($.38 annually)
Clipper Realty Inc. (CLPR) Dividend History | Seeking Alpha
I am reinvesting the dividend.
Yield at $6.17: 6.16%
Last Ex Dividend: 5/12/23 (owned 103 shares as of)
I have nothing to add to my most recent substantive discussion where I discussed the 2023 first quarter financial report. Item # 2.H. Bought 10 CLPR at $5.04 (5/27/23 Post); SEC Filed Financial Report for the Q/E 3/31/23
E. Added 1 WPC at $68.6; 1 at $67.37; 2 at $66.25 - Fidelity Taxable Account:
Quote: W. P. Carey Inc. (WPC) - Diversified REIT
As of 3/31/23, the portfolio comprised partial or full ownership in "
52 week price range: $66.76 - $89.63
Property Diversification as of 3/31/23:
 |
| Page 41, 10-Q |
10-Q for the Q/E 3/31/23 (Debt discussion starts at page 26. I own several WPC SU bonds, including 4 WPC 4.6% SU bonds that mature on 4/1/24, Bond Page | FINRA.org)
Top 10 Tenants:
Last Bond Offering (10/21): Prospectus for $350M 2.45% SU notes maturing in 2032
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
I own WPC in 4 taxable accounts, making an exception for reducing or eliminating duplicate positions. The largest position is 30 shares held in my IB account.
Since I have not discussed this REIT in awhile, I thought that I would buy 4 shares which gives me an excuse to summarize the last financial report and to highlight the current dividend yield. So far, I have not sold any shares.
I would classify WPC as a blue chip REIT.
Buy Discussions: Item # 1.A. Added to WPC in Vanguard Taxable Account - Bought 10 at $68.31 (4/1/21 Post); Item # 1.A. Bought 10 WPC at $66.79; 2 at $65.9 in Fidelity Taxable Account (2/13/21 Post); Item # 3.F. Bought 5 at WPC at $43 in Schwab Taxable Account (4/25/20 Post); South Gent's Comment Blog # 7: Bought 30 WPC at $59.45 in Interactive Broker Account (12/10/16 comment)
Average cost per share this account: $66.6 (17+ shares)
Dividend: Quarterly at $1.069 per share ($4.28 annually, rounded up)
W. P. Carey Inc. (WPC) Dividend History | Seeking Alpha
Dividend raises are very small but consistent. The penny rate was at $.82 per share in the 2013 first quarter. So doubling will most likely require more than 20 years.
I am reinvesting the dividend only in this account.
Yield at $66.6: 6.43%, rounded up.
Next Ex Dividend: 6/29/23
Last Earnings Report (Q/E 3/31/23):
SEC Filed Press Release and Supplemental
AFFO per share: $1.31
AFFO = $279.219M
Revenues: $427.79M
Occupancy Net Leased Properties: 99.2%
Goal: Any total return before any ROC adjustment to the tax cost basis in excess of the dividends received.
F. Added to PFLT - Bought 5 at $10.51:
Cost: $52.55
Quote: PennantPark Floating Rate Capital Ltd. (PFLT)
New Average cost per share: $9.41 (105+ shares)
Dividend: Monthly at $.1025 per share ($1.23 annually)
PFLT Dividend History | Nasdaq
Yield at New AC = 13.07%
Last Ex Dividend: 6/14/23
I discussed this externally managed BDC in my last post. Item #2.M. Added to PFLT - Bought 3 at $10.74 (6/17/2023 Post); SEC Filed Financial Report for the Q/E 3/31/23
5. Equity REIT Preferred Stocks:
A. Eliminated CIO.PRA in Schwab Account - Sold 10 at $17.2:
Quote: CIO-PA
This is an equity preferred stock issued by the equity REIT City Office REIT Inc. (CIO)
CIO SEC Filed Financial Report for the Q/E 3/31/23
I am eliminating a duplicate position. I still own 35 shares in my Fidelity Taxable Account.
Investment Category: Advantages and Disadvantages of Equity REIT Cumulative Equity Preferred Stocks, a subcategory of Equity REIT Common and Preferred Stock Basket Strategy
Profit Snapshot: $42.5
Prospectus Supplement
Coupon: 6.625%
Dividends: Paid Quarterly, cumulative and non-qualified (pass through entity)
Maturity: Potentially perpetual. Issuer option to redeem at par value + accrued and unpaid dividends started on 10/4/21.
Placement in the capital structure: Equity preferred stock, senior only to common stock.
Stopper Clause: Standard
Credit Ratings: Junk
CIO.PRA Realized Gains to Date: $446.18
Of that total, $302.19 was realized in two 50 share trades:
Prior Sell Discussions: Item # 4.A. Pared CIOPRA in Fidelity Account - Sold 10 at $24.47 (8/22/20 Post)(profit snapshot = $55.99); Item # 6.A. Pared CIOPRA-Sold 10 at $21.17 and 10 at $22.25-Highest Cost Lots (6/6/20 Post)(profit snapshot = $22.17); Item # 1.A. Eliminated CIOPRA-Sold 50 at $24.77-Used Commission Free Trade (4/24/19 Post)(profit snapshot = $155.22); Item # 4.A. Sold 50 CIOPRA at $24.14-Used Commission Free Trade (3/17/19 Post)(profit snapshot = $20.86); Item 3.A. Sold 50 CIOPRA at $25.21 (1/27/17 Post)(profit snapshot = $146.97).
Preferred stocks issued by Office REITs have succumbed to the same intense downward spiral as the common shares. The downdraft is due to both credit and interest rate risk issues.
