Due to Finra's investor unfriendly redo of its website, links to Finra data made in posts prior to May 25, 2023 no longer work.
I would add that Finra has made it so difficult to research bonds that it has in effect made its website useless to individual investors.
Part of the problem is that the bonds issued by a company are no longer linked to the stock symbol. This requires the entry of a CUSIP number or the issuer's name at a new page. Fixed Income Data | FINRA.org
For example, I wanted to find bonds issued by Citizens Financial Group but the website returned no results even though I new there were outstanding SU bonds. After using various abbreviations for "Financial", I found bonds linked under Citizens "Finl". However, the list did not have maturity dates or coupon information, which required me to look at every entry. Most of the entries were for bonds that had already matured. It was taking far too long so I just gave up the search.
Even when I find the bond, Finra no longer links the prospectus which is one reason why I previously used that website in my research.
FINRA no longer provides information on whether the bond is subordinated (junior), senior unsecured or a first mortgage.
FINRA no longer provides information on when the bond was originally issued. If I had this information, it would make it easier to find the prospectus.
+++
Economy:
May Payrolls: +339,000 vs. consensus of 190,000. The two prior months were revised up by 93,000, bringing the net gain to 430,000.
Average Hourly Earnings: +$.11 to $33.44, up 4.3% over the past 12 months and up .3% month-to-month. The annual increase through April was at 4.4% with the month-to-month increase at .5%
The combination of slower wage growth, potentially lowering inflationary pressures some, and the robust jobs gains gave stocks a jolt yesterday. I would add to that mix the .8% increase in PCE for April, up from .1% in March, which I discussed in the last post. Personal Income and Outlays, April 2023 | U.S. Bureau of Economic Analysis (BEA)
The average work week decline by .1 to 34.3 hours. While that appears at first blush to be insignificant, a .1 hour decline given the size of the workforce (160.721M employed) is a materially negative number.
Employment Situation Summary - 2023 M05 Results
Payrolls have now increased for 29 consecutive months.
 |
| In Thousands |
Wage Growth Tracker - Federal Reserve Bank of Atlanta
China's economic recovery loses steam as factory production contracts further | CNN Business
The May ISM manufacturing PMI declined to 46.9% from 47.1% in April, which is the seventh consecutive month of contraction after 28 months of expansion. Manufacturing PMI® at 46.9% The new orders component declined from 45.7 to 42.6.
The Atlanta Fed's GDP model is currently predicting 2% real GDP growth in the second quarter. GDPNow - Federal Reserve Bank of Atlanta
++++
Allocation Shifts Discussed in this Post:
Treasury Bills: $10,000 in principal amount
Corporate Bonds: $8,000 in principal amount
CDs- FDIC Insured: $5,000
Common Stocks: +$390.2
(consisting of $889.32 in purchases minus $499.12 in proceeds)
Outflow Stock Funds: -$462.51 (consisting of $602.59 in proceeds minus $140.08 in purchases)
Net Outflow Common Stocks/Stock Funds: -72.31
Realized Gains Stocks/Stock Funds: +$159.47
Weighted average yield stock purchases: 6.43% (the goal is to add individual common stocks each week that have a weighted average yield greater than 5%)
Bank Holding Company Equity Preferred Stock: +$163.1 (yield = 9.58%)
Exchange Traded Baby Bond: -242.66 (profit = $2.59)
2023 Net Outflow Stocks/Stock Funds: -$33,368.78
The primary rationale for the stock reduction YTD is the credit risk free yield alternative. In that regard, I am currently assigning a zero credit risk to treasury bills, FDIC Insured CDs, and MM funds that invest in treasuries.
Yield-Hungry Investors Are Feasting on T-Bills | Barron's
I assign a small credit risk to investment grade corporate bonds. I started to buy individual bonds in 2007 and have suffered so far 1 default in an investment grade bond purchase.
++++
Trump and His Anti-Democracy Party:
Trump Was Taped Discussing Sensitive Document He Had After Leaving Office - The New York Times Trump is recorded as acknowledging the document was secret which arguably undermines his claim that he declassified the top secret documents. According to news reports, this document has not been returned to the government and is currently missing. Exclusive: Trump attorneys haven't found classified document former president referred to on tape following subpoena
Trump lawyer said to have been waved off searching office for secret records-The Guardian; Report: Trump’s Lawyer Revealed Some Unfortunate Things for Trump in Classified-Docs Case | Vanity Fair Many of the documents marked top secret were found in Trump's office.
Based on what I have read so far, I view it as likely that Trump will be criminally charged with obstruction of justice. That charge relates to the failure to produce documents that were marked as classified in response to a grand jury subpoena. It is irrelevant to that charge whether Trump declassified the documents in his mind or in any other manner.