Recent developments at CIO which include relinquishing one office property located in Richmond, Texas, known as 190 Office Center, back to non-recourse lenders after losing a tenant is causing me to reconsider holding even small ball positions in the preferred stock. SEC Filing
6. Exchange Traded First Mortgage Bonds: +$441.67
Exchange Traded: Traded like a stock on the stock exchange rather than in the bond market.
Trades Flat: No accrued interest is paid to the seller. The owner on the ex interest date receives the entire quarterly interest payment.
I own exchange traded first mortgage baby bonds issued by Entergy operating subsidiaries in several accounts, making an exception to reducing my duplicate positions.
I also own in several accounts $1K par value first mortgage bonds issued by those subsidiaries.
I am using the proceeds from the early redemptions of TANNI and TANNL to buy these higher quality bonds. I am assuming considerable interest rate risk with the FM bond purchases.
A. Bought 5 EMP at $22.4; 5 at $22.15; 5 at $21.9- Fidelity Taxable:
Quote: Entergy Mississippi LLC 4.9% First Mortgage Bonds Overview
Issuer: Operating subsidiary of the utility holding company Entergy Corp. (ETR)
Entergy Mississippi operating results can be found in Entergy's 10-Q and 10-K SEC Filings. ETR 10- Q for the Q/E 3/31/23 at pages 101-112 (quarter revenues at $412.428M, net income at $20.04M; cash and cash equivalents = $36.152M; Utility Plant at $5.052+B after depreciation)
I currently have no credit risk concerns.
Interest rate risk to the bond's owners is potentially significant.
Interest rate risk is asymmetrical in favor of the issuer given the owners lack of call protection and the potentially long maturity.
If interest rates decline enough that the issuer would be better off refinancing, and does so, then the owners will receive the proceeds when reinvestment options would be at lower yields.
If interest rates continue to rise from current levels, the issuer will allow the owners to keep the bond that is going down in price.
Last Buy Discussions: Item # 2.E. Added to EMP in Schwab Account - Bought 5 at $20.92 (1/3/23 Post); Item # 5.A. Added 5 EMP in Vanguard Taxable Account at $21.75 (12/6/22 Post); Item # 2.B. Bought 10 EMP at $23.76; 5 at $21.07; 10 at $20.39 (4/25/2020 Post)
Average cost per share this account: $22.38 (40 shares)
Yield at AC: 5.47%
Next Ex Interest Date: 6/29/23
Credit Ratings: A/A2
Investment Category: Exchange Traded Baby Bonds
Par Value: $25
Interest paid quarterly.
First Mortgage attaches to "substantially" all assets
Maturity: 10/1/2066
Issuer Optional Redemption: At anytime now at par value + accrued and unpaid interest. The call protection period expired on 10/1/21.
Maximum Position-All Taxable Accounts: 300 shares
Other Current Positions:
Schwab: 30 shares with a $21.88 cost per share
Vanguard: 30 shares with a $23.99 cost per share.
Sell Discussions: Item # 5.A. Pared EMP-Sold 5 at $26.84 (6/27/20 Post); Item # 4.A. Eliminated EMP-Sold 70 at $24.87 (5/1/19 Post)(profit snapshot = $207.92); Item # 2.B. Sold 30 EMP at $24.44 (2/13/19 Post); Item # 2.A. Sold 50 EMP at $24.47 (7/22/17 Post)(profit snapshot = $66.98)
EMP Trading Profits to Date: $464.9
B. Added 5 EAI at $21.88 - Fidelity Taxable Account:
Quote: Entergy Arkansas 1st Mortgage Bonds 4.875% due 2066 (EAI)
Cost: $109.42
Entergy Arkansas is an operating subsidiary of the Entergy Corp. (ETR) utility holding company
The ETR SEC filings will include results from its operating subsidiaries.
ETR 10-Q for the Q/E 3/31/23 (Entergy Arkansas quarterly results at page 80)
Investment Category: Income Generation with First Mortgage Baby Bond, part of the Exchange Traded Bond category.
I own this security in several accounts.
First Mortgage Lien on substantially all assets.
Par Value: $25
Maturity: 9/1/66
Issuer Optional Redemption: On or after 9/1/2021 at par value + accrued and unpaid interest.
Quarterly interest payments.
Trades Flat.
Credit Ratings: A/A2
New average cost per share this account: $23.34 (55 shares)
Yield at AC = 5.22%
Last Ex Interest: 5/30/23 (owned 50 this account as of)
EAI Trading Profits to Date: $102.17
Maximum Position All Accounts: 300 shares
I recently discussed this exchange traded first mortgage bond and have nothing further to add here. Item # 4.A. Added to EAI in Fidelity Taxable Account - Bought 5 at $22.85 (5/13/23 Post)
7. CDs - FDIC Insured: $5,000
I am simply moving proceeds quickly out of my Schwab sweep account that pays .4%.
A. Bought 2 Merchants Bank 5.35% CDs Maturing on 9/26/23:
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Operating subsidiary of the bank holding company Merchants Bancorp (MBIN)
B. Bought 2 Valley National 5.35% CDs Maturing on 9/21/23:
Operating bank for the bank holding company Valley National Bancorp (VLY)
I have a small ball position in both the common and a preferred stock.
Interest paid at maturity.
C. Bought 1 Flushing 5.35% CD Maturing on 10/2/23:
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Operating bank for the bank holding company Flushing Financial Corp. (FFIC)
I have a small ball position in the common stock.
8. Treasury Bills Purchased at Auction:
June Treasury Yield Curve:
Probabilities for July .25% Rate Hike at 71.9%:
A. Bought 2 Treasury Bills at the 6/21/23 Auction:
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Matures on 10/24/23
119 Day Bill
Interest: $34.51
Investment Rate: 5.4%
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.