The grand jury subpoena is not publicly available. However, the U.S. Court of Appeals for the Eleventh Circuit was provided a copy and noted that the subpoena required the production of documents with "classification markings".
Opinion.pdf A significant number of documents with classification markings were found in Trump's office by the FBI during the August 2022 search. Trump FBI raid: Photo of docs labeled 'TOP SECRET'; DoJ says Trump team may have hidden or moved classified material from Mar-a-Lago : NPR
A Trump spokesperson responded to this story as follows: "This is completely false and rooted in pure fantasy. The real story is the illegal weaponization of the justice department and their witch-hunts targeted to influence an election in order to try and prevent President Trump from returning to the White House."
Fact check: Ron DeSantis on Amanda Gorman poem being pulled from a Florida elementary school library This poem was delivered at Biden's inauguration. DeSantis did not personally recommend that the poem be pulled from a school library. Instead, he pushed through a law that allowed 1 parent to complain about a book and a school district must respond to that complaint. The result is that books are being pulled from school libraries based on one parent's complaint.
+++
Putin and His Servile Orcs:
Russia’s Medvedev says UK officials are ‘legitimate military targets’ for their support to Ukraine There was a time when many in the West viewed Medvedev as a sane and rational Russian politician, but those operating under that delusion have been cured and now recognize him for what he is, just another Russian psychopath who has become extremely wealthy as a Russian civil servant. Don't call him Dimon by Alexei Navalny in English VO ( dub ) FULL MOVIE DOCUMENTARY RUSSIA MEDVEDEV - YouTube I do wonder why Medvedev wants Russia to start a war with the U.S. and NATO when it is unable to beat the Ukrainian army.
The Russian official with a none-too-subtle message from the boss | CNN
Moscow hit by drone attack as Russia strikes Kyiv; Drones hit Moscow, shocking Russian capital after new missile attack on Kyiv - The Washington Post The drone attacks on Moscow may have reminded residents that Putin is conducting a war of aggression in Ukraine, but did little damage and were ineffective.
Russia issues arrest warrant for Sen. Lindsey Graham (R-SC)- CBS News; Head of RT Margarita Simonyan Calls for Lindsey Graham’s Assassination After Edited Russia Comments
Putin congratulates 'dear friend' Erdogan as NATO's Turkey challenge looks set to stay; Turkey’s lira sinks to fresh record low after Erdogan re-election; Turkey economy: Erdogan vows to keep cutting rates to bring inflation down | CNN Business The annual rate of inflation in Turkey was 44% through April 2023. The Turkish Lira crashed 40% last year in response to Erdogan's economic policies. Both Putin and Erdogan are exceptionally bad leaders so they have that in common and much more.
Ales Bialiatski: Fears grow for Nobel peace laureate imprisoned in Belarus | CNN; Belarusian President Alexander Lukashenko offers nuclear weapons to nations willing 'to join the Union State of Russia and Belarus' | CNN Putin controls Belarus which will be formally absorbed into Russia within the next decade unless the current dictator is replaced with a democratically elected government that wants to return freedoms and independence to Belarusians.
Ukraine War: Drone strikes hit Russian oil refineries - YouTube
Ex-Putin ally reveals Putin is a ‘completely different person’ than before - YouTube
++++
1. Small Ball Buys:
A. Restarted GLW - Bought 5 at $31.41; 2 at $31:
Quote: Corning Inc. (GLW)
Cost: $219.05
52 Week Price Range: $28.98-$37.73
I have always been impressed by Corning's ability to innovate.
Recent earnings results have been negatively impacted by rising input costs, supply chain disruptions, the strength of the U.S.D., and lower demand for some products.
GAAP results in 2022 were negatively impacted by $414M "in severance, accelerated depreciation, asset write-offs and other related charges for the year ended December 31, 2022. Capacity optimization charges include accelerated depreciation and asset write-offs associated with the exit of certain facilities, product lines and other exit activities primarily within Display Technologies, Specialty Materials and an emerging growth business. Severance charges were recorded across all segments and as of December 31, 2022, the severance accrual is not material and is expected to be settled within the next twelve months."
Looking at a five year chart, the stock price has been drifting down since topping near $46 in April 2021. During that downtrend, rallies are relatively brief
Website: Corning | Materials Science Technology and Innovation
Advanced Optics | Advanced Optical Materials, Components, and Technology Solutions | Corning
Gorilla Glass | Damage and Scratch Resistant Device Glass Protection | Corning Gorilla Glass
Environmental Technologies and Emission Control Products | Corning
Life Sciences Products | Corning
Corning Optical Communications | Optical Connectivity Solutions | Corning
Pharmaceutical Glass Technologies | Pharmaceutical Packaging Technology | Corning
GLW Analyst Estimates | MarketWatch
2022 Annual Report (debt listed at page 83)
 |
| 2022 vs. 2021 Results, page 24, Annual Report |
Subsequent to these purchases, Corning announced a 20% increase in display glass products. Corning Announces Price Increase for Display Glass Products Most of those products are for notebook computers, flat panel desktop monitors, and phone screens. In the 2023 first quarter, display products generated $609M in revenue or about 19% of the $3.178B total.
Last Discussed: Item # 1.D. Restarted GLW- Bought 50 at $19.74 and Then Sold 50 at $22.28 (6/6/20 Post)
Average cost per share: $31.29 (7 shares)
Dividend: Quarterly at $.28 ($1.12 annually), last raised from $.27 effective for the 2023 first quarter payment.
Yield at AC = 3.58%
Last Ex Dividend: 5/30/23 (owned all as of)
Last Earnings Report (Q/E 3/31/23): SEC Filing
GAAP E.P.S. = $.20
Non-GAAP E.P.S. = $.41
"The primary differences between GAAP and core EPS stemmed from restructuring charges and from non-cash, mark-to-market adjustments associated with the company’s currency-hedging contracts and Japanese-yen-denominated debt."
The largest business segment is Optical Communications that generated $1.1B in first quarter revenues.
Last Bond Offering (May 2023): Prospectus
Morningstar (4/25/23): 4 stars with a fair value estimate fo $40
S&P (4/25/23): 4 stars with a 12 month PT of $40
Argus (4/25/23): Buy with a 12 month PT of $54 and a narrow moat.
Largest Realized Gain to Date: $568.02 (103+ shares)
Item # 3.B. Sold 103 GLW at $26.45 (2/7/17 Post)
Other Realized Gains to Date:
2012: +$48.97 (50 shares)
2014: +$252.23 (50 shares)
Item # 6 Sold 50 GLW at $17.34 (2/3/14 Post)-Item # 1 Bought 50 GLW at $11.98 (9/5/12 Post)
2016: $215.30 (102+ shares)
.jpg){kind=small}
2016 RI: $84.39 (51+ shares)
2020: $127.47 (50 shares)
GLW Realized Gains to Date: $1,296.38 (no realized losses yet)
B. Added to PINE - Bought 5 at $15.35:
Quote Alpine Income Property Trust Inc. (PINE) - Net Lease Retail REIT
Cost: $76.75
Management: External provided by a wholly owned subsidiary of the publicly traded CTO Realty Growth Inc (CTO).
CTO has an ownership stake in PINE:
 |
| 10-Q at page 23 |
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Last Discussed: Item # 4.G. Added to PINE - Bought 5 at $15.9 (10/11/22 Post)
New Average cost per share: $17.26 (25 shares)
Dividend: Quarterly at $.275 per share ($1.1 annually), last raised from $.27 effective for the 2022 third quarter payment
PINE Dividend History | Seeking Alpha
Yield at AC = 6.37%
Next Ex Dividend: 6/7/23
Last Earnings Report (Q/E 3/31/23):
SEC Filed Press Release and Supplemental
Revenue: $11.166M
FFO and AFFO per share: $.36
"Sold 10 net lease properties during the first quarter of 2023 for total disposition volume of $56.2 million at a weighted average exit cash cap rate of 6.1%, generating total gains of $4.5 million."
"Increase investment grade-rated tenant exposure to 58% as of March 31, 2023, up from 50% as of March 31, 2022."
10% of assets in cash to be used opportunistically to acquire properties net leased to investment grade tenants.
Occupancy: 99.4%
Weighted average lease term: 7.3 years
Number of Properties: 138
Square Feet: 3.5M
Debt is at spreads to SOFR, with hedging described at page 20, 10-Q.
Cash and Cash Equivalents: $4.29M
Restricted Cash: $59.269M
C. Bought 10 VLYPP at $16.31:
Quote: Valley National Bancorp 6.25% Preferred Series A (U.S.: Nasdaq) | MarketWatch
Equity preferred stock issued by the bank holding company Valley National Bancorp (VLY)
This is a fixed-to-floating rate preferred stock.
The fixed coupon of 6.25% is the applicable one to but excluding 6/30/25. If not redeemed, the floating rate will be at a 3.85% spread to the 3 month Libor rate or the alternate rate if no Libor quotes are available (page S-19)
Par Value: $25
Yield at $16.31: 9.58% (to but excluding 6/30/25)
Dividend: Paid quarterly, qualified and non-cumulative.
Maturity: Potential Perpetual
Issuer Optional Call: on or after 6/30/25 on a dividend payment date.
Stopper Clause: Standard (pages S-19, S-20)
VLY has another fixed-to-floating rate preferred stock that is currently in its variable coupon period. Valley National Bancorp 5.5% Preferred Series B Stock (VLYPO). The float is at a 3.578% spread to the 3 month Libor or the alternate rate.
On 5/26/23, VLYPO closed at $20.58.
While the current dividend penny rate rate is higher than the VLYPP dividend, most of the VLYPO current yield advantage is lost with its higher price.
If neither preferred stock is redeemed, the yield advantage of VLYPP will be significant starting on 6/30/25 for 2 simple reasons.
VLYPP has a higher spread and much lower cost. The much lower price is far more important.
Say the alternate rate in 2026 is 3%.
Coupon for VLYPP = 6.85% paid on a $25 par value
Yield at $16.31 (my purchase price) = 10.5%
If the alternate rate is 5%, the coupon becomes 8.85% and the yield rises to 13.57% at a $16.31 cost per share.
Coupon for VLYPO = 6.578% paid on a $25 par value.
Yield at $20.58 (closing price 5/26) = 7.99%
If the alternate rate is 5% in 2026, the coupon becomes 8.578% and the yield rises to 10.42% at a $20.58 cost per share.
Valley National Bancorp Declares Its Regular Quarterly Preferred and Common Stock Dividends
D. Added to THQ - Bought 5 at $18.02:
Quote: Tekla Healthcare Opportunities Fund Overview
Cost: $90.08
Sponsor's website: Tekla Capital
Leveraged: Yes at 20.56% as of 3/31/23. THQ_Fact_Card_1Q_2023.pdf
Leverage is through a credit facility priced at a spread to a short term rate. (page 31 Annual Report, linked below)
SEC Filed Annual Report (Y/E 9/30/22) The semiannual report has not yet been filed.
Tekla_Healthcare_Opportunities_Fund_Holdings as of 12-31-22.pdf
Tekla Healthcare Opportunities (THQ)-Morningstar (rated 4 stars)
Tekla Healthcare Opportunities (THQ) Portfolio | Morningstar
Investment Category: Monthly Income Generation
Last Discussed: Item # 3.B. Added 5 THQ at $18.58 (5/6/23 Post)
Average cost per share: $19.08 (30 shares)
Dividend: Monthly at $.1125 ($1.35 annually)
Some current ROC support.
The only way to completely cover this dividend is through capital gains.
Yield at New AC: 7.08%
Last Ex Dividend: 5/19/23
Data Date of 5/26/23 Trade:
Closing Net Asset value per share: $20.51
Closing Market Price: $18.03
Discount: -12.09%
Average 3 Year Discount: -6.66%
Sourced: THQ-CEF Connect
THQ Realized Gains to Date: $822.13
E. Added to MATV - Bought 5 at $15.5:
Quote: Mativ Holdings Inc. (MATV)
Cost $77.5
"The Company’s two operating segments, Advanced Technical Materials and Fiber-Based Solutions, target premium applications across diversified and growing end-markets, from filtration to healthcare to sustainable packaging. Our broad portfolio of technologies combines polymers, fibers, and resins to optimize the performance of our customers’ products across multiple stages of the value chain."
2022 Annual Report (Description of businesses starts at page 4)
10-Q for the Q/E 3/31/23 (Debt discussed starting at page 19
MATV Analyst Estimates | MarketWatch
Last Discussed: Item # 3.C. Restarted MATV - Bought 5 at $18.95; 5 at $18.1; 5 at $16.6 (5/6/23 Post)
Last Elimination: Item # 3.A. Eliminated MATV - Sold 30 at $27.97 (2/27/23 Post)(profit snapshot = $209.35) I discussed the 2022 4th quarter report in that post, which I viewed unfavorably. SEC Filed Earnings Press Release
Other Sell Discussions: Item # 5.C. Eliminated MATV in Schwab Account - Sold 18+ at $25.06 and Item #5.D - Pared MATV in Fidelity Account - Sold 15 at $26.05 (1/23/23 Post)
Average cost per share: $17.29 (20 shares)
Dividend: Quarterly at $.40 per share
Yield at New AC = 9.25%
Last Ex Dividend: 3/8/23 (owned 15 shares as of)
Last Earnings Report (Q/E 3/31/2023): SEC Filing
I view this report unfavorably. If future results do not significantly improve, the only prudent course would be to slash the dividend.
GAAP Loss per share: ($.14)
Non-GAAP E.P.S. = $.25
"Price increases more than offset the impacts of higher input costs; however, lower volumes primarily from customer de-stocking and manufacturing challenges drove margin pressure."
GAAP to Non-GAAP: Mostly eliminates expenses related to the merger.
Revenue: $679M
Management believes operating results will improve as the year progresses.
F. Added to OGN- Bought 1 at $19.55; 2 at $18.90:
Quote: Organon & Co. (OGN)
Cost: $57.35
OGN Analyst Estimates | MarketWatch
New AC per share: $25.38 (50+ shares)
Quarterly Dividend: $.28 per share ($1.12 annually)
Yield at New AC = 4.41%
Last Ex Dividend: 5/12/23 (owned 42+ as of)
Last Discussed: Item # 2.N. Added 1 OGN at $21.24; 2 at $20.28; 1 at $20.58 (5/20/23 Post) I discussed the last earnings report in that post. SEC Filed Earnings Press Release for the Q/E 3/31/23; 10-Q for the Q/E 3/31/23
Last Sell Discussion: Item # 5.A. Eliminated OGN in Vanguard Taxable Account - Sold 12 at $30.67 (1/23/23 Post)
G. Added 5 FISI at $16.54; 5 at $15.7:
Quote: Financial Institutions Inc. (FISI)
FISI is the parent of Five Star Bank, SDN Insurance Agency and Courier Capital. Five Star branches are located throughout Western and Central New York. As of 12/31/22, Five Star had 41 branch offices. Of those 31 were owned. 10-K at page 36
Cost: $161.2
FISI Analyst Estimates | MarketWatch
2022 Annual Report (investment security information can be found at page 47)
Financial Institutions, Inc. - Investor Relations
Investment Category: Regional Bank Basket Strategy
Last Discussed: Item # 1.F. Pared FISI - Sold 5 at $29.15 (4/17/2021 Post)(profit snapshot = $69.85)
Average cost per share: $15.22 (30+ shares)
The two 5 share purchases raised my average cost per share from $14.78 to $15.22.
I have now bought back the 5 shares sold at $29.15 and at $20.6:
Dividend: Quarterly at $.30 per share, last raised from $.29 effective for the 2023 first quarter payment.
Financial Institutions, Inc. (FISI) Dividend History | Seeking Alpha
I quit reinvesting the dividend after the 2020 4th quarter payment. Effective for the next payments, I have changed the option to reinvestment given the dividend yield and valuation.
Yield at $15.22 AC = 7.88%
Next Ex Dividend: 6/14/23
Last Earnings Report (Q/E 3/31/23) SEC Filed Press Release
Comparisons are to the 2022 first quarter.
E.P.S. = $.76, down from $.93
NIM: 3.09%, down from 3.11%
Efficiency Ratio: 63.68%, up from 59.06% (wrong direction and too high IMO)
NPL Ratio: .21%, down from .26%
Coverage Ratio: 540%
Charge off Ratio: .21%
ROTE: 14.53%, down from 14.81%
Tangible Book Value per share: $21.62, down from $23.23
TBV per share has been hit by lower fair market values on owned securities, a common occurrence with banks when comparing 2022 with 2021 or the 2023 first quarter with the 2022 first quarter.
Discount to Tangible Book Value at $15.22 AC per share = 29.6%
"Total deposits were $5.14 billion at March 31, 2023, $211.9 million higher than December 31, 2022, and $138.4 million higher than March 31, 2022."
Investment Securities:
Average yield = 1.93%
 |
| Maturity |
My grade for interest rate management is a "C". I am being generous with my grades.
There appears to have been little effort to meaningfully shorten the duration during 2021 when it had become obvious that problematic inflation would cause the FED to significantly raise interest rates. As of 3/31/23, the AFS portfolio has a 79% weighting in securities that mature after ten years. The weighted average yield is also too low and well below CD rates that have to be offered to depositors, thereby squeezing NIM.
Other Sell Discussions: Item # 3.F. Pared FISI Schwab Taxable Account-Sold 5 at $20.6-highest cost lot (12/5/20 Post)(profit snapshot = $23.26); Item # 3 Sold 50 FISI at $24.71 Update For Regional Bank Basket Strategy As Of 8/21/15 - South Gent | Seeking Alpha (profit snapshot = $442.07); Item # 2 Sold 51+ FISI at $24.1 (5/3/2015 Post)(profit snapshot = $254.18); Item # 5 Sold 50 of 150 FISI at $21.16 (10/11/13 Post)(profit snapshot = $59.15).
FISI Realized Gains to Date: $817.78
H. Added 5 VABK at $27.88:
Quote: Virginia National Bankshares Corp.
Cost: $139.4
New Average cost per share: $29.21 (15) shares
Dividend: Quarterly at $.33 per share ($1.32 annually)
Virginia National Bankshares Corporation (VABK) Dividend History | Seeking Alpha
Yield at New AC = 4.52%
Next Ex Dividend: 6/8/23
I discussed this stock in my last post and have nothing further to add. Item # 2.F. Added to VABK - Bought 5 at $29.25 (5/27/23 Post)
I. Added to TRST - Bought 5 at $27.75:
Quote: Quote: Trustco Bank Corp. (TRST)
Cost: $99.05
Investment Category: Regional Bank Basket Strategy
Dividend: Quarterly at $.36 per share ($1.44 annually)
TrustCo Bank Corp NY (TRST) Dividend History | Seeking Alpha
New Average Cost per share: $30.54 (30 shares)
Yield at New AC: 4.715%
Last Ex Dividend: 6/1/23 (owned all as of)
I discussed the 2023 first quarter report in this post and have nothing further to add here Item # 2.A. Added 5 TRST at $28.2 (5/20/23); SEC Filed Earnings Press Release; 10-Q for the Q/E 3/31/23
TRST Trading Profits to Date: $1,408.67
I previously eliminated duplicate positions: Item # 2.C. Eliminated TRST in 2 Taxable Accounts - Sold 5 at $36.84; 5 at $37.02 (3/11/23 Post); Item # 3.A. Eliminated TRST in Schwab Taxable Account - Sold 20 at $38 (12/13/22 Post)
J. Added to COLB- Bought 2 at $19.81:
A. Eliminated AJXA - Sold 10 at $24.27:
Quote: Great Ajax Corp. 7.25% Convertible Senior Note Maturing in 2024 (AJXA)
Proceeds: $242.66:
Investment Category: Exchange Traded Baby Bonds
Issuer: Great Ajax Corp. (AJX) I would classify this company as an externally managed mortgage REIT.
AJX 2022 Annual Report (Risk factor summary starts at page 15 and ends at page 43)
Profit Snapshot: Net of +$2.59
Last Discussed: Item # 3.E. Bought 5 AJXA at $24.93 (3/31/22 Post); Item # 2.A. Bought 5 AJXA at $23.08 (10/10/20 Post)
Par Value: $25
Coupon: 7.25%
Interest Payments: Quarterly
Maturity Date: 4/30/24
Last Ex Interest Date: 3/31/23 (owned as of)
AJXA Interest Payment History-Nasdaq
Rationale: Based on recent financial reports, which have been poor IMO, the credit risk was not worth IMO 4 more interest payments, taking into account the current risk free yield, and slightly more profit when and if the issuer pays the principal amount at maturity.
Last Loss Report (Q/E 3/31/23): SEC Filing
Loss of $7.9M or -$.34 per share
Operating Loss of $2.1M
Operating E.P.S. -$.09
B. Eliminated FTEKX- Sold 31+ at $12.73:
Quote: Fidelity Disruptive Technology Fund Overview
Proceeds: $407.22
Profit Snapshot: +$18.17
Sponsor's Website: Fidelity ® Disruptive Technology Fund
FTEKX-Morningstar (currently rated 2 stars)
This fund has had a stellar 2023, up 32.9% YTD through 5/26/23, but was down -47.4 last year.
This fund has yet to pay an ordinary dividend. Dividends sourced from capital gains have been paid semiannually. The two two payments totaled $.262 per share.
I am focusing more on current income now and have been eliminating mutual funds that have negligible dividend distributions and erratic performance with disappointing total returns.
C. Eliminated FGDFX - Sold 21+ at $13.39:
Quote: Fidelity Disruptors Fund Overview
Proceeds: $285.45
Profit Snapshot: +$27.13
Sponsor's Website: Fidelity ® Disruptors Fund
FGDFX – Morningstar (currently rated 2 stars)
Dividend payments are scheduled for July and December. However, the only two payments starting in 2020 was a $.107 per share dividend in December 2020 and a $.219 payment in December 2021. No payment was made last year.
D. Eliminated CSCO - Sold 10 at $49.91:
Quote: Cisco Systems Inc.
Proceeds: $499.12
Profit Snapshot: +$114.17
Last Discussed: Item # 3.C. Pared CSCO - Sold 2 at $49.68; 3+ at $52.19 (6/12/21 Post)(profit snapshot = $52.46)
Last Buy Discussions: Item # 1.G. Added to CSCO-Bought 1 at $38.82; 1 at $38.34; 1 at $37.69 (10/17/20 Post); Item # 1.H. Restarted CSCO-Bought 1 at $42.62; 1 at $42.1; 1 at $41.88; 2 at $41; 5 at $40.75; 1 at 40.33; 1 at $39.45 (9/13/2020)
Dividend: Quarterly at $.39, last raised from $.38 effective for the 2023 second quarter payment.
Cisco Systems, Inc. (CSCO) Dividend History | Seeking Alpha
While the dividend growth rate slowed to 2.63% with the last increase, the dividend has more than doubled from the $.17 per share paid in 2014. Doubling at a 2.63% annual growth rate, however, will take about 26.7 years. The Rule of 72 (with calculator)
Last Ex Dividend: 4/4/23 (owned as of)
Last Earnings Report (3rd F/Q ending 4/29/23): SEC Filed Press Release
Revenue: $14.571B
Revenue by Business Segment:
GAAP E.P.S. = $.78
Non-GAAP E.P.S. = $1, up 15% Y-O-Y
GAAP to Non-GAAP:
F/Y 2023 Guidance: Revenues up 10% to 10.5%; Non-GAAP E.P.S. $3.8 to $3.82.
Total product orders were down 23%. Cisco Systems (CSCO) Q3 2023 Earnings Call Transcript | The Motley Fool; Cisco Sounds an Alarm on Orders. Analysts Not Too Worried About Networking Sector. | Barron's
10-Q for the Q/E 4/29/23 (long term debt at $28.719B; cash and investments at $23.288B; debt discussed and listed starting at page 27)
Sell Discussions: Item # 1.N. Sold 4 CSCO at $47.21 (2/20/21 Post)(profit snapshot = $40.16); Item # 2.F. Sold 3 CSCO in Fidelity Taxable Account at $42.8-highest cost lots (12/25/20 Post); Item # 1.H. (9/13/2020)(contains profit snapshots of trades starting in 2009 through 2019, generating a profit of $1,804.65)
Realized Gains CSCO 2009 to Date: $2,013.76
I did not take profit snapshots prior to starting this blog in 2008, nor did I track profits/losses in specific stocks.
Largest Gain: $885.28 (50 shares)
Second and Third Largest Gains: +$561.77
3. Corporate Bonds: +$8,000 in principal amount.
A. Bought 2 Welltower 4% SU Maturing on 6/1/25 at a Total Cost of 96.925:
%204%25%206:1:25%20.png)
Issuer: This bond was originally issued by Health Care REIT that was later acquired by Welltower Inc. (WELL)
SEC Filed First Quarter Report
New Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa1/BBB+
YTM at Total Cost: 5.65%
Current Yield at TC = 4.13%
Last Bond Offerings:
3/22: Prospectus $550M 3.85% SU maturing in 2032
11/21: Prospectus $500M 2.75% SU maturing in 2032
B. Bought 1 Ventas LTD 3.75% SU Maturing on 5/1/24 at a Total Cost of 97.936:
Issuer: Operating entity for Ventas Inc. (VTR) who guarantees the notes.
New Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa1/BBB+
YTM at Total Cost: 6.101735%
Current Yield at TC = 3.83%
I now own 6 bonds.
My last purchase was made on 5/8/23 at a 98.357 total cost. Item # 1.C. The slightly lower purchase price of 97.936 has negligible impact on the current yield (3.83%, up from 3.81%) but does materially increase the YTM from 5.5% to 6.1% due to the short maturity.
C. Bought 2 Williams 4.55% SU Maturing on 6/24/24 at a Total Cost of 98.93:
%20.png)
Issuer: Williams Cos. (WMB)
SEC Filed Earnings Press Release for the Q/E 3/31/23
I own the common stock and other SU bonds.
New Finra page: Bond Page | FINRA.org
Since I did not have the date this bond was issued, I could not find the prospectus after looking for about 10 minutes.
Credit Ratings: Baa2/BBB
Fitch has a BBB rating. Fitch Rates Williams Companies Proposed Senior Unsecured Notes 'BBB'
YTM at Total Cost: 5.6%
Current Yield at TC = 4.6%
D. Bought 1 Truist Financial 4.25% SU Maturing on 9/30/24 at a Total Cost of 97.526:
Issuer: Originally issued by National Penn Bancshares that was acquired by Truist Financial Corp. (TFC)
I have a small ball position in the common stock that has a higher yield at my average cost per share than the YTM for this bond.
TFC Analyst Estimates | MarketWatch
TFC SEC Filed Earnings Press Release for the Q/E 3/31/23
New Finra Page: Bond Page | FINRA.org
The new Finra page does not have the credit ratings.
Credit Ratings: Credit Ratings | Fixed Income | Truist Investor Relations
YTM at Total Cost = 6.226%
Current Yield at TC = 4.36%
E. Bought 2 Magna International 3.625% SU Maturing on 6/15/24 at a Total Cost of 98.226:
Issuer: Magna International Inc. (MGA)
MGA Analyst Estimates | MarketWatch
Magna Announces First Quarter 2023 Results
New Finra Page: Bond Page | FINRA.org
Credit Ratings: A3/A-
YTM at Total Cost = 5.427%
Current Yield at TC = 3.69%
4. Treasury Bills Purchased at Auction: $10,000 in principal amount
A. Bought 2 Treasury Bills at the 5/30/23 Auction:
%2011:30:23%20.png){kind=small}
182 Day Bill
Interest: $53.49
Investment Rate: 5.526%
B. Bought 2 Treasury Bills at 5/30/23 Auction:
%208:31:23%20.png)
91 Day Bill
Matures on 8/31/23
Interest: $26.79
Investment Rate: 5.462%
C. Bought 3 Treasury Bills at 5/31/23 Auction:
%2010:3:23%20.png){kind=small}
Matures on 10/3/23
119 Day Bill
Interest: $52.81
Investment Rate: 5.511%
%208:1:23%20.png)
Needless to say, the low yield on the Schwab sweep account is a major profit center for this broker. Customers have been moving money out of that low yield account, as I have been doing, to buy higher yielding securities or a Schwab MM fund that can be purchased such as the Schwab Treasury Obligations Money Fund - Investor Shares (SNOXX) that currently has more than $32B in proceeds. The 7 day SEC yield on that MM fund is 4.79%. I have parked money in that MM fund as an option to more treasury bills in case I would to increase my stock allocation in that account without having to sell something.
%20+$11.54.png){kind=small}
%20+$24.34.png){kind=small}
The unemployment increase is consistent with the pattern of the recession coming on.
ReplyDeleteBut the jobs increases isn't.
Apparently this is going to be a recession that goes with a stagflation at the same time. Those seem to be unusual.
I was reading, something I didn't follow that well, that the federal be releasing bonds so that the government will have money, and the result will be that in order to get buyers, they'll have to increase rates.
ReplyDeleteLand: The government will have to raise a lot of capital this week which may cause short term yields to rise some.
DeleteI have been monitoring the current short term T bill rates and do not see much of a change from last week so far.
Currently the 3 month T Bill is trading at a 5.38% yield.
https://www.marketwatch.com/investing/bond/tmubmusd03m?countrycode=bx
I will be buying at auction today the 3 and 6 month treasury bills.
++
As to the slightly higher unemployment rate in May, I would not pay much attention to it.
There is an ongoing problem in divergences between the BLS Establishment (nonfarm payrolls) and Household Surveys that formed the basis of the jobs report each month. The divergence was 649,000 in May. Divergence is built into the surveys given the broader definition of employment in the Household survey.
The unemployment number comes from the Household survey which has a broader definition of employment (e.g. Ebay sellers, YouTube influencers, etc., recently formed new businesses )
While the establishment survey showed the growth in jobs, the household survey had a 310,000 decline in the employed civilian workforce, which, when coupled with 130,000 persons entering the workforce, led to the unemployment rate increasing to 3.7% from 3.4%.
See Table A, Household Survey:
https://www.bls.gov/news.release/empsit.a.htm
There could be a lot of explanations for the divergence in job growth numbers, and many of those have nothing to do with what is actually happening.
The key issue is that the sampling for the Household survey may be way off.
The establishment survey is based on a large sample of actual payroll data, subject to later revision when the BLS has more data.
Another less benign explanation is that there is a decline in new business start ups.
Thanks for all the info!!
ReplyDeleteI won't realistically be able to use the auction today cuz I'm at doctor's appointments. But another . 4 is a nice goose over bank rates and vanguards rate.
Vix is barely over 16. When it went below 15 and 2018, that was the indicator that the bear was over. Even though the time below 20 was not yet at 3 months. It'll be interesting to see if Vix gets below 15.
There is a rally in regional bank stocks today.
ReplyDeleteSPDR S&P Regional Banking ETF (KRE)
$43.37 +$2.25 +5.47%
Last Updated: Jun 6, 2023 at 12:08 p.m. EDT
https://www.marketwatch.com/investing/fund/kre?mod=search_symbol
The only news, which may explain this pop when the S&P 500 is up only .18%, is that Goldman Sachs lowered its recession odds back to 1 in 4.
The whole sector has been beaten up badly. I have been gingerly buying into the falling knives.
++
I did participate in Monday's 6 month treasury bill auction, but the 3 month bill order must have been placed in a dream.
I am participating in tomorrow's 4 month T Bill auction.
The yield on that T Bill closed yesterday at a 5.47% yield, 1 basis point higher than the 3 month.
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202306
I did not have the amount of new treasury debt that was postponed due to the debt limit. The WSJ has the amount at $850 billion which will need to be sold between now and September. That is in addition to what would normally be sold during that period which will send the total over $1 trillion. This could send short term treasury bills higher in the coming weeks, increasing the yield inversion between the 3 month bill and the 10 year treasury note which is already at a record level using a chart going back to 1982.
ReplyDeletehttps://fred.stlouisfed.org/series/T10Y3M
It'll be unusual if all this inversion doesn't result in some kind of tightening and ultimately recession with a market pull back.
DeleteDividend yields are not inviting by comparison. 4 mo at 5.47%.
Interesting article, pointed out that there's a tendency to look at dividend growth in past stocks. But logically going forward, the dividend growth will probably be best in tech and the new direction that the economy is going in. One problem though is that there aren't nearly as many of the new industries paying dividends.
I think today was the first day that Dow rallied and NASDAQ slid. Bloomberg said because of worries over rate hike. I can't believe that wasn't anticipated.
I have published a new post:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2023/06/cet-cfgprd-clpr-cnq-d-dcom-dcomp-ffnw.html